INSURANCE BUREAU OF CANADA
ONTARIO HOME BUILDERS' ASSOCIATION
CANADIAN FEDERATION OF STUDENTS
PEOPLE FOR EDUCATION
CENTRE FOR EQUALITY RIGHTS IN ACCOMMODATION
CHILD CARE ADVISORY COMMITTEE OF TORONTO
CHILDREN AND YOUTH ACTION COMMITTEE OF TORONTO
TORONTO COALITION FOR BETTER CHILD CARE
CANADIAN ASSOCIATION OF NOT-FOR-PROFIT RESP DEALERS
ONTARIO TRUCKING ASSOCIATION
URBAN DEVELOPMENT INSTITUTE
Friday 4 February 2000
Insurance Bureau of Canada
Mr Mark Yakabuski
Mr Doug Jure
Mr John Feeley
Mr Norman Bergstein
Mr Kyle Ferguson
Ontario Home Builders' Association
Mr Dick Brouwer
Mr Wayne Dempsey
Canadian Federation of Students
Mr Ashkon Hashemi
Ms Erin George
People for Education
Ms Gay Young
Ms Diane Dyson
Ms Annie Kidder
Centre for Equality Rights in Accommodation
Ms Sherrie Tingley
Mr John Fraser
Child Care Advisory Committee of Toronto; Children and Youth Action Committee of Toronto
Ms Cheryl DeGras
Ms Fiona Nelson
Toronto Coalition for Better Child Care
Ms Jane Mercer
Ms Theresa Radwanski
Canadian Association of Not-for-Profit RESP Dealers
Mr Tom O'Shaughnessy
Mr Ken Goodwin
Ontario Trucking Association
Mr David Bradley
Urban Development Institute
Mr Stephen Kaiser
Mr Doug Benedict
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)
Also taking part / Autres participants et participantes
Ms Marilyn Churley (Broadview-Greenwood ND)
Mrs Sandra Pupatello (Windsor West / -Ouest L)
Clerk / Greffier
Mr Tom Prins
Staff / Personnel
Mr David Rampersad, researcher, Research and Information Services
Ms Elaine Campbell , researcher, Research and Information Services
The committee met at 1002 in room 151.
INSURANCE BUREAU OF CANADA
The Chair (Mr Marcel Beaubien): Good morning, everyone. If I can get your attention, we'll bring the committee to order. Our first presenter this morning is the representative from the Insurance Bureau of Canada. Could you please step forward and identify yourself for the record.
Mr Mark Yakabuski: Good morning, Mr Chairman. I'm Mark Yakabuski, the acting vice-president of the Ontario division of the Insurance Bureau of Canada. I'm first of all pleased to have this opportunity to appear before the committee this morning. I should note that I'm not a complete stranger to this building. My father sat in the Ontario Legislature for seven terms, and I frequently remember visiting here at Queen's Park as he sat in the Legislature and in his office, so it's a pleasure to be here this morning.
I really have three messages that I would want to enjoin you to consider as you make your recommendations to the Minister of Finance, and to the Legislature, of course, with respect to preparations for the upcoming provincial budget.
First of all, I think that as the province now moves into a virtuous cycle where one hopes that there will be budgetary surpluses for at least some years to come, debt reduction has to take on an importance that we have not accorded it in the past. I don't have to remind you that, as you scrutinized the Economic Outlook and Fiscal Review that the Minister of Finance brought down earlier this fall, you would have noted that the total provincial purpose debt in Ontario now stands at $119 billion. That's a large figure. It is costing the government of Ontario $9.3 billion in interest costs this current fiscal year. That's about one half, a little bit less than one half, of what the government is currently spending on health and long-term care expenditures, and significantly more than the government currently spends on education. So that to the degree that we are able to reduce the province's debt-servicing costs, that will leave the government with considerably more resources to dedicate to the problems that we know have to be addressed.
I want to say that Ontario, in our estimation, just as it has led the country in a vigorous tax-cutting campaign in some sense-I hope that the government would also now want to add debt reduction to that equation and essentially lead the country in trying to establish a coordinated debt-reduction strategy with the federal government and the other provinces. That way, we are likely not to have increased interest rate hikes by the Bank of Canada etc that will add to our debt servicing costs in the future. I want you to perhaps take seriously the issue of a national strategy with Ontario playing a leadership role in this respect.
The second point I want to impress upon you this morning is the need to continue to exert vigorous controls on spending. There's no doubt that the government has, over the past few years, cut certain expenditures. The need to control expenditures in Ontario was great, and we applaud the government for having done that. However, I note, for example, that, as mentioned by the Minister of Finance when he appeared earlier before this committee, expenditures this year in Ontario are likely to be about $61 billion. Now, just two years ago expenditures were $54 billion. That's a $7-billion increase in just two years.
What I'm saying is that there is a great danger as we move into a surplus situation, human nature being human nature, that we will loosen the purse strings and there will be an attempt in many, many instances out there to increase that spending further. I simply say that there must be continuous and vigorous controls on spending, particularly as we move into a possible surplus situation.
If there are to be increases in expenditure, we believe strongly that they ought to be dedicated to areas that can clearly be shown to improve the province's productivity or, in the end, be shown to save taxpayers money.
I'll give you two examples. Most of the increases in expenditures over the past couple of years have been dedicated to health care, in particular, and education. We would not differ with spending more money on health care and education. I think the public believes that those services have to be strongly protected. However, we also believe that you have to bring some reform to the system and not just throw money at all the problems. That said, you have to be careful that you don't throw money at every problem out there.
The other thing I would say is that insurance companies are specialists in loss prevention. That's really the principal reason that I am here today. We try to reduce losses so that we can keep premiums under control and make them affordable. What we note is that there are lots of liabilities that the government of Ontario faces-most of them are funded. We know that health care expenditures are going to go up in future years; presumably, you're going to make provision for that, as you do in other areas.
One area for which provisions have not at all been made is the whole area of paying disaster relief costs in the face of future natural disasters. Yet we know, based on virtually every climate study that has been made over the past five years-we know from a recent report put forward by the United Nations environment program, for example-that it is expected that severe weather events will become more frequent and more severe in the years ahead.
Ontario is not immune to natural disasters. We all lived through the ice storm of just two years ago. As of today, the government of Ontario and the federal government combined have spent about $250 million on disaster relief to clean up from the ice storm of two years ago. That does not take into account the costs incurred by Ontario Hydro, nor the cost of bringing in the military to do a lot of that cleanup work. So that was a very expensive natural disaster. The fact that it cost insurance companies about $1.5 billion is an aside, but the point is that there are large future liabilities out there for which no provisions have been made. I don't have to remind you-if you didn't experience it personally, your parents did or it's there in the history books-that Hurricane Hazel, in 1954, left 4,000 people homeless, 81 people dead and cost millions of dollars in damages. This sort of thing is very likely to recur in one form or another.
What we have recommended at the Insurance Bureau of Canada is that all levels of government get together to essentially address this problem and in the end save taxpayers money. How? We approach national disaster reduction in this country by paying a great deal of money after the natural disaster strikes. As I say, in the ice storm case here in Ontario we spent about $250 million. We could substantially reduce the costs of natural disaster relief if we invested money up front in preventive projects; for example, the building of dikes in areas that are subject to recurring flooding. Currently they're developing technologies; for example, in the case of the ice storm, cables on which ice would not collect, using different polymer surfaces and all that sort of thing. If we invested a little bit of money in some technologies in preventive projects, we could save substantially in the future.
Probably the very best example of a preventive project that has saved millions of dollars over the years is the Winnipeg floodway that was constructed in the late 1950s and 1960s, again a joint effort between, in that case, the Manitoba government, ie, the provincial government, and the federal government. It cost about $63 billion at the time. It has been used 17 times since it was opened and it has literally saved billions of dollars in flooding costs that otherwise would have hit the city of Winnipeg.
That's just one example. There are many examples that we could use here in the province of Ontario where by investing a small portion of money up front we would reduce the liabilities of the provincial government and other governments in addressing natural disasters. I want to enjoin you to take that seriously. You have a major unfunded liability out there and it's better to address it now than to wait until after the storm comes.
My third message is simply this: Ontario has made great strides in reducing personal income taxes. We believe that should continue as the budget allows. However, it's also time, as Ontario moves into a more virtuous fiscal cycle, to make sure that our corporate income tax is more competitive. We would ask that the province undertake a review of corporate income taxes in the province to make sure that they are competitive with our most competitive jurisdictions. As part of this, as part of a general corporate tax review, we would encourage the government to look at some of the taxes that are laid on financial institutions in this province and in particular the property and casualty insurance industry.
In particular, I would like to simply recount for you how it came to be that auto and property insurance is the only financial service taxed in this province at the retail level. There are no other financial services that are taxed at the retail level, and that's for a very good reason. Nowhere in the world, except in some provinces in Canada, are financial services taxed at the retail level. Why? Because financial institutions pay large amounts of money in capital taxes, in premium taxes, in payroll taxes and in corporate income taxes, all of these before the product is delivered to the consumer.
In 1992 the previous government here in Ontario, basically as a means of generating quick and easy revenue, applied the provincial sales tax for the first time in history on property and auto insurance. That tax is now generating for the province approximately $600 million a year. It's very simple: That simply adds $600 million a year to the cost of property and auto insurance in the province, which already in some cases is a product that is not affordable.
I would ask you to take a look at that tax, which was introduced for purely revenue-generation purposes and is not consistent with the principle that products should not be taxed twice and three times, and take into account the large amount of premium tax that property and casualty insurers are already paying in Ontario, provincial income taxes, PST on the claims we pay out to rebuild homes, to repair cars. We are paying an additional $600 million already to the province of Ontario, as I say, on that traditional tax base. I'd like you to at least take a look at why you singled out property and casualty insurance for a retail sales tax that does not apply to other financial services.
In summation, I simply want to impress upon the committee the need to commit the province to a solid debt reduction strategy, to control spending vigorously in the months and years ahead, to make provisions for future natural disasters that represent a huge unfunded liability at the present moment and to ensure that our corporate income tax system is more competitive.
The Chair: Thank you very much. We have approximately four and a half minutes per caucus. Since the third party's not here, I'll change the rotation and start with the government side.
Mr Doug Galt (Northumberland): Thank you very much for an interesting presentation. I do appreciate some of your thoughts and concerns. A couple of questions, but first, as you mentioned the debt-and you're really concerned about it-in the beginning of your presentation, I want to bring to mind what's going on. At the end of this year, predicted almost a year ago, $121 billion would be the debt. Looking at the end of our first year, because I don't think we can be blamed for 1995-96, the debt at that time was $101.396 billion, the difference being $19.82 billion. Now if you take off the Ontario Hydro debt, which has been rolled in there, the real increase of government activity has been $10.9 billion.
What I think is interesting-and I hear from the opposition, "Oh, this tremendous increase"-is that if you really looked at and wanted to look at the extreme from our side to lobby, you could say we started with $101 billion, plus $30-plus billion from Ontario Hydro, being $130-plus billion and we're coming out at the end of this year at $121 billion. We've actually cut the debt by $10 billion. That's the kind of creative mathematics the opposition has. I just thought I'd be a little creative and point that out.
Mr Galt: You see Mr Phillips really enjoying that, but it's all-
Mr Yakabuski: Yes, right.
Mr Galt: If we were to follow the red book predictions in 1995, I can tell you the debt would be a lot more because it said so in the red book. Everybody who comes in wants to spend more, so obviously we know where we'd go.
I have two questions. One relates to insurance rates and what do you do with your rates to promote the kind of prevention you were talking about. I know on poultry barns, for example, your rates are different if there's a generator, but what about my home? If I have a generator, would that give me lower rates?
Second is the retail sales tax on property and car insurance that was brought in by the previous government. If that was removed, the government would lose $600 million-your figures-how many jobs would be created in Ontario?
Mr Yakabuski: Good questions. First of all on the debt, I don't want to say that the government has contributed immensely to this debt. I think your figures make a strong argument in that case. What I'm simply saying is that having addressed the tax side vigorously, if we continue to control spending-and we applaud you for that-let us not forget that we still have a large provincial debt on which we have to pay debt-servicing costs. Those debt-servicing costs are very large and therefore the third part of the equation should be addressed. That's all I'm saying. I think there's probably going to be a bit of room in future budgets to be able to do that, and I'd ask you not to forget that.
Mr Galt: I just had to get that on the record.
Mr Yakabuski: I understand that. With respect to what we're doing for natural disasters, first of all we pay out a huge amount of money to help people recover from natural disasters. As I said, in the case of the ice storm the property and casualty insurance industry paid out almost $1.5 billion-more than all of the governments combined. But what we do is this: First of all, you're rated on where you're located. For example, in cities or in rural areas it's to what degree are you close to a fire hydrant or to what degree do you have a proper municipal fire service in your locality. These things bear on the premium that you will pay.
Most farm insurance policies in this province are provided by farm mutual insurance companies. I do not represent the farm mutual insurance companies. Most of these are old companies that have grown up over a century and more. I think what we found in the course of the ice storm was that a lot of farmers out there had pretty bare-bones insurance policies. When you come to agricultural and commercial insurance policies, there is no one policy that is the same. It's essentially a negotiation between you and your broker. What kind of coverage do you want? what kind of coverage do you think you can afford? To the best degree possible we try to rate on the basis of what we think the future risk is going to be.
I would simply say this: As the evidence mounts that there are going to be more frequent and more severe natural disasters, we can expect in the future pressure on insurance rates, particularly at the property level, to reflect the fact that that risk is probably going to go up.
Mr Galt: How many jobs are we going to create in-
Mr Yakabuski: In terms of jobs, we haven't done a-
Mr Galt: That really sells to the Treasurer.
Mr Yakabuski: Exactly. That's a very good question. We haven't done a complete calculation as to how many jobs would be created in Ontario if we got rid of the PST, but I can tell you this much: Give me about a month and a half and I hope we're going to have a study completed that will answer that question.
Mr Galt: Maybe for this budget we need it a little quicker.
Mr Yakabuski: Well, if we can do it more quickly, we can. It's an excellent question and we'll get back to you on that.
Mr Gerry Phillips (Scarborough-Agincourt): Just on the debt, I deal in the real world. When the government came in the debt was $88 billion and today apparently it's $119 billion. They can say, "We had nothing to do with that first year," but actually the revenue came in higher than the NDP had estimated. The government has control of expenditures. When I go to the bank, a dollar is a dollar. The only reason the debt went down a little bit over their estimates was that they delayed cash payments this year of about $2 billion.
Be that as it may, the first issue I wanted to raise with you is that I think some people, when they look at the finances of the province, aren't aware-and this is into detail now, because you mentioned it in your opening remarks-that many of the expenditures that are recorded this year really are offset by revenue in the budget. So when you talked about the expenditure increase, it really isn't. There's about $3.5 billion there that is not a new expenditure increase. Some $2 billion is something called local services, where the province continues to deliver services for the municipalities but they charge the municipalities for that because they plan to hand that over to them. So it's just an offset; it's not really an increase in expenditures. The $500 million for Ontario Hydro is a new expenditure but completely offset by revenue. And the capital budget is $2.9 billion but the government has already said that over the next four years that's going to drop by at least $1 billion a year. That was a one-time extra infusion.
When you're comparing the expenditures-because I think in your opening remarks you suggested that expenditures are up substantially-there is about $3.5 billion that is, in detail, not really net incremental expenditures, but that probably is more detail than we need to get into.
My question is on one of your major proposals, and that is the removal of the tax on premiums, which by the way is one of the key reasons why it's more difficult to blend the GST and PST in Ontario, as you know. Your first recommendation on finances is to reduce the debt.
Mr Yakabuski: Yes.
Mr Phillips: Is it your recommendation that the debt reduction comes ahead of removing the tax on your insurance premiums?
Mr Yakabuski: I think there's a way of staging those two things in such a way that you can achieve both. I've not given you a time frame within which you might want to address those two objectives, but I think, given the revenue growth we are currently seeing in Ontario, it's not unrealistic to think that we could remove that PST on property and auto insurance and still get around at some point to reducing the debt somewhat. So I think these objectives, timed properly, can be achieved, but I appreciate your point that this takes a concerted strategy and that you have to do this probably over a staged basis.
Mr Phillips: As you probably know, the government has already made three major commitments on the "fiscal dividend," the roughly $5-billion tax cuts. Future tax cuts have been announced, about $500 million a year on debt reduction for a total of $2 billion over the next four years, and about $2.5 billion on health care. So the future fiscal dividend that you may see on the horizon, you're a little bit late getting to the table because-you're not too late but you're later than those other three commitments that already have been made by the government, and that's the basis on which they got elected.
You make, in my opinion, a very good point on investments in minimizing damage done through future disasters. I wonder if you've had a chance-this is one of your chances, but there is the SuperBuild fund, and it seems to me, at least as I listen to you, there's some logic in your arguments. Have you had an opportunity to date to make this same case to the-I guess he's now called the president of the Ontario SuperBuild Corp, Mr Lindsay?
Mr Yakabuski: We have not had a chance yet to pitch this idea to the president of the SuperBuild corporation, but we certainly are looking forward to that opportunity. I have communicated with every member of the Legislature in the last couple of months, since I took on my duties, to begin a dialogue on natural disaster reduction, which, as I have tried to explain, is really a cost-saving measure in the medium to long term.
I think the attention the province hopes to give to additional capital spending may be an opportunity for us to impress upon some of the decision-makers that when you are deciding infrastructure plans, it would be very wise and economical on your part to take into account the idea that if we had some projects out there that addressed the vulnerability of communities to natural disasters, these infrastructure projects would prove to be very, very cost-effective.
We are not talking about huge sums of money here. Really there are two ideas in our proposal. One is that a fund, in some respect, should be created in concert with the various provincial governments, with Ontario taking a leadership role in co-operation with the federal government and with the participation of the municipalities as well to create a fund that would see the Ontario government, for example, contributing about $20 million a year to the building of certain projects that are related to natural disaster prevention. Now, $20 million is not a huge amount of money.
The second idea is picking up from what they do in the United States. When a natural disaster of any size hits a community in the United States, after they have finished the cleanup, they assess what those cleanup costs were-say they were $100 million, for example-and they immediately allocate 15% of those cleanup costs to prevention projects to ensure that a similar kind of natural disaster would not wreak the same amount of damage in the future. So if you have a disaster that costs the government $100 million, immediately $15 million are allocated to prevention projects and you get that work underway immediately. We think an idea of that sort should be adopted here in Ontario and elsewhere in Canada.
The timing of this is opportune in the sense that the disaster relief formula between the provincial and federal governments is currently up for renegotiation. This would be a very good time to get some of these ideas built into the disaster relief formula.
The Chair: Thank you very much. Mr Christopherson.
Mr David Christopherson (Hamilton West): Thank you for your presentation. I note that you placed a fair bit of emphasis on the tax that was introduced in 1992 during the NDP government, which of course I was a member of. I actually joined the cabinet that year. Let me say to you that, first of all, I make no apologies for the fact that we did that, none whatsoever. Of course, 1992 was the depth of the worst recession we had seen since the Depression of the 1930s. This government has been in power for five years now and has brought in a budget every year, and they've deemed it necessary or decided to leave it in place.
Even their phony balanced budget legislation provides that at a certain point it's okay to run a deficit because you're in such dire financial straits. It turns out that 1992 is the only year where we crossed that threshold. So even under the Tories' phony balanced budget legislation, 1992 would be a year where, even with their hard right-wing ideology, they would run a deficit rather than eat into health, education, social services, environmental protection, all the things that we maintained.
Also, we know now from looking at StatsCan figures that during the Tory regime, where we've had the biggest economic boom in the history of North America, the gap in terms of the income of the very wealthiest and the poorest is greater now than it was during the worst recession, at a time when you would think that would be reversed.
So there are different points of view, different approaches to these things, but personally I think we made the right decision. We did everything we could to maintain the health care system that the Tories are now tearing apart. We did everything necessary to maintain our education system and its infrastructure, the very system that the Tories are tearing apart. The same with environmental protection, social services. In times of a deep recession, you've got to find the money to do that or you slash the services. I think that's a whole hell of a lot better than right now, where we've got this boom, we're awash in money, the economy is just blowing all records, driven mainly because of the American economy, and horrible things are happening in society and yet corporate profits are up.
So when someone like your organization looks back and says, "They introduced this tax just to generate money," yes, we did, absolutely. We did it to maintain those things that make this a strong, great place to live. Under traditional Keynesian economics, which I know don't carry a lot of currency in some quarters these days, the idea would be that you would take whatever measures necessary in a recession and then in a good time you start to pay down that debt, eliminate the deficit and, if necessary, go back and change some of the revenue-generating measures you took.
Rather than give you the relief you think you should have, this government has chosen to give this tax cut that the very wealthy benefit from, and there's $5 billion or $6 billion there. They could have used some of that to eliminate the $550 million that your report says comes into the provincial coffers. While no one likes to be taxed, I would suggest that if you look at the times we were in and the sorts of things that we made priorities, the fact that the Harris government has chosen to leave that in place in good economic times says to me you've got an uphill fight on this one. If it was that outrageous, I would have thought that the Tories, rather than giving $5 billion or $6 billion just to the very wealthy in Ontario, would have come to you and said, "We're going to take some pressure off you here."
Mr Yakabuski: If I could respond to that question, first of all, I appreciate your recounting the circumstances in which this tax was brought in. I take it from that that you recognize it was brought in as a revenue-generation measure. At the very same time the government had its so-called Fair Tax Task Force in place, our industry was in effect singled out because it was an easy way of generating cash immediately.
Clearly, we are no longer in a deficit situation, in the months to come at the very least. We are no longer in a recession. Therefore I would simply enjoin this committee to take a look again and say, "Are there other financial services that are being taxed out there?" There are not. Therefore, on what basis can you justify this tax remaining in place?
I should say that this is not the first time we have raised this question. This has been a part of our submission to the government in one respect or another ever since this tax was introduced in 1992.
The Chair: On behalf of the committee, thank you very much for your presentation.
Mr Phillips: Just as you're leaving, you mentioned here the increasing number of natural disasters. I wonder if you might provide the committee with any kind of evidence of that. That's very interesting, to me at least.
Mr Yakabuski: We will provide information both internationally and within Canada to show the increase in cost both in total numbers and the cost to government in repairing natural disasters.
The Chair: The next presenters are representatives from the Yonge/Bloor/Bay Association. Could you please step forward and state your name for the record.
Mr Doug Jure: Good morning. My name is Doug Jure. I'm a director of the Yonge/Bloor/Bay Association. Next to me is Norman Bergstein, who is the president of the association, Next to Mr Bergstein is John Feeley, who is an honourary director of the association.
On behalf of the officers, directors and the membership of the Yonge/Bloor/Bay Association, I thank the committee for scheduling our presentation this morning as part of your pre-budget consultations.
By way of introduction, the Yonge/Bloor/Bay Association was founded 80 years ago and is recognized as Canada's oldest business association. There are approximately 4,000 businesses and some 33,000 residents within our association's boundaries. The YBB represents their rights and interests before the city of Toronto, the Ontario government and the federal government.
Our association's achievements include siting the Bloor-Danforth subway line through Yorkville to promote business development; establishing the largest business improvement area organization in Canada to promote and strengthen the appeal of our community; and bringing the Toronto International Film Festival to Bloor Street to broaden our community, social and cultural activities.
Our purpose here this morning is to talk to you about property tax reform-current value assessment-in terms of the Ontario government's fiscal policy. There's no better forum than this committee engaged in consultations that are an important part in drafting the 2000 Ontario budget.
We intend to argue that the Ontario government must take steps to correct systemic problems in the Ontario fair assessment system as it relates to commercial properties and that it must recognize that the property tax rates supplied by the city of Toronto have created a tax liability that will drive landlords out of our community and with them retailers who are important to the social fabric of our city.
Although our membership stretches from St George Street in the west to Sherbourne Street in the east, and from Alcorn Street in the north to Wellesley Street in the south, our community is most often referred to as Yorkville. As Canada's premier shopping district, our retailers, contrary to popular belief, are experiencing challenges not unlike those of other retailers in Toronto and in your own constituencies.
It's just after 10:30. Our retailers have been open for over a half an hour. It's another day in what is typically a six-day workweek. Business hours are usually from 10 am to 6 pm on Mondays, Tuesdays and Wednesdays, from 10 am to 8 pm on Thursdays and Fridays and from 10 am to 5 pm on Saturdays. Additional hours are spent on planning promotions, taking and ordering inventory, managing staff and collecting and paying taxes. Our member retailers spend an average of 60 hours a week at their work for very little profit.
We recognize that Yorkville's reputation precedes us. Repeatedly described as the tony or upscale shopping district, the image masks the serious problem that no doubt is being repeated in downtown shopping districts in your own constituencies.
Not unlike communities throughout Ontario, Bloor-Yorkville evolved to what it is today because of a mix of commercial and residential developments. Three decades ago, several of the little buildings along rundown Yorkville Avenue were converted into coffee houses and became Toronto's locale for a new generation of folk singers, notably Joni Mitchell, Neil Young and Gordon Lightfoot. Their audience, the hippies, were drawn to the district. They moved into the old village's rooming houses and brought new life to the district. The first major traffic control problem was resolved by the police who kept Yorkville open despite resident hippies' intentions to close the street and for awhile an emergency medical trailer opened for business every summer day in a nearby parking lot to cope with acid trips gone wrong. Those were the most significant events since Toronto had absorbed the village of Yorkville in 1883.
Today, Yorkville is an eclectic blend of restored Victorian houses and world-class hotels. The main streets of Yorkville are busy city arteries, overwhelmed by pedestrians, cars and delivery vans. Yes, Yorkville has the highest concentration of hairdressers, plastic surgeons and international movie stars in Canada, all of which, no doubt, are related.
The Hudson's Bay Centre, the Holt Renfrew Centre, Cumberland Terrace, Hazelton Lanes and the Manulife Centre are all major retail centres in our community. Bloor Street, from Church Street on the east to Bedford Road on the west, is home to leading Canadian and international retailers. Throughout Yorkville, small independent retailers carry out their business in a variety of renovated buildings ranging from restored Victorian houses to low-rise buildings on Cumberland and Scollard Streets and on Yorkville Avenue.
Despite a strong economy-the popular perception-there is little by way of new commercial development in Bloor-Yorkville. For instance, Birks opened its renovated store in the Manulife Centre just before the Christmas retail season. The Gap opened its renovated and expanded store on the northeast corner of Bloor and Bay Streets. Cartier opened its new store at 130 Bloor Street West. The office building formerly occupied by Crown Life at 120 Bloor Street East is undergoing a complete renovation. Plans are underway to construct an 11-storey hotel at the northwest corner of St Thomas Street and Charles Street West. Construction is underway at 110 Charles Street West for McKinsey and Co's Toronto offices. Only two of those projects involve new construction. The others are merely renovations. In reality, what you are seeing when you look north from this building is condominium construction. Nine condominium projects are in the final planning stages or have construction underway.
Although the YBBA welcomes the initiatives of the province and the municipal government to support business growth through their fiscal policies, the implementation of current value assessment on commercial properties, if left unchecked, will undermine those policies and drive retail businesses out of Bloor-Yorkville, Canada's premier shopping district. The YBBA understands the decision taken by the Minister of Finance in October 1998 to limit property taxes on small businesses to no more than 10% in 1998 and 5% last year and this year, to be an interim step. The resultant three-year cap of 2.5% implemented by the city of Toronto in effect delayed the application of a tax liability that will diminish our members' capital assets and render their businesses unprofitable. The commercial properties on one street alone, Cumberland, face a multi-million-dollar future tax liability. The total 1998 Cumberland Street commercial property tax without the 2.5% cap is $7.8 million, $5.1 million more than what was paid in 1997.
The substantial and intolerable pending tax liability is made more difficult to accept because our members are enduring reductions in municipal services, often with fees attached. Garbage collection is an example. Other examples include fewer police services, limited snow removal, less park and street cleaning and less access to municipal planning services. In these circumstances, how can the differential between residential and commercial mill rates go from 15% to a differential between residential and commercial tax rates of 555%?
For many businesses where income taxes have become less a concern as a consequence of dropping profits, property taxes have taken up the slack and in general have grown to represent a relatively important tax burden for many corporate ratepayers. Today property taxes represent the highest single expense to a business, often over 50% of its operating cost.
To best illustrate our point, here is what has happened to a member of our association. She is a fashion retailer whose family owned the building at 18 Cumberland Street. The charts you have in the document before you, which we will go over in a moment, reveal the impact of commercial property tax reform since 1997. As you will see in a moment, if the 2.5% cap had not been applied, her property taxes, including the business improvement area levy, the BIA levy, would have increased by a total of 538%. You will note that even with the 2.5% cap, the BIA levy remained unchanged from the original 1998 assessment. In the first instance, no retailer can absorb a 538% increase in commercial property taxes. In the second instance, the 2.5% cap was not fully implemented, because the BIA levy was unaffected.
In your documents you will see these very simple calculations. This was provided to us by our member. In the first box you will see that in 1997, under the old system, a realty assessment of $8,800 applied to a mill rate of 529.51 gave a cost of roughly $4,400. The business occupancy tax was set at $2,640 and the mill rate was applied, for a figure of some $1,398. The BIA levy of $112.20 was attached. So in 1997, before the reform was introduced, her total property tax bill, including the BIA levy, came to $5,970.
When the reform came in in 1998-and this was without the cap-her building was assessed at a value of $414,000, with which she has no complaints. That is what, if she was going to sell the building, she would expect to get. But the municipality applied a tax rate of 7.6% and suddenly the figure is now $31,640. The BIA levy, which I mentioned earlier, came in at $433.59, for a grand total of $32,074-a substantial increase from the previous system.
When the cap was introduced by the government and applied by the municipality, the calculations dropped her assessment down to $6,004, but the BIA levy was not capped and came in at $433, for a total expense of some $6,400.
You'll see also in your presentation this chart, which is a more visible example of what happened. This is what happened in 1997. You can see there is also the business occupancy tax. When the reforms were introduced, you can see the tremendous increase in her assessment and then what happened with the adjustment. The question that we have of course is, where did the business occupancy tax go? It appears that it is blended into the assessment.
The other point I'd like to make is that the difference between these is probably one retail job. That's the impact the system has had on that particular member.
The other question that we want to raise is fairness. The manner by which the current system is being implemented raises that question. The Ontario Property Assessment Corp, OPAC, has established medians to be used by assessors when evaluating properties. We understand that these medians are 0.032, 0.050, 0.059, 0.068 and 0.088. These medians, in effect, identify discrepancies in assessments and, in doing so, raise the question of fairness. The following chart illustrates this point by comparing the 1997 and 1998 assessments in determining the ratio for 10 commercial properties on Church Street. This chart you have in your document. These properties, by the way, are converted rooming houses currently leased for a variety of commercial purposes ranging from convenience stores to restaurants and bars. Simply what we're saying here is, if you take the ratio on these properties, you'll see that the majority of them are outside the median of fairness.
Our intent was to argue those two points with respect to commercial property tax reform and its impact on our retailers and their ability to carry out business in our community.
First, the Ontario government must take steps to correct the systemic problems in the current commercial property assessment system as it is being applied by OPAC and the city of Toronto. Second, the Ontario government must recognize that the property tax rates applied by the city of Toronto have created a tax liability that will drive landlords out of our community and with them retailers who create jobs and are so important to the fabric of our downtown.
Therefore, the YBBA recommends that the provincial and municipal governments, through the Ontario Property Assessment Corp, undertake the following: first, assess all commercial properties on current use with respect to building character, function and usage; second, implement the 2.5% cap for a further three-year period based on evaluations during the 1996 base year; third, establish a property class for retail businesses; fourth and finally, modify the manner and the methods by which assessors conduct their evaluations.
Our association welcomes the finance minister's announcement in the May 1999 budget and his November 30 financial statements that the Business Tax Review Panel will examine the current personal, corporate and property tax systems for their impact on the capacity of business to create jobs. We believe that the panel will come to the same conclusion as we have: that commercial property tax reform, as it is currently being applied, will drive retail businesses out of Bloor-Yorkville, to the detriment of not only our community but downtown Toronto as well.
Those are our remarks, and we're prepared to answer any questions.
The Chair: Thank you very much. We have approximately three minutes per caucus for comments or statements or questions. I'll start with the government side; Mr Arnott.
Mr Ted Arnott (Waterloo-Wellington): Thank you very much for your presentation. I'm not sure I fully understand the point you're making with respect to assessments by the Ontario Property Assessment Corp establishing medians used by assessors when evaluating properties and then you list the medians. Can you explain to me further what that means and how it affects you negatively?
Mr Jure: Sure. I'll ask John Feeley, who in fact did the research.
Mr John Feeley: I recently had an appeal before the assessment appeal board and the assessor representing the corporation brought up the matter of ratios. I didn't at that time quite understand what he was talking about, so I went back to my office-I happen to be in the real estate and insurance business; have been for 50 years. These were the figures he presented, the different ratios he brought up. I went back to my office the next day-my office is two blocks away from here at Church and Wellesley and has been for 40 years-and worked out the ratios.
The whole purpose of the reassessment was to level the playing field, but obviously, if you look at these figures here, it has merely perpetuated the inequality. If you look at these particular properties-and this is only 10 or 12 out of thousands, not only within this area here but it probably applies all over Ontario-certainly this is dramatic. These particular properties were previously rooming houses. They were four storeys, those old-style houses where the main floor was about eight or 10 steps above the street level. The person who owned them redeveloped them, put four steps down into what was the basement, and therefore this particular level became the main commercial. In the normal context of a commercial property, this would be the main income-producing level. The 10 steps up, as compared to four down, became a secondary, and the third and fourth storeys were used for either offices or residences.
But what was the basement area and the main floor are the two income-producing levels. Imagine the scenario that the income-producing ability of these properties as a rooming house was nominal; therefore the low assessment in those days. Somewhere along the line-how these people got building permits to convert them into commercial properties without going through the process to be upgraded I'll never know. When the new system came in, whether they do it in the office-I don't think they could have done it on-site, otherwise a blind man would have noticed something was wrong.
At any rate, from a competitive standpoint-I'm a landlord as well, and a businessman. I'm up the block, overpaying taxes for 40 years, but I have to sit there and watch this property down the street operating for a fraction of my cost. That's where the inequality comes in. In another case at another building up Church Street, somewhere along the line somebody added on 30 or 40 feet to the back of the building from the basement right up four storeys high; it was never reassessed, and that person has had the revenue from all these years from all that additional space. Since the reassessment-the person has sold the property and he's gone now, but he had all his good years so he was happy, but anybody else in the area that saw that or knew it would have been most unhappy.
Mr Phillips: I appreciate your presentation. Just a comment on the BOT, that it was planned to-that's what the government said would happen, that the business occupancy tax would be added on top of the old realty tax. What you see here-your example's a good one. In the one you used, that person was paying 30% business occupancy tax. The average business occupancy tax in Toronto was 45%, because the banks were paying 70%, small business was paying 30%; it got averaged into 45%, and ipso facto, or whatever the right term is, small business paid more and the average bank tower was going to save $5 million a year in taxes before the cap came in. So it shouldn't have surprised your organization; in fact, I think the minister himself said that's what was going to happen.
My question is that one of your proposals here is establishing a retail class, I think you said.
Mr Jure: If I could just comment, I don't think it was always very clear. With all respect to the minister, what the minister might say and then what we actually see and hear and have happen to us in dealing with the assessment community can be confusing, and it has raised confusion. In terms of what the public policy is and what we're actually experiencing at the doorstep, it could be confusing and different. That was our point.
Mr Phillips: Well, you said what happened to the BOT units-as I say, it simply got added in. It's not very pleasant, but that's what happened.
My question is about your third recommendation, to establish a property class for retail business, which is a very interesting idea and I'd like to pursue it. How would that work where you've got a retail business in a larger piece of property? Let's say you've got two identical businesses competing with each other, whatever they are-Harvey's. One is in a free-standing building; one is in a larger building. How does your recommendation work to establish a retail class?
Mr Jure: John, I'll let you answer that.
Mr Feeley: To establish a retail class, if you've got these properties side by side-I happen to be a commercial property owner, and it doesn't function like this any more, but the way it used to was that every summer an assessor would come to my building and he'd look through the building to check that the same tenants were there, the same amount of space. I'd take him right through the building and everything was fine.
Yorkville might be a classic example of what you're talking about, because there's one building I'm thinking of-there are probably two or three of them along there, very large buildings that have a tremendous number of commercial establishments in them, and you might next door or a couple of doors away have a three-storey building. It becomes tricky. The proposal would have to be for anything below maybe four or five storeys in height. I don't think this proposal would be intended for, say-when they redevelop Maple Leaf Gardens I'll be very surprised if they don't have a commercial complex, possibly in the sub-basement, like when Eaton's College Street was redeveloped years ago, and commercial entirely on the ground floor. You've got a 30- or 40-storey building above it with the tenants supporting the businesses within.
But in this case, if you take Yorkville, where you have two buildings, a relatively new one with, say, a restaurant in it, and right next door you have a privately owned three- or four-storey building with another restaurant, the business that each of these two businesses is going to do is reasonably comparable, because in the final analysis the management of a restaurant determines whether it does really well or really poorly. But physically you've got them virtually side by side, so I don't think there should be a dramatic change in that regard. In the case of a high-rise building, which I think you're talking about, our proposal is that if a new class comes in, presumably the new building would be entitled to the same. Did that make sense?
Mr Phillips: Yes.
Mr Christopherson: You would know that this whole boondoggle was expected, given the fact that the government rushed the whole CVA in so quickly without thinking it all through. I'm sure you're aware that after the initial bill was introduced there were six more bills necessary to try to fix the mistakes of the first bill, and then the subsequent bills to correct the mistakes in the bills that were in there to correct the bill in the first place. I mean, it was just bizarre. Unfortunately, it's not just a stand-up comedy routine. It affects a lot of businesses.
Just to show how complicated this is, in my hometown of Hamilton, downtown Hamilton and Westdale, where we have two very distinct commercial areas, the imposition of the cap negated the one benefit that small businesses in my riding got out of CVA, which was that overassessed properties in downtown Hamilton, in Westdale, were finally going to get the reduction they deserved. The cap prevents them from fully realizing all the savings that they're entitled to, and it's affecting business. We're still losing businesses out of those areas because our taxes are not competitive with neighbouring communities like Burlington, for instance, and ultimately Oakville. It really is a dog's breakfast.
I wondered how your proposal would impact on those small businesses, say, in my community of Hamilton. How would it impact on those that are in the reverse situation of where you are? I appreciate that you may not have thought it through, because it's not your situation, but I wondered if in studying this you'd come up with how that might affect places like Hamilton.
Mr Norman Bergstein: I'll try to answer that question. I would agree with you. Going back to your preamble with the business occupancy tax, which Mr Phillips had talked about before, it's the implementation that is really hurting here. It's a big problem. With the Ontario assessment corporation, there's supposed to have been AVA, actual value assessment; then it went into CVA, current value; and now it's the highest and best use. So this is really broadening, and you're getting the Ontario assessment corporation giving it that broad view. They're there almost as if they are going to get some benefit for it-I don't mean that in that way, but it's raising all these values.
Our area is feeling the effect of it and the problem comes back to-I think Doug had mentioned the value of the property in question that we're talking about, which had been in the family. The mother owns it, but she had been this small little retailer and she had been there likely 40 or 50 years before her daughter, who has been there 20 years. But $425,000, you'd say, "That's likely the right value. She'd want that type of money." But nobody out there is going to buy it because of the situation when the business occupancy tax is unknown, so the real value may be $275,000 or $300,000, but there's not a value and you can't implement that. So going back, my wife is from where you're from, so I am aware of downtown Hamilton, and Westdale a little better. What can you do with that? It's hard to say, because there weren't corresponding benefits, and frankly I wasn't aware that there was a cap in place at-
Mr Christopherson: At the other end of it.
Mr Bergstein And where do you go? I think they have to rethink this through.
Mr Christopherson: Absolutely.
Mr Bergstein: At least the cap kept everything in proportion so there wasn't a dramatic shift. There wasn't a 535% increase going on in some properties but other properties are saying-at the end of the day it was supposed to be revenue-neutral; some would go up, some would come down. But what was going to happen-and this I guess is the other side of it. Maybe we're too insular. We're looking more in our area, which covers a wide spectrum, and not just Yorkville, but Church Street and everything else-
Mr Christopherson: That's fine. So you should.
Mr Bergstein: You're hearing horror stories: People put properties up for sale. There's no sale; they're not going through. I think they have to look at both, and I think this what the government may have wanted, in terms of the local municipality to apply it or not apply it as it affects their area.
The Chair: On behalf of the committee, thank you very much for your presentation.
The Chair: Our next presenter this morning is from Earthroots. Could you please step forward and state your name for the record.
Mr Kyle Ferguson: My name is Kyle Ferguson. I'm a campaigner with Earthroots.
The Chair: Welcome on behalf of the committee, and you have 30 minutes.
Mr Ferguson: Well, I probably won't need that long, but we'll see. As I said my name, is Kyle Ferguson and I'm a campaigner with the environmental organization Earthroots, and on behalf of Earthroots I'd like to thank the committee for giving me the opportunity to come here and speak with you today.
As you may be aware, since 1986 Earthroots and our predecessor organization, the Temagami Wilderness Society, have worked towards the preservation of Ontario's old-growth forests, and while we've not left behind this issue, over time we've expanded our mandate towards the preservation of other threatened ecosystems throughout Ontario. During this government's Lands for Life crown land use planning process, our organization played an active role in mobilizing the public and pushing the government for more protection. Although we were highly critical of many of the decisions that were made during the process, in the end we felt that it was a good step forward towards ensuring that wilderness areas will remain wild into the future.
The reason that I am appearing before you today is to encourage this government to continue the process of protecting threatened ecosystems into their second mandate. As I am sure the committee members are aware, there are precious few natural areas left in southern Ontario, and this is due largely to the growth of urban areas into areas that had previously been considered "the country." As urban sprawl continues to expand, the stresses on these remaining ecosystems will only be increased.
The most striking example of this problem is the growing crisis on the Oak Ridges moraine. This area, which lies just north of the city of Toronto in a 160-kilometre stretch from the Niagara Escarpment in the west to the Trent River in the east, represents the largest area of wooded habitat in the greater Toronto area. Often called the rain barrel of southern Ontario, it contains the headwaters of more than 30 rivers, including the Don, the Humber and the Rouge. It also serves as the breeding ground for approximately 130 bird species, including the threatened red-shouldered hawk. This area also contains several rare kettle lakes and many areas of natural and scientific interest. While providing crucial habitat for many birds and animals, the moraine also serves as an important area for recreation and tourism.
Unfortunately, the ecological integrity of the moraine is currently threatened by urban sprawl. Developers have plans to build thousands of new homes on the moraine in the coming years. This poses a threat to the connectivity of the moraine and to the water resources which lie below it. At the moment, over five million people live in the GTA, and it's estimated that another two million people will live here by the year 2021. With this continued population increase, the pressure to build here can only accelerate.
With these things in mind, it's important that the government act now to ensure that this important resource is protected for future generations. Therefore, I want to throw out a challenge to this government. I'm asking that the government set aside 5% of the proposed SuperBuild Growth Fund, a mere 5% of this fund, a total of $1 billion, to be put towards a southern Ontario protected areas acquisition fund. This would be an opportunity for the government to make an ecological investment in the health and well-being of the citizens of Ontario and the ecological health of the ecosystems in southern Ontario.
This fund could be used to secure some of the most threatened ecosystems throughout southern Ontario, starting with the Oak Ridges moraine. It would be an opportunity to build on successes achieved in protecting areas in northern Ontario. As well, we feel that this fund could help leverage monies from other sources in an effort to protect what is left of a rapidly disappearing natural landscape in southern Ontario.
In 1999, this government increased protected areas in northern Ontario by 6%. With the creation of the southern Ontario protected areas fund, we hope that this government will begin the process of increasing protected areas in southern Ontario.
I'd like to thank the committee for the opportunity to present here, and I'd be happy to answer any questions you might have.
The Chair: Thank you very much. We have approximately 10 minutes per caucus. I'll start with the official opposition.
Mr Monte Kwinter (York Centre): I'd like to talk to you about the Oak Ridges moraine. That seems to be the hot topic in southern Ontario at the moment, the one that's getting most of the attention.
How do you deal with the conflicting interests that are there, in that in an ideal world everybody would want to protect everything, but in the real world there are various pressures from various groups that see their needs may be more paramount than other people's needs? How do you address that and how do you resolve that so that there can be some compatible use of what are common resources for everybody?
Mr Ferguson: I think this is really where the role of the provincial government comes into play. As you know, in 1995 there were a lot of changes to the way planning got done in Ontario, and our organization has called for the province to take a lead to become in a sense an arbiter to set up something. We haven't specifically said something like the Niagara Escarpment Commission, but that's a very good example of an institution that balances the need for protection and development. We would really like to see, through the use of this particular fund, critical areas on the moraine purchased or traded or somehow protected and we think the provincial government has that role. The municipalities are all competing for development and tax dollars, and we don't think they are in a really good position to have a broader picture of protection on the marine. If the province would get back into the game of looking at development, we think there's an opportunity there to balance those conflicting interests. Again, I bring up the example of the Niagara Escarpment Commission. It's recognized by the United Nations as a really good example of how you balance those competing interests.
Mr Kwinter: I used to sit on the Metropolitan Toronto and Region Conservation Authority. In the 1970s, the provincial government came out with a very ambitious plan for the parkway belt. I don't know whether you are familiar with that particular plan, but it set out a band of green space to the north of what was then the developed area in Metro. That particular parkway belt has all but disappeared, and the reason is population growth-pressures to make sure this can be serviced properly, to look at the watersheds, to look at all of these things. Even now we have some other conservation authorities selling off some of their land that they don't think is absolutely critical to flood control and things of that kind.
My concern is that these pressures-and as I say, I'm absolutely in favour of saving the Oak Ridges moraine, but how do you deal with the conflicting interests that are out there, the natural evolution of population growth and the ability to service those people in an economical way to keep it all in tact? How do you deal with that?
Mr Ferguson: There are a number of points. As you say, the population of the greater Toronto area is going to continue to increase and that will continue to have pressure on areas like the moraine. However, there are lots of ways to develop without building on top of the moraine.
I think you have to recognize that the moraine has this huge aquifer underneath it. We're only now starting to realize that those aquifers are all connected, and if the people of Toronto and southern Ontario want to preserve their drinking water, you can't build on top of it. What happens when you build on top of it is that you pave over the surfaces. It's like a sponge, and if you pave over these surfaces, all kinds of contaminants like oil from your car or gasoline from the lawnmower, all that sort of stuff will percolate down into the aquifer.
I was at a meeting at York region about two weeks ago. A local councillor there from Richmond Hill, Brenda Hogg, has said that from the numbers she has looked at, there doesn't need to be any development on the moraine because you can do all kinds of in-field projects with the various subdivisions that are already there. There is already enough capacity without building more capacity on the moraine.
There was a lawyer from the city of Toronto who was talking about the fact that the infrastructure hasn't been developed to service those new communities up there. If you're talking about tax dollars and efficiency, you want to have a greater urban density. This sprawling out to subdivisions is not a very efficient way of using your resources. Does that answer your question?
The Chair: I think I said 10 minutes, but my mathematics were not very good this morning. It's about seven minutes, so I'm sorry, I have to cut you short. I'll go to Mr Christopherson.
Mr Christopherson: Thank you very much for your presentation. You've already made reference to some of the changes to the Planning Act. If we look at all the changes the government has made in the area of environment, there are very few of them that are positive. I think you're very generous in your comments. We view it a little more cynically in terms of the damage that has been done, certainly when we take a look at the Planning Act changes you've referred to. I think they actually had the audacity to call it the Environmental Protection Act or the environmental enhancement protection act, some oxymoronic name like that, which had nothing to do with the fact that the bill was actually gutting protections that had been in place.
They have decimated the ministry, as you well know. The funding has been slashed about 30%, and an even higher percentage of staff, about 40%, are now gone. Then we still hear people rolling in here saying: "We really like what you did with the Red Tape Commission. Keep doing that." And we keep arguing, every time they say it's red tape, that in many cases-not always; sometimes things can be improved and made more efficient, but in many cases-with this government, eliminating red tape means eliminating some protection either for the environment or for citizens as a whole.
Given all of that, what level of faith do you have that this government is really going to be there in the interests of the Oak Ridges moraine?
Mr Ferguson: As an environmentalist, I guess I have ultimate faith eventually. But this is a government that has responded to public pressure in the past, certainly through my experience in the whole Lands for Life process. We didn't get what we wanted, but considering what the round table recommendations originally had, a 0.6% increase, bumping that up to 6%-that was a result of a lot of hard work by the environmental community and others to get out there and mobilize public pressure. I think you're starting to see that on the moraine. You're getting a thousand people coming out to a meeting in Richmond Hill, not really your most radicalized community. You're getting hundreds of people coming out to meetings in Uxbridge. You're getting the city of Toronto taking an interest in this, York region, Peel, Durham; they're all looking for ways we can protect the moraine. Even local MPPs living on the moraine-I can't remember the member from Oak Ridges, but I've had a copy of a letter that he had written talking about how important it was.
So I'm hoping this is an opportunity, through this fund, that we can balance those interests. We're not necessarily against developers, and we certainly think that if land were going to be protected they should be compensated, not at the proposed profit rate but at what they had invested. We think this fund is an opportunity that they might be able to move some of those developments off the moraine.
Mr Christopherson: You're probably familiar with the continuing battle in Hamilton over the Red Hill Valley versus the Red Hill Valley expressway. That valley has been recognized by the United Nations in terms of its importance. It's the last natural green space in the east end of the city. The trade-off there in terms of the development needs versus the future is just not to the benefit of our community. It's in the courts now; it's not resolved.
Given that we're here talking about economics and the SuperBuild fund, its purported purpose is to ensure that there's efficient decision-making and strategic investment in capital projects that the government undertakes right across all its ministries. Given that that's the focus of both the economics of what you've presented and in large part what we're talking about here in looking at what we think should be in the upcoming budget, can you just for the record give us the reasons you see for ensuring that the environment is preserved from an economic point of view, in terms of what it means to us as a society vis-à-vis our economy over the long haul? I'm not talking about a couple of years; I'm talking about multiple decades.
Mr Ferguson: This is an opportunity to think big. I really think it is. If you look at the next couple of hundred years, how much is it going to cost you to clean drinking water if we pollute it?
Mr Christopherson: Look at what we're going through in Hamilton harbour. If we could go back and revisit those decisions at the turn of the last century-
Mr Ferguson: What's the economic value of Central Park in New York? The moraine serves not only as an area for wildlife but it's certainly an area for recreation. We're seeing a huge boost in ecotourism and a want by people to get out and get away from the downtown city core to enjoy nature. I think there's an economic benefit down the road, not just protecting things because they should be there and it's also good for us in water, but it's a good recreation area as well and there's that economic benefit. I think there are lots of reasons, not just because it's the right thing to do from an environmental standpoint.
Mrs Tina R. Molinari (Thornhill): Thank you very much for your presentation. My riding is in Thornhill. It's very close to the Oak Ridges moraine and it's in York region, so I have received a number of letters from constituents expressing concern over that.
I'm pleased to hear you say that this government has responded to the public, because some would say that this government is determined and unresponsive. I'm really pleased that you would highlight that as a point.
It's difficult to balance the need for houses and roads and protecting the ecosystem, and I'm sure you can appreciate the difficulties in doing that as a government. But it has been helpful hearing from environmentalists like yourself with some of the issues that you bring forward and certainly bringing the public awareness. I think it's like a sleeping giant: Unless there's a threat to them, people don't wake up and realize the effects of it. I think what you've also done is bring the education of it to a larger group of people who ordinarily might not have thought it was an issue. That's important.
We believe that partnerships are certainly important in anything we do to further it along. In Thornhill, the maple sugar bush-I don't know if you're familiar with that, where the Metro conservation authority, the city of Vaughan and the province joined in partnership to save that maple sugar bush area, and together with the builder who owned the property were able to declare that as a non-building area. So certainly having it in my riding and having the provincial government support that as an environmental property was helpful.
I appreciate all of the comments that you've made here on the Oak Ridges moraine. I will keep my eyes and ears open for anything further to that. As you've said, a Richmond Hill councillor has indicated that there is space there to also accommodate the growing need for homes, and if we can do that and protect the Oak Ridges moraine, then certainly I think it's a win-win situation, and at the end of the day that is what we look for. Thank you very much for your presentation today.
Mr Galt: Thank you for the presentation, especially the comment about it being a good first step, and for lobbying. That's all part of the democratic process.
We hear a lot about high-yield agriculture and what's going on in agriculture. Because of high-yield agriculture what I see in eastern Ontario are tremendous tracts of land that are reverting to trees. There are acres and acres that were never in trees before. You may question the quality or the type of trees, but it's certainly happened that as a result of that we're seeing deer in areas where we've never seen deer before. In parks like Presqu'île it's been threatened that we'll have to go in to cull, and of course there's some public concern over that. There are also challenges for farmers when this is happening with deer damage, and on the list goes.
What I wanted to come around and question you on was related to the SuperBuild fund. The idea there is $10 billion from government and $10 billion from private industry. You're looking for 5%, so I guess I flip it back to you. You're looking for 5%; in other words, 2.5% from government. Where would the other 2.5% come from?
Mr Ferguson: I think as Mrs Molinari said, there are lots of partnerships that can be developed. In the last three or four years there have been many trusts set up to either take land or to try and purchase land. I know there is a private trust on the Niagara Escarpment that raises money to protect land; there is the Nature Conservancy of Canada, organizations like that whose mandate it is to purchase threatened areas. I think there's a partnership there.
Also, if the local municipalities can be motivated to see this as an economic opportunity, as a recreation area or an area that they should protect because it's going to affect the quality of their drinking water down the road, then they will probably be interested in kicking in. I think you can get various levels of government.
I had a discussion with a fellow down toward Windsor and he's looking at trying to protect an area of the Marshfield Woods. He's really trying to get some of the big businesses involved in that area to throw in a few dollars, or what would be only a few dollars to them, to come together and protect this area that has traditionally been used, although in private hands, by the community as a recreation area.
Mr Galt: You might look at, I believe it's Minnesota, where they have what I think they call the One Percent Club, where they give 1% of their profits for environmental projects and they get a nice plaque in their waiting rooms, and then some will join the elite Two Percent Club. That kind of philosophy might go quite a way with this. Congratulations on looking at the kind of thing. It sounds like a good idea. As is often said, if you don't own it, you don't control it. If you have ownership on it, then you have some significant control over what's done with it. So thank you very much.
Mr Ferguson: I just wanted to say that I think the super fund is meant as building an economic investment. We think there's also an ecological investment that can be made with, as well as the economic-together.
Mr Arnott: I'll follow up on Mr Galt's question. Thank you very much for your presentation and the ideas that you put forward.
As I understand it, the SuperBuild Growth Fund is intended to renew Ontario's physical infrastructure-hospitals, roads, bridges, building projects-as opposed to setting that money aside for what you're suggesting, although it's something I'm sure the government will want to look at. If the SuperBuild Growth Fund is not the vehicle for that kind of a project, it still might be something that ought to be considered and worthwhile.
Following up on Mr Galt's suggestion, do you have any additional ideas as to how we might encourage private sector money to come into this kind of initiative?
Mr Ferguson: I think you have to stress public health as being-health and the environment to me are intimately connected, although sometimes they don't seem to be. I'm not sure. Other than the organizations I've mentioned, nothing pops to mind, but I think there are opportunities, at least in the local areas, to have businesses protect a portion of the marine. Maybe they're a bottler of water-
Mr Arnott: That have a direct interest in preserving the quality of the resource.
Mr Ferguson: -that somehow has a direct interest. Maybe it's a cross-country ski shop that might be interested. There are smaller partnerships that could be-I haven't given it a whole lot of thought, but that's certainly something we should look at.
The Chair: With that, we've run out of time. On behalf of the committee, thank you very much for your presentation this morning.
Mr Ferguson: Thanks for having me here.
ONTARIO HOME BUILDERS' ASSOCIATION
The Chair: Our next presenters this morning are representatives from the Ontario Home Builders' Association. Gentlemen, could you please step forward and state your name for the record.
Mr Dick Brouwer: Good morning. My name is Dick Brouwer.
Mr Wayne Dempsey: My name is Wayne Dempsey.
The Chair: On behalf of the committee, welcome.
Mr Brouwer: Thank you, Mr Chairman and members of the committee. Good morning. Like I said, my name is Dick Brouwer, not to be confused with the other Brouwer. I'm the president of the Ontario Home Builders' Association and I'm a builder and developer in the London area. I came to Canada in 1964 and started Brouwer Plumbing and Heating, which continues to specialize in new-homes installations of plumbing and heating systems.
With me is Mr Wayne Dempsey. Wayne is the first vice-president of the Ontario Home Builders' Association. He is a builder and developer from Muskoka. We are both volunteers of the association. In addition to our business and personal responsibilities, we are dedicated to serving our industry. We appreciate this opportunity to speak with you. It will be a brief report, as you have been given our full written submission. I'd like to begin by telling you a little bit about OHBA.
The Ontario Home Builders' Association is the voice of the residential construction industry in Ontario. As a volunteer organization, OHBA represents approximately 3,400 member companies which are organized into 32 local associations across the province. Our membership is made up of all disciplines involved in residential construction, including builders, land developers, renovators, trade contractors, manufacturers, suppliers, realtors, mortgage lenders, apartment owners and managers, housing consultants, economists, landlords, architects and engineers and lawyers. Together we produce about 80% of the province's new housing. The residential construction industry employs approximately 200,000 people and contributes about $20 billion to the province's economy every year.
Now Mr Wayne Dempsey will talk a little bit about the housing markets, both current and future, as well as the impact the housing industry has on the economy of Ontario.
Mr Dempsey: A healthy residential construction industry is a prerequisite for growth. Economic expansion usually begins with rising housing starts as well as industrial and commercial development. This leads to new infrastructure projects and institutional expansion, providing the necessary foundation for the next generation of economic activity.
Many of the more than 180,000 net jobs created in the province in 1999 were in residential construction. It's estimated that every housing start creates approximately 2.8 person-years of employment. That means the home building industry created 188,258 person-years of employment in 1999, not including the contributions to employment made by renovation work. This includes direct construction jobs, indirect jobs as well as the vast amount of employment created through the multiplier effect.
Last year our industry contributed nearly $20 billion to the Ontario economy. Construction activity also contributes significantly to government revenues. On average, every house contributes $40,000 to $50,000 in taxes and fees collected at all three levels of government. Based on 1999's performance, that amounts to over $3 billion in tax revenues. Add to that tax revenues collected from renovation work and you will see that our industry is a major contributor to the health of Ontario's economy.
The year 1999 was a great year for our industry. Ontario's housing market showed a marked improvement over 1998. Housing starts in 1999 were an incredible 25% higher than in 1998. Growth in housing starts should continue into the millennium, boosted by high consumer confidence, low mortgage rates and continued high levels of GDP and employment growth.
The major highlights of 1999 include increased starts across the province, with some areas showing spectacular results. The largest gains among census metropolitan areas were Oshawa at 40%, Toronto at 35% and Windsor at 23%. In fact, the only decreases were London at 13% and Sault Ste Marie, which experienced a decrease of 44% over last year.
Single-detached as well as condominium construction experienced significant gains in 1999. However, rental housing construction continues to stagnate despite encouraging new incentives brought forth by the provincial government.
In our submission you will see an economic forecast survey of our members conducted in November 1999 located at the back in appendix A. This survey found that 95% of respondents expected sales to increase or stay the same in 2000 while only 5% expected sales to decrease. That optimism is well reflected on OHBA's forecast for 2000. We expect 70,000 starts this year, which represent the third straight year of growth, and an 88% increase over 1995, the lowest starts of the decade.
Renovation spending has seen has seen a 1.2% increase in 1999, and this trend should continue well into 2000. We predict that renovation spending will climb to more than $10 billion in the coming year.
As you are well aware, Ontario's economic performance has been spectacular over the past year. Low mortgage rates and strong job creation have encouraged many new buyers in the housing market. While we're encouraged by recent positive economic indicators, the home building and renovation industry sees several potential roadblocks which may impede future growth.
Shortages in labour and materials, as well as cost increases, combined with new and increasing taxes, fees and charges, have the potential to distort true market demand. More than 75% of our members were concerned about material costs affecting their business in 2000, while 65% saw labour shortages as a major problem. Tight profit margins due to a number of factors, including increased competition and high taxes as well as underground activity, continue to be the concern for nearly 60% of our members.
Dick will now summarize some of the key factors affecting our industry and OHBA's recommendations.
Mr Brouwer: OHBA would appreciate your consideration with respect to the following.
First of all, high and rising development charges continue to stunt the growth in our industry in some areas. The recent introduction of new development charges bylaws in many Ontario municipalities poses a serious obstacle for the continued health of the Ontario housing industry. OHBA recommends close government monitoring of development charges on the home building industry and intervention if necessary to ensure that the supply of affordable housing can be maintained.
Secondly, a land transfer tax rebate for first-time buyers of newly built homes has been in place since May 1996. As of December 1, 1999, 54,029 rebates have been issued, for a total of more than $70 million. Because of the positive impact this has had on the affordability of new homes for the consumer, OHBA recommends that the provincial government make the rebate of the land transfer tax permanent for first-time home buyers of new homes.
Next, excessive regulations and overtaxation of the home building industry pushes the price of new homes higher and higher, and consequently puts home ownership out of the reach of many citizens. OHBA encourages the government to introduce legislation to ensure user fees are based on a reasonable direct cost-recovery basis and, further, that such legislation allow for the appeal of municipal decisions about fees and levels of service.
Building materials have been steadily increasing during the past year. Many building products have been experiencing increases of 25% or more. The cost of these materials has been driven up by a strong demand for Canadian product in both the domestic and US markets. A huge demand exists for building materials in Ontario. Manufacturers of these materials should be encouraged to stay within Ontario. OHBA encourages the provincial government to continue its overall fiscal policy of tax-and-spending cuts for the health of the manufacturing industry.
Also, the loss of skilled labour in our industry over the past years has been accelerated at an alarming rate. Some 65% of our members rated labour shortages a major concern for their business in 2000. The need for new skilled trades in our workplace is obvious. In order to attract new workers, OHBA recommends the development of co-op programs at the high school and college levels that bring students on to the site and provide hands-on experience in construction and safety.
Public perception about the value of skilled trades has to be changed. OHBA suggests that any campaigns geared at encouraging students into the skilled trades would be most beneficial to our industry and to the economy as a whole.
We also know that rental housing is in short supply in several centres across the province. In 1998, just four communities had a vacancy rate of less than 3%, which is deemed a short supply. By 1999, nine major communities had a vacancy rate below the critical 3%. It is not only large cities like Ottawa and Toronto but also smaller centres like Bracebridge and Brantford that are affected. OHBA recommends that government continue to implement policies that would encourage the private sector to resume building rental housing across Ontario. The elimination of the PST payable on the construction of new rental projects, along with reasonable development charges, would certainly result in renewed interest on the part of investors. Property taxes on rental housing relative to ownership housing should be competitive.
The pressure from the underground economy has continued to be a major problem for our industry. In addition to unfair competition, governments also lose out on billions of dollars in revenues; homeowners lose the benefits of inspections, suffer little or no recourse in the event of shoddy workmanship, and expose themselves to a number of liabilities. OHBA recommends that the government work together with the industry to seek out ways to encourage and entice consumers to utilize the skills and services of legitimate, honest, hard-working renovators and contractors.
Another issue that OHBA has been carefully following is the Kyoto agreement, which involves the reduction of greenhouse gas emissions. The reduction of GHG emissions will be a profound economic challenge for all industries in the future. OHBA encourages the provincial government to work with our industry to achieve the objectives of the Kyoto Protocol. Any concrete proposals must be reviewed with regard to the effectiveness and cost-benefit analysis.
To conclude, I would like to say that OHBA strongly supports the fiscal policy of the provincial government and encourages the government to continue in the direction of deficit reduction, spending cuts and tax cuts.
Mr Chairman and members of the committee, I would like to thank you for your attention and the interest in our presentation. We look forward to hearing any comments or questions you may have.
The Chair: Thank you. We have approximately six minutes per caucus, and I will start with Mr Christopherson.
Mr Christopherson: Thank you for your presentation. I want to focus on the issue of the affordable housing and the issues that you raise there. We've had earlier presenters this week who talked about this issue, and in fact a presentation yesterday. We were reminded that CMHC reports that the annual target for providing permanent, affordable rental housing in Ontario should be 16,000 rental units; that's new units. The government's current business plan calls for an additional 65 private rental units on top of an average of 215 units built in low-vacancy-rate areas. That's 65 in their business plan, in addition to 215, when the need has been identified as 16,000 units. I don't need to tell you the crisis that's erupting on our streets in all the major urban centres and, as we're hearing in presentations, even some communities you wouldn't expect.
Let me ask you, would you favour the provincial government returning to the business of ensuring that there is provision for the building and addition of affordable rental housing units to our stock?
Mr Brouwer: OHBA has always taken the position that we would not be in favour of what we used to call the non-profit housing sector in Ontario. I don't think the Ontario government should be in the business of building any housing. We've always believed in shelter allowances and we encourage the government to work on shelter allowances in order to get those who can least afford rental accommodations to be subsidized with shelter allowances.
Mr Christopherson: You understand that the opposing argument is that at the end of the day, the people of Ontario who have paid the supplement have nothing. It's gone. Over time, it's exceptionally more cost-effective to actually build and add to the housing units, because it's there and the people of Ontario own it. So it's not just one family who benefit from it, but indeed families across the board, as the need is there, have somewhere to go.
The units aren't being built by the profit sector and, quite frankly, I'm not faulting you for that. You're not in the business of providing non-profit housing. That's not your business. You're in the business of building houses and making money-fair game-but it does leave a responsibility on the part of the provincial government to ensure that through one means or another there is affordable housing for those who need it and to do it in a cost-effective way.
By way of example, one of the presenters mentioned the OHC scattered houses. We have them in all communities, single houses in various neighbourhoods. The operating costs there in Lanark county were $159 a month, but for supplementing units in private buildings the average cost is $376 a month in Lanark county. So on a month-to-month basis it costs twice as much money to go the route that you're suggesting and at the end of the day when that money is paid out the people of Ontario have nothing.
My problem is that I can understand philosophically where you're coming from, but that still leaves us a huge problem in terms of where we get the units that are necessary for this growing crisis. We know there are more people in poverty than ever before. They're in deeper poverty than ever before. You can see the homeless on our streets. This is not going to go away.
Mr Dempsey: I think what you may find is that-and we discussed this earlier-the $2,000 PST tax credit from the province would be a help. However, there's GST that we pay. There are also development charges and in some areas it's as much as $20,000. If we want to look at affordable housing and rental units that are going to go on the market, we've got to look at a large number of areas, being PST, GST, development charges, all the taxes and fees. I think I reported that we pay somewhere around $40,000 to $50,000 a unit in taxes, fees and charges. If we're looking at affordable housing, let's look right there.
Mr Christopherson: But with respect, if we're going to be subsidizing the private sector to build them, which goes to the bottom line-and again I don't question your right and need to make money out in the market, but when we're talking about interfacing with provincial taxpayer dollars, you need to do it in the most efficient way.
I know the government is going to talk about the fact that they didn't like the plan that we had, but at the end of the day we were adding more affordable housing units to our communities than ever in the history of Ontario. In fact, the NDP was the last government in North America that was still providing them. Since this government, with great shame in my opinion, announced they were getting out of the housing business, we've seen an increase in homelessness, an increase in middle-class people sliding down into poverty and a decrease in affordable housing.
If we're going to go the route of giving you enough financial incentives to make it profitable for you to build them on the profit side of it, why wouldn't we take that money and invest it and see it as an investment so that the bricks and mortar are owned by the people of Ontario and at the end of the day it's paid for? Why would we not go that route?
Mr Brouwer: I had been involved in the non-profit housing when the NDP was in power. As a plumbing contractor, I thought they wasted more money than I've ever seen before. Their specifications on quality were higher than probably you would use for your house. The people who were moving into those units were giving no respect to what they got.
Mr Christopherson: Everybody? Is that what you're saying? You're blanketing them all?
Mr Brouwer: A great number of people. I've been in a lot of units. Coming from Europe, I have never understood why a government would create slum areas, putting people who could barely afford housing all in one area and saying, "This is a good area to put the people who can't afford rental housing." We believe that people should be living where they want to live, all over the place. Give them a shelter allowance.
Mrs Molinari: Thank you very much for your presentation. Before I begin with some of my comments and my question, I want to focus on what you just said in response to Mr Christopherson's question.
What I heard you say is that there was higher-quality plumbing-if that's what specifically you were talking about-in those homes than one would put in their own custom-built home. Then I question, was it affordable, if you're talking about affordability and you're putting higher costs into it that negate the affordability factor? In any case, I'll continue.
I'm going to focus on some of your recommendations here, and specifically on 4.5, skilled labour shortages. You talk about the co-op programs that you're recommending start in high schools to bring students right into the site. There is a project that was taken up at the York Catholic board with Mattamy Homes where in fact this happened. A group of students built a home from start to finish. The students got a lot out of that in the way of education and what the building industry is like, and it was deemed to be something very, very successful. But it was a big commitment also on that company to come in and join that partnership.
You talk about campaigns geared to encouraging. I think the boards and the schools are encouraged to do this; it's finding the partnership with the building association to be able to do that, because it's a big commitment on the builders to do that-in time and in money, to some extent. I encourage you to pass that message on to the builders, because I know at first hand that the schools are very encouraged and they would love to do this. Certainly we're encouraging more to go into the trades. It's not seen as the sexy thing to do today. Most want to go into different areas. But it's certainly a need that we've recognized, and I agree that we need to encourage students to do that.
Before your presentation we had another presentation, Earthroots, that talked about protecting the ecosystems. That's where you find the balance, where you're talking about building and the need to build, and yet there are the environmentalists who are talking about the need to slow that down to some extent, to protect the environment. Give me your comments on what you would do as an organization to help in a partnership to find some sort of balance between those two.
Mr Brouwer: I've read the paper about what is going on in Toronto and the moraine lands this person before me was referring to. We believe that environmentally sensitive areas should be protected. As builders or even as developers, we certainly don't want to take any more trees out than are necessary in order to create a home for whoever wants to buy this particular house. As a matter of fact, the more trees we have on the property, the more money the property is worth. We certainly would encourage environmentally sensitive areas to be protected, but in a reasonable way. I know of some areas, especially in the area where I come from in London, where we have now been waiting for seven years in order to try to get some properties on stream. Somebody saw a frog swimming down the creek and now it becomes an environmentally sensitive area. There has to be reason being used in order to work with the industry. We agree that we like to protect as much as possible. But we also agree that people want to live where they want to live, and not where somebody else is going to tell them where to live.
Mrs Molinari: That's where that co-operation is important, because it's viewed as the builders are here, the environmentalists are here, that you're at opposing sides. I don't think that's the case when we speak to each of you on an individual basis, but the message out there appears to be that. So I think whatever you can do to build those bridges and to impress upon the environmentalists that you are in fact willing to work together with them, that's helpful.
Just one last question: Your 4.8, Kyoto Protocol-I'm not at all familiar with that. Can you just briefly tell me what that is?
Mr Dempsey: The Kyoto Protocol was a worldwide convention that dealt with greenhouse gas emissions. Canada has set a target for greenhouse gas emissions, and we're trying to work towards that target with the auto industry and with all the other industries in Canada.
Mr Phillips: I appreciate the brief. I always look forward to your annual survey, "If a provincial election were held today, who would you vote for?" and I'm pleased to see the Conservative support has dropped from 90% all the way down to 87%.
Mr Kwinter: Mind you, the NDP have got a 200% increase. Last year it was zero; now it's 2%. They're on a roll.
Mr Christopherson: Big momentum; we're on a roll.
Mr Phillips: They're up from zero to 2%. Dave, you're moving out.
Within this document there's something, among other things, that's extremely disturbing to me. You indicate here that household growth is about 60,000 a year. I assume that's the number of housing units you should have. You indicate that for many people buying a home is unaffordable. You indicate in here something like 20,000 a year of that 60,000 growth would be in rental. The very alarming numbers in here are that in the last three years there have been about 3,000 rental units built in total in the province of Ontario.
You would have to assume we're heading to a substantial-I'm maybe understating it-disaster: many people unable to afford to purchase a home, 20,000-a-year growth in the need for rental accommodation and virtually none being built. We heard yesterday people saying, "Well, it's not going to be built because there's always fear of rent controls coming back in." Based on what you've told us today, there's no indication that your members are planning any rental accommodation building.
We need your advice. Here we have what I would describe as a crisis. I'd like you to describe how you would describe it. It looks like we're just creating an enormous problem, not you but we here in Ontario, and I don't see any solution on the horizon based on what the government's doing and based on your recommendations. How do we deal with that enormous growth in people who need rental accommodation and virtually none being built-a thousand a year?
Mr Dempsey: I think what you're finding this year is that because of low interest rates a lot of the people who would normally be looking for rental accommodation have been able to buy homes. There have been quite a few in that situation. There have been a lot of condominiums built and some of those will provide some rental accommodation.
As I said before, there are a lot of problems with the whole rental housing industry: how you make it fit, how you provide a rental accommodation for a reasonable cost and get people into rental accommodation. It's a very fine line to build rental accommodation because of the cost. You've got to build them big enough that people are going to live in them, but the cost to build them, and then once they're built the assessment on them-the taxes are more than a private dwelling. There are a lot of problems in there and we don't profess to have the answers to all of them, but we're working on them, certainly.
Mr Kwinter: I just want to follow up on that. My impression is this: The only rental accommodation that's being built is luxury rental and that's to attract the market where people, for whatever reason-they're here on a transient basis because their company transferred them, they don't want to buy, they don't want to own-don't want the responsibility of ownership but they can afford to rent. The problem is that there's a whole sector of our society who can only afford a certain amount of rental and there is nobody who can build anything that will meet that target. The economic rent they can afford to pay in most cases-we saw a study-is half of what it would require for a developer to build a rental accommodation.
As you say, it's a problem. What is the solution? I don't know, other than government getting involved. Who else is going to get involved? You just write off that whole segment of our society who say, "I can't spend 100% of my income on accommodation"? Right now we've heard the numbers are up in excess of 50% of their income. Given that normally the rule of thumb is 25%, maybe 30%, it's up to over 50% in many instances. How do you address that as an industry, or do you feel that's a responsibility that you should have?
Mr Brouwer: Well, sir, we believe that the $2,000 the provincial government presently has given on affordable housing is only a step in the right direction. That's why we believe there has to be a greater incentive. Obviously as an investor you wouldn't want to invest any money where there is no return. Ultimately we have to be fair to each other and we say there has to be a return on income. Maybe it would be done over a 10-year period, where you would say: "OK, for this particular housing, you build these houses for 10 years. If you sell them, we take away your incentive." There has to be some kind of mechanism down there that will trick this rental housing issue.
Personally, I've built in London houses of 1,400 square feet for $100,000: air-conditioned, everything, three appliances. You couldn't give them away. The mortgages on those houses were lower than what I'm renting them for right now. So you try to figure out where the need is. I don't know. Sometimes I'm wondering myself if we're doing the right thing. But I think ultimately there have to be by the provincial government some incentives; probably take the PST off, probably do away with some development charges or make them reasonable enough in order for us to start building rental housing.
The Chair: With that, we've run out of time. On behalf of the committee, gentlemen, thank you very much for your presentation this morning.
The committee will reconvene this afternoon at 1 o'clock. We are now adjourned.
The committee recessed from 1201 to 1303.
CANADIAN FEDERATION OF STUDENTS
The Chair: Good afternoon. Our first presenters this afternoon are representatives from the Canadian Federation of Students.
Mr Ashkon Hashemi: My name is Ashkon Hashemi. I am the internal coordinator with the Ontario component of the Canadian Federation of Students.
Ms Erin George: My name is Erin George. I am the incoming chair of the Canadian Federation of Students, Ontario component.
The Chair: On behalf of the committee, welcome.
Mr Hashemi: I'd like to thank the committee for giving us this chance to present. In fact, we're happy there actually is a standing committee this year, as opposed to last year, so that's a good sign.
The Ontario component of the Canadian Federation of Students represents over 185,000 full- and part-time undergraduate, graduate and college students at over 20 post-secondary institutions across Ontario. Our key goal is the achievement of a high-quality, publicly funded post-secondary system that is accessible to all.
Unfortunately, the post-secondary system in Ontario is moving away from such a system towards one whose reputation for excellence and accessibility has been progressively compromised. In this presentation, we will highlight the importance of an accessible and high-quality post-secondary system and make some suggestions as to how to enhance the quality and accessibility of Ontario's colleges and universities.
We'll start with the funding picture. That sets the stage for what we feel are some of the problems in Ontario's system.
By all indications, the role of post-secondary education in enriching the social, cultural and economic life of Ontario is becoming predominantly more important. However, while there is a general acknowledgement of this growing importance, the government's response has been to slash funding for higher education in an unprecedented way. Since the 1996-97 school year alone, Ontario's colleges and universities absorbed a $400-million hit in funding, a loss that translates in constant dollar terms to approximately a 17% cut. Since then, public funding for post-secondary education as been frozen, with no provisions for increases in inflation.
As it stands, this government's funding policy will ensure that Ontario's colleges and universities remain the worst-funded higher education facilities in the country as we enter the new millennium. Ontario actually ranks fairly close to the bottom in North American terms, below such places as Alabama and Tennessee, so we're doing really great as far as making sure our universities and colleges get the funding they need.
The impact of this financial situation for the quality of post-secondary education is all too evident. Most colleges and universities are now operating with diminished faculty and support staff complements; hiring freezes and layoffs constitute the norm across the province; class sizes have grown significantly, resulting in less interaction between students and their instructors, while educational choices have been sharply curtailed by a host of course and program cancellations. Building repairs cannot be made or are delayed, posing health and safety threats. Equipment is way out of date. Underfunding has also impeded co-operation among institutions and created an unhealthy turf environment in which institutions point fingers at one another in their efforts to minimize the impact on their particular institutions.
Cuts to public funding of post-secondary education have also resulted in institutions depending more and more on alternative sources of revenue. Institutions have sought, and the government has approved, massive tuition fee increases. We'll get to that in a moment. In addition, Ontario's colleges and universities must now rely heavily on corporate largesse in order to remain viable. However, such reliance comes at a price. In return for funding, corporations are demanding a greater say in the day-to-day business of our colleges and universities and dictating policy decisions regarding curriculum. With alarming frequency, we are seeing pockets of our public institutions being privatized and funds going towards financing what we feel amount to job training programs for the private sector.
Relying on private sector funding to fill the core funding left by government cuts sets a very dangerous precedent. Private sector funding is neither stable nor comprehensive since it is often of a short-term nature and geared to specific programs or projects. At best, it brings temporary relief to the problem of underfunding that desperately requires a long-term, stable commitment. More frequently, that kind of funding compromises the quality of the educational experience by replacing broad and diverse program offerings with short-term corporate interests. In this regard, we would bring the standing committee on finance and economic affairs' attention to a recent study done by Robert C. Allen, who is a University of British Columbia economist. The study in question is entitled Educational and Technological Revolutions: The Role of the Social Sciences and the Humanities. In this study, released by the Social Sciences and Human Resource Council, SSHRC, Allen demonstrates that humanities graduates have rates of employment and earnings on par with or higher than most business graduates and those graduating in high-technology fields. In fact, Allen argues, the so-called "technological revolution" is increasing labour market demand for university graduates in the social sciences and humanities.
These findings are in direct contradiction to policy, tacitly endorsed by the Ontario government, of providing more funding and extra spaces for high-technology programs at colleges and universities while devaluing and eroding program funding in the arts and humanities. In light of Allen's report, we would caution the provincial government that an overemphasis on high technology, private sector job training to the detriment of other programs is a shortsighted strategy when considering the real social and economic needs of the province.
The continuing importance of the public post-secondary sector in addressing Ontario's needs is clear. However, what's not clear is the ability of our universities and colleges to meet these needs. From all indications, our viability both socially and economically rests largely with the ability of our centres of higher learning to meet the challenges of the future. As such, and this is a key point, it makes no social or economic sense for the government to point out society's need for more skilled graduates, a well-educated population etc while continuing to make ever greater funding cuts to those sectors that provide these services. What is needed is an ongoing commitment to stable public funding that would allow our institutions to continue offering high-quality programs without resorting to exorbitant fee increases or an unhealthy reliance on private sector funding.
The Canadian Federation of Students is doing its part in trying to secure this kind of funding. Through our Access 2000 campaign, we are calling on the federal government to restore $3.7 billion in operating cuts to post-secondary education, of which $1 billion would be Ontario's share. However, we want to make sure the Ontario government does not feel blameless in these cuts. They have exacerbated and passed the cuts down to students in an unprecedented way. As for our specific recommendations, you have the brief in front of you and can look at those, as far as our recommendations for funding are concerned.
Moving to the issue of tuition fees and accessibility, students have borne the brunt of the recent cutbacks to education by way of inordinate fee increases. Fees have increased 158% for university students and 147% for college students in the last 10 years, and the largest increases have occurred most recently. By the end of its first mandate, this government was responsible for a 53% college tuition fee increase and a 63% university fee increase.
To make matters worse, the Ontario government in its 1997 economic and fiscal statement announced the complete deregulation of fees for graduate and professional programs at universities and for post-diploma and other high-demand programs at colleges. For us, deregulation of entire programs of study within publicly funded institutions has meant massive tuition fee increases. Already, students entering deregulated programs are seeing increases of 20% to over 400% in one year. Consequently, we are not far from a two-tier system in Ontario.
As it stands, the accessibility of Ontario's colleges and universities has already been seriously compromised, and any further increases in tuition, especially of the kind associated with deregulation, are bound to have devastating ramifications on the participation rate of lower-income students and on the socio-economic makeup of the student population. To put it bluntly, we are not far from a system in which ability to pay outweighs all other considerations in determining the future of Ontario's students. Again, we have a series of recommendations that the committee should have a look at for our specific take on the tuition fee issue.
In terms of student aid and student debt, more and more students in Ontario are using OSAP, the Ontario student assistance program, to fund their studies. Individual debt carried by these students is rapidly mounting. Currently, over 50% of all students require financial assistance, and the debt load picture is very distressing. In 1992-93, the average yearly loan per student was $3,182. In 1996-97, the most recent numbers we have been able to get from the ministry, this number had climbed to $7,713 per student. An Ontario average debt load for students graduating with debt hovers around $20,000 on average.
The reasons for the escalating number of students on OSAP and the crippling debt loads they incur are manifold. Skyrocketing tuition fees certainly have had an impact, as have bleak year-round employment prospects. In addition, the Ontario government cut virtually all forms of grants in 1993-94, thereby forcing most students to rely solely on repayable student loans. As a note, Canada is one of only three OECD countries without a national system of grants. The combination of these factors on student debt in Ontario should not be underestimated. Ontario students have some of the highest debt loads in North America.
Students wishing to pursue a post-secondary degree or diploma have been required to amass greater and greater debt loads in the form of repayable loans. For many current or prospective students, the prospect of incurring what could amount to lifelong debt is inconceivable. They are simply left with the option of dropping out of post-secondary education or never applying in the first place. From a larger economic perspective, we question the logic of saddling students with immense debt loads at such an early stage in their lives. A generation of massively indebted graduates does not make for a bright economic forecast.
Unfortunately, this government's response to the growing need for adequate student assistance, including viable debt reduction strategies, has been the introduction of measures that actually increase student indebtedness and make it more difficult for needy students to access the financial aid they require. I am going to go over some of our recommendations in this area, because we feel that these are particularly critical.
The government of Ontario should offer an enriched OSAP, designed to alleviate the debt burden currently facing Ontario students. As part of this, they should include upfront grants to help reduce the debt loads carried by students, target assistance for students with dependants and/or special needs, expand work-study opportunities for students to earn while they study, and expand interest relief strategies and debt reduction measures to aid students who experience difficulties in repayment.
As part of such an undertaking, the government of Ontario must reverse erosion of the current OSAP system by providing adequate funding for student assistance to meet the needs of students; restoring OSAP funding for part-time students-something that this government cut very recently; restoring child care bursaries for students with dependants so that students who have children can actually access the system properly; restoring access to social assistance to students with dependants; revamping parental contributions and dependency requirements to reflect current student realities; and restoring students' allowable income during the study period to the previous amount of $1,700 so that students can actually have a chance to work while they go to school to be able to afford their education somewhat. I find it very ironic that this government would actually put a barrier toward students working and paying their way while they were in school.
The government must also end immediately the credit checks on OSAP applicants. This last point is worth reflecting on. Just to point out the difference between a bank loan and a student loan, student loans should be available to everyone, especially those with bad credit, so that they can actually have an opportunity to improve their lives in the future. People looking to go to school are often those who don't have the world's best credit rating, and it's very important that we make post-secondary education accessible to those people. Those are precisely the kind of people that a university or college degree can help.
Finally, the government of Ontario should publicly and aggressively call upon the federal government to implement a national system of grants as an effective tool in reducing student indebtedness.
We just want to reflect for a moment on the use of the millennium scholarships in Ontario. As part of its 1998 budget, the federal government set aside $2.5 billion over 10 years to distribute approximately 100,000 scholarships per year to students across Canada. This year, Ontario is responsible for distributing 35,415 scholarships, with awards averaging $3,000 each.
Despite its many shortcomings, the millennium scholarship does offer an opportunity to reduce student indebtedness in Ontario. To date, however, the Ontario government is using the money from the scholarships not to buy down student debt, but to help finance already existing provincial student aid programs. As it stands, most of the debt being reduced by the millennium scholarship payments in Ontario would already be forgiven under the province's Ontario student opportunity grants, formerly known as loan forgiveness, which forgive any portion of a student's debt over $7,000 per two-term academic year. As such, the millennium scholarships are only serving to reduce the Ontario government's loan forgiveness payments and are not reducing the overall post-graduation debt of the majority of Ontario millennium scholarship recipients. Some students actually stand to lose money if they accept a millennium scholarship, since any amount over the first $500 of a scholarship is taxable, whereas to date loan forgiveness has not been taxable.
The Canadian Federation of Students condemns this blatant attempt by the government of Ontario to appropriate scholarship money earmarked for students. By its own admission, the provincial government stands to gain $50 million from this exercise in diverting funds away from students and into its own coffers, although some estimates put the figure at closer to $77 million. While there have been vague promises regarding the reinvestment of the scholarship money in ways that help needy students, no concrete proposals have been forthcoming.
In this regard, we recommend the following:
The government of Ontario must move immediately to ensure that all funds allocated for the scholarships go directly towards reducing student indebtedness in Ontario. No portion of the millennium scholarship should be used to replace funding for already planned or existing programs; and
The government of Ontario must account for its use of millennium scholarship dollars through reporting mechanisms that are transparent and publicly accessible.
We'll stop there and take any questions if there is time.
The Chair: We thank you very much. We have approximately four minutes per caucus. I'll start with the government side.
Mrs Molinari: Thank you very much for your presentation. You have listed several recommendations here which are helpful to us in getting the perspective of where you're coming from as students. I do want to make some clarifications.
Ontario ranks fourth and not last when you take into account all of the student assistance there is to provide for students. You've listed that we rank last.
As a matter of fact, in the latest Maclean's survey, Ontario has three of the top schools in some of the very technical programs that you talked about in your presentation on the deregulation. You must agree that those are programs that are costly and much more expensive to offer than some of the other programs. The flexibility needs to be there to be able to offer an effective program when it's more costly, and certainly students graduating from that program would have access to jobs that would generate higher income than some of the others.
As a government, we believe that tuition is a shared responsibility and we are moving toward our Blueprint commitment, which is to have students pay 35% of that tuition.
Based on the recommendations here, I'm not getting a clear sense that you feel the student who seeks post-secondary education has some responsibility as to the actual fee. I'm getting a sense from this that you're saying it's totally the government's responsibility to provide for the students, sort of like it is in elementary and secondary. Could I just get your comments, please.
Mr Hashemi: A few things. First of all, Ontario ranks dead last in per capita funding for post-secondary education.
Mrs Molinari: We disagree on that.
Mr Hashemi: It's not a matter of disagreeing. It's fact.
Mrs Molinari: No, it's not. The fact is it's fourth. If you take into account all of the-
Mr Hashemi: The reason student aid payments are so high in Ontario is because governments persistently and consistently increase tuition fees, so you're paying out more in student loans. It's a fairly easy formula. If you could take out student loans from the picture, Ontario ranks dead last in per capita funding for post-secondary institutions. That's a fact. It's not a matter of dispute.
As far as our position on tuition fees, you'll notice that the recommendation is for a tuition fee freeze and moving toward a reduction in fees. Fees are way too high.
Mrs Molinari: So you said freeze, but now you're saying moving to a reduction.
Mr Hashemi: Our recommendation to the Ontario government currently is for a freeze until we can actually secure funding from the federal government towards funding some of the operating grants in our institutions. Right now we think a freeze is a very reasonable compromise to reach in Ontario. It's very doable, it's very possible, and it would actually go a long way toward reducing the financial burden on students. That's our recommendation on fees to this committee.
Mrs Molinari: I also want to clarify some of the other points you made. Enrolment in universities and colleges is growing all the time, and more than 50% of students actually graduate without any student debt, despite the number of students who need the assistance of OSAP. By the way, the money that's been put towards the Ontario student assistance program has increased by 30%. We're doing what we can to assist students with their loans, but the picture needs to be made clear that more than 50% of students actually graduate without any student debt at all, and for those who have a debt, the government is assisting those students.
You also talked in your presentation about those who have bad credit ratings, that they should get more money because they have a bad credit rating. Who, in their best business decision, would do that? Where would we find the money to accommodate all of those default loans? I don't understand that reasoning.
Mr Hashemi: I'll start with the credit checks. You said it doesn't make for a good business decision. We might argue about that, but our general point is that investing in students in Ontario and investing in the future of Ontario shouldn't be a business decision; it should be an investment in actual humans.
These people who have bad credit, who often don't have the best credit, are the people who without a post-secondary education are lost. They are going to cost the system much more money in the long run in social assistance payments, perhaps jail costs, all kinds of things. What we're saying to you is, invest the money up front right now to make sure these people have a viable way of earning a living so they are not a drain on the economy five, 10 or 15 years from now. That's the point around why these credit checks are unnecessary. A lot of times people with bad credit are trying to go back to school to improve their lives so they can get good credit, actually get a decent job and that kind of thing. To shut these people off is basically telling them: "Forget it. You are just going to be a drain on our system for the rest of your life, and that's all we care about."
In terms of student aid funding numbers, Ontario does invest a lot in student aid, but a lot of that increase in investment is due to the financial decision made by this government to increase tuition fees, to deregulate fees and to make students need to borrow more to finance their education. You can always inflate the costs by making people have to borrow more. That's a lot of why it's so high.
As far as enrolment numbers, enrolment hasn't gone down but the increases in enrolment have now flatlined as a participation rate. Applications to institutions have actually dramatically decreased in the last five or six years. To see who wants to go to post-secondary education, we look at who is applying to go, and those numbers have decreased.
Time and again we have asked various governments, not just yours but across the board, to actually fund studies to look at the socio-economic makeup of the student population so we can gauge whether people from low-income backgrounds are being impacted by these changes. It's not good enough just to say, "The enrolment is going up slightly so there is no problem." That to us is not good enough because we have no idea who is going and not going to school right now and that's what we need to find out. In our opinion, right now with increases in fees and increasing indebtedness it's having an impact on people from lower-income backgrounds.
Mr Kwinter: Thank you for your presentation. I want to follow up on the reference you made in light of a comment that was made by a member of this committee yesterday. I want to talk about Robert Allen's study at the University of British Columbia. You say that his study "demonstrates that humanities graduates have rates of employment and earnings on par with, or higher than, most business graduates and those graduating in high-technology fields. In fact, Allen argues, the so-called `technological revolution' is increasing labour market demand for university graduates in the social sciences and humanities."
Yesterday Mr Galt made a point of saying that people who study history and the arts programs are not really being trained to do anything useful and that we should be concentrating-
Mr Christopherson: It was O'Toole.
Mr Kwinter: Was it O'Toole who said that? Sorry, it was Mr O'Toole who said that. His position was that we should be devoting our resources to those people who are studying the hard subjects like technology, the professions, things of that kind. As I say, I see that Mr Allen's study says almost the opposite.
Mr Hashemi: Whoever made those comments is entitled to his opinion, that hard-core, neo-conservative opinion that the purpose of universities and colleges is job training for the private sector. What they are not entitled to is to have a bad reading of demand curves. The private sector has shown in its hiring practices that it values these graduates, despite what they might say publicly or despite what the funding priorities of government are. I really encourage people to read that study. It's a great eye-opener in that regard.
Robert Allen actually goes a bit further than what we've written in our brief. The worst thing you can say about humanities and social science graduates is that their employment rates are on a par with business and computer sciences. In many cases they are actually much higher. That's a fact we need to be aware of because there are a lot of myths flying around about what is useful and not useful in our post-secondary education system.
Mr Kwinter: I also want to comment on another comment that was just made about the fact that 50% of graduates graduate debt-free. I'd like your comment on the statement I'm going to make.
If everybody wanted to come out of this debt-free, the government would fund all university education so that everybody would come out of it without any debt. The feeling is that those who can afford to pay it, if they come from families or if they have developed resources of their own, do come out debt-free, but the purpose of the government program is to provide an opportunity for those people who normally could not afford to come out debt-free, and as a result that is the program. To suggest that using the fact that 50% of them are debt-free is the benchmark that everybody else should be measured against makes no sense to me. I'd like your comment on that.
Ms George: I'd like to comment on that number as well. Many of those students who are graduating debt-free are doing so because they have worked full-time or more during their studies. We have situations where students are working three or four part-time jobs in order to fund their education because they are not eligible for loan programs for whatever reason or they are afraid of loan programs because of their experience with debt. More and more students are working and not getting 100% out of their educational experience because they are under so much financial pressure and stress from working a number of jobs. This is becoming more and more frequent. The fact that the current government only allows students to earn $600 before they start clawing back the money is a disgrace for those students who want to work and study at the same time and have a balance between funding from the government through loan programs, part-time work and their educational studies. Those students who are graduating without debt are doing so at a great cost to their overall educational experience.
Mr Christopherson: Thank you for your presentation. You're both very articulate, very effective.
I want to refer to the statement you make in your conclusion, where you say, "The main issues facing students today are a direct result of the erosion of government funding to post-secondary education, and this must be our primary concern."
You will of course be aware that the reason the government found it necessary to dig so deeply into education funding, health care funding, social services and environmental protection was for the tax cut. The government likes to portray any of us who think that shouldn't be the absolute top priority, especially when for the last few years the tax cut was in effect but the books weren't balanced-we "just don't get it," is the phrase that one of the members of the government panel likes to say. "You guys just don't get it."
Well, it was interesting because on our opening day, Dr McCallum, who is the chief economist for the Royal Bank, came in, and this is the Instant Hansard from that day. I'm reading one of his statements. "You could argue-I don't think I argue this, maybe because I am a baby boomer-that all these calls for tax cuts today, which will favour the baby boomers who are in their peak earning years, are kind of like pigs at a trough from a younger generation's point of view." Now, that strong, well-known, left-wing individual who is the chief economist from the Royal Bank calls it "pigs at a trough." I would be interested to hear both your personal views and that of the students you represent in terms of the kind of economic world they're entering that has this situation of, as Dr McCallum points out, "pigs at the trough."
Mr Hashemi: A few things. Yes, there is a perception from students that this is an agenda coming from something that is not in their benefit, absolutely. What we've tried to point out in our brief, and what we've tried to point out whenever we have a chance to meet with government officials at any level, is, if we want the social and economic benefit, how best to maximize that kind of benefit. Consistently, it is not tax cuts that do that. Funding for post-secondary education is a benefit that has results far greater than any tax cut ever would. That is the message we are trying to get across, that it's an investment in the future of the province and the country, and it's an investment in the people who are going to be driving the economy and who are going to be its key participants. That kind of investment makes sense not just from a student perspective, but from a perspective of the province and the people of this country. That's the point we're trying to make. It's a much greater investment than tax cuts ever will be.
Ms George: I'd also argue that it's not just the younger generation but actually many members of the baby boomer generation themselves who are arguing against tax cuts and know that our priority, the government's priority both provincially and federally, needs to be social program funding. Poll after poll-Ekos, Angus Reid-is showing that not just the younger generation but the entire spectrum is saying we need to reinvest in social program funding.
Mr Christopherson: Absolutely.
The Chair: We've run out of time, Mr Christopherson.
On behalf of the committee, thank you very much for your presentation.
PEOPLE FOR EDUCATION
The Chair: Our next presenters this afternoon are the representatives for People for Education. Could you please step forward and state your names for the record?
Ms Gay Young: My name is Gay Young.
Ms Diane Dyson: My name is Diane Dyson.
Ms Annie Kidder: I'm Annie Kidder.
The Chair: On behalf of the committee, welcome. You have 30 minutes.
Ms Young: People for Education is a parent group working to preserve fully publicly funded education in Ontario. We formed in 1996 and for the last three years we have surveyed Ontario's elementary schools and published an annual provincial tracking report.
We also produce newsletters and information bulletins and network with parents and parent groups around the province. To date we've held three provincial conferences for parents.
Thank you for giving us the opportunity today to address you. I've introduced myself and you've met Diane as well. We coordinate the provincial tracking project together. Annie Kidder is our spokesperson. We will each make a short presentation and then we will be pleased to answer your questions.
Whenever ministers are questioned about concerns around the lack of resources, programs or services, their most common response is, "We are spending more than ever before," yet that just doesn't ring true to parents, nor is it reflected in our provincial tracking report. In fact, the amount of money spent on education in this province has remained pretty much the same over the past six to seven years. At the same time, enrolment is climbing and costs are increasing and as a result there have been massive cuts.
Our publicly funded education system is starving. Educating the young people of this province is not a business to be downsized and privatized; it is an institution to be proud of and worthy of our investment. So we are here today to tell the stories of parents and schools in Ontario, to try to convince you that if you don't act to increase funding, our publicly funded education system is in grave danger of dying a slow and painful death of a thousand cuts.
There's not enough money being spent now and we worry that a 20% cut to property taxes, which fund education, will result in even deeper cuts. In fact, Janet Ecker, our Minister of Education, says that her own salary will be cut by 25% if she overspends her budget this year-balance the books no matter what it costs our kids.
Is it part of your education plan, I wonder, to save money by closing schools? Across this province 133 schools have either closed this year or are under review to close next year, which will displace 26,848 children even though the Premier promised parents in 1998, before the election, that no school need close as a result of the funding formula. Yet many are closing as a direct result of the funding formula. Small schools are in particular danger and the EIC, the Education Improvement Commission, has recommended that the funding for small schools be changed.
Our provincial tracking report shows that 53% of the schools have fewer than 350 students, but your funding formula states that elementary schools must have 364 students to generate a full-time principal. Half of the elementary schools in the province don't qualify for a full-time principal and it's very hard to run a school without one. If boards can't staff small schools, then they may be forced to close them or to twin or triple them. What that means is one principal is shared between two or even three schools. They work half a day in one school, if they're lucky to have only two, and then get in their car and drive for 20 kilometres and spend the rest of the day at another school. So at times there's no one in the school office at all, because the secretary is often part-time too. In fact, our tracking report shows that 34% of elementary schools don't have enough students to qualify for a full-time school secretary under your funding formula.
Kayla is deaf. She was being bullied in the playground. When she went to the office for help, no one was there. No one was there because the principal was twinned, the vice-principal had been cut and the secretary was part-time. It's a safety issue, but lack of funds is forcing these changes, and you hold the purse strings. When no one is staffing the office, parents can't contact their school either. In the Grand Erie District School Board they have twinned 12 schools this year because they can't afford a full-time principal in each school any more. The Ontario Federation of Agriculture is fighting to protect rural schools too. They met with Janet Ecker last month and put forth a request for a rural education strategy. Van Turnhout of the OFA says: "The entire rural community is affected when rural schools are closed. These schools provide a lifeline for rural Ontario."
In its October report the EIC also recommended that boards be divided into smaller review areas so they wouldn't have to close schools in order to build new ones. Right now, if you have schools anywhere in your boards that are not full, you can't get money to build new ones, even where the population is growing and kids are sitting in portables. The Ottawa-Carlton Catholic District School Board closed two schools last year even though 25% of their students are in portables. It just doesn't make any sense. Closing schools causes children and their families great sadness and often means that children of all ages, including kindergarten, spend up to two hours each way, every day, on a bus.
Ms Dyson: For three years now, People for Education has surveyed Ontario parents and school councils. School by school, parents have counted class sizes, computers and custodians. Last year, 800 schools participated. They checked for worn textbooks, special education reports and specialist teachers. We purposely set out to do a resource inventory of our children's schools. Our annual tracking report allows us a snapshot to see what is happening in schools not only within one year, but to track it over time to see what is happening within the school walls. I'd like to explain some of our findings which have relevance here.
While we have seen class sizes drop, these have come at the expense of libraries, which are open more often on a part-time basis and more often staffed by volunteers; gym teachers, reduced from 41% to 37% within one year; music teachers, from 58% to 53%; and guidance teachers, from 31% to 23%. While we are seeing more education assistants in the schools, parents are reporting that because of the funding formula structures, they are tied to a single student. We're losing the non-special-education assistants.
Some illustrations: My father admired and loved his Christmas gift this year. It was an angel moulded out of gauze bandages that we placed on top of the tree. It was made by my daughter under the careful direction of her education assistant, who works in the common area outside her classroom. She taught my daughter that she could create beauty and magic. This woman has worked at the school for almost 20 years, at a salary of $22,000, and she's a vital part of our school. Parents are watching our children eating lunch on gym floors or in school hallways with hundreds of others, and just a small handful of adults to supervise them, often again on a voluntary basis. We're watching principals choosing between cleaning snow off sidewalks and repairing broken windows.
In an effort to create healthier and safer learning environments, parent and community volunteers are increasingly being asked to step in. Seventy-five percent of the schools reported some kind of lunch program for students whose parents worked or went to school. There is no provision for this in the funding formula. While we once had an education minister who promised computers for our children, the ministry's funding formula is so narrow and low that parents continue to sell cookies and muffins to pay for the printer to go alongside the new computer at the back of the class. In fact, we've seen fundraising levels rise at the same time as volunteerism has, something that appears healthy until you look harder.
Some schools in our survey reported raising $50,000 to $60,000 in one year for their schools, while others reported no parent fundraising, often because their children were bused from far away, relying instead on teachers to sell hot dogs at lunch to raise the few hundred dollars they could to supplement the school budget. Parents are increasingly raising more money for the schools. Among the 600 schools we surveyed, two years ago parents raised $5 million; 45% of these schools reported raising funds for classroom supplies, textbooks and computers. Field trips and drama clubs were farther down the list.
We're watching how parents' labour in schools is being used as a substitute for what was once paid labour. We're shelving books now, checking attendance, supervising lunchrooms, and missing the chance to sit quietly in a corner to read to a rapt audience or to go on a field trip. Our work has moved from bringing an extra treat to the kids every once in a while to becoming part of the daily operation of the school.
Ms Kidder: What I somehow want to impress upon you here today is that there is an emergency happening in our education system. I cannot show you bodies on gurneys, I have no stories of ambulances driving around searching for hospitals that will take their patients, but it's an emergency nonetheless. There's no blood in the emergency in public education, so it doesn't make the front page. But for the students going without services and for the parents fighting for their children, it is just as important as those front-page stories. The emergency has been caused for the most part by a lack of funding. In their second interim report on school board restructuring, the Education Improvement Commission said, and this is a direct quote: "The following areas of the funding formula are causing concerns-special education, transportation, pupil accommodation, principals and vice-principals, operations, and board administrations for small, remote schools and small school boards. The EIC recommends that these aspects of the funding formula be reviewed." What's left, one wonders.
In their third interim report, the EIC added to the list of things that don't work in the funding formula. In addition to their first list, they recommended a review of the funding for ESL programs, for French-language boards, for First Nations students and for the learning opportunities grant.
Gay has already described the consequences of the lack of funding for small schools, and Diane has listed some of the results of our tracking project. I want to talk about special education, transportation, ESL and the learning opportunities grant.
The EIC went on at length, in their second interim report, about the problems in the special education formula and in special education funding. The minister made an announcement last week about changes to the formula, but she did not address the central problems. She says she is adding $40 million next year, but when you read the fine print, you realize that's just the money the ministry knows they'll have to spend next year because of enrolment increases and newly identified students. There is no increase in per pupil spending for special education, and nothing has been done to solve the problem of all the students and programs that are falling through the cracks, or what's more like chasms, because of flaws in the formula.
The minister's recent announcement does not address the lack of funding for preventive programs and early intervention. It does not help Megan Standring's son, who has Tourette's syndrome but who only qualifies for funding for a half-time education assistant. Megan says, "It's as if the ministry thinks he only has Tourette's until lunch, and then after lunch he's cured." Her announcement doesn't help the children like my daughter Katie in grade 2, who needs help in learning centres, or through early reading programs so that they won't need much more expensive special-ed programs later on. In Durham they're cutting the teachers who work in those early intervention programs, in Ottawa they're cutting special classes for students with behavioural problems or learning disabilities and in Toronto we will lose our reading clinics next year. How can this be happening in our booming Ontario economy?
When the funding formula for transportation was implemented, it included a province-wide cut of 3%. Boards that were the most frugal, that already shared busing with other boards and already triple-bused students, were penalized, because they were cut along with boards that had not yet introduced these reforms. Rural boards, where virtually every student was bused, were faced with five extra days of school and a cut in funding. So now, high school students in the Upper Grand board can't have sports after school any more, because their board has been forced to cut all their late buses. In Huron and Perth counties, students can't help with the farm chores because they're on the bus at 7:30 and not home until 5 o'clock. Bev Rizzi's son, near Thunder Bay, spends three hours a day on the bus.
The EIC came down hard on the lack of funding for appropriate ESL programs as well. They said there's insufficient funding for children like the ones in Kitchener, for instance, who grow up on Mennonite farms and enter school not speaking a word of English. They pointed out that eligibility for ESL funding is based on the country from which the student arrives. Therefore, a board won't receive funding for a non-English-speaking student who recently spent time in England or the United States. Conversely, a board could receive funding for an English-speaking student who just happens to have arrived from Japan.
Most problematically, funding for ESL runs out after three years and we know most students require somewhere in the neighbourhood of seven years. The EIC found that because of the funding formula 50% fewer students receive ESL program support in the York Catholic board.
I'm just going to touch for a moment on the learning opportunities grant. This is the grant for students at risk because of socio-economic factors. We mistakenly assume that this is the big-city, lots-of-problems grant. But when you look at who actually benefits from it-Superior Catholic, Lakehead, Algoma, London-all need this funding and all get some of this funding.
When the government was first developing the education funding formula, it appointed expert panels to look at all sorts of areas and the learning opportunities grant was one of them. Their own expert panel recommended $400 million but, because this formula is fuelled by fiscal constraints and not student need, the government decided to spend only $175 million. You have to be more than double the provincial average in at least one of the four qualifying categories to receive funding under the learning opportunities grant. If your board is just under double in every single category, you get no money.
My daughter Katie crawled into my bed in the middle of the night last night. It woke me up and I lay there worrying about what I was going to say here today. The thing is, she came and got in my bed because she had a bad dream or she was frightened by something. She came to a grown-up because she knew I would protect her, keep her safe and take care of her. As adults, that is our job for all children.
As governments and as citizens, it is our responsibility to look out for the best interests of all our children. Our ambulances are with no open emergency rooms. Are the children going without special education programs or riding the bus for hours? They are the students who have lost their music and gym teachers and they are Kayla, who couldn't get help in the office when she was being bullied. We must remember that these children are more important than tax cuts and that the future of our whole society rests with them.
The Chair: We have approximately three minutes per caucus. I'll start with the official opposition, Ms Pupatello.
Mrs Sandra Pupatello (Windsor West): Thanks very much for your presentation. I was especially interested in the comments regarding the rural schools, having just spent some time around Algoma. I realized that in the second-largest riding in Ontario five of the schools in that particular area near Sault Ste Marie, so clearly rural, can't be identified as rural schools and therefore none of the grant applies to them and five of those are closing. Likewise, five are closing in the Sault proper, again because of the funding formula and their inability to be flexible and to move the monies from one envelope to another.
I was also interested in your special ed and was happy to hear your comments regarding the announcement the other day. If you're just watching the headlines it appears as though she's responding to this need in terms of special ed, but the truth is that there are many students in many areas of the province who, for this past year now, are in school literally two hours of the day, if that. There is just no recompense, there is no recourse for parents. It's pretty astonishing in this day and age that the parents literally have to take their kids home. They are simply not being schooled because they don't have the aides.
I don't know what to add to your presentation other than to support all of the parts that you've identified as real problems.
When you spoke about the parent councils, I wondered if you wanted to comment on the new role that the government clearly identifies for them. I have schools in my riding, one of which can raise $80,000 a year; a very sophisticated and elaborate fundraising plan that they effect every year. In my same riding I have a school with difficulty getting the parent council together. It's what would be considered a compensatory school. For the most part, the parents aren't speaking the English language yet and don't necessarily understand the concept of what their role has to be as a member of a parent council in the school. They're new Canadians and they're pretty much getting used to the country and looking for work, let alone all these additional responsibilities. I don't see any kind of solace in what's coming down the pike for them because there's such a greater importance being put on what the parent councils have to do in their fundraising capacity, never mind the assessment of their role in the effectiveness of the school.
Then we look at how we seem to be moving towards identifying the "bad" schools and how their kids make the grade in the grade 3 testing, for example. What happens when you have one school with all the wherewithal to have all the latest of equipment available to kids compared to the schools that don't, it's just one cycle that continues and you can't break out and eventually it will result in one school faring very well when they are being marked or graded versus the other, and they're not two kilometres apart.
I don't know if you have comments on that, especially the role of the parent council.
Ms Kidder: One of our main comments has to do with fundraising. We were very concerned about the increase in parent fundraising. It goes against the whole basic premise of the new funding formula, which is to make funding equitable across the province. When you have parents acting as kind of the food banks of education, basically supplementing the education budget, and as Diane said, some parent councils of schools are able to raise zero dollars while others are able to raise $60,000, it means that some schools go without computers, books, classroom supplies, while other schools have them. It flies in the face of the whole notion of the thing that's most fundamental to public education, which is that it provides a fair and equal education to every child.
Mr Christopherson: Thank you for an excellent presentation. Again, if you sit here even just for a few hours, if you listen to some of them talking about the boom, you'd think that this really was the land of milk and honey and that everything is just wonderful, and the reality is it's not.
If I can just first of all underscore the issues that you raised. I mean, they just rang so many bells. I'm from Hamilton-I represent Hamilton West-and I'll touch on a couple of them.
First of all, I'm not sure which one of you mentioned the idea of the ministerial pay cut. You're the first person after myself to raise that aspect. I've been a cabinet minister, so I understand that world. I think that is a key part of this and I'm glad you've brought that forward, the whole notion that somehow it's a good idea that ministers will be penalized if they run any kind of deficit. All that does is say that if money's that important to them, and obviously money's everything to these folks, then as soon as you're going to cross over the line where you're going to be running a deficit, regardless of what the need is in your ministry, whether it's education or health, you're going to be saying: "Cut it. Find the cut. I don't care. Get $600 million out of that budget because I don't want my wages to be cut." That's a horrible way and a terrible premise on which to base ministerial decisions.
You mentioned Kayla. Kayla is the name of my daughter, so that was the start. You talked about sharing principals. I've got a small school in my riding, an excellent neighbourhood school that's fought off closure for probably 60 years. They share a vice-principal. They don't even get to share a principal; it's sharing a vice-principal.
Tourette's syndrome: We have a couple of examples in Hamilton where we've got young students who have Tourette's syndrome. They can't get into school. There are not the support services for the EAs to let them get into the classroom.
Eating lunch on the gym floor: I've been in schools in my riding, and that's what they do. The only reason they can even do that is because the parents come in and volunteer. Here you've got a whole gymnasium that looks like there's been some kind of an evacuation, like there's some kind of-well, there is a crisis going on, but it looks like you've had some kind of an earthquake or a flood. You've got all these kids all over the floor in a gymnasium, and that's where they're eating lunch.
Ms Dyson: And it hasn't been cleaned.
Mr Christopherson: That's a problem because the custodian services have all been cut.
The $50,000 to $60,000 being raised by some schools and zero for others: Sandra pointed out the example in her riding. The other thing too is the socio-economic levels of where you are in terms of your geography. It's going to be a whole lot easier-pick a community. It's going to be a lot easier in Markham, where they have one of the highest per capitas in the country, than it is in one of the inner-city schools in my riding to be able to supplement the basic, fundamental money that schools need to operate. This is an ongoing problem, and yet they'll tell you they've equalized things. Nonsense. They haven't. They've created more discrepancy.
The notion of moving from treats to being a main part of the day-to-day operations-so true. So sadly true. I think it was your point that parents have become the food banks of education. This is such an upside-down world from the one we were raised in and so far different from what needs to be.
I want to ask you-I think I know the answer, but I'd like to get it on the record. With all of what you have said, is there any way at all you can imagine that the tax cuts that have benefited the very wealthy in Ontario are worth the kind of deterioration to the education system that you're seeing?
Ms Kidder: No, they're not. I don't think any parent thinks they are.
I just want to add one thing to the 25% cut in the ministerial pay. The reason it came up is that one of the boards went to the minister because boards had been promised stable funding over a number of years so they could plan. It's something that boards really needed. The minister told them they could not have that funding, they could not know what their funding was for next year, because she had to have a balanced budget each year or her pay would be cut by 25%. So now they can only know on a year-by-year basis, and this was from Janet Ecker.
Mr Christopherson: Well put. Thank you again.
Mr Galt: Thank you for your presentation. When you mentioned about that bus in Huron country coming at 7:30 in the morning and getting back at 5, it brings back memories. I was just thrilled to get a bus, because before that there were no buses. That was roughly the time-
Mr Galt: Not quite that extreme, but almost. But my father made sure I still had time to do the chores; there was no question.
Closing of schools: I sat on the school board locally in the late 1970s and I did close schools and I took the hard knocks then. Now we don't have to close schools in my riding because those decisions were made at that time.
But as we talked about having lunch on the gym floor, there's one school north of me that does not have a gymnasium. The school board has seen fit not to put one in there, and that's been through all the other governments, ours as well. They've been asking for a gymnasium since the late 1970s and as yet haven't got it.
One of the problems I have as an MPP is to try to sort out what is rhetoric and what is the real thing going on out there. I'll give you some examples. I was invited to a school earlier in my term, and I think it was 47 students, give or take a student or two. They had the press there, trying to embarrass me and saying, "Isn't this awful?" It was a year and a half later that I found out that room had a teacher and a half designated to it, but they were trying to tell at the time that it was only one teacher; that was the impression they were trying to leave. They didn't quite say it, but that was the impression that was left. I was embarrassed-there was the press there and all the rest. I found out a year and a half later what was really going on.
The laying off of teachers: When I was first elected, 300 teachers a year laid off the first April, given their pink slips, and they ranted and raved around my office. I think it was about embarrassing the local MPP. What happened in September? They were all hired back, plus more.
I think I sorted out on this textbook thing that we've heard so much about, and that happened to be the first week in January. We MPPs were being told there was all this money being spent. The union was coming back saying, "There are no textbooks." What in reality I understand was happening was that the textbooks hadn't been printed yet. But, you know, it was a confrontational approach to come to us rather than come and discuss it in a reasonable sort of fashion.
I think we've done a lot for education accountability with testing, with report cards, with curriculum, and certainly, in a non-partisan way, teachers will agree to that.
But my question to you has to do with the recent UN comment about Ontario being discriminatory as it relates to our present policies with a separate board being funded for the Roman Catholic faith and the public board. I understand you are very adamantly opposed to any monies flowing to other religious schools or private schools. Could you expand on that for me, please?
Ms Kidder: It's interesting that that's what you bring up after this presentation. It's a pretty amazing question to ask. I also want to note that all of your comments that you made before were all about teachers. We're not teachers; we're not funded by teachers; we're not attached to teachers. We came here as parents to explain the problems that parents are having, which were none of the things that you commented on, to do with special education, to do with busing, to do with lack of services for our children.
When you talk about that poor school with no gym, one of the things that the Education Improvement Commission brought up was that in the funding formula there is not enough money for school renewal. They talked about boards with old schools, that there is not enough money to build additions on schools, that there is not enough money to put new roofs on schools. That's what your own Education Improvement Commission says about the funding formula.
We have never made any statements about funding for religious schools or the UN appointment. We have never talked about it all, as a matter of fact. It's not one of the areas we've been concerned about. What we've been concerned about is the school system that we have, which funds Catholic schools and non-Catholic schools and French schools. We believe they are all part of the public education system. We've been fighting for full funding for those schools because they are part of our public education system, which as Canadians we always used to believe in, and that's what we care about and we focus on.
I think that bringing up all these teacher issues or how you felt embarrassed by teachers has nothing to do with us. You can speak to the teachers about those issues.
What we're here to say to the government is that there's serious damage being done to children in classrooms right now. It's only this year, when it's not a crisis now-there are not teachers on strike, there are not huge polarized fights happening-that parents are feeling this. We just had a conference in the fall with parents from all over Ontario saying, "What can we do now that we see what's happening?" To bring up all these complaints about teachers, I don't quite understand, or the UN ruling.
Mr Galt: It was about the union; it wasn't on teachers.
The Chair: We've run out of time. On behalf of the committee, thank you very much for your presentation this afternoon.
CENTRE FOR EQUALITY RIGHTS IN ACCOMMODATION
The Chair: Our next presenters this afternoon are representatives from the Centre for Equality Rights in Accommodation. Could you please step forward and state your name for the record.
Ms Sherrie Tingley: I'm Sherrie Tingley from the Centre for Equality Rights in Accommodation.
Mr John Fraser: I'm John Fraser from the Centre for Equality Rights in Accommodation.
The Chair: On behalf of the committee, welcome this afternoon. You have 30 minutes. You may proceed.
Ms Tingley: Before I begin I wanted to just touch briefly on the committee process.
We were thrilled to have an opportunity to come and speak with people today. We put a lot of effort into discussing all the issues that are out there and what are our priorities and thinking about the best way to explain things. I'm a volunteer with the Centre for Equality Rights in Accommodation. It's a volunteer position so I'm coming today as a volunteer to speak with you.
I want to talk about homelessness in Ontario and the case for a needs-based shelter supplement. When the media, politicians and housing advocates talk about homelessness in Ontario, they generally focus on a lack of affordable housing. Increasing the supply of rental housing is seen as the key to combating homelessness. Part of the reason for this supply-centred conception of homelessness is that the issue is being defined to a great extent by the specific housing situation in Toronto. The Centre for Equality Rights in Accommodation is a provincial human rights and housing organization and we're coming at things that way. Toronto has a very low vacancy rate, 0.9%, and as a result increasing the stock of rental housing is a high priority. Increasing housing supply alone, however, even in Toronto, will not solve the crisis of homelessness.
In the recently produced Where's Home? study, 47% of the Ontario municipalities surveyed had vacancy rates greater than the commonly accepted minimum rate of 3%. In addition, as the study pointed out, there appears to be no correlation between vacancy rates and the extent of affordability problems in the different municipalities. In 1995, 24% of tenants in Sudbury were paying greater than 50% of their income on rent, even though with a 6% vacancy rate there was a plentiful supply of rental housing. In Toronto, 23% of tenants were in the same situation and the vacancy rate was less than 1%. The vast majority of municipalities where vacancy rates increased between 1994 and 1998 still showed rent increases over the same period.
As the Where's Home? study illustrates, homelessness in Ontario is not simply a question of the demand for rental housing outweighing the supply. It is most importantly a problem of inadequate income to cover housing costs, especially for families with children. Whether it is plentiful or not, thousands of Ontarians simply cannot afford shelter. Unless we recognize the depth of poverty and its role in homelessness, we will never be able to adequately house our most vulnerable citizens.
Mr Fraser: I'm going to talk a little bit about the affordability squeeze for social assistance recipients and for people who are working with low incomes and not receiving social assistance.
In October 1995, social assistance benefits were cut by 21.6% across the province, causing immense hardship for families already struggling to make ends meet. Considering median gross rents in selected municipalities in May 1996-the municipalities are Toronto, Hamilton, Windsor and Ottawa-the cuts to benefits had an immediate, staggering effect on the ability of households receiving social assistance to pay for shelter. As you can see, if you look at the first table on page 2, a single parent with one child receiving social assistance would potentially have had to pay 73% of her income on rent in Toronto, 56% in Hamilton, 65% in Ottawa and 60% in Windsor. In all of the selected cities, the shelter allowance component of social assistance was well below median rents.
Professor Michael Ornstein, co-director of the Institute for Social Research at York University, calculated that welfare cuts in 1995 forced at least 67,000 single parents from their existing housing. This was almost certainly the largest economic eviction of families with children in Ontario's history.
If we go further, to 1999, and calculate a rough estimate of rent increases to October, the situation for households receiving social assistance becomes significantly worse. In Toronto in late 1999, as you can see in the second table, figure 2, a single parent would potentially have to pay 82% of her income on rent, in Hamilton she would potentially pay 62%, in Ottawa 68% and in Windsor 62%. So we see that between 1996 and 1999, the single-parent's income remained unchanged but the rent increased by as much as 12%.
The hardship faced by people receiving social assistance becomes particularly stark if we isolate the impact of rent increases on the money a person has left over to pay for other basic necessities such as food, clothing and transportation. Using the example outlined above, a single parent with one child in Toronto was left with $295 to pay for non-shelter items in 1996, and $199 in 1999. Thus, a 12% increase in median rents over the three-and-a-half-year period corresponded with a 33% decrease in the money left for other basic necessities. Rent increases have an exaggerated impact on basic-needs income. Food and clothing certainly did not get cheaper between 1996 and 1999.
The loss of income for non-shelter items is particularly problematic if we look at communities that are outside of major city centres, where many non-shelter costs such as transportation are significantly higher.
To account just for increases in rent, shelter allowance levels alone would have to increase by 20% in many circumstances to place Ontario Works recipients in the same desperate financial situation in which they found themselves in 1995, after the cuts. Just to bring people back to their position after the cuts in 1995 would require a significant increase to shelter allowances.
The situation for low-income working households that are not receiving social assistance is also very desperate in Ontario in terms of housing in the rental housing market. Those who are employed are particularly hard hit by housing costs in Ontario, and this is very much true for families with children where one or two parents are employed in low-paying jobs. Minimum wage is the same whether you are single or whether you have children to support.
If we look at median rents for 1996 in the selected municipalities, we see that a single parent making a minimum wage will have to devote an inordinate amount of her income to shelter. She would be paying more than 50% of her income on rent in all but one of the four municipalities selected. The picture looks significantly worse if we project the affordability squeeze to 1999. In each municipality listed, a single parent working for minimum wage in late 1999 would likely be paying over 50%, and in some cases as high as 68%, of her income on rent.
We want to stress, though, that the numbers we've described above in all likelihood underestimate the impact and the severity of affordability problems facing low-income households in Ontario, whether they're employed or whether they are in receipt of public assistance. These households usually have to pay more than the average or median rents. That sounds insane, but that's the experience we had, and the research we are aware of has supported that. These households usually have to pay more than an average or median rent because, when searching for housing, low-income families face a range of discriminatory and systemic barriers which keep them from renting the most affordable apartments they can find. They are refused by landlords because they are on welfare. They are refused by landlords because of their income levels, because they have children. They are refused because they don't have the last month's rent and can't afford to pay the last month's rent and it's not provided anymore by municipalities. They're refused because they may not have a credit history yet, if they are a young family of a newcomer. As a result, low-income households are pushed into undesirable and overpriced accommodation.
An analysis of census data by Professor Ornstein found that families with children living below the poverty line usually have to rent the most expensive apartments in the market. In 1990, 74% of single mothers with two children, living below the Statistics Canada low-income cut-off, who rented an apartment during the one-year period, had to rent an apartment above the most affordable third of units on the market, and this is controlled by size. Over half had to rent apartments, believe it or not, in the most expensive third of the market. They're not renting the cheapest apartments and they can't.
The housing affordability problems faced by the low-income households outlined above are simply impossible. Whatever way we decide to look at it, we cannot ignore this one fact: In Ontario thousands of single parents, young families, people receiving social assistance, youth, people with disabilities and the elderly do not have adequate incomes to afford decent shelter, a basic necessity and a fundamental human right.
Legislated homelessness in Ontario has been condemned by both the United Nations committee on social, economic and cultural rights and the United Nations human rights committee as a blatant violation of international human rights.
Ms Tingley: A needs-based shelter supplement: This is what we really came to talk to you about. Some people are of the view that the only solution to homelessness is to build more affordable housing. This should certainly be part of the solution and makes sense in cities such as Toronto that have a very low vacancy rate. However, it can only be part of the solution.
Indeed, in cities with higher vacancy rates, such as Thunder Bay with a vacancy rate of almost 8%, it would make little sense to focus on building new housing. The majority of low-income households in Ontario are housed in the private rental market, and we have no reason to believe that this will cease to be the case in the future.
According to data from the Ministry of Community and Social Services, 84% of households in receipt of public assistance live in market-rent apartments. Given the reality of the rental housing market in Ontario, dealing with the income side of the equation is the most important component of any strategy to end homelessness, which I'm sure the Ontario government is committed to. This government was elected on a promise to institute shelter allowances for households with affordability problems. It is an urgent necessity that it come through on this promise in the upcoming budget.
There is some misguided notion among a small minority that shelter allowances or income supplements to help families living in poverty pay for housing simply line the pockets of landlords. This myth simply justifies complacency about the immoral and unacceptable level of poverty in Ontario, and I'd add hunger. There's absolutely no evidence that rents are adjusted to capture housing allowances, which would vary depending on income and would be confidential information which not even a landlord would have access to.
A shelter allowance program is simply a means of adjusting the incomes of the most disadvantaged households in our society so they can afford life's necessities, such as shelter. We don't criticize tax credits for poor families as a means of subsidizing landlords. Similarly, we don't criticize income supports which are a response to the reality of rental housing in Ontario. The program would have to have two components: one for people on social assistance and one for low-income households in paid employment who do not receive social assistance. For people on social assistance, shelter allowance levels must be raised to better reflect actual rents across the province. Shelter allowance levels could be calculated based on Statistic Canada's median gross rents for each major city in Ontario, as recommended by Toronto's Homelessness Action Task Force. However, we do not agree with the task force's suggestion that shelter allowance levels be set at 85% of median market rent. This is inadequate. As discussed earlier, because of the many barriers faced by low-income households in their search for housing, it is impossible for most families to find accommodation under the median rent levels. Shelter allowance levels should be set at least at the level of median market rents.
Income supports for employed people would be equally essential. As discussed earlier, families with children who are dependent on low-paying employment have always been particularly disadvantaged in our society. An income support program for housing would be a means of correcting the inequality created by a wage payment system which ignores the financial realities of families. The program must be available to all those who need an income-based needs assessment. The recently announced rent supplement program is not the universal shelter allowance promised by this government and so desperately needed. It is limited to 5,000 subsidies across the province. In addition, the program is administered through local housing authorities, which in Ontario utilize chronologically based rather than needs-based waiting lists. The result will be that disadvantaged households will be unable to access the rent supplements at their time of greatest need. Young families, newcomers, those most at risk of homelessness, will not benefit from this program.
The crisis of homelessness in Ontario is far more than what you see on the streets. Women and children are by far the largest groups affected by the cuts and by the erosion of income since this government took office. If we are to help low-income people get housing, we have to give them what they need: an income which helps them pay the rent, prompt access to last month's rent deposit, far better protection from discrimination so that they can access the most affordable housing available and in areas with a supply problem more, affordable housing.
The Chair: We have approximately three minutes per caucus and I'll start with Mr Christopherson.
Mr Christopherson: Thank you for your presentation. I'm sure you were here for the last presentation about the school system and what's happening and the group of mothers that were here. I couldn't help but think that with the two of you back to back, one dealing with the education crisis and you dealing with the poverty crisis, the homelessness crisis, at the same time the headlines are screaming, "We've Never Been Better Off," "It's the Biggest Boom Ever," "Things are Great." If anything, it just points to the fact that building a strong economy is only half the job. What a government allows to be done with the generation of that wealth is the other half of the job. It's morally bankrupt in my opinion, and in that of the NDP, to be giving so much of that wealth to people who are already well off at the expense of the issues that you've raised, and the group that came in before. There's just something totally cockeyed about a world that works that way.
I wanted to ask you about the issue of income supports, just so we're clear. I don't think our view of this is different, but I wanted to explore it a bit. You spent a fair bit of time talking about the issue of providing shelter allowances because it deals with the reality that non-profit homes aren't there, affordable housing hasn't been built. Of course, there were 17,000 units that were chopped within weeks of the government taking power in 1995, units that we would now have, where people could be living. There's always been a huge component of shelter allowance but we in the NDP happen to believe very strongly that as much as possible money that's going to go into housing ought to go into trying to build the right kind of housing in the right locations and the right mix, all the things that we know from experience will give us the potential for a maximum outcome.
I just wanted to be clear it's not that you're opposed to the building of them, it's just to put all the money there and say that will take care of it in the short-term isn't going to solve the problem because they aren't built yet, or are you like the government and think we ought not build anything and everything ought to be shelter allowance?
Ms Tingley: I think we talked about supply being a component, but you can't allow shelter allowances-for people who may not have seen the table, the welfare rate for a single parent in this province is $950 and the shelter component of that is $511. So you're paying out $511 to a mother and child, or to a single parent and a child, in this province to obtain housing. You can't allow that because most recipients rely on the private market at this point and it will be a long time that that will happen. You cannot allow shelter allowances to fall that far behind.
You talked about prosperity. I would just say that people cannot share in the prosperity if they're hungry or if they do not have secure housing. Having spent a lot of time in this province talking to people on social assistance, they desperately want to share in the prosperity, they're optimistic because of what they're hearing, but they cannot do it when they spend their whole day going from food bank to food bank to ensure that they have enough food, that their children are able to eat. It's just not possible to participate or to find the energy to do the things you need to be a participant and to share in the prosperity.
Mr Arnott: Thank you very much for your presentation and for coming in today. There have been quite a number of presentations concerning the housing issue, and yours is another one which again provides a different perspective, I think it's fair to say, from what we have heard to date.
There is a question I had relative to something you said during the course of your presentation. On page 4 you talked about a study done by someone named Professor Ornstein which "found that families with children living below the poverty line usually have to rent the most expensive apartments on the market." I just wondered if you could tell me if he gave you any advice or conclusions in that study as to why that was the case.
Mr Fraser: His view on it, to our understanding, is the same as our view on it, that there are a number of barriers in place both in terms of discrimination and systemic barriers which essentially reduce the pool of rental housing which low-income households can apply to. Even looking at it from a market perspective, by decreasing that pool you're putting people in a position where rents can be raised unfairly or inordinately because landlords who do rent to people who are on assistance know that a lot of landlords renting the most affordable apartments will not rent to them. So they are stuck.
Ms Tingley: I would just add that a large part of the work that we do at CERA is to assist people who are facing discrimination in housing. So we do get calls from people, we try to mediate and then, in some cases, file human rights complaints. It is illegal to not rent to people on social assistance, but many landlords go to various means and close off their units to people on social assistance, although there is no business case for that.
Mr Fraser: It's something that's very frustrating for us in our work because we are trying to mediate with landlords to get someone an apartment where they would be paying 55% or 60% of their income on rent. We can't get them that apartment. The person ends up renting something where they end up paying 75% of their income on rent.
Ms Tingley: The previous government recognized the important role of CERA in terms of the housing sector and funded us under the Partners in Housing program that supported a whole bunch of groups that did this work. Your government doesn't fund any housing sector partners any more. That may be something you want to look at if you want to influence what does happen. You may want to look at reinstating some of those funding programs so that we can do the work to help families save money.
Mr Arnott: I suppose if there were available resources, that's something the government might look at, but we're glad that you're still in existence as an organization and still able to come in and make such a professional presentation.
Mrs Pupatello: Thanks for coming in today. I noted with interest that today we had the Ontario Home Builders' Association in. You are in agreement with that organization to institute shelter allowances. Are you making an assumption that the government, if they are going to do this-I didn't ask the home builders this-would then increase the shelter allowance, not only institute it but give a huge increase to what the value of it is so that it keeps it at the 30% of the total income being spent on housing?
Ms Tingley: Welfare benefits in the province have never been structured that way, so I don't anticipate that that would happen. But we're saying the shelter component in the welfare benefit should reflect what it costs to rent in the community, and it's probably what the home builders said today, I suppose.
Mrs Pupatello: So that when you say you're supporting the institution of shelter allowances for households, that's different from what is currently happening in the portion of the welfare allotment for shelter?
Ms Tingley: We're saying that within the welfare benefit the shelter component should reflect what people have to pay for shelter and we're also saying that for the working poor there should also be a shelter allowance program based on need.
Mrs Pupatello: There was some really alarming information yesterday at the hearings about how many units would have to be built to accommodate the need. It was some wild figure like 20,000. The home builders said today and yesterday they're just not going to build it. There's no influence, there's no return on investment to warrant that kind of building and they're not going to do it. Today one advanced the notion of dropping the PST on building materials and then suddenly they'll start building units. I personally don't think that would be the case. There have been lots of incentive programs in the past that haven't worked. I think they have to make a profit or they won't build the homes.
You noted that there's 84% of these recipients who live in the market rent apartments in any event, so that if you were talking about what the shelter allowance was, if it was appropriate, they would go into-I mean, if you have to find an apartment in Toronto tomorrow you can if you can spend money on the rent. The rents are enormous. It's not that they're not there; it's just you can't afford to pay.
Ms Tingley: I was interested to know what the government does see as a reasonable expense for MPPs to obtain shelter in Toronto.
Mrs Pupatello: You ask an interesting question-
Ms Tingley: You are paid.
Mrs Pupatello: -because they all tend to live in the downtown area, which is going to be the more expensive area, and the allotment is certainly higher than what is given.
But in any event, I want to go back to what that figure's going to be. You are assuming that it's going to go up-
Ms Tingley: Yes.
Mrs Pupatello: -that this is the group, the Conservative Party, that is the most likely to meet their promise in their Blueprint now, or whatever it was called before, to go with the shelter allowance. If that's going to be effective and make any difference at all, it's going to have to be increased by in some cases 50% to keep it as the amount that you should be spending on rent.
Ms Tingley: The way that the welfare benefit is structured is that your shelter component is only paid out if you pay that out in shelter. So if somebody was living in a much cheaper place, they only get what they pay out in shelter. We're saying to set it at a reasonable rate based on-
The Chair: With that, we've run out of time. On behalf of the committee, thank you very much for your presentation this afternoon.
CHILD CARE ADVISORY COMMITTEE OF TORONTO
CHILDREN AND YOUTH ACTION COMMITTEE OF TORONTO
The Chair: Our next presenters represent the Child Care Advisory Committee of Toronto. Could you please step forward and state your name for the record?
Ms Cheryl DeGras: Good afternoon. I'm Cheryl DeGras. I'm the co-chair of the Child Care Advisory Committee of Toronto.
Ms Fiona Nelson: My name is Fiona Nelson and I'm representing the Children and Youth Action Committee of Toronto.
The Chair: On behalf of the committee, welcome, and you have 30 minutes for your presentation.
Ms DeGras: The Child Care Advisory Committee of Toronto represents more than 600 child care centres, home child care agencies and family resource programs and special-needs services, as well as organizations which support the provision of quality child care in our city. The CCAC, as we're known, is an advisory committee to the city of Toronto city council and has for many years provided advice and support to both elected representatives and staff of Toronto Children's Services.
I'm pleased to have an opportunity to speak with you today about the challenges, both financial and operational, facing the child care system in Toronto. As a major partner from both the financial and policy perspective, the province can provide the needed solutions.
The licensed child care system provides many benefits to children, families and society as a whole. Quality, licensed child care gives children a wide range of social and developmental benefits. It allows their parents to work or attend school, secure in the knowledge that their children are well cared for.
The federal costs and benefits study released by Cleveland and Krashinsky clearly shows that quality child care is a sound long-term investment for governments. These two economists found that for every dollar invested in quality child care there is a $2 return in social and individual benefits.
As child care providers, we believe that recent provincial funding and policy decisions have threatened the child care system in Ontario. I'm here today to recommend that the upcoming budget contain the financial measures and the policy adjustments which will ensure the survival of the child care system for all the children who need it.
In November, the province made an announcement on the treatment of user fees from subsidized parents. The province intends to reverse the change made to regulation 262 in 1997 which allowed municipalities to keep 100% of user fee revenue. This constitutes an $11.8-million annual loss to the city of Toronto and could translate into the loss of 8,500 child care spaces. This provincial decision is a serious threat to the child care system in Toronto. The CCAC recommends that the province not proceed with this change and continue to allow the city of Toronto to keep all the user fees collected from low-income parents.
The child care system, including home child care, special needs and family resource programs in Toronto are not adequately funded. There are not enough resources to meet the demand for subsidized care. In Toronto, approximately 12,000 children remain on the waiting list for subsidy. Another 21,500 will need care once Ontario Works is fully implemented.
The province has not been providing the money necessary to meet the demand for licensed care. In the city of Toronto, child care programs are feeling the effect of this underfunding. We have not paid the actual costs of providing care since 1993. Rates for home child care providers have been frozen since 1991. This situation of underfunding is acute and undermines the stability of the system as a whole. The child care community struggles to make ends meet. Therefore, when a new expectation arises such as pay equity obligations or provincial directives for playgrounds, we have no ability to respond and are thrown into crisis.
Over the past two years, the city of Toronto has attempted to expand access and to ease our financial burden by putting up $3 million to fund 2,000 child care spaces. The province has declined to provide its share of funding so this expansion never occurred. If the province truly wants to see its initiatives like Ontario Works succeed, the Child Care Advisory Committee recommends that the province agree to cost-share the new spaces in order to allow the expansion to meet the child care demand.
Not only has the provincial government limited access to subsidized care, it has constrained the expansion of the child care system. The province no longer provides capital funding to assist child care programs in building or renovating new facilities. I'd like to add that there is also no funding for maintaining the buildings that we already have.
To make matters worse, the educational funding formula will negatively impact the current stock of available space. Currently, there are 325 child care centres providing licensed care for more than 17,000 children, as well as 18 family resource programs located in our public schools. This partnership is at risk as boards struggle to manage with reduced provincial funding.
The Toronto District School Board and the Toronto Catholic District School Board have announced an initial list of schools to close in June 2000. These schools house nine child care programs and two family resource programs. Child care programs located in receiver schools could also be affected. It is estimated, for example, that an additional 20 child care programs in the Toronto District School Board could be affected when the enrolment to receiver schools increases to accommodate the immediate closures. In addition, the education funding formula does not recognize child care as a legitimate cost of education. The school boards are now forced to increase occupancy costs to programs. Since child care programs have no ability to pay the rents the school boards are looking for, the city of Toronto will be asked for this funding. The CCAC recommends that the province re-establish child care capital funding and re-evaluate its funding formula to recognize child care as a legitimate cost of education.
The most recent crisis has been that, effective this fall, the province now requires all licensed child care programs to comply with the 1998 Canadian Safety Association standards. It is estimated that as many as 718 of the 750 licensed child care programs in the city of Toronto may need major retrofit or replacement in order to comply. The CCAC embraces the attempt to ensure that outdoor play environments are maintained in a safe manner, but the CCAC feels strongly that the province must commit adequate resources to accompany this directive.
Ontario Works and LEAP: Other provincial policies such as Ontario Works and the Learning, Earning and Parenting program undermine the stability of the current subsidized child care system in Toronto. The recently released operational review by KPMG Consultants confirms that there is not enough child care to meet this demand. "It is inconceivable that the Ontario Works program could succeed in the long term"-and this is a quotation from their report-"with inadequate access to child care." The Child Care Advisory Committee and the city of Toronto are committed to licensed, quality care provided on a first-come, first-served basis with geographic and age equity and full parental choice. The advisory committee is concerned that these clients will be given priority for service over other clients already waiting for care. LEAP clients could exhaust high-priority service for infants and toddlers, leaving the city of Toronto unable to serve other families. There is a real possibility that Toronto's child care system will be eclipsed by clients on social assistance, and working families will be denied access.
In closing, let me again thank you for the opportunity to explain the pressures on the child care system in Toronto, a system that is both complex and delicately balanced. As we have pointed out, provincial policy and funding decisions threaten to upset this balance and the ability of the city of Toronto to meet the needs of all our families.
This week, Finance Minister Ernie Eves has boasted about the strength of Ontario's economy. The provincial government must hear that this economy is based on the ability of parents to work. Parents cannot work without quality child care options. The time has come for the provincial government to invest in the future by adequately funding and increasing access to high-quality child care services. Thank you.
The Chair: Thank you very much. We have approximately five minutes per caucus. I'll start with the government side.
Mrs Molinari: Thank you very much for your presentation. It's certainly something that we all agree on, that children are our future and we need to do whatever we can that is available to us to protect that. Some of the comments that you've made with respect to the child care centres that were at risk, as you mentioned, because of the school closures that have happened in some school boards-I guess the question came up years ago when the child care centres were built attached to schools, and doing that appeared to be a good idea. As much as it's important for proper child care to be available, I guess the question that comes is, is it an education ministry matter or is it another ministry's? That's where the co-operation between ministries is necessary in order to provide the service, regardless of where it comes from.
One school in my area in Thornhill has done some creative things with respect to providing child care with the schools. One of the schools was at risk of being closed because of the lack of enrolment and because of the community no longer having the students who were of that age to attend that school. So what they did was they got together with various organizations and came up with a very, very clever plan and presented this to the school board, and it was adopted. That was to use a portion of the school for child care services, which appeared to be a need. There was a growing group of students, of children of a younger age who were moving into the area. It was a transition neighbourhood. It was very creative in what they did in providing for that service.
I'm hopeful that a number of other communities would work in partnership with the various organizations to see what needs there are in the specific communities. I hope you'll agree that not every community needs the same services. Each community is ideal on its own and so whatever services are needed are the services that are provided.
I welcome some of the recommendations that you've made here and some of the comments. Certainly, as a government, when we're hearing different views from different people, we need to take all of that and put it together and then have the difficult decision of deciding how to distribute the pot of money that is there to be distributed.
Again, I thank you for your comments and your recommendations. Certainly they will be looked at in the next few weeks, along with all of the others that are coming in. Thank you again for all the work that you do on behalf of children.
The Chair: You still have two minutes on the government side. If not, I'll go to the official opposition.
Mr Phillips: I appreciate the presentation and clearly welcome Fiona Nelson. Not that we don't welcome you too, but I've watched Fiona in action for probably 35 years and I don't think anybody has done more for kids in Toronto, maybe Ontario, than Fiona. A lot of us lose our flame as time goes by, but Fiona never has. Thank you very much for all you've done. You've been terrific.
Just on your recommendations, the government will always say to us, "We are spending more money than any other government in the history of the world on child care." My suspicion is that they may in fact be using some of the money that comes from the federal government that's shown as their own expenditures, as they've done in the millennium fund. Have you had a chance to look at the government's numbers when they say they're spending more than any previous government and what comment might you have on that?
Ms DeGras: As supervisor-director of a child care centre in the city of Toronto, you can tell us that you're spending more money and you can present it to us in many ways, but I can tell you what it feels like after providing care for 10 years in the same daycare centre. We are doing more with less every single day.
I want to point out that on page 2 it talks about the fact that our per diem rate in group care has not been increased since 1993. That means my staff have been earning the same dollars. In fact, because some of the grants that we depended on have been terminated, we are earning less than we were earning in 1993. Parents' work hours are increasing so they want us to stay open longer. It's exhausting our staff. The people who are paying the actual cost for child care in this province are the staff who work in the daycare centres. It's an invisible cost. It doesn't show up on any budget line.
Mr Phillips: I was surprised at Mrs Molinari's comment on the schools, about why don't you just go to the schools and set up child care there. My experience with the schools is that they are now so handcuffed by the "funding formula," particularly school boards that need to build new schools, that they can't build new schools if they've got any space at all in existing schools. The exact opposite of what she says is what's happening and that is that school boards are saying, "Sorry, but we can't have you any longer in there because we have to have pupils in there or else we're going to have to close some additional schools." That has been my experience. What's your experience dealing with school boards, in trying to find the space for child care?
Ms DeGras: The Toronto District School Board is the one I'm closely associated with, because the centre I run is in the City Adult Learning Centre. For 10 years, the school board has tried very hard to accommodate our program and to accommodate the community in which we work, and the demand for child care in that community is very high. But they are so cash-strapped at this time that there is nothing they can do. In fact that's another area in which we are scrambling.
At this point they are looking at the very serious situation where they are going to have to decrease their caretaking staff, which is going to add another cost to our operational budgets. We don't have the money to do that and we don't know how we'll be able to continue to meet the standards parents expect without some miracle. It's very frustrating. As I said to you, this is another thing where staff are supposed to be early childhood educators working directly with the children, but the pressure on us to provide additional services in terms of health and hygiene is pulling our resources apart. As I said, the Toronto school board tries to do what they can, but they don't have the money to do what they're supposed to be doing as educators. They are in difficulty too.
Mr Christopherson: Thank you both for your presentation. Just to pick up on the last point you raised, it's increasingly frustrating for us on our side of the house to watch our communities battling each other, knowing that it's not the desire of either party locally to pick a fight. We watched it in Hamilton with our public transit drivers and the local regional council-I used to be a member of the regional council, so I understand the issues.
We had a three-month strike, and what hurt was that the whole community was divided between who supported the regional councillors and who supported the bus drivers. Yet I and others who watch the provincial scene knew that the invisible hand in this fight, the one that was poking both sides in the eye, was the provincial government. It was their cuts in transfer payments that put the regional councillors in an untenable position.
You raise the same issue when you talk about school boards versus parents or school boards versus teachers. It's pitting one part of our community against another, which of course this government knew all along. There were those of us who were on the record in Hansard way back in 1995 and 1996 who pointed out, "Look, all these cuts in transfer payments are meant to do two things: (1) give the government the ability to stand up in the next election and say `Aren't we wonderful? We cut taxes at the provincial end by X dollars,' and (2) to push the fight to the local scene." Because it's the local councillors, the local aldermen, the local school board trustees who have to make the decisions on which schools they're going to have to close. It's not whether they want to but which ones they are going to have to close. It's the same with the child care programs. The tightness of money or the lack of money is not the fault of the school board; it's the fault of the province, which now controls 100% of the dollars.
I want to ask you specifically: In her comments, one of the government members talked about, "Well, we had to look at whether it's education funding or community and social services funding, or should it come from somewhere else?" Do you give a tinker's damn which ministerial pocket it comes out of, or are you far more concerned about making sure the money is there to take care of our kids?
Ms DeGras: Well, the last picture you painted is the one that best describes our situation.
I just want to note that Fiona Nelson, from the Children and Youth Action Committee, hasn't presented her position. We need to do that.
Ms Nelson: Mr Chair, ladies and gentlemen, the children and youth action committee of city council was set up a couple of years ago with the specific objective of making sure that the non-voting members of the society were front and centre at the city level. We were therefore very pleased when the government commissioned the Honourable Margaret McCain and Dr Fraser Mustard to produce this quite wonderful report. We are assuming of course that in this budget it will be implemented. The recommendations are very clear. While you have heard from Ms DeGras and other deputants today a great deal of statistical data backing up the reasons to do some of these things, I'd like to give you two other contexts within which to look at the problem.
One is the economic context and the other one, perhaps the more compelling one, is the moral context. To start with the economic context, I am quite sure that you are familiar with this excellent book that has just come out called Developmental Health and the Wealth of Nations. We take a great deal of pride in Ontario in being part of an extremely wealthy and economically healthy province. But when one looks under the covers, one finds that in fact while some people are doing remarkably well, there is a huge gap developing between the haves and the have-nots.
Among the large and increasing number of have-nots in this province are our children. While there are 1,000 children a day born in Canada, 100 of those children are born in the city of Toronto, which gives us a rather large window on the needs of children. To that end, for example, on Tuesday we invited down to council all the children who were born on January 1. There were about 100 of them and 36 of them actually came. What it did, more graphically than almost anything I can think of, was to show us what a significant shift in the population has taken place. There were children from every part of the world represented in the council chamber that day. It was quite lovely to see in the middle of a working day the number of parents who took time from work to come and bring along the grandparents and various other aunts, uncles and all the siblings. What it did was point out to council that in their decisions, they have an enormous impact on people who are much too young and much too vulnerable to be able to state their own case and therefore it's our job to state it for them.
But we also know, from studies such as the ones in this book and the ones done by McCain and Mustard, that if we really pour on the horses from conception to school entry we will in fact have to spend a great deal less once they get to school. Therefore, it makes absolute common sense for us to be looking at all the children in this society, and however shiftless and useless and poisonous their parents must be, we cannot visit on the children the sins of their parents. It is essential that we make sure that there is as level a playing field for them as is possible so their potential can be exploited, not only for their own and their individual good, but also for the good of this society. Whether or not you like children, they are the ones who are going to be paying our pensions and looking after us in our old age. It seems to me very important to remember that while they may only be some 20% of the population, they are 100% of our future. It's absolutely critical that we keep that one in mind.
We have an enormous moral imperative to do this as well. Mr Phillips mentioned 35 years ago. I'm afraid I go back a lot longer than that. I do remember from Sunday school days the injunction in the New Testament that says, "Suffer the little children to come unto me and forbid them not." It seems to me that we're doing an awful lot of forbidding these days of the children of this society. Whether they're your children or your children or yours doesn't matter a fig. They are children and they need us and it is absolutely required that we make sure that they are all properly fed and housed and provided with whatever their basic necessities are.
I represented for nine terms a ward in the city that probably had no business electing me. It was Rosedale and Forest Hill and Moore Park and various other very prosperous parts of the city. One of the election leaflets that I used, in two elections, in fact, was this one, because I like recycling. It says: "Let's get down to basics. Children first." It didn't matter where I went in the ward, I was able to make, and be agreed with on, the premise that we are all required to support our children. The most efficient, effective and fair way of doing it is through the taxation system. We can have all kinds of bun feeds and chocolate bar sales; they are never going to replace a decent tax system.
It seems to me that it is incumbent upon us all to do what Mr Justice Oliver Wendell Holmes said: "I don't mind paying taxes. They buy me a civilized society." Surely one of the biggest marks of a civilized society is one that looks after its weakest and most vulnerable members, and those are its children.
Whatever the statistics that back up the argument, whatever the economic arguments that back up the argument, surely the most significant one of all is that we do it because it's the right thing to do.
The Chair: On behalf of the committee, thank you very much for your presentation. It was very enlightening.
TORONTO COALITION FOR BETTER CHILD CARE
The Chair: The next presenter is a group called the Toronto Coalition for Better Child Care. Could you please come forward and state your name for the record.
Ms Jane Mercer: Good afternoon. I'm Jane Mercer, with the Toronto Coalition for Better Child Care.
The Chair: On behalf of the committee, welcome.
Ms Mercer: Thank you very much. I had hoped to be joined today better Theresa Radwanski, who is the supervisor of the Children's Circle's child care program, so if somebody slides in and sits beside me halfway through, then that's OK.
The Toronto Coalition for Better Child Care is a network with a membership of more than 250 programs across the amalgamated city of Toronto. Our members include non-profit child care programs as well as child welfare agencies, children's services organizations, social planning councils, family resource programs and licensed home child care providers. The Toronto Coalition for Better Child Care works towards a system of child care which is high-quality, regulated, accountable, affordable and accessible to parents.
On behalf of the Toronto Coalition for Better Child Care, I would like to thank you for this opportunity to speak today on the budget for 2000 for the province of Ontario.
Why do we need child care? Why must it be quality child care? Why does it have to cost so much? I know those are questions that you ask yourselves probably on a regular basis.
Why do we need child care? The reason we need child care now is the same reason we've always needed it: Parents need to work-the pressures on families and the absolute necessity for them to work, brought on by the financial pressures of the last few decades or the policies of this government over the past five years. The reality is that the vast majority of parents of our young children work, or they are in school, or they want to be. That includes, across Canada, 70% of the mothers of our young children, and in Toronto the number of mothers working must be much higher. Parents work. They want to work. You want them to work.
Child care has been around in Toronto for over a century. It has grown steadily since the end of the Second World War, when many mothers had to join the workforce. Over the last two decades, we have seen literally hundreds of programs spring up across this city and hundreds more across this province, not really because there has ever been any government plan to address this crucial need for families, but because communities have seen the need. It is communities that have worked incredibly hard, on their own, making the most of the resources available to them to put this system in place, persuading governments to support them along the way. It is testimony to the value that parents and communities place on child care that they would work so hard to build themselves a system.
If we need to have child care, why must it be quality child care? Because we all know now that the early years of a child's life are absolutely critical to their overall development. The results of extensive research, including that commissioned by yourselves, support the importance of quality early childhood development opportunities for young children, and with the vast majority of our parents in the workforce, this quality programming has to happen in child care.
Why does it have to cost so much? Child care is expensive. But surely you would expect that the dollars required to care for the different individuals in our society will relate to how vulnerable those individuals are. This should not surprise us. Of course, it will cost a lot to provide a quality child care system, just as it costs a lot to provide for the elderly, the sick and those with special needs in our society. But if we want to build a strong society, those of us who are able and strong must support all of those more vulnerable individuals. Every parent knows that young children take an awful lot of caring for. But we must care for them, and we must care for them well, or we will pay an enormous price in the future. The earlier speaker, Fiona Nelson, reminded you that although children may only be 20% of our population now, they are 100% of our future.
As we enter this new millennium, a turning point, surely, that we could harness here, some 13,000 children wait for a subsidized child care space in the city of Toronto, and thousands more wait for the privilege of paying the full fee for a child care space in this city. Since the introduction of this government's Ontario Works program some years back, another 21,000 children could require a child care space in the city of Toronto. We are looking at well over 34,000 children in Toronto in need of child care spaces now. By the way, 34,000 is the exact number of babies that are expected to be born in Toronto this year. We'll count them and we'll let you know how close we were. But this is clearly not a problem that's going to go away.
We know that over the past five years this government has had a very hard time coming to terms with the high cost of child care, especially in Toronto. That was undoubtedly one of the reasons that in the fall of 1998 the former Minister of Community and Social Services, Janet Ecker, ordered a review of the Ontario Works workfare program and the child care system of Toronto. We are not sure exactly what you were expecting to find when you commissioned this report, but at the end of what must have been a very expensive audit, this is what you were told: It is inconceivable that the Ontario Works program could succeed in the long term with inadequate access to child care.
We have a huge problem in Toronto. There have been massive cuts to our province's child care system over the last five years. An analysis of provincial allocations for regulated child care shows a difference of $70 million between 1995 and 1998, and it is our underpaid child care workers across the province who have been carrying this system while this government balances its books, the vast majority receiving no pay increase for over six years.
The systematic underfunding of this system for the past several years has led to a problem of catastrophic proportions. In Toronto, our child care system is facing a total of almost $50 million in service and financial pressures brought about by both the cuts and the policy changes over the last few years at the provincial level.
The service and financial pressures currently facing child care in Toronto arise from the following main sources: failure to pay the operators their actual costs of providing subsidized child care; insufficient child care fee subsidies to meet the service need or demand, especially since the Ontario Works program came in; the impact of school closures on child care located in school facilities; the playground retrofit and replacement required by licensing; the health and safety expenditures required by licensing; the loss of user revenue for provincial policy changes; funding pressures associated with downloaded programs-wage subsidy, family resource programs, special-needs resourcing; pay equity. These are the financial services and pressures that our city is facing at the moment.
There is no way we can hold on to our child care system without this government's help. Everybody else is pitching in. The school boards are pitching in. City council is doing its best. The parents across this city are working as hard as they have ever done before.
Over the last five years, parents and underpaid staff have had to work harder than ever before to defend the system they built. As you have seen, parents will work hard and they will fight for quality child care for their children. They will fight for it because they know the value of it. The vast majority of them have to pay the full cost of it. They will fight you for quality child care, but they are also very willing to work with you to preserve, build and expand this system. They will not let you put their children at risk while you get your books in order.
I have three very clear recommendations I'd like to make to this committee and then I would love to hear, as I know you would, from Theresa Radwanski, who has her hands right on the program.
Our recommendations would be: Restore the full level of funding to the licensed child care system in this budget in real dollars. That means those dollars have to be there, not just moved around.
Work with the municipalities to really examine the possibilities explored by the KPMG report. You paid for that report; now be prepared to fund appropriately so that we can see some of those recommendations they came up with. Listen to the municipalities and expand this system so that it can adequately meet the demand.
Finally, but certainly not least of all, please work with the parents of child care programs: not handpicked, but nominated by the community as ones who really know the programs. They are the users, the governors and the funders of this system. No one knows this system better and no one is more motivated to make this system work well.
Ms Theresa Radwanski: Hi. I'm Theresa Radwanski. I have been a supervisor at Children's Circle daycare for the last 20 years. The daycare has an excellent record and reputation and is based in the Riverdale community of Toronto. I'm here today to urge you to put the necessary funds into the daycare community, and that when there is a budget or policy change, there are realistic time frames and consultation with the daycare community.
Let me first tell you about Children's Circle daycare. It is a private, non-profit charitable organization based in the heart of downtown Toronto. As supervisor, I juggle the needs of 107 children plus 200 parents, along with 26 staff. I work with a volunteer board and I oversee a budget of over $1 million. We provide care for 10 children with special needs. This year, we averaged 25 children who are on subsidy.
Children's Circle is a special place. We have had an excellent safety record and have developed the reputation of a top-quality program with a caring, stable staff. On average, the children stay at least six years, and my staff an average of 10 years. The daycare is made up of an ethnically and economically diverse community of children and staff. Many children visit the daycare for years after they are enrolled. Parents often tell me that their children learn more at Children's Circle than they do at school. We offer a very creative program. Today-why I'm late-we were celebrating Chinese New Year and having a dragon dance. We're also going to celebrate Black History Month. We have a dance group coming in, a youth steel drum and an African storyteller.
Last year, Children's Circle had a really tough year. The children used to run, climb, play in tunnels, swing and play on the climber. Now they have a sandbox. On the old structure, the children learned new skills as they moved to more challenging equipment. Now the staff are challenged daily trying to provide adequate stimulation in an unstructured free play space. It is crucial that the children have this area to play in so that they get social and cognitive development.
This year at Children's Circle, everybody worked harder than ever before: the board, the staff and parents. As a group, we have fundraised and reviewed policies and staff salaries. Over the last few years we have struggled to have a break-even budget. Some 74% of our budget goes straight into staff salaries, and 10% goes into rent. That leaves 16% for food, insurance, trips and anything else we need. This year we have sold calendars of the children's artwork. We had a barbecue and a silent auction. All of this was very work-intensive for staff and families. We made $6,500.
It is a difficult balancing act, setting fees high enough to adequately reward the staff and low enough to be affordable to our families. The board of Children's Circle has had to make some tough choices. The gap between full-fee-paying children and subsidized children is now $1,500 per child per year. We have to have our costs met. We have to have ongoing funding for pay equity. This year the board has decided to reduce the number of subsidized children because we cannot run the kind of deficit that we have been seeing.
Let me clarify the situation at Children's Circle. The ministry came out with a directive. There was no money. There was a collision course with the child care community and Children's Circle, and the children lost their playground. Parents, staff and board put in an amazing amount of time to try and solve the problem. The government looked really bad. Now our playground will be funded through health and safety money.
What should have happened is that the ministry prepares a directive, works with the child care community and the municipalities, works with the child care programs to see how the new funding can be matched, and come up with the funding needed to do that. The money flows, playgrounds get fixed, and both parties look good.
Let's learn from the fiasco at Children's Circle. The children have had no playground for over six months. The staff cannot provide a program that was needed outside. Our parents were outraged by the process and they rallied to help fight for a new playground. I, myself, put in 500 hours, which was taken away from my role of being a supervisor at the day care.
Let's work together in the future so there's a win-win solution and the children of Ontario get the best care they deserve.
The Chair: Thank you very much. I'll start with the official opposition. We have approximately three minutes per caucus.
Mrs Pupatello: Thank you for your presentation today. I'm curious to know exactly the number of spaces, because I know your organization tracks them. This government, as my colleague mentioned to the group that presented earlier, is famous for saying they have spent more money on child care than ever before. That is always astounding to me because I've attended many of the meetings in the Toronto area as well, attended by hundreds of parents who are outraged by what is happening in the child care community. I can't find any of the new spaces. I'm interested to know where you think all of the new money is that the government has supposedly put into the system.
Ms Mercer: If we could find it, we'd get our hands on it so fast. There has not been more money put into this child care system. You can call a number of different things "child care." You can order your child to sit at the kitchen table all day and call that child care. We're talking about a regulated, accountable child care system. There has been no more money put into that child care system. In fact, we know that $70 million has been taken out of that system.
The only money that I would guess Mr Eves is referring to each time he says, "We've put more money in than any government before us," etc-and I can tell you, parents will cringe all over the province if we hear that line again, because people know it's not happening. I can only assume that maybe that money is the 21% cut in welfare spending. Maybe it's the $70 million they took out of the regulated child care system. Maybe that's the money they are now handing out in the form of benefits or sort of allocations so that for the welfare mother who goes back to work, who does get to work, she then gets an allowance per day per child to purchase child care.
Mrs Pupatello: You mentioned in your report, as did the group before you, in regard to workfare and what the requirement was going to be, assuming that this is what the government wants to happen, that they had done an extensive review of the Wisconsin model at the time and they failed to-or maybe they missed an entire chapter when they were reading the book on that model that talked about the huge investments which that state made in particular in child care. What they recognized at the end of it all was that it was a very expensive program to implement, because they deemed that their goal wasn't a cost-saving measure, it really was appropriate training, as they saw it, and they couldn't make it happen without the child care component. We've raised that in the House over the course of the last four years, that if that's the kind of program they need to implement, it's not going to happen. They will not be able to revisit, revise and improve a welfare system without a child care component that has been completely neglected by this government.
Ms Mercer: That was the strongest message that came out of the KPMG report, the audit that the government requested and paid for to tell it, presumably, what's going wrong, how come municipalities can't put this Ontario Works program in place. The words were-and it was quoted by me and it was quoted by the previous speaker-"It is inconceivable that the Ontario Works program could succeed in the long term with inadequate access to child care." That seemed very clearly stated. You can't have 21,000 mothers go back to work if you don't provide child care for 21,000 children, and that's just in Toronto.
Ms Pupatello: They managed to cherry-pick the parts that they wanted, that seemed convenient or was more in line with their message.
Ms Mercer: That might look good on paper but it can't work, because a mother, no matter how badly you have cut back her welfare and how badly she needs that money-and there are women in Toronto, and single parent fathers too, who are hurting so badly through these kinds of cuts. There is no way with all the goodwill in the world that they can go off to work if they can't find child care. They can't find child care within the regulated system.
Your government talks a lot about choice, but if there isn't the regulated system, then that's the bit of a choice that's missing in all of this. Certainly with 13,000 already on the waiting list in Toronto, that choice isn't there. I should have, but I don't even know the dollars that have been allocated for child care on a day-to-day basis for that parent to go back to work, but I can tell you that you can't get child care, even the neighbour in the apartment next door, for under $25 or $30 a day. That's what people charge. I can't board my dog in Toronto for less than $18 a day. It is so upsetting to hear that that kind of dollar allocation is less than I have to pay to put my dog in a kennel.
Ms Marilyn Churley (Broadview-Greenwood): Thank you very much and welcome. Theresa, I really want to take this opportunity to congratulate you and all the people who worked with you on your victory in the playground fight. As you will recall, I asked a question in the Legislature about that, and at the time, if I recall, the minister, as all the ministers do when they're asked questions about child care, we get the litany, "We put more money than your government and any other government before into daycare," instead of addressing the issue that's put before them, which was what was done in this case. But I was so happy to see through your very hard work-you have no idea how much work this woman put into that particular issue and succeeded. The message here is, you can fight these guys and you can win sometimes.
I raised that because, thank you for pointing out yet again that when the ministers and the Premier say you put more money into child care than ever before, it isn't so. Hopefully the committee members here are taking that to heart, which is why these committees are so important, and can go back to the finance minister and to the ministers and say: "We've heard it. We've got documented proof that in fact when you say you're putting more money in, you aren't. You're playing with the numbers here. We have a series of crises in the child care system that need to be addressed, and furthermore people don't even want to play the game of who put more money into the system, when and where. The issue now is, there's not enough money going into it and there's a crisis."
I got my start and partly what got me into politics was fighting for child care in Withrow school in my riding. By the time I got it-there were empty classrooms there-I didn't need it any more. But I'm happy to say it's still there in that school for other parents. I just find it extremely disheartening that we're going backwards now instead of forward, particularly with all the studies.
If I have time left, my question would be: Over the past few years, with so many reports, early childhood education is the issue here; it's not about babysitting. Could you expand on that a bit, why we need to expand not just child care but the licence in terms of giving the children that early education that's so important?
Ms Mercer: This is not new research. What is new about it is that there are now so many studies out there and so many reports and so much research that nobody can get through the room without tripping over it. I remember 25 years ago in teacher training college the line being, "You show me the five-year-old and I'll show you the man." That is so true. We have a window of opportunity in those first five years to work with kids. Also, as the saying goes, after that you're really just talking about a draft blowing through here, because whatever you do after the five years-not that it's not worth doing too, but it just takes so much more to impact on the child's life. Those early years are so critical, and they're critical whether you're talking about parents in the home or the grandparents or the caregivers at the family resource program. All of these things are important. The research is overwhelming that we must work with children when they're young.
Look at the other piece that tells us that the majority of parents of young children are in the workforce, and if they're in the workforce-and 70% of the mothers of young children are in the workforce-then it stands to reason that we have to have that quality early childhood development piece happening in the child care environment. It's not just enough to do the library thing and the family resource program thing when 70% of your children are in some form of child care.
Mr Galt: Thank you very much. I appreciate your presentation and also Ms Churley's comments, entertaining as usual.
Ms Churley: And true as well, I may add.
Mr Galt: The problem I'm struggling with as I sit here-and I'm trying to be serious with this-is that we've ended up in an "I said, you said, we said, she said," type of thing. You're saying we have exaggerated the figures. I haven't heard many figures coming from you people as to how much, other than, "We need more." We had a lot of groups coming before us that need more money. That's kind of a standard-I'm not being nasty. It's a struggle as a government as to where the spending should be of your money. It's not our money, it's your money. Others come before us saying, "You've got to get that debt down." So society tries to balance that out.
Let me just mention a couple of figures. I heard you say you didn't want to hear them ever again, but let me share them with you, and then I need to hear back from you, in hard dollars, what are we talking about? Where is it at? For example, I'm being told-and I'm not a specialist; child care isn't my background. Mine is veterinary medicine. I love to hear this $18 looking for a kennel. That sounds marvellous. Maybe I should be getting back into that business.
A 15.2% increase in child care spaces, for 19,000 spaces; for Ontario Works, some $40.2 million is being spent; for the LEAP program-Learning, Earning and Parenting-$25 million. We're up to $738 million; a 30% increase, or $173 million. These are the figures I'm given and then I come here and I hear you saying: "You've cut, you've slashed, you're not giving us anything. It's worse than it's ever been." I don't understand. How much has been cut? If so, how much are you saying needs to be replaced? What I'm seeing is a 30% increase. I don't understand. Sorry. I'm just a politician. Maybe you can explain.
Ms Mercer: Yes, and you're a politician in the government. This is really of concern to us because if none of us really knows what's going on here, then it sounds as though we should maybe be going through the freedom of information act to access those. I strongly urge the opposition to do exactly that, to get to the bottom of this, to ask for these hardcore numbers to be out on a sheet of paper for us.
I haven't come prepared with your numbers to explain those. As to this $70 million that has been taken out of the system that I referred to, I can tell you that that information comes from Child Care in Canada: Provinces and Territories (1995 & 1998). It has been put out by the Child Care Resource and Research Unit of the University of Toronto.
The LEAP program, the Ontario Works program, the way that those dollars are allocated is that you're requiring a woman who's had her welfare cut by 21% to go out to work. That's not going into the child care system; that's in your Ontario Works program. That I think is where the confusion is coming from. These are the dollars. I don't know enough about how the government is counting its dollars. I tune into the budget and will tune into the budget just like everybody else. I don't how those dollars are being counted.
The Chair: With that, we've run out of time. On behalf of the committee, we thank you very much for your presentation this afternoon.
Mr Phillips: Mr Chairman, maybe we could ask the staff to request of the ministry an explanation-some of those figures that Mr Galt had might be of interest-of the numbers on the increase in spending and where it's gone and the spaces that have gone. That would clear up any confusion.
The Chair: I don't have any problem with that. We'll follow through on that. We're going to have to recess because the 3:30 presenter has cancelled. However, I would like to point out to all the committee members that we will be flying out from the ESSO Avitat-I don't think it's a terminal, it's probably a hangar-on Sunday night at 7 o'clock sharp. We'll recess until 4 o'clock.
Mr Arnott: Is the 4 o'clock presentation in the building? Do we know?
The Chair: I don't know. We tried to get the 5:30 moved up, however, there was nobody, so we'll recess until 4 o'clock.
The committee recessed from 1532 to 1601.
CANADIAN ASSOCIATION OF NOT-FOR-PROFIT RESP DEALERS
The Chair: The next presenter is a group from the Canadian Association of Not-for-Profit RESP Dealers. Gentlemen, could you please state your name for the record.
Mr Tom O'Shaughnessy: Mr Chair, my name is Tom O'Shaughnessy.
Mr Ken Goodwin: My name is Ken Goodwin.
The Chair: On behalf of the committee, welcome. You have 30 minutes for your presentation.
Mr O'Shaughnessy: Mr Chairman and members of the committee, it's a pleasure to join you today. My name is Tom O'Shaughnessy. I'm the executive vice-president of Canadian Scholarship Trust Foundation. I'm here with Ken Goodwin, who is the executive vice-president representing USC Education Savings Plans. We have provided for you a handout to leaf through as we go through our presentation to ease the process.
Mr Goodwin: If you go through this handout, beyond the basic introduction, the first slide I want to refer to is our goal. Our goal today is to demonstrate how the Ontario government can make post-secondary education more accessible and, at the same time, reduce student loan debt. That's what we'd like to show you today.
Mr O'Shaughnessy: Last November, we made a presentation to the federal finance committee recommending increased benefits to low- and moderate-income Canadians. At that time and with them, we also recommended that the various provinces should be engaged to participate in the Canada education savings grant program.
Mr Goodwin: The next slide: Last week, the federal government announced that they would forgive $100 million to the banks who were not able to collect outstanding students loans. This is a clear indication, we believe, that the student loan burden is just too onerous for the graduating student. As a result, it is very costly for the Ontario government as well.
Mr O'Shaugnessy: If you turn to the next page, you see that the federal government has made changes to the Bankruptcy Act to potentially try and deal with the number of students who are declaring bankruptcy early after finishing their post-secondary education studies. The move to a 10-year hiatus on bankruptcy, in looking at the statistics, seems to be very successful, but in reality what is happening is that many of these students actually go to third parties, to organizations that do provide credit to them, pay off their student loans and then ultimately declare bankruptcy immediately. So the problem hasn't gone away; it's just been shifted from the public sector over to the private sector and ultimately will start shifting back on to the public sector once the private sector recognizes the impact of this.
Mr Goodwin: If you turn to the next page, you've seen in the paper, January 26, there was an article and an editorial in the Toronto Star which shows how the provincial government has received some negative reaction to the use of the Canadian Millennium Scholarship funds. This again is just another counterproductive process that's going on. In the presentation, we also have a copy of the particular editorial that we were speaking to.
Mr O'Shaughnessy: One of the things we, as organizations, have been doing is trying to find ways that we can encourage low- and moderate-income families to participate in the program. We have been having discussions on the financial level but also on the social level with individuals who are really interested in the development of children to, ultimately, post-secondary education.
We've had discussions with Dr Fraser Mustard. I'm sure many of you are aware of the report that he issued for the Ontario government on the early years of development of the child. We think that there are some opportunities to be able to somehow blend this social process of trying to get the young kids developed appropriately with the financial process of having parents set aside money for their post-secondary education.
Mr Goodwin: The next slide: The Ontario government has many programs that do help parents concerned with post-secondary education. We can see that coming forth with things like the early years study. But if you go on to the next slide, there still continue to be obstacles for the students. The graph on that slide, which talks about the cost of tuition, clearly shows that tuitions have grown at five times the rate of the consumer price index over the time period of five years. In fact, for Ontario, our studies show that the average tuition has risen from $1,653 in 1990-91 to close to $4,000 this year, which is clearly an increasing burden for the students.
Mr O'Shaughnessy: If you look at the next page-not something new to you today; I'm sure the Canadian Federation of Students has gone through the growing student debt problem and the defaults that are being generated out of it. Student loan defaults, according to Statistics Canada, have grown over 20% between 1997 and 1998. These defaults are costing all governments a significant amount, with no end in sight. We've looked at the Canadian Federation of Students' proposal, which is more short-term funding to deal with the issue. What we're talking about is more of a long-term plan to move away from an immediate funding process to a longer-term funding process that will reduce the requirements for student debts in the long term.
Mr Goodwin: In the next slide, I guess we talked a little bit about the fact that the Canadian education savings grant was introduced in February 1998 by the federal government. The purpose of that grant was to encourage people to save their own money for post-secondary education, with participation on the side of the federal government. We have found through studies that, while this has been a very successful program, still only about 13% of eligible parents have opened an RESP as of 1999. There are therefore still a limited number of people who are actually taking advantage of the Canada education savings grant. In fact, as we're a not-for-profit organization and we do focus mostly on the lower-to-moderate-income families, the feedback we're receiving across Canada is that the lower-to-moderate-income families are less aware and have less understanding of this program and are therefore less motivated towards it. That's an issue that we're concerned about.
Mr O'Shaughnessy: On the next page you'll see that our objectives today are to increase the amount of savings across the province for Ontario residents for post-secondary education; in the long term to lower student loan costs and debt and the write-offs related to those student loans and debt; to lower the number of students who are dropping out of post-secondary institutions-I think our studies indicate that the majority of dropouts are related to financial difficulties. The programs that we are in show that a significant number of the children who have an RESP set up will actually go through and complete their education-a much greater participation rate than you would have in the general public. And, as well, to increase the affordability of post-secondary education, especially for moderate- and low-income families in Ontario.
Mr Goodwin: If you turn the page, what we would like to consider is that we need to target the low-to-moderate-income families. They're the people who need most to save for education. We would like to increase the number of families taking advantage of the Canada education savings grant, which would in turn motivate more parents to save earlier. That's our strategy and our motivation.
Mr O'Shaughnessy: The general recommendation that we'd like to provide is that we encourage the Ontario government to become involved in the RESP regime, to look at the RESP very much like the RRSP, where it's in effect a jointly supported program of tax incentives for parents and individuals in the province to carry out an appropriate process of savings.
Mr Goodwin: If you turn the page again, the specific recommendation is for financial incentive. We would like to recommend that the province provide a financial incentive of a 10% top-up towards education savings, similar to the grant from the government of Canada. This would encourage more Ontario parents to save for education. It would also encourage more educated workers to stay within Ontario to take advantage of this regime and fight possible shortages of skilled labour and that sort of thing.
We believe that the grant regime, if it's large enough, will incent the lower- to moderate-income people because it will motivate them to put some of their money away to participate. This is a long-term solution to a long-term problem. We won't see any reduction in student loans in the next year or two as a result of it, but they'll have more ability to go to post-secondary education if they start putting away some money now for the future.
Mr O'Shaughnessy: The next page is some other, secondary recommendations. There are many programs that the Ontario government provides in terms of communication and funding to Ontario residents, and we'd like to pursue an opportunity to educate especially the lower- and moderate-income families more about the benefits of this program, and the benefits for their children, of setting aside small amounts at a very young age for their children's post-secondary education.
One of the problems we're identifying right now in the various communities is that social service agencies do not allow individuals who are relying upon social assistance to accumulate any amounts of savings for any purpose. There is a small, diminimous amount of savings, but not a significant amount. So we have many families who are in a situation where they've saved for five or 10 years for their child's education who, as a result of family circumstances, ultimately have to apply for welfare. Because these education plans have amounts over the diminimous, they are being instructed to actually collapse them to be eligible for welfare benefits. What we'd like to see is some kind of a process that would allow them to maintain at least a basic amount of savings in this tax-sheltered vehicle for their children's education, with some kind of reporting process to the government if the plans were collapsed by the individual at some point in time. That's an example of how we could use the cross-promotion.
Mr Goodwin: The last two slides in the presentation simply provide some more information about the Canadian Association of Not-for-Profit RESP Dealers and information about how to contact us. We have over 600,000 RESP accounts today and we service about 300,000 children's education savings through our various companies, in about $2.5 billion in assets. As an example, we've paid out over $200 million into the education system since 1998 just from our companies alone. That money is helping to support students in their ability to pay for their tuition and housing costs and that kind of thing.
It's been a pleasure for us to make this presentation to you today. We look forward to any comments, or if you wanted to have any questions. Hopefully we can work towards some solutions.
The Chair: We have approximately five minutes per caucus. Mr Christopherson.
Mr Christopherson: Thank you for the presentation. Could you just expand a little bit further on the collapsing of the fund in the case of social assistance. I don't profess to be an expert on the rules of RESPs, but I thought that once it was committed, you couldn't touch it, that it was dedicated to your child's education and you could only touch it if they chose not to go on to education. I didn't realize you could collapse it any time at will.
Mr O'Shaughnessy: You can collapse it with significant penalties. Obviously, the income that has accumulated in the plan would then either revert to other individuals or to an educational institution, and the person would be able to withdraw their savings, but that would be it. So it's a significant penalty to actually withdraw at that time and then potentially try to start up at a later time.
Mr Christopherson: Have you made this proposal to the government directly?
Mr O'Shaughnessy: No, we have not.
Mr Christopherson: So this is the first go around?
Mr O'Shaughnessy: This is the first.
Mr Christopherson: I hope they would be open to that, because there's no real cost; at least the cost is negligible and, given the fact that the cost of education is going up, it's one way the government can do something without spending a lot of money.
Mr O'Shaughnessy: The concern obviously is an individual building a significant savings account in one place while collecting benefits from the province in another place. But because, as you say, these are restricted amounts, potentially, if there is a capability for us to report a collapse by the individual, the individual can collapse it on their own at any time with those significant penalties. It then would create a check-and-balance process so there isn't any abuse of the program.
Mr Christopherson: Do some of the penalties include a return of the money the federal government has given, or do you keep that and you just have to pay an increased tax penalty? How does that work?
Mr O'Shaughnessy: The federal government grant that would have been received on the program would be repaid to the government. The individual would lose the benefit, the 20% that was accumulated.
Mr Christopherson: Do they have to pay tax on that money?
Mr O'Shaughnessy: No. The contributions come in on an after-tax basis, so when they get their contributions back, it would be on an after-tax basis.
Mr Christopherson: So it's the money off the total capital that they would lose.
Mr O'Shaughnessy: That's correct. The income on the grant would be lost.
Mr Christopherson: Do you have any figures in terms of projections of where you see the cost of post-secondary education going if we continue down the road that Harris is taking us?
Mr O'Shaughnessy: Do you want to comment on that one, Ken?
Mr Goodwin: Obviously, we have our statistics of the historical development. Based upon what we have seen so far, it looks like the rise is going to be at least another 10% or 15% per year for the next couple of years until things settle down. The question becomes what level of funding the government is providing, and we don't have any insight into that.
Mr Christopherson: Has the federal government given any indication that they are going to do anything else with this? You talk about treating it from a tax point of view, the same as RRSPs. Is there any indication that they are looking at that?
Mr O'Shaughnessy: We have had some discussions, but I don't think anything really serious at this time.
Mr Christopherson: You said one of the goals of your organization is to apprise people of this opportunity, particularly moderate-income families. Can you expand for me on what sorts of things you are doing: Where do you make presentations? Where are you trying to penetrate the public psyche?
Mr O'Shaughnessy: We go into the community, anyplace you find people with young kids: malls, country fairs, that kind of stuff. We tend to do most of our promotion and advertising at that level. Most of the larger banks and financial institutions-mutual fund companies-advertise on television and in the newspapers, generally targeting higher-income individuals.
Mr Christopherson: I worry that young people are going to grow up thinking all this stuff is the way it has to be. It has only been in the last few years that there has been an acceptance by parents. If we keep going down the road we are, we'll be into the American situation.
There are so many American families where the only way they are going to get an education for their kids after high school is that they would have salted money away, they have to borrow money or they have to be wealthy to start with. It has always been a huge thing for Americans. If you watch old American movies, even decades ago they talked about having to set aside money for their kids' education.
We have never had that. This is something new. In the years when I was growing up, as long as you had the ability, then you were going to go to college or university, period. Full stop. Now we are into this world where you have to start planning 10 or 20 years ahead to make sure your kid can go to university, at a time, and I keep hearkening back to this, when the economy is booming like it never has boomed before. In many ways, the world in Mike Harris's Ontario is upside down. It's nuts.
The Chair: For the government side, Mr Arnott.
Mr Arnott: I'm not sure I see anything wrong with encouraging parents to set aside some money, if they have extra money, for their children's education, and encouraging it at an early age. I think this program that the federal government has initiated is good and will benefit a lot of families over the next number of years.
I want to ask you a question about your first recommendation. I want to make sure I understand the distinction between the tax treatment today of an RESP and an RRSP. You are suggesting that the tax treatment should be the same. Can you tell me the difference?
Mr Goodwin: I'll answer that. As an example, with an RRSP you get a federal tax deduction and a provincial tax deduction. Say you're at a 25% tax rate federally and whatever Ontario tax rate, so you get a two-pronged tax deduction. On this program-and we agree with it-instead of giving a tax deduction, the federal government is putting away a grant. The effect to the taxpayer is essentially the same: They get a 20% credit. But there is no provincial participation in that. We are suggesting that the provinces get on the regime as well and put in their side of it.
Mr Arnott: Do you have any idea what that would cost the treasury of Ontario? Do you know what the federal government is spending on it?
Mr O'Shaughnessy: Obviously that would depend on the parameters that would be established. But our preliminary estimates on the top end are somewhere in the $50-million to $75-million range per year. Again, if the program is extremely successful-as we've seen, the federal government has reaped some significant rewards; it's been an extremely successful program for a certain group of the population-we anticipate that it might be something higher than that.
We recognize that the program actually has penetrated the higher end quite nicely. It's really what I would call lower- and middle-income individuals, who potentially would put away $20 to $30 a month, who are the ones who would actually get excited about it and potentially participate. So in terms of the number of people participating, I think it would be quite significant. The dollars per individual would be relatively small.
Mr Arnott: I agree. I think the mutual fund companies are increasingly trying to promote this as one of their important product lines, not quite as aggressively as we're seeing with RRSPs at this time of year.
Mr Goodwin: I'd like to comment on something that was said over here as well. Years and years ago education was taken care of by the social structure. Our company's been around for 30 or 35 years, and we see lower- to middle-income people, largely, and they're saving small amounts of money, but we also see the track record, that those students do go on to post-secondary education. There is a lot higher participation in post-secondary education than the general averages: 85% of the people who actually save the $50 a month for 18 years. It doesn't pay for their education but there is this motivation in the family because they are putting some of their own money away. It really does help to encourage people to go on to post-secondary education.
Mr Arnott: Because I'm sure as they're saving the money they're talking to their kids about the fact that they're saving this money with the objective of sending them to university at some point and all of that.
Mr O'Shaughnessy: Absolutely. It's the process of accepting the responsibility for sending their kids on, and the children then accept the responsibility to ensure that they go through and complete the education. It's a proven fact.
Mr Arnott: Thank you very much for your recommendations.
The Chair: Are there any other comments from the government side? If not, I'll go to the official opposition.
Mr Kwinter: I have two questions. The first one: I'd like an explanation on one of your first slides where you say, "To bypass this rule," of not being able to go bankrupt, "students have been taking out lines of credit, paying their student loans, and then declaring bankruptcy." I don't understand how that works. Do they go into the bank and say, "Look, I have an $8,000 loan; I want you to lend me $8,000 so I can go bankrupt"?
Mr O'Shaughnessy: They're not going into the banks, actually. If you have seen what's going on in the credit markets these days, there are some large organizations that have come into the Canadian marketplace recently that are offering unsolicited lines of credit for individuals who meet certain qualifications. They don't go through a pre-qualification screen. So what has been happening is that in those situations the individuals have been taking advantage of that credit and then turning around and going bankrupt.
I can tell you personally my experience. I sit on the board of the Credit Counselling Service of Toronto. We've dealt with a number of situations where individuals have come in for advice from us and have gone away and said, "I think I'm going to do something different," and have advised us that they've gone through this process. It is happening in Ontario and across the country. Very soon what's going to happen is that these organizations that have been offering this free credit are ultimately going to go through a pre-qualification process and the problem is going to re-arise.
Mr Kwinter: You said that you have no trouble penetrating the high end. It would seem to me, when we have citizens in Canada with the highest debt ratio ever, that this would only be attractive to people who have disposable income. To borrow to do this is counterproductive because they don't have any real benefit other than if they get the same tax treatment as an RRSP and if there is some grant money in there that makes it attractive for them to do it. But it would seem to me-and I'd like to get your comments-that to get to the economically lower- and middle-income people who are finding it very difficult just to stay ahead of the game because of what's going on is going to be very difficult.
Mr O'Shaugnessy: It is difficult and that's why we're here, obviously, to say there has to be a joint responsibility to try to ensure that they do the right things. Oftentimes we say that the role of government is to do the right things for the people. Sometimes we have to show the people and encourage them to do the right things for themselves. The process of moving away from a debt society back into a saving society, which we had maybe 25 or 30 years ago, I think is a good initiative. The more that it can be jointly handled and the more of an incentive there is for the parent to be able to put aside even only $20 or $30 a month, it means that it breaks that cycle of debt, where the child has the capability to be able to go on, gain some skill sets and potentially without debt be able to be a contributing partner to society.
Mr Phillips: Thanks for the presentation. Just a request: You mentioned earlier that based on some analysis you did, of the people who appear to be dropping out of school, many or most are doing it for financial reasons. It would be helpful, if you've got any information on that, to send it to the committee.
Mr O'Shaughnessy: Absolutely.
Mr Phillips: Just so I understand the proposal, you're suggesting-the way it currently works is, people can put up to $1,000 a year into this?
Mr Goodwin: Up to $4,000 a year, but they get a 20% grant from the federal government on the first $2,000 they put in per year per child.
Mr Phillips: You could put $2,000 in and get a $400 grant from the government?
Mr Goodwin: That's right.
Mr Phillips: The federal government?
Mr Goodwin: The federal government.
Mr Phillips: Does it then accumulate tax-free?
Mr Goodwin: Yes, it does. It is given to the trustee who then invests it. It accumulates tax-free on behalf of the students or the subscribers, as they call them, and it's allowed to be used for education purposes only.
Mr Phillips: Right, and it has to be with an organization such as yours that is licensed or registered to administer this?
Mr O'Shaughnessy: That's right. The federal government has set up a whole process of monitoring. So the infrastructure is there already to handle the process.
Mr Phillips: And your judgment is that the cost for the province to essentially provide half of what the federal government's doing in the way of annual grants would be $50 million to $70 million in Ontario?
Mr O'Shaughnessy: That's correct, $50 million to $75 million in Ontario.
Mr Phillips: The challenge, I'm sure, for all of us is how many more people would invest in this as a result of that, because presumably all those who were going to invest anyway under the old one would continue to, and this is, dare I say, like a bonus for them, although it helps a lot. Have you any indication or any estimates for us of how many incremental people might do it?
The students I worry most about in the future are those who come from families of very modest means where the family early on is saying, "I just don't know how we're going to do this," and the student fairly early on starts to do that. This particular program you're suggesting isn't targeted specifically at them. I don't know whether you've thought of any other things we could do along these lines that might be even more targeted at families of more modest means.
Mr O'Shaughnessy: Obviously we've had some discussions about how we structure the program to make sure that those with modest means would take more advantage of it. Potentially, one of the ways would be that the Ontario government money could only be used for institutions in the province. That way, the cost of the program might be somewhat less and could be a higher amount that's allocated to those people who stay within the province. Generally speaking, our experience has been that the lower- and moderate-income people stay very close to home when they do pursue post-secondary education. That's one possibility.
We have talked to the federal government about certain things related to the child tax benefit as well and whether or not we could get some process to get some-not kickback but a rebate if individuals participated at the lower level. We're looking at many ways from that standpoint, but I think the concept is, and what we've seen is, that if the carrot is big enough, then individuals in the lower and moderate income levels will say, "I think we do want to participate."
The Chair: On behalf of the committee, gentlemen, thank you very much for your presentation this afternoon.
ONTARIO TRUCKING ASSOCIATION
The Chair: The next group this afternoon is the representative from the Ontario Trucking Association. Could you please forward and state your name for the record.
Mr David Bradley: I'm David Bradley, president of the Ontario Trucking Association.
The Chair: On behalf of the committee, welcome and you have 30 minutes for your presentation.
Mr Bradley: It's a pleasure to be here. I appreciate the opportunity to talk to you. Of course we could talk about all kinds of things, but I'm going to try to focus on one issue. But before I do that, why I think it's important for the trucking industry to be here-and I'm always somewhat mystified that some of these numbers get lost in the mist. But at least 40% of Ontario's GDP is dependent upon trade; 90% of that is with the United States and 65%, overall, is with four or five of the contiguous northeastern states. Trucks haul 80% of Ontario's trade with the United States. About 30% of the province's GDP moves by truck. We've seen a doubling of that trade over the last five years. We'll see another doubling in the next three to five years, to the point where now we have a truck crossing the Ontario-US border once every three seconds. You could say that Ontario moves by truck and therefore distortions in our marketplace are not only going to impact directly on our industry, obviously, but on the economy overall.
In terms of our own situation, trucking is a low-margin, highly competitive business. There are tens of thousands of trucking companies licensed in the province of Ontario alone. We compete on pennies. We have been in a free trade marketplace for 12 years, so we compete with carriers from outside the province, whether they be from the United States or from Michigan, so anything that tips the balance from a competitiveness point of view impacts upon our industry.
Trucking is one of the major employers in the province. On a national basis, the 1996 census of Canada, which is the most recent, found, and I think this surprised a lot of people, that truck driver was the major occupation for males in Canada. In fact, over 220,000 Canadian males said their primary occupation was that of a truck driver. We indeed have a qualified shortage today. We could employ more people if we could find them.
In Canada, in Ontario, transportation costs are a significant component of the final cost of goods sold. Because we have to export our goods over longer distances into the United States, the transportation costs of our products can run anywhere from probably 3% to 12% or 13%, depending on the type of commodity. Again, anything that would add to the costs of the freight transportation or to trucking would inevitably find its way through the marketplace in terms of higher costs of goods sold.
We're also great believers in things like tax equity and fairness, ability to pay and all those kinds of things. We've listened to successive governments talk about those kinds of things, yet at the end of the day we still see a tax system-a retail sales tax system, at least-that discriminates against service sectors like trucking and has some anomalies in terms of taxing of some services that impact upon our sector more than others.
I have with me a large document that was recently produced by the chartered accountants at Deloitte and Touche, where they conducted a study for us, looking at how Ontario applies sales tax on the major business inputs in the trucking sector in Ontario versus our competing jurisdictions. We looked at Quebec; we looked at Manitoba, not so much as a competitor jurisdiction but it's one of the few jurisdictions in Canada that has a sales tax system that's still similar to Ontario's. Ontario, quite frankly, is rapidly becoming antiquated in terms of the way it deals with sales tax, compared to other jurisdictions. Then we looked at the major competitor states of Michigan, New York, Pennsylvania and Ohio.
A picture is worth a thousand words, because you don't want to, at this late stage of the day, start reading the Deloitte report. You can do that when you need to sleep tomorrow evening, perhaps. When you look at the picture there, I think it's pretty descriptive in terms of the sales tax burden that's placed upon the domestic trucking sector versus other jurisdictions. Ontario is one of the few jurisdictions in North America that applies retail sales tax on the acquisition of new trucks and trailers. It's one of the few jurisdictions in North America that applies sales tax on maintenance and repair labour, whether that is on a warranty repair or not. It's interesting that successive governments in Ontario have been opposed to the concept of the goods and services tax, the federal VAT tax, and part of the justification is that the government doesn't want to move into taxing services. Yet it's quite odd to me that in this one particular area-maintenance, repair and labour-we do indeed pay sales tax every time we take our truck to get fixed or maintained, not only on the parts but on the labour as well; not only if it's on warranty, where it's already been factored into the price of the warranty in the first place so that it's double taxation, but on non-warranty repairs.
In addition, Ontario and Quebec stand out like a sore thumb across North America in terms of imposing retail sales taxation on automobile insurance premiums. The sales tax on warranty repairs and auto insurance premiums was introduced in the 1993 budget. The government of the day was quite open as to why they did this. We were in a deep recession, we were in a fiscal deficit, and the government of the day chose to raise taxes to finance some of their expenditure programs. So it was, pure and simple, a revenue grab.
I can recall that the current governing party, while in opposition at the time, sitting around this very table, was quite agitated by this and felt that definitely there needed to be a reversal in those two particular taxes. They were seen as regressive and unfair at the time. We're saying that times are pretty darn good now and if there's any way we can address these issues now, it would be the time.
New York, Pennsylvania and Ohio don't impose any of these taxes on their domestic trucking industries whatsoever. While Ontario, if you look back over the course of the last 10 years, has only added to the tax burden on our sector in this regard, other jurisdictions have been moving in the opposite direction. Every province east of Ontario has moved to a harmonized goods and services tax, harmonized with the federal goods and services tax. Consequently, trucking companies in Quebec and Atlantic Canada do not pay sales tax on the purchase of equipment or on maintenance and repair labour. They get a tax credit, so they pay and get the credit back. They have a competitive advantage there. In the west, they also are moving in a slightly different direction, looking at annual sales taxes and the like.
More importantly, as for our neighbours to the south, last May Michigan extended a sales tax exemption that carriers that crossed boarders in Michigan were exempt from sales tax. They have now included the domestic industry there as well. Ohio, back in 1993 or 1994, also moved in that direction. I think most tax policy analysts would agree that taxing business inputs is a drag on employment and competitiveness, and they are moving in the opposite direction.
Some of these taxes are borne not only by the trucking industry but all motorists. Earlier this week we joined forces with the Canadian Automobile Association and the Ontario Motor Coach Association in attempting to bring to the attention of the government the fact that under the new Drive Clean emissions testing program the government had committed to the public that that would not be a tax grab and there would not be a net cost to the taxpayer so they didn't tax the $30 market price emissions test. However, every time you have a compulsory, mandatory repair that you have to undergo as a result of Drive Clean, you are having to pay tax on that. Our three associations have estimated that the windfall to the government of Ontario from that mandatory repair bill comes to a total of anywhere from $50 million to $70 million a year. We don't think that's right. We think that runs against the stated policy, which was to try to encourage people to conduct preventive maintenance, to maintain their vehicles, and not force them to do something and then have a tax on top of that. So we're calling for some restitution there.
Similarly, with the sales tax on automobile insurance premiums-I guess the last election was the only one I can remember where auto insurance wasn't necessarily an issue. But it certainly is an issue for the road user. I would go so far as to say it is yet another tax on safety and on public protection. Indeed, I would argue that the sales tax system in Ontario today, as it relates to trucking, is a tax on safety. Every time one of my members invests in new equipment, every time one of my members sends his vehicle through a maintenance check and introduces new parts or whatever, he pays sales tax on that. I don't think that's consistent with the policy of trying to get people to maintain their vehicles and be safer.
What do we do about these things? A number of approaches could be taken. One that doesn't appear to be particularly popular at this time would be for Ontario to get with most of the rest of the world and begin to move toward a true value-added sales tax. Barring that, I think we are into looking at wind-downs or exemptions from some of these taxes. We estimate that the combined impact of these taxes on the trucking industry comes to $200 million. We are also realists and don't anticipate that anybody is going to sign a cheque to us for $200 million right away. However, there are precedents for these kinds of things.
In the past, in the early 1980s, the Progressive Conservative government introduced an exemption on the acquisition of new tractors and trailers-new trucking equipment-and we would certainly love to see an exemption. But I think if people buy into that philosophy, we could begin to phase out those kinds of taxes over a period of time, and not have a negative impact on the treasury but at the same time begin to provide our industry with some relief. I think that things like automobile insurance and the tax on warranty repairs are so repugnant to most people-the dollar value to the government is not great in the scheme of things, and we would like to see more immediate relief there. Similarly, we would like to see that the sales tax burden doesn't become greater by continuing to impose the tax on Drive Clean mandatory repairs. That number will only get bigger as other communities or other regions of the province come on board with that program.
A lot of freight is being generated in the economy right now. Obviously the economy is strong, and truckers have been beneficiaries of that. There is no doubt about that, and I am not here to cry poor. Notwithstanding that, I don't think we can use that as an argument for not doing things that make sense from a tax policy perspective. Moreover, if you look at the events of the last few months, in our industry, for example, we've seen the price of diesel fuel go up 176% in Ontario since this time last year. That is having a significant impact on our margins. Our industry, because of its size, is not a big player in the equity market. We are the smallest of small-cap that you can find. As a result, we are an industry that has to rely on debt to a great extent, and we are starting to see a creep-up in interest rates. I think there is, particularly on the transportation side, some cost-push inflation effect that will begin to play itself out through the economy.
So I don't think we should take for granted the growth we have had over the last few years. Trucking is a good leading indicator of economic activity. When economic conditions change, we'll know it six months before the banks do. Right now I think there is some jitteriness in the marketplace that wasn't evident even a few months ago.
I thank you for your time. I hope you take a look at the study, and that you make mention of this in your report to the treasurer and to the people.
The Chair: Thank you very much. We have approximately five minutes per caucus, and I'll start with the government side. Mr Galt.
Mr Galt: Thank you very much for the presentation and for this fancy document. It's quite thick.
Mr Bradley: We set certain criteria and thickness is one of them, so there must be something useful in it.
Mr Galt: I'm interested in your comments about the tax, particularly as it would relate to jobs. Some of these taxes, as you remove them, create jobs. As announced today, there are another 21,300 net new jobs in Ontario, bringing us up to a total of 664,000 net new jobs since we took office.
As I look at this-and you mention $200 million, you've worked that out, would be the cost-there are these six weights that are sitting on this little truck here. Visually, it's really neat the way you're laying it out. If that tax was all we moved, how many jobs would be created in the province as a result of that?
Mr Bradley: We have a shortage right now, notwithstanding the tax situation, of 50,000 qualified drivers over the next 10 years in the province of Ontario. We can employ people today. The situation here is that the freight will move one way or another. It's whether you want it moving on trucks from New York, Pennsylvania, Ohio or Michigan, or do you want it moving on Ontario trucks, employing Ontario drivers? That's really the issue.
Mr Galt: I see that $200 million sooner or later gets applied to the commodity. It makes our own truckers less competitive and it's more than just truck drivers where the jobs are being created. I know it's a tough one.
Mr Bradley: Exactly. It is tough.
Mr Galt: Is it the kind of thing that sells to the minister, to this government?
Mr Bradley: I would think, given the finance minister's background in our industry, he might understand these concepts. Clearly, trucking is a derived-demand industry. We exist to serve Ontario's industrial sectors. We have, as a result, a very large GD multiplier in our industry, and what happens in trucking is a reflection of what happens in the rest of the economy. But also, you're absolutely right. Again, the costs of transportation represent anywhere from 4% to 13% of the final cost of goods sold for Ontario manufacturers and shippers. We serve every industry in the province. We serve the high-value-added manufacturing sector particularly because we're able to provide the just-in-time service. Anything that increases their costs eventually-and sometimes it takes longer for the market to adjust-does show up in higher export prices from Ontario. What that means specifically is difficult to say.
Mr Galt: It would be fun to see an economist come through with some figures on that.
Mr Arnott: Thank you, Mr Bradley, for your presentation. I represent a considerable number of your members in my new riding of Waterloo-Wellington so I continue to be very interested in your industry. You mentioned the significant increase in the price of diesel fuel in the last year. You said it was a 176% increase. What's the outlook in the year ahead? Will it stabilize? Are you expecting it to come down?
Mr Bradley: Everybody's got their crystal ball on that, I suppose. In the last few days I've heard everything from stabilizing near current levels to doubling again over the course of the next year. We would prefer, at the present time, to try to deal with that through the marketplace. That's a very definable shock that most people can understand so we're trying to collect that from our customers right now with, if you've read the papers this week, some mixed success. There are independent operators in the province today who are parking their vehicles because they can't make ends meet. That could create some havoc in terms of getting goods to market.
Seeing as we're here before the standing committee on finance and economic affairs, we're not asking for government to move in and regulate diesel prices or regulate truck rates or anything like that. That's a throwback to the days of the past. It never worked then and it won't work now. However, if the provincial government were serious about wanting to provide some relief, in the appendices to this report, it wasn't part of the key feature, we do provide some information with respect to the tax on diesel fuel in Ontario compared to the competitive jurisdictions.
Quebec is a little higher, but remember, they do have a GST-type sales tax credit system. On average, Ontario's provincial tax on diesel fuel is two to three times higher than what it would be in Michigan, New York or Pennsylvania. So if you wanted to provide some temporary relief-I know you're not saying you necessarily do, but if the government did-that would be the first area quite clearly under provincial jurisdiction where they could. We'll be meeting with Mr O'Toole's committee and I'm sure we'll be talking about that.
Mr Phillips: I appreciate your presentation. I happen to think you've got your finger on one of the huge issues for us over the next five years. I'm with you. You call exports the engine driving the Ontario economy. I believe that. The government's document says that there's no jurisdiction in the world that relies as much on exports as Ontario does now: 90% to the US.
I was a little bit surprised that the minister, when he came in here on Tuesday, kind of downplayed exports, that when you net exports and subtract imports, it's not that big a deal. But I think this is going to be a huge issue. This little table shows the issue. I think that now that so much of our economy is exports, we are going to see industry after industry come in with the same chart. I noticed that four of the six jurisdictions here are in the US and that will show-
Mr Bradley: That's where the trade is going.
Mr Phillips: Exactly. The pressure is going to be on us to obviously continue to grow exports. But people like yourself, as you've done, will say, "Our taxes in this area, this area and this area are higher than they are in the neighbouring jurisdiction." In fact, we heard from others on the income tax issue, on the corporate tax issue, on property tax issues. So the inevitable push will be to try and find a way to get levels the same as the US.
At the same time, we have a different system in Canada. We fund health care to a dramatically larger extent. We've decided that we will insure ourselves. The biggest insurance company in Ontario, that funds 60% to 65% of health care, is the Ontario government. The premiums are income tax, or whatever we want to say.
If we harmonize taxes with the US and everything, are we able to maintain that unique health care system? In my mind, it's difficult. I guess what I'm saying is that I'm strongly of the view that we can't deal with this on a piecemeal basis. Over the next two years, we are going to have to look at this in its totality: How do we continue to help develop our export business? Because on the tax front, frankly, you're a little bit late. Harris has already announced his big tax cut, which is the $4 billion on income tax and the $1 billion on property tax.
My own personal view, and I don't know how you feel about it, is we're going to have to as a province look at this in its totality, and not piece by piece by piece.
Mr Bradley: In a perfect world, I would agree. I would also agree that corporate income taxes and those kinds of things need to be adjusted. I would also say, and this might surprise you, that if you look at all taxes in Ontario versus the United States, this is the side of the border to be located on, specifically because of US health care and social security costs, which are paid by employers, versus the situation here. However, at the same time, I would argue that because of the nature and the structure of our economy, the taxes, notwithstanding that the folks over at the Frost building may say they are in parity, are still too high. We do not have the economies of scale to generate the wealth internally here and it's from taxing wealth that you get your key revenues to pay for education and health care.
I don't want to make this trucks or roads versus health care. A strong and vibrant economy has to have all of that infrastructure in place. But the reality of it is that we need to generate our wealth externally, which means we have to export. High imports are only an indication of a strong economy and people not being able to satiate their consumer demand domestically; they want to buy radios from Japan and that kind of thing. It has to start first, though, with strong exports.
Mr Phillips: I agree.
Mr Bradley: We didn't have strong imports in Ontario until we got the export trade going. To the extent that our industry, which is so integrated into the mid-continent manufacturing process-and when you look at the fact that business inputs in manufacturing are not taxable, specifically the policy perspective being that we have to keep our exports competitive, it make no sense that we would then tax the trucking element as well.
I don't know if we're too late because we come here every year and say this kind of thing. Maybe we just haven't been heard yet.
Mr Phillips: I wouldn't say too late.
Mr Christopherson: Thank you for your presentation; nice to see you again. You can appreciate we've heard from a number of umbrella associations in the business community that make exactly the same argument. Just jotting down a couple of thoughts, the Ontario Federation of Agriculture came in and made a very impressive presentation in terms of their needs; the same for the mining association. The home builders did the same thing. The road builders also did the same. I understand your argument or your concern that we have to have a vibrant economy, but we do seem to have achieved that. I mean, this is the government's slide from the opening day: "Corporation profits surge." They even put a nice little arrow there in case we miss the point.
Every single economist who has come forward has pointed out that we have the biggest booming economy that we've ever had in the history of North American. Certainly the President of the United States, in the state of the union address, wasn't suggesting that he saw this thing changing any time in the near future. But in addition-
Mr Bradley: I wouldn't place a whole lot of stock in that speech, though.
Mr Christopherson: I had a hunch you weren't a big fan of Clinton's anyway.
The issue is more one that the other presentations we've been getting have been talking about the decimation of providing affordable housing is gone because Harris has decided to give away $4 billion to $6 billion a year in tax cuts. By the way, the whole issue of exports driving our boom was recognized by virtually every economist. As much as the government wants do downplay it and say they spurred it on, they're riding that wave. You couldn't have screwed this one up if you tried. They can make that argument. Everybody is saying that the economy in the States is what is driving this and yet, at this time of boom, we have people coming in and pointing out that their neighbourhood education system is falling apart, the health care system is falling apart. I had a woman in my riding recently who couldn't get a bed for her mom who was being airlifted back from Mexico because there's just enough beds and the procedure wasn't clear.
The difficulty is that as much as I think you're sincere when you say you don't want to get into a situation of truckers or health care, the reality is that's where we are. My own brother is a broker. To that degree I have a vested interest, if you will, in seeing your part of the economy take off too.
Mr Bradley: Let me try to respond to that. I said yes, we are in a boom right now, but of course every economist will also tell you that things are cyclical. I talked about the underlying cost-push inflation that I see, the underlying push in interest rates that we're seeing. Also, we're now finally starting to see the Canadian dollar begin to creep up again. I'll tell you that a good deal of our export competitiveness-and the thing that's masked a lot of the underlying uncompetitiveness in our economy, in our tax system, is the fact that we've had a dollar that's been at 68 cents or lower. If that starts to reverse-I mean, many of you were sitting around here in 1988 when we had a 89-cent dollar and we were not competitive, both in the service side and the export side.
I would simply say, Mr Christopherson, with all due respect, your party produced a report of the type that Mr Phillips was asking for. It was called the Fair Tax Commission, if you remember that. It-and I can almost quote it verbatim-was saying that applying the sales tax on business input is a killer of jobs. At some point, we're going to have to pay the piper and we're going to have to be competitive over the long term. We're going to have to be competitive even when the US economy, at some point, decides to take a breather, which we are not at the present time.
Ultimately, we have to generate our wealth externally. When you've got the population we've got, the kind of economy we've got, the distances spread across the border, then we've got to be generating wealth, we've got to make sure that our infrastructure and our transportation links to get those goods to market are efficient and productive.
The Chair: With that, we've run out of time. On behalf of the committee, sir, thank you very much for your presentation today.
URBAN DEVELOPMENT INSTITUTE
The Chair: The next presenter this afternoon is a representative from the Urban Development Institute. Would you please step forward and state your name for the record.
Mr Stephen Kaiser: Good afternoon, Mr Chairman, members of the committee, ladies and gentlemen. My name is Stephen Kaiser, and I am president of the Urban Development Institute. On behalf of the membership, I would like to thank your committee for giving us the opportunity to share our perspective as part of the consultation related to the formation of this year's provincial budget.
During this short presentation, I would like to update you regarding the performance of our industry and its role within the overall economy of the province. Further, I will share with you some of the challenges we face within our sector, along with a related success story. Finally, I'll leave you with some food for thought in preparation for the upcoming budget.
The development and construction industry plays a vital role in the economy of the province, yet its benefits are often underestimated and rarely acknowledged. Every new housing start, every commercial project, every industrial development creates significant levels of employment, including direct construction jobs, indirect jobs in related industries and induced jobs resulting from spinoffs in the general economy. Collectively, these different sectors have traditionally accounted for between 9% and 11% of Ontario's GDP.
In the early 1990s, similar to other industries, we suffered through a very tough recession, and an estimated 230,000 jobs were lost. In 1989, the construction share of Ontario's GDP was $37 billion and the construction labour force stood at 344,000. In 1999, that same construction share of the GDP was $25.5 billion and the labour force is estimated to be nearly 300,000. We believe there exists substantial potential for further job creation in our sector over the next four years.
Obviously as a result of many factors, including a positive business climate in Ontario, the industry has experienced a huge recovery since 1995. The residential sector has bounced from a decade-low number of urban starts in 1995 of almost 32,000 to a decade-high 62,928 in 1999. In many areas across the province, the non-residential sector has experienced a similar trend.
Enclosed with today's presentation is a copy of the city of Mississauga's building report summary illustrating the construction activity from 1996 through December 1999. You will see that when all sectors are combined, building activity grew from $773 million to over $1.8 billion in 1999, a huge increase.
There has been a substantial recovery in all sectors in Ontario over the last part of the decade, and the strategy of this government has played a substantial role.
One of the tax cuts which was a catalyst to the residential recovery was the first-time homebuyer land transfer tax rebate. That program was suggested by our organization in a similar pre-budget hearing early in 1996 and implemented in the spring budget. To date, over 56,000 families have used the program to assist in the purchase of their home, a substantial portion of the total market. We ask that this program be extended again, as it has allowed many families to realize the dream of home ownership.
In order to illustrate how important this rebate is to some homebuyers, we have included with our submission a copy of a recently completed study by our organization entitled Government Charges That Drive Up the Cost of Development: A Study of Taxes, Fees and Charges in the Greater Toronto Area. The study clearly illustrates the huge burden of taxes, fees and charges that drive up the cost of both residential and non-residential development.
The study compared the cumulative impact of taxes, fees and charges on a townhouse, commonly a first-time-buyer product. The results are staggering. Consistently, almost 25% of the purchase price is due to taxes, fees and charges from three levels of government. In real terms, a $160,000 townhouse in York region carries a burden of taxes, fees and charges of over $40,000. This myriad of charges often causes the dream of home ownership to be simply that-a dream. The first-time homebuyer land transfer tax rebate program for many purchasers has made that dream a reality, and it should be extended in this year's budget.
We congratulate the government on its efforts to achieve a balanced budget. However, as we celebrate the elimination of a fiscal deficit, we must understand that this quest has left a huge infrastructure deficit that must be addressed. We need to reinvest in the essential hard infrastructure items such as roads, sewer, water and transportation in order to facilitate the Blueprint that your government has outlined. This morning I joined representatives from 27 other organizations in signing the Transportation Accord, which is a call to action for a transportation investment partnership for the greater Toronto area and Hamilton-Wentworth. It clearly indicates the need for investment in transportation by all levels of government. A copy of that accord and a list of the endorsing organizations are included in your brief today.
The need for immediate hard infrastructure spending and the size and structure of the SuperBuild Growth Fund cause the industry concern. As structured, provincial infrastructure dollars must be matched with private infrastructure dollars in order for them to flow. The magnitude of the commitment of the $10 billion in provincial dollars appears to be based on the success of achieving similar private sector investment for all infrastructure. In many cases this may not be achievable and there is a concern that the investment will not be made. Public-private partnerships are the way of the future for many components of infrastructure and service delivery, and we strongly encourage the government to continue to pursue that direction.
In 1997, our organization, working with the Dufferin-Peel Roman Catholic Separate School Board, presented to the Minister of Education the results of a comprehensive use study to explore public-private partnerships in the construction of new schools. That piece was titled Working Together to Build Ontario's Schools, and I have a copy of it here with me today. To date, though, that work has not resulted in the private sector designing, building and operating one new school in the GTA. These partnerships take time and may not fit every scenario.
It should be noted that the example of the 407 highway is often used when discussions of the SuperBuild fund take place. To date, there are no other similar infrastructure projects close to reality at the provincial level. Many of the infrastructure dollars are needed for much smaller undertakings, such as fixing a bridge, repairing a section of road, replacing a decayed section of pipe, or a new highway interchange-none of these conducive on their own to a public-private partnership.
The growth forecasts for the greater Toronto area indicate that an additional two million people will make their home within these borders by the year 2021. In order to facilitate that growth, a defined program of infrastructure investment must begin now. The SuperBuild Growth Fund must be unbundled and restructured in a way that allows it to partner with other levels of government and, in many cases, make specific unconditional infrastructure investments where needed. These investments are the tools to harness future prosperity within Ontario.
In closing, on behalf of the membership of our organization, I would like to thank you once again for allowing us our part in this very important process. We believe that there's huge potential within the borders of this province. We look forward to rolling up our sleeves and working with this government and all sectors to ensure that we capitalize on this opportunity.
Thank you, and I'd be prepared to answer any questions you might have.
The Chair: Thank you very much. We have approximately six minutes per caucus. I'll start with the official opposition.
Mr Phillips: Thank you very much, Mr Kaiser, for your presentation. It's thorough, as always.
Let me start on the public-private sector partnership because the success of that is key to our infrastructure. The province is counting on half of the infrastructure over the next five years being funded by the private sector. They hold out the 407 as the example. I think it's a terrible example. They essentially gouged the users of the 407. They sold it off at $1.6 billion more than it cost to build for one reason: They guaranteed the buyer that they could take tolls up at inflation plus 2% every year for 15 years. If you don't pay your tolls, you don't get your licence renewed. If some poor individual owed a penny, they couldn't get the licence renewed because it's all computerized. They own it for 99 years now.
I've been listening today to the Minister of Energy, Mr Wilson, tell municipalities, "We're not going to let you sell off your electrical utilities for a cash grab and use the money elsewhere." The 407 deal closed May 5, 1999, the day the election was called, at $1.6 billion, a cash grab, and now the poor users of the 407-I happened to ask the trucking people what their view was on the 407 and they said, "Our trucks can't afford to use it." We haven't relieved the pressure on the 401 from trucking.
We don't have difficulty with the concept of public-private sector partnerships, but if we are going to proceed with them, have you any advice for us on some of the things we should look for when we're structuring deals with the private sector to build our infrastructure?
Mr Kaiser: Mr Phillips, I'm certainly not an expert on public-private partnerships, but we did sit down with the separate school board and work at length through pro formas and examples of how the private sector could actually build schools. It's a tough way to go. At the end of the day, when we crunched all the numbers and looked at all the efficiencies, it seemed that the school board could get money at less cost. The capital cost allowance that companies would have to deal with when dealing with the federal government was an impediment. There was a host of factors put together as to why it didn't work, at least in this scenario, for the private sector to build schools. Even today, in a conversation with the region of Halton, they've looked at length in terms of doing a deal with the private sector for their infrastructure and at the end of the day that didn't make sense in a business deal for them also.
We're a big believer in public-private partnerships. I think Mr Lindsay's a very capable individual and we look forward to working with him, but coupling $10 billion of private sector money with $10 billion of public money over the next five years is a Herculean task.
Mr Kwinter: I want to just pursue that. To date, there are really two big public-private sector partnerships certainly in the Toronto area, terminal 3 and the 407. Both of them have worked. Whether they've worked successfully-and my colleague has just stated what he thinks is wrong with 407. The same thing happened at terminal 3, but the only way the private sector really went forward with it is that they had a long-term upside, because they had control. They provided the facility and then they could charge. They could charge fees for landing, they could charge fees for all of the franchises that were in the building. With 407, for 99 years they can raise rates almost at will.
The problem I have-and you've said that schools didn't work-is, how do you get any kind of public-private sector involvement if you're asking the private sector to get involved in a financing that has no revenue stream? If you build an interchange, what are you going to do, set up a toll booth at the interchange to say, "If you use this interchange, you have to pay for it"? How does that work in your estimation?
Mr Kaiser: In my estimation it doesn't work, and that's your point exactly. It's got to be a business case scenario. It's got to work on a pro forma in order for the private sector to get involved in it. Absolutely.
The Chair: I have to go to Mr Christopherson.
Mr Christopherson: Here you are back to putting it like it's a big burden again.
The Chair: It's not. It really isn't.
Mr Christopherson: Thank you very much for your presentation. I just have two questions, and they're based on the third paragraph of page 4 where you talk about signing the agreement regarding the transportation accord through the GTA and Hamilton-Wentworth: One, how big a component of that do you see for public transit in terms of the overall intermodal aspect of looking at transportation, or is this just strictly the corridor and nothing more? Which, I'll go so far as to say, would be somewhat problematic to us given the importance of getting as many people off the highways as possible and into public transit, given the environmental issues and everything else. And the fact that we're way behind in terms of public transit to what's happening to our competitors, both in the south and the quality of life that it brings to some of the European countries that have gone way ahead of where we are in public transit. With Harris, of course, we've gone in the wrong direction.
The other question I wanted to ask you-because I happen to agree. I was a former regional councillor before I came here to Queen's Park so I understand the importance of the transportation linkages that you're talking about, infrastructure, all of that. You almost have to be on the inside, if you will, to fully appreciate the importance of that, because it's not the sexy, headline-grabbing kinds of things that people think about. I just wanted your opinion, as the second question, on whether you think a serious percentage of the $4 billion to $5 billion that Harris gave away in the tax cut in the last term, invested in our transportation and infrastructure network, in the long run would bring us stronger economic activity and better returns over the business cycle. Or do you think that they did exactly the right thing, having all that money go straight to a personal income tax cut that benefited the very few wealthiest the very most and left the poor and moderate-income right out of the whole equation?
Mr Kaiser: Two good questions.
Mr Christopherson: Try not to spin in too much.
Mr Kaiser: On the first question, the accord is part of the documentation. You'll see it's very broad, it's one page. It's basically a call by all the signatories for three levels of government to come and understand that there's a huge problem here and a concern, and it's going to need to be addressed by the three levels of government and the private sector coming together for that concern.
Part of it is certainly public transit. One of the looming issues out there is a $735-million price tag for capital improvements for GO Transit and now, as we speak, there is no way visualized to pay for them unless we divvy up the portion and put it on top of new growth here. Obviously, we're interested in finding a new solution, to be candid in that.
In answer to your second question about tax cuts and what I would have done differently, I think that's been done and happened and we're here now sitting and looking at this position. I would rather strategize going forward and be part of the solutions going forward than questioning what happened in the past.
Obviously, I alluded in the presentation to the strength of the first-time home buyer land transfer tax rebate. We've seen the magnitude of dollars that were spent for that, and you could debate that equation in itself, but we feel as an industry that was money well spent, so to speak.
Mr Christopherson: I appreciate your comment about, why review history? Sometimes that's good to do and other times it's more important to look ahead. But if you want to look ahead, we still have Harris committing much the same thing again. He's got another 20% out there, billions of dollars, so it's still a live issue in terms of what's in the best interest.
I'm sure some folks are getting tired of hearing me say this, but all of this is still in the context that we've got crises in the education system and in our health care system, in our social services, environmental protection, and every one of those also has an economic factor as well as just a human factor. So it's a contemporary question.
Mr Kaiser: It's a tough balancing act. I watched many of the participants at committee over the last couple of days. The TV was on in the office. There are some tough decisions to be made; there's no doubt about it.
Mr Christopherson: Thank you very much.
Mr Galt: Thank you for an excellent presentation. It was most interesting, particularly as you were talking about the tax load on a given unit of construction. I appreciate Mr Christopherson's comments. In the best interest we made tax cuts, the type of tax cuts we thought would really stimulate the economy and stimulate job creation, and I think collectively that has been a success.
I'm concerned about the number of people who have come before us and the number of organizations talking about affordable housing, and this is where I'm headed into. I think one of the pressures on our housing market today relates to the fact that back in 1995 one of the big things I was hearing from people was, "My young son or my young daughter who graduated from university doesn't have a job so they have moved back home."
Well, they do have a job now and they've gone out and bought a home or have gone after an apartment. So there are tremendous pressures put on the housing market just because of those people getting jobs, moving out of mom and dad's home and now wanting to be out on their own.
You're telling me that on $160,000 construction there is $40,000 in taxes by the three levels of government?
Mr Kaiser: That's correct.
Mr Galt: In your opinion how is that $40,000, or 20%, affecting affordable housing and keeping people out of housing? If some of that tax were removed, how many more units might be constructed or how many more people might get into affordable housing?
Mr Kaiser: That question relates to all levels of housing, all the way through the spectrum, because it is the system. This relates back to the development charges discussions we had through the last mandate and the new legislation.
Part of the concern in the industry was this huge level of service that a homebuyer is buying into. Basically you're buying your piece of every piece of infrastructure in the community, and that is tagged on the front end of a home. I think we have to look at taking some of those costs and putting them on the back end of the purchase price through property taxes, as opposed to the current system where we have the municipality, and rightly so, concerned with getting paid for the cost of growth. I think we need to look at what we've done with some of those costs because there is too much on the front end and that front end becomes the hurdle for home ownership. You see, as you look at the $160,000 townhouse, that it just makes it that much harder to achieve home ownership. We can take some of those costs and put them on the back end where they can be financed over a mortgage, because for young couples it's that down payment, as you know, that is the lynchpin to home ownership; it's not necessarily the payments. If we can do that, I think we can work towards better affordability across the board.
The same goes for apartments. The debate is that with the three levels of government and the taxation we're going to have to see movement from the three levels of government in order to see apartments coming out of the ground here in Toronto.
Mr Galt: Just for the record, if I could have it corrected, I said 20%. I did a little mental math and it was 25%.
Mrs Molinari: Thank you for your presentation. I just want to quickly focus on one of the comments in your presentation, and that's the Dufferin-Peel Catholic board report, Working Together to Build Ontario's Schools. I'm familiar with that report and I compliment you on the excellence of the work that went behind that. As you say, those partnerships don't work everywhere, but I think having that report is something for the future and it may be looked at at some other point in time. There are partnerships happening with schools and municipalities. There is some of that happening and I think that's just a step forward. Having that report already done, when there is an interest from the private industry to work with that, at least there's a basis there. So I don't want to discourage you that, having done that work, it's not being considered.
Mr Kaiser: Great. Actually, we have a good rapport with the board and we're now discussing joint-use sites for high schools involving the public board also, and the community centre, library and those types of things. So those discussions are underway. There is a host of new ways of doing business, I agree.
Mrs Molinari: And that's what we're looking for, new ways of doing business.
The Chair: On behalf of the committee, thank you very much for your presentation this afternoon. Have a good weekend.
The Chair: Our last presenter for this week is Mr Doug Benedict.
Mr Doug Benedict: I'm going to make it very short because I see that you have been sitting most of the day and you're anxious to get home. I'd like to thank you in advance for the opportunity of speaking with you.
My name is Doug Benedict and I do not represent any special interest group or organization. I live in the riding of Oak Ridges, which is represented by the Honourable Frank Klees. I have two children, a 15-year-old daughter and a 16-year-old son.
What I want to talk about is the education system. My daughter is the honour student in the family and my son, the 16-year-old, has had 10 years of hell within the education system.
I'm not going to ask you for the spending of any more money, nor am I here to criticize the government in the way that they are spending their money. What I want to do is to discuss the allocation of dollars in what is referred to as special education.
Some of you may argue that I am speaking to the wrong people and some of you may truly believe that I'm wasting the committee's time, but I don't think so. The allocation of dollars to be spent in the province starts right here in this room and ends here in this room. The number of students requiring some form of special care in the education system is rising at an alarming rate. It is my understanding that some experts say that 25% to 30% of the student population requires some type of extra care.
The youths who concern me are the ones the schools refuse to teach, that they force out of the system on the pretext that they do not want to learn. They are the problem students, the troublemakers, the dummies. The ones I'm talking about are the ones everyone in this room has come in contact with through their own families, through their neighbours' families. There is not one of you who hasn't had contact with this situation. It is like alcoholism; there isn't anybody who hasn't had contact with somebody who's had trouble with alcohol.
How many times have you heard parents in your own constituencies stating, "My child is not getting what he or she needs in the school system", or you hear from the student, "I don't want to go to school any more because everybody thinks I'm a dummy"? These are the kids who have been told that they have ADHD or ADD or hyperactiveness or inattentiveness or behaviour disorders. The experts say that 20% to 30% of these kids will eventually commit a crime. The largest portion of people in our jails have been diagnosed as having ADHD.
The failure of the school system to deal with this problem has lasting implications on these kids as well as the province as a whole. We have a perceived problem with street youth. We have a perceived problem with youth unemployment. The education system is the problem. We have a perceived problem of youth crime, but the education system is the contributing cause. We have a perceived problem of youth homelessness. The education system is the contributing cause.
I said I was not going to give you a lot of research data, but I am going to mention one document and I think this should explain the argument. This document was the SHOUT Clinic's report on homeless youth unemployment. This survey was conducted in the summer of last year by an organization right here in the city of Toronto. I want to quote one section, section 5.4:
"One of the most common characteristics of a street-involved youth is clearly an early exit from the education system. While this phenomenon is partly due to family breakdown and the absence of parental support at an early age, frequently these youth display behaviour or emotional problems that undermined their ability to adjust successfully to the expectations of school.
"Participants were asked if they had ever met with guidance counsellors or doctors due to learning difficulties or emotional problems. A reasonably high 46.9% of the sample population responded that they had in fact had some counselling, whereas 47.7% had not. Of those who had some intervention in school, 25.6% reported that they had been diagnosed as having anger management problems, 19.1% were diagnosed as having attention deficit disorder, 15.2% were diagnosed as being hyperactive, and 4.5% as having dyslexia. There were then clear indicators that many of the street youth were having difficulties that came to the attention of the school authorities."
Look straight at the education system and you'll see the major cause of street youth problems.
The Honourable Margaret Marland did some work last year with regard to the mental health program, but unfortunately nobody knows the results of the work, nobody knows what happened to it, nobody knows what the government did with it
Those in the education system have taken the position that these kids are not wanted in the education system. They've taken the position that this is a mental health problem. This is garbage. These so-called intelligent people have their heads buried in the sand.
Today I want to make basically four suggestions.
In the next budget, I want the government to allocate dollars to the education system in such a way that the school boards will address this problem.
That an ombudsman be appointed to address the problem of the rapid growth of special needs in the education system.
That the question be put to the courts, "Is education a right or is it a privilege?" This is something that has been asked by many people who have been involved in the same situation as I am, "Does my child have a right to an education?" Nobody's been able to answer that question for me. People tell me it's a privilege for him to be going to school, but because he has ADD and he acts in a particular way, he has been in and out of school more times than you can possibly imagine. Without any reason, the school board in York region-the last time my son was out of school the principal of the school did not know. It took six weeks for him to know that he was out of school.
The last question I'd like to ask is, what responsibility do schools have in providing basic education for the special needs student?
To conclude, I want to say I'm not convinced that more dollars are needed in the system. I do believe that government must assure proper administration of the dollars that are in the system. This requires you, the members of the Ontario government, to allocate the funding and be specific with that funding. If the experts are correct, that 25% to 30% of the student body requires special needs, then 25% to 30% of the money budgeted to education should go for those needs. Is this not fair? Is this not democracy? Better still, is this not common sense? Thank you.
The Chair: Thank you very much. We have three minutes for each caucus. Mr Christopherson.
Mr Christopherson: No.
The Chair: The government side.
Mrs Molinari: Thank you very much for your presentation. I know it's a very emotional topic, especially when you're talking from the heart and it's something you have experienced personally, unlike a number of the other presentations we have heard here this week that have been more detached. Yours speaks truly from the heart, and I thank you for sharing that with us and some of the difficulties you've experienced.
I guess if there were a perfect way of doing it, and somebody knew what that perfect way was, we would do it. It's evolving, and special education certainly has been an area that has been of great concern to all of us. The minister made an announcement last week precisely on that. It's not to say that is going to solve all the issues and all the problems, but certainly it's an improvement. We need to continue to move towards improvements because a lot of the special needs students-and I sense that a lot are not identified and that's part of the problem, that there's a difficulty there.
I know from personal experience that they seem to be allocated as behavioural problems when in fact there is more than just a behavioural problem. Behaviour is only the reaction to an underlying problem. I think the identification certainly needs to be a very first area where school boards identify and then look at means and ways of servicing students.
The Chair: Mr Galt, you have one minute.
Mr Galt: Do you want to respond?
Mr Benedict: Tina, this problem has been there. I've heard the rhetoric, I've heard the talk, I've heard the same type of thing that you are saying. You've had the opportunity of meeting my son. What I am concerned with is that all that is being given is talk with regard to these particular problems with special education. It's all talk. There's nothing else there. The Conservative government has come out and they've taken a look at education. They've taken a look and said that they are going to evaluate teachers. That hasn't been done yet. We've heard very little about that.
We have a system in Ontario where we have the unions dictating to us what they're going to do and what they're not going to do in the education system. Until we break that down, until the government turns around and says, with their money, that they'll allocate the money in such a way that these problems are looked at and these problems are addressed. You can only do it with money, because the teachers, the people who are involved with education don't seem to address anything but the dollars. If there's not enough money, they scream.
Mrs Pupatello: Thank you for your presentation today, Mr Benedict. It's interesting to note that in fact announcements, as we've already addressed early today, that are being made in the special education area still don't get our levels of support back to where they were before the Conservative government took over. In fact, I think it's cruel to do identification of young people who have specific needs in school, because we're identifying them now actually more than ever, and to not provide support when we've identified that there's a need is cruel.
We are doing that with young babies now. We are identifying more young babies than ever before with this whole focus on prevention. Unfortunately, the identification process itself means that we're finding babies with issues and families with issues, and the social system has been so dismantled over the course of the last five years that there literally is no service to put in place when you've identified that there is a need in that family. So I think it's cruel to do that kind of identification. Now you're going to go out there and say, "We have no service to give you," unfortunately. We have never had such a dismantling as we've had since 1995.
We actually appointed a supposed minister for children in this government, in about 1997, which we feel was just a reaction to the opposition party having a children's critic. The first thing she did was say, "Geez, I guess we'd better find out what services exist." Well, had they not cancelled half the services they had in 1995, there was actually an organization within the government that knew what all the children's services were.
Mr Benedict: Excuse me, for a second-
Mrs Pupatello: I actually have a question for you.
Unfortunately, what that means is that the government doesn't know what services exist within its own government. They have cut some services that were actually very good and now, with the work of Dr Fraser Mustard, for example, they are making announcements to recreate what they cut in 1995, which is very frustrating to watch.
If you could choose one area where the government was going to make an investment in terms of assisting children with whatever the issues are, in your case it may be ADD, the types that you mentioned in your brief, what's the one area that you would specifically focus on in order to address the problem that you have seen within your experience?
Mr Benedict: First of all, I want to say that I do not believe that the problem is a lack of dollars. I happen to know what the Honourable Margaret Marland did. I think that what has happened is that if you were out there and involved in the system, you would find that what Margaret Marland did was actually a benefit to the system and not a detriment to the system.
Mrs Pupatello: Do you know what it was?
Mr Benedict: Because the system was a duplication of services, if you're talking about social services and you're talking to health services. It was a duplication of services. I'm not talking here about adding any dollars to the system. I'm talking about the administration of this system. The money is there. Damn it, administer it and make the people do what is there. The money is there; it's the people in the system-
The Chair: With that, we have used our time. Mr Benedict had 15 minutes. On behalf of the committee, I would like to thank you very much for your presentation this afternoon.
This committee will reconvene on Monday morning, February 7, at 10 o'clock in Kenora, Ontario.
Have a good weekend. We are now adjourned.
The committee adjourned at 1740.