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Ontario 


Standing Committee 

on 

Finance and Economic Affairs 


Interim Report 

Pre-Budget Consultation 1992 



HJ 

13 

.04 

.047 

1992a 


Principal Transfer Recipients: 
Municipalities 
Universities/Colleges 
Schools 
Hospitals 


( 


1st Session 35th Parliament 
40 Elizabeth II 








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STANDING COMMITTEE ON 
FINANCE AND ECONOMIC AFFAIRS 


COMITE PERMANENT DES FINANCES 
ET DES AFFAIRES ECONOMIQUES 



LEGISLATIVE ASSEMBLY 
ASSEMBLEE LEGISLATIVE 


TORONTO. ONTARIO 
M7A 1 A2 


The Honourable David Warner, M.P.P. 

Speaker of the Legislative Assembly 

Sir, 

Your Standing Committee on Finance and Economic Affairs has the honour to present its Interim 
Report, Pre-Budget Consultation 1992 and commends it to the House. 



ONTARIO MINISTRY OF 
TREASURY ANO ECONOMICS 

JUL 14 1993 

JBRARY 


Queen’s Park 
January, 1992 





Canadian Cataloguing in Publication Data 

Ontario. Legislative Assembly. Standing Committee on Finance and Economic Affairs. 
Interim report, pre-budget consultation, 1992 

Text in English and French with French text on inverted pages. 

Title on added t.p.: Rapport provisoire, consultations prdbudgetaires, 1992. 

ISBN 0-7729-9292-4 

1. Budget-Ontario. 2. Finance, Pubbc-Ontario. 3. Fiscal policy-Ontario. 4. Ontario- 
-Economic policy. I. Ontario. Legislative Assembly. Standing Committee on Finance 
and Economic Affairs. Pre-budget consultation. 11. Title. III. Title: Rapport provisoire, 
consultations prebudgetaires, 1992. 

HJ2056.05057 1992 354.7130072’223 C92-092511-1E 



MEMBERSHIP OF THE 
STANDING COMMITTEE ON 
FINANCE AND ECONOMIC AFFAIRS 


ZANANA AKANDE 
CHAIR 


KIMBLE SUTHERLAND 
VICE-CHAIR 


DAVID CHRISTOPHERSON 


NORMAN J. JAMISON 


MONTE KWINTER 


STEVE MAHONEY 


GERRY PHILLIPS 


NORMAN W. STERLING 


CHRIS STOCKWELL 


BARBARA SULLIVAN 


BRADLEY R. WARD 


MARGERY WARD 


JIM WISEMAN 


Todd Decker 
Clerk of the Committee 


Anne Anderson 
Research Officer 


Elaine Campbell 
Research Officer 



Digitized by the Internet Archive 
in 2018 with funding from 
Ontario Ministry of Finance 


https://archive.org/details/interimreportpreOOakan 


TABLE OF CONTENTS 


Page No. 


PREFACE 1 

INTRODUCTION 2 

MUNICIPALITIES 3 

« 

UNIVERSITIES 6 

COLLEGES 8 

SCHOOLS 9 

HOSPITALS 14 

LIST OF RECOMMENDATIONS 18 

APPENDIX A Dissenting Opinion - Liberal Caucus 
APPENDIX B List of Witnesses 


APPENDIX C 


List of Exhibits 



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1 


PREFACE 

For the last five years the Standing Committee on Finance and Economic Affairs 
has held pre-budget consultations with the public in January and February of each 
year in order to provide input to the Treasurer on Ontario’s upcoming budget. 
However, the budgetary transfers to the MUSH seaor (municipalities, 
universities, colleges, schools and hospitals) are announced several months in 
advance of the budget; these transfers represent over 30% of the government’s 
expenditures. Bearing this in mind, the Committee decided to begin pre-budget 
consultations with these transfer partners in November so that the views and 
recommendations of that sector and of the Committee would be known by the 
Treasurer before he makes the final announcement of the transfers for 1992-93. 

After a briefing by the Ministry of Treasury and Economics on the economic 
outlook and on the fiscal situation with respect to the province’s transfer partners, 
the Committee heard from representatives of each sector. In a departure from 
previous practice, the delegates from each sector attended the same meeting. 
Following a short presentation by each group, all wimesses remained at the table 
and responded to questions by members of the Committee. 

The Committee is grateful to all those wimesses who provided it with the benefit 
of their expertise and advice as well as to staff from the Ministry of Treasury and 
Economics who made themselves available for further questioning. 


2 


INTRODUCTION 

As is well known, the Ontario economy has been suffering through a severe 
recession, with reduced output and large numbers of people losing their jobs. 
Declining revenues and increased demand for social assistance has created a 
climate of exceptional fiscal pressures for the government. 

Revenues are expected to decline by 1%, the first year-over-year forecast decline 
since 1945, as a result of the recession and changes to the transfer payments from 
the federal government. There are no expectations of a strong turn around in 
revenue performance, according to the Ministry of Treasury and Economics. 
Corporate income tax revenue will remain low as a result of reduced corporate 
profit levels and loss carry-forward provisions; personal income tax and retail 
sales tax are expected to show only weak to moderate growth. At the same time, 
unemployment above 9 % will place continued upward pressure on social 
assistance programs and services. 

Currently, the major transfers of $16.7 billion to municipalities, universities, 
colleges, schools and hospitals represent more than 31% of government 
expenditures. Around three-quarters of these transfers are for wages and salaries. 
The fiscal year begins in April for hospitals, colleges and universities and in 
January for school boards and municipalities. 

The Committee heard from representatives of each of these sectors, each of whom 
made a brief presentation and responded to questions on the issue of funding. 
Several themes emerged during the hearings which were common to most of the 
sectors. Firstly, they argued that strength in these seaors was a key faaor in the 
future prosperity and quality of life of the province; for example, adequate 
funding for education at all levels was seen as critical for economic renewal and 
growth. Secondly, it was difficult to manage in a fiscally responsible way without 
full control over their expenditures and revenues. Finally, there could be better 
coordination of government services, particularly the delivery of social and health 


3 


services. The particular issues concerning each sector are discussed more fully in 
the subsequent sections. 


MUNICIPALITIES 

About 30% of municipalities’ expenditures, almost $6 billion, comes from the 
province, according to the Ministry of Treasury and Economics. Provincial 
funding may be in response to the number of eligible recipients of general welfare 
assistance and other social programs or as conditional or unconditional grants. 

The two programs included in the major transfers in 1991 were municipal roads 
($827 million) and unconditional grants ($947 million). Wages accounted for an 
average of 50% of the spending on these two programs. 

Both the Association of Municipalities of Ontario (AMO) and the Municipal 
Finance Officers’ Association of Ontario (MFOA) expressed understanding of the 
fiscal constraints facing the Ontario government but also sought recognition of the 
financial difficulties that municipalities are encountering. 

Of particular concern was the issue of control and accountability. A large 
proportion of the expenditures by municipalities are in response to provincially 
mandated requirements in the areas of social assistance, waste management and 
police services. These groups pointed out that the combined cost of the welfare 
systems and police services generally take up between one-quarter and two-thirds 
of the tax revenue raised by municipalities. General welfare assistance caseloads 
have risen by 143% between September 1989 and September 1991, according to 
AMO, and the MFOA suggested that there would be a further increase of 25-50% 
in GWA expenditures for next year. Regulatory changes in the area of waste 
management, in particular municipal source separation programs and mandatory 
leaf and yard composting, have major cost implications for municipalities. In 
addition, given the relatively high wage component, provincially mandated 
programs such as pay equity and the results of negotiated wage agreements strain 
municipal budgets. It becomes increasingly difficult for municipalities to act in a 


4 


fiscally responsible manner if they have no control over a large portion of their 
costs. They requested that transfers should be made to the municipalities 
commensurate with their responsibilities. The MFOA would also like the 
province to show "leadership in establishing responsible wage settlements." 

At the same time, the municipalities’ financial ability to respond is becoming more 
complicated and difficult. There is resistance to further property tax increases, 
certainly of the level required to avoid staff reductions. Both groups believed the 
property tax to be regressive and an inappropriate way to finance many of the 
municipalities’ expenditures, particularly social assistance. While many 
municipalities have accrued reserve funds, they are generally insufficient to cover 
costs on the scale of a new landfill or waste diversion program. 

Both AMO and the MFOA urged that the process of disentangling the roles and 
responsibilities of the municipalities and the province, particularly in cost-sharing 
arrangements, should proceed as fast as possible. They suggested that 
municipalities be given authority for police service board budgets, while the 
province should consider assuming 100% of the financial responsibility for social 
assistance costs. These concerns should form the first phase of social assistance 
and municipal finance reform. 

AMO also strongly advocated establishing a provincial-municipal agreement on 
revenue sharing that will help to redress the problem of unpredictability of 
transfers. Until such an agreement is in place, both groups recommend that there 
should be an across the board increase in transfer payments to municipalities by an 
amount at least equal to the rate of inflation. Furthermore, in order to facilitate 
the municipalities’ budgeting process, the province is asked to announce transfer 
payments as early as possible this year, and by November 15 in subsequent years. 

The Association of Municipalities of Ontario concluded with the following 
statement: 


5 


If the Province accepts the municipalities’ offer to 
carry the responsibility and cost of police services; 
if the Province agrees to assume the full cost of 
General Welfare Assistance; if the Province 
exercises control over the magnitude of provincially- 
determined labour awards; and if the Province 
considers the impact of new provincial programs on 
the financial state of local governments, then and 
only then will municipalities be in a position to 
demonstrate their abilities as financially responsible 
governments. 


The Committee’s recommendations: 


1. The province should proceed with reforming and disentangling provincial- 
municipal financial relations. In particular, two areas need to be 
addressed urgently: 

• social services, especially general welfare assistance; and 

• local boards and agencies, such as police services boards, that lack 
direa political accountability to the electorate. 

2. Recognizing that it may be some time before the full results of the 
disentanglement process are implemented, all decisions which have an 
impaa on municipalities and/or provincial-municipal cost-sharing should be 
linked to the disentanglement process. 

3. Municipalities should consult with the province to address the growing cost 
of government, in particular for cost-shared services. 

4. The province should show leadership in establishing responsible public 
seaor wage settlements. 

5. The government should take iruo account that unilaterally cutting municipal 
transfer payments shifts the tax burden on to the property tax base which is 
a far more regressive and inferior method of taxation. Property taxes are 
inappropriate for funding many of the demands on municipalities. 

6. The announcement of transfer payments should be made as early as possible 
this year, and by November 15 in subsequent years. 


6 


UNIVERSITIES 

In 1991-92 universities received $1,944 million from the province in transfer 
payments. The Ministry of Treasury and Economics advised the Committee that 
university operating grants provided funding to 19 universities. Provincial funding 
represents about 80% of university operating budgets with tuition fees contributing 
to most of the remaining 20%. About 80% is related to salaries and wages. 
Capital requirements are funded separately. 

The importance of a high quality, accessible university system was pointed out by 
all witnesses as well as the difficulty in attaining such a goal with the current 
funding levels. The Ontario Confederation of University Faculty Associations 
(OCUFA) emphasized that a high level of education and skills is vital for 
economic growth and prosperity and Ontario cannot afford not to fund its 
universities adequately. Furthermore, social policies such as employment equity 
are dependent on an educational system that is accessible to all members of 
Ontario’s society. Their views were succinaly expressed in the slogan "If you 
think education is expensive, try ignorance." 

The Council of Ontario Universities (COU) pointed to the increasing number of 
applications to universities, despite a shrinking cohort of 18-24 year-olds, as 
evidence of the public’s belief in the need and importance of a university 
education. As Ontario faces an increasingly competitive global economy where 
success is often based on knowledge, it is critical that Ontario invest in 
maintaining and enhancing its universities. The Ontario Federation of Students 
(OFS) reaffirmed its commitment to a high quality, fully accessible post-secondary 
education system. Consistent underfunding could lead to losses of up to one third 
of university support staff and declining services such as reduced library 
acquisitions and outdated lab equipment, according to the Confederation of 
Ontario University Staff Associations. 


7 


The OFS believed that it would take $130 million (1992 dollars) per year over two 
years to bring Ontario’s per-student funding levels to the Canadian average. 

Beyond this, it would require $613 million to bring operating grants for Ontario 
universities to their 1978-9 levels. The Committee heard from the COU that 
universities need an absolute minimum of 7 % to cover their rising costs in 
1992-93; a lower level of funding will result in reductions in full time enrolment, 
faculty and staff. The COU also believed that the government may have to 
consider legislating some period of wage restraint in order to have some control 
over its wage bill. 


There was much debate over the extent to which students should pay for their 
education. The COU felt that, if grants revenue is insufficient, universities should 
be able to raise tuition fees to a certain ceiling, subjea to some discretion within 
individual institutions. They also favoured an income contingent repayment plan 
as the preferred vehicle for students’ financing university-level study. Both these 
approaches were rejected by the OFS and OCUFA who felt they compromised 
accessibility and would lead to burdensome, life-long debt levels. There was 
much support, however, for the use of a more progressive income tax system, 
both personal and corporate, to fund university education. 


The Committee’s recommendations: 


7. The government should reaffirm its commitment to a high quality, fully 
accessible post-secondary education system. This goal has been difficult to 
attain as operating grants for post-secondary education have continued to 
decline relative to GDP growth. 

8. It is essential that Ontario fund its universities adequately; it cannot afford 
the economic and social costs associated with an inadequately educated 
population. Economists write that a high level of education and skills is 
vital for economic growth and prosperity; education may be the single most 
important determinant of economic growth in the developed world. 

9. The government should pursue a multi-year financial plan for Ontario 
universities. 


8 


10. The government should pursue fair share taxation and measures such a 
minimum corporate tax and a speculation tax as ways of addressing 
underfunding. 


COLLEGES 

Ontario’s 23 colleges of applied arts and technology received $826 million in 
major transfers from the provincial government in 1991-92, about 75% of which 
was related to salaries and wages, according to the Ministry of Treasury and 
Economics. This amount accounts for about three-quarters of the colleges’ 
operating budgets. Capital requirements are funded separately. 

The Ontario Council of Regents for Colleges of Applied Arts and Technology, 
together with the Council of Governors, the Council of Presidents and the 
Association of Colleges of Applied Arts and Technology, raised some serious 
questions about the role of government vis-^-vis the college system. Colleges 
have two streams -- post-secondary and training — and the demand for both has 
been rapidly increasing. Young students perceive a community college education 
as the basic level to be acquired while the current restructuring and large numbers 
on social assistance place a heavy demand on training facilities. Adults seeking 
retraining also create pressure on places for young students. It was suggested that 
colleges could have a significant role to play in meeting the challenge Ontario 
faces in restructuring and moving towards a high technology, high value-added 
economy. However, if the government chooses to use colleges as a primary part 
of their strategy for economic renewal, they would require a significant injection 
of funds in order to carry out their mandate. 

While enrolment has been increasing, funds for colleges have been lagging. 
Revenues are received from a variety of sources -- the Ministry of Colleges and 
Universities (55%), Ministry of Skills Development (11%), federal government 
for apprenticeship and training agreements (11%), tuition fees (9%) and others -- 
but these revenues are not easily transferrable within the college system. As a 


9 


result, resources are strained and some colleges are reluctantly considering a cap 
in enrolment. 

In order to meet current needs, colleges would require an increase in grants of 
around 8%. However, given the province’s fiscal situation, they would more 
realistically expect to receive an increase in the order of 2%. In addition, colleges 
would like to have more flexibility to be entrepreneurial and creative in managing 
their financial affairs. 


The Committee’s recommendations: 


11. The government should consider that colleges have a significant role to play 
in meeting the challenge of moving towards a high technology, high value- 
added economy. As the demand for post-secondary education and training 
increases, particularly during the current period of restruauring, the present 
funding approach should be re-examined and changed. 

12. The government should assist in alleviating the funding problems: colleges 
are seeking the maximum flexibility to be as entrepreneurial and creative as 
possible, for example in accessing revenue or moving money between 
different categories. 

13. The relationship between colleges and the Omario Training and Adjustmem 
Board should be coordinated with care to avoid fracturing the training 
culture. 

14. The government should consider that colleges would need an increase in 
grants of around eight percent to cover actual costs but are expeaing an 
increase in the range of zero to two percent according to the Ontario 
Council of Regents. 


SCHOOLS 

The Ministry of Treasury and Economics advised the Committee that the 
provincial government transferred $4,839 million in 1991-92 to school boards, 
approximately 80% of which was for wages and salaries. The province distributes 
funds for school board operations in the form of General Legislative Grants on the 
basis of enrolment and taking account of the property tax base. In 1990, the 


10 


province contributed around 42% of total school board operating expenditure; if 
provincial contributions to teachers’ pensions and school capital are included, and 
school board expenditure restricted to that approved by the government, this rate 
would rise to about 57%. School boards levy property taxes in order to fund the 
difference between their expenditures and provincial grants. 

The educational groups appearing before the Committee echoed the comments 
made by representatives from universities and colleges, that funding of the 
education system is vital, not only to maintain the principles of the right to 
education and equality of educational opportunity, but also to maintain and 
enhance the province’s future prosperity. As the Ontario Teachers’ Federation 
(OTF) stated, a literate, educated workforce is this province’s greatest asset and 
the key to economic regeneration. 

The increase in grants to school boards in 1992-93 should at least match the rate 
of inflation, according to the Ontario Secondary School Teachers’ Federation 
(OSSTF). The Ontario English Catholic Teachers’ Association (OECTA) and the 
Ontario Public School Teachers’ Federation (OPSTF) went further, suggesting that 
the grants should increase by inflation plus one to two percent. The Ontario 
Public School Trustees’ Association (OPSTA) also recommended that flat grants 
be terminated and the amount included in the grant ceiling. Together with 
OECTA, they suggested that grant ceilings should be raised in order to promote 
more equitable access to education dollars. Several groups, such as the Ontario 
Separate School Trustees’ Association (OSSTA), requested that the timing of the 
General Legislative Grants payments be changed to a more realistic schedule and 
that the practice of holding back a percentage until the end of the year be 
eliminated. 

Finally, the Ontario Public School Boards’ Association (OPSBA) pointed out that 
school boards cannot assume new responsibilities for provincially mandated 
programs without new revenue for implementation. In particular, the government 
was requested to restore the allocation to the pay equity fund and to make these 


11 


funds available as soon as possible to address the costs of implementing pay 
equity. The OPSBA would also welcome some guidelines on public seaor wages, 
though most other groups opposed any form of wage controls. 

There was some difference of opinion on the issue of capital support. The OTF 
suggested that, while there is need for capital improvements and additions, some 
coital allocations could be delayed during the current budget crisis. The Ontario 
Public School Teachers’ Federation advocated maintaining the current level of 
capital support, while OPSBA urged consulting on and revising the criteria for 
capital grant allocations. They also recommended increasing capital grant levels 
in a variety of ways, such as restoring the level of support to 75 % where lot 
levies are not a realistic funding mechanism, and amending the Capital Grant Plan 
annually to reflect the current construction price index. 

Excellence in education is not only achieved through the education system itself 
but also by funding social programs adequately. The Ontario English Catholic 
Teachers’ Association believes this to be necessary in order to achieve the goal of 
a well educated, healthy citizenry. The Federation of Women Teachers’ 
Associations of Ontario (FWTAO) focused on the impaa of poverty on children, 
not only in terms of health but on educational achievement. Poor children who 
are inadequately nourished, clothed or housed have more difficulty in learning and 
are less likely to complete school and attain higher education. They recommended 
provincial funding for a number of programs, such as school meals, increased 
low-cost housing and health professionals in the schools, as well as coordination 
and integration of health and social services for children in the community, as 
ways to help alleviate the effects of child poverty. Over the long term, the 
government should work towards eliminating poverty and maintain its commitment 
to job creation, an increased minimum wage and income supplementation for the 
working poor. 

Reform of the taxation system, including education finance, by the Fair Tax 
Commission was welcomed, though FWTAO argued that financing under the 


12 


present system should be maintained at adequate levels while the review is in 
process. The reform should proceed with a view to shifting funding from 
property taxes to a more progressive tax base, according to groups such as the 
OSSTF. The government was urged to ensure that the true cost of education was 
captured in its financing and that the system be rebuilt to ensure equity of 
outcomes for all the children in the province. When debating how to finance 
education needs, the OSSTF suggested that the government consider debenturing 
by school boards, phasing in a minimum corporate income tax, and eliminating 
the duplication of services. 

The OTF, FWTAO and others stressed the importance of integrating and 
coordinating health and social services provided for children. A clearer definition 
of the role and relationship of schools in the delivery of these services would 
result in greater efficiency. There was also a need for coordination within the 
education system itself, and some groups suggested that a series of financial 
incentives would encourage boards to cooperate. A specific example is the 
integration of busing between school boards; one solution suggested by OECTA 
was that each municipality should have a commission that would organize busing 
for all school boards. 

The Committee’s recommendations: 

15. The government should make poor children one of its priorities. Short-term 
and long-term solutions include: 

• The province should push for a substantial increase in low-cost and 
non-profit housing. 

• There should be provincial recognition that child poverty is part of 
"the feminization of poverty," and government action is required on: 

a) accessible, affordable childcare; 

b) fully errforced pay equity; 

c) mandatory affirmative action; and 

d) better training opportunities for women. 


13 


16. The government should continue to press the federal government to remove 
the caps in federal transfers to the provinces, and Ontario should seek the 
support of the other provinces for this increase. 

17. There should be greater transparency on the part of the Ministry of 
Education in explaining its allocation decisions. 

18. The government should clarify the status of adults in Omario high schools to 
show that they are as important for occupancy purposes as are ’’school age 
students." 

19. The Committee recommends then: 

• The Ministry of Education should, through consultation, develop 
allocation criteria and these should be publicized. 

• The Ministry of Education through its regional offices should provide 
a yearly public report which sets out the criteria and rationale for 
capital funding allocations. 

20. The reform of the tax system should include developing another approach to 
education financing that will adequately reflect the true cost of education. 

21. The Fair Tax Commission should be urged to aa with all dispatch to ensure 
that property tax reform proceeds as quickly as possible, with a view to 
shifting more of the burden of funding local educcuion to the progressive tax 
base. 

22. The Committee would like to stress the importance of coordination and 
integration of health and social services presently available to poor children, 
families, communities and schools. The province should consider: 

• community-based programs to involve and educate parents and 
teachers about drugs, child abuse, etc. 

• coordination and an increase in special services, such as speech and 
counselling; 

• integration of child care, before and after school latch key, breaJfast 
and lunch programs; 

• cooperation between pre-school, elementary, secondary and post¬ 
secondary in use of resources and expertise; and 

• coordination and sharing of recreational facilities. 

23. The government should analyze the potential savings from a comprehensive 
integration of children’s services. 


14 


24. The Committee would raise one suggestion to avoid duplication in busing 
and it is to have a commission in each municipality that would organize 
busing for all school boards. 

25. The Treasurer should implement a series of incentive grants that will 
encourage boards to cooperate in the utilization of facilities and in the 
provision of services to the maximum extent possible. 

HOSPITALS 

The costs of health care have been an issue of rising concern over the last few 
years. In 1991-92 capital and operating expenditures by the Ministry of Health 
represented 32% of the provincial budget. In the current year, $7,285 million 
was transferred to hospitals, according to the Ministry of Treasury and 
Economics. The province provides operating grants to 225 hospitals which cover 
approximately 85% of their expenditures; about three-quarters of these payments 
are related to salaries and wages. In addition, the Ministry of Health generally 
funds two-thirds of hospitals’ capital costs. 

The relationship between the government and health care is being altered, with the 
government changing from an insurance role to stronger management through 
tighter fiscal controls. There is also the desire to move from institutional to 
community-based health care. The relationship between physicians and the 
government has been renegotiated and there is more control of drug expenditures 
and out-of-province health insurance payments. 

There has been much discussion about the need for cooperation and partnership 
between the government and health care providers in controlling expenditures and 
remodelling the system. Hospitals, while willing to participate, have expressed 
frustration at the lack of direction and collaborative planning from the 
government. The Ontario Hospital Association (OHA) stated: 

I 

The difficulty, from the standpoint of the OHA and its 
hospitals, is that for several years now, we have been in 
holding pattern. Hospitals are willing, indeed they are 


15 


anxious to take an active part in reshaping the system, but 
clear direction from the government is needed. 

According to the OHA, the hospital sector needs an increase of 8.61%, or $630.7 
million, to maintain the current level of hospital services. This does not include 
collective agreements, representing 60% of staff, that are yet to be negotiated. 

The Ontario Public Health Association (OPHA), on the other hand, argued that 
the whole health care system needs to be reconfigured away from medical models 
based on sickness and towards community health that is based on wellness and 
sickness prevention. The OPHA advocated reducing overall institutional and drug 
benefit program costs by 3% in 1992-3, saving $312.4 million. The reductions 
should be made in the context of relevant community need and additional money 
should be spent on programs such as full implementation of mandatory core 
programs in the Official Health Units, improved and expanded community health 
centre services and long term care reform. Furthermore, OPHA recommended 
that tobacco taxes should be increased by 3 cents per cigarette as one component 
of a strategy to reduce cigarette consumption by teenagers. 

The groups all had suggestions of ways in Which health care savings might be 
realized. The Registered Nurses’ Association of Ontario (RNAO) suggested that 
there could be a reallocation of funds away from non-patient care to direct patient 
care. For example, the purchase of non-patient vehicles and furniture and 
cosmetic building enhancements could be frozen or deferred. Together with the 
OHA and the OPHA, the RNAO pointed to eliminating the duplication of services 
as a key area for improved cost efficiency; district health councils might achieve 
coordination of services across the health care system through an expanded role. 
On the subject of user fees, the OHA indicated that there were certain user fees in 
the system at present. The OPHA were opposed to user fees in principle and 
pointed out that the use of user fees on a selective basis will result in a two-tier 
health system. Similarly, the RNAO was adamant that all Ontarians should have 
access to the appropriate level of care without a user fee but implied there may be 
some scope to charge user fees for activities beyond that level. 


16 


The move from institutional care to community-based care elicited comments from 
all groups. The OPHA stressed that additional expenditure on hospitals and 
physicians does not equal health care and that the community health model 
incorporates a much broader range of health factors such as adequate food and 
shelter, clean air and water, etc. The RNAO emphasized the need for human 
resources planning to ensure that patients received the quality health care from 
caregivers with the appropriate skill and education and in the most realistic 
setting. Furthermore, the move towards community health will result greater 
autonomy for the nurses involved and require higher levels of training. 

The OHA pointed out that while hospitals would cooperate in this redirection of 
health care to the community, there remained situations such as 24-hour-a-day 
care in which hospital care was more cost-effeaive. Hospitals are a key 
component of each community and would be prepared to oversee the operation of 
homecare programs, for example the coordination of admission and discharge of 
patients. Nevertheless, witnesses agreed that the transition from institutional to 
community-based health must be managed with care and may be expensive; the 
system must ensure that community care is in place before institutional care is 
withdrawn. 

The Committee’s recommendations: 


26. The Committee supports changes to the Public Hospitals Aa which are 
currently under review that would mandate utilization management and 
strengthen hospital boards in monitoring physician practices. 

27. The Committee feels that what is required is a contemporary vision of 
accessible, portable, universal, comprehensive and publicly-administered 
medical care that is also affordable and that we can work together to create. 

28. The Committee is supportive of provincial government action to retain and 
increase federal transfer payments. 

29. The government’s policies for the redirection of long term care and support 
services need to be clarified. 



17 


30. The Committee is of the view that there is a need for more direction and 
collaborative planning, rather than arbitrary directives to stay within 
budget. Hospitals must be willing to take an active part in reshaping the 
system. 

31. The Committee feels that there should be more coordination to avoid 
duplication of services by various players in the health care system. Distria 
health councils have been providing coordination but the number of players 
involved could be expanded. 

32. The government should consider that the health care system needs to be 
reconfigured, away from medical models and towards community and public 
health. 

33. The Committee is of the opinion that all Ontarians should have access to the 
appropriate level of care without a user fee. There may be aaivities beyond 
that level which individuals can elea to receive. 

34. The Ministry of Health should investigate the creation of criteria for the 
establishment of Boards of Hospitals that will reflea the changing nature of 
the work force in the hospital and create greater accountability. 

35. The Ministry of Health should investigate the cost-saving potential of 
decentralizing the decision making process of the hospitals. (This should 
include the closer cooperation of Fiscal Advisory Boards and the Boards of 
Direaors of the hospitals). 


18 


LIST OF RECOMMENDATIONS 

1. The province should proceed with reforming and disentangling provincial- 
municipal financial relations. In particular, two areas need to be addressed 
urgently: 

• social services, especially general welfare assistance; and 

• local boards and agencies, such as police services boards, that lack 
direa political accountability to the eleaorate. 

2. Recognizing that it may be some time before the full results of the 
disentanglement process are implemented, all decisions which have an 
impaa on municipalities and/or provincial-municipal cost-sharing should be 
linked to the disentanglement process. 

3. Municipalities should consult with the province to address the growing cost 
of government, in particular for cost-shared services. 

4. The province should show leadership in establishing responsible public 
seaor wage settlements. 

5. The government should take into account that unilaterally cutting municipal 
transfer payments shifts the tax burden on to the property tax base which is 
a far more regressive and inferior method of taxation. Property taxes are 
inappropriate for funding many of the demands on municipalities. 

6. The announcement of transfer payments should be made as early as possible 
this year, and by November 15 in subsequent years. 

7. The government should reaffirm its commitment to a high quality, fully 
accessible post-secondary education system. This goal has been difficult to 
attain as operating graras for post-secondary education have continued to 
decline relative to GDP growth. 

8. It is essential that Ontario fund its universities adequately; it cannot afford 
the economic and social costs associated with an inadequately educated 
population. Economists write that a high level of education and skills is 
vital for economic growth and prosperity; education may be the single most 
important determinant of economic growth in the developed world. 

9. The government should pursue a multi-year financial plan for its 
universities. 

10. The government should pursue fair share taxation and measures such a 
minimum corporate tax and a speculation tax as ways of addressing 
underfunding. 


19 


11. The government should consider that colleges have a significant role to play 
in meeting the challenge of moving towards a high technology, high value- 
added economy. As the demand for post-secondary education and training 
increases, particularly during the current period of restructuring, the present 
funding approach should be re-examined and changed. 

12. The government should assist in alleviating the funding problems, as 
colleges are seeking the maximum flexibility to be as entrepreneurial and 
creative as possible, for example in accessing revenue or moving money 
between different categories. 

13. The relationship between colleges and the Ontario Training and Adjustment 
Board should be coordinated with care to avoid fracturing the training 
culture. 

14. The government should consider that colleges would need an increase in 
grants around eight percent to cover aaual costs but are expecting an 
increase in the range of zero to two percent according to the Ontario 
Council of Regents. 

15. The government should make poor children one of its priorities. Short-term 
and long-term solutions include: 

• The province should push for a substantial increase in low-cost and 
non-profit housing. 

• There should be provincial recognition that child poverty is part of 
"the feminization of poverty," and government action is required on: 

a) accessible, cffbrdable childcare: 

b) fully erforced pay equity: 

c) mandatory affirmative action: and 

d) better training opportunities for women. 

16. The government should continue to press the federal government to remove 
the caps in federal transfers to the provinces, and Ontario should seek the 
support of the other provinces for this increase. 

17. There should be greater transparency on the part of the Ministry of 
Education in explaining its allocation decisions. 

18. The government should clarify the status of adults in Ontario high schools to 
show that they are as important for occupancy purposes as are "school age 
students." 


20 


19. The Committee recommends that: 

• The Ministry of Education should, through consultation, develop 
allocation criteria and these should be publicized. 

• The Ministry of Education through its regional offices should provide 
a yearly public report which sets out the criteria and rationale for 
capital funding allocations. 

20. The reform of the tax system should include developing another approach to 
education financing that will adequately reflea the true cost of education. 

21. The Fair Tax Commission should be urged to aa with all dispatch to ensure 
that property tax reform proceeds as quickly as possible, with a view to 
shifting more of the burden of funding local education to the progressive tax 
base. 

22. The Committee would like to stress the importance of coordination and 
integration of health and social services presently available to poor children, 
families, communities and schools. The province should consider: 

• community-based programs to involve and educate parents and 
teachers about drugs, child abuse, etc. 

• coordination and an increase in special services, such as speech and 
counselling; 

• integration of child care, before and after school latch key, breakfast 
and lunch programs: 

• cooperation between pre-school, elementary, secondary and post¬ 
secondary in use of resources and expertise: and 

• coordination and sharing of recreational facilities. 

23. The government should analyze the potential savings from a comprehensive 
integration of children "s services. 

24. The Committee would raise one suggestion to avoid duplication in busing: to 
have a commission in each municipality that would organize busing for all 
school boards. 

25. The Treasurer should implement a series of incentive grams that will 
encourage boards to cooperate in the utilization of facilities and in the 
provision of services to the maximum extern possible. 


21 


26. The Committee supports changes to the Public Hospitals Aa which are 
currently under review, that would mandate utilization management and 
strengthen hospital boards in monitoring physician practices. 

27. The Committee feels that what is required is a contemporary vision of 
accessible, portable, universal, comprehensive and publicly-administered 
medical care that is also affordable and that we can work together to create. 

28. The Committee is supportive of provincial government action to retain and 
increase federal transfer payments. 

29. The government’s policies for the redirection of long term care and support 
services need to be clarified. 

30. The Committee is of the view that there is a need for more direaion and 
collaborative planning, rather than arbitrary directives to stay within 
budget. Hospitals must be willing to take an active part in reshaping the 
system. 

31. The Committee feels that there should be more coordination to avoid 
duplication of services by various players in the health care system. Distria 
health councils have been providing coordination but the number of players 
involved could be expanded. 

32. The government should consider that the health care system needs to be 
reconfigured, away from medical models and towards community and public 
health. 

33. The Committee is of the opinion that all Ontarians should have access to the 
appropriate level of care without a user fee. There may be aaivities beyond 
that level which individuals can elea to receive. 

34. The Ministry of Health should investigate the creation of criteria for the 
establishment of Boards of Hospitals that will reflea the changing nature of 
the work force in the hospital and create greater accountability. 

35. The Ministry of Health should investigate the cost-saving potential of 
decentralizing the decision making process of the hospitals. (This should 
include the closer cooperation of Fiscal Advisory Boards and the Boards of 
Direaors of the hospitals). 



¥ 





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APPENDIX A 


Dissenting Opinion - Liberal Caucus 



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LIBERAL CAUCUS SUBMISSION TO THE STANDING COMMITTEE ON FINANCE 

AND ECONOMIC AFFAIRS - INTERIM REPORT ON THE MUSH SECTOR 


The Treasurer’s presentation, on December 19, 1991 to the Standing Committee on Finance 
and Economic Affairs, was significant for its juxtaposition of two elements critical to the 
stability of the MUSH sector. The Treasurer: 

1, confirmed that the province’s municipalities, hospitals, universities and school boards 
would have to wait until the new year — a potential delay of six to eight weeks -- for an 
indication from the government regarding the level of financial support to be transferred in 
the 1992 fiscal year and beyond; and, 

2. indicated that a basic restructuring of the MUSH sector, its programs and its priorities is 
essential to managing the "historically high" deficit. 

The Liberal Caucus regrets the delayed MUSH announcement most particularly for the way 
in which it hinders the efforts of the government’s funding partners (municipalities, hospitals, 
universities and school boards) in planning and budgeting for the upcoming year. 

More important is the Treasurer’s public declarations that the MUSH transfers will be "very 
lean", particularly when considered in light of the basic sectoral restructuring that he feels is 
necessary to manage the government’s fiscal crisis. If the transfer payment allocations are 
significantly lowered, the government has a responsibility to provide standards and guidelines 
for municipalities, universities, school boards and hospitals which will enable them to 
respond to provincial fiscal downloading and accompanying program cuts in a way consistent 
with government priorities. In short, if transfer agencies are to be required to cut their 
budgets, the province has an obligation to tell them what to cut. 




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APPENDIX B 
List of Witnesses 





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APPENDIX B 


LIST OF WITNESSES 


From the Ministry of Treasury and Economics 

Bryan Davies, Deputy Minister 

Phyllis Clark, Assistant Deputy Minister and Chief Economist, Office of Economic Policy 

Tony Salerno, Director, Fiscal Planning Policy Branch 

Alan Puttee, Director, Intergovernmental Finance Policy 

Steve Dorey, Assistant Director, Macroeconomic Analysis and Policy 


From the Ontario Confederation of University Faculty Associations 
Bill Graham, President 


From the Ontario Federation of Students 

Asha Bhat, Director of Communications 
Yves LaCroix, Treasurer 

From the Council of Ontario Universities 

Peter George, President 

Brian Seagal, Chair of the Board and President of the University of Guelph 

From the Confederation of Ontario University Staff Associations 
Barbara Johns, President 

From the Association of Municipalities of Ontario 

Helen Cooper, President and Mayor of Kingston. 

From the Municipal Finance Officers Association 

Jo Rinaldo, Commissioner of Finance and Treasurer, Halton Region 
Mike Trojan, Director of Finance and Treasurer, Niagara Region 


From the Ontario Teachers Federation 


Ron Poste, President 

From the Ontario Public School Teachers Federation 

Gene Lewis, President 

From the Ontario Secondary School Teachers Federation 

Liz Barkley, President 

Larry French, Legislative Researcher 

From the Ontario English Catholic Teachers Association 

Michael Cote, President 

From the Federation of Women Teachers’ Associations of Ontario 

Margaret Dempsey, President 

From the Ontario Public Health Association 

Ruth O’Donnell, President 

Audrey Danaher, Chair, Public Policy and Resolution Committee 
Peter Elson, Executive Director 

From the Ontario Hospital Association 

Dennis Timbrell, President 
Brian MacFarlane, Chairman-elect 

From the Registered Nurses Association of Ontario 

Joan Edwards, Chairperson, Finance Committee 


From the Ontario Public School Boards Association 

Paula Dunning, President 

Gayle Neiberg, Trustee and Vice-President 

Karen Redman, Trustee and Vice-President 

Penny Moss, Executive Director 

Ron Sutz, Superintendent, Northumberland/Newcastle 

Beverly Allen, Director of Legislation 


From the Ontario Separate School Trustees Association 

Betty Mosely-Williams, President 
Jim Sherlock, Past-President 


From the Colleges of Applied Arts and Technology 

Richard Johnston, Chairman, Council of Regents 
Keith McIntyre, Chairman, Council of Presidents 
Peter Milner, Member, Council of Governors 



;JL .; VC ^ 







APPENDIX C 
List of Exhibits 





STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS 


1992 PRE-BUDGET CONSULTATIONS 
EXHIBITS 


EXHIBIT NO. 1/04/001 

EXHIBIT NO. 1/04/002 

EXHIBIT NO. 1/04/003 

EXHIBIT NO. 1/04/004 

EXHIBIT NO. 1/04/005 

EXHIBIT NO. 1/04/006 

EXHIBIT NO. 1/04/007 

EXHIBIT NO. 1/04/008 

EXHIBIT NO. 1/04/009 

EXHIBIT NO. 1/04/010 


MINISTRY OF TREASURY AND 
ECONOMICS: Presentation entitled "Part I: 
Ontario’s Economic Outlook: 1991-1992 and 
Medium Term". 

MINISTRY OF TREASURY AND 
ECONOMICS: Presentation entitled "Part 11: 
Fiscal Environment and Overview of Major 
Transfers". 

ONTARIO CONFEDERATION OF 
UNIVERSITY FACULTY ASSOCIATIONS: 
Submission regarding Pre-Budget Consultations. 

ONTARIO FEDERATION OF STUDENTS: 
Submission regarding Pre-Budget Consultations. 

COUNCIL OF ONTARIO UNIVERSITIES: 
Brief regarding Pre-Budget Consultations. 

ASSOCIATION OF MUNICIPALITIES OF 
ONTARIO: 1992 Pre-Budget Consultation 

Brief. 

MUNICIPAL FINANCE OFFICERS’ 
ASSOCIATION OF ONTARIO: Pre-Budget 
Submission. 

ONTARIO TEACHERS’ FEDERATION: 
Submission on the 1992 Ontario Budget. 

ONTARIO PUBLIC SCHOOL TEACHERS’ 
FEDERATION: Submission with respect to the 
1992 Budget 

ONTARIO SECONDARY SCHOOL 



TEACHERS’ FEDERATION; Submission on 
the Pre-Budget Consultation Process entitled 
"Meeting the Challenge in Educational Funding 
in Tough Times". 

EXHIBIT NO. 1/04/011 

ONTARIO ENGLISH CATHOLIC TEACHERS 
ASSOCIATION; Brief on the 1992 Ontario 
Budget. 

EXHIBIT NO. 1/04/012 

FEDERATION OF WOMEN TEACHERS’ 
ASSOCIATIONS OF ONTARIO; Statement for 
the 1992 Pre-Budget Consultation. 

EXHIBIT NO. 1/04/013 

ONTARIO PUBLIC HEALTH ASSOCIATION; 
1992/93 Budget Brief. 

EXHIBIT NO. 1/04/014 

ONTARIO HOSPITAL ASSOCIATION; 
Presentation regarding Pre-Budget Consultations. 

EXHIBIT NO. 1/04/015 

REGISTERED NURSES’ ASSOCIATION OF 
ONTARIO; Submission on Pre-Budget 

Consultation Hearings. 

EXHIBIT NO. 1/04/016 

ONTARIO SEPARATE SCHOOL TRUSTEES’ 
ASSOCIATION; Brief regarding Pre-Budget 
Consultations. 

EXHIBIT NO. 1/04/017 

ONTARIO PUBLIC SCHOOL BOARDS’ 
ASSOCIATION; Presentation entitled "Funding 
Our Education System in the 1990’s". 

EXHIBIT NO. 1/04/018 

ASSOCIATION OF COLLEGES OF APPLIED 
ARTS AND TECHNOLOGY OF ONTARIO; 
Presentation regarding Pre-Budget Consultations. 

EXHIBIT NO. 1/04/019 

LEGISLATIVE RESEARCH SERVICE; 
Summary of Recommendations Pre-Budget 
Consultations 1992; Transfer Partners 

(Municipalities, Universities, Colleges Schools 
and Hospitals). 


Ontario 


Standing Committee 

on 

Finance and Economic Affairs 


Interim Report 

Pre-Budget Consultation 1992 



Principal Transfer Recipients: 
Municipalities 
Universities/Colleges 
Schools 
Hospitals 


1st Session 35th Parliament 
40 Elizabeth II