Hansard Transcript 1974-Apr-11 | Legislative Assembly of Ontario

Hon. R. Welch (Provincial Secretary for Justice and Attorney General): Mr. Speaker, I am tabling a letter and a report to the federal Minister of Consumer and Corporate Affairs, the Hon. Herb Gray.

This material expresses this government’s concern with respect to Bill C-7, An Act to amend the Combines Investigation Act. I would certainly wish that both this material and my comments this afternoon will be viewed as presented, in a spirit of co-operation aimed at helping shape economic policies which, of course, transcend federal and provincial jurisdictions.

The federal government’s competition policy was first introduced in June, 1971, as Bill C-256, the Competition Act. In February, 1973, the Ontario government published its views on that initial legislative attempt. The present bill, Bill C-7, is the first part of the federal government’s two-stage legislative initiative designed to implement its revised competition policy.

From the information made public by the Hon. Herb Gray, it is our understanding that this second stage will contain the main thrust of the federal government’s competition policy. Therefore, before I outline our concerns about this first stage, Bill C-7, may I reiterate some of the views made in our earlier report?

First, we would appreciate a clear indication that the federal government has formulated its competition policy within the context of a comprehensive national industrial policy. Little explanation has been discernible as to how this proposed competition policy will coincide with the federal governments policies on taxation, tariffs, foreign investment and regional development, to name a few.

Second, we are concerned that the second stage legislation may contain provisions potentially so restrictive as to prevent the desirable long-term restructuring of the Canadian economy. There is a need to give more priority to the benefits which can be achieved through industrial rationalization, such as its effects on employment and Canada’s ability to compete in international markets.

And third, Mr. Speaker, the Restrictive Trade Practices Commission should not be given the authority to determine Canada’s industrial strategy.

The combination in the Restrictive Trade Practices Commission of both a policy-making function and a policy-implementation function would result in that body being vested with almost unrestricted discretion. When stage II is introduced, the federal government should ensure that the objectives of the government’s policy are presented in clear legislative statements, and that there be timely and meaningful consultation with both the private and public sectors.

Let me now turn to Bill C-7, Mr. Speaker, the first stage of this two-stage legislative process.

This government is in basic agreement with many of the aims of stage I. We are pleased to see additional federal efforts to protect the consumer, and we agree that the services industries should, in general, be brought within the scope of anti-combines legislation.

At the same time Ontario does have a number of reservations about this current federal legislation. They fall into three broad areas.

First, there are the problems raised by overlaps in federal and provincial jurisdiction. There are a number of cases where specific practices and industries may be subject to provincial laws which overlap or conflict with the provisions of Bill C-7. For example, the province currently regulates a number of professions as well as a number of specific industries, such as loan and trust corporations and the securities industry. Similarly, areas such as telecommunications and transportation which are at least partly regulated by the federal government may also be subject to competition legislation. These overlaps create confusion and uncertainty and are detrimental to the conduct of business.

Second, there are problems arising out of the enlarged scope and authority to be granted to the Restrictive Trade Practices Commission. While we agree that an administrative body is an appropriate forum for resolving some judicial issues, we think, however, that Bill C-7 should include specific rights of appeal on decisions of the commission to a superior provincial court with a tradition of experience with criminal matters. We are also concerned about the appropriateness of granting a subordinate agency the power to determine industrial organization and structure and to make policy which it will then implement.

Our third point is that there are economic and legal problems arising out of ambiguities and uncertainties in Bill C-7. Ontario thinks that certain portions of Bill C-7 are unclear and will make business planning difficult. To some extent, this problem can be dealt with by redrafting portions of the statute, expediting passage of regulations, and by issuing rulings and policy guidelines. Our report placed before members today provides specific examples of our concerns.

It is obvious that any federal competition legislation will have a major impact on the provinces. Not only are their economies directly affected, but new federal competition law will also in many instances necessitate changes and additions to provincial statutes. In view of these intergovernmental implications, it seems appropriate the provinces should continue to play a major role in the evolution and the continuing implementations of national competition policy.

Beyond those three broad areas of provincial concern, Mr. Speaker, I would like to add the hope we have that the bill’s objectives for consumers and distributors might be clarified. For example, the possibility that a manufacturer might be required to supply all distributors so requesting, could militate against the responsible, often small retailer, who emphasizes full-line service and maintenance and who gives priority to Canadian goods.

On a number of occasions, and again today, Ontario has stressed the importance of provincial participation in the development of economic policies which transcend both federal and provincial jurisdictions. Competition policy is clearly one of these areas. It is, therefore, in the spirit of co-operation that our views are put forward in this House this afternoon.

STUDY ON FOOD COMPANY PROFITABILITY

Hon. J. T. Clement (Minster of Consumer and Commercial Relations): Mr. Speaker, there has been a great deal of concern with regard to increasing food prices and questions have been raised about the increased profits of food companies. In addition, there appears to be a great deal of confusion as to exactly who or what is causing the prices to rise. In response to these inquiries my ministry has been trying to get at the facts. We are preparing a two-part study on the profitability of the food industry to try and establish once and for all the accurate situation.

I would like to place before the Legislature today part one of an analysis of profitability for 16 companies in the food industry which has been prepared for the ministry. This document, together with the supporting statistical data, covers the period from 1967 to 1972. Part two of this report will be made public in late June or early July, which will review and analyse 1973 financial results just now becoming available.

The purpose of the overall study, Mr. Speaker, is to determine the extent to which food company profits contribute to rising food prices. We are all aware of last year’s rapid increases in food prices. Food company profits also increased along with the prices, making necessary an independent study of the relationship between prices and profit. I believe the provincial government has a natural role to play in providing such a study.

The method we are pursuing has three important steps. First, we are attempting to separate the profits of food operations from those resulting from acquisitions, real estate transactions, or changes in federal taxes. If our objective is to trace the relationship between food prices and profits, food profits should first be isolated.

The second step is to assess profitability in the base period of 1967 and 1972, when prices and profits were relatively stable, and compare these results with the profitability of the same companies in 1973, when profits and prices increased sharply.

Our third step will be to compare the profit trends of the food industry with those of other industries having similar capital structure, size and business risk.

By employing this approach, Mr. Speaker, we intend to avoid the errors made by many others who have offered their quick and ill considered analysis of the situation. We will not be comparing increases over a short time period in order to have dramatic appeal; nor will we jump to the conclusion that all increases are excessive, particularly if the figures indicate a return to previous acceptable levels of earnings rather than the achievement of new levels of profitability. We will also separate out as much as possible the impact of short-term tax changes and non-food profits to provide a proper basis for judging the relationship between food company profits and price increases.

Our studies will not attempt, Mr. Speaker, to provide a final answer to whether or not food company profits are excessive. Certainly the comparison of food industry rates of return with those of other similar industries will be most helpful in determining the acceptability of food industry profits. However, the final determination on what is excessive must be made by the public -- and that is how it should be.

An interplay between social and economic forces must decide the definition of excessive profits. The entry of new firms into an industry in which profits appear to be out of keeping with risk will occur naturally and tend both to define and to offset excessive profit situations.

Investor expectations, corporate requirements for expansion and modernization, the cost of money and public confidence in business are further components in the final determination.

Mr. I. Deans (Wentworth): He sounds like an apologist even before he begins.

Hon. Mr. Clement: One of the purposes of this study is to initiate an informed dialogue with the public and industry, leading to a fuller understanding of why profits are needed, how they occur and what level of profitability is considered acceptable by consumers, investors and company management. Perhaps it will be possible to come to a consensus for the industry’s rate of returns, taking into account all these viewpoints.

Mr. Speaker, I would also like to point out a number of difficulties turned up by this study.

The most important difficulty has been the inadequacy of some of the financial data published by many food companies. It seems to me that annual reports are written with too much emphasis on management accomplishments and too little accent on informing the public. Disclosure requirements are being met, but in an effort to please shareholders or frustrate the competition, valuable information is not being given -- information vital to the consumer.

Companies should be showing us in more detail where their profits are coming from, why they are needed and where they are going.

Mr. V. M. Singer (Downsview): Is the minister going to amend the Business Corporations Act?

Hon. Mr. Clement: Most “source and application” statements are insufficient to assure the consumer as to corporate responsibility; nor is this the best medium to use for communicating to the public. Some companies even refuse to send copies of their annual report to non-shareholders.

Communicating with their consumers should be a major objective of every company, especially where there is much widespread concern about rising prices. In the case of the food industry, the legitimate concern consumers have for what is happening to the extra money they are forced to pay for food has become an important social issue.

Mr. Speaker, I intend in the very near future to write to the major companies in the food industry to suggest that greater co-operation be shown to the consumer seeking information, and that greater effort be given to explaining the facts about the profitability of their companies.

Mr. E. J. Bounsall (Windsor West): Legislate it.

Hon. Mr. Clement: Part one of this study which I am tabling today for the benefit of all members is, I think, a sound beginning to a clear and complete analysis of the profitability of one of our most important industries. I ask the members of this Legislature, the public and the companies to give this report a dispassionate reading and then to write to me with comments and suggestions to direct our further investigations and to contribute to the conclusions. Because we intend to complete this study by July, I hope to receive these comments before the end of May.

Mr. Speaker, a copy of this study has been sent to the federal Food Prices Review Board which is doing a similar study of the food industry. One of the questions that will naturally arise is the position of our government and the federal government should this analysis and subsequent public consensus indicate that some excessive profits are being made. At this stage, with many facts outstanding and many questions unanswered, particularly the question of how and where profits are being made, no conclusion or statement of position is possible. We must first see where this study leads us and then judge the public’s reaction to it.

Thank you.

Mr. S. Lewis (Scarborough West): Is the minister tabling a study without any conclusions? Is that it?

PHASING OUT OF JUVENILE TRAINING SCHOOL

Hon. R. T. Potter (Minister of Correctional Services): Mr. Speaker, the hon. members will recall that two years ago the ministry initiated a group home programme. These group homes offer a homelike atmosphere for those young people in our care who, in our consideration, do not require institutionalized care but who are unable to cope with the more intense relationships involved in the normal single-child foster home.

The development of the programme in the past two years has served to illustrate that many young people, after a short assessment period, can function well in the community when given care and supervision.

A year ago, due to the success of this policy, we were able to discontinue the use of Elmcrest Training School. Since that time the group home programme has continued to develop and as a result the ministry is now in the position where it can discontinue the use of a second training school. Moreover, I venture to say that providing present patterns of commitment to training schools continue we will be in a position, 18 months from now, to close a third training school.

The phasing-out of another training school is, of course, in keeping with the ministry’s policy, with adults as well as with juveniles, of caring for and supervising those placed in its care in the community wherever possible rather than in a training school or in a correctional centre.

The decision as to which school to phase out was not an easy one, but after most careful deliberation by the ministry’s task force charged with examining the alternatives, the decision has been made to close Glendale school in Simcoe as a training school and to operate it as an adult training centre. The programme which will be developed there will be very similar to that of the Brampton Adult Training Centre and will cater to young adults who are first offenders and who, without this new alternative being available would normally be housed in the Guelph Correctional Centre.

Few alterations need to be made to equip Glendale school for this purpose, and it is anticipated that most of the staff now employed at Glendale will choose to become involved in the new programme for young adults. Staff who do not wish to work with the older age groups will be offered employment opportunities in other training schools.

CONTAINERS FOR FARM PRODUCE

Hon. W. A. Stewart (Minister of Agriculture and Food): Mr. Speaker, you will recall that when objections were raised last fall to the requirements that new containers must be used by producers to market certain vegetables, I undertook to review the regulation with the Ontario Fruit and Vegetable Growers Association. When the Act was first introduced in 1937, it consolidated several existing Acts. Subsequent amendments to the Act and the regulations under the Act have attempted to keep pace with both the sophisticated demands of the consumer and the changing marketing attitudes of our fruit and vegetable producers.

In the last 10 years Ontario’s fruit and vegetable industry has upgraded the quality of its packaging. This trend has been accentuated by the influence of United States packaging in the industry itself. This trend will undoubtedly continue in the North American market.

Uniformity of packaging characterizes the milk industry and many other food products; returnable plastic milk containers commercially used for milk are not also used for some other purpose. This practice itself protects consumers from undue contamination and provides them with a greater assurance of a wholesome product. The fact that containers used for fruits and vegetables are essentially of multipurpose design, warrants a particular effort to ensure that fruits and vegetables are packed in clean, sound containers.

We propose to revoke clause (h) of section 3 of regulation 293 of the Revised Regulations of Ontario, 1970, and the following is substituted:

3. No person shall pack, transport, ship, advertise, sell or offer for sale any produce -- and this is under subsection (h) --

(h) in a package that is damaged, stained, soiled, warped or otherwise deteriorated so as materially to effect the soundness, appearance or wholesomeness of the produce packed therein.

This regulation is a revision based on both the present federal regulations and our own regulation on the packaging of farm products, adding the new requirement of wholesomeness.

The regulations which require the grower to place his name plainly on a container which is being used for the purpose of selling produce, and which prohibit use of a container bearing another producer’s name, remain in force and will be more vigorously enforced.

In light of the above amendments, subsection (4) of section 27 of regulation 293, which requires new containers only to be used for cabbage, cauliflower, celery and head lettuce, is revoked. This will permit the use of used containers for cabbage, cauliflower, celery and head lettuce as long as the containers are not altered so as to affect the soundness, appearance or wholesomeness of the produce.

The amendment will become law on Tuesday, April 16, 1974.

Mr. Speaker: Oral questions.

The hon. Leader of the Opposition.

STUDY ON FOOD COMPANY PROFITABILITY

Mr. R. F. Nixon (Leader of the Opposition): A question of the Minister of Consumer and Commercial Relations relative to his statement: Is it his intention to replace legislative action at this session with the further study that he has announced today, even though the first part dealing with pricing matters up until 1972 is tabled; particularly in view of the fact that food costs are going up, according to Statistics Canada, at the rate of one per cent a month; and that vegetable costs, it was particularly announced this morning, are going to increase in cost by 10 to 20 per cent, even though the farmers concerned will only get an extra cent and a half, for example for the peas that go into the can, while their costs are going to increase by 20 per cent?

Hon. Mr. Clement: No, Mr. Speaker, it is not my intention to substitute the one for the other.

Mr. R. F. Nixon: A supplementary: Since the minister has expressed explicit concern for the reports from the corporations, why would he not give an indication that he is going to amend the business corporations statute requiring specific information that obviously he feels should be a part of the background in order for his ministry to make decisions and new regulations?

Hon. Mr. Clement: Mr. Speaker, as the Leader of the Opposition knows, there are mandatory disclosure requirements, mainly of a financial nature, that are already part of the Business Corporations Act and the securities legislation.

Mr. Singer: Right -- but the minister is not satisfied with them.

Hon. Mr. Clement: The things I would like to see amplified are such matters as increased explanations, and policies of the company being made available in those same financial statements. It is something to consider, but it might well be out of the purview of the ministry insofar as compelling the amplification of all those matters that don’t relate primarily to financial structures pertaining to the company and its operations.

Mr. Speaker: The hon. member for Scarborough West.

Mr. Lewis: I am working from memory, but as I understood the minister’s statement, he indicated that despite the study on all the material that was available, for a five-year period of 1967 to 1972 inclusive, no conclusions could be drawn. Is that what he said?

Hon. Mr. Clement: No, Mr. Speaker. There are certain things pointed out by the study and, upon reading the study, members will see certain apparent conclusions that are arrived at by the people who prepared the study. We are only able to go to 1972 because a number of the 1973 statements are not yet available; hence my having to do it in the two-stage process so that we can bring it up to date when those other items of information are available to the ministry.

Mr. Speaker: The hon. member for Grey-Bruce had indicated he wanted to ask a supplementary question before the hon. member for Downsview.

Mr. E. Sargent (Grey-Bruce): Mr. Speaker, in view of the fact the food industry is the biggest ball game in the world, why would the minister put controls on land before food?

Mr. R. G. Hodgson (Victoria-Haliburton): Why doesn’t the member get Lalonde to do it?

Hon. Mr. Clement: Well Mr. Speaker, I think before the hon. member starts talking or asking questions in terms of priorities, he should take a look at this report I filed today.

It’s also interesting to note that investment analysts have for a period of time hesitated against recommending investments in certain major food industries in this country, and I think that when one takes a look at the statement some of the answers will become apparent, certainly pertaining to certain operators but not all of them.

Mr. Speaker: I think the hon. member has had one supplementary; we will alternate.

The hon. member for Downs view is next.

Mr. Singer: Mr. Speaker, could the minister advise why he feels he must go on bended knee to the companies to ask for additional information in their annual statements when it would be a simple thing to draft appropriate amendments and include them in the Business Corporations Act?

Is the minister not aware that he has told us in his statement that he is not satisfied that the present provisions in the Act are sufficient to allow him to exercise a little muscle? Couldn’t he exercise muscle if he amended the statute appropriately?

Hon. Mr. Clement: There is no question about it; I think we have the jurisdiction to do those things. What I am concerned about and what I meant --

Mr. Singer: Well then, don’t beg them -- do it!

Hon. Mr. Clement: -- in the statement that I gave today, Mr. Speaker, is that quite frankly in many areas the food industry has not, in my assessment and my advisers’ assessment, been conscious of its responsibilities on a public relations basis to the consumers of this province.

Mr. Singer: Well then, legislate it.

Hon. Mr. Clement: If necessary it is a possibility, but I have invited comments from members of this House as well as the general public; and after having had an opportunity to study those comments --

Mr. Singer: Oh yes, 12 years from now we will have another select committee.

Hon. Mr. Clement: Well, I don’t know how long it takes the hon. member to respond to my invitation.

Mr. Lewis: A supplementary: What about the minister’s responsibilities to the consumers of this province, never mind the supermarkets’ PR responsibilities? Is he saying that after a review of 16 companies in the field over a five-year period, in advance of the major profit period, he is still not prepared to take any action selectively to roll back certain prices? Is that the result of this study?

Hon. Mr. Clement: No, it is not the result of that study.

Mr. J. A. Renwick (Riverdale): Or even to express a view?

Mr. Lewis: The minister doesn’t even have a view after all that.

Mr. Speaker: The hon. Leader of the Opposition.

MUNICIPAL WATER AND SEWERAGE GRANTS

Mr. R. F. Nixon: I would like to put a question to the Treasurer, Mr. Speaker, actually for clarification on a couple of his statements yesterday. Specifically, in the absence of the Minister of Housing (Mr. Handleman), can he tell the House what he expects to accomplish with the $11 million allocated to a special 15 per cent subsidy for servicing costs in certain regions, in view of the fact that it is expected there will be over 100,000 building starts?

Hon. J. White (Treasurer, Minister of Economics and Intergovernmental Affairs): We are going to give some additional financial inducement to municipalities and regions. It was to correct a distortion which has existed for a decade or more.

Mr. R. F. Nixon: How many lots would be connected?

Hon. Mr. White: I would be glad to explain the background, if the Leader of the Opposition would like me to, although it may not be necessary.

Mr. R. F. Nixon: Yes. I was particularly concerned, if the minister will permit me, about two matters. First, how many serviced lots can be provided by the infusion of $11 million under this programme? And am I correctly reading his speech that he said specifically the 15 per cent reduction would be available only in regions or reformed counties of which we have none as yet?

Hon. Mr. White: Yes, that’s right. The 15 per cent subsidy has been available only when the OWRC owned the asset. That idea was created when London built a pipeline from Grand Bend and when very serious objections were raised by the municipalities standing between London and Lake Huron. Their fear was that London would cut off their water.

Mr. Singer: They have been doing that for years around here.

Interjections by hon. members.

Hon. Mr. White: To induce London to go ahead with the pipeline and leave the ownership of the asset with the OWRC, thereby allaying the fears of the municipalities between London and the lake, a 15 per cent subsidy was introduced.

Now we have regional government and will have restructured county government in many parts of the province.

Mr. R. F. Nixon: Not in London, they don’t.

Hon. Mr. White: Had London and Grand Bend been in a region there would have been no need for that subsidy. Now that we have the regional governments we want to make available to them the same subsidy which has been available previously, even if they themselves own the assets. This comes in part in response to requests from the regions. It is going to make quite a difference to Toronto and certain other areas.

May I, Mr. Speaker, abridge the rules slightly to say I have a bulletin that the member for Grey-Bruce is celebrating his 39th birthday today. In fact, the memo says 59, but I know that can’t be true.

Mr. R. F. Nixon: In this state of high good humour, I would simply again like to ask the Treasurer two things.

Is it true that only 2,200 lots could be serviced with the $11 million, the 15 per cent subsidy? And why would it appear that any further assistance to municipalities that do not choose, or have not yet had the opportunity, to go into a regional government will be restricted? Surely this is an unfair application in the approach to the provision of services?

Mr. D. M. Deacon (York Centre): Why doesn’t it affect London?

Hon. Mr. White: I don’t think it is fair to single out this one particular item of $11 million when one considers we have got an $8 billion budget, and when one considers there will be hundreds of millions of dollars expended on services of one kind or another to satisfy a number of priorities, one of which is to create more housing.

Mr. R. F. Nixon: The minister should have more of them in there.

Hon. Mr. White: Questions on further details of this and related programmes must be put to the Minister of Housing. I do point out to the hon. member that we created 110,000 new homes in this province last year, an increase of seven per cent and the largest number in history.

I point out also that while I had the responsibility we increased the supply of lots by 68 per cent over the previous year.

Mr. R. F. Nixon: It would have been increased by 100 per cent if the minister hadn’t --

Hon. Mr. White: And that previous year was 40 per cent above the year before. I point out that we built 1.23 new dwelling units for every new family formed here in the last 10 years.

Mr. R. F. Nixon: Why doesn’t the minister speak on that? Let him make a speech on that.

Hon. Mr. White: To single out a particular grant is, in my view, completely distorting the reality of the overall integrated programme of the government. Now what was tile next question?

Mr. R. F. Nixon: All right, Mr. Speaker, with your permission, surely you would agree with me that the answer the Treasurer has made completely obscures the question and the answer that is required to the question. Why is it that in the Treasurer’s budget -- and he is the father of more of the regional governments than anybody else around here -- he would dislocate the economy of the province to the extent that those areas which do not participate in regionalism and do not choose to are not going to have access to this programme? Surely that’s an unfair approach?

Hon. Mr. White: I think in certain circumstances one might consider broadening the programme. Let me put it this way: If Brantford wanted to build a big pipeline through Brant and hold the asset and control who used the water out of that pipe, does my hon. friend think the interests of all the municipalities in Brant county would be fully protected? Or does he think we might be wise to continue the existing policy of keeping the asset in the hands of the OWRC? Which?

Mr. R. F. Nixon: There is no way Brant would do it. The Province of Ontario should do it. That’s what I’m saying.

Hon. Mr. White: That’s a little more telling, isn’t it?

Mr. R. F. Nixon: Would he kindly answer the question of why the funds are not available to the municipalities? What about the Brantford pipeline? Why doesn’t the government build it if it wants it? It has the money.

Mr. Speaker: Order.

Interjections by hon. members.

Mr. R. F. Nixon: Why doesn’t the Treasurer answer the question? He really is ridiculous.

Mr. Speaker: Would the hon. Leader of the Opposition --

Mr. Lewis: A supplementary: What did the minister mean when he said the programme might be broadened under certain circumstances?

Hon. Mr. White: I think if one found a group of municipalities which were in full concurrence there might be a way, not now provided for in my budget -- or not now in my current thinking, quite frankly -- by which we might want to make some further changes to the programme. If there are such circumstances I would be very glad to have the details and to consider some further improvement on this kind of programme.

Mr. Deacon: A supplementary: In view of the fact the London pipeline is not owned by the municipality but is owned by the government of Ontario, why is he comparing that project with the 15 per cent assistance to those municipalities which will be doing the water improvements or the sewage improvements on their own? I understood this is a programme only for municipalities which wish to carry out a programme of servicing on their own, not using the Ontario government? Is that correct?

Hon. Mr. White: Yes, that’s right.

Mr. D. C. MacDonald (York South): A supplementary.

Mr. Speaker: The hon. member for York South has a supplementary.

Mr. R. F. Nixon: That pipeline has got nothing to do with it.

Mr. MacDonald: When the minister uses these figures of 68 per cent more lots in 1973 over 1972, and in turn 40 per cent more lots in 1972 than in 1971, what is the number in 1971 so that we can get some meaningful idea of what these figures are?

Hon. Mr. White: I don’t know. As a matter of fact, now that I think about it, the 68 per cent may have been sometime before the end of the year. It is a figure that was very attractive to me and which is embedded in my cranium.

Mr. R. F. Nixon: It had nothing to do with the question anyway.

Mr. MacDonald: There were 50 lots in 1971 and he is only up to 100 now.

Mr. Singer: How about relating it to the price of houses?

Hon. Mr. White: I have not been directly involved in this area --

Interjections by hon. members.

Mr. Speaker: Order.

Hon. Mr. White: -- since Jan. 8 and I must say I’m a little vague about the figures. The Minister of Housing can certainly provide them to the House.

An hon. member: Really vague.

Mr. R. F. Nixon: A vague minister.

Mr. Speaker: The hon. member for Grey-Bruce is next on a supplementary.

Mr. Sargent: In view of the fact that Grey county and Bruce county do not want regional government -- is this a pressure play to have us in there or what?

Mr. R. F. Nixon: That’s what he is trying to do.

Hon. Mr. White: No. It’s an attempt to take a further restriction off the use of these public moneys insofar as the regions are concerned.

Mr. R. F. Nixon: As long as you are in a region.

Hon. Mr. White: Now if there is a way of broadening the grant programme to take in all municipalities without establishing some kind of civil war between municipality A and municipality B, I’d be very glad to look at it. But I’m going to tell you, Mr. Speaker, in a lot of circumstances -- and the blushing that I’ve observed on the face of the Leader of the Opposition is further evidence --

Mr. R. F. Nixon: Blushing?

Hon. Mr. White: -- a number of municipalities are going to object to the largest municipality owning the water pipe that runs through their territory.

Mr. R. F. Nixon: He is trying to impose his regionalism policies using that.

Mr. Sargent: And that’s not going to work.

Mr. Lewis: Since the Treasurer is obviously adept at pulling figures from the air at the drop of a hat --

Mr. R. F. Nixon: Adept? Fuzzy, not adept.

Mr. Lewis: -- what do all these figures amount to in terms of the actual number of additional units of housing which he must have assumed they would create in order to have chosen $15 million on one hand, $11 million on the other? What total of lots did the Treasurer have in mind which underpins this programme?

Hon. Mr. White: The old grant programme encouraged regionalized municipalities to let the OWRC put in the facility and own the asset. The regions are big boys and they are accumulating additional resources, economies of scale and expertise.

Mr. Deacon: Show us where, show us where.

Mr. E. R. Good (Waterloo North): They aren’t accumulating anything.

Mr. Deacon: Bigger taxes.

Hon. Mr. White: I saw no reason why these regions should be precluded from providing these services for their own citizens, particularly since the planning and the pipes and sewers are at the upper tier in the region.

An hon. member: Bigger bureaucracy.

Hon. Mr. White: In meetings with the regional chairmen last fall this was a request from them, and since it did eliminate some distortion it seemed to me reasonable, and of course I hoped it might have the further advantage of increasing the supply of serviced lots.

Mr. Good: One more supplementary, Mr. Speaker?

Mr. Speaker: No. There have been six supplementaries, which I believe is reasonable. The hon. Leader of the Opposition.

ALLEGED EXCHANGES OF PURCHASE OFFERS

Mr. R. F. Nixon: I have another question of the Treasurer. Has he heard the reports, mainly from the CBC, of unwarranted exchanges of offers to purchase among and between real estate companies, which led at least some observers to contemplate there might very well have been a leak in the proposed new laws in the budget yesterday pertaining to land transfer tax and the land profits tax? Is the minister aware of those reports? Is he concerned, and if he is concerned, as many people are, is he conducting any investigation?

Hon. Mr. White: I have not heard those reports. This bill is going to be brought forward today by the Minister of Revenue (Mr. Meen). We have a number of safeguards so that this kind of thing cannot take place. If people break the law in this instance then I expect they will go to jail.

An hon. member: They could go to jail?

Mr. J. R. Breithaupt (Kitchener): A supplementary question of the minister: In reviewing any attempts to claim benefits because of offers to purchase which are provided to set subsequent values, would the Treasurer undertake that those offers would be particularly reviewed, especially in this last week or two, to ensure they were in fact bona fide?

Hon. Mr. White: The Minister of Revenue may want to comment on this, but let me say that an offer to purchase, in and of itself, does not establish value any more than it would have done for succession duty purposes over the last 50 years.

Mr. Breithaupt: If the Speaker will allow: So the minister is content that the regulations and the procedures which will be followed are so minded that they will certainly attempt to screen out that particular problem, if in fact it exists?

Hon. Mr. White: Yes.

Mr. Speaker: Does the hon. Leader of the Opposition have further questions? The hon. member for Scarborough West.

REAL ESTATE TRANSACTIONS

Mr. Lewis: A question of the Treasurer, also of course flowing from the budget: Could the Treasurer indicate for the most recent year, presumably 1973 would do, what proportion of Ontario’s real estate transactions fall into the various categories exempted from the land speculation tax? That is, what proportion of transactions falls into commercial- industrial, what proportion into renovated property, what proportion into new dwellings, what proportion into second homes or second cottages, since all of those are exempted?

Hon. Mr. White: The data we have is highly imperfect and I can’t give a good answer. The Minister of Revenue, once again, may have detail which I lack. We will, by the end of the year, have much better data affecting residential properties because of the new assessment programme and the information now required by the assessors. All of this information is going into the computer and will be readily available in printouts. Some time in 1975 we will have similar information for industrial and commercial properties.

In the meantime we have an interministerial task force attempting to collect additional information, through sampling techniques and so on, indicating the ownership of existing lands, the nationality oi purchasers, the mix between different classes of real estate and such like.

Mr. Lewis: The Treasurer will understand my supplementary. How does he arrive: (a) at a ball park figure when his statistics are, as he calls them, imperfect; and (b) how does he know it will have any beneficial effect at all on the rising prices of land, and, more important, on the rising cost of housing -- that’s quite a different issue -- when he has absolutely no idea what his exemptions exclude, and what is covered and what isn’t covered -- and he won’t have much on it till 1975 or 1976?

Interjection by an hon. member.

Hon. Mr. White: There are two aspects to it. First of all, there is no doubt but that some foreign investors are putting money into land in Ontario -- land and buildings --

Mr. Lewis: What about the speculative tax? The 50 per cent?

Interjections by hon. members.

Hon. Mr. White: -- because they see Ontario is one of the most progressive, prosperous and stable jurisdictions in the world.

Mr. Singer: Not just the world, the galaxy.

Interjections by hon. members.

Mr. M. Shulman (High Park): It is a tax which will never be collected.

Mr. Lewis: When I see him doing up his jacket, then I know for sure --

Mr. Speaker: Order, order.

Mr. E. M. Havrot (Timiskaming): He’s just warming up.

Interjections by hon. members.

Hon. Mr. White: Now while it’s true we haven’t any exact number as to these cash inflows, we are sure they are significant --

Mr. Lewis: Then this is just a hoax.

Hon. Mr. White: -- and we believe this additional tax will mitigate this problem.

Mr. Lewis: How does he know?

Hon. Mr. White: As the foreign demand is removed from the total demand curve, the upward pressure on prices should be very greatly decreased.

Mr. Deans: No.

Hon. Mr. White: If 20 per cent doesn’t work, then we’ll try something higher.

Mr. Lewis: The Treasurer is not talking about the speculative land tax. He is talking about the land transfer tax.

Mr. Speaker: Order.

Hon. Mr. White: But we are Conservatives; we don’t want to start at 75. Now I am coming to the speculation tax.

Mr. Lewis: On a point of order, I am not talking about the land transfer tax.

Mr. Speaker: The minister has the floor.

Hon. Mr. White: Now, coming to the land speculation tax.

Mr. R. F. Nixon: Which is the answer he sought.

Hon. Mr. White: It’s once again true the data is not as extensive or as accurate as we would wish.

Mr. Speaker: Order, please.

Hon. Mr. White: At the same time, once again it must be recognized there is very considerable land speculation by Canadian residents.

Interjections by hon. members.

Mr. Lewis: Yes, all right.

Hon. Mr. White: By introducing this very substantial tax which runs the total tax up to 81 per cent for an individual, 87 per cent for a corporation --

Mr. Lewis: I understand.

Hon. Mr. White: -- and 95 per cent for a non-resident, we think we will take most of the profit out of these transactions --

Mr. Shulman: Sounds all right.

Hon. Mr. White: -- and will induce moneys to go into equity securities in Canadian corporations instead.

Mr. Lewis: Will it stop the sale of land?

Hon. Mr. White: If these instruments are not powerful enough, we have other possibilities now being explored. For instance, it may be necessary to levy some kind of a property tax surcharge on idle lands which are being kept out of the market.

Mr. Lewis: Has the Treasurer thought of buying land?

An hon. member: Oh, no.

Hon. Mr. White: This is a matter that is under consideration at the present time.

Mr. Shulman: The government is just forcing the price of land up.

Mr. Singer: Mr. Speaker, a supplementary.

Interjections by hon. members.

Mr. Speaker: The hon. member for Downsview.

Mr. Singer: Mr. Speaker, I wonder if the minister can tell us if he has considered what effect this speculation tax is going to have on small builders who have been in the habit of buying two, three, five or half a dozen lots from a developer? If the tax applies to a developer, he is going to be unable to sell to the small builder because of the tax rate; so the small builder, it would seem, is very likely to be forced out of business.

Has the minister given any thought to this and what is he going to do to try to preserve the small builder?

Hon. Mr. White: Yes, we are aware of this potential. The Minister of Housing has had conversations with the development industry. Most of these development industries have a development capacity which is well in excess of their housebuilding capacity, and as the hon. member suggested in the past they have sold off these lots. Now there will be an inducement to retain the lots and build their own houses on them, even if that can’t be done fairly quickly.

The minister will have the power to exempt certain lands from taxation if he is satisfied this is necessary to increase the stock of housing. And here again, I think if further details are wanted by the House in the question period, the question might go to the Minister of Revenue.

Mr. Shulman: What is left of the tax, then?

Mr. Lewis: What is left?

Mr. Deans: A supplementary question.

Mr. Speaker: The hon. member for Wentworth.

Mr. Deans: Mr. Speaker, a supplementary question: Doesn’t the minister feel the speculator is more likely to do one of two things -- either delay putting the land on the market, or attempt to build me tax into the final price in order to ensure he does in fact get back the profit he seeks and got previously.

Mr. Lewis: This is just a headline.

Hon. Mr. White: This is a mistake that is often made. The price of a house has nothing to do with the cost of that house. The price of the house is established by the supply and demand equilibrium point.

Interjections by hon. members.

Hon. Mr. White: My house cost me $25,000.

Mr. Lewis: That’s almost second year economics.

Hon. Mr. White: That was the cost. And today it is worth $50,000 or $60,000 or $70,000.

Mr. Deans: Today it costs that; but it is not worth it.

Hon. Mr. White: Now in what way did my cost affect the selling price? I had occasion to use another illustration in a meeting this morning, which was attended by the member for York South. The Edsel probably cost $75,000 per unit, and they couldn’t sell it for $3,000.

Mr. Deans: Is the minister going to answer my question?

Hon. Mr. White: I’ve answered it. If the member can’t understand it, that’s his problem.

Mr. Speaker: The hon. member for York Centre.

Mr. Deacon: In view of the fact I agree with the minister’s statement that supply and demand is the key factor in the selling price of the house --

Mr. Deans: Does he think it’s not too much?

Mr. Deacon: -- does he believe that his $34 million increase in his budget for provision of serviced lands through the provincial programmes and the $11 million subsidy he just talked about earlier in this question period, is going to be sufficient to eliminate the province-wide shortage of serviced building sites?

Mr. R. F. Nixon: No way.

Mr. Deacon: And if not, how many building sites will he have to provide in addition to what he has in this budget to eliminate this shortage? Because he well knows well never stop this speculation with this tax unless we have an oversupply of serviced land.

Hon. Mr. White: Well, this disappoints me. This disappoints me because the member’s leader said yesterday it was excellent.

Interjections by hon. members.

Hon. Mr. White: The leader of the Liberal Party said the land speculation tax was excellent.

Hon. J. R. Rhodes (Minister of Transportation and Communications): I don’t know which one is leader over there.

Interjection by an hon. member.

Mr. Deacon: He said it was excellent if it was tied to a major land serving programme.

Hon. Mr. White: That is what the man said. There is some information in the budget statement about the increase in housing stock. Further details will have to be obtained from the Minister of Housing.

Mr. Deacon: We are talking about a shortage of building sites.

Mr. Speaker: The hon. member for Scarborough West. A new question?

HOSPITAL WORKERS’ WAGE RATES

Mr. Lewis: A question, Mr. Speaker, of the Treasurer: Is the Treasurer aware that the GAINS programme he has introduced now gives -- and we support the principle; it’s the anomaly that I’d like an answer on -- to the elderly and the disabled a level of income which in both gross and net terms in many instances is significantly ahead of that received by many hospital workers in this province who have families to support? Is he in a position to indicate when the government will provide an increase for the hospital workers to avoid the crisis of May 1?

Hon. Mr. White: We are certainly aware of the anomalies. A number of possibilities are under study insofar as the Ministry of Health is concerned -- and that matter should be dealt with by the Minister of Health (Mr. Miller).

Mr. J. Dukszta (Parkdale): Is the minister aware that the Ontario Hospital Association has written a letter to all of us here in the Legislature suggesting the danger of strike is imminent? Is the government prepared to grant some money to the hospital workers immediately?

Hon. Mr. White: I don’t think I should say anything that is going to in some way affect the negotiations now taking place. It must be evident that every year we are engaged in negotiations with the public service of Ontario and other groups in the public sector. When a contract is negotiated, the funds are provided.

Mr. Speaker: The hon. member for Scarborough West? All right, supplementary; the hon. Leader of the Opposition should have the next one.

Mr. R. F. Nixon: Yes, the question is really put because May 1 is the deadline. Surely if there is something the Treasurer can say or do to be of assistance in this regard it should be said and done. If he is afraid of interfering with negotiations, he shouldn’t be afraid, because isn’t he aware that negotiations have been interrupted, that the last offer is not accepted and it appears there will be an illegal strike -- illegal under the laws of the province -- beginning May 1 unless somebody, whether it is the Treasurer or the Minister of Health, says or does something?

Mr. MacDonald: Why does the Treasurer deliberately provoke us?

Hon. Mr. White: Mr. Speaker, I have said as much as is fitting. Further questions may be asked of the Minister of Health perhaps next week.

Mr. Speaker: I think there have been sufficient supplementaries. The hon. member for Scarborough West. There are just a few minutes remaining.

GAINS PROGRAMME

Mr. Lewis: What amount of money does the Treasurer expect to recover from the federal government for the GAINS programme?

Hon. Mr. White: We expect to recover against those payments made toward the disabled and the blind. We do not expect to recover any portion of the costs for GAINS to persons over 65 years of age.

Mr. Deans: Why not?

Mr. E. W. Martel (Sudbury East): Why not? Barrett gets it.

Hon. Mr. White: In answer, I have as a recollection, $17 million for persons under 65 years of age.

Mr. Deans: But why?

Mr. Lewis: Forgive me -- tell me if I am wrong, I may well be -- but my understanding was that in the Province of British Columbia up to 43 per cent was recoverable of the additional amounts they paid to those over 65 when they introduced their programme.

Mr. Martel: That’s right.

Mr. Lewis: They are still fighting for 50 per cent but they are receiving 42 to 43 per cent, which is many millions of dollars and would make a substantial change to the Treasurer’s budgetary allocation.

An hon. member: What’s the difference in the programme?

Hon. Mr. White: The federal minister has complete power over whether or not to accept a provincial programme as having eligibility for the federal grants, that is within his discretion. Right or wrong, that’s the way it is. The British Columbia government had hoped to get back a very large proportion of its expenditure. Those hopes, I think, have diminished as negotiations have proceeded. The last report we had --

Mr. Martel: It gets 40 per cent now.

Hon. Mr. White: -- and we were in constant communication with the federal government as we developed this GAINS programme, was that they would pay only for this group of citizens and the amount of their contribution would amount to $17 million, I would like to assure the House we will get every dollar we can.

Mr. R. F. Nixon: Supplementary: The minister then is telling the House he discussed this at each stage with the federal authorities, is that so? And is he further saying that really the Canada Assistance Plan will pay half the cost for those additional payments undertaken by the province associated with a means test or associated directly with payments predicated on the guaranteed income supplement, which is a means test?

Hon. Mr. White: One of the requirements of the federal legislation policy is that there be a means test applied -- not the automatic needs test of GIS out a specific means test, which is to say the income received by a recipient and the costs of that recipient, which vary of course from Toronto to Lucan, Ont. Our officials were in touch with the federal officials. I think it comes under Mr. Al Johnson if I remember correctly. Mr. Al Johnson I think is the person responsible in Ottawa.

Mr. Martel: The Treasurer was just too late. He was a year late. Barrett did it over a year ago.

Hon. Mr. White: The information I have given the House is the best information we have to date.

Mr. Speaker: Does the hon. member for Scarborough West have further questions? The hon. Minister of Transportation and Communications has the answer to a question asked previously.

U.S.-CANADA FREIGHT SURCHARGE

Hon. Mr. Rhodes: Thank you, Mr. Speaker. The question had been placed to me by the hon. member for Kent (Mr. Spence). The question was:

Is the minister aware that the United States Interstate Commerce Commission approved a six per cent surcharge in freight charges being applied to Ontario destinations from American points of origin to the Canadian destinations, whereas this surcharge should only apply to the Canadian point of entry? 1. Why is this surcharge applied on goods coming into Canada? 2. What authority does the Ontario Highway Transport Board have with regard to such rates?

Mr. Speaker, on Feb. 8 of this year, the Interstate Commerce Commission issued special permission allowing a maximum emergency fuel surcharge of six per cent to be applied on line haul common carrier rates. The proposal was initially made to the ICC by various tariff bureaus in the United States, including the Niagara Frontier Tariff Bureau, which in fact determines the rate level on many shipments between Ontario and the United States.

The Niagara Frontier Tariff Bureau is a non-profit-making organization wholly owned by major motor carriers that serve within the United States and between the US and Canada. This bureau has the jurisdiction to set and publish rates between all US states and Ontario, excepting the states of Arizona, California, Utah, Colorado, Iowa, Montana, Nevada, New Mexico, Oregon, Washington and Wyoming.

In the United States, the member carriers are allowed to develop and publish rates under the Interstate Commerce Commission Act. In Ontario, the rates are decided upon by the bureau in the absence of any other body. They must be filed with the Ontario Highway Transport Board, as of May 1, 1963. The bureau is not allowed to change their rates for a period of 30 days after they have been filed with the board.

The tariff bureau does perform some useful functions, simplifying and reducing the number of tariffs that shippers use. However, the ministry staff is concerned about the apparent monopolistic nature of some bureaus and is investigating their impact on the trucking industry.

In summary, the Niagara Frontier Tariff Bureau sets New York-Ontario rates as they are by default, because it is the only organized rate-making body. The Ontario Highway Transport Board does not have the legislative right to scrutinize and reject the bureau’s rates.

On the subject of fuel increases, my ministry has been investigating fuel costs in the trucking industry. Fuel prices in Ontario have advanced since last September, and the truckers have lost their traditional bulk fuel discount. Labour costs are also increasing as of the beginning of April. Together, the labour and fuel increases account to close to the total rate of increase filed by the carriers.

Mr. J. P. Spence (Kent): Mr. Speaker, may I ask a question for clarification? Does the minister’s department get that six per cent for the distance of the journey in the Province of Ontario?

Hon. Mr. Rhodes: Well, the six per cent is the rate that has been set -- pardon me, it’s five per cent -- by the Niagara Frontier Tariff Bureau. So that goes to the trucking industry in the way of rates that have been established by tariff. These tariffs have been filed with the Ontario Highway Transport Board and approved. Basically, it’s a rubber-stamp approval, because the legislation is a little weak in this area, no question.

Mr. Speaker: The hon. member for York-Forest Hill is next.

GO-URBAN SYSTEM

Mr. P. G. Givens (York-Forest Hill): I would like to ask a question of the Minister of Transportation and Communications with respect to a display ad which was published by his department in the Globe and Mail of April 9, calling for engineers in the $22,000-class to participate in our GO-Urban and light-rail transit programmes: Would the minister pray tell us what light-rail transit programmes he has been indulging in that he hasn’t told us about?

Hon. Mr. Rhodes: Mr. Speaker, I believe the hon. member is well aware, and it has been stated before publicly and certainly it’s been said in this House, that the Ontario Transportation Development Corp. is very interested in all forms of urban transit systems, despite the fact that the Opposition have attempted to mislead the public of this province into believing we have gone into only one particular area.

We are most interested in light rail; we are interested in buses, we are interested in straight railroads and in all forms of urban transit systems. So there’s nothing misleading about it. If the member hasn’t been aware of what’s going on, that’s his problem, sir; it’s his city.

Mr. Givens: What programmes has the government got?

Interjections by hon. members.

Mr. Givens: Supplementary: It’s one thing to be looking into something; it’s another thing to have programmes. What light-rail transit programmes has the ministry got? I’m not asking him what it’s looking into. What light-rail programmes does it need an engineer for?

Hon. Mr. Rhodes: Mr. Speaker, there are light-rail programmes, obviously, that are being developed within the various municipalities. Certainly here in Metropolitan Toronto it has been indicated that light rail would very effectively serve certain areas. We don’t dispute that, and the Ontario Transportation Development Corp. is looking into that very system.

Mr. R. F. Nixon: That’s right, back off.

Mr. Singer: What about Spadina?

Mr. Speaker: The hon. member for High Park.

ALLEGED LOSS OF LIQUOR BY LCBO STORES

Mr. Shulman: I have a question of the Minister for Consumer and Commercial Relations, Mr. Speaker. Can the minister explain how the Liquor Control Board of Ontario could lose so much liquor that they have had to send letters out to all the stores asking if anybody knows where it has gone?

Hon. Mr. Rhodes: The member has been around again.

An hon. member: Somebody is buying futures in booze.

Hon. Mr. Clement: Perhaps the hon. member might give me more information. I don’t know what he is talking about.

Interjections by hon. members.

Mr. Shulman: Is the minister not aware that last month the head office of the Liquor Control Board sent a letter to some dozen stores, asking if any of them know what happened and why there is such a shortage?

Hon. Mr. Clement: Yes, I do.

An hon. member: More consumption.

Hon. Mr. Clement: The introduction of self-service stores in this province has provided a great convenience to the consuming public.

Mr. Breithaupt: They didn’t know they had to pay.

Hon. Mr. Clement: Up to the time the self- service stores were introduced it was necessary, and always acceptable, that they balance right to the penny. But with the introduction of the self-service stores, pilferage has been a problem.

Hon. A. Grossman (Provincial Secretary for Resources Development): There has been some self-service and then some.

Mr. Breithaupt: By a lot of people with raincoats.

Hon. Mr. Clement: There have been some who have taken the self-service invitation very seriously, and as a result the stock balance doesn’t necessarily come out with the right answer in view of the fact there are these shortages, and they are constantly making our managers aware of these shortages.

Mr. Shulman: How much is missing?

Hon. Mr. Clement: I don’t have those figures right now, but I can provide them to the hon. member. It is not significant in terms of total sales, but it still is a problem insofar as the management of those stores is concerned.

Mr. MacDonald: A few dozen cases.

Mr. Speaker: I think in view of the fact there are just a few moments remaining, we should not entertain further supplementaries.

The hon. Minister of Correctional Services has the answer to a question asked previously.

GUELPH CORRECTIONAL CENTRE

Hon. Mr. Potter: Mr. Speaker, the member for Wellington South (Mr. Worton) asked on April 8 whether action had been taken on the recommendations of the Eastaugh report on the working conditions at Guelph Correctional Centre.

This report was made public on July 5, 1973, and at that time my predecessor (Mr. Apps) undertook to initiate action towards the implementation of 11 of the 12 recommendations, noting that the 12th recommendation was a subject for negotiation between the CSAO and the province.

Mr. Speaker, I am pleased to report this has been done. Ten of the 11 recommendations have already been acted upon and the other one, recommending the installation of a PA system, is in the process of being carried out.

I will have more details on the progress which we have made at Guelph during the estimates, but I thought members might be interested to know that our plans to divide Guelph Correctional Centre into 11 smaller units should be completed within the next two weeks. Much of the work on the physical alterations has been carried out by the inmates themselves at a considerable saving to the taxpayers of the province.

Mr. Speaker, it is hoped also that when these changes are completed it will be possible to do away with overtime almost entirely, again at a considerable saving to the taxpayers and obviating the necessity for taking any action on recommendation No. 12 of the report.

I would just add that the staff have been involved in these changes from the beginning, and the ministry is grateful to them for the role they have played.

Mr. Speaker: The hon. Minister of Transportation and Communications has the answer to another question.

COMMUTER TICKET INTERCHANGEABILITY

Hon. Mr. Rhodes: Thank you, Mr. Speaker. The hon. member for York Centre asked me a question on Tuesday, April 2, relative to the need for interchangeability of commuter tickets between Canadian National, Canadian Pacific and GO-Transit. I can only surmise that this may have arisen due to the recent introduction of the Toronto-Barrie CN passenger train service.

Mr. Deacon: We have it in Stouffville too.

Hon. Mr. Rhodes: The fares being charged on this service were set by the railway transport committee of the Canadian Transport Commission and they have chosen to set single-trip fares that are slightly more expensive than GO Bus fares and monthly passes that are identical in price to the GO Bus monthly passes.

With such limited service, I can readily see where the monthly pass would not be attractive to most commuters. However, had the committee set fares for a 10-trip book of tickets comparable to those offered by GO, I would think that interchangeability between CN and ourselves would be accomplished to a large degree and thus satisfy the commuters from that area.

Mr. Deacon: A supplementary: In that case, will the ministry agree to work with the Canadian Transport Commission to get common fares established so that they can be clearly interchangeable?

Hon. Mr. Rhodes: Mr. Speaker, when the Toronto Area Transit Operating Authority comes into being in the very near future --

Mr. Deacon: I am talking about now.

Hon. Mr. Rhodes: -- fare integration will be one of the objectives, and this certainly would include discussions with CN, CP and the railway transport committee.

Mr. Deacon: But is there any reason not to go ahead with it right now, instead of waiting for this authority?

Hon. Mr. Rhodes: Well, I am not going to suggest we can go ahead with it this very day and attempt to put together discussions, but we do believe we can hold our discussions with all of the interested parties, including the carriers as well as the commission.

Mr. Deacon: Don’t stand on one leg waiting for CN.

Mr. Speaker: The time for questions has now expired.

Petitions.

Presenting reports.

Mr. Taylor, from the standing private bills committee, presented the committee’s report which was read as follows and adopted:

Your committee begs to report the following bills without amendment:

Bill Pr11, An Act respecting the town of Ingersoll.

Bill Pr17, An Act respecting Diamond and Green Construction Co. Ltd.

Bill Pr23, An Act respecting Dominion Cartage Ltd. and Downtown Storage Co. Ltd.

Your committee begs to report the following bills with certain amendments:

Bill Pr9, An Act respecting the town of Strathroy.

Bill Pr13, An Act respecting Tara Exploration and Development Co. Ltd.

Bill Pr18, An Act respecting Victoria Hospital Corp. and the War Memorial Children’s Hospital of Western Ontario.

Mr. Speaker: Motions.

Hon. Mr. Stewart moves that when this House adjourns today it stand adjourned until Tuesday next, April 16.

Motion agreed to.

Mr. Speaker: Introduction of bills.

Orders of the day.

RETAIL SALES TAX ACT

Hon. Mr. Meen moves second reading of Bill 27, An Act to amend the Retail Sales Tax Act.

Mr. Speaker: The hon. member for Kitchener.

Mr. J. R. Breithaupt (Kitchener): Mr. Speaker, my remarks on this bill will not be lengthy. There are a few points, I think, which should be raised as these various changes, reflecting the budget decisions, are brought into effect.

It’s interesting, of course, to note that some $354 million has been raised this year over last year, the result of the increase, particularly, of the sales tax from five to seven per cent. In light of that great increase by which this tax becomes the largest tax collected by the Province of Ontario, we see a very minor return. That return of $43 million reflects two particular items, the items of personal hygiene matters which are, I suppose, of some particular consequence, and the matters dealing with the reduction of the tax burden on the costs of footwear.

I suppose there would be some who would think that the price of $30 is, in reality, quite generous although I think the facts will show, as members are no doubt aware, that especially in young people’s shoes and in various of the athletic items -- the requirements of skates and various other kinds of specialty shoes -- the prices of these articles are substantially higher than one might ordinarily presume.

It is, however, somewhat curious that this government, in attempting some changes in the sales tax, has chosen this particular area when there are other areas which are equally important. I would refer briefly to the situation with respect to the removal of the sales tax on building materials, a tax which brings in a revenue, no doubt, of about $100 million a year. Further, it is a tax, the removal of which, we believe, would have a substantial effect on the provision of housing and on real benefits for the people of the Province of Ontario. However, this is the choice the government has made.

We had noted in earlier years in the review of the select committee on taxation -- of which I happened to be a member and of which the present Treasurer (Mr. White) was the chairman -- that there were other items which had been suggested for taxation at that point. It was, indeed, the view of the select committee, at least in majority, that the items to be taxed should include not only these items which are being removed today but also matters of children’s clothing and various other items which would be balanced with a tax credit. That has not been proceeded with although the tax credit programme of this government has been brought in as various tinkering has been done to bring certain credits to various sectors of the economy.

I think that the recent budget has of course made some changes in the increasing of tax credits, which have probably resulted in some benefits to selected areas or our society.

We, of course, are of the view that it would be better in the first place not to collect taxes rather than to collect them and then hand them back, as though the largesse of the government of Ontario was the source of these funds rather than, in fact, the initial removal of the items from the pockets of the people and from the purses of the people of this province.

I do suggest that these changes should have been in effect immediately as of the date of the budget. As hon. members will recall in the last year we had certain increases in taxes which this party of course thought should not be imposed until, in fact, the legislation was passed. However the government chose to make those impositions as to increases of taxes on the date of the budget -- which is ordinarily the case, I must admit.

If that is the case and the philosophy which this government is following, then we also believe that the deductions and the removal of taxes should be in effect as of budget night. Surely some consistency in the matter should exist and I would appreciate hearing from the minister when he has the opportunity to advise us as to the reasoning behind the withholding of the lowering of these taxes until the bill is passed. This especially in the light of the fact that there was the opportunity for persons to avoid other taxes last year because of the difficulty of increasing the taxes until, presumably, the legislation had been passed by this House.

You will recall, Mr. Speaker, the turmoil that existed at that point and it would be interesting to know the reasoning behind the withholding of tax reduction at this point, when there was no problem in increasing taxes in the last budget.

I’m interested in noting section 2 of this bill which refers as well to some particular items that are sold by charitable or various benevolent organizations. I note that only used items are referred to and I would suggest to the minister, following a discussion which we had, that some consideration might be given with respect to the sale of donated items.

As the minister will recall there was some correspondence seeking an exemption from the collection of sales tax, particularly with respect to the Mennonite sale in New Hamburg. This is a sale of donated items of food, of clothing, of quilting, of all sorts of hand-made items that are sold after they have been donated and the full profits given to charity. I think an exemption has been granted to this kind of circumstances in the past and, indeed, the minister may have already dealt with this particular point.

I am interested in his view as to whether some general legislation might be acceptable with respect to donated items or, of course, his reasoning as to why he would feel that it would be better to deal with this as an exception rather than a general item of legislation.

As we look over the pages in this bill there is another section which is somewhat involved, but which I take to mean that a proportion of sales tax will be refunded to municipalities for the various kinds of amusements carried on in community centres in the proportion that those amusements bear in the net proceeds to the municipality compared with the gross admission amounts.

This would allow the province to involve itself in the refunding of at least a certain proportion of tax, especially in circumstances where -- so far as community centres are concerned -- likely large groups of citizens are involved in fund-raising projects or whatever. And, of course, the province, to encourage that sort of thing, should give some tax benefit.

I think particularly of the smaller community centres where fund raising, in order to improve these centres, goes on from time to time. I think that the minister is well advised to give a rebate of the sales tax otherwise collected as an encouragement to those who are involving themselves in developing programmes from which the net proceeds are going to benefit the municipality or the community.

I don’t know whether these proceeds have to be given directly to a municipal organization or whether, for example, the board of management of a community centre or some other local service organization is able to benefit where the proceeds are being used, shall we say to put an extension on the local arena or to contribute additional facilities to a location that already is receiving or has received a benefit under the Community Centres Act. Perhaps the minister will be able to give some explanation to that point when the time comes.

As I say, Mr. Speaker, the reduction of taxes against these particular items with respect to the retail sales tax is welcome. We think that this kind of a situation is to be encouraged, particularly as in family expenditures. These items bear a certain proportion in the overall budget of a family. I suppose there are some who might facetiously say that the government is simply attempting to encourage cleanliness as being next to godliness on the basis that even if we have housing problems or other problems, at least we’ll all smell nice and look clean. This may not be the only reason -- and I hope it isn’t -- because certainly there are greater tax areas that need reform than this particular one.

However, I am content that some progress has been made in this area, even though it is not exactly along the lines that we in this party would like to see the sales tax used for. That tax remains a regressive one in many facets; however, at least some of the regressivity is attempted to be removed by this and by the various tax credits which have been proposed by the government.

Accordingly, we are prepared to support the bill and encourage the minister to make further and other exemptions that will benefit in a much more effective way the people of Ontario.

Mr. Speaker: The hon. member for York South.

Mr. D. C. MacDonald (York South): Mr. Speaker, I recognize that the rules of the House, strictly interpreted, narrow the scope of this debate to consideration of the few new exemptions; and I presume if one strays at any great length into a discussion of the sales tax per se, that I will be the victim of your gavel -- at least your voice if not your gavel.

Mr. Speaker: The hon. member for Kitchener strayed somewhat, but I didn’t interfere and I don’t intend to with the hon. member for York South.

Mr. MacDonald: Yes, well, I shall not breach the rules of the House excessively.

An hon. member: Don’t be superficial.

Mr. MacDonald: When the sales tax was originally introduced in this province we expressed our views with regard to it. I was interested at a meeting which I attended with the provincial Treasurer this morning and the number of groups who are reviewing the budget, to learn from him that authoritative independent outside sources have pointed out that the sales tax is 19 times more regressive than the income tax. Perhaps I can sum up my sentiment with regard to the sales tax per se, with a quote from such an authoritative source as the provincial Treasurer himself: “We are operating on a tax that is 19 times more regressive than another that might be applied.”

Now, when you take that into account as the sort of context in which you are operating -- the premise for your start -- then an exemption list that looks lengthy, but which, Mr. Speaker, I draw to your attention, actually adds up to $43 million. This $43 million happens to be 2.9 per cent of last year’s take on the sales tax, which was a cool $1,487,000,000.

So, as the hon. member for Kitchener has pointed out, last year we had something like $354 million more revenue coming in from the sales tax -- this highly regressive tax -- and yet, as a sort of Santa Claus effort, presumably in terms of or for the purpose or coping with the increased cost of living, the government now is going to create further exemptions which will hand back 2.9 per cent of that total take, namely about $43 million.

The next point that I would like to make is that on the other side of the House we are periodically -- again from as high a position as that of the Premier (Mr. Davis) -- being accused on this side of the House of being hypocrites. Well, you know, when the government had a choice as to where they might cut off sales tax in order to meet public needs -- and they themselves admit that so much of the rest of their budget is directed to meeting the need for housing and cutting the cost of inflation, particularly in the housing field -- one wonders why they didn’t move in terms of removing the sales tax from building materials.

And here I get to the hypocrisy of it -- the Tories in Ottawa are screaming for removal of the sales tax. They aren’t in power, so it’s easy to talk. The Tories here are in power. They don’t remove the sales tax. The Liberals here are screaming for removal of the sales tax. They are not in a position to do anything about it. The Liberals in Ottawa are in power, but they don’t do anything.

Mr. R. F. Nixon (Leader of the Opposition): But the NDP in BC are yelling about it and not doing anything. They are trying to get it both ways.

Interjections by hon. members.

Mr. MacDonald: So you see, Mr. Speaker, the loss of sales tax revenue from building materials, which presumably would be a very important ingredient in terms of reducing housing costs, is approximately one-half of what the government gained in the added amount in the sales tax last year. The government gained about $354 million. I understand the building materials would represent about $190 million.

In other words, Mr. Speaker, obviously this is a bill which one should support because it is going to reduce the regressivity, and I presume one should also concede that it is going to reduce it on items that are bought by individuals, and that may have an added factor of progressivity. But the limited extent to which it is going to make that reduction and the particular choices which the government has made, and more particularly the choices which it has excluded, bring into question many of its rather high professions with regard to its desire to have equity in the tax structure in the Province of Ontario.

But as I have already implied, we will support it as a tiny, baby step in the right direction with reference to individuals and the costs they have to bear in face of rising living costs today.

There would have been another alternative, of a cost of living rebate that would be meaningful, but this government always proceeds on a bits-and-pieces basis rather than a comprehensive basis to meet a fundamental need.

Mr. Speaker: The hon. member for Waterloo North.

Mr. E. R. Good (Waterloo North): Thank you, Mr. Speaker. The reduction of $43 million in sales tax collected this year is a very small amount when one looks at the total sales tax revenue.

I think we must briefly draw attention to the fact that the government, by its structure this year, even with this reduction in sales tax revenue, is moving to a larger and larger source of revenue from the retail sales tax field.

It’s regrettable, in my view and in the view of this party, that the government collects more revenue from retail sales tax than it does from personal income tax. This should not be, Mr. Speaker.

Last year there was $1,305 million collected from retail sales tax, and even with these reductions, Mr. Speaker, this year there will be $1,487 million. So the government will take $182 million more this year than last year in its estimates from retail sales tax, even with these reductions.

I’m sure that the people of Ontario are thankful for these few reductions, but certainly the philosophy of keeping such a regressive tax as a major source of income is absolutely a wrong philosophy, Mr. Speaker.

Mr. B. Newman (Windsor-Walkerville): The wrong approach.

Mr. Good: The approach by government that is incorporated into the retail sales tax is not in the best interests of the majority of the people in the province. We accept the $43 million reduction but we do not accept the $182 million additional revenue which the government will receive because of inflation, and certainly inflation plays into the hands of the retail sales tax more than any other source of revenue within the province. Personal and corporate income tax is a much more progressive type of tax to receive and we regret that the government continues to have as its major source of revenue the retail sales tax, even with these much heralded reductions.

Mr. Speaker: The hon. member for Wentworth.

Mr. I. Deans (Wentworth): Thank you, Mr. Speaker. I have very few comments to make. I want to say that as I see the principle, it is whether we approve or don’t approve of the government removing sales tax from certain things. I want the House to know that I approve of the removal of the sales tax from the items mentioned in this particular Bill 27. I wonder a bit, nevertheless, about how the minister decided on which items were to be exempted from sales tax.

Before I deal with that I want to ask the minister if he would be kind enough in his reply to explain the difference between taking a tax off and not dealing with it until after the Legislature has passed it and imposing a tax and making it retroactive.

The member for Kitchener mentions they supported that last year; I think it fair to say we initiated the action on it last year. In fact, the discussion was very much centralized between ourselves in this party and the government; I think it fair to say we believed that a tax should neither be imposed nor taken off without legislative action.

I am interested to know whether this is a change in the government’s policy with regard to the imposition of taxes as much as with the removal of taxes, and whether the government’s intention would be, from here on in, to give adequate notice of any intended change in the tax structure and not to proceed with it in the fashion with which it has previously been proceeded, and to give time for the Legislature to discuss and consider any proposed changes in the taxation policies of the government of the province.

It seems to me, though, as I think about it, that during the budget discussion by the Minister of Finance, he indicated there were some things which were going into effect almost immediately. I am not absolutely clear how one draws an analogy between that and what the government is currently doing with regard to taxes that are being taken off. We will go through that argument again no doubt.

I said last year and I say again this year that I think that any time the government alters a statute, it has to have one of two things. Either it has to have legislative approval prior to implementation or it has to have a bill or an Act in force which gives it the right to collect taxes provisionally during the course of debate. That wasn’t done by this government and I want to suggest that should have been done and I had hoped that it would be done.

Let me ask the minister about two or three matters that are specific to this particular bill. How is it that he would agree to exempt powders and liquids for cleaning floors, walls, tiles, glass, metal, cooking utensils, etc. and yet he wouldn’t exempt the mops and brooms needed to do the job? He wouldn’t exempt the pails people have to have in order to do the job effectively. Scouring pads -- there are surely as many scouring pads used to clean cooking utensils in this province today as there are cleaning fluids? Why would he decide to exempt certain things, the intent of which is clear, and not exempt similar kinds of things?

Let me ask him about another. He has exempted sanitary pads but has refused to exempt sanitary belts. Why would it be that he would decide to exempt one without the other since they are both obviously used one with the other and are necessary one to the other? What’s the rationale behind the changes? Did he sort of peek and stick his thumb in, take a few and say, “We’ll exempt these because they fall into a category which would meet public acceptance” and ignore some of the others?

The reason I ask about those specifically is that those are the ones specifically mentioned in the retail sales tax bulletin. The bulletin spells out “To be exempt” and “Still taxable” so it’s obvious that the ministry thought a bit about it. If the minister thought a bit about it, maybe he can explain to me why toothbrushes are exempt but combs aren’t. I don’t quite follow.

Hon. A. K. Meen (Minister of Revenue): Toothbrushes are sanitary items. We cannot all afford marcelles.

Mr. Deans: Pardon?

Hon. Mr. Meen: Toothbrushes are sanitary items but we can’t all afford marcelles.

Mr. Deans: I want to let him know some other things are, too. Let me suggest to him that disinfectants are still taxable but deodorants aren’t. Well, all right -- let me suggest to the minister that there are certain inconsistencies in the government’s attitude toward certain matters as being matters of necessity.

Mr. E. W. Mattel (Sudbury East): They put them in a hat and drew out a number of them.

Mr. Deans: Maybe the minister could consider broadening it ever so slightly and including two or three of the items I have mentioned, because I think a number of people would be interested in having that happen.

There is one other point I want to raise with the minister that should be considered.

The exemption on shoes is worthwhile, I am sure, and for the majority of people, who don’t buy many shoes over the course of a year anyway, the saving won’t be very great. But there are people who have foot problems and have to buy special kinds of shoes, which are obviously more expensive, and I am wondering whether there is a way that they can be exempt. I am not absolutely clear at the moment whether they can be exempted or not.

Perhaps the matter falls into that category whereby if there is a prescription then they can be exempt, but if there is no prescription they can’t -- and there is no prescription needed for any replacement. So I would like to ask the minister if he would check with his officials, if he is not sure about it, and let me know about that at some future time.

Hon. Mr. Meen: Yes.

Mr. Deans: In any event, I think it is a bit of a mishmash. It is unfortunate that the minister couldn’t see his way clear to make the exemptions a little broader, but I think in the areas I have mentioned, and in others that I haven’t mentioned, that there are certain inconsistencies.

Mr. Speaker: The hon. member for Windsor-Walkerville.

Mr. B. Newman: Mr. Speaker, I wanted to make a few comments concerning this bill, endorsing the principle of the bill. Anything that will reduce the sales tax for the general public certainly is a welcome change. However, I do regret that the minister has not gone as far as I have attempted to get him to go when I asked a question the other day during the question period. This involves section 2 of the bill.

I have noted that the minister has exempted footwear under the value of $30. However, I would have liked the minister to have included in that section on exemption for athletic equipment. Since 1976 is Olympic year, I think that we in the province, as well as in Canada, should go all out in an attempt to not only sell the Olympic games and the concept but also encourage maximum participation on the part of our youth. There are many amateur groups and organizations, on whom is imposed the seven per cent sales tax on equipment they buy to encourage participation on the part of all ages of youth, who should have been considered for exemption.

The ministry does exempt purchases made by boards of education through exemption certificates. I think, Mr. Speaker, that same principle should apply to those athletic groups that are recognized and financially assisted by the Minister of Community and Social Services (Mr. Brunelle). In other words, we already have lists of groups that are considered worthwhile by the government as far as some type of athletic equipment assistance is concerned.

The minister could have gone one step further in this section of the bill by extending exemption of sales tax to those organizations through some type of arrangement with the Ministry of Community and Social Services. Exempting them from sales tax wouldn’t amount to a substantial amount of money, Mr. Speaker, but it certainly would show the government’s greater awareness of and concern for fitness and a greater awareness of and concern for physical activity on the part of our youth.

We do have a drug problem, sir, and we do have all types of other problems. At least if the individual is going to bum out his energy through good clean athletic activity, he may not get involved in some of the other less salutary types of endeavours.

Another suggestion that I would like to make to the minister is where he mentions footwear, I think any type of orthopaedic footwear should be exempt from the sales tax regardless of the price.

Mr. Good: Right.

Mr. B. Newman: I don’t think we should limit that to $30. As long as it is for the physical or the health benefit of the individual, as the previous member made mention, it should be exempt from the taxation.

In section 3 of the bill the minister is going to rebate to municipalities the sales tax collected from functions that have been conducted in community centres. I would suggest to the minister, rather than use that approach, the municipality and/or organizations that are going to conduct these activities apply to the ministry in the same way that an individual applies to the Liquor Licence Board for a special occasion permit. They apply to the ministry for a permit stating that they are going to conduct this type or that type of charitable activity in this or that facility and would the ministry send them an exemption certificate. All of this red tape and the letter writing back and forth, collecting the money, mailing it to the ministry, then asking for a refund, would be expedited and done away with.

I offer those suggestions to the minister for his consideration and hope he does act on them. Thank you, Mr. Speaker.

Mr. Speaker: The member for Sudbury East.

Mr. Martel: Mr. Speaker, I want to ask the minister, if I might, for a clarification on something that is apparently lacking -- or maybe I am missing the point -- on children’s clothing. I have two points really. I am not sure why the government simply doesn’t take the tax all off, and that’s where maybe I am wrong. The tax is off children’s clothing, but I really don’t think so. And more importantly -- well, not more importantly, as that’s pretty important -- I am not sure if the minister has been buying children’s clothes of late in order to realize the tremendous increase in cost of those items for that group which actually needs adults’ clothing, but which is only 12 or 13 years of age. I don’t know if they grow bigger today. It certainly seems to be the case.

I have had a lot of complaints about young people whose parents take them to buy clothing and in the children’s section simply cannot get the type of clothing that fits or the type of shoes that fit and consequently find themselves either in the ladies’ department or in the men’s department buying clothing that will fit, and paying retail sales tax on it.

There has been rumbling about it, but surely there should be a way to work around this, using maybe official school student cards that most high schools have that have the ages of the young people on, so that we could get around that extra cost to those people whose children are too big. It seems to me to be a simple request. It may be a little difficult in working out the semantics to ensure that only those who are actually of age would derive the benefits, but it seems to me to be an area in which the government could move quite easily.

Mr. Speaks: The member for Essex South.

Mr. D. A. Paterson (Essex South): Mr. Speaker, in rising to take part in this debate, I realize at the present time the retail stores in Ontario are still collecting this seven per cent tax on all these items that are going to be excluded and which our party concurs in. It would be my hope that with the support that the minister is receiving with respect to this legislation, that we could proceed, not only through second reading today but hopefully into third reading and Royal assent later today so that when the stores reopen this Saturday that the public of our province may enjoy the benefits of this good legislation.

I don’t know what the intent of the House leader is, but possibly the minister can indicate when he concludes the debate on second reading.

Mr. Speaker, I speak as a merchant; and possibly as I stay in this Legislature longer I might qualify as running a non-profit organization. It’s getting close to that point. There are two points that I want to --

An hon. member: That’s under section 2.

Mr. Paterson: Right. I might qualify for section 2 in another year or two here.

Mr. Martel: There might be a conflict of interest.

Mr. Paterson: Right. Well, I’m getting to that non-profit organization category.

Mr. Breithaupt: He’s laying the foundations for that right now.

Mr. Paterson: I may not have the conflict.

But there are two matters I would like to discuss and I think the first is in relation to section 3, which deals with rebates to municipalities where sales are conducted at community centres.

I guess this is one of the old chestnuts that I bring up from time to time -- and I realize it’s not in the bill -- and that is the matter of rebate for those persons who are doing the book work and making the collections -- that is, the retail merchant.

I would hope that the minister, in his rebuttal, might state whether that is still being given consideration or not.

And the second point is possibly a little closer to a conflict of interest in myself, although I guess as a merchant we are really doing the work of the province and we are not extracting funds for our own purposes when we collect the tax from the public.

I believe in the ministerial statements regarding the retail sales tax exemption there was an indication that further thought was being given to exclusions in relations to children’s clothing. I happen to be in the retail fabric business and all fabrics and patterns and the necessary supplies in making a child’s garment are subject to the seven per cent tax. I realize that this would be a most difficult area to exempt.

Possibly the minister is aware of a new organization in the province composed of both wholesalers and the retail establishments across the province, along with pattern companies and so forth. He might sit down with them some day and possibly come up with a formula that when a child’s pattern is purchased and the required length of fabric for the child’s dress is purchased and the sundry supplies, that possibly -- as with farmers -- a signature on a purchase for an exemption might be a possible way around this.

I don’t know; but I know in my own experience I’ve had this drawn to my personal attention many times. A housewife comes in to buy fabric for a child’s dress and says, “Why do we have to pay tax when we can go next door, buy the ready-made garment, and there is no tax on the same?”

There is only one other area of confusion in relation to the collection of tax and that is in relation to the retail selling on certain books -- instruction books -- and I feel that there should be some clarification put forth either to the printers or the distributing companies that issue these through to the retail trade.

I believe the exemption is, if a book is printed less than four times a year it is not subject to the retail sales tax. It is most confusing and I draw this matter also to the minister’s attention and that of his officials and possibly something can be done in future legislation to clarify this.

I think these are all the remarks I wish to make at this time.

Mr. Speaker: Any further hon. members wish to speak to this bill? If not, the hon. minister.

Hon. Mr. Meen: Mr. Speaker, to begin with I would like to thank the hon. members for their, I suppose it’s fair to say, universal support of this bill -- for a varying number of reasons, of course.

I’ve heard the argument that the sales tax is 19 times more regressive than income tax, and so any reduction is better than nothing. If indeed it is 19 times more regressive, than a very small reduction in the impact of the Retail Sales Tax Act on our people has a very significant effect on them.

The question I might raise -- and I think it was the hon, member for York South who purported to quote the Treasurer on this -- is whether, in fact, it is 19 times more regressive than the income tax. It is really academic because I think most of us in this House consider that the Income Tax Act is not a regressive tax but is a rather progressive tax. So I don’t know how you compare apples to oranges and suggest that something that is not regressive is 19 times better than something that is, or whatever the suggestion was by that comparison.

I think perhaps the best way to deal with these points is to deal with them in the order in which they were raised in the House this afternoon. The hon. member for Kitchener referred to the extent to which this bill applies and the way in which we wound up selecting what articles were on it and what articles still remain off it. In fact, that item has been touched upon by a number of the members this afternoon.

I think it is fair to tell you that my ministry put together several possible alternatives -- we called them packages, in the colloquial -- of articles that were practical for the retail merchandising industry to be able to categorize within their bins, their trays, their shelves and their corridors in their stores, so that they would be able to readily identify, at the cash counter or however else, whether the article was taxable or not taxable, and we were able to tell the Treasurer the kind of money that the province would then lose by the selection of one or other of these various packages.

The package selected by the minister, which includes the removal of sales tax on shoes up to a price of $30 a pair, eliminates between 80 per cent and 90 per cent -- by sort of a rough type of estimate -- off the top of one’s head -- of the complaints that we as members have received with respect to the problem, as outlined by the member for Sudbury East and others, of determining when the youngster who has grown too fast is suddenly, at age 14, in the class where he winds up having to buy adult clothing and pay the tax. So the selection of a size was not terribly satisfactory. It was most dramatically illustrated as being unsatisfactory in the category of shoes and boots.

So, in the removal of that, I think we have overcome around 80 per cent or 90 per cent of all the problems that our people have faced in that age grouping where the youngsters are growing from young people into young adults. I think it is fair to say that if the hon. member for Sudbury East or any of our other colleagues can come up with some suggestions as to the way in which we can deal with clothing generally in some rational way, so that small adults don’t get the benefit of buying children’s clothing, then we can very well, in my ministry and in conjunction with the Treasurer, maybe next time around or even earlier, by way of regulation, adopt something that will suit. But for the present time, if we were simply to wipe that out, the loss would be many millions of dollars to the Treasury, and it has been the Treasurer’s decision that we would not remove it at this time.

There was the question, also raised I think by the hon. member for Kitchener and repeated by others, of how does one justify the imposition of a sales tax now on certain things but its removal at some later time. The imposition of the tax last year was not an abrupt imposition, it was an increase in an existing tax on which all the merchants had all the information at hand, their staff knew how to deal with the matter, it was simply a matter of charging up seven per cent instead of charging up five per cent.

In this case we would dearly love to be able to roll in Tuesday morning with a removal from sales tax of the items as set out in the bill and as set out in a very elaborate regulation -- which will have to flow from this bill; but the difficulty is that that regulation has to go through the mechanics of the regulations committee and cabinet itself and on to the registrar of regulations.

My staff are preparing that elaborate regulation and we would estimate a period of roughly 10 days from the time when the bill is passed to the time when I can get it through the various hoops and approved and out to all the retail merchants in Ontario so that they will have adequate information in time to be able to deal with the matter properly.

The member for Kitchener also referred to donated items. We haven’t covered that. I told him -- I believe it was at the reception the other day -- that we would look at this; we will look at it. I think it’s a matter that should be given serious consideration; that we shouldn’t necessarily do these things on an ad hoc basis of exempting one and then letting another one make application.

Perhaps if an organization qualifies as a charitable organization for other purposes that it might then automatically qualify. So far the practice of my predecessors has been to look at each one in turn and determine whether it was an appropriate organization, as I understand it, to be exempted from this kind of thing, whether they be donated goods or otherwise. I think we can take a further look at it in the course of the next while.

The member for Kitchener also asked the question concerning the community centres amendment; and my notes, I’m afraid, don’t bring the question fully back to mind. He did say something about the benefits going back to the municipality -- and this is, of course, what we would expect would be the case. If it does go back to the municipality -- if that was the member’s question; I think it was as I ruminate on this -- if it does go back to the municipality and the affidavit, as contemplated by the amendment in the Act, is sworn to say it goes back to the benefit of the municipality, then however the municipality and its council or its community centres board determines to apply the fund, it would qualify for a proportionate abatement of the sales tax.

The member is nodding his head. I presume that that satisfactorily answers his question.

The member for York South raised a point which, of course, we have all reflected on from time to time -- and that is the matter of the removal of the retail sales tax from building materials. We would like to see the federal government remove their tax, which is a very much larger one than the tax imposed by Ontario.

Mr. R. F. Ruston (Essex-Kent): It is on the wholesale price -- the provincial one is on the retail price.

Hon. Mr. Meen: We are not satisfied that the removal of our tax would significantly reduce the retail sale price of that house. We think that the builder would simply move in and absorb that reduction in cost to him and in fact would retain the same sale price. The point is the value of the sale price of the house on the market is not determined by the cost to the builder so much as it is determined by what the builder can get when he puts it on the market. And that, I suspect is why the federal government has also not removed its sales tax.

If they remove theirs at the federal level, the amount of our tax would of course be reduced by a factor -- by I suppose 11 per cent of our seven per cent.

But we do not believe in this present market that there would be any significant abatement in the sale price of houses, unless and until there can be a sufficient supply of houses on the market so that they are in fact competitive -- then the sale price will simply be governed today by what the market can stand.

By reducing that tax, we would lose roughly $195 million -- I think that is the estimate -- without any significant improvement in the price by way of reduction in the sale price of houses on the market.

I think I have answered the questions by the member for Wentworth as to how we decided which items we would exempt and how we would not accept others, but I might just point out that as for shoes, I have checked with our staff and -- since the member for Wentworth isn’t in his seat his colleagues might relate it to him -- I am advised that orthopaedic shoes now do qualify. That is, the type of shoe with an elevated arch or strengthening facilities would qualify as an orthopaedic device.

The member for Windsor-Walkerville asked about athletic equipment. That again is just part of a package, one might say. If one starts talking about athletic equipment, one has to start getting selective unless one is prepared to wipe out the $100 pair of skis or the expensive pair of skates.

Mr. B. Newman: The way of doing it, though, is by going through the Ministry of Community and Social Services, not to --

Hon. Mr. Meen: At the present time there are facilities for schools to purchase this kind of equipment tax-free. I would suggest that unless we can come up with something, and maybe the hon. member has some suggestion that’s workable -- we can look at that -- but again it is a package. We have got to consider all the factors and particularly the financial impact of this. Whether these people who are paying the tax can presently afford to pay it is certainly an important one but it is not the only factor to remember. We have got to look at the luxury aspect of these things.

Mr. B. Newman: I don’t say all athletic equipment. I am specifying selected equipment,

Mr. Speaker: Order, please.

Hon. Mr. Meen: I was not clear about what the member for Windsor-Walkerville was suggesting with respect to municipalities and their applications for exemption permits on admission prices. It seems to me that might just develop into an administrative nightmare.

I have the notion that the course of action we are following by way of a distinct exemption by statute, thereby permitting them from the beginning to know where they are when they are planning their function, is far better than requiring that they apply to the ministry for specific exemptions. Waiting for the minister’s response can leave them in limbo for some time while the matter is weighed. Consequently, I think the course of action we are following here in a specific area is a far clearer one.

Mr. B. Newman: The government is going to handle the moneys two times.

Mr. F. Laughren (Nickel Belt): Is that the same as twice?

Mr. B. Newman: There is no sense in that.

Hon. Mr. Meen: I come now, I think, to the last item I need to touch on. It’s the comment by the member for Sudbury East, on which I have already touched briefly, dealing with younger children with outsized feet and that kind of problem with larger than average children. The member for Essex South touched on this, too.

The difficulty is that today the styling of students’ clothing and adults’ clothing is much the same. I am told it used to be that one could always tell the difference between young children’s clothing and clothing for children up to age 16 and adult clothing. I see the member for Essex South is not in his seat but I think he would confirm that there is very little style difference any longer. It’s difficult if not impossible to police sales of this nature whereas it is possible to police them if there are styling differences.

Mr. Ruston: Take it off all clothing and be done with it.

Mr. J. P. Spence (Kent): Right.

Hon. Mr. Meen: I would ask the member for Sudbury East if he has any suggestions as to how we would cope with, say, telephone orders? Recognizing that styles are the same, how then do the tax auditors inspect the books when people have placed telephone orders? It’s fine for someone to come in and produce a card identifying him as a student at the XYZ collegiate and that he’s 15 or 16 years of age but what kind of evidence is then left with the merchant so that he can satisfy the auditors when they check to make sure if he has or has not collected a properly payable tax?

These are some of the problems we face in my ministry. If we can come up with some ideas as to how to properly organize this end of merchant selling, I can tell you, Mr. Speaker, that I’d be the first to recommend to my colleagues a suitable course of action, provided it can be policed properly.

Mr. Speaker, those observations conclude my comments. I just want to repeat my opening words -- that I appreciate the support coming from all sides of the House on this very significant bill.

Motion agreed to; second reading of the bill.

Mr. Speaker: Shall the bill be ordered for third reading?

Agreed.

THIRD READING

The following bill was given third reading upon motion.

Bill 27, An Act to amend the Retail Sales Tax Act.

Mr. MacDonald: The minister will never have it easier.

Hon. Mr. Meen: No, I don’t think I will.

Mr. MacDonald: He shouldn’t draw any conclusions from that.

Hon. Mr. Meen: I have been around here for a while, Mr. Speaker.

Hon. W. A. Stewart (Minister of Agriculture and Food): Mr. Speaker, I believe that the idea was to go into estimates at this time. However, there have been suggestions made to me that it might be wise to consider adjourning the House right now -- rising now. The traffic is very heavy at this particular hour for the members to go home and it would seem to me an appropriate time if we were to move that the House rise. I’m not sure what that does to the committee downstairs, but it does seem to me to be the useful thing to do.

Mr. B. Newman: Right on.

Mr. R. Gisborn (Hamilton East): They’ll be glad to go too.

Hon. Mr. Stewart: I assume it wouldn’t upset our friend the Minister of Correctional Services (Mr. Potter), so with that in mind I would move that the House do now rise.

Hon. Mr. Stewart moves the adjournment of the House.

Motion agreed to.

The House adjourned at 4:05 o’clock, p.m.

April 11, 1974

FEDERAL COMPETITION LEGISLATION

STUDY ON FOOD COMPANY PROFITABILITY

PHASING OUT OF JUVENILE TRAINING SCHOOL

CONTAINERS FOR FARM PRODUCE

STUDY ON FOOD COMPANY PROFITABILITY

MUNICIPAL WATER AND SEWERAGE GRANTS

ALLEGED EXCHANGES OF PURCHASE OFFERS

REAL ESTATE TRANSACTIONS

HOSPITAL WORKERS’ WAGE RATES

GAINS PROGRAMME

U.S.-CANADA FREIGHT SURCHARGE

GO-URBAN SYSTEM

ALLEGED LOSS OF LIQUOR BY LCBO STORES

GUELPH CORRECTIONAL CENTRE

COMMUTER TICKET INTERCHANGEABILITY

RETAIL SALES TAX ACT

THIRD READING