Legislative Assembly of Ontario

The House met at 10 o’clock, a.m.

Prayers.

Mr. Speaker: I understand that routine proceedings, including question period, will proceed at 2 o’clock, so we’ll call for orders of the day now.

Clerk of the House: The first order, resuming the adjourned debate on the amendment to the amendment to the motion for an address in reply to the speech of the Honourable the Lieutenant Governor at the opening of the session.

THRONE SPEECH DEBATE

Mr. Speaker: The hon. member for Downsview.

Mr. V. M. Singer (Downsview): Mr. Speaker, it’s approximately four years since I was asking for the resignation of George Spence, who was then the Provincial Auditor. One of the main reasons I was asking for his resignation was the fact that the audit reports we were getting regularly from him were pale, thin, unexpressive volumes which contained hardly any criticism at all of the handling of the finances of the Province of Ontario by the government of Ontario, by the various governmental departments and by the agencies of the Crown.

One of the more fatuous answers that was forthcoming from the Treasury benches was that the reports were not elaborate by reason of the fact that the handling of Ontario’s financial affairs was far better than the handling of the affairs of the government of Canada and there was really nothing called for in criticism; that any comparison anyone might have wanted to draw between the kind of reporting done here in Ontario and the kind of reporting done in Ottawa by Maxwell Henderson, was only because Henderson was able to rout out those terrible practices up in Ottawa; all the good Tory practices here in Ontario were fine and there was nothing to complain about.

For whatever reason, the criticism of Mr. Spence’s activities mounted. The public accounts committee had a very good look at some of the things, and in due course Mr. Spence went on his way before retirement age. He was replaced by Mr. Richard Groom; and the first report following that event, al- though signed by Spence, was authored by Groom. For the first time -- certainly in my experience here in the Legislature -- there was a real effort made to draw to the attention of the members of the Legislature, and to the members of the public, discrepancies, errors, and sometimes worse, in regard to the handling of the public moneys of the Province of Ontario.

One of the real criticisms that was set out -- and we are all familiar with it -- was the recital of the fact of the use of aeroplanes by various members of government. That certainly had a salutary effect. Even the Premier (Mr. Davis) decided that the time had come when he should switch from using government planes at government expense and resort to commercial airlines when he was going off on personal business together with his family.

Mr. Groom seemed to have made a noteworthy debut and we were quite pleased that this kind of investigation was going to be carried on and pursued with some zeal and some vigour. Unfortunately, Mr. Speaker, a tragic accident took place in July, 1973; Mr. Groom was killed as the result of a motor vehicle collision, and a vacancy was created in the position of Provincial Auditor.

This vacancy continued to exist for some seven months, despite the criticism in the Legislature and outside by myself and others to the effect the government, in allowing the vacancy to continue, and the office to be carried by Mr. Scott as acting Provincial Auditor, was creating a system whereby the acting incumbent was being denied the security of tenure and independence guaranteed the Provincial Auditor by statute, and that it was possible that any person in that position would be somewhat less than brave in his criticism of government before he was made secure in his position. This was referred to in some detail in an article written by Bob Miller in the Star after he and I had discussed this very point.

Unfortunately, Mr. Speaker, my worst fears were confirmed. The auditor’s report for the fiscal year ending March 31, 1973, is dated and was signed by Mr. F. N. Scott on Nov. 30, 1973, and was tabled in the Legislature on March 6, 1974.

Mr. Scott was formally appointed Provincial Auditor and given his security of tenure for the first time in February, 1974, some seven months after the signing of his report, so the report was signed while he was still acting. While I don’t want to attribute motives or fears or lack of courage to anyone, I think it is very sad that this hiatus period of some seven months did in fact take place and that the government did not see fit to put forward the nomination of an alternative Provincial Auditor during that lengthy period of time. And I point out, Mr. Speaker, that during that hiatus period, the report of the auditor was signed on Nov. 30, and that report obviously had some glaring omissions.

We now have, as detailed in the Globe and Mail stories of Saturday, April 6, and Monday, April 8, in copyright articles written by Gerald McAuliffe, a series of sordid events surrounding the affairs of the Ontario Northland Transportation Commission and involving Star Transfer Ltd., a subsidiary of the Ontario Northland Transportation Commission. Strangely, it appears that even though two investigations into the affairs of this commission and Star Transfer were conducted -- one by the Ministry of Transportation and Communications, whose report was submitted to the members of the Ontario Northland Transportation Commission on Dec. 17 and 18, 1973, and the other by the staff of the Provincial Auditor, which commenced in January, 1973 -- neither of these investigations were reported to the Legislature, as there was an obvious public duty so to do.

Mr. McAuliffe has stated that even though the government was aware of the serious shortcomings for some time, neither the government nor the ONTC has firmly laid down policies and guidelines for management to follow. The commissioners have met only once -- and their one-time meeting seemed to be awfully well paid; I’ll deal with that in a moment -- in the last three months and the matter of guidelines was not even on the agenda.

The following points are made in these articles: No full inventory of railway assets and holdings has been taken; inventory procedures are lacking; accounting practices are deficient.

The member for Fort William (Mr. Jessiman), the chairman of the commission, chartered a private plane to fly to a meeting in North Bay. The plane waited for him and returned to Toronto. The cost to the taxpayers of the Province of Ontario was some $400; by comparison, the commercial economy fare for that return trip is $52.

The member for Fort William charged the Ontario Northland Transportation Commission for air travel between Toronto and Florida and for a number of trips between Thunder Bay and Toronto.

Mr. R. F. Nixon (Leader of the Opposition): Like old times.

Mr. Singer: There is no written policy on what types of travel or entertainment expenses should be charged; and there was not always a requirement that those claiming reimbursements give information to establish that expenses were properly incurred.

One instance indicates that an executive of the commission billed his airline ticket on Air Canada and then charged the fare to his expense account, that both the billing and the expense account were paid, and that apparently this executive was paid twice for one trip.

The chairman of the Ontario Northland Transportation Commission, the member for Fort William, is paid some $7,000 as a director of the commission; and this, of course, is in addition to his legislative indemnity and his expense allowance. The vice-chairman, a gentleman named Gaston Demers, whom some of us will remember, a defeated Tory candidate formerly representing the riding of Nickel

Belt, is paid some $5,000. A gentleman named Allister Johnston, whom many of us know, is also a commissioner; he is paid some $3,000. The other commissioners are John A. Kennedy of North Bay -- and I am going to mention him again in a moment; Ian Hollingsworth of the Soo; Mike Palangio of Cochrane, W. Roy Thompson of Kirkland Lake, and C. P. Girdwood of South Porcupine. Gossip in the north has it, Mr. Speaker, that the political loyalties of these gentlemen are readily identifiable, and they are neither NDP supporters nor Liberal supporters.

In addition, Mr. Speaker, I find it very fascinating that when Star Transfer was taken over by the Ontario Northland Transportation Commission and came under the ownership of the Province of Ontario, lo and behold, these bold and brave commissioners became the directors of Star Transfer and decided that since they were doing so much extra work -- and I pointed out to you a moment or two ago, that they met once in three months up to December of last year -- they decided they weren’t getting quite enough money, so they voted themselves another $9,600 in additional fees as directors of Star Transfer.

The member for Fort William’s secretary at Queen’s Park somehow got herself on to the payroll of the Ontario Northland Transportation Commission and received, in addition to her regular salary, what is variously referred to as $20 a week or $32 a week. It seems strange, Mr. Speaker, that with all the facilities of the Ontario Northland Transportation Commission, it was necessary to bill them for additional dollars for a member’s secretary here at Queen’s Park.

The Ontario Northland Transportation Commission holds frequent meetings at Pinewood Lodge and pays substantial amounts for services. Pinewood Lodge, believe it or not, Mr. Speaker, is owned by J. A. Kennedy, who happens to be the same J. A. Kennedy who is one of the commissioners of the Ontario Northland Transportation Commission.

There is, of course, the executive railcar. It’s a most comfortable and elaborate railway car. It has dining room facilities; comfortable beds; ample and adequate -- perhaps luxurious -- service. But, Mr. Speaker, there apparently is no detailed accounting of its cost and use. There are no records of liquor expenses or other hospitality expenses. Apparently it is used by people in business and in government to take their families on trips to Moosonee.

The financial affairs of the commission are so efficient that they were late in paying their sales tax. And they had to pay to the government of Ontario some $8,000 by way of penalty. Some $40,000 in legal fees were paid to a prominent Thunder Bay lawyer for negotiations to buy Lakehead Freightways Ltd. The talked-about price was some $2.5 million. The owner of Lakehead Freightways was one Harvey Smith who is a prominent Progressive Conservative supporter. The deal was never consummated but, nevertheless, this very large amount in legal fees apparently was paid.

Moosonee Lodge owned by the Ontario Northland Transportation Commission had spent on its behalf some $8,000 in 1970 to prepare plans for renovations and the plans were never, in fact, used. In 1972, Mr. Speaker, some $35,000 was paid to a Toronto contractor to do some work on Moosonee Lodge. There were no tenders. There were no working drawings and no detailed invoices to support the expenditures. Apparently some of the employees of the ONTC draw two pay cheques. Some also work under contract as janitors in addition to their regular employment. If it happens to take them away from their janitorial obligations, they are able to arrange to have their work done by their wives and their children.

Apparently over $100,000 was paid to a small Cochrane grocer for food used in Moosonee Lodge and on dining cars. The prices were over-the-counter prices. There was no benefit of wholesale rates. A food consultant was hired some three years ago. I haven’t got the amount that was paid to him for handling the food. The commission received the report and never, in fact, used it.

The Ontario Northland Transportation Commission owns a ship called the Chief Commanda. It’s a cruise ship. This ship has lost money every year for seven years. Presently there is being spent some $50,000 to refurbish it for one year and make it seaworthy because the federal authorities have said it’s a danger. However, the refurbishing at the cost of $50,000 for this money-losing operation is pending the delivery of a new ship in 1975. There are no logs kept of the ship’s movements and no purchase orders to support $10,000 a year in food purchases. Apparently, in relation to the ship, a cleaning contract involving some $300 a month is payable to Metropolitan Cleaning Services, which is a firm owned by two Ontario Northland Transportation Commission employees.

Apparently there were 1,000 used railway ties which normally sell for 75 cents each on site, shipped from Noranda, Que., and donated to the North Bay Golf and Country Club. Senior executives of the Ontario Northland Transportation Commission are members of this golf club and the Ontario Northland

Transportation Commission holds shares in the club.

The government of Ontario lent Ontario Northland some $30 million some 20 years ago, and despite the fact that it had profits during several years none of this amount has ever been repaid to the Ontario Treasury.

One Kenneth Passmore was given $25,000 so he would leave, quietly, his job as managing director of Star Transfer. There is a long and detailed account in this morning’s Globe and Mail which says there was substantial mismanagement and perhaps worse in Star Transfer during the time Kenneth Passmore was there. Examinations were made by auditors, by the auditor’s office and by Transportation and Communications, and again no reports about these events were ever made to the Legislature, nor was any reference to these irregularities made in the auditor’s report. The auditor’s report has some 200 words relating to Star Transfer this year; the reference is brief and it is vague and it is certainly far from condemnatory.

Well Mr. Speaker, I have dealt, rather briefly, with some of the charges that were made. Now let me put forward my suggestions in regard to them.

First of all, there must be an immediate explanation by the Minister of Transportation and Communications (Mr. Rhodes) as to why no report has been made to the Legislature about these sordid events and why there has been no major reorganization of the Ontario Northland Transportation Commission. Is there any justification for the further continuance of this organization as a body separate and apart from the government of Ontario, or should it not be taken back into government and made accountable directly to the Legislature through the Minister of Transportation and Communications?

If it is argued there is some validity to its continuation as an independent body, then surely, as Camp recommends, the government should get the politicians off the commission, get the Tory hacks off the commission; get rid of the hon. member for Fort William and get rid of the former member for Nickel Belt and get rid of the former member for Parry Sound; get rid of the Tory hacks and put in some businessmen who know how to run a commission and who will deal with the affairs of handling public money in a reasonable, proper and fair way.

Second, Mr. Speaker --

Mr. D. C. MacDonald (York South): There is a man in the wings who hopes to get on next, the hon. member for Timiskaming.

Mr. E. M. Havrot (Timiskaming): I am not that hungry for power. The member for York South may be but I am not.

Mr. Singer: The auditor must be immediately questioned by the public accounts committee and asked to show cause why these matters were not in his report; and if in fact the facts are as they appear, and there is no reason to believe they are not, the auditors should at least be reprimanded.

I do have a little sympathy for him, because his unfortunate position was partly the creation of government, partly the fault of government neglect and partly the fault of the Premier’s lack of decisive progress in filling that position as soon as it became vacant. As I said at the beginning of my remarks, it was most unfair to put Mr. Scott in the position of acting as Provincial Auditor after the tragic death of Mr. Groom, not giving him the security he had to have to do his job properly and expect him to fearlessly report on matters that were discovered. In so doing the public of Ontario has been badly served and the substantial fault lies at the door of the Premier and his colleagues for fearing to fill this appointment; although again that is no excuse for Mr. Scott, who apparently had knowledge of these events, not making some report about them in his last audit report.

Third, surely there has been enough about the misuse of planes already. The public accounts committee has had a lot of sessions in regard to this, and that information should have permeated at least as far as Fort William and probably could have been a beacon in front of the hon. member for Fort William. When the Premier will take commercial air lines for his own personal use, one must wonder at the nerve or the callousness of the hon. member for Fort William.

I would suggest, Mr. Speaker, fourth, that there must be an investigation by the police and, if necessary, by the law officers of the Crown or the Attorney General’s department concerning the allegation that an official was paid twice by the ONTC for an air flight. We must remember that three aldermen from the Metropolitan Toronto area are presently facing criminal charges for alleged offences that seem to be of the same calibre.

Fifth, I can’t understand, as I once more read about the awarding of contracts, why Ontario does not have some strictly laid-down, perhaps statutory provision that there must be compulsory tendering on all contracts that involve the use of public money. I note that even the Province of New Brunswick, just a few days ago, gave third reading to a statute that requires public tendering for all contracts involving the purchase of goods over $750. Since there seems to be constant abuse and certainly blatant suspicion about our tendering procedures -- and many more examples are contained in the stories concerning Ontario Northland -- hasn’t the time come when we should have a public statute setting out in clear and unmistakable language what the tendering procedure should be?’

Sixth, Mr. Speaker, I think there should be an immediate investigation by the law officers of the Crown as to whether or not there was sufficient cause to dispense with the services of Kenneth Passmore for cause. That’s a legal phrase, and if you find that you can dismiss somebody for cause, then you don’t have to give him pay in lieu of notice. It would seem that Mr. Passmore received some $25,000, and it would also seem that there might have been sufficient cause to dismiss Mr. Passmore without the payment of that $25,000.

There should be, seventh, Mr. Speaker, an immediate and detailed report to the public accounts committee and to the Legislature as to what steps have been taken to clean up this mess. The public and the Legislature are entitled to assurances that the mess is cleaned up once and for all and that it is unlikely there will be loopholes and doors left open that will allow this kind of abuse to continue any longer.

Eighth, there should be a report to the public accounts committee and to the Legislature as to who has used the private car, say over the past three years, how long it has been used by such people, for what public purpose and at whose expense. Who were the businessmen who used that private car? Did they travel with their families? Were there members of the Legislature who had exclusive use of that private car? Did they travel with their families? And what was the purpose of that kind of expenditure?

Ninth, there should be a report from the government as to what justification there is to charge directors’ fees -- to my mind, it’s absolutely inexcusable -- to Star Transfer in the amount of $9,600 in addition to what the commissioners are already paid. That practice should certainly be stopped immediately.

Tenth, I would suggest there be a taxation of the $40,000 legal bill. It seems very large to me. It may be justified, but I think that bill should be taxed before the taxing officer so that we can find out whether or not that bill was a proper and adequate bill and whether or not it should have been paid.

Remember, Mr. Speaker, the bill was in relation to negotiation and advice for a deal that was never in fact consummated. And $40,000 for a $2.5 million deal is not a small fee, but when the deal doesn’t go through, it might very well be a very large fee and much too large.

These are only some of the more obvious matters. There are many more matters that should be raised, and I am sure the public accounts committee is going to go into each and every one of the charges, each one of which must be investigated, and full reports and action recommended by the public accounts committee, by the Legislature and by the ministry.

Mr. Speaker: The member for High Park.

Mr. M. Shulman (High Park): Mr. Speaker, I have a number of serious matters that I would like to discuss in this Throne debate. but before I come to them, I may just take a very few moments for one that is not quite so serious. I think perhaps I have involved our province in a war, and I thought I should let members know about it. Before I begin, I think we all must have solidarity in here. We have our differences, but when one of our members is in trouble, I think we must all stick together to help him out because the one who is in trouble is me.

The situation is that some eight years ago I wrote a book which caused some surprise to the publisher and myself in that it sold remarkably well. There is an organization in Washington called the Securities and Exchange Commission. Two months ago they discovered I had written this book and they sent me a very official letter in which they say that they have just discovered my activities. Although normally they do not insist on taking into their fold foreigners who write a single book on the market, to quote them they say: “Your activities seem to clearly involve you in being in the business of advising others for compensation through publications as to the advisability of investing in securities.” The letter finishes off: “Would you please inform us in writing of your intentions with regard to registration.” It’s signed Allan Rosenblat, chief counsel of the Securities and Exchange Commission, Washington, DC.

Hon. J. T. Clement (Minister of Consumer and Commercial Relations): It’s about time they caught up with the member.

Hon. A. Grossman (Provincial Secretary for Resources Development): The member gets the message.

Mr. Shulman: Right, that’s the way I felt about it. Well, I was terribly flattered. I mean if the US government thinks that I am an investment adviser, I thought that would be very nice and that I would put that after my name -- Morton Shulman, MD, MPP, IA for investment adviser. So I wrote them back and I said: “Thanks very much, that’s really great.”

One thing that puzzled me: I received the letter on Feb. 26, 1974, and it was dated Jan. 8, 1973. I couldn’t figure whether the mails had really slowed down there, or whether they were confused which year it was, but I finally figured out they didn’t know which year it was. The other thing that bothered me was that it was addressed to Dr. Morton Shulman, care of the Book of the Month Club, Camp Hill, Pa. That may have had something to do with the delay in getting to me.

But, anyway, I wrote them back and said: “Gee, thanks, fellows, that’s great. If you think I’m an investment adviser, I’d be delighted to register and have those initial’s after my name. Send me the forms.”

Well, that was all very well until the forms arrived. There was a 25-page form to fill out, and the first question was, “What are your qualifications as an investment adviser?” Well, I really have no formal qualifications, so I wrote down “none.” That’s right, Mr. Speaker, you have to tell the truth when you are dealing with a government agency.

I filled out this 25-page form and then I thought, gee, before I send this down to the American government maybe I should have some lawyer see it. He said, “Gee, Morty, you had better not send it down because as soon as they see your first answer ‘none’, they are going to refuse you registration as an investment adviser and then you will be a failed investment adviser, and as a failed investment adviser they’ll be able to get the US courts to stop you selling books in the States and that would be bad.”

Interjections by hon. members.

Mr. Shulman: I wrote back to them and said, “Look, under these regulations it says I don’t have to register if I have less than 15 clients. I only really give advice to one person. That’s my wife, and she doesn’t follow it anyway, so I don’t think that counts.

“The second thing is that you are exempt if you have less than 15 clients and you do not generally hold yourself out as an investment adviser. I really don’t hold myself out as an investment adviser. I generally hold myself out as a statesman. Would you advise me what I should do?”

That all seemed very well until on my birthday they sent me this letter, and I thought it was in very bad form really. Anyway, it was dated April 2, 1974, and it’s from the Securities and Exchange Commission, Washington, DC. It is no longer addressed “Dear Dr. Shulman,” it’s addressed “Dear Mr. Shulman.”

Hon. Mr. Grossman: They took a couple of initials away.

Mr. Shulman: It starts off: “Compliance with the federal securities law is no laughing matter.” They then proceed to lay out the various horrendous penalties that can happen to me if I don’t co-operate with them. Apparently huge fines are possible and -- what else? -- 20 years in jail for each book that’s sold.

Hon. Mr. Grossman: The next thing is they’ll take the member away and give him a number.

Mr. Shulman: Well, I felt that this was a hostile act, Mr. Speaker. I wrote back to the securities commission in the United States and I said: “I feel that you’re carrying out a hostile act. I’m not quite sure how we’re going to carry out all these things, short of sending in the Marines. I know what American strategy is and -- ”

Hon. Mr. Grossman: We don’t have marines.

Mr. Shulman: “ -- unfortunately, my province has very little military capability.” But I’ve been in touch with the Minister of Natural Resources (Mr. Bernier) and he has some 45 planes he uses for fighting fires. I have requested him to do a pre-emptive water bombing strike on the SEC building in Washington. One of the planes has a loudspeaker, and it’s my plan, if members all agree, that we’ll hover over the building, and using a loudspeaker, we’ll yell down, “Mr. Rosenblat.” When he sticks his head out the window, then, plop, we’ll let him have it!

Anyway that is my current situation with the securities commission in the United States. I hope I’ll have the unanimous support of this House if it does come to war.

Hon. Mr. Grossman: Except don’t try to make any trips to the States now.

Mr. MacDonald: The Minister of Consumer and Commercial Relations has offered his help already.

Hon. Mr. Clement: We can take his Ontario licence away from him.

Mr. Shulman: Well, with that minor problem hanging over us -- and I’m sure that we’ll come to some solution -- there’s another matter I want to deal with, and this is the budget which the Treasurer (Mr. White) is bringing down tomorrow.

There has fallen into my hands this morning a certain book. I wasn’t going to talk about the budget today, let me say. I usually would save that for my budget debate speech, but under the circumstances I couldn’t help reading this book, which was given to me this morning. And I must say that I am bitterly disappointed with the contents. Actually I’m not really the financial expert for this party. This may surprise members. It is the hon. member for York South, who will speak next.

Mr. I. Deans (Wentworth): Now why would that be a surprise?

Mr. Shulman: I’m going to pass this volume on to him. He will deal with it in detail in his speech, but I just want to make one comment about it. I’m really very upset about one of the taxes the Treasurer is bringing in here -- a tax on raw land speculation -- because it isn’t going to work. Although it is a very sizable tax, it isn’t going to work, because it’s going to freeze up all the land on the market and people just aren’t going to sell. But anyway I won’t deal with that myself; I’ll leave it for the hon. member for York South, and I’m sure that he will handle it.

Hon. J. White (Treasurer and Minister of Intergovernmental Affairs) : Well, Mr. Speaker, on a point of order, I had my picture taken with that dummy this morning.

Mr. Deans: Which one?

Mr. MacDonald: Does the Treasurer mean there are two dummies?

Hon. Mr. White: I mean the document and not the hon. member.

Mr. MacDonald: Two dummies in the same picture?

Hon. Mr. White: When I showed it to some of the officials here earlier today, they were intrigued with the design, and more particularly, I think, with the gorgeous Tory blue.

Mr. MacDonald: The date?

Mr. Deans: Not with the picture.

Hon. Mr. White: I gave the document, which in fact contains the 1973 budget, to the hon. member in the hope and expectation that he would read my budget statement from a year ago, instead of punishing us with his Throne debate speech containing, I have no doubt, all kinds of misinformation and incorrect allegations.

Mr. Shulman: He’s right, I confess. I had intended to read that, but something about it seemed vaguely familiar, Mr. Speaker, and I decided under the circumstances I’d let the hon. member for York South read it.

Mr. MacDonald: It’s like most budget speeches; it sounds like the previous year all the time.

Hon. Mr. White: When my dear friend reads that hell find out we were right on in every respect.

Mr. R. F. Nixon: Ah, the Treasurer is going to point to the same villains as last year.

Mr. Shulman: If I may turn to a somewhat more serious matter --

Mr. R. D. Kennedy (Peel South): How about a scandal?

Mr. MacDonald: Which does he choose from?

Mr. Shulman: -- I would like to follow up the remarks made by the previous speaker from Downsview, in which he was kind enough to read the front page of the Globe and Mail for the last two editions. There are just one or two brief comments I would like to make.

I’m not too upset by the fact that there are one or two crooks on the Tory side of the House. We know it and they know it. There are probably one or two crooks on this side of the House, too. When there are people who have a chance to dip their hands into public funds, they will do it. Ultimately it always comes out and when election time comes those people will be punished.

That isn’t what upsets me. What does upset me far more is the fact that the House cannot depend on the auditor. I think the hon. member for Downsview was far too mild in his comments about the auditor. We expect the worst from the Tories. We search for it all the time and when we find it we expose it. The public ultimately will render its verdict on their behaviour.

Mr. Kennedy: And the member is never able to prove it.

Mr. Shulman: The auditor does not depend on the public. He does not go for re-election. His behaviour is essential to the Legislature. He is responsible to us, and I cannot see how the present auditor can continue in his present position.

There are only two possible courses of action that can be followed. He will come up with a denial of the allegations in the Globe and Mail story, and that seems impossible from the detail that has been developed by Gerald McAuliffe. If he is unable to come up with a detailed denial, the fact remains that he has withheld essential information from the House. How can the House ever, in future, trust him? How can members believe that what he is telling is the truth? How can they believe that what he is telling is the complete truth?

If he is unable to deny the allegations in this story he must be replaced. Honour says he must resign. If he does not resign he must be replaced. I don’t want to belabour this. It’s all spelled out in the Globe. There is no use my repeating everything that has been written by the Globe and has been repeated this morning by the member for Downsview. But surely, the brunt of this must lie on the shoulders of the auditor and his head must roll. It’s as simple as that. He must go.

The major subject I wish to talk about today -- there is one aspect involving organized crime which I’ll save until the end -- is something which has not been dealt with either in the Legislature or, to my knowledge, in the press before. Primarily I want to talk about the Liquor Licence Board because this is a major scandal. It’s a major scandal which has been going on for several years. It has not been given any public exposure except for a few articles written in an obscure Toronto journal. In effect, there has been nothing said of it either here in this Legislature or, for that matter, in the greater public media.

The Liquor Licence Board is governed by the Liquor Licence Act. There is a great deal of confusion in the public mind and, to my surprise, in the professional mind between the Liquor Licence Board and the Liquor Control Board. I am not today talking about the Liquor Control Board. Much can be said about that place but I want to make it quite clear I’m talking about the Liquor Licence Board, the one that controls the licences given out to the establishments in this province which serve liquor. It is governed by the Liquor Licence Act; it is also governed by certain regulations which have been brought in by this Legislature. At least, it’s supposed to be governed by the Liquor Licence Act and it’s supposed to be governed by these regulations but it is not.

There are 11 sins committed by the Liquor Licence Board and let me just itemize them.

1. They exercise blatant discrimination in the administration of the law. 2. They harass those establishments and persons which displease them by making up special rules for one establishment and not another. 3. They have set themselves up as advertising censors, advertising censors of some establishments but not of others. Some are immune to these rules. 4. They make up arbitrary rules which are not grounded either in law or in legislation. 5. They treat their employees as guilty until proven innocent.

6. They give the good jobs at the board to friends of the boss. In fact, I’ll come to that in detail. 7. They have given themselves the power to act as building inspectors even though there is nothing in the law which gives them this power. 8. They’ve given them- selves the power to act as entertainment censors even though they have no legal power to do this. 9. They use special occasion permits as a present given or withheld depending on whether they like or dislike the person making the application.

Up to now I’m going to prove those points beyond the shadow of a doubt, but on point 10 I’m going to fuzz a bit. There is evidence -- it is not conclusive evidence as to point 10 -- that they accept influence in the granting of licences. There is not conclusive evidence on that. I have been unable to get the facts to establish the evidence, the truth or not, because they will not allow me to have those facts. Finally, 11, and perhaps most serious, in certain cases they have actually reversed the law and given instructions that legislation which was passed here in this House is not to be enforced. In fact, they threatened one establishment that if it actually went so far as to follow the law as it is stated here by this Legislature, it would lose its licence. I’ll come to that in detail.

Let’s start off with the first point which is that they exercise blatant discrimination in the administration of the law. I have a number of examples of that. The first one was brought to my attention by a reporter from the CBC some months ago and this is what started this investigation. He discovered that, for reasons which to this day we have not been able to determine, the Liquor Licence Board issued instructions to one restaurant in town, a place called El Cid, that it was not to be allowed to serve a drink called sangria. Sangria is a very dilute wine; it is a combination of a Spanish wine and soda water.

Yet at the very same time that El Cid was given this instruction, the other Spanish restaurants in town who also sell sangria were allowed to continue, despite the tact that actually it appeared in the press that these other restaurants were serving sangria.

I went to the three restaurants involved: El Cid, which is not allowed to serve it; and the other two. Cafe Madrid, and Don Quixote, which are allowed to serve it. I asked them why at El Cid and they said, “We think we insulted one of the inspectors.” This was their response. They received a letter saying, “You may not serve sangria.” I asked the other two establishments why they were allowed to serve sangria, and they said, “We have had no trouble with the board.”

Now that is a simple example. And let me say a word about the minister now that he is here facing me. He has done very well his first year. He has received good press; he has good relations with the members on all sides of the House -- and he’s done this by being fairly straight. He has a good sense of humour and this is going to be his downfall, because he gets up and replies with a quip when serious problems are brought to him.

Hon. Mr. Clement: What does the member mean “fairly straight”?

Mr. Shulman: Fairly straight. Now, when I brought in the problem of this sangria, sir, nothing happened to the restaurants involved; but the minister replied, “Who wants to drink that cheap Spanish wine?” No, it is not good enough to joke about these matters, because the minister has a scandal sitting under his seat and it is about to erupt on him.

Mr. F. Drea (Scarborough Centre): How can the member see the minister’s feet under the desk?

Mr. Shulman: So, I presented these facts to the Liquor Licence Board and I said to Chief Mackey, “Would you please explain to me why El Cid is not allowed to serve sangria?” He said: “It is very simple. Under regulation 563, item 9, section 4, ‘any non-alcoholic liquid that is added to liquor in the preparation of a drink shall be added in full view of the customer’.” This is Mackey’s explanation.

As any member of this House knows, you can go into any restaurant in town, any licensed premise in town, and order a Bloody Mary -- and when that Bloody Mary is brought to you, it is already mixed. The non-alcoholic liquid, the tomato juice, does not go in in view of the customer.

So I wrote back to Mackey and I said: “What kind of nonsense is this? Why is El Cid the only one who is forced to follow this regulation and nobody else is?” He said: “Well, it is true that you don’t actually see the tomato juice being added to the vodka, but you could see it if you went up to the bar. And it is my information that El Cid was mixing its sangria the night before, so no one was there and could see it.”

So I went up to El Cid again and said, “Do you mix your sangria the night before?” They said “No, we mix it at the time.” But that doesn’t matter, the people sitting at the table couldn’t see this mix taking place.

So here is a regulation in the Act that is quite clear -- all mixes must take place in full view of the customer. But Mackey has decided to ignore that except for one restaurant, which for some unknown reason has displeased someone at the Liquor Licence Board.

That’s not an isolated example. There are dozens and dozens of them.

Mr. Speaker, may I just ask you if we go to 12 or 12:30?

Mr. Speaker: Until 12.

Mr. Shulman: There is a restaurant called the New Windsor at the comer of Richmond and Church streets. It wasn’t advertised at all, but it had a thing called a “happy hour,” and this was an arrangement whereby during certain hours the patrons could get two beers for the price on 1 1/2 and two drinks with a mix for $1.50 instead of $2. Well, at noon on Friday, March 20, I believe it was, an inspector came to their door and ordered them to cease this practise forthwith or be closed for six days.

The people who owned the establishment said “Why, it is done all over the city.” The inspector replied: “We are not discussing the rest of the city, we are discussing you. Now if this ‘happy hour’ continues after today, six days suspension.”

It didn’t make any sense because not only were they being singled out, but there is another establishment called the Friar’s Tavern, just a few blocks away, which has been running an ad since October. I’m going to read it in full -- it is a very brief ad:

“The Drawing Room. Delightful. Jerry Adams nightly from 9. After theatre menu. A great place to meet for the ‘happy hour.’ Lunch and buffet $2.50. Dancing. No cover. The Friar’s, 283 Yonge at Dundas Square, 362-6693.”

We phoned down to the Liquor Licence Board and asked, “How come one establishment is told it can’t have a ‘happy hour,’ which is apparently bad, and another establishment has been running this same ad daily for six months?” Well, the gentleman I spoke to at the Liquor Licence Board agreed and said it did seem strange. They responded immediately.

Last Friday, two inspectors arrived at the Friar’s and said, “You may not use the word ‘happy’ in your ads any more.” And he said, “why can’t we use the word ‘happy’ in our ads any more?” He said, “Damned if I know, but those are the instructions I’ve been told to give you.”

I phoned down to my contact at the Liquor Licence Board and said, “Why can’t they use the word ‘happy’ in the ad?” They said, “The orders from Chief Mackey are as follows: ‘No words are to be used in advertisements that indicate that patrons may be having pleasure.’” Just stop and think about that one --

Mr. MacDonald: They haven’t seen TV beer ads for a while.

Mr. Shulman: Just stop and think about that one for a minute. We’ve got a man in charge of the Liquor Licence Board who is a teetotaller. He’s straight; he is really straight. He’s an ex-policeman, a good policeman. He was the best chief of police this city has ever seen. He kept Toronto clean. The fact that he was a good chief of police does not mean he is going to be good in another job, and he is very bad in this job. And. the reason is, unfortunately, his own personal background.

As a teetotaller he believes that there are a lot of weak people in this country who feel they have to drink, and if they must be allowed to drink, we will allow them to drink under the law, but they are not to be allowed to enjoy themselves. Ads that use the word “happy,” ads that use any word that suggests people are doing more than getting over this terrible, horrible sin of drinking must be outlawed.

To give you another example in the same field, Mr. Speaker, two months ago his inspectors descended on all of the restaurants in this city that have piano bars. Now, what’s a piano bar? It is a piano where someone plays, and there are stools around it where the patrons can come and sit down and have a drink and listen to the music.

Well, Chief Mackey discovered that strangers were talking to each other. People of different sex, men and women who actually didn’t know each other, were coming into these piano bars, having a drink and talking to each other. This upset him mightily, and the order went down immediately: “All piano bars are to be outlawed at once.” And they went into each and every establishment in this city that had a piano bar and said, “Out!” Well, almost each and every establishment. One or two were immune for some reason -- but they cleaned out the Oyster Bar, La Strada, AJ’s. Why? Because we have got a very strange man at the head of the Liquor Licence Board, a man who does not approve of people enjoying themselves.

And what has he done with that rule? He has put all sorts of musicians, fine musicians, out of work -- people like John Arpin -- the type of good musician who made a tour of these bars, which have all been closed down. It just doesn’t make any sense; it just isn’t fair.

I went again to the minister involved; I appealed to him. But apparently he doesn’t have too much influence; he hasn’t been able to do anything about it.

Well, what other discrimination is there in the way he runs things? What else does he do? There is a restaurant called Tanaka of Tokyo, just a few blocks from here, at the corner of Bloor and Bay. It is a typical Japanese restaurant that serves multi-course meals, and 95 per cent of its business is done at night. They were told that, according to the regulations, they had to stay open at lunch. They wrote a letter to Chief Mackey and said, “Look, we have no business at lunch. Do you mind if we close?” He wrote back, “No, you may not close at lunch.” And no reason given.

I wrote to him and said, “Chief Mackey, why do they have to stay open at lunch?” He wrote back: “Section 34(c) of regulation 563 reads that in every dining lounge or dining room, lunch must be served.” Well, that’s fine; if that’s the law, it must be followed.

I wrote to him again and said, “Chief Mackey, how come Barberian’s, just a few blocks from Tanaka of Tokyo, is allowed to close at lunch? Don’t they have to follow the same regulation? They have the same licence.” And he wrote back to me again -- and I don’t want to be unfair; let me quote him exactly -- and said, “They have always closed at lunch. The board gave them permission back in 1962 to close at lunch, so since they have always had the permission, why should we change it now?” That’s what he said.

It didn’t make much sense to me. It’s like a chief of police who sees two people speeding at 50 miles an hour through a 30-mile-an-hour zone and stops one and lets the other go. And the one fellow whom he stops says, “Why didn’t you stop him?” “Oh, he’s always sped through here, even before the speed limit was 30-miles-an-hour.” There’s no sense, no logic; it’s blatant, open discrimination.

Another example -- lounge licences. There hasn’t been a lounge licence given in this province for years because Mackey does not approve of lounge licences. But there was an exception made. The rule is no lounge licences, but when Ontario Place opened the people there had very good, very close contacts with the government and suddenly we have lounge licences given to Ontario Place. Nobody else can get a lounge licence but all the restaurants at Ontario Place -- those private restaurants, not the government-run ones -- were given lounge licences. I said how come? He said he thought that Ontario Place was a special situation so he should make an exception in that case.

That’s how it is all the way through; special situations for everything.

Hon. Mr. Grossman: Which private operator got a lounge licence in Ontario Place?

Mr. Shulman: Pardon?

Hon. Mr. Grossman: Which places in Ontario Place got lounge licences?

Mr. Shulman: There are four of them.

Hon. Mr. Grossman: They have dining room licences.

Mr. Shulman: They also have lounge licences. I can quote from Mackey’s letter, if the minister likes.

Hon. Mr. Grossman: That’s a different ball game.

Mr. Shulman: Let me read his letters if there is some doubt.

Hon. Mr. Grossman: I didn’t say there was doubt about them having them. They have two licences.

Mr. Shulman: Yes, they have two licences. They have a lounge licence and a dining room licence. But no one else can get a lounge licence. There are all sorts of dining rooms which would like to get lounge licences but they can’t get them.

Let me give another example of the sort of thing he does, coming back for a minute to the piano bar. There is a fellow by the name of Hy Eisenstadt who owns some $25 million worth of restaurants across this province. He’s terrified of Mackey. He’ll be very upset that I mentioned his name here in the House but I mention it for a very important purpose. Before he built a restaurant in Yorkville, which just opened a few months ago, he submitted his plans and got approval. One of the things on those plans was a piano bar and that is marked “approved by the Liquor Licence Board.” But the day after he opened they came down and said, “We have changed our minds. Take it out.” He asked for a lounge licence. “No.” It’s run by whim!

The next point is the harassment of those establishments and persons which displease. Let’s take the regulation that says there may not be any partitions in places which have restaurant licences. There is such a regulation. What the regulation actually says is a patron in any part of the room must be able to see all of the other patrons in the rest of the room. This is a regulation they brought in. I don’t quite understand the point of that regulation but, anyway, that is the regulation -- but it doesn’t apply to everyone. It only applies to some people.

Thus there are places like Ed’s Warehouse which has these beautiful little courting parlours where you can go in and nobody can see you and you can’t see anyone else. It’s quite nice. It’s very attractive and they serve drinks there. I cannot see the world coming to an end because Ed’s Warehouse does that.

But in another establishment a friend of mine, Marika Sereny, is attempting to get a licence. She won’t get it. He has decided he doesn’t like Marika Sereny. She is attempting to get a licence for Cafe Marika, just here on Bloor and Bay. They came in and said “My God, you’ve got partitions. Those partitions will all have to come out.” They are not enclosing partitions but just simple partitions between each booth such as one sees in many of the restaurants in town.

She said, “But how come Nicchi” [and she mentioned a number of other restaurants] “have partitions and you don’t bother them?” He replied, “We are not discussing Nicchi and we’re not discussing Ed’s Warehouse. We are discussing you. And unless all these partitions come out there will be no licence.”

It’s straight, plain, ordinary harassment. I have a letter here from the board of directors of the German-Canadian Business and Professional Men’s Association complaining of the way they harassed Oktoberfest. I’m not going to go through this -- it’s fairly lengthy and the minister has already seen it and replied to it. This was not isolated. They sent in a troop of inspectors and the instructions of the inspectors were to look for infractions because the whole idea of Oktoberfest upset James Mackey mightily. People were actually putting up signs with a beer bottle on them. This really upset him and the regulation went down, “Get those signs down or else we close down the whole Oktoberfest.”

Mr. MacDonald: The Grey Cup festival is certainly doomed.

Mr. Shulman: They took down all the signs. And there is still harassment and shutting down of establishments. It isn’t just Oktoberfest. The leader of the House told me yesterday -- I hope I don’t embarrass him by repeating this -- that up his way in Grey North -- is it? -- they have a thing called apple blossom --

An hon. member: Grey South.

Mr. Shulman: -- Grey South; they have apple blossom festival and again it is a similar thing to Oktoberfest. This year their application for liquor licences, which they have had every year, were turned down. They came to the leader of the House and said, “Can you do anything?” and he is not sure whether he can or not. He is not sure if he has enough influence. They will have to wait and see.

Well, what else do they do, this Liquor Licence Board of yours -- if it is yours, I’m not sure?

Point three. They have set themselves up as advertising censors. They decide what advertisements may be run in the public press and what may not. But again, they do not set up the same rules for everyone. Some people have one rule and other people have another rule.

Here, for example, is a book called Key to Toronto. I don’t know if any of the members have seen it but it is distributed through all of the hotels and it is meant for tourists who come to Toronto who want to know what is on and where they can go to dine. Well, there was an ad a couple of months ago by Max- well’s Plum and the horrible word in this ad is apparently “drink.” It says: “Early dine and dance. All you can eat and drink. Gourmet buffet dinner.”

Well, they summoned the owner of Maxwell’s Plum down for a personal appearance in front of James Mackey and Mackey’s conversation with him went as follows: “How long have you been in the restaurant business?” And he said, “Twenty-four years.” “Well, by now you should know that you are in the business to sell food and not liquor and if that word, that bad five-letter word ‘drink’ appears again in any ad that you run, you will lose your licence.”

The owner of Maxwell’s Plum was a little upset because in the very same issue here is a full-page ad for the Old Spaghetti Factory. Now, the Old Spaghetti Factory ad admittedly does not use the word “drink.” In their ad they use the word, “cocktails.” They say: “Dinner for two with wine for less than $6.” This ad is okay. Figure that one out.

To make things even worse, to make things even more ridiculous on Friday night I went to the Royal Alex to see Gypsy and they give you a little programme. I opened the programme and on page 5 is an ad for another restaurant -- another favoured restaurant -- by the name of Shakespeare’s. Here in Shakespeare’s ad it says: “$1.75 to $4.15 after- theatre drinks.” Now, apparently the word “drink” is no good but “drinks” is allowed. That is Mackey’s rule.

Well, do you think that is the ultimate of ridiculousness, Mr. Speaker? I have here a letter from the people who ran the Brazilian Carnival Ball for Cardinal Leger’s work in Africa. That happened just two weeks ago and let me just read this because it is the most incredible -- well, if it wasn’t the Liquor Licence Board you would think it incredible, but being the Liquor Licence Board it is par for the course. The letter says:

“The Brazilian Carnival Ball was held at the Imperial Room at the Royal York on Monday, March 25. It was a costume ball and was well covered by all the Toronto newspapers. It was a great success. This year the proceeds of the ball went to Cardinal Leger’s works in Africa.

“We thought the television coverage would be a natural for this event and it might help to establish the ball as an ongoing charitable affair. Heaven knows this city can always use another charity. But after TV arrangements had been made the Liquor Licence Board said: ‘No television cameras allowed in the Imperial Room.’

“I phoned chairman Mackey but he was away, so I spoke to Mr. T. Gilday, who is a member of the board, and I asked him why. He said he was a little embarrassed but the board did not want pictures taken of people drinking. I replied, ‘But we are not going to take any pictures of anyone drinking, we are just going to take pictures of the costumes.’ Mr. Gilday was very embarrassed and said, ‘Our rule now is that television pictures may not be taken in any licensed premises, whether or not the people are drinking.’”

Well, this is rather interesting, Mr. Speaker, because what this means is that a speech given by the Premier at the Four Seasons just a few weeks ago will no longer be able to be repeated. In the next election campaign -- or for that matter at any other time -- all of us who happen to get television coverage or all of the government ministers, people like the Premier, even people like the Provincial Secretary for Resources Development, people like Pierre Elliott Trudeau will not be allowed to have television coverage of their speeches if the speech is given in any place that has a licence, whether or not liquor is present.

It’s insane; it’s plain ordinary insane. There is no thought given to it. It’s a rule brought down at the whim of the moment. Obviously, they are not going to descend on the Premier and say, “You may not have television coverage;” so what they do is they exercise their rules as they see fit.

Here’s a write-up I took out of the Globe and Mail business section of Thursday, March 28, 1974. It shows the president of Carling O’Keefe Ltd. sitting with workers in the lunchroom at the Carlingview Dr. plant. With Mr. Tennyson are several workers and, believe it or not, there’s a picture of them drinking beer. Now, there are several laws being broken here. First of all, of course, there is no licence to drink beer in the lunchroom at Carling O’Keefe. Secondly, it seems a picture has been taken of the drinkers but they are not being bothered, because Jim Mackey picks and chooses his targets very carefully. We pick on the weak and ignore the strong. It is as simple as that.

Well, let’s go on to the next point -- arbitrary rulings, rulings that they make on the spur of the moment. Here is a letter, on the letterhead of the Liquor Licence Board of Ontario, which was sent out to a friend of mine who got a licence after going through certain routines which I will tell the House about. Down near the bottom of the rules, after he got his licence, there is a rule that reads as follows: “The licensee will not dispose of the premises for a period of three years from the date of the issue of the licence.”

There is nothing in the regulations to give them the right to say someone cannot sell his business. You know, things happen. People run into financial difficulties. People get sick. People have to move. Yet because of the arbitrary rule, no one may sell his business within three years of getting a licence.

I wrote to the board and said, “Would you please explain to me under what rule or what regulation you have the power to do this?” And they wrote back to me that “it’s done under the rule of board policy.” So I wrote them again; I said, “Would you mind sending me a copy of board policy, because this intrigues me, and I would like to know what policy is.” Chairman Mackey wrote me back, saying:

“Dear Mr. Shulman:

“I am in receipt of your letter asking for information on board policy. I would suggest that if you have some particular decision of the board in mind, I would be pleased to supply the information on that particular decision.

“Yours sincerely,

“James Mackey.

Well, the reason is that he couldn’t give me something he doesn’t have. Board policy has never been written down. This is something that changes from day to day. It depends on the whim of the chief. It doesn’t apply to everyone -- that’s why they don’t write it down. It applies to some establishments and not to others. It is an arbitrary exercise of power for the sake of the exercise of power.

I will go on to the next point. How do they treat their employees? Well, in this country, we are supposed to have the belief that people are innocent until proven guilty -- and so they are, in our courts, in government, everywhere in the province, but not at the Liquor Licence Board. If someone is accused of wrong-doing at the Liquor Licence Board, they will be suspended without pay.

A few weeks ago, one of the inspectors of the Liquor Licence Board was charged in the courts with certain offences. I don’t want to discuss that because it’s before the courts, but immediately that this happened, Chief Mackey suspended the man without pay. So I wrote Mackey and said, “Chief Mackey, how can you do this? You know we have the presumption of innocence until proved guilty? If you feel he should be suspended until the matter is cleared up, that is your prerogative. But surely he should be sus- pended with pay and if, subsequently, he is found innocent, he will not have been punished unfairly and improperly.”

That letter was written some weeks ago but there has been no response to it at all, and the man is still suspended without pay. And I have here, sitting in the gallery, a representative of the employees at the Liquor Licence Board; their morale is so low it’s incredible, because of arbitrary acts of this nature. I have had the opportunity to meet a number of employees from the board. They feel that they are trod upon.

I will give you an example of what goes on there. Two months ago regional government was coming to Oshawa and the chief of police of Oshawa, a fellow named Pilkington -- who is an old acquaintance of Chief Mackey -- was going to lose his job as chief of police; he was going to have to become a sergeant. He called his old friend up and said, “Buddy, can you help me out?” Mackey said, “No problem, we will make you an assistant chief inspector.” And he did.

They didn’t advertise the post. They didn’t offer the post to any of the employees who had been licence inspectors for many years. One of them came to my office and said, “I feel so low about this I hate to go into the office.” When an important post comes up they don’t advertise it; they just give it to whom they want to.

I went to the minister again and I said, “What about this?” He said they are not required to advertise. He then replied with his usual quip. He said: “First we give the jobs to the relatives, then to friends, then to members of the Tory party, and then if we can’t fill them, we advertise.” Well, he said it with a joke and with a smile. All very well.

Then he said seriously to me: “We really have no control over that.” But then he added the kicker. He said the employees agreed to that -- the employees’ association agreed to that. So I got in touch with the employees’ association and it is not true. They don’t agree to it; they are very upset about it. They don’t like that place being run as a private fiefdom.

Men who have worked there 15 years have no chance of promotion because James Mackey has a long list of friends he wants to bring in. He has brought in somewhere between 15 and 20 cops. There is nothing wrong with having policemen working for the Liquor Licence Board -- but the jobs should be advertised; promotion wherever possible should be within the board. And just because you are not a friend of Jim Mackey should not preclude you from advancement.

I was curious as to what pay was given to the assistant chief inspectors, so I phoned down and I got a person in the chief inspector’s office on the phone on Thursday. I said: “What is the pay range for chief inspectors?” He said “I am sorry, I can’t give you that information.” I said, “Is it a secret?” And he said, “No, I have been instructed by Chief Mackey that any inquiries are to be forwarded to him.” I said, “But I understand he is away.” He said, “Yes, that’s a shame.” I said, “Well, does that mean that while he is away the board shuts down?” He said, “Maybe you should phone the registrar. I have been given instructions I am not to say anything.”

I phoned the registrar, Mr. Brown, and his secretary came on the phone and said, “Who is this?” I said, “Morton Shulman.” She said, “Just a moment,” and she came back and said, “What is it you want to know?” I said, “I just want to know the salary range for assistant chief inspectors.” She said, “Just a moment please,” and she came back and said, “Mr. Brown just went into a meeting and can’t take the call.”

So I said, “Who is Mr. Brown’s assistant?” She said, “They all just went into a meeting and they can’t take the call.”

I said, “Would you mind having one of them phone me back? All I want to know is the salary range for assistant chief inspectors.”

I never got a phone call back. However, I did get a phone call back from the minister’s deputy. He said the salary range for assistant chief inspectors is $13,500 to $16,500, or something like that. I said, “How come you are phoning me back?” He said, “The registrar was so frightened he didn’t know what to do because Mackey was away so he phoned us and asked if he should give out any information. So I am phoning you to tell you.”

The morale there right up to the very top, including two of the three board members, is low. It is fear; they are frightened. They are frightened of publicity, they are frightened of Mackey, they are fearful for their jobs. A very strange way to run a government department.

Well, Chief Mackey has ambitions. It isn’t enough just to dispense liquor licences and overlook little things like that. He wants to be a building inspector. So this last year and a half he has expanded the functions. Now, if a place applies for a licence, it isn’t enough to comply with all the regulations that this government brings in. It isn’t enough to comply with the Act. It isn’t enough to comply with board policy. Now he has set up his own building regulations.

An establishment on Bloor St. applied for a restaurant licence. They got their restaurant licence. The building was inspected by the building department of the city of Toronto and was passed. It is a brand new office building. Then they applied for a liquor licence and Mackey ‘s troopers came down and said, “No, we can’t give you a licence unless you put in another exit. You have got two exits; you have to have three exits.”

They said, “You know it is a brand new office building and there is no way you can put another exit; we would have to blast the wall out. It is not our building, we are just renting the premises.” They said, “Well, that’s too bad, we can’t give you a licence unless you have another exit.”

I couldn’t understand this, because there is nothing in the Act that gives them the power to do this. I wrote to Jim Mackey and said:

“It is my understanding or perhaps misunderstanding that your board’s responsibilities are confined to liquor, and that building inspection was a responsibility of the building inspectors and the Metro Licensing Commission. Under what authority have you assumed these added powers?”

He wrote back to me:

“You ask under what authority the board has assumed these added powers. It’s under section 24, subsection 4, of the Liquor Licence Act which reads as follows: ‘The board may restrict the scope or effect of any licence and may issue a licence upon such terms and subject to such further conditions as it prescribes.’”

He took that innocuous section and has now misread it to say it gives him the power to set up building standards. He exercises that power and anyone who doesn’t go along with it doesn’t get a licence. And anyone who complains is in danger of losing his licence.

He doesn’t act just as a building inspector. By the way, the interesting thing about that building inspector is that these particular premises which have been refused a licence unless there is another exit are on the same site -- exactly the same site -- as another establishment which was called the Sandpan Tavern. It had the same number of exits and it was given a licence. It went broke, the place closed down and was bought by a new establishment which was refused a licence. Exactly the same number of exits; exactly the same physical plant.

I said to him, “How can that be?” He said, “Until last year we used to accept the Metro licensing requirements but we’ve changed it now. Now, we follow the National Building Code.” Arbitrarily. Who decided? Jim Mackey decided.

What else have they done? They’ve set themselves up as censors. Mackey has decided there are certain things, certain entertainments, that people should be allowed to see and certain entertainments they shouldn’t be allowed to see. What brought this on? Apparently a young girl danced in one of the licensed establishments with very little clothing on, perhaps with no clothing on; I think she was wearing a G-string. She covered her- self with whipped cream, of all things, and she circulated through the audience, inviting members of the audience to lick it off.

Interjections by hon. members,

Mr. Shulman: Admittedly, Mr. Speaker, this showed a certain lack of feeling for the weight problems of the guests and, perhaps, a certain lack of taste.

Interjections by hon. members.

Mr. Shulman: In any case the police came in and decided this was a lewd performance. They laid charges against her, quite properly; it came to court and was dismissed.

Hon. Mr. Grossman: A waste of good food!

Mr. Shulman: Right. The case was dismissed and in the meanwhile the young lady has disappeared somewhere down in the United States where, presumably, she is plying her trade. But Mackey was so upset about this case being dismissed that three days after this ruling came down from the courts, he issued instructions to all of his inspectors, “This has to be cleaned up. No more naked breasts.”

Hon. Mr. Clement: On a point of order, Mr. Speaker, perhaps the hon. member is not aware that while a criminal charge was laid against the young lady to which he refers and has, in fact, been dealt with, the other charges against the proprietor are still outstanding. Perhaps it might be in the best interests of justice for it not to be discussed any further.

Mr. Shulman: I have no intention of discussing the charges against the proprietor. What I want to discuss is Mackey’s ruling which the minister had to reverse. He decided that naked breasts were a terrible thing and that as of that day -- there was no warning -- every licensed establishment in the province was given notice that as of that night it must cease such entertainment on pain of losing its licence. The minister was embarrassed, quite rightly so.

Whether or not he or I wish to go to such entertainment is a matter of choice but Mackey is not a censor. This government has the power to set itself up as a censor if it wishes. The courts have the power to punish those who break the law. James Mackey is not the censor for this province and someone should tell him so. He is not the building inspector; he is not the ad examiner; he is supposed to be in charge of liquor licences. That was so bad the minister had to reverse that rule.

Let’s look at another aspect of his mismanagement, if we can use a kind word, of the special permit. Here is a major scandal which no one has even discussed at this point.

Special occasion permits are given out by the thousand for every possible occasion for every possible reason except, and unless, you get on a certain blacklist that is made up and held by the board. If your name gets on that list, goodbye.

One of the men whose name is on that list is Roger Fraser. The story of Roger Fraser is quite a fascinating one because it’s a case example of how Mackey runs the liquor board. Fraser owns a place called the Cupid Computer Dating Service and he has some sort of a machine where ladies and gentlemen who wish to meet people have their various physical and emotional needs fed into the machine and then names come out the other end and you phone them up and you meet them and you go on a date.

I’m not exactly sure of the great virtues of the computer in affairs of the heart but, for whatever reason, Mr. Fraser has had this business going for some years and he has had a number of parties which he has held, where the people come to meet and where he has received special occasion permits.

All went along very well until this year when someone else, no relationship to Fraser whatsoever, held a singles fest down at the Four Seasons which turned out to be a disaster as far as the liquor board was concerned. It was overcrowded and all sorts of strangers came and met and went home together. Mackey was very upset. He cancelled the Four Seasons licence for a week as a result of it, and he issued the rule, no more singles fests.

The unfortunate thing is, poor Roger Fraser didn’t realize this. He had nothing to do with the singles fest but he read in the paper about it, and said: “Look, I’ll run a proper singles fest and I won’t let it get overcrowded. We’ll follow all the rules and it will be a great thing for people.” So he applied and, of course, got turned down because there were no more singles fests to be allowed, regardless. This is understandable.

Unfortunately, his name now got on the list, so the Cupid Computer Dating Service, which he had been getting licences for for some years, suddenly no longer could have its parties. He didn’t know this. He applied for the regular Christmas party for the Cupid

Computer Dating Service and, bang, they turned him down, of course, because he was now on the list. He couldn’t understand why, so he asked why but they wouldn’t give him a reason. They don’t have to give reasons.

So he came to me and I asked why and they gave me a reason. Let me read the members the reason. It’s very interesting. It’s from James Mackey. I quote:

“The reason this permit was refused is that the applicant was applying for a permit to serve liquor to the public and was a business operation for the purpose of making a profit.”

He said one is not allowed to make a profit when one runs this type of affair. So I wrote him back and said: “This doesn’t make sense. You’ve been giving him licences right along.” He wrote back: “No, we haven’t. He has never had a licence before.”

So, two weeks ago I got five of his old special occasion permits which I have here and I phoned down to the man in charge of the special occasion permits department, a fellow by the name of Gertley, and I said: “This whole correspondence doesn’t make any sense. First of all, you say he’s never applied for one before and now you’re not going to give him one because he wants to make a profit. He’s been running the same thing for years.” He said: “What are the numbers on the permits?” I read the permit numbers to him and he said: “I’ll give that information to Chief Mackey.”

I said: “That’s all very well, but how about giving me some information. What’s going on?” He said: “My instructions are that I’m not to give out any information. You’ll have to speak to Chief Mackey.” I said, “Well, that’s fine. Will you ask Chief Mackey to let me know what the hell you people are doing?” That was two weeks ago and I guess Chief Mackey decided it was time for a vacation because I’ve heard no more on that subject.

However, that’s not the end of this story. Here, I have this letter from Mackey saying that the Cupid Computer Dating Service may not have a special permit because they want to make a profit. But I have another letter from Mackey, sent to someone else, which is quite interesting. On this he asks: “After you have your special occasion permit, please file a financial statement indicating costs, total sales, and profits.” Some people can make a profit and some people can’t make a profit. That’s the way it works,

I got in touch with the board again. I said: “Look, the Cupid Computer Dating Service would really like to have this affair. If you feel they shouldn’t be allowed to make a profit they’re willing to call in a charity to run the bar. They’ll have nothing to do with it whatsoever, so they won’t make any profit. Whatever profits come in, the charity will take it in. Fraser won’t go anywhere near the money.” They said: “No, the Cupid Computer Dating Service may not have a licence whether or not they make a profit.”

It isn’t just myself who is upset about the way they run the Liquor Licence Board. You don’t get complaints within the industry because they’re frightened. I hope the members will all go to different licensed establishments in the next few days and ask any one of them about the Liquor Licence Board. They will all pour out a tale of woe on conditions that the member doesn’t use their names, because they are all frightened of reprisals.

One multi-millionaire said to me when I asked him if I could use his story: “I want to open up new premises in Ontario, but I’ll never get the licence. They’ll keep harassing me. Don’t use my name whatever you do.” There is fear in that industry.

I have a letter here from the St. Catharines city council, which has been endorsed by the Toronto city council, saying: “The whole way they run the special occasion permits is nutty and something should be done about it.” That was sent to the minister. I won’t go through all that, there is enough of it here.

What about the question of influence in the granting of licences? Just a moment, before I leave this special occasion permit, they do something else. I have a special occasion permit that was granted to a certain charitable organization, or at least it was granted to an individual to raise money for a charitable organization, and he paid the $15. I’ve got the receipt here for the $15 he paid. But they have another gimmick at the Liquor Licence Board, which I can’t find in the law anywhere. Maybe the minister can help me.

On any liquors that are sold for the purpose of charities, in other words through these special occasion permits, they charge a special extra tax, a tax of 17 per cent. In other words, when you go to buy that liquor at the liquor board, where you and I are going to pay $5, they’ll charge them another 17 per cent on top. Why? Is it to punish the charities? I haven’t been able to get an answer to that one. Nobody seems to know the answer for that special tax. Maybe the minister knows.

Hon. Mr. Clement: Ontario retail sales tax.

Mr. Shulman: Seventeen per cent?

Hon. Mr. Clement: One dollar a small bottle.

Mr. Shulman: But this was on the total. The total bill here is $850 and they put on 17 per cent tax. Figure that one out. Nobody at the board can figure it out. They said, ‘Well, that’s the way it is. That’s the way it is.”

Well, what about the question of influence? Rumours have gone around for a lone time that if you go to the right lawyer -- and there are two specific lawyers in this town who, rumour has it, will solve all your problems. I don’t want to mention the two lawyers, because one of them at one time was a colleague of ours and the other is my boss in one of my arrangements, so perhaps I shouldn’t mention their names. In any case, there is a rumour in the city -- I underline the word “rumour” -- that if you go to one of those two gentlemen or to their firms, your problems will be solved.

I thought it was rather important to find out whether this was true or not, so I went around and looked at some of the new establishments. I went to a place called The Cossacks. It is a new restaurant that opened up last year down on Queen and University. It was run by experienced people, all of whom had had experience. The owner, the chap who took it over and who opened it had been the maître d’ at Captain John’s. There was no question that they knew how to run a restaurant.

He applied for a licence back on Feb. 8, 1973, well before he opened. There were some problems getting a licence. There was nothing wrong, he had carried out all the rules. He didn’t have any partitions. He had all the exits they asked for. He did everything they asked, but somehow there was a long delay, months and months of delay. He had to wait some seven months after he was open before he got the licence.

There was another restaurant opened at the same time, Fernando’s Restaurant over here on Prince Arthur Ave. Fernando is an interesting person. Actually his licence was approved before he opened. His licence was approved four weeks before he opened. They opened on Boxing Day and a few weeks later they had put the liquor in the bar and they were serving the liquor. No long wait there, and I was curious.

I went to lunch at Fernando’s, and I took a couple of witnesses along just in case, you never know what people are going to say on the spur of the moment. I said to Fernando, “Congratulations on your beautiful new restaurant. It is wonderful food. How did you manage to get your licence so quickly? You didn’t have to wait the way L’Escargot had to wait, five years, and The Cossacks had to wait, seven months. Marika’s can’t get it at all. They’ve been waiting a year and a half.” He replied -- and we wrote it down -- I quote: “I was a good boy and I don’t belong to your political party.” That’s Fernando’s explanation.

Well all right, that is still no proof. So I thought, well there is a very simple way to establish the truth of this. Let’s get a list of all the establishments in town that got a licence in 1973, let’s see how long they had to wait for their licence and let’s see who the lawyer was. Simple. It’s funny that nobody has ever done that before.

So I wrote a letter to Mr. Shirley who is in charge of that particular branch. I didn’t get a reply. I waited a week or so, and still no reply. So I phoned Mr. Shirley and I said to Mr. Shirley: “How about that information about the lawyers?” And we thought we better get this on record. Mr. Shirley replied: “I passed your letter on to the chairman for his decision, because I was concerned about the names of the lawyers being made public.”

Okay, that’s fine. So I said: “When is the chairman going to make his decision?” He said: “He will be in touch with you.” Well, the very next day -- we had very good service from the chairman -- the very next day he phoned down and he said:

“Dr. Shulman, there is a lot of work involved in getting that together. We can do it for you, of course, but we are preparing our annual report right now and our files are scattered all over the office. We won’t be able to get you the information until after April 1.”

I said, “That’s fine. Chief Mackey, that’s just fine. I’ll be quite happy to have it after May 1.” Then he said something else. He said, “Why do you want that information? Lay it right on the line.” I said, “Well, I’ll be perfectly frank with you. I have the suspicion that if you go to a certain lawyer you’ll get your licence without a wait, and if you don’t use the right lawyer, you are going to have a long, long wait.” And he replied to me “That’s nonsense. I don’t even know who the lawyers are.” I said, “Well, thank you very much. I’ll look forward to receiving the information.”

The very next day I got a letter from Mackey saying he had changed his mind and he wasn’t going to give me the information. He said that there was too much work involved. Well, if there is suspicion, he is nurturing it. And if there is nothing wrong, why do some have to wait for years, some have to wait for a month and some get their licences the very day they apply?

I have another letter from James Mackey. I want to read you this one. The very day that Fernando was getting his licence, the day it was approved, four weeks before he opened, Mackey sent out a letter to another restaurant that had already been open for months. It reads as follows:

“The board feels that your application is premature. We suggest your dining room be in operation for a reasonable period of time before making another application.”

How can you possibly explain that, Mr. Speaker?

It isn’t just that. They don’t just make up their own rules. They don’t just use discrimination. They don’t just ride roughshod over those people in their power, and the licence holders are in their power. They do something else. They have contempt for the Legislature, and they have contempt for our rules. It doesn’t matter what we say. The minister says, “Don’t worry. In May I am going to bring in a new Act and I am going to change things. We are going to clean it all up.” It doesn’t matter what he puts in the Act; it’s what Jim Mackey decides.

Let me tell you another story. When I had this funny story about Barberian’s not serving lunch -- and it’s in the Act to have to serve lunch -- I thought I’d better look up the Act and see what it actually says. The regulation doesn’t just say that. What the regulation actually says, and I quote:

“In every dining lounge or dining room, meals for which adequate menus shall be provided, shall be served at regular breakfast, luncheon, dinner or supper hours.”

Not just luncheon, but also breakfast. I thought, that’s strange; the law says they have to serve breakfast. I phoned Wellington’s and said, “I want to make a reservation for breakfast for tomorrow morning.” The girl had a great laugh, and said, “We don’t serve breakfast.” I said, “But the law says you have to serve breakfast.” She said, “Don’t be ridiculous. The law doesn’t say we have to serve breakfast.”

I wrote Mackey and I said, “The law says they have to serve breakfast, and I want to have breakfast at Wellington’s.” And he wrote me back saying, “No, we don’t enforce that law.” And he gave me several reasons. First of all, it was poor economics. It was a great hardship for the licensees.

He said, “In the three and one-half years I have been here, yours is the first complaint.” Well, that seemed reasonable, but there was one thing that worried me. I wrote him back again and I said:

“Dear Chairman Mackey:

“Thank you for your letter. I am writing again to ensure that there is no misunderstanding. As I understand the situation,

“1. The Legislature in its wisdom, or lack of same, has passed a law requiring that meals be served at breakfast in our dining lounges.

“2. The Liquor Licence Board for various reasons, for economics, hardships to licensees, lack of public complaint, has decided this particular legislation should not be enforced. The implications to me are staggering and I invite your reconsideration of the matter.

“Yours sincerely,”

Mackey wrote me back I think perhaps the most significant letter in this whole series -- just a one liner:

“Dear Mr. Shulman:

“I am in receipt of your letter in which you ask that I reconsider the matter of the issuance of licences to owners of dining lounges that do not provide a breakfast or luncheon service. I think you are quite right with regard to the enforcement of the legislation. This matter is now being studied.

“Yours sincerely,

“James Mackey.

Just think about that one. He says I am right. They are now studying whether or not they’ll enforce it.

That isn’t the end of it. There is a place called the Cambridge Club down at the Four Seasons, an all-male club where people go for exercise. There’s a swimming pool and a sauna and things like that there, and they can play squash. They have always served breakfast there. Recently they received their liquor licence. Three weeks ago one of the inspectors, a Vern Colby, walked into the establishment and said, “My God, you are serving breakfast. We don’t want you to serve breakfast. You must stop serving breakfast. It’s against our policy.”

This is not like a restaurant. This is where people come in the morning to work out and after they work out they like to have a bite of breakfast. But he said, “If you don’t stop serving breakfast we’ll take your licence away.” They stopped serving breakfast and they got in touch with me and said, “What in hell is going on? The Legislature says we have to serve breakfast. Mackey says we mustn’t serve breakfast.” I got in touch again with the board and I said, “What in hell are you people doing down there?” They said, “It’s board policy -- ”

Hon. Mr. Crossman: They are carrying on correspondence with the member. They don’t have any time to do anything else.

Mr. Shulman: That’s about the only thing they are doing. They said, “It’s board policy that breakfast not be served by our licensed establishments.” I said, “The Legislature is supposed to have something to do with this province. It says breakfast must be served.” The man on the phone said, “It’s board policy they do not serve it or they lose their licence. Orders from Mackey.”

What does it matter what law the government brings in? What does it matter what Act it brings in? He doesn’t pay attention. It’s Jim (I am the law) Mackey. The minister doesn’t count. What does it matter what he says to him? We don’t count. What does it matter what legislation we pass? There is nothing in here that governs the things he is doing.

We’ve got a teetotaller, who believes that drinking liquor is sin, in charge of the licence board. He has become obsessed with his position. He has become obsessed with exercising the power which he became used to as the chief of police. The minister is never going to clean up the mess unless he gets rid of that man.

Let the minister do what he wants with him. Make him the head of the OPP. Put him in charge of the Police Commission. He’ll do all those things well, but get him out of the Liquor Licence Board. Because it is not just all these stupid things -- it’s permeating through. The public is becoming aware of it and it’s not just here in Toronto. It’s in Kitchener and it’s in Grey South and it’s all across the province, everywhere there are licensed establishments.

Those inspectors are going around and I can’t blame the inspectors. Each day they are given a certain set of instructions and the instructions are maddening. They are told, “You see such-and-such a regulation? Go down hard on that one. See the other regulation? Ignore that one.” What are the inspectors to do? If they don’t go along they’ll lose their jobs. And the instructions are coming down, “You will do what I say.”

Mr. Speaker, surely we cannot continue to allow this man to be the law in this province? We cannot allow him to continue to do all of these things which are improper, illegal, not based in law. The morale of the employees -- I wish the minister, before he leaves today, would go and speak to the representative of the employees. He’s here. There was a whole delegation of them the other day but unfortunately I couldn’t get on and they are working today. There is a representative here who is not afraid to speak. They have been afraid for so long. Go and speak to him. Find out what the truth is down there. They are all frightened. They all hate going to work there. It’s Mackey’s fault and it’s the minister’s fault and his predecessor’s fault for not exercising control.

All right. I won’t belabour it any further. I think it’s quite clear what the minister has to do and a little facelifting, a new bill, isn’t going to solve his problem. He has to revamp the board; he has to get rid of all three of them, I think, because the other two are just rubber stamps. He has to put in someone who is going to be responsive (a) to the Legislature and (b) to the public.

Now I just want to say a word about organized crime. As members know, we were talking about laundering the other day and I said I would prepare a bill. That bill has now been prepared and I gave the first draft of it to the minister. I have a second draft prepared here which is a slight improvement on that and I am going to pass that on to the minister also. I’m not introducing it until he has had time for his experts to go over it but I hope that problem will be under control.

I want to talk about a different problem in the field of organized crime, one which has never been discussed in this House. As far as I know, it has never been discussed in the public press. It’s a growing type of organized crime and a highly profitable one which now ranks second only to bookmaking in its financial importance. That is scamming.

It’s a whole new way of raising money for organized crime and it’s in the form of criminal bankruptcies. It works very simply. A legitimate business will be bought by a front. They often come from out of the province or from the United States. They will often do it through a lawyer. There is one particular lawyer who specializes in that in this city.

What happens is that they buy a firm with a good credit rating, and the new owners then purchase large volumes of merchandise on credit and get rid of this merchandise by selling it at a quick sale. Sometimes they sell it to the public. Sometimes they sell it to other stores. Sometimes they sell it to wholesalers who are aware of what is going on. They deal in goods which are difficult to trace, like appliances, jewellery, furs, meat, toys, furniture and clothing.

What happens is that they buy as much as they can on credit, 60- or 90-day credit, fill the stores, and sell it as fast as they can. And as soon as the material is sold, they close the doors and never open again and declare bankruptcy.

According to Henry Jensen, who is the RCMP superintendent whom I am quoting here:

“The business closes its doors silently and then fails to reopen. Often financial records are missing or destroyed. False financial statements are prepared to dupe suppliers into granting credit on favourable terms. Credit is the key to success in this criminal venture.”

According to Supt. Jensen, there were some- where over $200 million worth of fraudulent bankruptcies in this country, most of them in this province, in this past year. This is big, big money. It is an unfortunate thing that no attempt has been made by our OPP, the Police Commission or the Metro police to tackle the subject. Perhaps they are not capable of tackling it. Their basic problem is that they do not have accountants; they don’t have the university graduates that we need to fight these highly sophisticated thieves.

I have the details here on one man who has been carrying out fake bankruptcies -- he has been doing most of them in the construction field -- and in one year he had had 28 of these phoney bankruptcies right here in this city. The police are aware of his activities, yet they can’t seem to do anything about it.

Obviously my making a speech here is not going to affect the matter one iota. I am directing this to the Solicitor General (Mr. Kerr) and I hope the word will get to him. We have to have something more done on the intelligence squad of the OPP. We have to have trained men brought in -- accountants, lawyers, university graduates, people who can understand a balance sheet just as well as these criminals can. It isn’t good enough to promote a cop up out of the ranks and say, “Go after them.” He doesn’t know what to do and he doesn’t understand what he sees when he gets into these places.

It is absolutely essential that a proper intelligence squad be formed in the OPP. This has been the complaint I have had now for some years. For many years they didn’t have a single university graduate on the intelligence squad. I believe they now have one.

While they are very fine in handling things like the wiretapping, gangbusters and bank robberies, they are not competent to handle this type of white-collar crime, which is being taken over very rapidly by organized crime.

I don’t want to belabour the point, but it is very important that the Solicitor General move in this field. I am very pleased with the Solicitor General -- for the first time in many years we have a Solicitor General who is willing to listen, who is willing to move and who is willing to act. I hope that this energy will continue and he will be allowed to remain at his post for a reasonable length of time.

Mr. Speaker, I just want to say one other word, then I will quit, and it has to do with the budget that is coming down tomorrow. This is a more serious word than the one I had before. I am terribly upset by the inflation that is stalking us, and I am terribly upset by governmental policies which are feeding that inflation -- not just this government, but governments right across this country, perhaps right around the world.

I have here a copy of the Wall Street Journal of last Wednesday, and the headline is: “Painful prospect. Big New Price Rises on Retail Products Expected in the Fall.” They say by fall, for example, that silverware selling today for $63 will sell at $120; draperies that sell at $10 will sell at $12; sheets that sell at $4 will sell at $5; and so on right down the line. Everything in the clothing field, in the textile field, in the metal field is going to show a tremendous jump in price. What bothers me is that government is doing nothing about it.

I am sorry the Treasurer isn’t here. I don’t know what’s in his budget but I fear it’s going to include very much of the same mistake that has been made in Ottawa and which has been made in Washington for so many years which is: “Put off the evil day. We will tamper with it. We will give more money to the people who are most disadvantaged to help them solve the problem.” But, of course, by giving more money, you must print more money and that in fact aggravates the problem.

All that does is tinker with it and somewhere along the line -- and this is not going to make me popular with any member of this House but I think somebody has got to say it -- somewhere along the line, sanity must come back to government and we must live within our means and this is basically what the problem is.

In Ottawa, Queen’s Park, in Washington, no one bothers to balance the budget any more. It doesn’t matter. Nobody cares. “Keep priming the pump, because if we don’t, we are going to become unpopular at the polls.” You can keep postponing the evil day, Mr. Speaker. You can postpone it for some years, but now we are into two-digit inflation -- it is up over 10 per cent. By fall we are going to be at 16 per cent inflation in this city and the things we are doing now, if we keep doing them, have to be done even faster.

It is like a treadmill, Mr. Speaker. The faster you go, the faster it goes and you can’t catch up this way. Somewhere we are going to have to pay the price, come to reason and live within our means. The longer we wait for that, the worse is going to be the crash that comes at that time.

I very much fear if the financial, economic and fiscal policies that are being followed in our economy are continued for another three or four years, we will be in the situation Germany was in 1923 when people had to use wheelbarrows full of money to go to a restaurant to buy a meal.

The situation that came to Chile just a year ago -- that’s what brought Allende down, not the other things. It was the fact that finally the ordinary man in the street couldn’t buy the necessities of life for his family. He couldn’t pay the rent. He couldn’t pay for food.

And there is a great temptation in government to tinker. We will put in price controls in one place. We will put in 90-day price controls. Well, it has been tried in so many nations and it doesn’t work. It doesn’t work for a very simple reason. We are not self-sufficient and we have to import so many of the things we use. If we put price controls on certain things, the things that continue to come in will continue to go up in price and the things we produce here that are selling too cheaply will slip out of the country. They’ll be exported because we can get more money elsewhere. That’s why that doesn’t work.

In order to make that work you have to put in border controls, Mr. Speaker. You mustn’t allow the goods out. People then find ways of getting the goods out and you have to have police to punish thorn and you have to have severe punishments, because the profits become tremendously high very quickly.

It’s that whole scheme of things, price and wage controls, border controls, punishments -- it’ll only work if you are prepared to do one thing and that’s kill people. The only time it ever works is in an absolute dictatorship when people who break the rules are taken out and shot. You can’t do it. That road is a bad road and I hope that Bob Stanfield doesn’t go down that road, because it leads to bad places.

But the other scheme, what we’re doing now, is equally bad. This is the horror. We keep printing the money, more and more paper money, and the public is waking up. They recognize now that buying government bonds is a fool’s game. They recognize now there is no use buying a Canada Savings Bond that gives you seven per cent or eight per cent when inflation takes that much and more away from you as fast as you draw the interest. They recognize there’s no point in putting your money in the bank. They recognize there’s no point in buying government annuities. They recognize there’s no point in having pension plans. Our pension plan in here is a joke. So is every other pension plan. By the time we draw it it’s not going to mean anything.

The whole economy is being ruined because the dollar is being ruined. We’ve fooled the public for a long time, but the public is waking up as more and more recognize that paper money doesn’t mean anything, that a piece of paper is nothing more than that, whether it is coloured green and has the Queen’s picture on it. As the flight from money continues, as the people rush out to buy goods, to buy real estate, to buy metals, to buy commodities, there is going to be a financial panic and there’s going to be a financial collapse in this country and it’s not too late to stop.

I feel like I’m baying at the moon. Nobody listens. Nobody pays attention. And when you do say this, the papers criticize you. I made the mistake of giving a speech like this once before and the Star ran a series of letters saying: “That man must be silenced. He’s going to frighten the people. What we want are politicians who have the cures. We don’t want people coming out and scaring people. We want Trudeaus and Lewises and Stanfields -- people who would say: “I know what to do. You follow me and everything is going to be okay. We’ll just print more money’.”

Mr. R. Haggerty (Welland South): They’re buying the gold.

Mr. Shulman: Same thing. There’s a flight from paper money and it has to be stopped and the only way it can be stopped is by sanity in government.

I hope when the Treasurer brings down his budget tomorrow he won’t follow the temptation which so many others have followed of trying to put a Band- Aid on here and there; he has to cut back his expenditures.

And the Premier was right when he said that the other day. But you see, the Premier did not quote correctly what I said the other day. He said, “You should support the ceilings; this is a way of holding it back.”

But there’s no point in holding it back in one spot if you don’t hold it back all over. All government expenditures must be restrained -- all government expenditures. And, unless we do that, we are going to have a most unhappy situation for everyone in this country.

I hope my contribution has been of some benefit. Thank you, Mr. Speaker.

Mr. Speaker: The member for York West.

Mr. J. P. MacBeth (York West): Thank you very much, Mr. Speaker.

Mr. Haggerty: A hard act to follow.

Mr. MacBeth: I will limit my act and I think I can be through by 12:05, Mr. Speaker, if you might go that long.

Mr. Speaker: We plan on rising at 12.

Mr. MacBeth: I thought if I could go a few minutes over, you can be through with me and the next speaker can be one from the opposition party.

However, Mr. Speaker, as you know it’s customary for the members of this House to deal with many matters when it comes to the Throne debate. I thought this afternoon or this morning that I would limit mine to one matter only and that is the distribution of power under the British North America Act. As some of the members know, I have been concerned from time to time with the encroachment of the federal authority into provincial powers.

I have been noticing something in recent days that has filled me with a great deal of wonderment. I see, sir, that the federal Minister of Health has indicated what type of football he will permit us as Canadians to attend.

Now, sir, I am not sure under what section of the British North America Act he purports to acquire his authority, but I suppose it is under that first general heading of “Peace, order and good government.”

Now, I see this, sir, as a very brave step, because a less daring minister could possibly conceive it as a matter of property and civil rights -- particularly in view of the number of dollars rumoured to be involved -- and therefore conclude it was a matter of provincial jurisdiction.

But not so this brave minister. And I say what a fortunate happenstance for this country that such a far-sighted minister could see the insidious threat that American football would pose for the good government of this country, of the true north, strong and free -- and to nip this invasion of American culture in the bud.

One can hardly imagine the threat to the culture of this country if its sports enthusiasts -- and I must say, sir, in my mind the sports enthusiasts are one of the most basic forms of culture we have, even though perhaps they are a most primitive form of Canadian culture.

So, I say it’s a good thing that we are to be protected from this foreign abuse, and are censored from a perverse desire to indulge in this adulterated species of this sport.

I am not generally regarded as a great sports enthusiast myself. So why am I concerned? In brief, I see it as a constitutional issue. Is there any more pressing problem for the Canadian people at this point of time in our history than this invasion of American culture? Surely it is time for a strong federal government to recognize that the Fathers of Confederation may have erred in giving such matters of culture as education into the hands of the provinces. This has resulted in many regional differences and permitted Canadian youth to be stamped in more than one common mold.

Now is the time to save the purity of Canadian football. One game, one set of rules from coast-to-coast, with the players completely interchangeable and fluently bilingual. Now is the time to fortify our Canadian culture. Great harm could ensue if each province is allowed to go it alone.

Look at what happened in Quebec some years ago when that province attempted to establish cultural ties with France. It shook Confederation to its very foundation. Let’s look at our sister province to the far west -- British Columbia. It is noted for its flirtations with innovative labour demands. I am informed, perhaps by erroneous foreign publications, that if US labour has a new idea it will try it on for size in British Columbia. Think how important it is for the peace, order and good government of Canada that federal legislation should be forthcoming to stop that dangerous practice, that predilection and peculiarity of the citizens of British Columbia.

On Saturday afternoon I was travelling in midtown Toronto when I noticed a show advertising an Italian film. It didn’t even suggest that there would be English subtitles. The people, sir, were lined up to get into that film and nearby was another theatre showing a Canadian picture but it was almost deserted. Surely, that second theatre must be headed for financial failure. Now with this new brand of federal censorship our Canadian film industry could be saved.

Mr. Speaker, in the matter of entertainment, whether in sports or culture, we Canadians need to be protected from ourselves. Surely, the provincial prerogatives of property and civil rights and education cannot be allowed to stand in the way of national unity. Is this not a most commendable erosion of provincial rights? When the federal Minister of Health is protecting us, sir, from American football I hope he will not overlook those TV reruns of the Shirley Temple films.

Thank you, Mr. Speaker.

It being 12 o’clock noon, the House took recess.