Legislative Assembly of Ontario

The House met at 2 o’clock, p.m.

Prayers.

Mrs. M. Scrivener (St. David): Mr. Speaker, I take pleasure in presenting 30 students from the Queen Alexandra Senior School, who are here in the west gallery today, with their teacher, Mr. David Havery.

Hon. A. Grossman (Provincial Secretary for Resources Development): Mr. Speaker, it is my pleasure to introduce, in the west gallery, Sister Mary Alexander and a number of her students from the Adult Day School of Dundas St. W. in Toronto, within the riding of St. Andrew-St. Patrick.

Mr. W. Ferrier (Cochrane South): Mr. Speaker, it is a great privilege for me to introduce to you and to the House, 32 students from École Ste. Thérèse, in Ramore, Ont., and three adults, and they are being led here by Mr. F. G. Tremblay.

Mr. N. G. Leluk (Humber): Mr. Speaker, I would like to welcome 60 students from Runnymede Collegiate, in the riding of Humber, who are seated in the east gallery. They are accompanied by Mr. Gray Taylor.

Mr. T. A. Wardle (Beaches-Woodbine): Mr. Speaker, there are some 25 students from the George Etienne Cartier Separate School in my riding, and I would like to welcome them to the Legislature this afternoon. They are accompanied by Mrs. Doyle and Sister Riedel. They are grades 7 and 8 students, and they are sitting in the east gallery.

Mr. Speaker: Statements by the ministry.

GO-URBAN SYSTEM

Hon. J. R. Rhodes (Minister of Transportation and Communications): Mr. Speaker, last week a public tender was opened for the construction of a guideway for the transit demonstration project at the Canadian National Exhibition. The prices quoted in those tenders for the work at the CNE are greater than were calculated at the time we prepared our estimates in 1972.

Hon. members will recall that the TDS contract has two basic price components, the first being a fixed price component for the guideway components, power substations, the command and control system and the vehicles. The price quoted in May, 1973, for these components was $10,620,704. This price is subject only to exchange fluctuations and official price index changes in either Canada or Germany and as a fixed price is not subject to further changes.

The second price component was for civil engineering work and the contract called for this work to be awarded and priced by the method of public tenders. The work consists of a guideway contract, station contracts and a foundation contract. To date, only the foundation contract has been awarded. It totalled approximately $426,000. The guideway contract was opened Wednesday of last week and the lowest bid was $10,263,160. The station contract tenders have not yet been received. The earlier estimates of the developer and the civil engineering consultants were approximately $6.9 million, giving a total of approximately $17.5 million for the fixed and tendered price estimate.

The increase in guideway price has been occasioned by a number of factors such as the substantial price escalation experienced in all heavy construction during the past two years, together with a number of design changes which were found necessary as design progressed. Many of these changes were found necessary for aesthetic reasons in Exhibition Park and also to make it possible to have the guideway more adaptable for continued testing in future years.

Regarding the increased cost of all heavy construction, I would point out to the House that not only have there been large increases in labour costs, but all materials used in this work have become vastly more expensive during the past two years. For example, the wage rate increases for structural workers have averaged approximately 20 per cent between 1972 and 1974. We know also that some collective agreements are in existence which will further increase these rates in 1975 and, therefore, affect this contract by a further seven to 10 per cent. Other agreements will be expiring this year and will be up for renegotiation. There is every indication of even higher wage demands to keep pace with inflation. For example, the ready-mix-concrete truck drivers signed an agreement this week which increased their wages 35 per cent, including fringe benefits.

The increased cost of material since the start of 1972 has been even more dramatic, Mr. Speaker, when you consider that the main components of this contract are concrete and reinforcing steel and that concrete has increased in price in the past two years by 27 per cent and is expected to go up to 40 per cent by 1975. This increase does not take into consideration the increased wages referred to in respect to the ready-mix truck drivers. The other major component, reinforcing steel, has increased in price in the two-year period by 115 per cent. A further increase is certain to the point that we can expect an increase over 1972 of 140 per cent.

These are but examples of the major components, but I would add that all elements of material are subjected to varying degrees of inflation, somewhat comparable to the two mentioned. We, and industry, are finding it increasingly difficult to obtain firm price commitments for material to extend over any significant period of time. In other words, changes in prices and materials are almost on a daily basis.

From the aforementioned it is quite apparent that most of the increases in the guideway contract can be attributed to the inflation in material, service and labour. I would further point out that our own highway construction work is being subjected to these same pressures and we can certainly look forward to similar increases in respect to the new Toronto subway contracts which will soon be advertised, showing comparable increases experienced in the tenders which were opened last week for the guideways.

Mr. A. J. Roy (Ottawa East): The statement of his predecessor is non-operative, eh?

SALES TAX

Hon. A. K. Meen (Minister of Revenue): Mr. Speaker, on budget day, retail sales tax bulletin 74-1 was sent to the approximately 130,000 vendors in Ontario, advising them of budget proposals which would remove the retail sales tax on certain specific personal hygiene and household cleaning items and on footwear which sold for $30 or less per pair. As implementation of these exemptions required amendments to the Retail Sales Tax Act and certain regulations, it was not possible at that time to advise vendors of the effective date for implementation. All procedural steps have now been taken and the exemptions will apply to sales made on and after April 29, 1974.

However, due to the postal strike we are unable to forward by mail a supplementary tax bulletin advising vendors as to this date. In addition to making this statement, which we hope the press will pick up, we are proceeding to place notices in provincial daily papers. A tax bulletin has been prepared by the ministry and will be mailed to all registered vendors once the mails resume. In the interim period, for clarification of these instructions or information concerning additional exemptions, vendors should phone their district tax offices.

We solicit the general co-operation of the House in passing this word along to interested constituents.

Mr. Roy: I’ll bet that really hurt the minister’s feelings having to put ads in the paper.

Hon. J. B. Handleman (Minister of Housing): Who’s that?

Mr. Roy: Does it have his name on it?

Interjections by an hon. member.

Mr. Speaker: I am sure the hon. members of the House would be interested to learn that we have with us a very distinguished visitor today. The Rt. Hon. Peter Shore, who is British Secretary of State for Trade, is present in the Speaker’s gallery along with his party and I’m sure we would like to extend a special welcome to them.

Hon. Mr. Rhodes: Now the member for Ottawa East should behave himself.

Mr. Speaker: Oral questions. The Leader of the Opposition.

GO-URBAN SYSTEM

Mr. R. F. Nixon (Leader of the Opposition): Mr. Speaker, I would like to ask the Minister of Transportation and Communications, further to his statement just completed, if he is now prepared to give an estimate of the overall financial commitment of the government to prepare the whole maglev experimental track, stations and train for Use in the exhibition grounds by 1975? Is he actually telling the House that when the estimate was first prepared about 18 months or two years ago there was no ingredient involving the inflationary aspects of the materials and workmanship which must surely have been expected by any reasonable engineering projection?

Hon. Mr. Rhodes: Mr. Speaker, first of all I cannot give an answer as to what sort of consideration was given when that estimate was prepared two years ago. I didn’t have any part of it. Secondly, I can say that I cannot give a firm figure on the cost of the demonstration project at the CNE because we have not had the tenders returned on the development of the stations which will be necessary there. I can say to the hon member, though, that his estimate which he mentioned here in the House of about $23 million, I think, is fairly accurate.

Mr. J. R Breithaupt (Kitchener): A supplementary, Mr. Speaker.

Mrs. M. Campbell (St. George): Imagine that.

Hon. Mr. Grossman: He surprised himself.

Mr. R. F. Nixon: I knew it was right but I didn’t think he did.

Mr. Speaker: Order.

Hon. Mr. Rhodes: That’s the first time he has been mathematically right in two years.

Mr. Breithaupt: If the minister has the same officials advising him who advised his predecessor, can the minister inquire of those officials as to what factors were built in with respect to inflation possibilities?

Hon. Mr. Rhodes: Mr. Speaker, I have been in discussion with. the officials as one might assume, and we are --

Interjections by hon. members.

Mr. R. F. Nixon: Not the same ones his predecessor had.

Interjections by hon. members.

Hon. Mr. Rhodes: We are having continual discussions on this particular subject and, as I said, I cannot give a firm answer at this time as to what factors were used.

Mr. Roy: An open-ended contract.

Hon. Mr. Rhodes: I certainly don’t think anyone on either side of this House could have anticipated in 1972 the rate of increase we’ve been faced with in materials, service and labour in 1974.

Interjections by hon. members.

Mr. S. Lewis (Scarborough West): A supplementary: Working from the minister’s figures on the alleged inflationary spiral -- which I think is really grandly inflated, but leaving it at that -- is he willing to contemplate a GO-Urban system the total cost of which may now range to a quarter of a billion dollars beyond that which was originally suggested for the entire system when operative? Doesn’t he think it’s now time to strike a public strategic retreat to an alternative transportation network, modelled on light rail, and leave the entire GO-Urban fantasy to some other jurisdiction to deal with?

Hon. Mr. Grossman: That won’t be subject to inflation, eh?

Mr. Lewis: Not this kind of inflation.

Hon. Mr. Rhodes: Mr. Speaker, I think that in this inflationary period we’re in despite -- I’m amazed the leader of the New Democratic Party says there’s no inflation.

Mr. Lewis: Of course there’s inflation, but not the kind the minister is talking about.

Hon. Mr. Rhodes: There is? He admits there’s inflation?

Mr. Lewis: The cost of the wages is not driving up the total.

Mr. Speaker: Order.

Hon. Mr. Rhodes: The answer to the question is simply this, I would say that I don’t think we can suddenly stop everything we are doing. The same inflationary factors apply to subway construction, to the development of light rails. Does the hon. member think he can buy a streetcar for the same price now as he could yeah ago?

Mr. Lewis: It is out of control, completely out of control.

PUP TRAILERS

Mr. R. F. Nixon: I would like to ask the same minister, Mr. Speaker, if, in light of the accident involving two large trucks with pup trailers designed to carry petroleum, he can report to the House that his officials are now of a mind we ought to bring these special types of trucks under more strict and severe regulation; or that we might even contemplate banning them on our roads since there have been so many accidents associated with them?

Hon. Mr. Rhodes: Mr. Speaker, the accident to which the hon. member is referring occurred around 4:30 this morning. It has already been investigated by the ministry.

I can tell the House that in no way was the pup trailer in any way responsible for that accident. It was a rear-end collision in which a tank truck ran into the rear end of a flat-bed truck; that is the collision to which he is referring. Fortunately, there were no injuries.

I can tell members that we are, and continually have been, looking at the problem of pup-trailer trucks on the highways. It may well be they will have to be removed but I can’t make a firm commitment at this time.

Mr. R. F. Nixon: A supplementary? The minister is aware that his predecessor, who is referred to from time to time in this House --

Mr. Breithaupt: Very favourably.

Mr. V. M. Singer (Downsview): Now that he’s gone he is a great fellow.

Mr. R. F. Nixon: -- had undertaken in a very similar way to investigate problems of this type, particularly in connection with petroleum transportation. Surely the time has come when the ministry’s officials should be able to say they are either safe or not? I am here, Mr. Speaker, to say to you that the community believes they are not safe.

Hon. Mr. Rhodes: Mr. Speaker, I think it is fair to say that one of the big problems in the past has been the type of coupling that was used; I think that has been corrected.

Certainly the ministry has been dealing with the petroleum industry on this problem in an effort to have them co-operate. They have indicated every intention to be as co-operative as they possibly can to make this a safe vehicle. If the vehicle is not safe then I will give the member this commitment: If it cannot be made safe on the highways then I would certainly recommend it be taken off the highways.

Mr. E. R. Good (Waterloo North): Put them back on the slow roads where they belong.

Mr. D. M. Deacon (York Centre): Supplementary: In view of the fact that for the last 15 months almost every accident involving petroleum-carrying vehicles of this sort has involved pup trailers, and there has been a plethora of them, would the minister not agree it is already evident the regulations should be changed to stop these pup trailers being further used? Obviously this morning’s problem occurred because the pup trailer couldn’t be controlled when the brakes were applied.

Hon. Mr. Rhodes: Mr. Speaker, I didn’t investigate the accident; I wasn’t up at 4:30 this morning, perhaps the member was.

Mr. Singer: Well, the minister should be.

Mr. I. Deans (Wentworth): Why wasn’t he? Does he have a guilty conscience?

Interjections by hon. members.

Hon. Mr. Rhodes: I can say that the statistics on the number of accidents involving these trucks are as they are because most of the petroleum trucks travelling on our highways today are involved with these pup trailers. Whether they in themselves are the cause of the accidents or not, no one can really say; no more than the member can say accurately that the one that occurred this morning was caused by the pup trailer.

OIL PRICES

Mr. R. F. Nixon: A question of the Minister of Energy, Mr. Speaker: In light of the fact that Imperial Oil has announced profits in the first quarter of 1974 of $92.7 million, twice last year’s profit, is he now prepared to recommend --

Mr. Lewis: Well! Well!

Mr. Roy: Did the member think his people had a patent on that type of question?

Interjections by hon. members.

Mr. R. F. Nixon: -- to recommend to his colleagues in the ministry --

Interjections by hon. members.

Mr. Speaker: Order please.

Mr. R. F. Nixon: Thank you, Mr. Speaker, I appreciate your intervention. I even appreciate the intervention of the leader of the NDP (Mr. Lewis).

I would like to ask the minister if he is prepared, under these circumstances, to recommend to his colleagues that the powers of the Energy Board be expanded, as we suggested when the Energy Board was established with new powers a year ago, to extend its controls over prices to domestic use of fuels.

An hon. member: As has been done in Nova Scotia.

Mr. Lewis: Say; there is a good point.

Hon. W. D. McKeough (Minister of Energy): Mr. Speaker, I don’t specifically recall the suggestion made by the Leader of the Opposition.

Mr. D. C. MacDonald (York South): Nor do we, nor do we.

Mr. Lewis: Just check Hansard.

Hon. Mr. McKeough: It occurs to me that that great gathering in a telephone booth at Sudbury this weekend might recommend that to their federal party and they will do a little bit better job.

Mr. R. F. Nixon: Supplementary: Since the minister supervises the Energy Board of the Province of Ontario, which does have price control, or price recommendation powers, why would he not assume the same powers can be used at the provincial level the way they are, for example, by the government in the Province of Nova Scotia?

Hon. Mr. Grossman: What kind of powers do you need for recommendations?

Hon. Mr. McKeough: Mr. Speaker, my reading of the Act does not indicate to me that those powers presently exist in the Ontario Energy Board Act.

Interjections by hon. members.

Mr. Lewis: A supplementary if I may; a supplementary --

Mr. Speaker: The hon. member for Scarborough West, a supplementary.

Mr. R. F. Nixon: Surely the minister would agree that an amendment would give those powers?

Hon. Mr. McKeough: Mr. Speaker, I agree completely with the Leader of the Opposition that an amendment would give those powers.

Mr. Lewis: A supplementary: Is the minister, in fact, as has been reported, reviewing the possibility of imposing a price level in the Province of Ontario for costs for gasoline and home fuel oil charged by the major oil companies?

Hon. Mr. McKeough: Mr. Speaker, I and the ministry have been preoccupied with the problems associated with wind energy but when we get ourselves off that subject we’ll turn to the subject which has been suggested by the leader of the New Democratic Party.

Mr. Lewis: No, no. I’m not going to be diverted so easily. While he trumpets around the countryside clobbering the oil companies, are all of the minister’s speeches dealing in the direction of introducing legislation in the House which will give to his ministry the right to set or roll bade prices in the area of gasoline and home fuel oil, as has been suggested in other jurisdictions and as he has indicated publicly he is now interested in?

Hon. Mr. McKeough: Mr. Speaker, these are matters which are under consideration.

Mr. Lewis: They are not.

Mr. MacDonald: A supplementary question, Mr. Speaker: Now that Shell Oil has indicated that it is willing to forgo the 2%-cent unnecessary increase for non-existent costs, can the minister indicate whether that is likely to be a pattern subscribed to by the other oil companies? Is he going to take any initiative to see that it is the pattern accepted?

Hon. Mr. Handleman: I thought they were. It sounds like it. They always work together.

Hon. Mr. McKeough: Mr. Speaker, the matter of the Shell Oil increase, or non-increase -- or the industry increase, or non-increase -- is being dealt with, as the member is well aware, by the government of Canada through the Department of Energy, Mines and Resources and through the National Energy Board. That is a matter for their consideration.

I congratulate Shell Oil for the position which they have taken that this increase is perhaps not necessary, in their view, at this moment in time. But whether the rest of the industry will follow suit, or whether the government of Canada will determine that an increase is necessary or not, is something for the government of Canada to decide at this moment. I would suggest that the member get on that pipeline, through his leader to the federal leader, and sort that little matter away.

Mr. R. F. Nixon: Oh, here we go.

Mr. MacDonald: A further supplementary: If perchance the federal government in Ottawa isn’t persuaded to accept its responsibilities, will the minister accept his, in his constitutional jurisdiction, of control of retail prices in the Province of Ontario through the Ontario Energy Board to make certain that that unnecessary increase doesn’t take place here?

Hon. Mr. McKeough: Mr. Speaker, my leader and this government have made it clear for over a year that when the government of Canada is prepared to come to grips with the problem of wage and price controls then this government will co-operate to the fullest.

Mr. P. D. Lawlor (Lakeshore): Answer the question.

Interjections by hon. members.

Mr. Speaker: Order. There have been five supplementaries, which is reasonable in accordance with our standing orders. Does the hon. Leader of the Opposition have further questions?

The hon. member for Scarborough West.

Mr. J. A. Renwick (Riverdale): Why take him off the hook?

Mr. MacDonald: He needs to be taken off the hook.

Mr. E. W. Martel (Sudbury East): What’s all this blunderbussing as he goes around this province, then?

HOSPITAL WAGE CEILINGS

Mr. Lewis: May I ask the Minister of Health a question, Mr. Speaker? Does the Minister of Health recall that it was in August, 1973, when the original ceilings in the education area were set at 7.9 per cent, and it was Aug. 29, 1973, when the ceilings in the area of hospitals were set at 7.9 per cent, and why have we allowed an increase in the ceilings in educational expenditures but not in hospitals?

Hon. F. S. Miller (Minister of Health): Mr. Speaker, it’s very tempting to assume that the two fields are parallel. I do not feel they are. I’m quite aware of the inflationary pressures in the hospital field and have been giving a great deal of consideration to them lately. We have certain basic problems to resolve right now and those, of course, deal with the hospital workers who are threatening to strike in Toronto. These negotiations are being carried on, and I think quite well at this point in time. I just feel that no such sweeping statements will apply to the health field at this point in time.

Mr. Lewis: Is the minister ready to make any selective statements in the health field with some seven days to go to a strike deadline? Is he ready to indicate that he has given to Mr. Dickie, the chief officer of the Ministry of Labour, the authority to indicate to the unions at some point that he will raise the ceilings on their wages, as apparently he is doing behind the scenes now with the hospitals themselves?

Hon. Mr. Miller: Mr. Speaker, I don’t give directions to Mr. Dickie directly; he doesn’t work for my ministry. I have great faith in his ability and knowledge to deal with problems in the labour field. I’m very interested in the progress he is making. I’m sure the steps he takes and the offers he makes would be met by my ministry.

Mr. R. F. Nixon: Supplementary, Mr. Speaker: Would the Minister of Health not agree that it is just not enough to say of the conciliator made available from the Ministry of Labour that he doesn’t direct him? Surely there has got to be a policy co-ordination that in the interest of the welfare not only of the hospital workers but of the people of this province has got to result in an announcement without delay of government policy which will avert what could be a very acrimonious, serious and illegal strike that can be averted only by a statement of government intention?

Hon. Mr. Miller: First of all, Mr. Speaker, I disagree with the last statement made by the Leader of the Opposition. I don’t think it can only be averted by a public statement by this minister. I believe in the process that is under way right now and that is the free collective bargaining process, which is carrying on.

Interjections by hon. members.

Mr. R. F. Nixon: It can’t be -- it is not free.

Hon. Mr. Miller: I have every confidence --

Mr. Speaker: Order.

Mr. Lewis: The minister has wage controls in the hospital sector; that’s not free collective bargaining.

Mr. Speaker: Order.

Hon. Mr. Miller: I have every confidence that the steps that are necessary have been taken.

Mr. Speaker: Does the hon. member for Scarborough West have further questions?

LICENSING OF LANDFILL SITES; ENVIRONMENTAL IMPACT OF PUBLIC WORKS

Mr. Lewis: I have a question of the Minister of the Environment. Has he anything to report yet on the CP Rail application in Hope township for the land disposal site, on the various land disposal applications in Vaughan township, and on the inquiry officer hearing into the Arnprior dam?

Hon. W. Newman (Minister of the Environment): Mr. Speaker, on the Hope site we are still obtaining data and we are still doing work on that.

An hon. member: No hope.

Mr. Lewis: Still waiting.

Hon. W. Newman: Regarding the other site the member was talking about --

Mr. Lewis: Vaughan township.

Hon. W. Newman: Which site in Vaughan was the member talking about?

Mr. Lewis: Maple, the 900-acre site.

Hon. W. Newman: The 900 acres? There has been an application, but no date has been set for a hearing as yet. On the inquiry officer’s report, I have not made my report on it yet but hope to do so very shortly.

Mr. Lewis: So the minister has nothing to report on any of them yet?

Hon. W. Newman: No.

RENFREW PHYSICIANS’ AND SURGEONS’ APPEAL

Mr. Lewis: A question of the Minister of Health, Mr. Speaker: Can the Minister of Health tell me how he has responded to the appeal placed in local papers from the physicians and surgeons in Renfrew as to the deteriorating health conditions in the county because of the various unilateral cutbacks on chronic care and active-care facilities in the local hospitals?

Hon. Mr. Miller: Mr. Speaker, I think that steps were taken about two weeks ago in the city of Renfrew that, insofar as I know, satisfied the local needs for those facilities.

There was talk about closing down a rehabilitation facility in that area. However, in our opinion, or mine at least, that would have been premature because we didn’t have alternative facilities available in that area. I believe a statement was made that we will build a 75-bed nursing home in the Renfrew area, and until such time as that 75-bed home is in fact available, we do not intend to close any of the chronic or rehabilitation beds.

Mr. Lewis: The minister doesn’t. Can I ask him then about Barry’s Bay? Has he done anything about Barry’s Bay and the chronic and acute treatment problems that exist in that community?

Hon. Mr. Miller: Are we on a geographic jaunt?

Mr. Roy: What about Smiths Falls?

Hon. Mr. Miller: Smiths Falls; that is closer to the member’s riding, isn’t it? As a matter of fact, Mr. Speaker, I am pleased that the member is choosing towns that I have visited.

Mr. Roy: My riding? He is really on the ball.

Hon. Mr. Miller: I visited Barry’s Bay, along with my friend the Minister of Community and Social Services (Mr. Brunelle), back in early December. We realized that this land of community, which is typical of very many small communities in Ontario, cannot perhaps support either a home for the aged or a nursing home per se. I can only assure the members that we are giving very active thought to some form of care for senior citizens, and the elderly and the chronic patients in towns like Barry’s Bay throughout the province.

Mr. Lewis: Well, then, by way of supplementary, since this has also been brought to the minister’s attention from Pembroke, is he singling out Renfrew county especially as an area of perverse discrimination in health policy where chronic and convalescent and nursing home care are concerned, or is he prepared to free the funds to deal with the special requirements in that part of the province where he has a considerable component of aged population?

Mr. Roy: It depends where the Conservatives are.

Hon. Mr. Miller: Well, we certainly recognize that Renfrew county had very real problems, and perhaps more aggravated problems and acute problems than most areas of the province --

Mr. Lewis: Right.

Hon. Mr. Miller: -- and it was on that assumption that we approved the 75-bed nursing home in Renfrew. I might also say we allowed the hospital in Pembroke to use, I think 27 beds, that were previously closed for active treatment, to be reopened for extended care patients in that area. I think those two steps alone have provided well over 100 beds in an area that badly needed them.

Mr. Speaker: The hon. Minister of Consumer and Commercial Relations has the answer to a question asked previously.

RAPID DATA

Hon. J. T. Clement (Minister of Consumer and Commercial Relations): Mr. Speaker, on March 29 the member for Welland South (Mr. Haggerty) raised a question in regard to a $6.5 million investment the T. Eaton retirement annuity plan had in Rapid Data and asked, as I understand it, if those in receipt of the pension or contributing to the pension were protected.

Under the Pension Benefits Act and regulations, the pension fund may hold, in eligible investments, up to seven per cent of the total asset at book value in the fund. The Eaton annuity plan meets this requirement and the majority of the fund’s total assets are invested in fully secured bonds, debentures, mortgages, and so on, and a lesser portion in blue chip common stocks. In this particular case the plan is fully funded -- that is, the assets from the plan, even after deducting the anticipated loss from the Rapid Data investment being taken into consideration, are greater than the total liabilities of the plan.

I further understand that each year an independent actuary and chartered accountants verify the soundness of the plan. Therefore I am advising the member and the House, Mr. Speaker, that none of the employees who already have money in the plan or those who are presently contributing will in any way have their deposits or their pension contributions inhibited in any way because of the anticipated loss from Rapid Data.

Mr. Speaker: With respect to the three or four members of the Liberal Party in the second row, all of whom have had a question, I do believe the hon. member for Downsview was on his feet first.

OHC TENANTS DISPUTE

Mr. Singer: Thank you, Mr. Speaker. I have a question of the Minister of Housing. Could the minister advise if he is planning to increase the Ontario Housing security force, as suggested by the Metropolitan Toronto police, to prevent a recurrence of the violence that resulted in several injuries over the weekend in Cather Cres., Lawrence Heights, in the riding of Downsview?

Hon. Mr. Handleman: Mr. Speaker, I have been assured that the security force in that community will be strengthened. I have no details on specific numbers by which it will be strengthened. I’ve asked for a report on that. I am distressed by the continued stigmatization of Ontario Housing Corp. communities of all kinds, and I am very upset by the fact that Ontario Housing Corp. seems to be singled out for this type of public comment when, in fact, it is not common in many other areas of high density. On the other hand, we are taking the necessary steps to try to protect the tenants.

Mr. Singer: By way of supplementary, could the minister adviser us if he has investigated the allegation that this particular trouble was caused by three or four families, or centres on three or four families, who occupy one house on Cather Cres. and who apparently block other tenants’ access in vehicle parking by the illegal and improper parking of a school bus?

Hon. Mr. Handleman: Yes, Mr. Speaker, those allegations have been publicized and I have asked the officials of OHC to look into them to determine whether or not they were aware of them, and if they were, what, in fact, the remedies are.

Mr. Deacon: Supplementary.

Mr. Speaker: Supplementary, yes. The hon. member for York Centre.

Mr. Deacon: What steps is the minister taking to give more authority to, say, a tenants’ council to deal with the root causes of problems such as those occurring in that area?

Hon. Mr. Handleman: Mr. Speaker, happily I attended a tenants’ conference in Windsor on Saturday at which this very point was discussed. The tenants are of mixed views themselves as to whether or not they wish to police this type of disruption in their own communities or whether they wish to join in a partnership with OHC in doing it. We are waiting for recommendations arising from that conference in Windsor. I expect they will be constructive and I am looking forward to receiving them.

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

BAN ON SILENT FILMS IN LICENSED PREMISES

Mr. M. Shulman (High Park): A question of the Minister of Consumer and Commercial Relations, Mr. Speaker: Has the minister any explanation for the most recent caper by the Liquor Licence Board in which it has banned Laurel and Hardy silent movies in licensed premises?

Interjections by hon. members.

Mr. Breithaupt: Which role is the member going to play, Laurel or Hardy?

Mr. MacDonald: How do you “smash” that one?

Hon. Mr. Clement: Mr. Speaker, I am in a quandary here. I have the responsibility for the administration of the Theatres Act, and I wondered perhaps if the hon. member this month might turn his attention on Mr. Silverthorn out there. I will, in fact, inquire into it. Perhaps the member might advise me where this ban occurred and whether it was this year or in the past?

Hon. Mr. Grossman: This is getting to be a pretty good comic act.

Mr. Shulman: A supplementary --

Interjections by hon. members.

Mr. Speaker: Order, please. I think the question really was not urgent nor of public importance. Therefore there shall be no supplementaries.

The hon. member for Waterloo North.

TAX EXEMPTIONS FOR BENEFIT SALES

Mr. Good: Thank you, Mr. Speaker. A question of the Minister of Revenue regarding the collection of sales tax at the Ontario Mennonite relief auction sale: Would the minister reconsider his position as stated in a letter of April 18 that the continuation of exemption for this relief auction sale will not be continued in light of the fact that this sale has contributed over $400,000 to worldwide relief in the past seven years? Would the minister reconsider his decision and exempt this sale once again this year from the retail sales tax?

Mr. B. Newman (Windsor-Walkerville): It’s very worthwhile.

Hon. Mr. Meen: Mr. Speaker, the Act presently provides for exemptions of this nature on a quarterly basis up to, I believe, the sum of $7,500 on any such sale. In this instance the charitable organization has had sales which have grown, I understand from information provided by the member, to something in the order of $100,000. It therefore gets well beyond the area in which the minister has discretion, as the Act presently stands, to grant such exemption.

What I think may have occurred in the past if, in fact, exemptions were granted was that it was an ad hoc arrangement, perhaps even turning the other eye so to speak, or putting the telescope to the blind eye. Now that it has come to my ministry’s attention regrettably it may be that, as the Act presently stands, it will be necessary to enforce that regulation.

I would say that to do that in this instance brings into question all the charitable functions, not just the Mennonite function to which the member makes reference and the projects of which are highly commendable, but all the other charitable functions which take place in this province from time to time. If we are to do that, it would have to be on a much broader basis than just the one exemption to which the member makes reference because of its enormity and its size, among other things.

Mr. Good: A supplementary, Mr. Speaker: Does the minister not feel that it is inconceivable and certainly unwarranted that the Province of Ontario should be the only agency which can possibly benefit from this sale, skimming off $7,000 or $8,000 in tax before it goes to overseas general relief when there are over 2,000 volunteers working without pay? All foodstuffs and material are donated and not one cent of cost is taken off the sale price of these articles to defray any expenses whatsoever. Surely he would not put the province in the position of being the only one to benefit from this sale, other than the people in the developing countries of the world?

Mr. Roy: How mean can one get? Has the minister no heart?

An hon. member: How about the Olympic lottery?

Mr. Speaker: Does the hon. minister wish to comment or answer?

Mr. Good: Will he answer that? Mr. Speaker, does the minister care to answer?

Hon. Mr. Meen: I have already answered the question, Mr. Speaker.

Mr. Speaker: The member for Scarborough Centre.

HEALTH DISCIPLINES ACT

Mr. F. Drea (Scarborough Centre): Mr. Speaker, a question of the Minister of Health: Is it correct that the new Health Disciplines Act has altered the rights of the members of the Christian Science Church in respect to their use of prayer to heal the ill?

Mr. Speaker: The hon. member should realize that there is a bill on the order paper and he cannot anticipate in any way the provisions of that bill nor the debate on that bill.

Mr. Drea: But it’s there.

Mr. Speaker: A ruling was made to this effect just a few days ago.

The member for Port Arthur.

BURNING OF WILDERNESS CABINS

Mr. J. F. Foulds (Port Arthur): A question of the Provincial Secretary for Resources Development: Did the Resources Development secretariat have any participation in and can he explain the decision which has caused the Ministry of Natural Resources to reinstitute its policy of burning wilderness cabins in northwestern Ontario without prior warning to the owners of these cabins? Specifically, is he aware of the ministry’s justification? Has his colleague made him aware of the justification that the ministry used for going into the business of arson and burning down a legitimate mining claim cabin at Circle Lake on Wednesday, March 13, and for threatening to do the same to a cabin on Fallingsnow Lake?

Hon. Mr. Grossman: Mr. Speaker, that was a long question and pretty detailed. I can tell the hon. member, however, that during the time I have been provincial secretary of this field, the question has not been referred to the cabinet committee on resources development. It may have been referred prior to my term of office. I will look at the records and find out if that is the case.

However, I would suggest the hon. member probably would get a quicker reply by asking the Minister of Natural Resources (Mr. Bernier), who will be back in the Legislature on Thursday, than if he waited for me to go into the records.

Quite frankly, however, I must tell the hon. member I couldn’t follow his question. It was a pretty long one. I’ll read it in Hansard.

Mr. Roy: That was a long answer.

Mr. Foulds: It’s a matter of great public importance.

Mr. Speaker: The hon. Minister of Transportation and Communications has the answer to a question asked previously, and then the hon. member for Rainy River.

Mr. Roy: The minister has already made a statement.

SHINING TREE PHONE SERVICE

Hon. Mr. Rhodes: Thank you, Mr. Speaker. Some time back, the hon. member for Nickel Belt (Mr. Laughren) asked me to look into the situation in the community of Shining Tree, where there are communications difficulties, and obviously the member and I have had communication difficulties as well. I apologize for the delay, part of which is his responsibility.

Mr. MacDonald: That is rather provocative.

Hon. Mr. Rhodes: Since the question was asked, I have had an opportunity to discuss the subject with the staff of the ministry, and I find that not only are they aware of the difficulties experienced in the community but they have had telecommunications engineers visit the community to determine what can and should be done.

For the information of the other members of the House, this is a community of approximately 100 people on Highway 560 between Englehart and Gogama.

Mr. Martel: Don’t call it a highway. It’s a disgrace.

Hon. Mr. Rhodes: The community has been without telephone service. Both Northern Telephone and Ontario Northland are taking steps to ensure that this community’s isolation is ended.

There are several small communities such as Shining Tree in similar predicaments. The ministry has been assessing their needs and making recommendations to the carriers involved to complete the telecommunications service.

I would point out, however, that the provision of service is costly for the companies, with little hope of major offsetting revenues. For example, in that community of 100, I understand it will cost at least $360,000 to link Shining Tree to the Ontario Northland long-distance network -- and that is not allowing for inflation.

Following the question by the hon. member and discussions with my staff, I have instructed that both the Ontario Northland Transportation Commission and the provincial regulatory body, the Ontario Telephone Service Commission, should examine the situation of Shining Tree to determine whether service can be completed this year, and I will be glad to let the member know the results of that examination.

Mr. Speaker: The member for Rainy River.

Mr. Martel: Does the minister call that a highway?

VIOLENCE IN AMATEUR HOCKEY

Mr. T. P. Reid (Rainy River): I have a question of the Minister of Community and Social Services, Mr. Speaker, with regard to violence in the sport of hockey.

Is the minister aware that a young man was convicted today in a matter resulting from hostilities in a hockey game and that there has been a lot of violence connected with the Junior B championship? Is the minister, through his athletic commission or as a result of his responsibilities, investigating this matter? And does he have any programme to try to reduce the kind of violence that does go on in the game of hockey in the Province of Ontario?

Hon. R. Brunelle (Minister of Community and Social Services): No, Mr. Speaker, I read in the daily press the report of the case referred to. The whole question of violence in hockey is one that certainly merits looking into, and I’d be glad to report on that at some later time.

Mr. Reid: A supplementary: As a means of restraining the kind of violence we’ve been seeing, will the minister consider requiring amateur hockey to adopt international rules, which would cut down on the physical contact in the sport?

Mr. Deans: Has the hon. member read about the world hockey tournament?

Hon. Mr. Brunelle: I would be glad to look into that suggestion, Mr. Speaker.

Mr. Speaker: The hon. member for Sudbury.

ADMISSION TESTS AT CAMBRIAN COLLEGE

Mr. M. C. Germa (Sudbury): Mr. Speaker, a question of the Minister of Colleges and Universities: I would ask the minister if he is prepared to issue a directive to Cambrian College in Sudbury so that they will discontinue using the services of Dent Psychometrical Services of Canton, Ohio, in order to determine the admissibility of nursing students to that college?

Hon. J. A. C. Auld (Minister of Colleges and Universities): Mr. Speaker, I am not aware of that specific instance. I know that in a number of our post-secondary educational institutions --

Mr. Shulman: Practically all of them.

Hon. Mr. Auld: -- US-established tests have been used, mainly because they are used in a relatively small number of institutions and the cost of establishing ones here has been just too high. In fact, I know there has been some discussion with the Canadian federal university association in this connection. I will look into the test the member mentions and give a reply when I know a little more about it.

Mr. Germa: A supplementary, Mr. Speaker: Is the minister not aware that the community college at North Bay and the community college in Sault Ste. Marie are conducting their own admission tests for the nursing courses?

Hon. Mr. Auld: I am aware of that, Mr. Speaker, and I understand that as part of the general policy different institutions use a different variety of tests and recommendations and so on. I will look into the case the member mentions.

Mr. Speaker: The hon. member for Ottawa East.

OTTAWA AREA LAND SCHEME

Mr. Roy: Mr. Speaker, I have a question of the Minister of Housing and it deals with the Marlborough and Huntley township land scheme and the 1-ft strips which have been ruled illegal by the Supreme Court of Ontario. What has he done to protect the interests of the people who bought properties from this company? Secondly, has he investigated the scheme in Huntley where 1-ft strips were transferred to the municipal officials without the municipal officials being aware of this? Has he transferred this matter to the Attorney General to investigate this situation for possible offences under the Criminal Code?

Hon. Mr. Handleman: Mr. Speaker, with regard to Marlborough, which is now the township of Rideau -- I assume my friend is aware of the municipal reorganizations which have taken place there?

Mr. Roy: Let the minister just answer the question; I know that.

Interjections by hon. members.

Hon. W. A. Stewart (Minister of Agriculture and Food): Nobody would ever know --

Hon. Mr. Handleman: The entire matter has been brought before the courts once again by the regional municipality and while it is before the courts my ministry and, I assume, other ministries of the government will not take any action. As far as Huntley is concerned, the only thing there is that there have been a number of allegations and a number of claims. As far as my ministry is concerned, it has not been brought officially to our attention.

Mr. Roy: Mr. Speaker, if I might ask a supplementary: Has the hon. minister investigated to see if this 1-ft strip scheme transferred to the municipality has been done in other areas of the province? Is his reluctance to look into and investigate this situation due to the fact that his Conservative friends are involved in the scheme and he doesn’t want to get them involved?

Hon. Mr. Grossman: That is another question.

Interjections by hon. members.

Mr. Speaker: Order.

Hon. Mr. Handleman: Mr. Speaker, the situation in Marlborough, of course, where everybody is Conservative, involved only Conservatives. As the hon. member knows I was one of those who came down hard and asked my predecessor to issue a ministerial order. The then parliamentary assistant recommended to the Treasurer (Mr. White) that this be done and it was done. It was done at my request regardless of the policies of the people who were concerned.

Mr. Roy: What about Huntley?

Mr. Speaker: The hon. member for Wentworth.

WORKMEN’S COMPENSATION BOARD PENSIONS

Mr. Deans: Mr. Speaker, I have a question of the Minister of Labour. With the recognition that the rising cost of living affects everyone and that corporate profits are thoroughly healthy at this point, is the Minister of Labour considering a revision of the pensions under the Workmen’s Compensation Act to be effective during this session of Parliament in order to avoid any further depreciation of the ability to purchase of those people presently in receipt?

Hon. F. Guindon (Minister of Labour): Yes, Mr. Speaker. I think I already indicated to the members of the House at one point or another last spring, I believe, or last session --

Mr. Deans: Last fall.

Hon. Mr. Guindon: Last fall, right -- that I would look into the benefits of the Workmen’s Compensation Board. I haven’t been sitting idly by. I have looked at them and I am just about ready to make recommendation to government; once they become government policy I will be glad to announce them.

Mr. Reid: A supplementary, Mr. Speaker: Among the recommendations the minister is making, will there be a recommendation for an escalator clause with regard to inflation for those pensions?

Hon. Mr. Guindon: There are a number of recommendations and I am not prepared at this time to tell the House what they are going to be. I hope to make a statement before too many weeks, let’s say.

Mr. Speaker: The hon. member for Scarborough West with a supplementary.

Mr. Lewis: In his review of pension levels could the minister make a special provision available to the hundreds of miners at Elliot Lake who are now seeking silicotic pensions, 400 of whom from Denison and Rio Algom mines met last night to set out their health and pension concerns and who are still on strike against Denison because of the safety conditions and the pensions and all matters related to that?

Hon. Mr. Guindon: I think in the past the Workmen’s Compensation Board has never excluded people. They have considered as many injured workmen as possible. Although I cannot make a definite promise here today, I am sure they will look at it.

Mr. Speaker: The hon. Minister of Consumer and Commercial Relations has the answer to a question asked previously, and then the hon. member for Windsor-Walkerville.

LOSSES FROM BROKEN LIQUOR CASES

Hon. Mr. Clement: Mr. Speaker, I refer to a daily question asked of me yesterday from my friend from High Park. The question was: “Can the minister comment on the unique packaging and cartage methods used by his department which resulted in 301 out of 319 cases that arrived at Freedland St. last Thursday being smashed?”

Last Thursday the Liquor Control Board did, in fact, receive a number of cases of alcoholic beverages which were received in a damaged condition. The member’s information is not totally accurate. The board did receive this unsolicited shipment containing 299 cases, of which approximately 100 were damaged in transit. The unsolicited shipment, as I understand it, is a private order of which the Liquor Control Board of Ontario had no advance notice and the board is not responsible or liable for any of the damage. Those cases which were damaged have stickers on them which were placed there by the airline or air freight handlers indicating damage in transit.

Hon. E. A. Winkler (Chairman, Management Board of Cabinet): How much of it did the member for High Park order?

Hon. Mr. Clement: The board has not handled the merchandise but is awaiting the attendance of a representative of the private importer. That’s the message for the day.

Hon. Mr. Rhodes: And let the member bring his own straw.

Hon. Mr. Grossman: That one was all wet.

Interjections by hon. members.

FLOOD INSURANCE

Mr. B. Newman: Mr. Speaker, I have a question of the Provincial Secretary for Resources Development. Is the secretary, either on his own or in co-operation with the federal government, developing a policy of flood insurance for the affected landholders?

Mr. Roy: It’s to the Provincial Secretary for Resources Development. The member is talking policy. The minister doesn’t know what the member is talking about.

Hon. Mr. Grossman: I am sorry, Mr. Speaker, I thought it was directed to another minister.

Mr. Roy: Policy, what’s that?

Mr. B. Newman: If I may repeat, Mr. Speaker, I have a question of the Provincial Secretary for Resources Development. Is the provincial secretary developing, either on his own -- that is, through his own ministry -- or in co-operation with the federal government, a scheme of flood insurance that would protect affected landholders?

Hon. Mr. Grossman: Mr. Speaker, at this time I am not in a position to advise the House on any matter of that nature. If, as and when we come to a decision to take this matter up, we will, of course, advise the House when policy has been formed.

Hon. G. A. Kerr (Solicitor General): EMO is the member’s best insurance.

Mr. B. Newman: May we expect an answer from the provincial secretary before the House adjourns for its summer recess?

Hon. Mr. Grossman: Mr. Speaker, if a decision is made by that time.

Interjections by hon. members.

Mr. Speaker: The hon. member for Sandwich-Riverside.

Interjections by hon. members.

METHANE GAS

Mr. F. A. Burr (Sandwich-Riverside): Mr. Speaker, I have a question of the Minister of Energy. What has been the minister’s reaction, or the reaction of his advisers, to the claim in the March issue of the American Chemical Society’s publication, Chem Tech, to the effect that a supply of natural gas can be assured forever through mass production of various water and land plants, such as algae and sorghum, and their conversion into methane?

Interjections by hon. members.

Mr. Roy: Give the minister a glass of water.

Hon. Mr. McKeough: Mr. Speaker, my reaction, not having read the article, is nil. The reaction of my advisers has not been communicated to me, if they have read the article. The closest I have come to this particular subject, if I may put it that way, and that may be a little indelicate, was a very excellent paper delivered by, I think, a civil servant or one on the staff of the University of Guelph under my colleague, the Minister of Agriculture and Food, on this whole subject of the use of methane gas at a great conference sponsored by the Progressive Conservative women of this province not long ago.

Interjections by hon. members.

Hon. Mr. McKeough: At that particular conference a great number of things were brought forward and, as I recall, the conclusion of that particular subject was that the day of methane gas has not yet arrived.

Interjections by hon. members.

An hon. member: Are the Conservative women bothered with gas?

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

I’m sure the hon. members will be interested to learn that our new seating plans are now available and will be distributed shortly.

Petitions.

Presenting reports.

Motions.

Introduction of bills.

ONTARIO WATER RESOURCES ACT

Hon. W. Newman moves first reading of bill intituled, An Act to amend the Ontario Water Resources Act.

Motion agreed to; first reading of the bill.

Mr. Roy: That’s the greatest contribution the. minister has made in the last year.

Hon. Mr. McKeough: And it’s more than the member will ever make.

Hon. W. Newman: Mr. Speaker, the first purpose of this bill is to implement the reorganization of the Ministry of the Environment so that the powers under the Act that were formerly exercised by the heads of various branches of the ministry will be exercised by one or more directors appointed for that purpose by the minister.

An appointment may limit the authority of any director in such manner as the minister considers advisable so that the director may be authorized to act only with respect to a particular provision of the Act and only for a specific region, of the province or for a specified period of time. A transitional provision is designed to authorize the exercise of powers by the directors appointed under the new authority, and by the Treasurer and minister where appropriate, during the period of time from April 1 to the date when royal assent is given the amendments bringing them into force retroactively to April 1, the date of the reorganization of the ministry.

The amendments also provide that all receipts and expenditures of the province, including payments by municipalities in respect to projects, will be under the control of the Treasurer rather than the minister. Accounting with respect to these payments will be carried out by the ministry.

The amendments permit sewage and waterworks projects under agreement entered into after April 1 to be financed by methods other than the sinking fund method, which was formerly compulsory. Moneys under project agreements entered into before April 1, 1974, with respect to reserves and debt retirement will no longer be treated as trust funds under the control of an investment committee and will be transferred to consolidated accounts in the consolidated revenue fund.

Provision is made for the protection of the employees of the ministry, members of the hearing board and Crown employees involved in ministry work who act in good faith, from legal liability other than application for judicial review to test the validity of their actions. The liability of the Crown for the acts of such employees remains.

Provision is made for the licensing of waterworks operators in addition to sewage works operators. Provision is made to limit the liability of the ministry on inspections to the liability on common law, that is for negligence, trespass or exceeding authority. The present statutory liability imposed by the Act is unlimited.

The offence of making a false statement to a minister or a director is extended to cover false statements made to any employee of the ministry. The offence is limited in that it only applies to false statements which are made knowingly.

MINISTRY OF HOUSING ACT

Hon. Mr. Handleman moves first reading of bill intituled, An Act to amend the Ministry of Housing Act, 1973.

Motion agreed to; first reading of the bill.

Hon. Mr. Handleman: Mr. Speaker, section 7 of the Ministry of Housing Act calls upon the minister or the deputy minister to make recommendations to the government of Ontario in respect of housing policies and objectives and the co-ordination thereof. However, as the Act stands there is no provision for the implementation of these recommendations. The purpose of the new section 7(a) is to provide authority for such implementation.

ENVIRONMENTAL PROTECTION ACT

Hon. W. Newman moves first reading of bill intituled, An Act to amend the Environmental Protection Act, 1971.

Motion agreed to; first reading of the bill.

Hon. W. Newman: Mr. Speaker, the amendments are made to facilitate the reorganization of the ministry similar to the changes made in the Ontario Water Resources Amendment Act.

Similar changes are made with respect to the Treasurer having control of all moneys received and disbursed, to limit the liability of employees of the ministry, members of the board under the Act, and Crown employees involved in ministry work, who act in good faith, to limit the liability of the ministry on inspections and to change the provisions with respect to the offence of making a false statement.

Mr. R. Haggerty (Welland South): What happened to noise regulations?

PUBLIC HOSPITALS ACT

Mr. Roy moves first reading of bill intituled, An Act to amend the Public Hospitals Act.

Motion agreed to; first reading of the bill.

Mr. Roy: Mr. Speaker, the purpose of this legislation is to amend the Public Hospitals Act to allow enforcement of a decision by the Ontario Hospital Appeal Board pending any further appeal.

A case in point, Mr. Speaker, is the case of Dr. Martin Schiller, who was given a favourable ruling by the Ontario Hospital Appeal Board, and the hospital frustrated the ruling in the sense that it went on to appeal and did not implement the ruling of the Ontario Hospital Appeal Board.

The purpose of this legislation, Mr. Speaker, is to make the board’s decision enforceable during an appeal and, secondly, to make the appeal directly to the Court of Appeal to avoid too many interim appeals.

PESTICIDES ACT

Hon. W. Newman moves first reading of bill intituled, An Act to amend the Pesticides Act, 1973.

Motion agreed to; first reading of the bill.

Hon. W. Newman: Mr. Speaker, amendments are made to facilitate the reorganization of the ministry similar to changes made in the Ontario Water Resources Amendment Act, but as a new Pesticides Act does not come into force until proclamation, the amendments are not retroactive and will come into force in June at the same time that it is intended to bring the Act into force.

Changes are similar to those in the Ontario Water Resources Amendment Act and the Environment Protection Amendment Act and are for the purpose of providing that all receipts and disbursements are under the control of the Treasurer for the protection of the employees of the ministry. Members of the board under the Act and Crown employees involved in ministry work who act in good faith; and for limiting the liability of the ministry on inspections, and for changing the provisions with respect to the offence of making a false statement.

RENT CONTROL AND SECURITY OF TENURE ACT

Mr. Cassidy moves first reading of bill intituled, An Act to provide for Rent Control and Security of Tenure.

Motion agreed to; first reading of the bill.

Mr. M. Cassidy (Ottawa Centre): Mr. Speaker, this bill was introduced in June of last year in the previous session. I’m reintroducing it at a time when the need for rent regulation in the province, and particularly in our major cities, is even more pressing than it was at that time.

The city of Toronto has just asked the province to move with emergency legislation. The mayor of North York, not noted as a radical, has made a similar request, and the demands are coming in from across the province from tenants who are being victimized and exploited by their landlords.

The bill would establish a landlord and tenant tribunal and a system of rent officers in major cities. It would establish guidelines under which rents would be determined. Hopefully, the rents would continue to be made between landlord and tenant.

The principle would be that rent increases from a base of December, 1972, would only be justified in relation to increasing costs and not in relation to the speculative and exploitative factors which have been permitted by the government.

Mr. Foulds: And even encouraged by it.

Mrs. Campbell: Mr. Speaker, I rise at this time on a point of order. Yesterday, during the estimates of the Attorney General (Mr. Welch), the committee sat for almost half an hour, unable to have a quorum, because there wasn’t one Conservative member of that committee present --

Mr. Cassidy: Shame.

Mr. Roy: Shame.

Mrs. Campbell: -- save and except for the chairman and the minister. At the conclusion of the vote, we were in the same position and we waited for another half an hour. We did have some discussion but, again, there wasn’t one Conservative member on that committee.

Mr. Roy: Terrible.

Mrs. Campbell: Mr. Speaker, this frustrates the work of this Legislature, and if this government is permitted to show its contempt for the legislative process in this way --

Mr. Roy: Right.

Mrs. Campbell: -- having been provided with extra whips to get their members to order --

Mr. Singer: Five of them are paid.

Mrs. Campbell: -- we are not going to be able to continue to function adequately as an opposition in reviewing the estimates. I would demand, at this time, Mr. Speaker --

Mr. Speaker: Order, please. The hon. member has made the point she wished to make, and I would say it is not a point of order at all.

Mr. Singer: And made it well.

Mr. R. F. Ruston (Essex-Kent): It is a good point.

Mr. Speaker: It’s not a point of order. There is nothing in our standing orders providing for any such programme or procedure. I think there are other means by which the hon. member might achieve her purpose.

Mr. Cassidy: It affects the privileges of this House, Mr. Speaker.

Mr. Speaker: Out of courtesy to the hon. member, I have permitted her to continue, even though I knew full well -- and I’m sure she did, too -- that it was not a point of order.

Mr. Roy: They should be ashamed over there.

Hon. Mr. Winkler: Mr. Speaker, before you call the orders of the day I would like to inform the members of the House that due to circumstances beyond the control of the Minister of Revenue, he will not be able to be with us this evening. I just want to say that in the event we do not finish Bill 26 in committee of the whole House, at 8 o’clock we will proceed to item No. 6 on the order paper.

Mr. Roy: At what time?

Hon. Mr. Winkler: Eight.

Mr. B. Gilbertson (Algoma): Mr. Speaker, before the orders of the day, I would like to announce to the hon. members that the page-boys and girls are going to distribute some maple sugar to every member’s desk, with the compliments of the Ontario maple syrup producers.

Mr. Roy: Good for you.

Mr. Cassidy: This is the finest moment in our year.

Mr. Speaker: I might say there is nothing in our standing orders to permit that, but I think it’s quite in order.

Hon. Mr. Winkler: The only perks that are left.

Mr. Speaker: Orders of the day.

Clerk of the House: The second order, House in committee of the whole.

LAND TRANSFER TAX ACT

House in committee on Bill 26, the Land Transfer Tax Act.

Mr. J. R. Breithaupt (Kitchener): Perhaps the minister would outline for us the sections which he may be amending, if there are any amendments, so that any remarks we may have to make could possibly be foreshortened as a result?

Hon. A. K. Meen (Minister of Revenue): I’d be pleased to do so, Mr. Chairman; I had already indicated to you on second reading that I would have amendments to section 1, and I’ve got one. Let me just make sure I’ve got this right; section 1, sub (1), sub (f), sub (ii) is the way I described it. That is the section dealing with identification of non-residency, one of the criteria for identifying the non-resident corporations.

I will also have a further amendment to section 1, by the addition of a clause, subclause 3, which will provide a definition of “ordinarily resident.” This is a definition which hon. members may have noticed was conspicuous by its absence by omission from my earlier bill.

Mr. M. Cassidy (Ottawa Centre): I couldn’t sleep last night because of its absence.

Hon. Mr. Meen: I’m sure you must have had some reason for lying awake wondering about this bill. I will have an amendment on section 6, subsection (1). On section 9, I will have a small housekeeping amendment -- typographical correction actually -- and I will also have small amendments to section 15 and to section 18.

Mr. Breithaupt: Mr. Chairman, perhaps the minister could place his amendment to section 1; and once that amendment is put there may be some general comments that could be made to that particular section. Would that be convenient?

Hon. Mr. Meen: Mr. Chairman, that is perfectly satisfactory to me, if the hon. members recognize I still have a second amendment to section 1, subsection (2).

On that basis, Mr. Chairman, I believe that copies of my proposed amendments are not only in your hands but also in the hands of the hon. members opposite who will be participating in this debate. There are extra copies available. I see that my deputy has them and he will see that you get copies.

Mr. Chairman: Maybe the pages could give them out after this amendment.

Mr. Breithaupt: While that is being distributed, Mr. Chairman, perhaps I might just make a comment on the first subsection, item (b), the definition of the word “convey”.

I was interested in some of the comments that were made earlier on in general discussion on second reading with respect to the matter of mortgages. Now the hon. minister will recall that the point was raised concerning the possibility that matters would be upset if mortgages were placed on properties and then final orders of foreclosure, if such should happen, would bring certain problems with respect to conveyance.

In subsection (c) the minister does refer, under the definition of the word “conveyance”, that it includes not only the usual deed but also “a final order of foreclosure.” I presume that since a mortgage is technically a conveyance, subject to a return of the fee on discharge of the mortgage, that we should have, for perhaps a more general knowledge of this situation, an amendment or an inclusion in the definition of the word “convey” that would include the mortgaging aspects.

I presume it is the minister’s intention to include that aspect; and perhaps we could have a comment as to how he sees the problem being resolved if an amendment is not considered to be required.

Hon. Mr. Meen: Mr. Chairman, it was our opinion that the term “convey” was sufficiently broad to cover the grant of a mortgage; recognizing, too, that in land titles a mortgage is a charge and is not a conveyance. We therefore have not specifically referred to mortgage in the definition of conveyance” but of the transitive verb “convey.” But when you get to conveyance, then we have defined it as including a mortgage or charge.

That’s the reason, as I understand it, for the somewhat broader, and it looks like rather awkward, wording in the definition of “convey.” It is in order to catch all the areas that might affect the release of any interest in land, a quit claim and all the other manners of the transfer of a fee. Conveyance then goes further to include, as indicated, the registration of a final order of foreclosure. If that is satisfactory to the member for Kitchener, perhaps I would now introduce copies of these proposed amendments so he will have copies of them, and the hon. member for Ottawa Centre as well.

Mr. Chairman: Is it the proposed amendment to section 1 you are talking about now? To clause (f)?

Hon. Mr. Meen: To section 1, Mr. Chairman.

Hon. Mr. Meen moves that subclause (ii) of clause (f) of subsection (1) of section 1 of the bill be amended by adding at the end thereof:

But this subclause does not apply where it is established to the satisfaction of the minister that such individual or corporation does not, in fact, exercise control directly or indirectly over the corporation that has issued or allotted to such individual or corporation shares to which are attached 25 per cent or more of the voting rights ordinarily exercisable at meetings of the shareholders of the corporation.

Mr. Chairman: The hon. member for Kitchener.

Mr. J. A, Renwick (Riverdale): Mr. Chairman, if my friend would agree, just before we get to that particular subsection of the bill, I notice, in looking at the existing Land Transfer Tax Act and subclause (b) of clause (1) of section 1 of the Act, you are now proposing to include a lease as a taxable conveyance. That is not now presently contained. I noticed Mr. Chairman, in the notice issued by the minister with respect to the proposed changes, that he does propose to exempt a lease for a term of not more than 10 years. I am curious as to the reason the lease is to be included as such as document and why there was the selection of the more or less arbitrary term of 10 years as the definitive period of time within which no tax will be levied; and whether or not the same purpose is likely to be accomplished by a continuing right of renewal if the concern and fear of the minister is for long-term leases to become a normal method of conveying property in Ontario?

Hon. Mr. Meen: Mr. Chairman, a continuing right of renewal would not be acceptable within the ambit of the proposed regulation which would nail this down to 10 years. What I have in mind in endeavouring to enforce this provision is that a lease must be registered if it is for a period, including any terms of renewal, beyond seven years. If I understand the member correctly, what he is saying is that if you had a lease for 10 years with a right of renewal, for say a further five years and a further five years after that, you are really getting to a 15 or a 20-year term unless there are other options open to the lessor, as to say the amount of rental to be charged or something of that sort; giving, in effect, the tenant the first right of refusal but not really an absolute right to renew.

If he has an absolute right to renew then we would consider that a lease having a longer term than the first 10-year period and would, in fact, look at the total period for which he had an absolute right to renew. If you have a period very much longer than 10 years it is possible for the purchaser -- the lessee in this case -- to treat his improvements on the property as though they were capital. So we looked at this in an effort to have it as short as possible so that he couldn’t acquire by the backdoor what we won’t let him do by the front door without paying the non-resident tax, and yet have something that was enforceable by way of our being able to look at the title and through our registry office procedure be able to keep track of these conveyances, by way of lease or otherwise, which will come to our attention through the mechanism of the registry office.

Therefore, although 10 years looks arbitrary, it is as short as we could make it. I suppose, in theory, one could make it seven years; but in making it 10 years it looks like a reasonably practical period, having regard for the capital aspect of the acquisition by the non-resident.

Mr. Renwick: Mr. Chairman, I assume the minister will have that authority under item (a) of subsection (2) of section 18 with respect to the making of regulations.

Hon. Mr. Meen: Yes.

Mr. Renwick: I gather that’s the particular clause of the regulatory power that he intends to use for that purpose. He can speak, perhaps, when we come to that section, about the adequacy of it.

The other clause in item (b) which concerns me is the clause which states:

... whether the effect of any of the foregoing is to bring into existence an interest of any kind in land ...

That’s quite all right, but the part which concerns me is the next part:

... or is only for the purpose of giving effect to or formal recognition to any interest of whatsoever kind that theretofore existed in land ...

It would appear to me that if, in fact, there is an interest in land and this particular document is only for the purpose of formal recognition, there should be some way of exempting it.

I would ask the minister two questions. Does he intend to exempt it? Secondly, can he give me an example of the kind of document that would be included in that clause with respect to “for the purpose of giving effect to or formal recognition of any interest whatsoever?”

Hon. Mr. Meen: Mr. Chairman, I believe, but I will ask my advisers if they can assist me in providing an illustration or two for the benefit of hon. members, that this is intended to catch some of the less definitive kinds of interests -- an interest in reversion, possibly interest through an estate and various undefined ways in which there might be an interest by agreement, unregistered or otherwise, on the title.

I’m not satisfied in that answer myself, so I will ask them if they can provide to me, to be conveyed to the members, some more comprehensive answer to that rather sophisticated question.

Mr. Renwick: It may have been a sophisticated question. It was asked out of sheer ignorance of what it was intended to cover.

Mr. Chairman, I have a further item in connection with the definition of land in the Act. In the existing Act the word “land” is defined to include tenements, realty, fixtures and goodwill. I notice that in the main part of the section there is no reference to the word “fixtures.” I see there is a reference qualifying the word “goodwill.” I’m curious, though, as to whether or not the term “lands, tenements, and hereditaments and any estate, right or interest therein, a leasehold interest or estate, the interest or an optionee, the interest of a purchaser,” in fact, picks up the term “fixture.”

It is quite obvious that the following part of it -- “goodwill attributable to the location of land or to the existence thereon of any building or fixture and fixtures” -- leads me to wonder whether that last clause, “and fixtures,” covers the point that I am trying to make as to whether or not there is an inadvertent omission of the word “fixtures” in the early part of the definition.

Hon. Mr. Meen: Does the hon. member mean in the earlier Act?

Mr. Renwick: Whether it shouldn’t read, “including lands, tenements, hereditaments, and fixtures and any estate, right, title or interest therein.” It is a pretty technical matter but --

Mr. Chairman: Before the minister answers, I should ask if anyone else wants to speak on clause (b) before it is carried and we move on. Did the hon. member for Kitchener want to speak on clause (b)?

Mr. Breithaupt: Not at this point, Mr. Chairman. I have been waiting my turn.

Mr. Chairman: On clause (b)?

Mr. Breithaupt: Well on section 1 in general.

Mr. Cassidy: I have a number of points, Mr. Chairman, on clause (d).

Mr. Breithaupt: Before we deal with the entire subsection (1), there are various points on definition, and perhaps if hon. member may refer to any of the items within subclause (1), the interpretation clause, this may be a way of --

Mr. Chairman: Well we could deal with (a), (b), (c) and (d) with reference to the amendment and go backwards and forwards on it.

Mr. Breithaupt: It is pretty difficult otherwise.

Hon. Mr. Meen: Perhaps at this point, then, I might just try to answer the hon. member for Riverdale; and then if the other hon. members want me to go back over this area we can.

The hon. member was asking about the definition of land. The last words in the section, “and fixtures” -- and the hon. member for Riverdale isn’t listening at the moment, but this is expressly for his benefit -- the words “and fixtures” modify the entire clause.

Mr. Renwick: Thank you, Mr. Chairman.

Hon. Mr. Meen: This is actually a clarification of the earlier section -- to which the hon. member for Riverdale referred -- particularly as regards goodwill attributable to location, which has not been spelled out. A geographic location of a lot may be somewhat different because of its potential for development for some other use, but we have elaborated somewhat on this definition.

Mr. Breithaupt: Just to complete one point that was referred to earlier by the hon. member for Riverdale, Mr. Chairman, and that is the matter dealing with the situation of the leasing on the 10-year term.

Would it be the intention of the ministry, then, to keep some sort of record in the registry offices of leases that did have various options of renewal? The reason I am asking that is of course because the right to renewal may be based upon various tax adjustments or other items that might not in effect be seen as an absolute right to renew but rather a discretionary one on the lessee.

I am thinking that if that is the case the burden, while it is possibly not a very heavy one and will be readily accepted by the lessee, still it could be seen to be a burden which he might not choose to accept; and as a result might not be as carefully watched as would be the case with what would seem to be a stronger right to renew without any condition.

The question, if I am making myself at all clear, is that if there is a condition which will no doubt be readily accepted, are you going to keep some sort of a record to see if in fact these leases are renewed? Or would you -- and I think it would be more practical -- make a value judgment right at the time to avoid all the traditional paper work or subjective decisions? So that once the lease was proferred for registration, the decision would be made and I think you would save yourself some particular problems.

Hon. Mr. Meen: Mr. Chairman, we haven’t completed the regulation yet, as I am sure the hon. members can appreciate. But I do expect that we would make the value judgement at the time of registration of the initial lease -- is it an absolute term, are there absolute rights of renewal, are they subject to negotiation of certain terms at that time.

It seems to me, though I am thinking out loud as I go, that if with the lessee there are certain options, then he really is acquiring at that time a right to go forward even if he doesn’t exercise that right at a later time. So if he has a fixed 10-year term or some term, which coupled with an absolute right of renewal would carry him beyond the total right of occupancy, in excess of 10 years, I think we would make the assessment at that time that he had in fact acquired it by way of a conveyance within the definition of subclause (b).

Mr. Breithaupt: I think the minister would agree there could well be various terms put into an option to renew that might seem onerous, but in fact could be terms of straw which would be another way of attempting to avoid what the minister is attempting to accomplish.

Hon. Mr. Meen: Yes. Before we get away from subclause (b), Mr. Chairman, my deputy tells me that one of the questions under conveyance, if I can read his notes, is that sometimes if there is no consideration, let’s say if there is no tax, the court of appeal, he has pointed out, has suggested that an equitable interest in land can arise with the execution of an offer. I guess I should have remembered that from my conveyancing days.

You can assign an offer and with the assignment of an offer there is a transferral of the equitable interest. That’s the kind of thing we are trying to get at; where people, I think I am right on this, maybe trade in offers -- submitting an offer with a small down payment at a later time and transferring that offer, or assigning the offer rather than assigning the deed. That would be picked up by this very broad and esoteric description or definition of the term “convey”.

Mr. Breithaupt: Presumably you are going to have as well the opportunity of vetting any of the various kinds of documents which might otherwise be deposited on titles as clouds on title? Such as --

Hon. Mr. Meen: Yes, the assignment of an agreement.

Mr. Breithaupt: The assignment of an agreement as well.

Hon. Mr. Meen: Yes, we would.

Mr. Renwick: I take it, Mr. Chairman, that in that situation -- if for example a person takes an option and registers the option and in due course exercises the option -- you would have to exempt the second step if the tax was paid at the time of the registration of the option because the option is included? Would I be correct in that assumption?

Hon. Mr. Meen: I believe so, Mr. Chairman. The intention is not to tax twice on the same agreement, on the same transfer of the fee. If the tax was extracted at the registration of the option, of course, it would not be extracted again when the option was exercised.

Mr. Breithaupt: This would be the normal circumstance of any transfer in trust?

Hon. Mr. Meen: Yes.

Mr. Renwick: My concern is that you carefully spelled out the fact that if land is registerable in more than one land registry office the tax is only payable once. But I question whether at some point there shouldn’t be a statement in here that you can only be taxed once on one conveyance, rather than leave it to be dealt with solely in the regulations.

Mr. Chairman: The hon. member for Ottawa Centre.

Mr. Cassidy: Mr. Chairman, I have felt a bit crowded aside by these lawyers who have been working on the bill. I have two or three general questions I wanted to raise with the minister which hearken back, perhaps, a bit more to our debate on the bill yesterday, although I have some points which may be as fine as those the member for Kitchener and the member for Riverdale have been raising.

The first question is does the minister know and can he give us any idea of what kind of situation we are dealing with here? Can he give us a general idea of the value last year and the estimated value this year of property transactions in the province?

Mr. Chairman: I think the hon. member will have to speak to the section of the bill.

Hon. Mr. Meen: That has nothing to do with these sections.

Mr. Cassidy: Mr. Chairman, it is traditional, I believe, that these more general questions about a bill are raised at the outset. If the minister wishes I can raise them at other points but it seems sensible to get them through at this particular point.

Mr. Chairman: It isn’t appropriate at this time anyway because it’s not in the sections that we are dealing with.

Mr. Cassidy: Mr. Chairman, the point I wanted to follow up with was to ask the minister what is the estimated value of the transactions he expects to be dealing with? What would have been that value according to his officials if there had been no tax levied? How has that changed over time?

Hon. Mr. Meen: Mr. Chairman, this is not intended as a tax-raising bill. The Land Transfer Tax Act, specifically in reference to non-residents -- the element which is attracting all the attention in the debate of course-is not intended as a tax-raising measure.

I, in my ministry, have no idea what kind of money this will raise, because we expect it to be a deterrent on foreign investment in real estate, and therefore I am not in a position to estimate. Of course we have no records of this in the past, because the identification as to whether purchasers were residents or non-residents was never a requirement of any of our registry office procedures. Ergo, we have no record of that sort of thing.

While I am on my feet, perhaps I could clarify, the point made by the hon. member for Riverdale and the hon. member for Kitchener. As I say, it is not intended to tax twice. My legal counsel point out to me that the tax that would be paid on the registration of the option would be based on the consideration paid for the option. Then, when eventually the option is exercised, the tax that would be charged would be tax based on the consideration paid on the exercise. So in the end result you have not taxed twice, there have been two pieces of tax paid.

Mr. Cassidy: I would like to pursue this point, Mr. Chairman. The Treasurer (Mr. White), in his budget, estimated that the land transfer tax that --

Mr. Chairman: Well, we are not really dealing with the tax. You are out of order as far as dealing with the bill before us is concerned.

Mr. Cassidy: At some point it is reasonable, Mr. Chairman, that the House --

Mr. Chairman: You had an opportunity to deal with this on second reading.

Mr. Cassidy: The questions were posed, but the way the debate works the minister did not answer the questions which were posed at that time. I will pose them at a further clause in the bill, but it is reasonable to raise it now to get the perspective on the bill and then to talk --

Mr. Chairman: As I say, you are out of order as far as dealing with clause 1 of this bill is concerned.

Mr. Cassidy: Thank you, Mr. Chairman. The second point I wish to raise --

Mr. Chairman: If the minister wishes to answer you, why I will concede to the minister’s wishes.

An hon. member: There’s no answer.

Mr. Chairman: I don’t think there is an answer for you.

Mr. Cassidy: On a point of order, Mr. Chairman: Can the chairman kindly tell me when questions like this which are relevant to legislation, tax legislation in particular, are to be raised?

Mr. Chairman: Yes; on second reading. The question you are asking at the present time could have been very well raised at second reading of the bill.

Mr. Cassidy: It was raised, Mr. Chairman, on the point of order, but when is one to get answers? That is normally done during the question and answer that is permitted under committee stage of the House. It seems to me, Mr. Chairman, that to rule these things out of order is not allowing the committee stage to follow its normal course.

Hon. Mr. Meen: Ask him where he was when I was replying on second reading?

Mr. Renwick: If I may just speak on that point of order, Mr. Chairman, I would suggest the questions raised by my colleague, the member for Ottawa Centre, would be appropriately and properly raised when we come to those two taxing subsections of section 2, which are of course where the tax is levied and where it would appear to me, Mr. Chairman, that questions with respect to the extent of the tax and how much the minister anticipates raising would be very relevant to the clause by clause discussion of the bill.

Mr. Chairman: It could very well be, but I said it was out of order to deal with it on clause 1. One part here may be in order.

Mr. Cassidy: Thank you, Mr. Chairman.

The second point I wanted to raise -- I will try to be general at this point; however, bearing in mind your approach, Mr. Chairman, it may be necessary to raise this throughout the bill -- can the minister comment on two or three apparently large loopholes which have been suggested in the bill, as to whether the ministry has taken account of them and what it intends to do with them?

The two that come most to my mind, which are apparently legal, are the ones raised by the member for High Park (Mr. Shulman) and a loophole which would be involved in evading the tax through the use of options.

As the minister knows, options for example can be bought, for let’s say 10 per cent of the market value of a property. Subsequently they might be sold a year or two later on a speculative market and the capital appreciation in the value of the property would all attach to the option. Therefore, for the sake of argument, a $10,000 option on a $100,000 property might be sold a year or so later for $50,000 or $100,000; and the only deterrent to the foreign speculator would be to have to pay 20 per cent of the value of the option, which would be about two per cent of the value of the property -- a far cry from having to pay 20 per cent of the value of the property.

The other approach which was suggested by the member for High Park, was in effect this capitalization. I have a couple of amendments to suggest on that point later on in this section. This would be where the voting control of a corporation was held by Canadians, but where the preferred shares were held by foreigners and the voting control was handed to trustworthy Canadians who could be counted upon not to violate the interests of the majority of the shareholders, although those shareholders would not have voting rights.

It could possibly be accompanied by a provision, which I think is not abnormal, that would give the preferred shareholders the power to seek to wind up the company in case they grew to be unhappy with the way in which it was being managed. They would not be able to influence the decision-making of the company in any legal way, but they would be able to wind it up upon a certain application.

Those are two possible loopholes which, it seems to me, would permit either evasion of most of the tax or, in the case of the thinly capitalized company with a very small proportion of its issued capital in voting shares, would permit complete evasion of this particular tax.

Hon. Mr. Meen: May I ask one point of clarification at this point, Mr. Chairman? Are we now into section 1(1)(f), which deals with the definition of a non-resident corporation? It was with respect to that section that the hon. member for High Park raised the points on which the member for Ottawa Centre is talking. Have we gone on to that part of the Act?

Mr. Chairman: I will find out.

Mr. Cassidy: I appreciate the interest of the minister in trying to sort of tick off the subclauses one by one. I believe the question about options probably would come under section 1(1)(b); apart from that, I’m quite ready to go on to section 1(1)(f).

Hon. Mr. Meen: Section 1(1)(b) then, of course, would pick up the term “convey.” If an option is registered then we have some notice of it, and the nature of residency or non-residency of the optionee or other parties to the contract would then come to our attention. And the trading in those options would be subject to the tax in the normal fashion as a conveyance.

If they aren’t registered and they are traded as paper without being registered, I suppose it is possible to avoid the tax, because at the moment we have no particular mechanism available. We may be able to develop something in the future, but I don’t picture anything at the moment, other than the mechanism through the registry office procedure and the affidavits required by the Act, to identify the residency of the grantee, optionee, lessee or whatever in the registered document.

The other point raised by the member for Ottawa Centre was the matter mentioned on Monday by his colleague from High Park. The kind of company which his colleague suggested, in which the class A shares would be entitled to all the benefits of profit in the corporation, but where there would be common shares with exclusive voting rights -- the class A having no voting rights under that proposal, as I recall the suggestion of the hon. member for High Park -- would in fact leave control still in Canadian hands.

The question is, are we trying to cut out all foreign investment or are we simply seeking to cut out foreign control of our real estate? What we are really getting at here is foreign control of real estate. So if foreign moneys see fit to be planted in a corporation here, in which they in fact do not have control and in fact the control still resides with Ontario citizens, then we have still met the criteria we are trying to establish by retaining the control of our land in Canadian hands.

If we are talking about equity investments, those moneys might go into other stocks and shares in other companies in a similar kind of interest. Are we talking about beneficial ownership? If that’s the case, what are we talking about in terms of normal investments in the case of mortgage and bond investments without control over the destiny of the company any more than those class A shares in the example given by the hon. member for High Park?

Really, although he called it a loophole, it is one facet of the operation in which foreign money may come in if it wants to. But it will come in under circumstances in which it does not have control over our real estate.

Mr. Breithaupt: Mr. Chairman --

Mr. Cassidy: Could I follow that up for a minute? I really find it quite stupendous, what the minister has said. I want to put on the record the proposal of the member for High Park, which his lawyer told him was perfectly legal.

Hon. Mr. Meen: It’s already on the record.

Mr. Cassidy: All right, and which the minister now says is legal as well. In a company which has 1,000 common shares with the par value of $1 apiece and 999,000 class A shares, preferred shares, with the par value of $1 apiece, the common and the A shares share equally in any profits, dividends, proceeds, capital gains and so forth of the corporation. Voting control is in the common shares which are held by Canadians, or most of which are held by Canadians, who simply act in a prudent manner but in effect are investing the $999,000 worth of share capital which has come in from abroad.

That is not going to trouble in any way any investors from Switzerland or Hong Kong or the United States or other people who have found all sorts of reasons for coming into this country. What the minister is outlining is a perfectly legal way by which they can come in and continue to do what they have been doing. What he is therefore saying, is that apart from the Detroit auto worker who will find it more difficult to buy a cottage along the St. Clair River, there is no effective deterrent in this 20 per cent tax to foreign money coming into Ontario real estate. This is why the questions which I’ll raise later about the values which are affected are very important, because if what he’s saying is a wide-open loophole to anybody, then why have the tax at all? It is not an effective tax, unless I’ve grossly misunderstood the minister.

Hon. Mr. Meen: We can debate this thing, I suppose, until the cows come home, but the fact is that what we’re trying to get at is some handle on foreign control of our real estate.

Following the observations made by the hon. member for High Park yesterday I observed that we might want one day, and maybe not before very long either, to take a look at the element of beneficial ownership, the true beneficial ownership. I’m not suggesting that it’s a legitimate loophole; I’m suggesting that that’s one mechanism which on its face could look that way.

If in fact, however, those wealthy people over in Switzerland or West Germany or Hong Kong, or wherever the money is coming from into the class “A” shares, are telling the Toronto-based management firm which is holding the common voting shares what they want done with the company which they, the non-residents, really own because they have that beneficial ownership, then it’s a very good question, say my legal advisers, as to whether they are not controlling the corporation. Whether the de facto control is in the hands of non-residents might well be held to be the case, even if on the surface the patent control were in the hands of a few common shareholders who are managing the corporation.

If they wish to try it, I suppose one might say: “Be my guest.” That’s the approach we’re taking right now, concerning the basic element of control, while at the same time having an eagle eye out, alerted, as others have also alerted me before the member for High Park for that matter, to this kind of potential sway, or as some have described it, a loophole in the Act.

I have yet to see one that really is one. I think they’re the figment of some people’s imagination. By the time we have issued our body of regulations with definitions, by the time we have worked our way through the Act with the amendments which I will be proposing, I would hope that we have an Act that is not fraught with difficulties. I don’t for one minute minimize the possibility of loopholes being discovered by clever tax lawyers, by clever chartered accountants. That’s, you might say, part of their business.

It’s a hazard of running government too, that we pioneer new legislation like this. We won’t be surprised if it turns out there are some deficiencies that have to be remedied by amendments to regulations. As I said during the course of my reply yesterday, I might even be back before this session rises for the summer vacation with an amendment to the legislation if I found it necessary; or, if it were possible, to do the necessary elements by amendments to the regulations throughout the summer and be back in the fall almost without doubt with some amendments to the Act.

Mr. E. Sargent (Grey-Bruce): In other words the minister is going on a fishing expedition.

Mr. Cassidy: Well Mr. Chairman, I suggest we pass the amendments the minister suggested. I have a couple of proposed amendments to sections (1)(f) which would attempt to cover the problem that I have raised. And I offer this in a helpful spirit rather than a combative one.

I agree with the minister that the de facto question may be other than the de jure question. The problem is, of course, that you have to do this in a legal manner. If control is in Canadian hands, even though it’s with only $1,000 worth of shares, your alternatives may well be to ultimately come up with a clause as the federal Department of Revenue eventually came up with in cases of dividend shipping and -- what is it? -- bond washing and that kind of thing. It simply said these situations exist where the minister deems they exist, or in this particular case that a company is foreign-controlled where the minister says it’s foreign-controlled.

I wouldn’t propose that amendment right now, but the minister might eventually come to that in order to cover some of these situations where foreign money is hiding under a cloak of control of friendly lawyers or real estate people in Ontario.

After all, many of these people say: “Look, buy us a couple of apartment buildings; as long as the return is above six per cent a year we are happy.”

They don’t care where they are; or what they are like. They trust the people locally to come up with a reasonable kind of investment and they take no further interest in it. It’s managed in Ontario. It hots up our market, but they don’t actually exercise control in terms of making day-to-day or month-to-month management decisions.

Mr. Chairman: The hon. member for Kitchener.

Mr. Breithaupt: Mr. Chairman, I am rather surprised at the turn the debate has taken, most particularly because it would appear the minister in his comments has acknowledged that in fact there are immediate ways around the whole principle of this bill. I think that his advisers could well be used this afternoon to deal with the matter of beneficial ownership so that this problem is considered by the House before we pass the various sections of this bill in committee.

Surely the most important problem facing us is that of beneficial control. Now, as the member for Ottawa Centre has mentioned, the point of beneficial control and the setting up of a class structure of shares was already raised by the member for High Park. The minister is aware of the comments concerning the matters of trust, but I think he would be naive if he thought the situation in which a company could be placed through presumed ownership by Canadians would, in fact, resolve the matter of foreign capital control.

If it is the minister’s wish to resolve this matter and effectively to tax, at least to the higher rate, those persons who are non-resident Canadians that intend to invest in Canada, he would be well advised now to review the matter of beneficial ownership.

It is surely not enough to say that the fact that three of five common shares in a private company are owned by Canadians will be enough to avoid the payment of the tax, if that is the principle that we are supposed to be following in this bill. There are immediate ways around this problem. As soon as we define the situation the minister hopes to cover, there will be means of subverting the principle of that definition by those persons who are either learned in the law or are clever in the matter of accountancy and such other tax matters.

I think the member for Ottawa Centre is correct in his assumption that what we have done today has really been to outline how to avoid the implications of this Act. The fact of Canadian share ownership, where there are a small number of common shares, is not going to resolve this problem.

It is not going to resolve it in the same way that the matter of effective directorship of Canadian corporations cannot be resolved by the simple fact of naming Canadian citizens as more than half of those persons who are directors.

We are all well aware that there are problems that can be easily raised and situations, really, which can effectively be avoided by having tame directors, as we will be having in this case by having tame shareholders who may have some technical control and ownership of a small number of common shares in a private company.

That company can give various securities. It can go into the class share situation to which the member for Ottawa Centre referred. It could, by the granting of its own securities, by a promissory note with a reasonable interest return, by a personal trust situation so far as the ownership of the shares was concerned, by any kind of an obligation or indenture on the assets of the company, avoid the fact of ownership. I think these matters should be considered by the minister.

If in our interpretation section we are to define particularly the non-resident corporation, then to be complete I think we have to include the matter of beneficial ownership. The minister has proposed an amendment to subsection (f) in which he refers to the control of 25 per cent or more of the voting rights and he refers to the fact that in this situation these are, “voting rights ordinarily exercisable at meetings of the shareholders of the corporation.”

In this subsection, Mr. Chairman, we have the circumstance of this ownership of voting rights, which perhaps could only come up in case of certain default by common share situation. In other words, again it is the problem the member for Ottawa Centre has raised -- the matter of some kind of class shareholder ownership which would allow parity of involvement, perhaps, as far as the classes of shareholders are concerned; or would involve the large dollar volume of shareholders having effective control as soon as any minor term in the preference items, which would be attached to their shares, might be breached by the operation of the ordinary shareholders or the management of the company.

Many of these things, of course, are done in matters of trust by a real estate company, a management company, a law office, a chartered accountancy office. All of these individuals are regarded by foreign investors, because of their own professional approach, as being fairly secure persons to whom to give these rights and these trusts. The foreign investors realize they would, of course, have certain professional and ethical controls over any defalcation or failure to live up to the terms of a trust agreement for which any of these various Ontario professionals might be responsible.

I think, as I have said, the matter of beneficial ownership is going to be the real bugbear in this situation. If the minister is prepared to consider now or virtually immediately a further amendment which is going to resolve this matter he will, I think, be able to control this in the way in which he sees it should be controlled. He and I may disagree as to the eventual result or the various ways of doing it, but I do suggest, Mr. Chairman, that the minister consider the beneficial ownership matter. If he does not, his method of attempting to control this point will not be the effective one he seeks.

Hon. Mr. Meen: Mr. Chairman, I appreciate the observations made by the member for Kitchener. What I was trying to say was that I had raised the question of beneficial ownership with my advisers to determine whether to attack this sort of situation was, perhaps, an appropriate course of action to follow.

What my people point out to me is that we have incorporated into the Act -- I’m getting ahead of the story really because we haven’t got to this yet. If the members would like to look at subsection (2) of section 1, we lifted a definition of control from the constrained share provisions of the Canada Corporations Act; if I may just read to them this section:

For the purposes of subclause v of clause f of subsection 1, “control” means control by another corporation, individual or trust that is in fact exercising effective control, either directly or indirectly ....

This is what I was saying earlier, that if it can be shown that if those equity investors in the class A shares were in fact exercising effective control, regardless of how that could be shown -- and I don’t minimize the difficulty attached to this aspect of getting at this kind of subterfuge -- nevertheless if it can be shown that such constitutes effective control, then indeed it has become a non-resident corporation for the purposes of those sections.

So it isn’t necessary at this time to try to come up with some kind of definition of beneficial interest or control by those having a majority of the beneficial interest or whatever, and I think the hon. member for Kitchener can recognize some of the immense complexities that we would face.

So, having tackled this situation presently by way of a definition of control and taking the course of action found desirable in the Canada Corporations Act along the same lines, I believe we’ve tackled it in the right way now and that if we were to try to simply put in a definition of beneficial control without rethinking many of our other provisions, we could have a meaningless section in the Act. I would recommend against trying to do that at this time, recognizing that we will, over the next few months, have some time to analyse the nature of transactions that come to our attention, the nature of material that comes through the registry office, and we may very well then have a better idea of how to get a handle on it, if indeed it is necessary to go any further than we are going at the moment.

Mr. Breithaupt: It would appear, Mr. Chairman, that the minister might then consider that the Corporations Information Act is going to have to be amended so that the ownership of all shares or obligations of the company may have to become a record, if not a public record at least information available to the ministry. Because if you are going to be able to review the changing obligations and the possibility of control and its definition, you may well have to require that additional information in order that at least there will be, coming through your companies branch each year in the Ministry of Consumer and Commercial Relations, some flow of information dealing with other obligations of the company that might lead you to suspect that control was effectively elsewhere than in the three names of the three shareholders who appear in the ordinary return.

Hon. Mr. Meen: I would just say, Mr. Chairman, I think that is a rather interesting observation that my colleagues and myself might look at.

Mr. Sargent: Mr. Chairman --

Mr. Chairman: Is it on this point? On this amendment?

Mr. Sargent: Yes. Mr. Minister, I don’t think you have any control whatsoever insofar as your whole Act is concerned with regard to non-resident corporations or non-resident persons. I think your definition of the various mechanics defeats what we in the opposition would like to see. In effect we are closing the barn door too late. But even this isn’t meaningful at this time and place here.

Hon. Mr. Meen: Out of order.

Mr. Sargent: Limitations on how much land an individual may own --

Mr. Chairman: Order. Order.

Hon. Mr. Meen: This is not really germane to this section, Mr. Chairman.

Mr. Sargent: Well --

Hon. Mr. Meen: If the hon. member had wanted to talk about the principles of this bill I would have welcomed his observations during second reading, but we are now into committee of the whole.

Mr. Chairman: We are dealing with an amendment to subsection (1), clause (f).

Mr. R. Gisborn (Hamilton East): Give him an hour because he wasn’t here the other day.

Mr. Sargent: I wasn’t here. I had to leave for the other committee; and I’m sorry but I want to register my opposition to this whole piece of legislation.

An hon. member: Oh, knock it off.

Mr. Chairman: No; but the hon. member knows he is out of order.

Hon. Mr. Meen: The member can’t do that.

Mr. Chairman: We have dealt with the principle of the bill in second reading. We are now in committee of the whole House dealing with clause by clause, so a general discussion --

Mr. Sargent: I submit respectfully that, regarding the control facts he is talking about, if your aim is bad to start with, then we are talking about bad control.

Mr. Chairman: Actually, it seems to me that’s under the general principle of the bill, which has been carried.

Mr. Sargent: Mr. Chairman, in this section of the bill he is talking about non-resident corporations and non-resident persons.

Mr. Chairman: We’re dealing with an amendment to this particular subclause.

Mr. Sargent: Subclause (f) refers to non-resident corporations and subclause (g) to non-resident persons.

Mr. Chairman: If you have some comment to make about this --

Mr. Sargent: If you will just keep quiet for a minute, I can --

Mr. Chairman: Order, please. It seems to me you’re discussing the whole bill in general, which is out of order.

Mr. Sargent: It seems to me that every time an opposition member gets up to speak, you interpret what he’s going to say and block him off.

Mr. Chairman: Does the member wish to discuss this amendment or shall I rule him out of order?

Mr. Sargent: Pardon me?

Mr. Chairman: Does the member wish to discuss this amendment? If not, he’s out of order with any further comments.

The member for Ottawa Centre.

Mr. Cassidy: Mr. Chairman, I just want to pursue what the minister had to say. I can see the point he makes about control, that there are certain powers of discretion in deeming control to be in the hands of foreigners. I would suggest, though, that it’s still possible, even if that clause is effective, for very large quantities of foreign real estate money to come into this country.

There is clearly some difference between his party, as a government, and our party as to the desirability of having that kind of money coming in essentially for non-productive purposes, given that the supply of building materials, of land and other things are domestic, are limited and cannot be greatly increased by import of things from abroad.

The member for High Park, the member for Riverdale and myself could set up a real estate investment corporation entirely owned and directed by Canadians, but in which 98 per cent of the shares were sold to any number of foreign investors who wished to have participating shares with non-voting rights, and it would be quite legal, according to this particular provision. For that matter, as the minister has already indicated, the 49-51 per cent deals would continue to be permissible, and in fact would be encouraged.

Given the fact that only $300 million is involved in foreign investment out of the $10 billion or $12 billion that changes hands in the real estate market in Ontario in a given year, it would be quite simple for foreign investors to find Canadian partners who would take a 51 per cent share.

None of that is discouraged by this particular bill, and the bill therefore gets to only a very small part of the problem.

I would like to ask the minister about the constitutionality of taxing non-resident corporations in view of the points he raised about Prince Edward Island and the constitutionality of other measures during the course of the second reading debate. Specifically, I had understood that the PEI bill had been upheld in the PEI Supreme Court and was now being appealed to the Supreme Court of Canada.

Hon. Mr. Meen: You’re wrong.

Mr. Cassidy: Is that not correct?

Hon. Mr. Meen: No.

Mr. Cassidy: I beg your pardon. That was my understanding.

Mr. Renwick: Are the reasons for judgement out?

Hon. Mr. Meen: I can’t answer. I don’t know.

Mr. Cassidy: Perhaps you could ask the officials to find out, because the constitutional grounds that hindered the ministry from imposing a ban on non-resident ownership or acquisition of property didn’t seem to interfere in making this particular bill.

Hon. Mr. Meen: I heard what the hon. member said, but I’m wondering if he really heard what I said. What we were talking about is the constitutionality of the province to levy a tax on real estate. I say there’s nothing wrong with that. We all know we can do that. And, in fact, we can have different rates for residents and non-residents.

Mr. Renwick: It’s not quite as easy as that. You are not levying a tax on real estate.

Hon. Mr. Meen: All right. If you levy at such a level that in fact it could be treated as confiscatory -- and our advice and the advice to the select committee on economic and cultural nationalism was potentially the same, I understand -- if you get up to the level of 50 per cent or 100 per cent of a purchase price, whereby you are increasing the purchase price payable by a non-resident or a foreigner by 50 per cent to 100 per cent, you are then dealing in an area which is within the constitutional competence of the federal government and not within our constitutional competence. That is the grey area on which constitutional lawyers have some real arguments. We were not anxious to create the kind of economic turmoil in our economic community that would arise if we endeavoured to do that at this time.

Mr. Renwick: It is not only grey; you are seeking in the dark.

Hon. Mr. Meen: What we are doing is imposing a tax on non-residents, whether they be Canadians or nationals of other countries, at a rate which is substantial but not confiscatory. That’s the purpose of setting the figure at this time at 20 per cent. It also signals the general direction in which we are thinking with respect to our national heritage, the land we have around us.

The other point made by the hon. member for Ottawa Centre and the islands concerns discouragement of foreign money. I’m not suggesting that we are discouraging foreign money for all purposes. No one has suggested that. If we can simply discourage it from getting into the real estate investment field and prick that investment balloon from that quarter, their monetary investment interest will be directed elsewhere --

Mr. Renwick: The Ottawa member is smiling about it.

Hon. Mr. Meen: -- probably, if they still want to settle that money here in Ontario, which we hope they would, into mortgage securities, into bonds and debentures, into the equity investments on the stock exchange if they like that. But we hope this will reduce the upward pressure in the real estate market brought about by the very real presence of a lot of foreign money here in Ontario at the time.

Now again the hon. member for Ottawa Centre and the islands is straying from subsection (f) and the amendment which we proposed, But perhaps since he missed my reply in the House yesterday on second reading it is worthwhile simply having repeated it.

Mr. Cassidy: Mr. Chairman, it seems to me that a tax which according to the budget would be of 87 per cent to a public corporation on the capital gain from a land deal, and would be higher if one took into the account the 20 per cent tax in the case of a public corporation controlled by non-residents --

Hon. Mr. Meen: I believe the net result, when you take into account all the credits available and the way in which they are applied, works out to something like 95 per cent.

Mr. Cassidy: Well now, a tax which is 95 per cent of the profit might be deemed to be confiscatory. A tax which is 50 or 100 per cent in addition to what you pay confiscates nothing.

There was no obligation on the corporation to pay that tax because they don’t have to go through with the deal. When they do go ahead with the deal they have an asset, only they’ve had to pay more for it. I simply reject the minister’s argument -- I don’t want to dispute it ait length -- I reject that argument as having any validity at all.

Mr. Chairman: Anything further on this amendment? The member for Riverdale.

Mr. Renwick: Mr. Chairman, I think the minister is going to find that in a number of cases, as the member from Waterloo has said, the question is going to turn on the factual one of who controls the corporation. That’s going to be it.

Hon. Mr. Meen: No quarrel about that.

Mr. Renwick: From the point of view of the local land registrar, who is the collector, when the document comes before him, I think he’s entitled to have a much better kind of affidavit than this particular document which you have circulated as being an affidavit of residence under this particular Act. I think you are going to have to have four kinds of affidavits.

You are going to have to have an affidavit where the transferee is a corporation. You are going to have one where the transferee is a trust. I think you are going to have to have one where there is a partnership syndicate or other type of association; and one where the transferee is an individual.

I think the person who takes that affidavit is going to have to state in the affidavit that, in the case of a non-resident corporation or in the case of a corporation establishing that no tax is payable, it is not one of the types of corporations, and specify each and every one of them in the affidavit so it can be ticked off. Because it may very well be that at some point the examination by your auditors of the affidavits which are filed for the purpose of determining whether or not you have collected the tax which is going to be levied, will depend a great deal on being able to establish the specific accuracy of the affidavits. Particularly when you come to this question of control.

I make this other point because in corporate documents of any kind, and the minister is well aware of this, you have got to have a very clear statement as to who the officers of the corporation are who are going to make those affidavits, if in fact they are going to be made by the transferee if it happens to be a corporation.

I think somewhere in your regulations, when you prescribe the way in which these affidavits are completed, you are going to have to specify if it is going to be the president or the vice-president or two directors, or some people, when they look at it, are going to say: Is this accurate? You can’t have it in the way, as the minister knows, of a conditional sale agreement where the fourth assistant treasurer can sign it and get away with it and the senior officers would not be fixed with the responsibility.

I think the nature of the information which is being provided has got to be so clear in here that no agent authorized in writing and no solicitor will be able to hide behind the fact that it wasn’t specifically clear what he was attesting to. I think you are gradually going to find that, except in the ordinary turnover of house transactions, in any substantial real estate deals the solicitors are going to bow out of taking those affidavits on the back of the forms. I just emphasize that because, while the factual situations may be in certain of these definitions accurate, that factual question of control is very, very important.

I make another minor comment about the amendment which is now before us. I suggest, in the ecumenical spirit in which my colleague from Ottawa Centre is dealing with some aspects of this matter, that perhaps you require a consequential amendment to subsection (2) of section 1 of the bill, because you are introducing the term “control” into this amendment to item (ii)(f). It may well be that you need a cross reference in subsection (2) to subclause (ii) of clause (f) as well, because of your introduction in the amendment of the word “control”, so that you carry over into that subsection this question of control being a factual question. I haven’t gone into it in great detail. I make it for what it’s worth. Perhaps your advisers would look at it and see whether such an amendment is not a necessary consequential one to the proposed amendment.

Mr. Chairman: The member for Kitchener.

Hon. Mr. Meen: I wonder, Mr. Chairman, if I might just reply to those observations by the hon. member for Riverdale.

I couldn’t agree with him more with respect to the affidavit. We all think that We had to have a form of affidavit available on Day 1. It will catch and does catch 999 out of 1,000 of all of the transactions, I expect, to use a figure.

I would expect that we will have several runs at far more elaborate provisions in the affidavits as to who takes them. I think he’s quite right that there isn’t a lawyer who values his right to practise at the bar who is going to lightly swear one of these affidavits without ensuring himself as to the facts. Everyone is going to be very careful, as was pointed out in my notice to the profession, to which you referred earlier, as to the significance of this affidavit.

Mr. Cassidy: How many weeks did you spend preparing the bill, please?

Hon. Mr. Meen: It’s an interesting observation the member for Riverdale makes as to subsection (1) of section 2. I hadn’t thought about that, but my counsel can take a quick look at it and see if, because of this amendment, perhaps we should take another look at the definition of section 1, subsection (2), in light of my amendment, which does bring into question the de facto control of the corporation.

Mr. Chairman: The member for Kitchener.

Mr. Breithaupt: Just a point, Mr. Chairman, with respect to the amendment the minister has moved to subsection (1)(f) clause (ii); it’s interesting to see that he is including in his non-resident corporation the situation with respect to 25 per cent or more of the voting rights.

I am wondering, though, why he feels the necessity of bringing in this additional subsection. It would seem to me that what he is doing is saying that where he is satisfied that it shouldn’t apply, it won’t apply. Well if that is the case, surely the statement could be proven before the minister, or before the courts. If the matter was raised, the matter would resolve itself.

Why doesn’t the minister feel that it is necessary to bring in this saving clause? Is it solely because of the matter that he wishes to have his discretion exercisable at this point? Is there some other particular reason?

Hon. Mr. Meen: No, Mr. Chairman. Actually, I would rather have as little discretion on this as possible and I would like to spell it out as accurately as I could. But on the other hand, when people point out to you that it is entirely possible that one person, say a non-resident, could have a 25 per cent interest in a corporation, but that the balance could be held by as little as one person with 75 per cent, then obviously that is not the kind of resident corporation we are trying to catch.

I would have no discretion whatever as this Act stands, that corporation by that definition would automatically become a non-resident corporation by virtue of having some minority shareholder -- with no capacity to control a corporation -- holding 25 per cent of the shares. Consequently, it seemed appropriate there should be some flexibility in here to look after what I would suppose would at least apply to some Ontario resident corporations which have, for whatever reason, some block of shares held by a non-resident.

Mr. Chairman: Will this amending motion carry?

Motion agreed to.

Mr. Chairman: Is there anything further on section 1?

Mr. Cassidy: Yes.

Mr. Cassidy moves that section 1 of Bill 26 be amended by adding the following sections:

1(f)(vi) Of which more than half the value of all classes of shares is owned or controlled by one or more non-resident persons as defined in this Act and;

1(f)(vii) Of which more than half the value of all issued capital is owned or controlled by one or more non-resident persons as defined in this Act.

Mr. Cassidy: The purpose of these two extra clauses is simply to present more clearly the questions of thin capitalization which I have raised.

I think the minister will agree that the section which we just amended, 1(f)(ii), in fact would be covered by subsection 2 -- the general question about whether it is a factual aspect of control or not. The reason that 1(f)(ii) -- if I can get down to it -- was put in was so that you had a set of rules which were fairly automatic and you did not have to sit down and prove control in every case; unless they could produce compelling reasons to the contrary, then when 25 per cent of the shares were in one person’s hands, you deemed that that person, if they were non-resident, had control.

I’ll send over those amendments; I am sorry.

Hon. Mr. Meen: While that is going about, I must confess that I am hearing the hon. member, but I am not comprehending. Could he go through that again?

I thought we had picked up the various definitions which we have found within the constraint share provisions of the Canada Corporations Act and also the Foreign Investment Review Act of Canada, which have definitions. We have used them and taken what I thought were all the various possibilities and essential criteria necessary to identify a foreign corporation; so I am really not at all clear on just what the hon. member is saying.

Mr. Cassidy: Okay; subsection (f), which defines a non-resident corporation, could in fact say non-resident corporation means a corporation incorporated in Canada controlled by non-residents. Then the definition of control would be what you have in subsection (ii).

Hon. Mr. Meen: Could I ask how he would define the value of shares?

Mr. Cassidy: Pardon?

Hon. Mr. Meen: How would the member define the value of shares?

Mr. Cassidy: Well, the value of shares is the paid-up capital or the fair market value if there is no --

Hon. Mr. Meen: But they move from day to day. There is no certainty in it.

Mr. Cassidy: Not in the paid up value, it does not move; nor does the initial amount tendered for those shares vary. The point about that is the minister has in fact inserted on page 3 -- the top clause -- the similar kind of thing, as value of course would vary from day to day, when he states that a partnership of more than 50 per cent of the value of the property is held for or by non-residents.

Hon. Mr. Meen: But you see --

Mr. Cassidy: You are running into the same problems. You have spent zillions of dollars on your experts --

Hon. Mr. Meen: Right.

Mr. Cassidy: If you think you can do those clauses in a better way I’d be happy to see those proposals. I am saying, though, that rather than wait for the Canada Corporation Act clause to apply you should spell it out wherever possible, and this is an attempt to do so.

Hon. Mr. Meen: When you are talking about real estate you are talking about the time of the application of the Act, and of course there is an evaluation which can be established on that. What I am worried about is how one establishes the value of all classes of shares owned or controlled by certain persons. They may have different values for certain people, depending on what they can do with them.

Mr. Cassidy: But presumably at the time of the transfer tax being paid --

Hon. Mr. Meen: Although commendable in a sense, I think it would cast so much grave doubt as to what a corporation was from day to day -- a resident or non-resident corporation -- that we have to have something far more definite than the value of the shares owned or controlled by one or more non-residents.

Mr. Renwick: Mr. Chairman, I recognize that when a proposed amendment is put forward we do not have either the time or the skills necessary to put it into the precise language to cover the precise point. The points which are made by my colleague from Ottawa Centre on this question are directed to assisting the minister. The member for High Park gave an example yesterday and I don’t need to repeat it. The minister indicated, I think mistakenly or much too readily, that it was a loophole in his Act. What the hon. member for Ottawa East --

Mr. Cassidy: Centre.

Mr. Renwick: -- for Ottawa Centre is saying is that half the value of all classes of shares is owned and the value, I take it, that the hon. member for Ottawa Centre is referring to is the paid up capital value of those shares.

That is, in the case which the member for High Park spoke about, the actual number of dollars to buy that piece of land is going to come from abroad. He wants to make certain that if that system is used you don’t just look at those shares carrying the voting right under all circumstances, but you look at the question of the value of all the shares for the purpose of delimiting this vexed problem of ascertaining where the control is.

I am very interested that the minister put forward the proposition that he and his advisers looked at the Foreign Investment Review Act of the federal government. I suggest it is entirely different and you have to be much more particular and much more precise when you are talking about speculation in land. You are dealing with speculation in land, where the conveyancers are very careful; the conveyancers have immense expertise. It is a very abstruse art and the corporate lawyers are getting to be as abstruse as the conveyancers in finding their way around these problems.

That kind of thing would mean to me that the definitions in the foreign takeover bill are quite different and serve a different purpose, and it is done openly and in the public. Here you are dealing with something which is going to depend entirely on a document furnished to a local registrar of title, who isn’t going to be able to go behind the document. Therefore, it seems to me, you would be well advised to look at this amendment. Did you move both amendments?

Mr. Cassidy: I moved both amendments as one.

Mr. Renwick: Look at both the amendments in order to make certain that you have tightened up the area or ruled out the area in which you are going to have to decide this question of control.

Certainly the question of the value of all classes of shares can be related to the paid-up capital account of the company. You already levy a paid-up capital tax in the Province of Ontario and you have a definition of paid-up capital in that Act which includes loans and moneys advanced by way of loans for the purpose of the paid-up capital tax under the Corporations Tax Act. Similarly in the second amendment, where my colleague deals with half the value of all the issued shares of the company, the same argument applies.

Please do not close your mind to it. The amendments are put forward for the purpose of delimiting the problem which you are obviously going to face if you want this Act to be efficacious so far as the basic question of control is concerned.

Hon. Mr. Meen: Yes, I agree that I do not want to close my mind to any of these. Quite honestly I think that we are going to have to look at some other definition such as this before we are finished in order to accomplish the end this Act seeks.

We have a general provision in subclause (v) dealing with controlling, directly or indirectly by one or more non-resident persons, including a non-resident corporation within the definition. I think it gets right down again to the de facto control of the corporation -- which way it happens to have control.

I am not going to toss out these amendments. They are going to stay in my file and I will discuss them with my colleagues and see if there is some merit in incorporating something of that sort in some of our regulations in order to define with greater particularity just what does or does not constitute control.

Hon. members will doubtless have more to say on this subject, but they probably already have noticed that the regulations, as provided for under section 18, give the minister a fair amount of discretion as to the way in which this Act may be enforced and interpretations that may be placed in sections such as this, particularly in subclause (g). That’s one I think we might be able to take a look at later. I am reluctant to accept it now though, for obvious reasons. Our counsel won’t have had a chance to consider the implications of those sections with respect to the others.

May I just mention, in reply to the hon. member for Riverdale, that we can adopt an amendment to subclause (2) as he has suggested -- I think rightly -- which would refer the exceptions here to the whole of subclause (f). I think when we get to that stage that would pick up the objection which the member for Riverdale rightly detected,

Mr. Cassidy: Mr. Chairman, I have to apologize to the minister, I have to catch a plane to my riding. I appreciate his comments. Will he accept from this side that the registrars are into a new ball game, because they have never had to look --

Hon. Mr. Meen: I’m sorry, would you say that again?

Mr. Cassidy: Your registrars of land titles have never had to look behind transactions in the past. They simply come in, conveyances are put before them, they levy the tax, they do what they have to do, and it’s over and done in a pretty simple kind of way. Now they are being asked to be experts in international finance and corporate structure and so on. The more guidelines you can give them that will allow them to separate put pretty quickly the 990 cases -- leaving only five or 10 out of 1,000 for the, ministry to delve into in the depth that is suggested by section 2 -- the better.

Therefore, if you can give them a rule that allows them to pounce on a company where, say, 900,000 shares are without voting rights but effectively amount to control and only 10,000 have the voting rights, by all means let them do that.

Hon. Mr. Meen: I don’t disagree with that, Mr. Chairman. I think we will be having a set of guidelines of that sort. Indeed, I believe they have them now within a limited quarter, and that whenever there is any question the matter would then be referred to the ministry for a ruling within the regulations.

Mr. Cassidy: Okay.

Mr. Chairman: We will now have to deal with these two amendments, or is there further discussion on them?

Mr. Renwick: Mr. Chairman, I just want to make one comment, stimulated as I always am by my colleague from Ottawa Centre. I don’t want to find that you are elaborating a large number of minute detailed regulations. If you conceptualize the question simply, in a large number of these cases you will find that one of the things which is done is to provide a separate corporate vehicle for each particular land transaction in many cases. And of course we now have these numbered companies under the Business Corporations Act.

I am suggesting that what you really want to look at is: He who puts up the money for the purchase of the building controls the company. That’s what you are talking about, and not some artificial elaboration of how the share structure may or may not be made up so that you have accomplished what you intend to accomplish.

That doesn’t necessarily apply in all cases of a large, diversified real estate development company. But where you have specific investments by foreign money in specific developments you will usually find that somehow or other they have a separate corporate vehicle for it. You want to look at where the money comes from; that is equivalent to control regardless of where the particular people happen to reside.

Hon. Mr. Meen: It’s entirely possible.

Mr. Renwick: If that’s it, maybe there is some simpler way rather than elaborating a large numbers of obtuse exceptions.

Mr. Chairman: Mr. Cassidy’s amendments must be dealt with now. Those in favour of Mr. Cassidy’s motion will please say “aye.”

Those opposed will please say “nay.”

In my opinion the “nays” have it. I declare the amendments lost.

Before we go on, Mr. Speaker has asked me to inform the House that he has received a notice in accordance with the provisions of standing orders 27(g) and 28 from the hon. member for Port Arthur (Mr. Foulds), which states that he is dissatisfied with the response given to his question yesterday by the hon. Premier (Mr. Davis). Accordingly he intends to raise the question of the regulation of Lake Superior on the adjournment of the House at 10:30 this evening.

Is there anything further in section 1, subsection 1? The member for Riverdale.

Mr. Renwick: My next comment is in the definition of value of consideration.

Hon. Mr. Meen: Yes, sub (m).

Mr. Renwick: Well I am rather old-fashioned about this. I like the wording in the old Act about the true amount.

Hon. Mr. Meen: I thought it was the same, frankly.

Mr. Renwick: No, no. “Setting out the true consideration for the transfer or conveyance” and “the true amount in cash,” and so on. It seemed to me that in this kind of a -- I don’t happen to agree with the Minister of Revenue’s interpretation of what the Treasurer said.

Hon. Mr. Meen: Could I have a clarification? Sorry to interrupt the member. I thought he was talking about value of consideration and that’s sub (m).

Mr. Renwick: That’s the one.

Hon. Mr. Meen: I don’t see the reference to which the member is now addressing himself.

Mr. Renwick: That is what I am speaking about --

Mr. Breithaupt: In the old Act.

Mr. Renwick: I am speaking about the old Act.

Hon. Mr. Meen: Oh.

Mr. Renwick: The old Act has that delightful word “true” in there. This is a revenue-producing statute, which we can come to when we get to section 2 of the bill, but the present Act states “setting out the true consideration for the transfer or conveyance” and “the true amount.”

Now somebody may say that is an over-elaboration and unnecessary emphasis in this modern day and age, but for the purposes of this kind of an Act I don’t think it hurts to emphasize that you want the true amount, not some arbitrary or otherwise determined amount -- particularly when there is nothing in this Act, as I understand it, for the purpose of ascertaining value; or am I wrong?

I am talking about when you state the consideration in the affidavit that supports the conveyance: Do you state the value? How do you come at the value? How do you come at the value of the encumbrance or charge, which is relatively easy; but how do you come at the value of any property or security exchanged for the conveyance of land?

Hon. Mr. Meen: We have the mechanism in the Assessment Act and through the assessment division of my ministry, Mr. Chairman. And under the definition of value of consideration I think we pick up the various elements that can go into making up the value.

Mr. Renwick: I am curious, by the way Mr. Chairman, what sort of additional administration are you going to have to set up to monitor this bill?

Hon. Mr. Meen: We estimate there will be additional bodies required within the present structure of the retail sales tax section of the ministry, but I am presently looking at a reorganization of that aspect and it is not possible for me to estimate at this time the additional people who will be involved. As time goes on expertise will probably mean fewer people, but at the present time it is going to be necessary for us to train a number of people to be able to assess these various elements in the transactions.

Mr. Chairman: Anything further on subsection 1?

Subsection 2:

Hon. Mr. Meen: On subsection 2, Mr. Chairman, I would follow on with the suggestion made by the hon. member for Riverdale.

Hon. Mr. Meen moves that section 1(2) of the bill be amended by striking out “subclause (v) of clause (f) in the first line so that it would read: “For the purposes of clause (f)”

Hon. Mr. Meen: For the purpose of clarification -- and I regret the form in which that amendment reached your desk, Mr. Chairman -- section 1(2) would then read: “For the purposes of clause (f) of subsection 1, ‘control’ means ...” etc., as in the section.

Mr. Renwick: We’re always glad to help, even with a perverse bill, Mr. Chairman. In the ecumenical atmosphere of the day!

Mr. Chairman: Shall the motion carry?

Motion agreed to.

Mr. Chairman: The hon. minister has a further amendment to this section.

Hon. Mr. Meen moves that section (1) of the bill be amended by adding thereto the following subsection:

(3) For the purposes of clause (g) of subsection (1), an individual shall be considered to be ordinarily resident in Canada if, at the time the expression is being applied;

(a) He has been lawfully admitted to Canada for permanent residence in Canada;

(b) He has sojourned in Canada during the next preceding 24 months for a period of, or periods the aggregate of which is 366 days or more;

(c) He is a member of the Canadian forces required to reside outside Canada;

(d) He is an ambassador, minister, high commissioner, officer or servant of Canada, or is an agent general, officer or servant of a province of Canada, and resided in Canada immediately prior to appointment or employment by Canada or a province of Canada or is entitled to receive representation allowances;

(e) He is performing services in a country other than Canada under an international development assistance programme of the government of Canada that is prescribed for the purposes of paragraph (d) of subsection (1), section 250 of the Income Tax Act, Canada, and resided in Canada at any time in the three-month period preceding the day on which such services commenced; or

(f) He resided outside Canada and is the spouse or child of, and is living with, an individual described in clauses (c), (d) or (e).

Mr. Chairman: Shall this motion carry?

Mr. Renwick: Mr. Chairman.

Mr. Chairman: The member for Riverdale.

Mr. Renwick: Again, I think the wording leaves a considerable amount to be desired. The amendment says, an individual shall be considered to be ordinarily resident in Canada if he falls in any one of those classes. I don’t know, I suppose I fall under item (b); I suppose the great bulk of the people in Canada fall under item (b).

Hon. Mr. Meen: I would expect so.

Mr. Renwick: That’s not the purpose of item (b), of course. If you’re going to be that definitive about it, then you’ve got to include something which deals with the great majority of people. And since I’m not any one of the other people who are involved in this -- has my friend from Waterloo sojourned here the proper period of time?

Mr. Breithaupt: Mr. Chairman, I’m --

Hon. Mr. Meen: He’s from Kitchener, not from Waterloo.

Mr. Renwick: The member for Kitchener.

Mr. Breithaupt: I think that does raise an interesting point, but I was more interested in item (f) because we refer to a number of “he’s” and then we refer to a further “he,” who is the spouse of one of the “he’s” referred to in (c), (d) or (e)

Hon. Mr. Meen: You know the Interpretation Act as well as I do.

Mr. Breithaupt: I was just going to inquire as to whether that was clear so that we were not getting too many “he’s” involved in this kind of situation.

Mr. H. Worton (Wellington South): How about a few “her’s”?

Hon. Mr. Meen: It does cover the “resided with” as well as “spouse of”, you will have noticed.

Mr. Renwick: You got my point, Mr. Minister.

Mr. Chairman: Shall this motion carry?

Motion agreed to.

Mr. Chairman: Is there anything on section 2? The member for Riverdale.

Mr. Renwick: My colleague, the member for Ottawa Centre, raised the point that this is the revenue-producing section of the bill. This is the section which imposes the tax, and I think it deserves a little bit of comment.

First of all, I’m intrigued by the minister’s suggestion that he is taxing non-residents here.

Hon. Mr. Meen: Actually, what we are doing is applying a tax in respect of non-residents but against the land, if the hon. member wants me to get a little more precise.

Mr. Renwick: Might I say that the constitution of the country in section 92, subsection 2, or head 2, says for the purposes of direct taxation for the raising of revenue for provincial purposes.

Hon. Mr. Meen: Right.

Mr. Renwick: You can’t impose an indirect tax. It is very interesting that if the transferor tenders the document because the non-resident is away out of the country he can claim against the non-resident for the tax. I question whether or not that isn’t an indirect tax, and whether or not you are not going to be faced with a constitutional question, because the person intended to pay the tax is, as the minister has said, and as has been obvious all along, is the non-resident transferee.

That’s the person who has to pay the tax, and if that is direct taxation within the province then I think it may leave itself open to some kind of constitutional case to establish it. I will be glad when the Attorney General (Mr. Welch) is briefed in that matter and a case goes to the Supreme Court of Canada for a decision as to whether or not this is a direct tax.

The second point I want to make is that the budget papers show that you raised an estimated $45 million last year under the land transfer tax. If my calculation is correct, that represents transactions in land in the Province of Ontario of between $7.5 billion and $15 billion, assuming my mathematics are right.

Hon. Mr. Meen: Say that again, would you?

Mr. Renwick: If you raised $45 million by a tax which varies between three-tenths of one per cent and six-tenths of one per cent, the maximum amount of the value of land which could have been transferred would be $15 billion if the tax had been all three-tenths of one per cent. At one-sixth of one per cent it would be $7.5 billion, so somewhere between --

Hon. Mr. Meen: On the contrary, your arithmetic is in the wrong direction, unless I misunderstand it.

Mr. Renwick: It probably is.

Hon. Mr. Meen: It would be $1.5 million if it were all at six-tenths.

Mr. Renwick: Well three one-thousandths of $45 million is $15 million, plus three noughts on the end of it, and that makes $15 billion. Six-tenths of one per cent would be half that amount, that is $7.5 billion. So there were land transactions in the Province of Ontario last year somewhere between $7.5 billion and $15 billion.

Mr. Breithaupt: Likely about $10 billion.

Mr. Renwick: Roughly say $10 billion, which is a lot of property to be transferred. The minister had said in his budget that you anticipate raising $120 million this year from this tax, of which, according to the Treasurer, the estimate is $60 million for this, roughly 20 per cent tax, technically 19.4 per cent or 19.7 per cent increased tax.

Therefore I assume that you arc anticipating sales of land to non-residents of about $300 million. If you anticipate raising, at 20 per cent, 60 million, you are obviously anticipating sales to non-residents of $300 million.

I am extremely curious as to where the figure of $60 million came from. Sixty million dollars compared to $10 billion is some percentage which I can’t quite figure out. Maybe three per cent or something like that. I don’t know what it is.

Hon. Mr. Meen: It sounds like nine per cent.

Mr. Renwick: Yes. But, when I make that calculation it is a meaningless calculation to me unless I know how you arrived at that estimate of $60 million, because I take it that the ministry hasn’t any idea whatsoever about the extent to which the $10 billion of transfers last year were in fact transfers to non-resident persons, who if the tax had been in force last year, would have been caught by this Act. Is there any information available as to how you determine the estimated revenue that the tax imposed by subsection 2 of section 2 is arrived at by this Treasurer?

Hon. Mr. Meen: Mr. Chairman, I have none available. I don’t know whether this was developed through his Ministry of Treasury and Economics, or whether prior to my coming on the scene in the Ministry of Revenue my ministry was able to provide certain backup information to his ministry of sales of the known nature. We know, of course, from the $45 million in revenue of last year that on the -- guesstimate I would suppose as much as anything else by the member for Riverdale -- $10 billion may not be out of the way. I don’t know whether we’ve dropped a digit in that calculation.

Mr. Renwick: No, you haven’t.

Hon. Mr. Meen: I have a notion it’s right.

Mr. Renwick: It’s right.

Hon. Mr. Meen: So if that is the case, then the $300 million estimated by way of sales to non-residents has to be a guess. It’s very small. If that’s three per cent of the total, then we would hope that it would be even smaller, because as the Treasurer pointed out we are not trying to raise --

Mr. Renwick: No, he didn’t. That’s very interesting.

Hon. Mr. Meen: -- $60 million by this. We would expect that some will continue to be raised. We can’t shut our eyes to the fact that this will raise some money. But quite frankly, if it starts raising a tremendous amount of money we might just decide that 20 per cent wasn’t a sufficiently large enough deterrent.

Mr. Renwick: You would just raise more money that way.

Hon. Mr. Meen: Well, maybe we would, or maybe we would reach, as the economists call it, the economic maximum return. It would be our goal in that case to reach --

Mr. Breithaupt: Point of diminishing return.

Hon. Mr. Meen: -- and exceed the point of maximum economic return in order to deter the same volume in dollars of purchases of Canadian real estate by non-residents.

Mr. Renwick: Well, Mr. Chairman, I want to correct a fallacy that the Minister of Revenue referred to yesterday and has referred to again on two occasions today --

Hon. Mr. Meen: Have I been wrong three times?

Mr. Renwick: -- that it was only with respect to the land speculation tax that the Treasurer of Ontario referred to the fact that it was not a revenue-producing tax. He was very careful not to make any such statement with respect to this particular tax. I am suggesting that no one in any of the government departments has any conception or has any way of collecting the basic information to find out to what extent of the estimated $10 billion in land transactions in the Province of Ontario was transfers to non-resident persons as envisaged by this Act. If the minister thinks he doesn’t know of any way in which the government would get this information, the only true test would be the land transfer tax, and certainly the information in the Ministry of Revenue with respect to the collection of tax doesn’t show that kind of a breakdown.

Hon. Mr. Meen: That is correct.

Mr. Renwick: Therefore, all I am saying is that I would be very interested a year from now to find out what that figure is.

Mr. Breithaupt: So will the minister.

Mr. Renwick: I am suggesting that in fact this is a revenue-producing tax, that the government intends it to produce revenue, that the Treasurer in introducing his budget -- I have a copy of the budget here if I can just find the precise section of it -- I think my colleague from Ottawa Centre took it -- he referred only to the land speculation tax as not being a revenue-producing tax. Now we will come to that when we get to the other bill.

This one -- this 20 per cent tax -- he expects will raise $60 million. The 50 per cent tax, in the land speculation bill, he talks of as raising $25 million. That’s the one he says is not revenue producing.

I am saying to the minister the very thrust of the New Democratic Party position in the debate yesterday was that this is participation by the government of the Province of Ontario in the increased price which will be paid for land by non-residents who will be quite happy to pay the extra 20 per cent.

There is a wide range of investment permitted under the Land Speculation Tax Act where no tax will be paid by the vendor under that Act and where it will be worthwhile for the purchaser paying the non-resident tax and purchasing land under the Act to pay the extra 20 per cent and not have to absorb the land speculation tax.

What I am saying is that I think the figure of $60 million is groundless. It cannot, in all charity, be characterized even as a guesstimate because there is no information on which to base a guess. The tax is estimated to go from $45 million to $120 million according to the table as set out in the budget papers.

Hon. Mr. Meen: Well, Mr. Chairman, the Treasurer estimates there will be an increase in the volume of real estate as our economy moves on.

Mr. Renwick: Well, that’s $15 million.

Hon. Mr. Meen: Every year has shown an increase in revenues in this area. So he expects the essential $45 million to aggregate, I gather, to $60 million. His economic advisers look at the state of the provincial economy.

Now, whether he derived his estimates of non-resident acquisition of real estate through other sources -- and there are many in the Ministry of Treasury and Economics -- I can’t say. I can say that within my ministry that information has not been available, to my knowledge at any rate, through our land registry system. We will be acquiring that and I, too, will be interested to see the information contained in our land transfer tax affidavit over the next year. In fact, we might even have something that we can look at within a few months’ time.

Mr. Renwick: That was my next question. Maybe by the end of June you can tell us.

Mr. Chairman, I would be very interested and would ask the minister to undertake, would he seriously consider before the House rises -- as I assume it will at some time at the end of June or early in July -- to let us know what the experience has been on the collection of this tax on the non-resident portion of the tax, say, for the first two months of its operation?

Hon. Mr. Meen: Mr. Chairman, if that information is readily available, I would have no hesitation in sharing it with the members of the House.

Mr. Breithaupt: Mr. Chairman, with respect to section 2, the member for Ottawa Centre was going to propose an amendment. I don’t know if it is going to be placed by the member for Riverdale at this point or not. But the amendment which the member for Ottawa Centre was going to make dealt with subsection (2) of section 2.

In that amendment, I presume it was the intention, as it states here, to raise in subsection (2) the matter of the 20 per cent rate to 100 per cent. I anticipate that the member for Ottawa Centre would comment on this as a possible means of effectively stopping this kind of investment.

It may be that amendment will not be put, Mr. Chairman, and I could only advise you that had it been put, I would not have been readily willing to accept it. I think the minister has commented on the matter of confiscation and the difficulties that would arise there. But a second and more important point, I think, is the one that would result from charging non-residents twice the price of anyone else who happened to be a Canadian to buy Canadian land.

Surely, if the 20 per cent figure is not effective, as some of us think it may not be in dealing with the matter of foreign ownership, then indeed to simply raise that total tax amount to 100 per cent only advises persons who are non-residents in Canada that they will indeed have to obtain a rather high return on their money to make the whole prospect worthwhile. If we are to be considering the economic and cultural nationalism committee and its report to this Legislature, then I think we have to consider the recommendation of that committee that foreign ownership, that non-resident Canadian ownership of our lands, should be no longer considered an acceptable situation within the Province of Ontario.

Accordingly if that is to be the case, Mr. Chairman, then we could amend subsection (2) of section 2 to allow the views of that committee to become the opinion of this Legislature.

As hon. members are aware, in the debate on second reading of this bill several members who had served on that committee entered into the debate, including the member for Victoria-Haliburton (Mr. R. G. Hodgson). There were comments with respect to the exact involvement and the exact items within that report upon which all members agreed, and certain particulars in which members did not bring in a unanimous report.

However, Mr. Chairman, I think that if we were to amend subsection (2) to ensure that the ownership of lands within the province was consistent with the report of the committee on economic and cultural nationalism, then the following amendment might be considered acceptable.

Mr. Breithaupt moves that subsection (2) of section 2 of the bill be amended so that all the words after the word “transferee” in line 3 be struck out and the following substituted: “shall contain an affidavit that the transferee is a Canadian citizen or has landed immigrant status.”

Mr. Breithaupt: Mr. Chairman, in moving this amendment I think that we have to look seriously upon the suggestions of the committee on economic and cultural nationalism. If standing and select committees particularly, are going to have meaning within the Legislature, then the reports that come from these committees have to be considered serious documents which have ordinarily received the consideration and the approval of the majority of members who have served on the respective committees.

Particularly when we are looking at select committees, we should surely be at the point where their reports, and the recommendations they make will be seen as influencing governmental policy. Because, Mr. Chairman, if they don’t influence that policy there seems little point in sending members around the province dealing with particular items. Those items are not only the ones of economic and cultural nationalism, they can be anything from the use of our educational resources, to drainage, to snowmobiles.

I think, Mr. Chairman, if we are serious about the work which that particular committee has done, then the House should give serious consideration to this amendment. I believe the amendment would have the effect most Ontario citizens would like to see, to welcome foreign capital in certain particular forms, but to advise that the future development of our province is to be by our citizens and for the particular benefit of our citizens.

I believe that, obviously, we must encourage capital of various forms to enter into the Canadian economy so that our economy can be further built up. But surely that development must be on our terms. That development must come in ways which are acceptable to us as Canadians and also as residents of Ontario.

I think it is quite clear that the economy developing in Canada is surely going to be one of the most important and the most powerful in the world within the next 20 or 30 years, particularly because of our availability of resources and the abilities of our people to deal with a very favoured part of Canada.

We can’t continue to give away our resources, as my colleague from Nickel Belt (Mr. Laughren) has mentioned, but we also, of course, have to strike a particular balance and a very careful one as we look upon the development of our own resources and economy.

Accordingly, Mr. Chairman, I hope that this amendment may find favour within the House, because I think that it might be a more effective way of dealing with a portion of this problem rather than advising persons who wish to purchase items in Canada that if, they are non-residents the price has gone up 20 per cent. In effect, we would still be bargaining away our resources without keeping the kind of control that we should have over them.

Mr. Chairman: Perhaps we should place the motion first,

Mr. Renwick: Would the hon. member for Kitchener read the section with the changes as he proposes the amendment? I can’t quite follow it.

Mr. Chairman: I haven’t placed the amendment yet. Perhaps it would be clear if I were to place it.

Mr. Breithaupt moves that subsection (2) of section 2 of Bill 26 be amended so that all the words after the word “transferee” in line 3 be struck out and the following substituted therefor: “shall contain an affidavit that the transferee is a Canadian, citizen or has landed immigrant status.”

Any discussion?

Mr. Renwick: I take it that perhaps I am a little bit obtuse. Because of my colleague speaking with me at the time, perhaps I wasn’t paying attention as closely as I should have been. Is the intention of this amendment, in fact, to reverse subsection (2) entirely and to provide in substance that you are proposing the implementation of the recommendations that are contained in the select committee studies?

Mr. Breithaupt: Yes, that is correct, Mr. Chairman.

Mr. Renwick: Well, then, I would assume that we in this party would have no difficulty in supporting that amendment. The reasons are quite clear. I referred a little while ago to the spurious nature of the $60 million anticipated revenue from this particular tax put forward by the Treasurer. The second thrust of the debate of the New Democratic Party yesterday on this bill, and the day before, was with respect to the implementations of the substance of the recommendations of the select committee on economic and cultural nationalism.

Strangely enough, with all of the caveats which are involved in it, apart from the concern of some of the Conservative members of that committee about some minor delay, no one objected to the major thrusts of the report. The essential nature of this report requires that something be done to ensure the continuing Canadian presence in real estate in the Province of Ontario. And the other necessary concomitant part of it is the exclusion of others from participating in it.

We will certainly support that amendment and I may say that I assume this meets the wishes of the hon. member for Kitchener, but in any event we would not agree to stack this vote. It would be our way of indicating quite clearly that we continue to oppose this particular bill and we are now focusing our attention upon the specific taxing subsection of section 2, which imposes the tax. We would therefore call for a vote on this amendment.

Mr. Breithaupt: Right now?

Mr. Renwick: Right now.

Mr. Chairman: Are you ready for the motion?

Mr. J. F. Foulds (Port Arthur): Unless, of course, the minister is going to accept it

Mr. Chairman: Does the minister wish to respond?

Hon. Mr. Meen: Yes. Mr. Chairman, obviously I can’t support this position. It flies completely in the face of everything that I said in my reply on second reading. We cannot undertake something that is without our constitutional competence to have such a provision. I am going to repeat all the arguments I advanced yesterday. The hon. member for Kitchener was in the House during, I think, part of that debate yesterday afternoon. I am not sure that the member for Riverdale was here at that time. But in any event I cannot accept it. Our provisions here we believe are within our constitutional competence and I would urge the House to reject the amendment at this time.

Mr. Chairman: Order please. We are considering a motion by Mr. Breithaupt. Mr. Breithaupt moves that subsection (2) of section 2 of Bill 26 be amended so that all the words after the word “transferee” on line 3 be struck out and the following substituted: “shall contain an affidavit that the transferee is a Canadian citizen or has landed immigrant status.”

The committee divided on Mr. Breithaupt’s amendment which was negatived on the following vote:

Clerk of the House: Mr. Chairman, the “ayes” are 32, the “nays” are 52.

Mr. Chairman: I declare the motion lost and the section carried.

Section 2 agreed to.

Mr. Chairman: Any comment, question or amendment on sections 3, 4 or 5?

Mr. Renwick: I couldn’t possibly miss the opportunity of speaking when we have such a large audience.

Mr. Chairman: On which section?

Interjections by hon. members.

Hon. A. Grossman (Provincial Secretary for Resources Development): We’ll fix that in a minute.

Mr. Chairman: The member for Riverdale, on which section?

Hon. Mr. Meen: Could I ask what section?

Mr. R. F. Nixon (Leader of the Opposition): Any section.

Mr. I. Deans (Wentworth): Three, four or five? That is what be asked.

Mr. Chairman: On section 3, 4 or 5.

Mr. Renwick: Mr. Chairman, a minor comment on section 3. Section 3, for practical purposes provides no change, as I understand it, from the --

Hon. Mr. Meen: It is a modification of the old Act to adapt it.

Mr. Renwick: A minor modification of the old Act, but in substance you don’t intend to change any collection or reporting procedure with respect to the amount of tax paid so far as the responsibility of the collector is concerned.

But on subsection (4), I am really concerned about two aspects. One I touched on earlier this afternoon, and that is the immediate necessity of revising the affidavits with respect to residence to provide adequate protection for the Treasury to assume collection of the tax.

At the time the land transfer tax was an internal operation conducted mainly by the legal profession, and the tax was not a matter of great moment and there was little opportunity for evasion, this was not important and you could rely on affidavit evidence at the time the conveyance was tendered for registration to make certain that the tax was paid.

There was no problem. I doubt if there was very much fraud or misrepresentation with respect to collection of the tax.

There is an immense incentive now to retain lawyers and others with great expertise to avoid this tax. If that is the case, then I refer to the comments made somewhat earlier about the nature of the affidavits which should be framed to make certain persons swearing to the affidavits are fully aware of what they are swearing to and to make absolutely certain that to the extent that the transferee corporation is swearing the affidavit, you get the responsible officers to be the ones who must swear the affidavit and to make certain that the proper tax is paid.

I note it is very conveniently tucked away in this particular section, but I raise again that this is the section which says, when the affidavit is made by the transferor or his agent or solicitor, the transferor is personally liable to the Crown jointly and severally with the transferee for the amount of the tax. It is a joint and several liability imposed upon the transferor, that is, the resident in Ontario or the non-resident and the transferee who is the non-resident. There is a further provision that if the transferor is the one who has to pay he has got a right over against the transferee to collect the tax.

I am suggesting that the government is inviting a constitutional challenge to the tax on the basis that it is not direct taxation within the province in order for the raising of revenue for provincial purposes as required by the British North America Act, because the intention of this Act is that the non-resident will pay the tax. The event which triggers the tax is tendering the conveyance. It is not a tax on land; it is not a tax on the document which is tendered; it is a tax payable by and intended to be payable by the non-resident person. You are imposing a tax on a person beyond the jurisdiction of the province. I am suggesting to you --

Hon. G. A. Kerr (Solicitor General): Everybody pays.

Mr. Renwick: -- that you have invited a challenge because it is not the person who tenders the conveyance who is liable for the tax, because normally the person who tenders the conveyance is either the solicitor who closes the transaction or the agent --

Hon. Mr. Kerr: The purchaser pays.

Mr. Renwick: Sometimes the purchaser’s agent. I am simply saying that the person who in his personal capacity appears at the registry office and tenders the document, which is what triggers the tax, is not the person who is liable to pay the tax The person who is liable to pay the tax is the transferee, and the transferee who has to pay the tax is a non-resident.

Hon. Mr. Kerr: He pays more. Everybody pays; he just pays more.

Mr. Renwick: The non-resident has to pay this particular tax. He has to pay more but he has to pay it under a different subsection than a resident. I am simply suggesting to the ministry that, quite properly, they have said when the transferor or his agent or his solicitor tenders he is jointly and severally liable. That is a protective provision to protect the Treasury.

The intention of the bill is to impose a substantial increase in tax at the rate of 20 per cent under a separate section of the bill on the transferee who is a non-resident. I am simply suggesting that there is a very real question in my mind as to whether or not that happens to be a direct taxation within the province in order for the raising of revenue for provincial purposes. And this, Mr. Chairman, will be a convenient time to break.

Mr. Chairman: Will there be further discussion on this section?

Mr. Renwick: Oh, yes.

Hon. Mr. Winkler moves the committee of the whole House rise and report progress and ask for leave to sit again.

Motion agreed to.

Mr. Deans: Are you going to the health bill tonight?

Hon. E. A. Winkler (Chairman, Management Board of Cabinet): We are going to item 6 this evening.

The House resumed, Mr. Speaker in the chair.

Mr. Chairman: Mr. Speaker the committee of the whole House begs to report progress and asks for leave to sit again.

Report agreed to.

It being 6 o’clock, p.m., the House took recess.