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December 21, 2011 - No. 18

Demands for "Austerity Measures"

Stop Paying the Rich;
Increase Investments in Social Programs!
Public Right, Yes! Monopoly Right, No!

Demands for "Austerity Measures"
Stop Paying the Rich; Increase Investments in Social Programs! Public Right, Yes! Monopoly Right, No! - Steve Rutchinski

For Your Information
Misrepresentation of the Facts -- Lies About Ontario Government Spending
A Word About Moody's

Toronto Municipal Workers on the Front Line
Ford Regime Continues Push for "Showdown" with Toronto Workers and Residents
Toronto Needs a Pro Social Aim - David Greig

Public Child Care Is a Right
Government Supports Privatization of Child Care by International Monopoly - Pritilata Waddedar

Harper Omnibus Crime Bill
Impact of Crime Bill on Ontario - Philip Fernandez


Demands for "Austerity Measures"

Stop Paying the Rich;
Increase Investments in Social Programs!
Public Right, Yes! Monopoly Right, No!

Not unexpected but nonetheless unacceptable. The international financial oligarchy is ending the year with a stepped up demand for the government of Ontario to impose "austerity measures" in the New Year, or face increased borrowing costs. On December 14 the so-called investor service, Moody's, declared that if Ontario "does not take serious steps in the next budget to deal with the multibillion dollar deficit," it will downgrade the province's credit rating.

Ontario Finance Minister Dwight Duncan immediately declared "Moody's action shows that the government must be 'relentless' in meeting its targets to eliminate the province's deficit by 2017-2018." Ontario PC leader Tim Hudak said, "The Moody's warning is a further wake-up call to Dalton McGuinty that this job [turning the province's finances around] needs to start now." TD Bank chief economist Craig Alexander agreed. What markets need from governments around the world right now are credible commitments to deal with their deficits in the medium term, Alexander said. The Globe and Mail said Moody's was ratcheting up pressure for the province to take more aggressive action to rein in spending and "get its fiscal house in order."

One would think that having paid more than $150 billion in interest alone in 10 years on a provincial debt, which in 1992 stood at $49.4 billion, and despite not incurring any new debt in six of the last 10 years, Ontario should have a five star credit rating, not a second rate Aa1 bond rating. The people of Ontario do not even know how the government spends their money, transferred as it is through secret deals such as the written off loans given GM and Chrysler, but the international financial oligarchy credit rating services are certainly going to tell them what to do with the rest! The more the rich manage to swindle, the more they demand. It has now become the fashion to blackmail countries with the downgrading of their credit rating, which results in higher borrowing costs, unless they restructure to meet all the claims of the rich, while the claims of the people are to have no standing.

Moody's threat to downgrade Ontario's credit rating and its repetition by representatives of government, big business and the monopoly media is PR to add fuel to the fire that Ontario has no choice but to cut spending on social programs, attack public service workers and privatize delivery of public services under the hoax of "saving money." Moody's pronouncements are not based on facts. Facts and truth do not matter to the hired guns of the financial oligarchy which is on a mission to wreck the existing social infrastructure of all the societies, privatizing whatever is lucrative in the delivery of public services and resources so as to plunder the public treasury.

By capitulating to this blackmail, the Government of Ontario and the Opposition are permitting gross interference in our sovereign affairs. The PR spin seeks to perpetuate the lie that the people of Ontario are being sustained by the rich so as to justify cuts to the funding of social programs, cuts to public services and privatization of delivery of public services under the hoax it will "save money."

The fact that Moody's is privately owned, makes its money doing the bidding of the financial oligarchy, has little regard for truth or that its principle owners are suspected of insider trading, corruption and blackmail has no bearing on the character of its pronouncement, according to them. Moody's is to be taken as the word of god!

Why is this when Moody's assertions contradict the published public accounts? Why do Ontario government officials not stand by their published accounts? Do they have a guilty conscience that their accounts are not accurate? Or is it that they are capitulating to the credit rating agency of the international financial oligarchy so as to blackmail the people of Ontario that they have to tighten their belts? Why should the people of Ontario tighten their belts rather than the government of Ontario stop paying the rich? Far from permitting the demand that the people of Ontario should be taxed more to pay for social services, or that social services should be privatized, the working class should demand that governments do their duty to uphold the public interest which must start by refusing to put all the assets of Ontario, including its government, at the disposal of the dictate and blackmail of the financial oligarchy.

Stop Paying the Rich!
Increase Funding for Social Programs!
Say No! to Austerity Measures!

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For Your Information

Misrepresentation of the Facts --
Lies About Ontario Government Spending

The Ministry of Finance 2010-2011 Public Accounts shows that provincial revenue exceeded provincial program spending every year from 2002 through 2008. Only in 2009-10 and 2010-11 did spending exceed revenues and that was due to spending to bail the rich out of the crisis, not to increase funding for social programs for people in need due to the upheaval caused by the financial crisis.

These are matters of fact published in the Ministry's own Public Accounts statement: "From 2003 until the start of the global recession, average growth in program spending was held below growth in revenues." It continues: "In response to the global economic downturn, the Province collaborated with the federal government, municipalities and other organizations on a program of additional stimulus spending that started in 2009." A total of $16.3 billion was committed by the provincial government, of which $15.2 billion was spent by the end of 2010 fiscal year. (See Table 1 below)

Stimulus spending is rolled into "program" spending in the Ontario Financial Accounts statement. If the $15.2 billion in stimulus spending is taken out of the $106.3 billion "program" expenditures for 2009-2010, program expenditure was actually only $91.1 billion, less than provincial revenue and in fact a decrease from the 2008-09 fiscal year. (See Table 2 below)

Table One: Ontario Ministry of Finance Public Accounts 2010- 2011



Table Two: Ontario Program Expenditure

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A Word About Moody's


Protests in Portugal (left) and Spain this past July, following credit downgrades by Moody's.

The following excerpts regarding Moody's are taken from Wikipedia.

***

[Moody's] is one of the big three credit rating agencies and has a 40 per cent share of the world market, as does its main rival, Standard & Poor's. Fitch Ratings has a smaller share.

Starting in the early 1970s, the "Big Three" ratings agencies (S&P, Moody's, and Fitch) began to receive payment for their work by the securities issuers for whom they issue those ratings, which has led to charges that these ratings agencies can no longer always be impartial when issuing ratings for those securities issuers. Securities issuers have been accused of "shopping" for the best ratings from these three ratings agencies, in order to attract investors, until at least one of the agencies delivers favorable ratings. This arrangement has been cited as one of the primary causes of the subprime mortgage crisis (which began in 2007), when some securities, particularly mortgage backed securities and colleralized debt obligations rated highly by the credit ratings agencies, and thus heavily invested in by many organizations and individuals, were rapidly and vastly devalued due to defaults, and fear of defaults, on some of the individual components of those securities, such as home loans and credit card accounts.

Moody's have been subject to criticism in the wake of large losses in the asset-backed security collateralized debt obligation (ABS CDO) market that occurred despite being assigned top ratings by the credit rating agencies Similarly, large companies such as Bear Stearns and Lehman Brothers had AAA and AA rating until they went bankrupt in 2008.

Moody's has been accused of "blackmail". In one example the German insurer Hannover Re was offered a "free rating" by Moody's. The insurer refused. Moody's continued with the "free ratings," but over time lowered its rating of the company. Still refusing Moody's services, Moody's lowered Hannover's debt to junk, and the company in a few hours lost $175 million in market value.

Portugal's foreign debt downgrade to the category Ba2 "junk" has infuriated the European Union and Portugal alike. Moody's has been accused of fueling speculation and bias towards European assets. Furthermore the legitimacy of US based rating agencies has also been put in question. State owned utility and infrastructure companies were also downgraded despite claims to having solid financial profiles and significant foreign revenue

[...]

[Raymond W. McDaniel, Jr. chairman and chief executive officer of Moody's Corporation, the parent company of Moody's Investor Services and Moody's Analytics] has also been the subject of significant scrutiny for the timing of his stock sales. "If you look at his major sales in 2007, 2009, 2010, they are all around price peaks and followed by large declines. The likelihood that this is just 'lucky' is very low -- it appears he is using inside information to time his trades, said Jesse Fried, a Harvard University law professor who studies stock trading by CEOs." [...]

[E]fforts by company employees to report improperly evaluated financial products (sub-prime mortgage scandal) were handled slowly, and little publicity was drawn to subsequent revisions of financial models on which the evaluations were based. Moody's, and Mr. McDaniel personally, were named in a civil lawsuit alleging employees who reported such actions were subjected to "defamation, injurious falsehoods and tortious interference with business relationships" through "malicious, false and/or scandalous statements"

In December, 2010, Mr. McDaniel's terms of employment with Moody's were changed. "According to a Dec. 20 regulatory filing, Moody's said that it amended its "change in control" plan so that in the event of a sale, Mr. McDaniel would get a lump-sum payment equal to three times his base salary and "target bonus." Based on his pay for 2009, the most recent year available, the change would make Mr. McDaniel eligible for a payment of $6.9 million, which is about seven times as much as he would have received under the former arrangement. [...]

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Toronto Municipal Workers on the Front Line

Ford Regime Continues Push for "Showdown" with Toronto Workers and Residents

On Wednesday, December 14, negotiators for the Ford regime presented CUPE Local 416 with a plan to expand use of part-time workers across city operations, and then moved immediately to call on the provincial government to appoint a conciliator under the Ontario Labour Relations Act. This provocation is another step in the administration's push for a "showdown," as Ford has put it, with inside and outside city workers and their unions. The city employees' main collective agreements expire December 31st.

The "showdown" this regime seeks is an abuse of power against municipal workers and all residents of Toronto, and negates a modern conception of society itself. The municipal workers are on the front lines of this battle over what kind of city and society are to be, because the Ford administration needs to smash the job security provisions in the workers' collective agreements in order to continue rapidly handing over public services to private monopolies.

Job security provisions in the existing contracts with Toronto municipal workers are an important impediment to privatization because the city is required to redeploy rather than lay off permanent workers whose jobs are contracted out. However, about one-third of the 5,500 CUPE Local 416 members covered by these contracts are temporary employees not covered by these provisions. A significant portion of the "inside" workers in the larger Local 79 are in the same situation.

Applying for a provincial conciliator is a legal prerequisite to locking out the workers with the aim of imposing conditions of work dictated by the Ford regime. It truncates negotiations and even mediation for settlement of bargaining differences and would hasten the issuing of a "no board" report by the conciliator, 17 days after which the city could lock-out its workers. The Ford regime wants to continue implementing its agenda as rapidly as possible, and considers a winter lock-out (or strike) to be to its advantage rather than one in warm weather.

Mayor Rob Ford told the media his administration is "bargaining in good faith." These manoeuvres for the purpose of imposing the regime's will on city workers are nothing of the sort. And Ford has already lied about balancing the municipal budget without imposing new taxes, cuts to social services and lay-offs of municipal employees. As for the pledge to sell off or privatize anything that isn't nailed down, the Ford regime is proceeding in the face of the broad and growing resistance of the people of Toronto. There is nothing "in good faith" about anything the Ford administration is up to.

In the same vein, Deputy Mayor Doug Holyday told the media that "all we are trying to do is come up with a reasonable agreement that allows management to manage." There is nothing "reasonable" about trying to destroy the security, well-being and jobs of thousands of workers who provide public social programmes and services, or leaving them subject to the unrestricted will of the regime and its management. This assault on the city workers is an integral part of this regime's whole anti-social agenda of cuts, privatization and increased user fees etc., and is an attack on the people of Toronto as a whole.

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Toronto Needs a Pro Social Aim

Throughout 2011 thousands of Toronto residents time and again, at official venues as well as demonstrations, have confronted the Ford regime to reject its cuts and privatization agenda. Their demands have been largely ignored or rebuffed on the basis that the funding for public social programs, services, and the pay and benefits of the workers who provide them, must be reduced and many jobs eliminated. This comes in various ways: "taxpayers" must be respected; the city's supposedly difficult fiscal situation demands these measures; the city must save money by imposing upon its workers the insecurity and low wages that are the lot of so many others and, in general terms, there is no money.

In a modern society, the state's duty, and that of its various levels of government, is to guarantee the rights, security and well-being of the people. The Toronto city government, among other governments, is in violation of that principle. This is evident in its approach to its finances, spending and the rights, security and well-being of city residents. How else can the city government plan to eliminate or degrade public day care, homeless shelters, transit, nutrition programs, libraries, access to recreation, etc. or deprive those who provide public services of their standard conditions and jobs? Why is it these things are threatened or attacked rather than guaranteed and improved? Why does the regime so blatantly abuse its power and stubbornly dismiss people's demands that public services and jobs be preserved and even increased?

The inescapable conclusion is that this regime has another aim, an aim that violates its duty to human society. Instead, the aim which it pursues relentlessly, puts public services and assets in jeopardy or in the wrecking yard. Its aim, like that of other levels of government, is to fulfill the demands of big private capital, the rich and their monopolies, to increase their profits and put what has remained public directly in the service of those interests.

When a public service is cut -- subsidized day care, for instance -- it increases the market for private companies selling daycare; what was formerly provided in part according to need using tax and user fees, now will be available only according to ability to pay.

When a public service is privatized, for instance garbage collection or water and sewage, the public monies and user fees that formerly paid for the service (inputs, wages, etc.), will have to provide a guaranteed profit to the monopoly involved as well as pay the costs of the service. In spite of the rhetoric, provision of this private profit is the main purpose of the privatization. And since the purpose of the privatized services is private profit, a decline in quality is one way of achieving that end.

In many cases, public jobs at modest but standard pay and benefits will be eliminated and a smaller number of workers paid lower wages and who receive fewer benefits will be employed, providing more room for private profit. Such destruction of a standard for workers' remuneration and security also represents removal of a socially valuable restriction on the "free" labour market and its tendency to drive down the pay and conditions of all workers toward bare subsistence. Wealth diverted from the claims of workers to the pockets of the rich distorts the economy towards meeting their demands to the extent that increased profits may not even remain in the local economy.

The imposition and increase of many user fees underway is restricting certain public services to those able to pay instead of providing them on the basis of need. This puts the burden of financing more directly on workers and the poor, and opens a market for profit making by selling the same service.

To the extent the above measures may reduce the city's expenditures, more is available to the regime to "pay the rich" by other means, debt servicing for the financial oligarchy, contracts of various kinds and further reduction of whatever claims are still made upon the rich for public finance. The Ford regime's declared intention is to eliminate the city's land transfer tax worth around $200 million, an irritant to real-estate speculation interests (and less so to those residents buying or selling a home).

So, the Toronto city government's onslaught against public services and the workers who provide them does not arise from some unavoidable necessity, any lack of real or potential wealth, or some benefit that will indirectly trickle back down to society. Its anti-social, city wrecking offensive arises from its equally anti-social aim of putting what has remained public at the disposal of private capital and its pursuit of profit, thus ignoring its duty to guarantee the rights and well-being of the people. Toronto needs a new pro-social aim and we need to carry forward the struggle to achieve it.

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Public Child Care Is a Right

Government Supports Privatization of Child Care by International Monopoly

On December 12, the Edleun Group Inc., an international child care services monopoly, announced that it has purchased seven child care operations in Ontario, four in Toronto and three in Windsor. Edleun says that these purchases are part of its plan to buy 80 more child care operations across Canada in the near future. Edleun has a $40 million fund provided by Canadian and international banks for this purpose. The purchases in Ontario bring the total number of child care spaces operated by Edleun to 4,711 in the three provinces. It already operates 2,539 spaces in Alberta and BC.

According to media reports, a number of other consortiums are being organized by the international financial oligarchy to penetrate Canadian child care services. Canada is considered a prize market because 75 per cent of child care spaces are operated by government or not-for-profit organizations. The expansion of this aggressive monopoly in Ontario is being facilitated by the continued underfunding of child care by the provincial and municipal government. This crisis is being compounded as governments cut funds for child care in the name of deficit reduction. The Toronto City budget tabled last week proposed closing three child care centres and cutting low-income fee subsidies.

Edleun Inc. is very explicit about exploiting the child care underfunding crisis to push its aggressive expansion plans. "We understand there are a number of non-profit operators who worry they will need to vacate their space and this creates an opportunity," said chief executive officer Ty Durekas in a press conference on the Ontario expansion.

Increased privatization in the child care sector is being opposed by child care workers and their organizations. They know that when the financial oligarchy inserts itself into child care the profits have to be squeezed out of child care centres and this can only come from driving down child care worker wages and from a deteriorated service. They point out that child care worker wages are only $13 per hour at many private child care centres even for the Early Childhood Educators (ECEs) whose certification requires two years of college.

Edleun's entry into Ontario has also been denounced by researchers in the field of early childhood learning. "From the point of view of children and families, this is one of the worst things that could possibly happen in Ontario. The bottom line is this is a business and a business exists to make money. Any money that is considered profit is money that is not being spent on children," said Martha Friendly in response to the announcement by Edleun Inc. Friendly is the Executive Director of the Childcare Resource and Research Unit at the University of Toronto (CRRU). Considered one of the leading early learning research institutes in Canada, CRRU cites study after study that shows deterioration of service when child care is run for profit and that this has negative impacts on young children.

The rich though are putting the full weight of their media and political representatives behind Edleun's Ontario expansion. Ontario Minister of Education Laurel Broten defended authorizing the expansion of Edleun in Ontario, saying "We have always had a balance between public and private in our delivery model for child care." A Globe and Mail editorial said that expansion of Edleun should be celebrated as a solution to the child care crisis, "With a shortage of regulated daycare spaces frequently declared to be one of the most pressing public-policy issues in the country -- estimates put the gap at up to 165,000 spaces -- one might think the appearance of a new and energetic operator of daycares would be cause for widespread celebration."

The Globe editorial also urges people to disregard the opposition to for-profit child care by workers and early childhood science: "The alarms raised against for-profit daycare seem ideological, rather than practical." This kind of advice to people to abandon their just demands because they are allegedly impractical is becoming a hallmark of the disinformation campaign of the rich pushing privatization. Its aim is to cover up that the agenda of privatization is the practical implementation of a narrow self-serving and capital-centred ideology, and that the alternative is the provision of public daycare that the people require as the practical solution based on a human-centred ideology.

The heart of the child care problem is user fees that impose a crushing burden on families using the system and exclude most families with children from formal services. Workers have a longstanding demand for user fees to be abolished and for a universal government operated system. The expansion of monopolies in child care will not solve this problem. In fact it will further consolidate the fee-for-service system in opposition to the progressive trend of abolishing fees.

Workers and their allies must recognize the political nature of all decisions around the funding of public services and around all economic affairs and become political themselves. Individual workers must be political to defend their rights and basic interests. From individual actions, they must unite with their fellow workers and allies in a collective political opposition.

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Harper Omnibus Crime Bill

Impact of Crime Bill on Ontario

Ontario's jails are already overcrowded, even without the expected increase in prisoners from changes on the Harper government's Omnibus Crime Bill, Bill C-10. This is not because of the number of crimes being committed but due in part to the failure of the system to process criminal charges in a timely fashion and the failure of the Ontario government to provide social support services for mentally ill individuals as well as the socially excluded, and the criminalization of poor people and people of national minority or aboriginal origin, especially the youth.

The 2008 Annual Report of the Office of the Auditor General of Ontario documents the number of individuals held in prison on remand, either because they cannot afford bail or have been denied bail and are awaiting trial. They are "warehoused" for long periods of time and deprived of the possibility to participate in education, work or social programs. They are not accorded the same programs that are available to convicted prisoners. The report points out that the main reasons for the increased proportion of remanded individuals in custody is due to delays in disposing of criminal cases. For instance, it took 165 days on average for courts to dispose of a criminal case in 1997; it took 205 days, or 24 per cent longer, in 2007. Over those ten years, inmates remanded in custody have been incarcerated on average 30 per cent more days and more importantly "the number of inmates remanded in custody awaiting their court appearances has doubled and now represents almost 70% of all inmates."

Meanwhile, the Globe and Mail reported on November 17, 2010 that almost 20 per cent of inmates in Ontario prisons have some sort of mental illness, and of the almost 600 women prisoners, 31 per cent were mentally ill. The report notes that the inmate population of Ontario who has mental illness is growing by 5-10 per cent a year and the system is unable to cope. According to the article, "Factors behind the phenomenon include new Canadians who suffer mental collapses as they try to cope with relocating, faulty mental health legislation, and police who lay charges rather than wait for a hospital to find a forensic bed" because it takes too much time. The Globe quotes Dr. John Bradford, a leading forensic psychiatrist who says "It's easier for them (police) to charge someone than hang around for six to eight hours for an emergency room."

The 2008 Annual Report of the Office of the Auditor General of Ontario points out that although the Ontario Ministry of Community Safety and Correctional Services had a strategic plan to reduce the number of people in prison by 2005; the number of prisoners in Ontario jails has actually increased, to the point where many are over-crowded. "Currently, Ontario's correctional institutions operate overall at 100% of inmate capacity, with 11 institutions operating at up to 135% of their capacity. Current facilities are overcrowded and at increased risk of inmate disturbances, labour-relations issues, and health and safety concerns for staff and inmates," the report points out.

According to Statistics Canada, on any given day there are approximately 9,000 adult prisoners in Ontario and about 700 youth under 18 who are incarcerated. Over a year, the number of prisoners approaches 100,000. Those serving sentences of two years or more are held in federal institutions of which there are 14 in Ontario. Those serving less than two years are held in one of the 31 provincial corrections facilities staffed by approximately 6,000 corrections officers.


South Ontario Detention Centre being built in Etobicoke.

It is in this context that the Harper government's Bill C-10, The Safe Streets and Communities Act, is being imposed and will have significant consequences for the people of Ontario. It is expected to result in increased incarceration rates, especially for the youth. Various estimates suggest that Bill C-10 will result in an additional 4,000 prisoners per year being incarcerated in the refurbished jails and super-jails being built across Canada. Among the super-jails being built in Ontario is the South Ontario Detention Centre being built in Etobicoke at a cost of $1.1 billion.

Experts in the field broadly condemn not only the expansion of these super-jails, but call for those already in existence to be shut down because of their inhumane conditions. The John Howard Society describes the conditions in the super-jails as follows: "The environment in which provincial prisoners are detained in these institutions is indeed spartan and no-frills. To the members of this Committee, there is nothing positive or redeeming about detaining people in what we would characterize as sterile, harsh environments that are too big and hold too many people to be constructive, correctional or rehabilitative in nature. The environment of the superjail was designed to be a deterrent by being punitive in its effect and the environments of all of these institutions certainly feel punitive, with their pods, maze of corridors, concrete block walls and cement floors, bars, enclosed yards, metal chairs and tables bolted to the floor. Not only is a punitive environment contrary to human rights standards with respect to the treatment of prisoners for both sentenced and remand prisoners but it also works against any reasonable notion of public safety. There is virtually no evidence to suggest punitive environments reduce the likelihood of future criminal activity; in fact, the evidence would suggest that the opposite is true."

Bill C-10 will impose mandatory minimum sentences for many crimes where judges previously had leeway to take factors affecting the accused individual into account. Bill C-10 also removes the ability of the courts to use remediation and restorative justice for young people. These changes will increase the number of people incarcerated and the length of their sentences.

Bill C-10 will also make it more difficult for prisoners to obtain parole, adding to the number of people in jail. According to the Ontario Parole and Earned Release Board, parole grants decreased from 3,833 in 1993-1994 to a mere 361 in 2002-2003. The Elizabeth Fry Society, one of the main organizations involved in assistance and rehabilitation of prisoners argues that "the decline of provincial parole in Ontario brings significant human, social, and economic costs considering the damaging effect of imprisonment on individuals, the lack of community support and supervision to assist community integration and minimize recidivism, and the expensive cost of keeping people in prisons."

Other changes will force judges to ignore the reality of the accused person and the charges against them. For example, the possession of just six marijuana plants automatically requires the accused to be identified as a "drug trafficker." Definitions used to categorize various crimes as "serious" and/or "violent" have been expanded to include more offenses. For instance, threatening to commit a violent act will now be considered an act of violence. The option of judges to use house arrest in cases where they deem it appropriate is also going to be restricted.

Many people working in the judicial and penal system have expressed concerns that the legislation will increase social problems rather than reduce crime. The Harper Conservatives have ignored these concerns and have limited debate and used their majority to force the legislation through the House of Commons. The legislation reached Second Reading in the Senate when Parliament adjourned on December 16.

(Corrections Canada, Statistics Canada, Globe and Mail, Smart Justice Network, Office of the Auditor General of Ontario, John Howard Society.)

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