The House met at 2 p.m.
Mr. Speaker: Statements by the ministry.
NEW HOME WARRANTY PLAN
Hon. Mr. Handleman: Mr. Speaker, I would like at this time to clarify the government’s position on new home warranties. As you are aware, the Speech from the Throne indicated that a new Home Warranties Act would be introduced providing for registration of home builders and a warranty plan to protect home buyers from builders’ defaults and poor workmanship. This is still our intention and, in fact, the bill is now proceeding toward final draft. It will be introduced to the House shortly.
As hon. members may be aware, the Housing and Urban Development Association of Canada has announced a voluntary warranty and insurance system. I want to make it absolutely clear that there is no conflict between these plans. The Ontario new home warranty legislation will interface smoothly with the HUDAC scheme. The plan, when operational, will provide Ontario home buyers with the most comprehensive and effective home warranty and insurance coverage in Canada.
We have worked closely with HUDAC for more than two years. Originally, a national home warranty scheme was proposed but when this became unworkable HUDAC and the government resolved the problem in the best tradition of industry-government cooperation. I congratulate HUDAC on its plan and I take this opportunity to inform the members of this House that the bill outlining details of the Ontario new home warranty plan will be introduced shortly.
Mr. Deans: You said that two years ago.
HEALTH MINISTERS’ MEETING
Hon. B. Stephenson: Mr. Speaker, last week I attended the conference of federal-provincial Health Ministers in Ottawa; today I am tabling the official communiqué of that meeting. I am going to comment on only one aspect of the conference, but I respectfully suggest to the hon. members that they note particularly the items in the communiqué relevant to such health concerns as automobile accidents and alcoholism, to name just two of the important health matters that were under discussion.
In discussing the extension of coat-sharing under existing health legislation and a review of legislation to replace the existing hospital insurance and medical care Acts, Ontario’s position was that it was inappropriate, now, to discuss these topics, since they will in fact be discussed at a first ministers’ meeting in the very near future. At that meeting the federal government is expected to present a major new proposal for the financing of mature cost-shared programmes.
We continue to hope that the new initiative will respond constructively to Ontario’s preferred alternative of opting out for tax points. These tax points are equalized in such a manner that the less affluent provinces would not be undercompensated.
I stressed at that meeting that Ontario is not prepared to take part in more general discussions on health cost-sharing until a co-ordinated federal action is apparent.
In view of the lack of provincial consensus, the federal government stated that the provinces will have until Oct. 1, 1976, to consider the extension of federal cost-sharing under existing legislation to lower-cost services.
Technical people in our respective ministries will continue to have dialogue concerning the federal proposals, in order that the matter may be resolved as rapidly as possible after the first ministers’ meeting.
Hon. Mr. Bennett: Mr. Speaker, I would like to review very briefly, our critical concerns related to the employment and viability of firms in the textile and clothing industry here in Ontario. In particular, we are concerned about the import situation that is urgently demonstrable in the polyester field.
There have been two reviews by the Textile and Clothing Board related to the imports of polyester yarns into this country. In both instances, the Textile and Clothing Board recommended action be taken to control such imports, but no action was taken by the federal government on the recommendations of the board. The last report made by the Textile and Clothing Board was on Feb. 14, 1975. The most current recommendations have not, as yet, been made public.
In the absence of federal action, the situation is continuing to degenerate, with the result that in the past three months, 150 employees have been released from their work in Cambridge, approximately 350 became unemployed in Millhaven, and layoffs are anticipated in Cornwall. I anticipate a further announcement, likely this afternoon, by a large industry in Ontario. Unless immediate action is taken by the federal authorities, such employment erosion is likely to continue.
I last communicated the concerns of Ontario and its industry in this regard to the Hon. Don Jamieson on April 13 of this year. While no action has yet been taken related to the polyester yarn situation, there was an announcement on April 15 of this year which indicated that federal action was being taken on measures related to men’s and boys’ shirts, acrylic yarn, implementation of surveillance measures on outerwear and structured suits and jackets, and negotiations with Hong Kong and Singapore for restraints on knitted fabrics coming into Canada.
Additionally, it should be noted that the Senate issued, on April 7 of this year, the first report to the government recommending immediate measures to alleviate the current textile problems to improve the industry’s labour situation in Canada. My ministry is in full support of the majority of the Senate recommendations and urges the federal government to act on the recommendations immediately.
I am also pleased to announce that this province, along with Manitoba and Quebec, is to join with the federal government and the industrial representatives to recommend changes in the national textile policy. Immediate discussions are scheduled in view of the crisis that exists in the industry and its important employment consideration.
My ministry issued an analysis of this particular sector in November, 1975. The response to our request for participation by concerned associations and companies in the sector has been excellent and should allow the province to reflect the needs of this industry in any discussions with the Textile and Clothing Board and with the federal government.
We will be looking for immediate action by the federal government and making our position clear related to the renewal of the multi-fibres agreement and other GATT-related matters in the textile industry. We certainly feel that Canada should provide its industries the same domestic environment that industrialized countries now provide for their industries.
TRANSPORTATION COSTS IN NORTHERN ONTARIO
Hon. Mr. Snow: Mr. Speaker, on April 13 this year I tabled in the House a report entitled, “An Investigation of Freight Rates and Related Problems in Northern Ontario.”
This report was, in fact, an executive summary prepared after discussion with other ministries from an extremely large background report. I had not intended to present a large background report to the House, because of the limited quantity available and the high cost of publication. However, several hon. members have requested this information. As there are a limited number of copies available, I would like to table one copy, and there will be a limited number available -- perhaps one to each caucus library would be sufficient for the background material.
BUILDING CODE REVISION
Hon. Mr. Handleman: Mr. Speaker, I’d like to inform the House that my ministry is in the process of preparing an amendment to the building code at the request of a number of rural municipalities in Ontario.
As the code now reads, an individual constructing farm buildings for his or her own use is exempted from applying for a building permit and satisfying the structural requirements of the code, provided the building is not intended for residential use. The amendment which we propose would remove this exemption on building permits for farm buildings.
At the present time, only buildings manufactured for sale to a farmer and erected by someone other than the farmer are required to comply with the provisions of the code. This was done to afford farmers third-party protection without interfering with their ability to do the work themselves, and we do not propose any change in this requirement. Alternatively, the enforcement of zoning and obtaining information for assessment purposes involves logging considerable mileage.
It is my view, therefore, that the building permit procedure suggested by the rural municipalities is the most constructive way to deal with this problem, since to do otherwise would tend to increase municipal expenditure at a time when constraint on spending is being sought by all levels of government.
The amendment is also in keeping with our stated policy that the building code would not be used to transfer authority from the municipalities to the provincial government.
TRANSPORT BOARD REPORT
Hon. Mr. Snow: Mr. Speaker, as promised last week. I would like to table today copies of the report of the Ontario Highway Transport Board relating to applications by Carleton Bus Lines Ltd. and Hagar Coach Lines Ltd.
Mr. Speaker: Oral questions.
HAMILTON-WENTWORTH HEALTH COUNCIL
Mr. Deans: I have a question for the acting Minister of Health: Can the minister indicate whether she is now prepared to yield to the Hamilton-Wentworth Health Council, the powers which were delegated to it to make a decision with regard to what is in the overall best interests of the provision of health care facilities for the Hamilton-Wentworth area, and to accept its latest proposal in that regard?
Hon. B. Stephenson: Mr. Speaker, the hon. member knows that this is precisely the intention of the Ministry of Health and has been throughout this time of discussion, and I can assure the hon. member that the Hamilton-Wentworth Regional Health Council will be in receipt of information and response from the ministry within the next day or so.
Mr. Deans: By way of supplementary, can I assume from that then that she is prepared to allow them to do the job for which they were set up, provided they operate within the guidelines, as they are, in fact, now doing?
Hon. B. Stephenson: Mr. Speaker, as I said before, we have always been prepared to have that council function in that way.
Mr. Deans: I have another question for the acting Minister of Health: Can the minister indicate whether it is true, as reported today in the Ottawa press, that information was brought to the attention of the Ministry of Health in Ontario with regard to some highly contagious strains of polio germ being found in two sewage outlets dumping water into the Ottawa River in the month of January, and that to this point nothing has been done about it?
Mr. S. Smith: Were you here Friday?
Mr. Deans: I heard your question.
Hon. B. Stephenson: Mr. Speaker, we responded to that question, as a matter of fact, last Friday. There has been information, which has been gathered from various sources, that certain strains of polio virus have been found in certain sewage disposal areas. If, in fact, the immunization level of the population is adequate, then this is really of no concern to the general population. However, because of our concern that in some areas, and particularly within some groups, the anti-polio immunization is not adequate, we are very much concerned about this and have instructed medical officers of health -- and, hopefully, the physicians of the province will have taken heed as well as the parents of the province -- to ensure that children’s immunization programmes are maintained.
Mr. Deans: Supplementary question -- I was here Friday and I did hear the discussion of immunization, and that’s not what I am asking about; I can appreciate the need -- I want to know what took place between the month of January, when the federal Ministry of Health was informed of the kind of polio strains in the outlets, and the month of March when the Province of Ontario ought to have known and should have been taking some steps? I understand the minister responded to the matter of the vaccine on Friday. I listened to it very carefully.
Hon. B. Stephenson: I cannot tell the hon. member precisely what happened between the month of January, when the federal government was informed, and the month of March, when the provincial government was informed. I have no explanation for the lack of action in that two-month period. However, our concern, as I said, is primarily protection of the public against such possible infection with such possibly virulent strains, and that is where our activity is taking place.
Mr. Deans: One final supplementary: Given that there seems to be some rather serious lack of communication, would the minister then make herself informed as to how it could be that a matter of such importance could be within the knowledge of the Department of National Health and Welfare in Ottawa and would not have been made available to the Ministry of Health here at Queen’s Park; in order that the appropriate and necessary steps could be taken, because it could be happening in other places in the province?
Mr. Yakabuski: The Liberal leader never told us, and he is always getting information and instructions from Ottawa.
Hon. B. Stephenson: Or it could be happening in other places in the country, which is probably of even more importance. But we shall certainly try to find out why the delay occurred.
LLBO AND LCBO EMPLOYEES’ WAGE NEGOTIATIONS
Mr. Deans: I have one final question for the Minister of Consumer and Commercial Relations. What’s wrong with the negotiations between his ministry and its employees in the Liquor Licence Board and Liquor Control Board areas? Why is it that these negotiations, which commenced more than a year ago, have not reached a satisfactory conclusion?
Hon. Mr. Handleman: First of all, of course, as the hon. member knows, the bargaining unit negotiates with its employer, which is the Liquor Control Board and Liquor Licence Board of Ontario -- not with the ministry. Quite true, the negotiations have followed the usual course of negotiations: offers have been made, counter-offers have been presented and eventually the negotiations went to arbitration, which is provided for under the Act, It went to arbitration and under nor agreement with the Anti-Inflation Board, any arbitration award in excess of the guidelines is submitted to the Anti-Inflation Board, which has now made a decision. My understanding is that the employees’ association will be appealing that decision, and I don’t feel I would like to comment on their dissatisfaction with the AIB decision at this point.
Mr. S. Smith: Supplementary: Could the minister explain to me how it is that when that arbitration agreement was made, it went to the Anti-Inflation Board and was opposed at the Anti-Inflation Board by Mr. Evans, the chief negotiator for the LCBO? How can it be that the government would oppose the arbitrated settlement in front of the Anti-Inflation Board in Ottawa?
Hon. Mr. Handleman: First of all, I deny that the arbitration award was opposed. It was not opposed, either by the ministry or by the representatives of the board. What was opposed was a claim that was made by the association concerning en historical relationship with the employees of the Brewers’ Warehousing Co. in Ontario, and that was the only part of the employees’ position before the Anti-Inflation Board which was denied by the two boards.
Mr. Yakabuski: The leader of the Liberal Party is getting bad information from Ottawa again.
Mr. Bounsall: Supplementary: Further to that point about the opposition to that historical connection between the liquor store employees and the Brewers’ Retail employees, was that opposition taken with the full knowledge of the minister, to whom the liquor board answers?
Hon. Mr. Handleman: No, it was not, but it was made during the arbitration; and in order to be consistent, the board felt it had to maintain that position at the Anti-Inflation Board as well. It did not oppose the arbitration award.
Mr. Speaker: A final supplementary. The member for Sarnia.
Mr. Bullbrook: Are we to understand from the response of the minister, notwithstanding the fact that he doesn’t do the actual collective bargaining, that the arbitration sections of the Crown Employees Collective Bargaining Act are no longer effective in this province?
Hon. Mr. Handleman: I normally don’t give legal opinions; I take them. Under this circumstance, I would suggest that question should be asked of the Attorney General (Mr. McMurtry).
Mr. Roy: Don’t be so modest.
Mr. Bullbrook: May I be permitted to redirect my supplementary to the Attorney General?
Mr. Yakabuski: Mr. Speaker, is this a debate?
Mr. Speaker: Perhaps the hon. member can make it a new question a little bit later.
Mr. Bullbrook: Whatever you wish. Mr. Speaker.
Mr. Speaker: The member for -- I’m sorry; I thought that was the last question that the member for Wentworth wanted to ask.
Mr. Deans: It would have been, but the Minister of Education has just wandered in.
Mr. Speaker: You may ask it.
WINDSOR TEACHERS’ DISPUTE
Mr. Deans: I’d like to ask, with regard to the Windsor situation, what now?
Hon. Mr. Wells: What now, what?
Hon. Mr. Wells: Mr. Speaker, I would be happy to tell my friend, as he’s aware, the letters that I sent to both the board and the teachers about opening the schools today were received by them and were responded to. The teachers indicated acceptance of the conditions laid out in the letter, which would have opened the Windsor schools this morning. The school board, in its wisdom --
Mr. Foulds: Or lack of.
Hon. Mr. Wells: -- or lack of wisdom --
Mr. Deans: Now we know what the problem is.
Hon. Mr. Wells: -- rejected the offer and said that for a particular reason it would not agree to the offer, which would have opened those schools today. The main basis of its objection was an objection to one of the mediators who had been suggested to sit in to help guide the proceedings through this week.
At the present time, the Education Relations Commission is carrying on some further talks with both parties to see if there isn’t a way of opening those schools tomorrow. I have to accept that people who believe in local autonomy in this province, and who are elected to do a job, can find a way to do that job without interference from down here. My faith in that kind of a premise may be shattered, but I still believe in that premise.
Mr. Deans: Supplementary: Is the minister prepared to make it clear to teachers and boards alike that we’ve come to the end of the road as far as legislating people back to work and dealing with problems that they are either elected to solve or employed to perform, and that they had better find another way, because we’re not forever going to be doing their job for them?
Hon. Mr. Wells: I have to say to my hon. friend that at the present time my uppermost concern is to get the schools in Windsor open again and the children back into school. I’ve got to decide on ways that this can be done, and that is what I am thinking about at the present time.
Mr. Ruston: Let’s do it.
Mr. B. Newman: Supplementary: Mr. Speaker, in case the problem is not resolved today and the minister is convinced that the impasse remains, is he prepared to introduce legislation and pilot it through in one day so that a minimum amount of school time is lost by the students?
Mr. Foulds: That’s the Liberal stand.
Hon. Mr. Wells: Mr. Speaker, I don’t think --
Mr. Deans: That’s the Liberal position.
Mr. Speaker: Order, please.
Hon. Mr. Wells: Our prime concern is to get those schools open. I see ways that they can be opened and the local autonomy preserved, which I know my hon. friend believes in -- and which everyone in that party believes in also -- and if people are elected locally to do a job, let them get on and do it. I might commend to all members that they read the editorial in the Windsor Star today.
Mr. Bounsall: On the question of the Windsor teachers, will the minister be involved quite personally in talking to the board to see if there is any possible way he can change the members’ minds and get them to negotiate? Or, if one is thinking in terms of legislation -- and the minister has to have that as one of the alternatives in his mind -- would he consider legislating what was, I think, a very reasonable proposal made by him last Wednesday?
Hon. Mr. Wells: Mr. Speaker, all I can say is that I have been involved personally for more than a week with this matter and with both parties.
Mr. S. Smith: A question to the acting Minister of Health: Can she confirm that a certain private laboratory, namely S and M Lab, has been performing tests for which the laboratory is not licensed and that it has been billing OHIP for these tests? Is it true that her only response to such activity has been to order the lab to stop doing these illegal tests and possibly try to recover the amount by withholding future OHIP payments?
Hon. B. Stephenson: Mr. Speaker, that laboratory is under investigation at the moment. A special audit is being done. There are certain other investigative procedures which are being carried out, and I think perhaps it would be inappropriate to speak further about it at this point.
Mr. S. Smith: Is the minister able to confirm that in fact this lab applied to do certain of these tests and was informed on May 14, 1975, that it could not; that the owner of the lab met with the minister when this decision was reconsidered, and yet it has been doing some of these tests anyway? Will she, in fact, report to the House on this situation, without in any way harming the investigation that is presently going on?
Hon. B. Stephenson: Mr. Speaker, I shall attempt to do so.
Mr. Deans: A supplementary: Is it true that, in fact, other than by performance of an audit, it isn’t possible to determine by way of the computer whether procedures being charged for by the labs are procedures which they are authorized to perform -- in other words, within their licences?
Hon. B. Stephenson: No, it is possible, through the procedures which are presently set up, to ensure whether a laboratory is fulfilling its licence or not, or whether it’s overstepping its licence or not. It does take some special investigation to do so.
Mr. Deans: One final supplementary question: Is it not possible to set up within the computer a coding method that would show on the bill whether the procedure being billed is within the licence of that particular lab?
Hon. B. Stephenson: Mr. Speaker, I should think that the new procedures which we are establishing right now will, in fact, resolve almost all of these problems in a way which is much easier to handle than it has been in the past.
Mr. S. Smith: A final supplementary on that particular topic. Can the minister report to the House whether or not she has discovered any instances of labs ceasing to perform certain tests, yet continuing to bill OHIP for them?
Hon. B. Stephenson: Mr. Speaker, to my knowledge at the moment I have not heard of any instances of that sort, but I shall attempt to find that out as well.
Mr. S. Smith: A question of the same minister, on a related but somewhat separate topic: Regarding our exchange of the last few days about whether or not there are reports about lab work being put out to tender having been recommended to the ministry, has anybody made the minister aware of the fact that in 1971, as part of the ill-fated health constraint package developed by Dr. Kinloch at that time, a proposal to put private lab work out to tender was proposed and accepted by the Policy and Priorities Board of Cabinet?
Hon. B. Stephenson: No, Mr. Speaker, I am not aware that it was accepted by the Policies and Priorities Board of Cabinet. I am not aware, either, that it was ever put before the Council of Health, which is what the hon. member suggested the other day, and I have not seen the report of Dr. Kinloch, although I have searched for all the other reports and found no other such recommendations.
Mr. S. Smith: Supplementary: Since this is the second time that the minister, despite my denial, has suggested I said something about the Council of Health, would she be willing, please, to look into the precise question that I asked her on April 23, which had nothing to do with the Council of Health but said:
“Is the minister now willing to table the reports that I asked for some weeks and months ago, which warned the ministry at least four years ago that the present system was open to abuse and recommended that such things as tenders should be asked in each region…”
And so on. Would she respond to the actual question, please?
Hon. B. Stephenson: Yes. I’ll read it.
Mr. S. Smith: The acting Minister of Health will be delighted to know that my next question is for the Minister of Labour. This is with regard to vinyl chloride monomer that we were talking about last time, In view of the very serious problem that has arisen with vinyl chloride monomer, can the minister confirm that, in fact the guideline in this province of 10 parts per million is just a guideline, and that a maximum of 25 parts per million is allowed before the plant is asked to close? Can she confirm that union representatives are not being allowed access to the charts which show what the readings are of vinyl chloride in the plants where they are working?
Hon. B. Stephenson: No, Mr. Speaker. I cannot vouch for the fact that the workers are not being supplied with that information, because it most certainly is the recommendation of both the Ministry of Health and the Ministry of Labour that workers in such plants be given the information which is handed to the companies, and it has been our explicit request that such be done.
The 10 parts per million is a guideline which has been established. It’s one which the plants are attempting to reach at the moment, but I would think that perhaps it would be much more appropriate, in view of the previous question of the hon. leader of the Liberal Party, to remind him that, in fact, the very small guideline which has been recommended in the United States has not as yet been accepted anywhere in the United States as a standard or even a guideline.
Mr. S. Smith: A supplementary: Can the minister tell us how often and on what basis the two plants -- the Goodrich plant and the Dow plant -- where vinyl chlorides are involved, are being inspected by ministry inspectors? Will the minister undertake to be sure that the graphs which are being kept of vinyl chloride levels -- a very sophisticated means of keeping them -- will be made available to the workers?
Hon. B. Stephenson: Mr. Speaker, we attempt diligently to ensure that those reports will be made available to the workers. I shall find out the exact record of monitoring for the past year for the hon. member.
40-HOUR WORK WEEK
Mr. di Santo: Mr. Speaker, I have a question of the Minister of Labour. Since 29.7 per cent of construction workers are unemployed while, at the same time, many other workers are forced to work 50 to 55 hours a week with a negative effect from a safety, health and family life point of view, can the minister indicate whether she recognizes the opportunity of introducing by way of legislation or regulation a standard 40-hour work week with stringent overtime regulations in order to make more rational, this important sector of the economy of the province?
Hon. B. Stephenson: Mr. Speaker, as I told the president of the Ontario Federation of Labour and Mr. John Stefanini last Wednesday, the Ministry of Labour has been investigating the recommendations which Mr. Stefanini and his union have made to the ministry. It had begun that activity before it received those recommendations and he can expect to have some discussions with us in the very near future about this specific problem.
Mr. di Santo: I have a supplementary, Mr. Speaker. Since any decision made by the ministry will be an important factor also in the current strike at the subway and in the possible controversy which will arise in the contract Local 183 is bargaining for at this moment, can she indicate to the House when she is prepared to inform us of her decisions in that regard?
Hon. B. Stephenson: Mr. Speaker, I can’t indicate the exact date on which this is going to be carried out but I would remind the hon. member that the negotiators in collective bargaining negotiations are frequently extremely imaginative and very capable. I would not underestimate Mr. Stefanini’s capability in this regard in any way. I do not think he is depending upon legislation to do what he wants to do in terms of the labourers’ union. I would expect he would be quite capable of introducing that into his negotiations quite successfully.
Mr. Speaker: Does the member for Sarnia wish to put the question which he didn’t before?
Mr. Bullbrook: I’d love it but I must yield to some of my colleagues who have preference over me.
Mr. Speaker: Thank you. I believe the hon. member for St. George has a question.
OHIP BUDGET BRANCH
Mrs. Campbell: Thank you, Mr. Speaker. My question is of the acting Minister of Health. Can she advise this House whether it is a fact that the section of the ministry dealing with the budgeting for OHIP has been disbanded and why, if that is the case?
Hon. B. Stephenson: No, Mr. Speaker, I cannot say that is a fact. It is not.
Mrs. Campbell: Mr. Speaker, is it not a fact that those engaged in that function have already had notice that they will discontinue that function? Is the minister saying that is not a fact?
Hon. B. Stephenson: Mr. Speaker, there is some integration of the budgeting mechanism within the ministry and I think that is, perhaps, what the hon. member is talking about.
Mr. Martel: I have a question of the acting Minister of Health. On April 26 she indicated to the Legislature -- and I’m quoting, “A member of the council was present at the time but, in fact, that’s exactly what happened;” that was in relation to the appointment by the regional chairman of three people and the minister indicated at the time that it went to council. Is the minister now aware that the regional chairman has admitted that he did not ask anyone on council? Is the minister willing to give the rest of the community an opportunity to appoint three other people to the board which will stay in existence until the end of February?
Hon. B. Stephenson: Mr. Speaker, I was in error in saying that the entire council had been consulted regarding those appointments but I have been informed that several members of the council were consulted before the names were submitted. At this point in time I would remind the hon. members that this is an interim board which is going to function only until the annual general meeting of that hospital.
Mr. Singer: By way of supplementary, Mr. Speaker --
Mr. Speaker: A supplementary here first from the member for Sudbury East.
Mr. Martel: Could the minister tell me why the government waited until the day following the termination of the appointments of Judge Michel and Mrs. Evans to that board by the province before bringing in an order in council appointing the new board?
Hon. B. Stephenson: Mr. Speaker, as I informed the House, we carried out this action on the strong recommendation of Judge Waisberg and moved as rapidly as it was possible to, in order to carry out that request of the judge. There was no relationship to any other activity.
Mr. Speaker: A final supplementary, the member for Wilson Heights.
Mr. Singer: Doesn’t the minister feel that since she misled the House in such definite and probably insulting terms, she owed the House the duty of standing up and correcting the record when she found out from the chairman of the regional council in Sudbury that what she had said was wrong?
Hon. B. Stephenson: As a matter of fact, Mr. Speaker, I attempted to do so on Friday but didn’t have an opportunity to stand up.
Mr. Yakabuski: You weren’t here on Friday. You were in the courts on Friday.
Mr. Singer: One of the burdens of this job is to have to listen to you.
Mr. Speaker: Order, please.
INTERMEDIATE CAPACITY TRANSPORT SYSTEM
Mr. Reid: I have a question of the Minister of Transportation and Communications. Does the minister recall his predecessor’s statement in the House on April 14, 1975, in regard to intermediate capacity transit systems, to the effect that we would be hearing something within 13 months as to the new ICTS? Can he now report to the House what has happened, since that period of time has gone by?
Hon. Mr. Snow: Mr. Speaker, I don’t believe the 13 months has gone by yet, has it?
Mr. Reid: It was April 14, 1975. By way of supplementary, is the minister aware of Mr. Kirk Foley, the chairman of the Urban Transportation Development Corp., commenting that these matters would be reviewed with the various people and that there would be 140 people employed in this programme by this time this year? Does the minister have any comment on that? He said there would be 140 people employed in this intermediate capacity transit system programme.
Hon. Mr. Snow: Mr. Speaker, I can’t tell the hon. member, without checking with the UTDC, exactly how many people are employed on this programme at this particular moment in time but I will get that information for him.
COW-CALF STABILIZATION PLAN
Mr. MacDonald: A question of the Minister of Agriculture and Food: Can the minister confirm whether the rumours are correct which were rife at the cattle sale at Thessalon on Saturday that the premium in the cow-calf stabilization plan is going to go up from $5 to $15 per head? If that is going to happen, will it be accompanied l an increase in the basic price?
Hon. W. Newman: Mr. Speaker, we are working on a formula at this point in time. We are also working on what the fee will be. It will be announced before very long, after consultation with the Ontario Federation of Agriculture and other groups.
Mr. MacDonald: A supplementary, Mr. Speaker. Can the minister indicate, since he is working on it, if he is going to present a fail accompli and a finalized document? What organizations has he consulted with until now? Specifically, has he consulted with the OFA? Has he consulted with the OBIA?
Hon. W. Newman: Mr. Speaker, maybe I didn’t make myself very clear the first time around. I would like to say that when we have done our preliminary work on our cost analysis of the farms across the Province of Ontario, on the cost of operating a cow-calf operation -- as members know, we take several samples from around the province and work out the basic cost figure -- when we have done our preliminary work I have indicated to the Ontario Federation of Agriculture we would be glad to bring them in and discuss what we have done and listen to their figures. I believe the Ontario Cattlemen’s Association -- which used to be the OBIA -- has requested a meeting with us to discuss that also. As soon as we have our figures in place we will be meeting with them both.
Mr. Philip: A supplementary: Would the minister not consider it common sense to consult with the ORIA and the Federation of Agriculture at an early date when he is preparing his reports?
Hon. W. Newman: Mr. Speaker, as I said, the Ontario Federation of Agriculture has already suggested a price for the cow-calf this year; they have brought up a suggested price. Until we have done our preliminary figuring, bow can we sit down and intelligently discuss with them the figuring they have been doing, unless we have our figures to show them?
GRAPE CONVERSION PROGRAMME
Mr. Hall: A question to the Minister of Agriculture and Food: In that the Premier announced a grape vine conversion programme last September in Grimsby, could the minister advise why this programme is not yet in operation some eight months later?
Hon. W. Newman: Mr. Speaker, the time limit has been extended for the grape conversion programme because of the problem we were having in getting the interest rates which we felt were proper. I believe the programme is in a position to move forward now.
Mr. Hall: A supplementary, is the minister aware that the proper planting season is right now -- from early April until mid-May -- and that the programme is in jeopardy for this year unless immediate attention is paid to it?
Hon. W. Newman: Mr. Speaker, I see no reason why anybody who wants to go ahead with conversion should not be permitted to go ahead at this point in time. I’m aware of the fact that plantings are taking place now. There are other considerations, I think, to be taken into account when talking about conversion.
DISPOSAL OF MINE TAILINGS
Mr. Foulds: Mr. Speaker, a question of the Minister of the Environment. Is he aware of the unique sewage disposal system, approved of by his ministry, employed in the community of Madsen in northwestern Ontario which requires the use of mine tailings from the Madsen Red Lake goldmine? What steps has the ministry taken along with Housing, Natural Resources and TEIGA, now that the mine is going to close and the tailings will no longer be available for the sewage disposal system, so that the residents there don’t endure an undue hardship?
Hon. Mr. Kerr: I’m not sure what the hon. member wants our ministry to do. Hopefully the plant will continue in operation, if that is the hon. member’s main concern, in spite of the fact that the mine itself may be shut down.
Mr. Foulds: A supplementary, what steps is the minister taking to ensure that the sewage disposal plant is going to be maintained?
Hon. Mr. Kerr: Mr. Speaker, I would assume that if there are residents in that community, in spite of the fact that the mine may close down, it is my hope that the sewage treatment plant will continue operations and, of course, that there will be continuous monitoring of the tailings and any leaching which may result from the tailings on that site.
Mr. Foulds: A supplementary Mr. Speaker; the minister does not seem to have understood the question.
Hon. Mr. Kerr: Try it again.
Mr. Foulds: I will try it again; thank you very much, I will. Does he understand that the mine tailings are necessary for the sewage disposal plant? What I want to get from him is what steps is the ministry going to take to ensure that the system continues to operate if the mine tailings are no longer available because the mine is closed?
Hon. Mr. Kerr: Mr. Speaker, that is a technical type of question and I would have to get some information from the officials of my ministry. I’m not sure if there are other mine tailings in the vicinity which may be available for that particular experiment. If so, they would probably have to be hauled to that site to make sure the plant will continue in operation.
Mr. Deans: Why don’t you say you don’t know?
Mr. Foulds: Final supplementary.
Mr. Speaker: No, that was the final one.
Mr. Kerrio: Mr. Speaker, I have a question of the Minister of Housing. Is the minister aware that the Ontario Housing Corp. accepted two bids on the 65-unit senior citizens’ site in the town of Lincoln-Beamsville, which were not publicly opened on the date specified and that the project was recalled?
Hon. Mr. Rhodes: No, Mr. Speaker, I was not aware of that.
Mr. Kerrio: By way of supplementary, Mr. Speaker, would the minister look into the matter with regard to the recalling by invitation, because the housing authority thought it was economically unfeasible to build 65 units and in the subsequent recall they called for tenders on 60 units --
Mr. Speaker: Order, please. Is there a supplementary question?
Mr. Kerrio: Yes, sir. At the end of my first question I stated that the bids were recalled, and I’m relating to that now.
Mr. Speaker: Well, ask the question.
Mr. Kerrio: Is the minister aware of the fact that it was recalled on the basis of cutting the number of units and the subsequently successful bidder had not submitted a bid that was initially opened publicly?
Hon. Mr. Rhodes: No, as I said to the hon. member, I was not aware of those particular tender calls; and yes, I will certainly look into that matter to see what the circumstances were.
PUBLIC HEALTH NURSES
Ms. Sandeman: A question for the acting Minister of Health: On April 6, the minister told us she felt that progress was being made in settlement of disputes with public health nurses across the province and that she hoped to have further news to report within two weeks. I wonder if the minister could give us some updating on that situation.
Hon. B. Stephenson: I am still hopeful. We have had further meetings with boards of health and their representatives, and I am hopeful that within a reasonable period of time -- and it’s certainly not going to be two weeks, I’m afraid -- we are going to have some reasonable suggestion to make to both sides which will resolve this problem.
Ms. Sandeman: Supplementary: Does the minister feel that the ceiling of eight per cent which the ministry has imposed on the negotiations is having anything at all to do with the slowness with which agreements are being reached?
Hon. B. Stephenson: I am sure there are a number of factors that have some influence upon the rate of speed, which is certainly not remarkable, including the fact that the boards of health seem to be unwilling to go to arbitration, as the nurses are at this point. I think it’s a matter of helpfully suggesting to both sides that there are certain moves they might make which would be of assistance.
ACCESS TO HOSPITALS
Mr. O’Neil: Mr. Speaker, I also have a question of the acting Minister of Health. Is the minister aware of a letter I sent to her, dated April 22, in which I advised her that the doors of the Prince Edward County Memorial Hospital in Picton are locked at 10 p.m. daily, after which time admission to the hospital is gained by ringing an emergency doorbell?
On March 27, 1976, in the early morning, the parents of three-year-old Howard Gardiner brought this child to the Picton hospital for emergency treatment. I am told that upon arrival at the hospital, it was some 20 minutes before the child was admitted to the hospital and a further 15 minutes before a doctor arrived at the hospital to examine Howard. Upon examination, the doctor declared the child dead.
Can the minister tell me if officials in her ministry are presently taking the necessary steps to ascertain the condition of the child were upon arrival at the hospital, whether or not the doors were indeed locked and the length of time that passed from Howard’s arrival at the hospital until he was admitted to it?
Hon. B. Stephenson: This, of course, is a coroner’s case and is being investigated at the moment. I am very much aware that certain hospitals in fact are locked after normal visiting hours and that one gains admission by ringing a bell. This is not an unusual procedure where there is not a doorman or an attendant at the door constantly. The ministry most certainly will be looking at the coroner’s report.
Mr. O’Neil: As a supplementary, does the minister not feel that immediate steps should be taken to correct the situation, not only at the Prince Edward County Memorial Hospital but at any other hospital in this province where doors may be locked at night, hopefully preventing further tragedies such as this?
Hon. B. Stephenson: The public Hospitals Act makes the board of governors of hospitals autonomous --
Mr. Speaker: Order; order, please.
Hon. B. Stephenson: -- and it is their responsibility to ensure that the level of care which is necessary within that institution is maintained. That is their responsibility to the Ministry of Health, and of course we shall undertake to ensure that.
Mr. Roy: Did you tell them that when you called them?
Mr. S. Smith: Is keeping hospitals open their responsibility?
Mr. Speaker: Order, please. A final supplementary.
Mr. Deans: Surely, in addition to guarantee that the level of care is maintained, there has to be a guarantee of access.
Hon. B. Stephenson: Unless the doorbell was not working, I cannot for the life of me understand why it would take any hospital 20 minutes to open a door.
Mr. Deans: No one is arguing about that.
ACCESS TO OMBUDSMAN
Hon. B. Stephenson: On April 29, the Leader of the Opposition (Mr. Lewis) asked me a question regarding a memorandum on the bulletin board at the Hamilton Psychiatric Hospital regarding inquiries from the Ombudsman’s staff.
I would like to report that in late 1975 the director of the psychiatric hospitals branch met with the staff of the Ombudsman’s office to develop plans for liaison. As a result, a directive was sent to all the administrators of those psychiatric hospitals, which I shall quote:
“It is to be expected that there will be investigations from time to time by staff of the Office of the Ombudsman, often addressed directly to staff of psychiatric facilities. In order to keep track of such inquiries and to provide the best and quickest answers, it is requested that the following procedures take place:
“Advise the branch office by telephone that an inquiry has been made.
“If it is evident that a speedy reply is necessary, telephone it to the branch office for a tape recording. A typed reply will be then completed by the branch office and forwarded immediately to the Office of the Ombudsman.
“If a normal correspondence reply is suitable, send that directly to the Office of the Ombudsman with a copy to the branch office.
“Inquiries to the branch office from the Office of the Ombudsman will be transmitted to the facilities in similar fashion.”
This memorandum went on to advise:
“It is intended to help in every possible way where such inquiries are made, the essence of any replies being both speed and providing the best of up-to-date information, avoiding the red-tape approach.”
In order to ensure that the memorandum, which was placed upon the bulletin board of the Hamilton Psychiatric Hospital, be not construed as to be opposed to the function of the Ombudsman, as suggested by the hon. Leader of the Opposition, I will re-read the last paragraph of that memo which he omitted to read:
“It is intended to help in every possible way where such inquiries are made, the essence of any replies being both speed and providing the best of up-to-date information, avoiding the red-tape approach.”
It is perfectly obvious that the branch of the ministry involved in psychiatric hospitals was attempting to ensure assistance to the Ombudsman. I am convinced as well that it is concerned about maintaining patient confidentiality but, most certainly, our contact with the Ombudsman’s office would lead us to believe that the office has no complaints whatever regarding its contacts with Ontario psychiatric hospitals.
EXPENDITURE ON PARKING LOT
Mr. Angus: I have a question of the Minister of Government Services. In light of the constraint programme that the government is undertaking in cutting back hospital services and social services, can the minister tell me how her ministry has justified the expenditure in 1976-1977 of $203,000, as it says in the ministry manual, for “Government complex; surface for parking lot”?
Hon. Mrs. Scrivener: I will respond to the question at a later date.
Mr. Angus: Supplementary: While the minister is preparing her response, could she also investigate the costing of that parking lot resurfacing since it is already covered with a good layer of asphalt; and why is it going to cost $203,000 to resurface that?
LLBO AND LCBO EMPLOYEES’ WAGE NEGOTIATIONS
Mr. Bullbrook: I have a question of the Attorney General, further to my supplementary directed previously to the Minister of Consumer and Commercial Relations and my comments last week with respect to the estimates of the Management Board. It is in three parts.
May we presume correctly that the attitude being taken by the government with respect to the arbitration award with the LLBO and LCBO employees’ association is that the arbitration section is no longer operable because of the execution of the AIB agreement with the federal government?
Secondly, would the Attorney General be of the opinion that the arbitration section is severable from the Crown Employees Collective Bargaining Act so that, although it obtains that the award is not final and binding, the deprivation of the right to strike is still part of the law of the Province of Ontario?
Thirdly, does he see a degree of inequity when he is dealing with statutory awards as opposed to collective agreements where the government deprives them of the right to compensation under the statute but still maintains that they have no right to an appropriate collective agreement?
Hon. Mr. McMurtry: Where there is any conflict between federal anti-inflation legislation and the Arbitration Act, the answer is simply that the federal anti-inflation legislation is paramount during the term of the agreement between the province and the federal government. As the member for Sarnia knows, the matter of both the constitutionality of the federal legislation and the validity of the agreement will be determined by the special reference to the Supreme Court of Canada, which is scheduled for May 31. In relation to whether or not a section would be severable, I don’t know that I really understand the thrust of the member for Sarnia’s question in that respect. And, I am sorry, but I have forgotten what the third question was.
Mr. Bullbrook: May I just attempt, by way of supplementary, to clarify the matter? Am I correct in understanding that the government of Ontario is saying that no longer are awards pursuant to the Crown Employees Collective Bargaining Act final and binding because of the execution of the AIB agreement? And does the minister see a degree of inequity as far as the Crown employees of Ontario are concerned in the concept that awards are no longer final and binding, but they are still subject to the obviating influence that they can’t collectively bargain, nor can they strike? Does he see a degree of inequity there?
Hon. Mr. McMurtry: Again, Mr. Speaker, where there is a conflict, I repeat my answer that the federal legislation is paramount during the term of the agreement; and I am not prepared to state that there is --
Mr. Bullbrook: On a point of order --
Hon. Mr. McMurtry: -- any more --
Mr. Bullbrook: On a point of order --
Mr. Speaker: Order, please.
Mr. Bullbrook: There is no order in this House that requires a minister to answer a question. He can stand in his place and say: “I don’t know the answer. I refuse to answer.”
Mr. Speaker: Order.
Mr. Bullbrook: Please, Mr. Speaker, stop this business of not answering the question, but obfuscating the question time after time.
Mr. Speaker: Order, please. The hon. minister may answer as he or she sees fit.
Mr. Bullbrook: On a point of order --
Mr. Speaker: Order, please.
Mr. Bullbrook: -- if he answers the question surely --
Mr. MacDonald: If he answers questions as he sees fit, in violation of the rules, then we can ask questions as we see fit, in violation of the rules. The rule applies to the whole of the old jurisdiction, and if he is not answering the question, he should be put in his seat.
Mr. Bullbrook: Right!
Mr. Speaker: It’s very difficult for the Speaker --
Mr. Bullbrook: I agree it is.
Mr. Speaker: -- to know whether a minister is answering a question directly or not, but it may be part of an answer. I have no way of knowing that. The oral question period has expired.
Mr. Bullbrook: He doesn’t know the answer.
Hon. W. Newman tabled the annual reports of the Co-operative Loans Board, the Ontario Stock Yards Board and the Ontario Food Terminal Board.
Mr. Speaker: Motions.
Introduction of bills.
Orders of the day.
Clerk of the House: The second order, consideration of Ontario’s proposal for an alternative method of pricing domestic crude oil.
DOMESTIC CRUDE OIL PRICING
Mr. Speaker: Yes, the hon. member for York South is leading off.
Mr. MacDonald: Mr. Speaker, this country has no coherent or effective energy policy. I am glad to have the Minister of Energy (Mr. Timbrell) applaud that, because I just want to draw attention to the fact that he, perhaps more than anyone else, has lamented that.
The real, underlying message of my comments today is that if you are going to get an effective energy policy, Mr. Speaker, you must have control of the basics and the shaping of that policy in the public sector.
If you leave it to the private sector, Mr. Speaker, the government here in Queen’s Park, and they there in Ottawa, are going to continue to have an ineffective, incoherent energy policy.
We have not had the basic information. What has happened in the last six or eight years in this nation is that the oil companies have been able to use self-serving statistics to suit their own particular purposes at any given time. And the government, having no alternative to those self-serving statistics, went along with it. Therefore, at the end of the 1960s the oil companies were arguing that we had a great surplus of oil, and we should have permission to export more of it. And the Energy Board okayed it, because nobody was in a position to correct the figures. Some time later they discovered that they had a shortage, and so they argued that if we were going to be able to do something --
Mr. Speaker: Order, please. Will the members keep their private conversations down?
Mr. MacDonald: -- if we were going to do something about removing that shortage, we would have to go to the frontiers to explore and that would require increasing prices and the government went along with that.
In short, my basic point -- and I’m going to make it briefly because there are time constraints on this debate -- is that to the extent that we have had a policy -- and I would agree that it’s been incoherent and I would agree that it’s been ineffective -- it has been a policy dictated by the oil companies, the multinational corporations, who are in the control of the energy resources of this nation for the most part.
The provincial government has lamented this. On occasion it has given its lament a facade of talking tough to the oil companies. Both this Minister of Energy and his predecessor, the provincial Treasurer (Mr. McKeough), on occasion would get up and say rather tough things and it looked as though finally, in implementation of a public policy, they were going to call the oil companies in and talk turkey to them. But I have seen nothing to suggest that it wasn’t a verbal facade; that this government, like the government in Ottawa, has been willing to shape its policies or have its policies shaped primarily by the oil companies and the gas companies, those who control our energy resources.
We have a recent example of this. It was pointed out a week or so ago that in this country we were going to move from $8 a barrel to the world price of some $12.60, an increase of $4.60 a barrel. Mr. Speaker, you may be interested to know that if you take the number of gallons in a barrel, it translates into an increase in gasoline prices of 14.3 cents, which will net the oil companies a new revenue of $643.5 million.
The fact of the matter is that the oil companies said they would need 18 cents. The Liberals in Ottawa parroted it and the Tories at Queen’s Park have said nothing about it. In short, here we have the oil companies once again saying that this proposed increase is going to take the price up 18 cents and only 14.3 cents of that is required to meet the increase in the price of crude oil. The other 3.7 cents is going to be extra. Extra for what?
Our research department, which is normally very reliable -- more reliable than the government’s research department, if I can say so with as little offence as possible -- I would have assumed that the increase of $4.60 and the 14.3 cents to meet it would have covered exploration costs. But we don’t know whether the money the oil companies need is covered in that figure or whether it is going to be covered in the extra 3.7 cents to bring it to a total of 18 cents.
In short, we don’t know, once again, what is going to happen to this incredible amount of new revenue extracted from the consumers, extracted from the economy, of hundreds of millions of dollars. I don’t know exactly; the Minister of Energy doesn’t know; Ottawa doesn’t know. I’m persuaded that Ottawa doesn’t care because it is having its policies shaped. What I’d like to try to find out this afternoon is if the minister really disagrees with public policy being shaped by the oil companies, the energy companies, who control our resources.
Let me move on to the next problem; the problem of the necessary revenue to do exploration. The federal government is contending that we’ve got to move to international prices because only through moving to international prices are we going to be able to provide the financial wherewithal to dig out, to explore and to find these new resources. The provincial government has said essentially the same thing. This minister has said essentially the same thing.
He has camouflaged it by saying that the oil companies need more revenue -- let the minister listen to me before he puts down a false note because he will be responding to the false note. The minister has said that the oil companies need more revenue and if governments weren’t taking so much of the increases recently, the oil companies would have enough money for exploration.
I’m back at the same point, Mr. Speaker. We don’t know what the oil companies think they need for exploration and they are playing the game so that we don’t know whether it comes out of this source of revenue or that source of revenue. I submit that the minister doesn’t know, because what he is doing is, in effect, playing the multi-national corporate game of saying that they must have more revenue otherwise they won’t be able to explore and, therefore, they won’t maintain an assurance of supply in the future.
The next point that I want to make for the very serious consideration of the minister is this, that there is no assurance that price incentive is the source of providing an assurance of having exploration money. There is plenty of evidence, in hearings that have been held across this country, of the oil companies sort of fudging the picture when they were queried as to exactly how much of a price was required for exploration purposes. They would never give any specific replies and, therefore, we could never find out exactly. In fact, let me give a specific quote.
Before the Energy Board in 1974, the Nova Scotia Public Utilities Commission, which has been wrestling with the oil companies and manifesting a bit more intestinal fortitude in challenging them for their excessive increases in prices, and having their constitutional rights to do that reaffirmed by the courts, pointed out:
“The board counsel -- [that is, the board counsel of the National Energy Board] -- sought opinion from witnesses as to the price of crude oil that would provide the necessary incentive adequate for exploration and development. Most witnesses preferred to answer in general terms, stating that the free play of the international market prices would call forth the exploration appropriate to the time and economic conditions.”
That is just a generality, a sort of a smokescreen to permit the oil companies to continue to operate as they so please, seeking higher prices with no assurance that an appropriate percentage of that higher price is going to be used for exploration, which Ottawa says is vital and which this government says is vital.
Mr. S. Smith: What do you say?
Mr. MacDonald: Of course, it is vital.
Mr. S. Smith: Are you agreeing with them, Donald?
Mr. MacDonald: But the question is, who is going to get the money and who is going to use it?
Mr. S. Smith: I agree with that.
Mr. MacDonald: We will come to that in one moment and I trust you will still agree with me when we get to that. On page 134 of the federal government’s recent energy document, “An Energy Strategy for Canada,” there is a quotation which sets down its position on this:
“A new reporting system will be introduced and should it become necessary, the government of Canada will take action to ensure that an appropriate share of the industry’s cash flow is used for exploration and development.”
“An appropriate share.” Again, vagaries. Nobody knows exactly what the share will be and nobody has attempted to define and to fix it as an obligation and as a responsibility.
Again, when we get on, we find that the provincial government is taking essentially the same position, because in that same document the federal government states: “It is the federal government’s objective to see domestic oil prices increased to a level sufficient to bring on new supplies.” If I may paraphrase, sufficient to do the exploration that is required.
The first principle of Ontario’s pricing policy has been enunciated by this minister as:
“Existing indigenous production must be maintained and future production developed.” But neither the federal document nor the provincial document offers any indication as to the price level that is necessary to achieve this. There has been no effort to sort of break down the price and say, X amount is required for the basic crude, X amount is required for exploration, X amount is required as an appropriate amount to go back to the provinces which own these resources and which are entitled to some return, or to the federal government, and X amount is a legitimate amount of the profits of the company. It’s all in one big ball of wax, so to speak, and nobody has sought to define it.
Having said all that, I now want to get to the main issue that presumably is the point of our debate today; that is, this minister’s pet theme, the proposal for a blended price. It is possible that the proposition of a blended price might have been a useful suggestion three or four years ago. Today, I want to suggest to the minister, it’s outdated. In fact, it’s almost a little silly because, among other things, it avoids the major issue: What is the price for the new oil that will give us adequate money for exploration and development work? And how do you ensure that the work is done, while allowing the public return on the resource to those provinces and to the federal government to the extent that they entitled?
If we could roll back the clock to 1972, it might have made sense to blend prices. Most of the oil we consumed at that time -- and let me remind you of this, Mr. Speaker; it’s almost unbelievable in this day -- most of the oil in 1972 was being produced profitably at $2.75 a barrel. New oil could have been imported at that time and we could have come up with an appropriate blended price. But there’s no logic whatsoever in a proposal that blends old oil prices at $8 a barrel when that price has no relationship at all to the cost of production and one that attempts to blend them with new oil prices in some sort of a systematic approach to production costs.
We don’t know what the production costs are in the instance of the new oil. We know it’s a monopoly price, dictated by the international cartel. We do know, as far as the prices in Canada are concerned, that the cost four years ago was no more than $2.75 and provided a good profit to the companies. What’s happening to all of that margin in between? We know some of it is going to the producing provinces. We know some of it is going to the federal government. But more of it is going now to the companies providing them with the wherewithal for exploration -- and they are not doing adequate exploration. What assurance does the government have, by any further increase in price, that they’re going to do further exploration.
In other words, the basic problem with both approaches -- the approach of the federal government and the approach of this government in its blended price -- is that the kind of information that is required for intelligent policy-making, the kind of perspective that is needed in the role of energy in the economy as a whole, and the kind of control that is needed to implement the policy, demands a much greater direct public role in energy planning, in decision-making and in implementing than either the Tories here in Queen’s Park or the Liberals in Ottawa are willing to tolerate. Therefore, in their own ways -- different ways, admittedly -- they are still permitting the energy policy of this nation to be dictated by the multinational corporations.
Mr. Martel: What stake has the Premier got in it?
Mr. MacDonald: In short -- let me say this to the minister as kindly as I can -- all his efforts to promote blended pricing won’t be accepted by the federal government, it’s not acceptable to the producing provinces, including this government’s friends in Alberta.
Hon. Mr. Davis: Nor to yours.
Mr. MacDonald: It’s this government’s friends in Alberta who produce 85 per cent of it, so let’s not confuse the issue.
Mr. Peterson: We don’t have any friends there; we are lucky.
Mr. Foulds: You don’t have friends anywhere.
Mr. MacDonald: What the minister is engaged in is a futile exercise. He knows it’s not acceptable to the federal government. He knows it’s not acceptable to the producing provinces. It certainly isn’t acceptable to the consumers. What is he engaged in the exercise for? Dare I suggest a little hit of grandstanding to give the image of activity in relationship to a serious problem when the minister knows it’s not acceptable?
Hon. Mr. Timbrell: What would you do -- just buy it right across the board?
Mr. MacDonald: I’m glad the minister raised that, because I’ll suggest to him what should be done.
Mr. Martel: And we hope that the minister will learn.
Mr. MacDonald: At the very least, part of the industry has got to be brought into public ownership, because only in that way are we going to have some foot in the door and some capacity to find out what the facts are so that we can shape policy.
In other words, only in that way can the minister get himself out of the embarrassing situation of accepting the self-serving figures of the industry upon which he goes on to shape so-called public policy. The minister has to gain information to costs and reserves to ant as a benchmark for the industry, to implement exploration and development programmes.
In addition, Mr. Speaker, there must be a national pricing policy that deals explicitly -- and I underline explicitly -- to see appropriate returns to the provinces and to the federal government for the sale of crude oil and with the cash required for exploration and development. We just don’t go along with handing over great amounts of money -- the $8 now, or the $12.60 that we’re moving towards -- and let the oil companies play behind the scenes through their boards down in New York in accordance with their international interests -- not our interests here in Canada. That’s what the government is walking into at the present time, Mr. Speaker.
I say this must be done explicitly. By explicitly, I mean that the price should contain a specific provincial and federal return agreed to by the parties concerned; a specific amount reserved for exploration and development, and a specific amount allocated for actual production costs. Then we’ll know exactly where we are. We won’t be engaged in this sort of cat and mouse game of trying to find out who has the money and where it’s going and whether they’re going to use it for the admittedly important need of continued exploration.
How could the funds for exploration and development be reserved for the purpose that we want them? I suggest to you, Mr. Speaker, that it could be done by the federal government collecting the exploration and development funds and disposing of them only by way of compensation for proven activity. The funds could be used to finance development at a pace and in those geographic areas dictated by public need, and could be directed towards public rather than towards private ventures.
This proposition that the government has to move something into the private sector with a public capacity is not a new one. It was one that was introduced in Ottawa, and is part of the whole effort to shape a new policy. Indeed, the federal government even moved a week or so ago -- or was it a month ago? -- and suggested that they were going to bring one al company under public ownership. Interestingly enough, they picked on Atlantic-Richfield, which is not really an integrated company and, therefore, won’t give them an effective entry into the field so that they can get all of the information. Atlantic-Richfield isn’t active all across this country. In short, they’re picking on an ineffective means of achieving what they themselves have conceded is a desirable goal.
Just let me summarize this, Mr. Speaker. We have got to have greater control of this industry if you’re going to be able to shape public policy. The New Democratic Party’s position is we are opposed to the $2 a barrel increase on the grounds that it represents rationing by the pocketbook and it’s ineffective and inequitable; and it simply increases the price, but it won’t generate the exploration and development which is needed. It won’t give any assurance to us what will be done.
Also, any price increase that is agreed to should go, in its entirety, into the exploration and development funds to be used by Petro-Canada. They could do, or contract out future exploration and development work on land not now under lease.
Existing leases should be cancelled, expropriated or renegotiated to put exploration and development under public ownership and control, so that we will know what is happening. That’s the kind of thing that even the Energy Minister’s colleague in the cabinet, the Treasurer, suggested with regard to the gas pipeline -- that exploration for gas was something that is necessary. And some of the minister’s other colleagues who are very active at the federal level have conceded it is necessary if we are going to have control of the industry. We must have greater public presence in the actual exploration, the actual development and the actual ownership and control, otherwise we will continue to be victimized and have this government’s policies shaped by the multi-national corporations.
It involves, in our firm submission, not something like Atlantic-Richfield being nationalized and giving government the weapon it needs, but a company like Imperial Oil -- an integrated company operating across this country which can be found in the industry all the way from exploration right through the whole process to the actual retailing. If that is done, the government will be pushing the federal government to something which is an effective policy. I suggest that that must be done if the minister is going to do something other than just grandstanding and talking about a blended price which is not going to be accepted and, even if it were accepted, doesn’t meet the basic problems.
Mr. Peterson: Mr. Speaker, I’d like to thank the Premier (Mr. Davis) for organizing this debate today.
Mr. Peterson: I’m not like a lot of people who suspect his motives on this particular and, I gather, unique opportunity that we all have to express our ideas prior to the meeting this Thursday. I personally have a great deal of respect for the Premier for initiating this move. I think it’ll be helpful in the future and I trust he will take, verbatim, all our comments to Ottawa and discuss them there.
Mr. Samis: Verbatim?
Mr. Peterson: We’re trusting that he will.
Mr. Peterson: May I say that I don’t believe this is really a talk about oil pricing. I think we’re into far more critical and much broader issues in this particular discussion, and I know that my friend from York South (Mr. MacDonald) discussed some of these. I must say I am in sympathy with some of his views but certainly not all of them.
Mr. Martel: I wonder which ones.
Mr. Peterson: If you guys would just be quiet for a while and listen, you’ll learn a lot.
Mr. Peterson: I think that this conversation and this discussion today is about the entire matter of energy policy which I find sadly lacking, not only in this province but in the country as a whole.
Mr. Samis: The federal level.
Mr. Peterson: I think we have some positive and constructive suggestions to make to the Premier and to the minister on this particular issue.
Let us not forget, too, that it’s not a discussion just about pricing and where the pricing should be. It’s a discussion about taxes, government involvement, where that money goes and who pays it. Let us look at the history in the last little while. Even at $3.80 for oil the companies were getting $1.49; at $8 they’re getting $1.70 and various other wrinkles depending on the amount of exploration. The point is that the fundamental abuse and the fundamental problem, in my opinion, has been a lack of government leadership in this particular area.
Mr. Samis: Your friends, the feds.
Mr. Dukszta: At the federal level.
Mr. Peterson: I think, in addition, there’s a substantial lack of credibility both in the industry and in the government. I know of no other business and no other industry which has given the public worse information over the years. If we examine all the public pronouncements on our reserves and pricing and our position, I think members will find no industry -- or no subject has been more poorly treated in terms of accurate information than this very critical one.
Mr. Mattel: Deliberately.
Mr. MacDonald: We’re in agreement so far.
Mr. Peterson: Good, I hope I’m not being redundant here, so I’ll try to think of something more to say.
I’m very concerned about the industry and as fundamental as anything else in this province is the view the man on the street has of this particular problem. I have discussed this problem with many people in all walks of life and I think it’s fair to say that there’s unanimity that governments in this particular area have no credibility and the industry has no credibility.
I don’t think we should fall for that old saw that the companies need more money just to explore, without some mechanism of monitoring to make sure that they do do the exploration. I use, for example, Hudson’s Bay Oil and Mobil. From 1972 to 1974, combined revenue increased from $322 million to $604 million, an increase of 87 per cent. The after-tax earnings increased from $69 million to $144 million, an average of 79 per cent. Exploration on a combined basis went from $39 million to $38 million, down two per cent, but as a percentage of revenue went from 12 per cent to 6.4 per cent.
We get all these old saws that they need more exploration and need more investment yet I don’t see it forthcoming. Although there’s talk that exploration was up this particular year I think the figures say it was down last year over 1974 and it was down 1974 over 1973. That concerns me.
The government’s record in this particular area has been equally poor. We just have to look at and compare the “Energy Policy for Canada” published in 1973 with the energy strategy published in 1976. We find that even in their wildest dreams, in $6 oil in those days, they projected a surplus too and lots of supply into the sear 2000.
The reserve position has been netted out to about 40 per cent of the reserve position held three to four years ago. To me, you can’t expect the public to have faith in us as politicians and in companies of this magnitude with that kind of poor information. I think it is time we recognized the vicissitudes and the difficulties; and recognized, I think in fairness, that this isn’t completely a function of had faith. I think it is the function of poor organization and lack of co-ordination and lack of very serious commitment to a problem that we, in the Liberal Party in the Province of Ontario, see as perhaps the most fundamental issue facing people of Ontario and people of Canada in the next 10, 20, 30, 40 and 50 years.
We would be irresponsible if we stood up here and articulated a policy for the next six months. I think it is time that politicians had some kind of perspective and long-term vision on this particular policy.
The kinds of things that are important to us as Liberals are these, and I would like to say this to the Premier and to the minister: I think it is very important that they, as the government of this province, attempt to restore some of the credibility between business and government and the people of this province. I think we should have a policy aimed toward that; and granted it will be difficult.
I think we have an obligation to inform the public of this province of the real problems: of the real problems and not just imagined problems. We are going to have to discuss reserve positions and profits, and refinery profits, and we are going to have to give the people of this province and this country the complete information. I think that’s the least obligation we have. I think the Premier is in a position to do something about that cry quickly and I hope he will take these remarks to those people in Ottawa with whom we will be dealing at his private luncheon on Thursday.
I must tell the Premier, I do commend his stand on insisting on open meetings. I think he has a responsibility and I respect the view he took to make this a public, open discussion; this is not the kind of discussion that should be behind closed doors, in our position.
Let me say this before I discuss our specific suggestions. We believe very strongly that Ontario has an obligation to take a lead in national unity, and one of the very important aspects of that, in our particular view, is a national oil price and subsidized and equalized payments. I hope the Premier will always take that view of a strong Ontario, a strong Canada. I think he will be well respected by the people of this province for that kind of large, Canadian view.
Let me say that I think one of the problems, as I see it, in the government’s proposal, is that it has not addressed its mind seriously enough to the problem of supply. I think I agree with most observers that this blended price proposal is at best a superficial one in the circumstances. Although the government pays lip service to making its No. 1 priority security of supply, I see no positive contributions to that particular proposition. I think it is something that we, as Liberals, are very concerned about in this province; concerned about, as I have said, in the next 10, 20, 30 and 40 years. We think that has to be a very high priority.
The government’s position of maintaining the competitive position of Canada and of Ontario in the world market is an admirable one, but I think it has to adjust to the realities of a situation. I don’t think one waits until the last drop of oil spills to adjust to those new realities.
You know, Mr. Speaker, the facts are that several countries in this world are paying 50 per cent more than Canada for energy at this particular point in time, The average price to the US, contrary to the minister’s figures, is on the average 20 per cent more than in Canada; it is around $9.50 a barrel, and not the $7.76 which is the domestic price. I recommend to the minister that he checks his figures out.
We sympathize very much for the position of losing jobs in Ontario. We don’t want to do that, but we think the government has to face the inevitability of the price increasing as slowly as possible, measured as well in economic terms, as possibly can be done.
An hon. member: Here’s the federal pitch.
Mr. Peterson: We don’t like it. Let me say this to you all: We don’t want increased prices but we are not like these people to the right of us who want to be insulated from the realities forever and forever. We are going to have to learn to be competitive in the world situation. We have to face up to the facts of life, we can’t perpetually insulate ourselves.
We are spending billions of dollars to equalize; we have a net deficit from importing oil of these phenomenal billions of dollars.
Mr. Peterson: We are going to have to address ourselves to some of the realities. You can’t insulate, you can’t subsidize and you can’t regulate forever against these economic realities. We are in a position where we either have to adapt or to die. The question is when that is going to be and how it’s staged and how it is organized.
What depresses me the most is that I have seen the government of this province make absolutely no allowance for the new economic realities that came into place in 1973 when the international price of crude oil started to go up. Those are realities. We must face them and we must deal with them. It is going to require a very substantial change in the way we run the business in this province and the way we live in this province, in that we are an energy-intensive and an energy-poor province. We have to face up now to those realities and start adjusting for the day when we don’t have any more. Those are the realities. Just check the figures about how much we’ve got in this province.
Mr. Martel: Are we an energy-poor country?
Mr. Peterson: Just check the figures. I think with the member’s party in power we would be a hell of a lot poorer than we are now.
Mr. Martel: We wouldn’t give any more away than your friends in Ottawa.
Hon. Mr. Davis: We will make sure they don’t get into power, so we can take that part out of their control.
Mr. Peterson: I will give this assurance, if it is not you, it will be us.
Mr. Roy: It is beyond even your control.
Hon. Mr. Davis: We are going to work at it though.
Mr. Peterson: Even the C. D. Howe Institute, an independent, respected authority, in its wisdom sees that there is some very wrenching adjustments with this whole problem of oil pricing and if we don’t start to move on a phased, intelligent basis into world pricing.
I just want to deal with a few of the other suggestions of the minister’s report when he was assessing the effect on consumers. We share that feeling that we don’t want to see the consumers of this country pay any more than they have to in this province. But let’s realize this, as the price moves up, there is going to be some room to move with the excise tax. In other words, the same amount will not be required for equalization. One of the things this government should fight for very hard is, if the price goes up, that the excise tax comes off to the same extent so that it ameliorates to some extent the retail pump price of gasoline.
I am concerned about this government’s pricing proposition of old oil, new oil and imported oil. I think that the problems of sorting out what it is, where it belongs and what the costs are by a big pool as opposed to a small pool or close to a distribution system or far away or not far away don’t matter. It really doesn’t matter whether it’s old oil or new oil or old dollars or new dollars. What really matters is that we have a supply at a reasonable cost and that we can adjust our system to the realities as they are.
Mr. MacDonald: What does that mean?
Mr. Peterson: Hang on.
Mr. MacDonald: I am listening to see how you are going to increase the amount of exploration. We are agreed on that but I want to see how you are going to do that.
Mr. Peterson: The minister’s concern with the financial position of the producing provinces is perhaps legitimate in that they are friends of those people over there, but we are in the very fortunate position that none of them are friends of ours. And we don’t have to look after our people out there.
Mr. Peterson: We think that those governments are getting a big enough share of the oil dollar and the oil pact.
Mr. Peterson: They are getting money today heretofore uncontemplated. With a $2 price increase in oil, Alberta would get another $400 million. We don’t feel that is necessary. We don’t feel that is necessary in their coffers. We think there are lots of better places for that money.
Let me tell you, Mr. Speaker, Alberta is not a member of OPEC yet. We are recommending that all increases in the price of crude oil go to a co-ordinating federal-provincial agency to make sure that they don’t go into oil company profits, and to make sure that they go for a carefully planned, well-orchestrated government industry initiative to meet --
Mr. Martel: The member for York South just said that for you.
Mr. Peterson: -- exploration and research into new forms of energy.
Mr. MacDonald: Forgive me, while I catch my breath.
Mr. S. Smith: That’s not nationalizing the companies. Take it easy. It’s not nationalization.
Mr. Peterson: We do not see this as an isolated problem restricted only to crude oil pricing, but we say it must be discussed and must be worked on in the context of many forms of energy. We recognize a reality that our funny friends to the right do not recognize, that eventually the prices will have to go tip to some extent.
Mr. Samis: That’s not what you said five minutes ago.
Mr. Peterson: We are concerned, as I said before, that this money goes to finance research and exploration. We are concerned about having a reporting system from the oil companies so that the people of this province and this country understand what all the money is being used for, where it is going and at what particular time.
We are going to need a massive planning effort for all of the energy sources in this province and this country, and we would charge this agency to do that planning effort, taking into account all forms of energy and, at the same time, this multi-faceted energy policy. Believe me, there is no one thing which is going to solve the very serious problems facing us at this time. We are going to have to launch on many phases, many times.
We are going to have to tuck into a massive conservation programme toward which this province has been absolutely and abjectly irresponsible. Every single programme we have now is geared toward more and more consumption and nothing toward conservation. I would say to the government of this province that it is going to have to have one very quickly and very soon. We are going to have to introduce rate structures for the pricing of our energy products so that the more one uses, the more one pays and not vice versa. We are going to have to punish the over-abusers of our system and that’s going to come very quickly, Mr. Speaker.
Mr. S. Smith: What have you done about this -- the big cars, the swimming pools, the Hydro rates?
Mr. Peterson: I recommend this to the minister. It has been under study for years and years but nothing has happened. We have been talking like this for a long time.
We are going to need a massive national programme to substitute plentiful for scarce resources. I am saying that we need the transportation systems and the delivery systems for our massive coal deposits. It appears from the numbers -- and I am not suggesting they are absolutely correct because so many of the numbers we have been handed today are incorrect -- that our reserve position is far greater in that particular energy source. We are going to have to explore -- and this agency can explore -- on a joint venture or partnership basis with the people who have the expertise today. It doesn’t offend us whatsoever that private enterprise is involved in that exploration.
We are going to have to develop a priority because there is a limited amount of capital available for the entirely capital-intensive kind of work which is going to have to go on. It is estimated that we will need $100 billion in the next 10 years in this country to develop in all areas of energy. We are going to need somebody to co-ordinate that an apportion that and distribute it rateably on the basis of priorities.
We are going to have to spend a great deal on delivery systems for coal and oil and natural gas. We are going to have to spend a great deal for synthetic oils and for coal gasification in the oil sands. We are going to have to get that money from somewhere and I would suggest that the excess profit which comes from any increase can go to that kind of a national energy policy, co-ordinated with our provincial government here in the Province of Ontario and with its complete support. Then we can have the kind of national programme we need.
Let me just say one thing. There is no one who is an expert on the energy business in Canada and, indeed, the world today who doesn’t recognize that ultimately our solution is renewable resources. I would say to the Premier, the Minister of Energy and the Minister of Industry and Tourism (Mr. Bennett), why should we let these technologies and this research and development get out of our hands? Why don’t we start that kind of initiative which we need so badly to develop the industrialization and to keep the jobs in this Province of Ontario? I would say it’s going to be a few years before it does come on stream but let’s start doing it now so that we have something unique and valuable to us alone because that is our only solution to the human dilemma. There is no question about that.
I would say that where I think the government has been so terribly irresponsible is it has been looking at old solutions and hasn’t adjusted to the new realities of the reserve position and the pricing position as we currently know them. I recommend to the government that it takes some of these suggestions to those people in Ottawa whom we used to know -- prior to two weekends ago -- and suggest to them that those kind of solutions are what we need for this very serious dilemma today.
Hon. Mr. Timbrell: Mr. Speaker, I intend to make today a comprehensive statement on oil and natural gas pricing within the context of this province and the country. I will not attempt to comment beyond this because it is a broad enough subject as it is and time does not permit. I will, at the conclusion of my previously prepared remarks perhaps have a few comments to make on some of the things said by the members for York South (Mr. MacDonald) and for London Centre (Mr. Peterson).
I want to say that I’m particularly pleased that this debate is taking place at this time, only three days before we meet in Ottawa. The involvement of all parties is I think, a very desirable thing, so that the people of the province may know where each of the parties stands. I must say I had hoped that in the interests of the people of Ontario it would be possible to have the three parties united, that we could go to Ottawa with this House united --
Mr. Martel: Come on over, Dennis.
Hon. Mr. Timbrell: -- to try to bring about some equity for the people of Ontario.
Mr. S. Smith: Change your mind and we will be united.
An hon. member: Accept our policy.
Hon. Mr. Timbrell: I’m sure, Mr. Speaker, all members are well aware that this province imports 80 per cent of its energy. We have, unfortunately, modest indigenous supplies of lignite, some crude oil, very little natural gas, very modest amounts, in fact. Unfortunately our primary sources --
Mr. Martel: What about uranium?
Hon. Mr. Timbrell: -- exist only in the forms of hydraulic power and uranium.
Of the primary energy that is consumed in Ontario, approximately 32 per cent is used in the form of electricity, some of which, of course, is generated from the burning of fossil fuels. The remaining 68 per cent is fossil fuels; 64 per cent is crude oil and natural gas and the remaining four per cent is coal which is used by consumers other than Ontario Hydro and that’s mainly the steel industry.
The crude oil and natural gas that we use comes from the western provinces except for that part of our province which lies east of the so-called Ottawa Valley line for which oil is supplied from off-shore through OPEC. As the Minister of Energy I have to be concerned with the entire spectrum of energy sources, the supply, demand and cost interrelationship which exists between them, and the effect of these interrelationships on the overall economy of our province.
I cannot ignore these factors, as the federal government seems to want to do. To pursue a higher price for one form of energy while at the same time refusing to take note of the broader consequences of such a move is not only folly but basically irresponsible. There is a very real danger that excessive concentration on rapid price increases for crude oil and natural gas will, for example, create demand problems for Ontario Hydra which will be far beyond those which they can meet.
There is no short-term prospect of our relative reliance on crude oil and natural gas altering significantly. In fact, I would have to say that it is our expectation that we will still be dependent on these two energy sources for some two-thirds of the energy which we consume a decade, probably two decades from now.
The hard fact is that there are no economically viable alternatives to crude oil and natural gas as major sources for this province. For example, as members of the select committee on Hydro’s 1976 rates will be well aware, to alter the nuclear component of primary energy in Ontario from five per cent to, for example, 20 per cent, would, in the first instance, be a monumental task and in the second, would impose absolutely unendurable capital pressures.
I don’t propose to discuss with the hon. members some of the alternative energy sources today, namely coal, uranium and hydraulic power. All of these sources obviously do have a relevance but the meeting this week on Thursday will be concerned with the pricing of crude oil and natural gas. It seems appropriate that those two sources should command the concerned attention of this Legislature.
The other sources are important. However, they are not an economically viable alternative that could displace crude oil and natural gas as energy sources.
Mr. S. Smith: They never will be, if you don’t put any money into them.
Hon. Mr. Timbrell: We are concerned that unrealistic and in our view unnecessary price increases for crude oil and natural gas could place intolerable pressures on Ontario’s electrical system, given the fact that individuals could begin to shift from other energy sources to electricity.
Everyone in Ontario has reason to be concerned about the security of supply and the degree of price stability for Canadian crude oil and natural gas and the impact these factors may have on the demand for electricity and its long-term costs.
Mr. Bullbrook: You’re right! It’s Canadian crude oil not Alberta crude oil.
Hon. Mr. Timbrell: We are dependent upon large supplies of crude oil and natural gas for energy for this province and it is inescapable that this will continue to be our situation for the predictable future. Therefore it is appropriate that members of the Legislature should be deeply concerned as to both Ontario and national policy planning with respect to energy sources.
The hon. members are well aware that the government of Ontario is of the view that the policies of the government of Canada have not been sensitive to the real needs of this nation nor of this province. That the policies have been inadequate and misdirected is not surprising, given the incredible ineptness of the inventorying of our national crude oil and national gas supplies.
In 1972 and 1973 our Premier advised this Legislature that he was concerned as to sources of energy supply, an advice which he had received from the advisory committee on energy, which had been chaired by the late Dr. John Deutsch. Dr. Deutsch’s concerns had been strongly reiterated in the report prepared by my predecessor when he was the Premier’s parliamentary assistant for energy.
In 1972, Dr. Deutsch advised that the need for long-range policy formulation and planning with respect to energy supply was, to quote him, “immediate.” In the spring of 1973, the member for Chatham-Kent (Mr. McKeough) advised the Premier and the Premier advised this Legislature that, and I quote: “Canada, operating in the absence of a clearly articulated national energy policy, is not in a position to protect our domestic industry and users in terms of price, supply, or indeed, security of supply.”
Subsequent to these Ontario expressions of urgent concern, the federal Department of Energy, Mines and Resources published a document entitled “An Energy Policy for Canada.” On page 81 of that report, the federal government recorded its view, which was a total contradiction of Ontario’s express and published view as of that date. Incredibly, EM and R’s published view was that this country’s resource base was such that we had, and let me quote: “A more than adequate supply to cover foreseeable requirements to the year 2000.” They went on to add: “Moderate to large production surpluses could be available for export.”
I emphasize again, Mr. Speaker, that we were already on record at that point in time before that report ever came out.
Mr. S. Smith: Not very loud.
Mr. Roy: You are getting great support from your caucus.
Hon. Mr. Timbrell: You aren’t listening very well either. I’m not supposed to waste my time nor the time of this House, Mr. Speaker, in ravaging the already ravaged reputation of EM and R and the government of this country in the matter of energy policy. But the fact is that as late as three years ago the government of Canada was designing policy on the basis of inadequate research an inaccurate information has a vital relevance today.
The surpluses for exports which had been projected by the federal government in 1973 have become the reality of serious potential supply difficulties today. The policy has been reversed in important respects but has not been made more relevant to the needs of Canada and the imperatives of national economic and industrial planning.
The policy of our national leaders now is to track the international price of crude oil, which is apparently supported, Mr. Speaker, by the Liberal Party in Ontario, of Ontario, for Ontario or whatever. At present, crude oil from the international market is being laid down in Montreal at about $13.30 a barrel. That compares to about $8.80 a barrel for domestically-produced crude delivered in Toronto, with the difference being made up from the compensation fund which is a special fund set up by the federal government and fed from the export levy on crude oil that we export to the United States and the revenue from the 10-cents-per-gallon federal government excise tax on gasoline.
If I may, I would like to quote a paragraph from the recently-released document “An Energy Strategy for Canada” which is, apparently, the latest word from EM and R, the Department of Energy, Mines and Resources which, increasingly and unfortunately, is becoming known better as the Department of Errors, Mistakes and Repairs.
Mr. Peterson: Like your Ministry of Health.
Hon. Mr. Timbrell: Either way, EM and R say this:
“It is the federal government’s objective to see domestic oil prices increase to a level sufficient to bring on new Canadian supplies. To the degree that this level is lower than international oil prices it is a differential for the benefit of Canadian consumers and Canadian producers. Should it be the case that a price sufficient to bring on Canadian supplies were to exceed international prices, it would be necessary to make a further decision, as we did in 1961, as to whether it is in our best interests to continue to develop our own resources or to import supplies from other countries.”
The government of Canada hasn’t set a target although they relate their price objective to the world price of about $13.30 in Montreal. But one has to ask what will the policy be if the price moves to $20 a barrel or goes to $50 a barrel? And what if, as The Economist has predicted, the extravagant OPEC price calls out such a flood of supply that the world price actually falls back?
Presumably, in EM and R, the Error and Mistakes functions will be pre-empted by the activities of Repairs.
I might also add that this same report, “An Energy Strategy for Canada,” visualizes the possibility that the immense resources of the Athabasca tar sands may not be developed in any substantial measure because of the per-barrel price that will be required to cover production costs. So the policy of tracking international prices includes as a component the possibility that it may not be able to use these immense resources, a potential which we are told may be equivalent to the entire resources of the Persian Gulf.
Mr. S. Smith: I wonder if it costs $15 a barrel to take it out? Geez, what a genius. Where did you find this one?
Hon. Mr. Timbrell: Under the proposal that has been made by the government of Ontario, Canada’s domestic price would not briskly surge to some undefined world level. It is highly probable that under the Ontario proposal, Canada, especially Alberta, would in fact gain the national benefit of the development of such costly resources as the tar sands. The Ontario proposal might result in the par-barrel price of oil from costly sources exceeding the world price but, because the old oil would be held to a lower price, the Canadian advantage could still be maintained.
Mr. S. Smith: There won’t be any old oil in eight years’ time. That is kindergarten stuff.
Hon. Mr. Timbrell: I’d like to go through the Ontario proposal in a little more detail. In designing the policy, we first outlined the real requirements of an energy policy that would, in our view, best serve this nation and we’ve stated relevant principles.
Mr. S. Smith: That’s just pathetic.
Hon. Mr. Timbrell: It seemed to us that the principles must first relate to supply and price and so we postulated that the policy must contribute to the realization of an adequate and secure supply and must do it at a price that from all perspectives was reasonable. The reasonableness of price obviously would be defined differently depending upon one perspective, but it seemed to us that in the first instance it must not be unfair to the producing provinces.
Mr. S. Smith: Why not?
Hon. Mr. Timbrell: At the same time, it must not do violence to the ability of our export industries to compete, so must result in a reasonable relationship to crude oil prices in countries with which we compete, especially the United States. It must not ignore the interests of consumers, those for whom the whole system exists. It should permit citizens and industry to project with reasonable confidence the approximate levels of crude oil prices five years and 10 years into the future. Finally, it must not be such as to disrupt existing financial relationships among the provinces.
In other words, the national energy plan must be part of total national planning and must not be insulated from the well-being of consumers, the relationships of provinces, a national strategy with respect to industry, and the broadly-defined need of the nation.
Now, one thing is clear about the unfolding federal energy policy.
Mr. S. Smith: If I had a researcher who produced this document, I would fire him.
Hon. Mr. Timbrell: It is uncertain in everything with the sole exception -- Sorry, are you saying that you would fire me?
Mr. S. Smith: You wouldn’t have got past the office to get hired, but believe me if I had a researcher who produced this document I would fire him.
Mr. Speaker: Order, please. The hon. minister has the floor.
Hon. Mr. Timbrell: That’s the best compliment I’ve had since I don’t know when.
Mr. Speaker, everything that the feds are saying is uncertain with the sole exception of an unblinking and unthinking determination to arbitrarily increase the price of crude oil with the price of natural gas so locked to it that the natural gas price is automatically moved up every time the price of crude oil is itself escalated.
The essence of the Ontario proposal is that costs of producing crude oil vary widely, and that the lower-cost oil should be priced at a relatively lower level in order to permit the development of the higher-cost oil resources without the Canadian price becoming intolerably high, measured against the essential principles that should influence price.
Mr. Peterson: When are you going to move it up?
Hon. Mr. Timbrell: The federal policy of automatically raising the price of crude oil a couple of dollars every year, we think should be altered to a policy that relates in a reasonable way the selling price of a barrel of oil to the cost of producing that barrel of oil.
Mr. Martel: That’s something new!
Hon. Mr. Timbrell: The cost of crude oil from existing fields -- old oil, if you will -- has been long established and the present price of $8 a barrel would seem, at this time, to be adequate to cover those historic costs. But in many cases such a price would not cover the cost of producing crude or synthetic oil from such sources as new fields, frontier sources, the oil sands and heavy oil and, of course, secondary and tertiary recovery from existing oil fields. For this “new” crude oil there would be a higher price that bore an appropriate relationship to the higher production costs.
I might pause and note that the price for new oil might, if costs so dictated, exceed the current international price of crude oil. This could mean that we might be able to expand production from the oil sense even if the cost dictated that we pay, for example, $15 a barrel. But the essential element, if the principle of consumer protection is also to be honoured, is that we concurrently hold the price of old oil at, for example, $8 in order that the subsequent blended price does not move to levels unacceptable when measured against the principles applied to pricing.
Mr. S. Smith: What old oil? By the time the tar sands come there won’t be any old oil.
Hon. Mr. Timbrell: Oil, on the international market would, of course, continue to be bought at the prices charged by the producing countries. Whether that proved to be $7 or $17 or $27 a barrel, it would have to be blended into the price that we, as Canadians, would have to pay.
The three prices would be blended. In other words, the volume of oil from each of these sources will be multiplied by the price for the oil from that one source and one price -- a weighted average price -- would result. This price would be reduced by the amount of revenue received by the federal government from its export tax on crude oil shipped to the United States, and the 10 cents per gallon federal excise tax on gasoline.
This blended price would be the amount paid by the refineries and this would result in equalizing the price of crude oil other than for differences in transportation costs in all parts of Canada. That cost to the refineries, and so to the consumers, would be related to the cost of producing that crude oil.
This proposal would not avoid an increase in the price of energy and it is not necessarily designed to do so. What it would do is to relate that increased cost directly to the calling-out of new supplies of crude oil. The cost of finding and developing the new oil sources is higher and it is obvious that it should demand a price that compensates the producers.
Mr. S. Smith: Then what happens to those wonderful Ontario consumers you were worried about a few moments ago?
Hon. Mr. Davis: You haven’t read it properly.
Hon. Mr. Timbrell: It is still our view, however, that there is little reason why the cost of producing one cupful should determine the price of the whole barrel of oil. The Ontario proposal would result in a gradual and predictable upward movement in the price of crude oil.
Mr. S. Smith: I am listening to it, Even if it is more expensive we will take it anyway’, that’s what he is saying.
Mr. Speaker: Order, please. The hon. minister is the only one who has the floor at the present time. Thank you.
Hon. Mr. Timbrell: The fact that it will be gradual and predictable are both benefits. In the current year, applying prices of $8 for old oil, the existing price for international oil, and an appropriate incentive price for new oil, it is our view that the price would increase about 20 cents a barrel. Contrast that with the $1.50 to $2 a barrel that is generally assumed will be suggested at the first ministers’ meeting by the federal government and several of the provinces including Saskatchewan and Alberta.
The Ontario proposal would retain the important principle of equality of price, other than transport charges that presently exist. It would automatically balance the federal compensation fund. It assures that the producing companies will be provided with an incentive to do a job that they can do better than anyone else -- produce crude oil and natural gas so that they would gain a return that bore an appropriate relationship to the higher costs of producing this new oil.
In addition to being fair to the producing provinces and producing companies, it would pass on to the consumers only those costs necessary to assure that the costs of producing the energy are covered, while providing an incentive to move in the direction of domestic self-sufficiency or, if you prefer, the new Ottawa buzz-word, “self-reliance”.
This is in contrast to the procedure followed in recent years. The present arrangement of periodically and arbitrarily increasing the price and taking away most of the increase in the form of royalties and federal government taxes, causes economic disruption in the consuming regions and in spite of the high cost to consumers, the relationship of supply from domestic source and consumption is worsening and, if EM&R’s “An Energy Strategy for Canada” is to be believed, that relationship is likely to worsen even further under this so-called federal policy.
I have discussed the proposal with other provincial governments, with the federal government, with a number of the oil-producing companies and with citizens’ groups around the province.
Mr. S. Smith: And they have laughed.
Mr. Shore: How are you making out?
Mr. S. Smith: And when they stop laughing what do they say?
Hon. Mr. Timbrell: The major issue that has been raised, and certainly the one with the greatest merit, is the problem of cash flow for the producing companies. It is pointed out, with considerable validity, that holding the price of old oil at $8 a barrel would limit cash flow to the point where it would be difficult for the companies to accumulate the capital that would enable them to develop the new sources of oil.
There is virtue in this argument, but there is an answer. The answer, we feel, is that governments -- particularly the federal government -- should not extract so much of the cash flow from current royalties and corporation taxes.
Hon. Mr. Davis: It is so simple, it must be --
Mr. S. Smith: That’s right, Alberta should keep extracting; your friends in Alberta need a national heritage.
Hon. Mr. Timbrell: Some also expressed the concerns that relating the cost of producing the oil and the price received would convert producers into government-controlled public utilities.
Mr. R. S. Smith: You are saying, “Give it to Alberta and not to the federal government.”
Hon. Mr. Timbrell: That is not the intent of our proposal and it need not be the effect. Industry spokesmen have commented, probably with a good deal of justification, that the federal government and the producing provinces will be very unlikely to accept this proposal.
I don’t challenge that conclusion. However, if that proves to be the case -- and it may -- the onus is on the federal government to come forward with a further alternative which honours those principles of energy pricing which clearly should determine the procedures to be followed.
It has also been suggested that the Ontario proposal would be difficult to administer. I don’t accept that the problems of the administration of our system would be any more involved or any more cumbersome than for the present policy. If this system best serves the public, I think it is wrong to suggest that we can’t do it.
Certainly we are not saying that the Ontario proposal is necessarily the only alternative. We are saying it will accomplish important and essential national purposes which will not be accomplished by the proposed federal policy of simply escalating price. There may be another policy option which would serve this nation better than the one we are advocating. If so, we would be pleased to adopt it as our own.
I would like also to take this opportunity to discuss natural gas supply and pricing with the hon. members. Attention has been focused on the price of crude oil in much of the discussion which has taken place with respect to Ontario’s preparations and proposals for this upcoming meeting. At that meeting, the federal government and the governments of the producing provinces will concurrently seek an increase in the price of natural gas.
I propose to review the mechanisms which have been put in place to deal with the pricing of gas. I propose to discuss the effect of current price levels in our marketplaces and their effect on exploration and development. I will also discuss the role of TransCanada Pipe Lines, a matter of concern to the Province of Alberta and, of course, for different reasons and goals, though, to Ontario.
A decision of considerable importance relative to the pricing of natural gas was implemented on Nov. 1, 1975. On that date the federal government, acting under the authority of the Petroleum Administration Act, fixed the citygate price for high-load-factor supplies of natural gas in southern Ontario at $1.25 per million Btu. For the information of the members, Mr. Speaker, 1,000 cu ft of natural gas do contain one million Btu. The National Energy Board, at the same time, approved a price of 72 cents per mcf payable at the wellhead to producers in Alberta for gas sold beyond the borders of that province. The 72-cent wellhead price results when transportation costs are deducted from the southern Ontario citygate price of $1.25.
It should be recalled, I think, that at the first ministers’ conference last year and in this Legislature, the Premier urged the early enactment by the federal Parliament of the Petroleum Administration Act in order that that government would then be able to fix the price of natural gas moving in interprovincial trade. Had Parliament failed to respond to this urging by my leader, consumers in Ontario would have been faced with the imposition of natural gas prices of $1.15 per mcf at the wellhead in Alberta -- a substantially higher price than the 72 cents per mcf or per million Btu approved by the NEB.
The figure of $1.15 at the wellhead was determined by arbitrators working in accordance with the Alberta Arbitrations Act. Holding the price of 72 cents we think was a considerable achievement but it is worth noting that even this price is a very substantial increase over the average wellhead price of approximately 45 cents which had prevailed in 1975.
The increase is very dramatic indeed if we compare it with the average field price for natural gas produced in Alberta in 1972; in that year the average field price was 10 cents per million Btu. In short, the increases in natural gas prices imposed on Ontario consumers by the federal government have not only been rapid, they have also been massive.
In addition, these figures do not fully state the benefits gained by the producing provinces as a consequence of these federal policies.
It was also on Nov. 1, 1975, that the federal government fixed the border price of natural gas being exported from Canada at $1.60 per million Btu. Unlike the tax on the exports of oil which is paid, as I mentioned earlier, into the oil compensation fund, the difference between the cost of natural gas delivered to the international border and the border price is, to use the industry jargon, “flowed back” to producers in Alberta,
As a consequence of this revenue flowback, natural gas producers receive an average of 25 cents per mcf in addition to the 72 cents. This brings the average wellhead revenue per million Btu to the producer to a total of more than 97 cents -- quite an increase in 3½ to four years’ time.
When higher export prices were first fixed by the NEB in 1974, natural gas producers in Alberta who sold their gas to purchasers for resale to export markets received more revenue per million Btu than did producers whose gas was sold to and destined for the domestic market. This government protested that arrangement, because it put purchasers for Canadian markets at a serious disadvantage by creating a disincentive for producers to sell their gas to them.
After repeated urging, the federal government has required, as we had suggested, their revenue from export sales to flow back to producers on an equal basis. In four years the average revenue at the wellhead in Alberta has increased from about 16 cents a million Btu to over 97 cents. That is a huge increase. The entire increase does not, of course, remain with the producing companies: The governments of the producing provinces and the federal government have greatly increased their take. Nonetheless, there has been an enormous increase in the producer’s revenue from natural gas sales.
Notwithstanding this recent history of price escalation, the federal government is preparing to increase the price of natural gas still further. The current southern Ontario citygate price of $1.25 per mcf is to be adjusted according to a formula which will relate the citygate price of natural gas with the delivered cost of crude oil to refineries in the Toronto area. Expressed in Btu, or in other words, equivalent energy terms, it is proposed by the federal government that the price of natural gas -- now 85 per cent of the equivalent price of crude oil, and only a year ago 65 per cent -- should move in the direction of 100 per cent in the next few years.
The average refinery-gate price of crude oil in the Toronto area is about $8.80 a barrel. The citygate price of natural gas is $1.25 per million Btu which, as I mentioned, is 85 per cent of the equivalent --
Mr. S. Smith: You would better have switched to using gas whenever that is in low supply. We should all switch to natural gas --
Hon. Mr. Timbrell: If you would just sit down, keep quiet and listen, you might learn something about the overall problems of this province.
Mr. S. Smith: I have been listening.
Hon. Mr. Davis: But you don’t understand this.
Hon. Mr. Timbrell: As I mentioned, Mr. Speaker, natural gas is at this time about 85 per cent of the equivalent energy cost of crude oil.
Natural gas prices could move to higher levels from two causes. The first is by increasing the 85 per cent figure discussed above to a higher figure -- moving towards 100 per cent over the next couple of years. But an obvious second means is through any increase in the price of crude oil, given that the price of natural gas will be 85 per cent of a higher oil price and so will automatically increase.
It is apparent that an increase in the price of crude oil will carry with it an increase in the price of natural gas. That fact has contributed to our urging of a moderation in the pricing appetites of Ottawa, Edmonton and Regina with respect to the price of crude oil.
I have noted that the comparison of southern Ontario delivered prices is a comparison of a natural gas price to be determined by government to an average price for crude oil delivered to Toronto. Secondly, it is a price comparison at two points. The citygate gas price and refinery-gate crude oil price are not comparable if one looks at the cost and market structures which are met downstream of these points.
Natural gas leaves the city gate and is transported through a distributor’s franchise area to his mix of industrial, commercial and residential customers. Crude oil is first refined into a wide range of petroleum products -- from heavy fuel oil to heating oil and motor gasoline -- and then is distributed by a variety of modes of transportation. The refiner producing a range of products has greater pricing flexibility than the natural gas distributor selling only one.
These circumstances have been reflected in current market comparisons at the burner tip between natural gas and petroleum product prices. For example, in major refinery centres such as Sarnia and Montreal, heavy fuel oil has been sold at prices below those for interruptible natural gas sales to large industrial customers. In the case of some other products the competitive margin of oil to natural gas has been less than the 15 percentage points suggested by the citygate refinery-gate comparison.
In short then, gas and oil prices at the burner tip have already approached the stated federal government goal of parity in many large significant markets. Further increases in gas prices relative to petroleum products could, in our view, create serious dislocation in the structure of natural gas sales in Ontario.
Due to a difficult supply situation over the next few years, it is expected that natural gas will be less available for many of the uses for which interruptible sales are now being made. But if this process of large users switching from gas to oil occurs rapidly on a large scale, the only results can be the shifting of a major cost burden to the smaller commercial and residential natural gas customers.
Canada’s best hope for significant new energy supplies at this time appears to be natural gas from the frontier regions. These supplies will only be able to displace imported crude oil from OPEC countries if large users retain their capability to use natural gas. Further tampering with the competitive relation of natural gas and petroleum products by increasing the percentage relationship of natural gas to crude oil at this time would have serious consequences for our future security of energy supplies.
A further concern with respect to natural gas prices arises from the lower prices being paid for natural gas in the states that border Ontario and that compete strongly as locations for industry. As the Treasurer (Mr. McKeough) indicated in his budget, the range of citygate prices in the northeastern states is 70 to 99 cents per million Btu, compared with the $1.25 imposed by the federal government last November. Over the current year, these US prices are forecast to move up to the range of 80 cents to $1.15, still below what we are paying today.
The fact is that if the price of natural gas in southern Ontario was not moved up at all, Ontario manufacturers would still be at a disadvantage vis-à-vis the US manufacturers with whom they must compete for most of their business. Further increases would worsen a situation that is already unsatisfactory and disadvantageous to this province and country, to employees as much as employers.
Natural gas price increases already have resulted in massive revenue gains to the oil industry and to the governments of the producing provinces, in addition to damaging the industrial fabric of this nation. The one positive result is that they have, in fact, provided the explorers with an increased stimulus to look for and develop new natural gas reserves.
In the case of natural gas that has already been discovered, further increases in price may not be necessary for the stimulation of maximum production of these reserves and to encourage exploration for new reserves. A pricing policy that differentiates between discovered or “old” gas and yet to be discovered or “new” gas provides, we feel, the greatest incentive to maximize natural gas supplies at minimum cost to the consumer. Our analysis indicates that a policy of increasing “new” gas prices at rates just slightly in excess of prevailing rates of inflation and fixing “old” gas prices at current levels can be expected to attract as much additional supply as increasing all gas prices to parity with crude oil and then tracking the equivalent of international crude oil prices.
In short, restraint in the matter of natural gas prices by the producing provinces and the federal government will provide the best protection for the consumer in terms of securing adequate supplies as well as in terms of his ability to afford the purchase of the natural gas he requires.
A policy for Ontario today becomes both predictable and rational: Natural gas prices must not be increased beyond the 85 per cent of the cost of an equivalent amount of energy in crude oil at the Toronto refinery gate.
There is another important matter which I wish to discuss briefly. I refer to the fact that the Premier of Alberta has recently reiterated a concern as to the role of TransCanada PipeLines Ltd. as the supplier of natural gas to the Canadian market east of Alberta.
Throughout its history, TransCanada has been an aggressive, responsible and reliable supplier of natural gas to Saskatchewan, Manitoba, Ontario and Quebec. This has been possible as a consequence of the breadth of its supply base and the efficiency of its operation and its pipeline system.
Several years ago concerns were expressed that the absence of competition from other buyers in Alberta permitted TCPL to exert an undue influence in the direction of keeping the Alberta well-head price of natural gas too low. Ontario has never accepted this premise. TransCanada, in fact, has always faced extensive competition, a matter which was dealt with in great detail by my predecessor when he appeared before the National Energy Board in December of 1974.
I shall not recap the arguments he advanced at that time other than to note that if the desired degree of competition had not, in fact, been present in the past, that cannot be of valid concern today when prices for natural gas are no longer set by competition in the market place but are fixed by government. This is a course that was initiated by the Alberta government itself, by an amendment to its Arbitration Act, and was further entrenched by the passage by the federal government of its Petroleum Administration Act. Concerns about the effect of TransCanada’s ability to influence well-head prices were never well founded. They now have no foundation at all and, frankly, they should have vanished. In fact, there are growing arguments in favour of maintaining natural gas supply and the pipeline delivery system under the ownership and control of a single entity. Canada faces the very real prospect of a curtailment of natural gas exports and the allocation of natural gas supplies between consuming provinces. Allocation, if it should be necessary, will be much more manageable if the delivery system can also be a mechanism for needed curtailments and allocations. A multiplicity of buyers, brokers, shippers and transporters would unnecessarily complicate natural gas supply problems that already can be anticipated. The present system has served both producers and consumers well and it is obviously the best mechanism for the future.
There is no adjustment in our policy position which, as has previously been stated, is that: “The co-ordinated and integrated system of natural gas purchase, transportation and sale that is epitomized by the TCPL system is a form to be preserved and not discarded or amended.”
I’d like to discuss briefly with the members two more aspects of energy that may bear on the first ministers’ discussions later in the week. The Ontario government has assessed the economic impact, over a 12-month period, that would flow from a $2-a-barrel increase in the price of crude oil, with gas increasing in the proportion that would result from the fact that it is indexed at 85 per cent of the energy equivalent cost. The total paid in a 12-month period for oil and natural gas by the people of Ontario would increase by $650 million, of which $400 million would be attributable to the increase in the price of crude oil.
Even assuming an effective anti-inflation programme, the consumer price index would increase by 1.3 per cent, of which 1.1 per cent would be due the oil price increase. The real rate of growth of the gross provincial product of Ontario would be reduced by 0.4 per cent, of which 0.3 per cent would be due to the oil price increase. Oil and natural gas price increases would further damage a deteriorated competitive position, raising the export price index by 3.2 per cent.
These figures apply only to Ontario. On their own, they should be sobering enough. Applied to the entire nation, and the price increases will have an impact everywhere of course, they are very serious indeed. The offset that would result from increased economic activity in the producing provinces would not begin to compensate. It will clearly be economically damaging to this country.
It would also have serious implications in terms of fiscal balances in Canada. Exclusive of the export tax, new revenues available to governments and to the oil and gas industry from a $2-a-barrel increase in the price of crude oil and a lock-step increase of about 35 cents in the price of natural gas would be about $1.9 billion over a 12-month period. The distribution as between governments and industry under existing fiscal arrangements would vary in accordance with the industry’s response to exploration inducements that are already in the fiscal system.
If exploration was not increased, this $1.9 billion would be so divided that $510 million would pass to the federal government, $1.01 billion would pass to the producing provinces and $380 million would appear as industry cash flow. The respective percentages would be 25 per cent to the federal government, 53 per cent for the producing provinces and 22 per cent would find its way up the line to the producing companies. If exploration was stepped, let’s say by $200 million, the respective percentages would change to 22 per cent to the federal government, 52 per cent to the provinces and 26 per cent to the companies.
If it sounds a little irrational that those we are relying upon to assure the supplies essential to our future are to receive only a fifth to a quarter of the extra dollars paid by consumers, then I say to the members don’t look at the government of Ontario because it sounds just as silly to us as to you. We don’t like the policy either.
The fact is that the petroleum industry has been perverted into a vehicle for new taxes on Canadian consumers by your federal government. And Canadians are paying twice: We are paying higher taxes, and our future is being threatened through the failure of the policy to assure future and needed crude oil and natural gas supplies. It’s a perverse policy.
The very serious issues facing this nation in terms of prices and supplies of energy inspired the Department of Energy, Mines and Resources to strain and bring forth yet another report, which I mentioned earlier. It’s entitled “An Energy Strategy for Canada,” and it will be a companion on the bookshelves to “An Energy Policy for Canada,” which only three years ago so seriously misled the nation as to our potential supplies of oil and gas.
I don’t want to condemn the whole report. The statistical tables at the end are very helpful. Certainly, parts of the report itself are useful. The weakness of the “strategy” is that it emerges as little more than a Justification of the existing federal policy, and it fails to recognize that energy policy cannot be divorced from other vital policy considerations, including fiscal relationships, national economic and industrial policy and, broadly, the well-being of Canadian consumers and the economic health of the nation.
I might best sum up the report by quoting two paragraphs from the Financial Post of May 1:
“If the report is long on analysis, it is short on hard recommendations. It repeats earlier warnings that Canada faces oil and gas shortages soon, that import of oil will climb at an alarming rate and that massive energy-related capital investments will be required during the next 15 years.
“To meet the challenge requires, eventually, specific policy decisions by the federal and provincial governments. Yet the report dodges the issue. Instead of hard policy, it outlines general ‘energy targets’ for an even more generally defined ‘strategy for self-reliance.’”
Whatever that’s supposed to be.
Mr. S. Smith: What did they say about cost, Dennis?
Hon. Mr. Timbrell: It is a regrettable fact that this is a political document, produced for political purposes. It has emerged at the time when it might most usefully rationalize the past policies of the federal government --
Mr. di Santo: That’s your document.
Hon. Mr. Timbrell: -- which, presumably, the federal government wishes to extend at the meeting on May 6. It does not contribute to decision-making.
There are some who have already prejudged the outcome of the result of the first ministers’ meeting later this week. I think the first two speakers would have to be among them. I think that’s regrettable, I think it’s fatalistic. Not only that, it is a disservice to this province and to this country. It is a course which everyone in this province, indeed in this country, must reject. There is just too much at stake.
The present policy of the federal government is an act of folly. Its insensitivity and determination not to consider alternative policies are examples of how much out of touch it is with reality and the real needs of this nation. Its persistence to unnecessarily escalate crude oil prices and to tax the consumers of this nation is, at its worst, deception. It is a policy brutal in its impact, and which has failed and will fail to contribute to security of supplies from domestic sources.
Our protests have resulted in some modifications. Alberta is talking of lowering its royalty rates. The government of Canada has built in some incentives for increased exploration, inadequate though they are. We have gained some successes for the beleaguered consumer. Irrespective of the outcome of the meeting this week we will continue to argue the course of reason in energy policy.
Our policy is clear; it is logical; it is reasonable. From the response to date from people around this province, in every part of this province, I know that it has the overwhelming support of the people of Ontario and, as I indicated earlier, I would hope it would have the support of this Legislature.
Mr. Speaker, I don’t want to use too much of my party’s hour except to say that I found it disappointing that the hon. member for York South (Mr. MacDonald) instead of examining in detail the policy paper that we put forward, or even for that matter examining in detail the present policies of the federal government, chose instead to go back to that old chestnut, nationalization; that somehow, through nationalization, all the problems of the country could be solved. I think that kind of an expression of opinion fails to take into account --
Mr. di Santo: Not all the provinces, but this province.
Mr. Speaker: Order, please. You’re wasting valuable time. Thank you.
Hon. Mr. Timbrell: I don’t know what it’s like over there, but here in this country there are bodies in place -- the National Energy Board, the surveys branches of EM and R, the marketing commission of the Province of Alberta, any number of bodies -- which do, in fact, have control now over the industry and can call the industry to account and call into public forums the information which is required for policy making. There is no question in my mind, and I’ve said this repeatedly in my, unfortunately, long address, that --
Mr. Foulds: Unfortunately.
Hon. Mr. Timbrell: -- that the direction that was given by the federal government in years gone by to its departments and to the agencies of the government, was insufficient, was short-sighted. There is no question that the interpretation placed by that government, and let’s be fair to all of Canada, was undoubtedly short-sighted. But to suggest that nationalization is the final answer, that somehow by spending billions of dollars to buy even one oil company with the burden that goes with that in terms of borrowing and debt, when we can get the information we need now through existing structures, I think is really being rather silly.
Mr. Speaker, some time ago -- about the end of February -- I received a brown envelope containing a memorandum headed, “Liberal Research Report.” It was addressed to Messrs. Peterson, Reed, Shore and Floyd. I’m sorry I don’t know Floyd, but I understand he’s a mandarin around “the big red machine.” This memorandum was directed to these four gentlemen by a Mr. Stevelman, who at the time was a researcher with the Liberal Party in -- of, for, at, whatever -- Ontario.
Mr. S. Smith: Fired after two weeks of employment!
Hon. Mr. Timbrell: The subject was, “Minister Timbrell’s statement on proposed oil price increases.” In February I had set out the general details of Ontario’s position, the principles upon which our position was based and this is what Mr. Stevelman wrote:
“I most definitely think a statement on this matter from either the caucus or Stuart [whoever that is] is urgently needed. Without such, the public will not have any idea on where we stand on this most important matter and we could thus be misunderstood, as was most assuredly the case in last year’s election.”
Mr. S. Smith: It’s unbelievable. Do you have any statements by unemployed cleaning ladies as well? It’s marvellous.
Mr. R. S. Smith: Did you get that in a pink envelope? We can give you his whole file if you want.
Hon. Mr. Timbrell: He goes on:
“Thus I would suggest that we should and must come out 100 per cent behind Timbrell on this matter, despite the possibility of being at loggerheads with the federal government.”
Mr. S. Smith: To stand during this important energy debate and quote an unemployed nitwit is shameful.
Hon. Mr. Timbrell: Instead, what has happened, notwithstanding the advice that they had been given, the Liberal Party of Ontario has, as I interpret the remarks of the member for London Centre (Mr. Peterson) and perhaps the member for Hamilton West will give us some clarification of the principle --
Mr. S. Smith: You might want to quote some of the receptionists who worked in our offices as well.
Mr. Gaunt: We had a cleaning lady fired too.
Hon. Mr. Timbrell: Isn’t it interesting, Mr. Speaker, when brown envelopes go the other way; isn’t the reaction interesting?
Mr. Speaker: Order, please.
Hon. Mr. Timbrell: The point is that this advice has been given to that party by one of their own officials. We know it has been given to them by countless citizens, because I get copies of letters that go to them, where people write in to tell them, as much as me, what they think; and yet, today, they still came around to saying the price has to be the world price. They have not, to this point, made a serious analysis of the position we put forward.
Mr. Peterson: Did you reply?
Mr. S. Smith: You didn’t listen. You didn’t hear what we said.
Hon. Mr. Timbrell: Mr. Speaker, we go to Ottawa this week in an attempt to bring to national energy policies, specifically oil and gas pricing policies, some recognition of the needs of the seven consuming provinces and an appreciation for the aspirations of the producing provinces, several of which, for many years of their existence, have been have-not provinces.
Mr. S. Smith: Poor Alberta! Poor Peter Lougheed!
Hon. Mr. Timbrell: We take with us a desire to keep prices in this country below those which prevail in the United States so as to give to Canadian industry, and therefore to Canadian employees, some advantage.
Mr. S. Smith: You are $2.30 out in the American prices.
Hon. Mr. Timbrell: We take with us a concern that it must be the private sector that is the primary vehicle for the regaining of energy self-sufficiency in this country.
Mr. S. Smith: They have done a great job so far, haven’t they?
Mr. Breithaupt: They can’t even contribute any more.
Hon. Mr. Timbrell: We do not take with us the notion that government can do it better.
Mr. Peterson: Your government can’t do it. We’ve established that.
Hon. Mr. Timbrell: We know that government has the authority, through existing structures and existing statutes, to cull out whatever information they want -- in fact, to force whatever they want on the industry --
Mr. Warner: Why don’t you?
Hon. Mr. Timbrell: -- but the fact of the matter is that the industry is still better able to do it, given the resources. We take with us a genuine concern and commitment to do everything possible --
Mr. Lupusella: You never had any genuine concern to solve the problem.
Mr. S. Smith: They have done a great job of exploration.
Mr. Speaker: Order, please. There is a time limit on this debate. It’s not fair to be interrupting.
Mr. Peterson: He deserves it, Mr. Speaker.
Mr. Speaker: Order.
Hon. Mr. Timbrell: -- to do everything possible to offset the negative influence of the last two years’ actions by the federal government. We will try to do everything possible to convince our sister provinces and the federal government that there is a better way and that Ontario’s alternative may just be that better way.
Hon. Mr. Taylor: Great stuff.
Mr. Peterson: Wasn’t that a stirring oration?
Ms. Bryden: Mr. Speaker, I can understand why the hon. minister has so much trouble coming up with a policy regarding possible increases in the price of oil and gas, because he has no framework in which to fit it. There is no overall Ontario energy policy and therefore he does not know how any increase in one component will affect the whole economy. He does go around the province talking about the impact of suggested price increases, but he has not come up with any policies on how to offset that impact; what to do about the people whose jobs will be lost and the people whose jobs have already been lost from the increases that went into effect in 1974 and which also went into effect and are being worked through the economy in 1975 and in 1976.
There are figures that show that in 1974 we lost 22,000 jobs, 16,000 jobs in 1975, and expect to lose 19,000 in 1976; just from the increases that have already gone into effect. It has been estimated that if the proposed increase of $4.60 per barrel over the next two years which is being talked about goes into effect, there will be a job loss in this province of 70,000. We already have over 260,000 unemployed, but the minister, going around the provinces, has produced no policy as to what can be done about that.
Hon. Mr. Timbrell: No, that’s not true.
Mr. MacDonald: She wouldn’t have said it if she didn’t think it were true.
Hon. Mr. Timbrell: She doesn’t believe it.
Mr. Speaker: Order, please.
Ms. Bryden: I can also understand how the spokesmen for the Liberal Party have problems with the question of oil price increases because there is no federal energy policy either which would fit oil and gas into the context. I think what we are here to do today, Mr. Speaker, is to make some suggestions for a positive Ontario policy in Ottawa on this question of oil and gas price increases. The blended price policy, as my colleague has pointed out -- the Ontario proposal -- is a non-policy. It does not address itself to the main problem connected with any price increases; and that is what will happen to that price increase, how much will be available for exploration and development in Canada?
Hon. Mr. Timbrell: That’s what we’re saying.
Ms. Bryden: How much will go to industry for actual production costs and how much for increased profits? How much will go to government and what will those governments do with it; simply reduce taxes in provinces that are more fortunate in having more oil supplies? Or will it be used to overcome some of the economic problems that arise from higher oil and gas prices? Will it be used to increase exploration and development?
The Ontario government has not taken any position on how that money coming from the increased prices will be divided. Nor has it taken a position on any windfall gains that come from any price increase due to inventories being priced at the old price and then sold at the new price. The policy that was followed in Ontario in the last year took back some of those windfall gains, but the proposal of the Isbister commission is that it should be reduced to the overall average of inventory gains. In our opinion there should be no inventory gains for any oil company; it should not be just based on an average.
Mr. Speaker, I want to speak particularly about parts of the positive policy this government should take to Ottawa. One is on the question of conservation. The proposals that have come out of Ottawa so far are very weak in this field. They are suggesting that the proposed increase in utilization of oil and gas should be cut back to 3% per cent a year over the next ten years. That is a very modest reduction from the 4% per cent increase in the three years from 1970 to 1973, and the four per cent increase from 1960 to 1973.
Mr. Speaker, we will not solve our energy problems if we cannot do better than that on reducing the consumption of energy. But this province has a very weak policy on conservation. I heard the minister the other day on the radio saying he didn’t believe in imposing policies on people, in telling them how they must reduce consumption. He believed in encouraging them by word of mouth and by ads and that sort of thing.
That is not good enough. It is time the government looked at some things such as higher motor vehicle licences for big cars. It should look at changing all billing practices of utilities so that instead of the more you buy the cheaper it is, it would be the more you buy the more expensive it is. They should be working to end Hydro’s policy of bulk metering in large apartment buildings. This causes, according to a recent study, a 39 per cent increase in consumption, this bulk metering. They should be withdrawing the special exemption from the gasoline and fuel oil tax they gave to industry just a year ago, in April 1975.
These are the sort of positive policies the Ontario government should be undertaking to give leadership and to show the federal government it really means business about conservation and that it would be prepared to co-operate with similar tough policies at the federal level.
They should, of course, also be researching alternative forms of energy to these non-renewable sources and encouraging the manufacture of appliances that are more energy efficient; and advertising to inform the public which ones are the most energy efficient. That is one positive policy area where we feel the hon. minister could beef up his presentation at Ottawa and do far more in that field.
The second area is on the question of impact on consumers and workers. Our research department has worked out the effect of a possible increase of $4.60 in the price of crude oil over the next two to three years and what effect it will have on the Ontario economy. I just want to read a few of the figures into the record to let you know the kind of crisis situation we are facing. All governments must be working to reduce this impact.
They estimate that a $4.60-a-barrel increase in crude would reduce our gross provincial product by $828 million; it would reduce consumption of goods and services by $828 million. It would reduce investment by $313 million. As I mentioned earlier, it would cause unemployment of 70,000 people and it would raise the consumer price index by 3.9 per cont. The previous increases have already raised the consumer price index by 2.3 per cent so that we can see that these proposed increases are going to have very serious effects on our economy.
We have also worked out the total cost in dollars to consumers from such an increase which would require an 18 cent increase in gasoline and similar increases in heating oil and natural gas. To consumers, if they heat with oil, it would mean $246 a year extra; if they heat with gas, $206 extra.
My colleague mentioned that some of that increase is the result of the proposal, being bruited about the country, that the petroleum companies would ask for almost a four cent increase over and above the actual increase in cost from increasing the price of crude. So that part of those figures I have given you are the tribute to the oil companies. It would amount, on gasoline for example, to $21 a year per family to the oil companies just in extra profits; and in heating oil to $29.60 a year to the industry over and above the actual cost resulting from the proposed increase of crude. These are the sorts of things the Ontario government must be prepared to oppose. Any further increase in petroleum companies’ profits is completely unnecessary. We all know their profits have been at an all-time level for the last few years.
The third area on which I would like to suggest that the minister should approach Ottawa is a positive energy policy. First of all, it must be a policy that will have a clear-cut picture of where the money goes. It must be a policy which will see that the money goes into exploration and development in Canada, that it does not go into oil companies’ profit; that it goes into oil sands development but not on the basis of Syncrude. That is a situation where the government puts up the money and the companies pretty well reap the profits -- or control the amount of profits that are available to the other shareholders -- and the government has no real say in the management of the company.
I think it is time the Ontario government also put it to the federal government that energy is too important to be left to the private sector, especially when the sector is largely dominated by foreign companies. Energy affects every job, every export, every homeowner, every tenant. It affects too many facets of our economy. It affects every wheel that turns. For that reason, we must start moving toward bringing energy under public control. We must develop an industrial strategy which takes into account all kinds of energy and sees that we get the most efficient use of our energy resources.
In short, Mr. Speaker, I would urge that the minister go to Ottawa and suggest that it is time we developed an integrated energy policy in this country, and that Ontario is ready to lead the way.
Mr. S. Smith: Thank you, Mr. Speaker. I am very pleased to participate in this emergency debate which is of obviously great moment and great interest to the government. At times there were as many as five members of the government party sitting in the House listening to this debate. At the moment, the Premier (Mr. Davis) is not here and the Minister of Energy (Mr. Timbrell) has just entered to speak to some people in the gallery. It is shocking to me that we should have to engage in a debate on something so important to the political life of this province and have nobody here to listen.
The position that was put by the Minister of Energy sounds to me very much like the same old game of “let’s attack the federal government and see how many points we can score by so doing”. Unfortunately I can assure you there is lots to attack in that particular government when it comes to energy, because I don’t think they have had a coherent energy policy for some time. However, this particular government has even less of an energy policy. If you look at the document produced by the Minister of Energy, it is a kindergarten effort. This particular document has to be one of the most misleading and one of the least appropriate documents for important consideration, and on which a decision that has to be made, that I’ve ever seen.
The document first of all purports somehow or other to come up with a blended price for oil. It is going to tell us how we can take the existing cheap oil in Alberta and assign to it the present arbitrary value of $8 a barrel. We are also going to be able to take the imported oil, for which we have to pay world price -- and even the geniuses in the government opposite haven’t figured out a way we can pay less than that to Venezuela, but that is the way it goes -- and they are going to take another figure, a magical figure of $11.20 it has a nice ring to it, a nice sound -- and that is now the figure for what it’s going to cost to produce a barrel of new oil. That’s marvellous that they can come up with a figure like that.
There is no new oil. The only reason we are sitting here having this debate is that we’re running out of oil in Alberta and there is no new oil.
Hon. Mr. Timbrell: There is new oil.
Mr. S. Smith: What is the magical figure of $11.20? We don’t know what this tar sands oil will cost; we don’t know what the frontier oil is going to cost; we don’t know what the off-shore oil is going to cost; it’s guess work, but he has come up with $11.20.
Mr. Foulds: You should be comfortable with that.
Mr. S. Smith: He’s blending a price for us, a blend, an amalgam if you will, of various prices conjured up by the Minister of Energy and allegedly corresponding to some reality which exists in his imagination.
He says that this is a marvellous scheme, because as you blend the price of the old oil, the cheap oil, with the new oil that comes in from the tar sands and so on, even if the tar sands cost “$27 a barrel,” it won’t matter because it will be offset by the price on the old oil.
Hon. Mr. Timbrell: I said $15.
Mr. S. Smith: The only problem is that by the time the tar sands are producing oil for us the old oil in Alberta won’t be there anymore. What kind of a blend will it be if it’s a blend of zero plus $27?
Hon. Mr. Timbrell: In 1978?
Mr. S. Smith: The figures are just the most interesting imaginable. Look at the tables at the back. At least he said the federal document, which I’m not very fond of, had good tables. That’s more than I can say for his. Strangely enough, these tables show how this government proposes a gradual increase in the price of oil, 8 to 10.49 and so on, under case No. 2, in a few years’ time. They show how they’re going to increase the price of oil. Conveniently, the date stops when the Alberta oil would no longer exist.
If we’ve got lots of cheap oil in Alberta, then let’s all go home, stop wasting our time sitting here, because there’s no need for the debate. The problem, unfortunately, is that the oil won’t be there. When the oil is no longer there, then you have to pay what the seller is asking. You can’t go to Venezuela with a Canadian gunboat and lower the price according to his blend. The world price will have to be paid at some point. When the Alberta reserves have run out then the world price will have to be paid, barring some discoveries in our own country of equivalent crude oil and equivalent energy that can come in more cheaply.
We all earnestly hope that will be discovered, but as it stands at the moment all the figures indicate that any new oil which will be discovered in this country will come in rather expensively. When you get to the price of oil that is going eventually to replace the cheap oil which is presently coming in from Alberta and other western areas, when you get to the point where we’ve discovered this new oil and bring it in, the chances are the world price will adjust to that, because the world price at the moment is totally artificial. But at some point, it will have to relate to its marginal replacement price, and that is the price at which the US can bring in oil from the shales or that we can bring in tar sands oil or something of this kind. The chances are that’s how the eventual equilibrium will be reached.
What we’re talking about in our party and in our efforts to come up with an energy policy in the Ontario Liberal Party is that we assume, first of all, that we’re running out of cheap oil. If that’s not true, then forget the whole thing; we assume it. We assume at some point we are either going to have to come up with discoveries of our own, which will probably come in more expensively no matter where we find them, or we are going to have to import an awful lot of oil from other countries and pay their price. That’s the assumption we make, and that’s going to be sometime in the mid-1980s, that’s what most experts believe.
If we start with that assumption, then the fact is the people of this country, and of this province in particular because we’re the biggest energy users, are suddenly going to find themselves overnight with a gigantic energy bill, unless we have an assured supply of additional energy that comes on stream between now and then.
Now there are other forms of energy. There is nuclear energy, and the Canadian government and the Ontario government have put a lot of work into nuclear energy, I think with some success. Rut we know the problems of nuclear energy. There are hazards; there are dangers; it is difficult matter to keep clean, the by-products are a troublesome problem for most of us to think about.
Still, I suspect we will have to use nuclear energy to some extent, at least during the gap until renewable sources of energy come on stream. But remember that renewable sources of energy will not be meaningfully available unless we start working on them now. It is probably, and I agree with the minister, a 20- to 25-year lead time for these things. The lead time isn’t magical; if we don’t start working on them we are never going to have them.
So we start with the assumption that at some point we are going to be faced with a drastic increase in the price of crude oil and the price of energy. The question then becomes: Is it better to wait until that point arrives and figure we will deal with it when it comes, or is it better to prepare your economy gradually for the fact that that point is coming?
Already, our major competitors in Japan, in Europe and to some extent in the United States, are gearing their economies for the days of expensive oil, because that is already the case in most of those places. They have had to deal, and learn to live, with expensive oil. Consequently, they are already introducing the more efficient engines, the energy-saving devices and the various conservation measures which we have been suggesting are essential for us to use in this province.
So we suggest that at some point down the road it will be better for Ontario to realize that the crunch is coming; realize that expensive oil is going to have to come in at some point. It will be better for us to adapt gradually; not be like the dinosaur that sort of goes along and then when there is a sudden change in the climate dies out, but rather get ourselves geared up for the inevitable, not hide our heads in the sand.
Now unfortunately, this is not a good time to contemplate vast increases in the cost of energy. Our country, and our province in particular, have come through a very difficult recession combined with inflation. Employment is not growing in this province in a way that it should and that we would all hope it would; we cannot tolerate, in simple words, a large increase in the price of crude oil at this time. That is all there is to it. We have to refuse to accept a significant increase in the price of crude oil at this time.
Mr. MacDonald: How would you do that?
Mr. S. Smith: But we have to accept the principle that over the years to come there will have to be some movement in the price of oil toward higher levels so as to prevent the drastic, wrenching adjustment which would otherwise have to take place when we were thrust on the mercy of expensive oil; that is the first point.
To some extent, actually, the minister and I are in some agreement; inasmuch as his blend is really a gradual increase and he and I agree on that. The point is that the blend doesn’t make any sense. It deals with new oil prices which aren’t meaningful because we don’t know what the new oil in any bulk is going to cost. We know it is two per cent new oil now, but I am talking about in bulk. We don’t know what it is going to cost and so these prices are not particularly realistic and we are running out of cheap oil,
It is interesting, when it comes to Hydro, that the minister made the argument that we should be spending more on Hydro now to assure a supply later on; but when it comes to crude oil he doesn’t accept that argument, it is only good for Hydro.
Mr. Sweeney: The federal government doesn’t produce hydro.
Hon. Mr. Timbrell: That’s nonsense and you know it.
Mr. S. Smith: You heard it. Now let us move on.
Hon. Mr. Davis: That’s silly; absolutely, totally silly. The investment has been made; even these people understand that.
Mr. S. Smith: We have the fundamental question as to whether we are in fact running out of oil or not. We all accept that if there is to be any price increase in oil by the way -- and let me make this clear just to get it on the record -- that there are to be no inventory profits. The fact is, there is to be a freeze during the time that inventories run out. We have to insist upon that, even if there is an increase in energy price at this time.
Hon. Mr. Kerr: Like we did last year.
Mr. Renwick: Glad to have your support.
Mr. MacDonald: You didn’t support us last time.
Mr. S. Smith: We are particularly concerned about the way in which this government and the federal government go about distributing the money that comes from the increases in the price of crude oil. This government has agreed that we are talking of wellhead price for oil. Now, well-head price for oil is distributed between the producing provinces and the oil companies and the federal government, and I want to be clear about this --
Mr. Foulds: You don’t have to tell Davis this, he learned it the hard way.
Mr. S. Smith: We say not one more cent for the producing provinces. We want to be clear about that. Now let’s get that on the record.
The Province of Alberta is not a member of OPEC, there is no need for them to try to take advantage of this artificial price that has been established by the Arab cartel and attempt somehow to thrust it down the throats of Ontarians and other people in this country. They are rich enough in Alberta, they are rich enough. They have very little --
Hon. Mr. Timbrell: How would you achieve that?
Mr. S. Smith: They have no sales tax, they don’t pay property tax on education, they have no inheritance taxes, their income taxes are much lower than those of the rest of us; they are rich enough in Alberta. No more money for the producing provinces.
Hon. Mr. Timbrell: How would you do that?
Mr. S. Smith: Now, the second point we want to make --
Mr. Renwick: They don’t have one thing out there that we have; there’s no Liberal Party.
Mr. S. Smith: We’re looking forward to hearing the views of Joe Clark, on this subject, you know.
It’s a pity the Prime Minister hasn’t thought of the clever gimmick of having a debate in the Commons the way the Premier thought of one here, to find out what the opposition parties think and put them on record. But Joe Clark has managed, so far, to avoid being on record. We’ll hear what his point of view is, we’ll hear what your kissing cousins have to say. We know what your step-brothers in Alberta have to say, but we don’t know what your kissing cousins in Ottawa have to say yet.
Hon. Mr. Timbrell: You have read Stevelman’s memo.
Mr. Peterson: You can have Stevelman back, we don’t want him.
Mr. S. Smith: The second point we make is that the oil companies, as far as we are concerned, are making enough money and we do not want to see a single cent of any increase in the price of oil going to the oil companies. Now the oil companies make the point that they need higher prices for two reasons.
Hon. Mr. Davis: That’s exactly what we say.
Mr. S. Smith: The first reason, they say, is that they need the money in order to be motivated to go out and find new oil; because if they’re not going to get a high price for their oil they naturally won’t be motivated to go and look and they would prefer to go and look in other places, Indonesia or whatever, where they could get a high price for their oil. What I say to that is, by all means promise them more money for any new oil they find. We should come to an agreement, find out what they need per barrel to make it worthwhile to look, and promise them they will get that amount per barrel for any new oil that they find. But we should not permit them to sell cheap old oil at excessive profits, allegedly in order to be motivated to look for new oil. The motivation will come by our guaranteeing them that if they find new oil they will get a decent price for it.
Mr. MacDonald: I don’t know how you reconcile that with what Peterson said.
Mr. S. Smith: The second matter has to do with the amount of money they claim they need now for cash flow. They say they need more money now, based on excessive profits of the old oil, in order to be able to afford to go and look for new oil. They claim they have to be able to sell their old reserves at the going rate in the world market in order to get money to replace those reserves, which are more expensive to replace because of the new problems of looking for them at the frontier; that’s what they say.
What we say is let them find their money in the usual time-honoured way in which prospecting and exploration have gone on in this country in the past; which is they can raise it by equity issues. They can raise risk capital and they can in fact go and look for it in the usual manner.
Mr. MacDonald: That’s two policies from the same party on the same afternoon.
Mr. S. Smith: The fact is there is no particular reason why we should be giving them more money --
Hon. Mr. Davis: We are going to have, the Peterson party and the Smith party.
Mr. S. Smith: Do you want to hear the policy? I’ll give it to you. Surely the Premier doesn’t have to copy the acting leader of this particular party in order to find out what his bon mots should be. Surely you can think of a few of your own.
Hon. Mr. Davis: Mr. Speaker, on a point of order.
Mr. S. Smith: This is no point of order, Mr. Speaker. You know it is not a point of order.
Hon. Mr. Davis: Does the member for London Centre (Mr. Peterson) not speak for the Liberal Party when it comes to matters of energy? I listened to him very carefully.
Mr. S. Smith: The leader is speaking at the moment, listen!
Hon. Mr. Davis: Hollo!
Mr. MacDonald: It’s different from what he said, isn’t it?
Mr. Speaker: Order, please; the hon. member for Hamilton West has the floor.
Mr. S. Smith: I can appreciate why you would not want to hear this. I am sure it is very embarrassing to you to hear somebody making sense for a change after listening to the pathetic ramblings of your junior minister.
Hon. Mr. Davis: We won’t make any comment about who rambled.
An hon. member: No, you don’t understand that.
Mr. S. Smith: I particularly enjoyed, of course, reading on page 3 of this particular document the fact that Ontario feels the Anti-Inflation Board spirit and intent has to be dealt with in any energy pricing. Of course that didn’t hold for Hydro, but it certainly must hold for crude oil.
Mr. S. Smith: So let me be clear: We oppose any increase in the wellhead price for crude oil because we don’t want it to go to the producing provinces and we don’t want it to go to the oil companies.
An hon. member: Where do you want it to go?
Mr. S. Smith: Although this is not a good year to raise prices, we accept that in the near future prices will have to go up, to prepare the economy for the wrenching adjustment and for another reason.
Mr. MacDonald: That’s trying to have it both ways.
Mr. S. Smith: The second reason prices will have to go up in the near future is because of the fact we are going to need money, not only for exploration but for research into other forms of energy, research into conservation, research into the various possible conservation mechanisms and into renewable forms of energy.
It is really shocking when you consider that in this country at this time -- and this is a condemnation of both levels of government -- we are spending $84.8 million, that is 75 per cent of any revenues that are in fact being used for doing research, for nuclear fission. When you look at renewable, we are spending $1.5 million in this country on research into renewable sources of energy. That is absolutely disgraceful.
Mr. S. Smith: Per capita, in fact, the United States and Japan are spending over 100 times what we are spending per capita on renewable resources.
Hon. Mr. Timbrell: You should have kept Stevelman, he would have given you much better figures.
Mr. S. Smith: No, he is in your employ now. He is not my boy; he is your boy, he’s your fellow. We have here in our country, unfortunately, very little money going to any form of research for other forms of energy except nuclear energy. All our eggs are in the nuclear basket, and that’s a very dirty basket indeed. It’s one which worries me tremendously.
Hon. Mr. Timbrell: That’s not true.
Mr. S. Smith: It seems to me essential that the price of oil, when it does go up, should not go up at the wellhead but only at the fuel pump. Any extra money which comes from the increased price of oil should go as follows:
Hon. Mr. Timbrell: Do you want another excise tax?
Mr. S. Smith: None of it should find its way into the coffers of the provincial government or the federal government. None of it should find its way directly to the oil companies. The money should be used as follows:
First of all, it should be used to defray the compensation fund to keep it in balance, because we believe in a single price for energy, barring transportation costs, across this country. We are sufficiently federalist to believe in that.
After that, all the money should go to a new agency, an agency similar to that of NASA in the United States; an agency similar to the National Research Council, perhaps, in Canada, but it should be under federal and provincial administration. The board should be appointed by the federal government and the provinces in concert. This agency should be charged with a crash programme of developing the energy sources that Canada will need for the next 10, 15 and 25 years.
There is no co-ordination now between Quebec’s hydro, between Nova Scotia’s coal, Ontario’s uranium, and the natural gas and oil of other parts of this country. There is nobody making the decision should this dollar be better spent in Syncrude or should it be better spent in solar energy?
Mr. S. Smith: Should this dollar be better spent in oil exploration in the north or should this dollar be better spent in nuclear energy? Should this dollar be better spent in the gasification of coal research or should this dollar be better spent in offshore drilling?
These are the kinds of decisions that have to be made. We need an energy body that is going to take the bull by the horns and is going to deal with the energy needs of this country once and for all. That is the body that should get any additional money the consumer has to shell out of his pocket. It should go only to that kind of co-ordinated effort.
And that body should have a number of functions. It should have the function of coordination, it’s long overdue. Speak to any experts in the field of energy and they’ll tell you that Canada has suffered for many years from the lack of this form of coordinating body. This body -- similar, as I say, to the National Aeronautics and Space Administration in the United States, is long overdue -- and it should carry out a number of functions which have previously been reserved for the oil companies.
It should determine investment priorities between all possible energy supply options, including conservation and gasification, renewable energy and so on. In addition, it should function as an energy ombudsman for Canadians, with the power to examine the books of all oil companies, to independently assess oil and gas reserves and to determine the potential of other energy sources for Canadian use.
We are not falling prey to the simplistic thinking of the people opposite, who see only that if you pay more for oil it’s got to go to Alberta or it’s got to go to the oil companies. We say that it’s possible to have a unique, Canadian way of doing things. We say it’s possible for this body I’m suggesting if need be to enter into partnerships with the oil companies for exploratory purposes if it wishes.
Mr. MacDonald: it’s Blakeney’s idea; that’s a steal.
Ms. Gigantes: That was a Saskatchewan proposal.
Mr. S. Smith: The fact of the matter is that this policy is a novelty to these people. These people come instead with this nursery school, this kindergarten document about blending prices, none of which are existent prices. There is the old price that they suggested for oil that won’t be there, and the new price they suggested for oil that we don’t know the price of. What a fine blend that is I
Hon. Mr. Davis: And of course this agency is going to predetermine all the prices and know --
Mr. S. Smith: Our policy is very clear, and I hope there can be absolutely no doubt about that.
Hon. J. A. Taylor: Which one?
Mr. Bain: Which one is clear?
Mr. S. Smith: There is to be nothing for your friends in Alberta. There is to be nothing for the oil companies. There is to be a gradual movement, once the crunch is over in our economy, toward higher prices. The price would gradually approach world price, so that the wrench doesn’t occur when we run out of old oil.
Our policy is not to be based on fairy tales, like your so-called blended price in that shameful document. It will be based on realities when the prices become known. It’s to be a co-ordinated effort with all forms of energy that this country has and not simply the type of single-minded approach this government has come up with so far.
The amazing thing to me in this whole debate is that we’ve stood here for all this time and we have never heard the Minister of Energy say we’re running out of old oil. He has not stood up and had the courage to say we are running out of cheap reserves. He has not stood up and said the interests of Ontario would be best served by assured supply, and that’s what this province depends on. Nowhere has he dealt with the question of what to do when the crunch comes if the economy is not geared tip to it.
We say, yes, there will have to be increases in oil prices in the years to come, and let’s get Canadians used to that. No, we don’t want a price increase this year because this year is a tough one for us, we’re just coming out of a very tough economic crisis.
Finally, let’s have a federal-provincial agency that co-ordinates this, and no more money for the western provinces or for the oil companies. Let’s deal in the traditional, time-honoured manner of doing exploration in the way it’s always been done in this country. That is a proper policy for Ontario and for Canada.
Mr. Speaker: The hon. member for Riverdale.
Mr. Renwick: Mr. Speaker, I’d like to address myself to the question which has been put before us today. I think I’ll skip the comments I was going to make about why the government insists on having these debates a day or so before they go to Ottawa. Perhaps they want to have the unanimous opinion of this assembly to support them, although I guess they can’t expect that or they’d call for a vote on this resolution.
Mr. Shore: Never go wrong with that, Jim.
Mr. Renwick: Nor do I really want to speculate as to why, on May 3, we’re discussing a document of the Ministry of Energy, dated March, 1976, and why we couldn’t have had the proposal from this government long before that time.
Hon. Mr. Davis: You had it.
Mr. Renwick: I do want to try to talk about the substance of the question the government has put forward as its proposal to the government of Canada, its lack of certainty that anything will come of it and, to that extent, the posturing which is involved in taking that position. I take it I won’t have to spend a great deal of time discussing the position of the Liberal Party, because I suppose the distinction is between whether we go to $10 now or whether we go to $9 now. I take it that the government of Ontario is prepared, for practical purposes, according to its statement, to go to $9 on this blended price formula -- or $8.94 -- rather than $10. I take it that the Liberal Party of Ontario, despite the withdrawal symptoms to which it is subject at this time, agrees with the proposal of the federal government that it should go to $10 next week.
Mr. S. Smith: It’s a pity you don’t listen. If you heard me, you would know I said no increase this year.
Mr. Peterson: Read Hansard and come back tomorrow.
Mr. MacDonald: I think you would call it realism.
Mr. Renwick: What they are both saying, in different ways, it they accept the inevitability of the present existing relationship between the government of Canada, the government of the Province of Ontario and the oil companies. They accept it.
Hon. Mr. Davis: Look at Alberta and Saskatchewan.
Mr. Renwick: They live within it and try to find some elbow room but they can’t find any elbow room because, I say to the Minister of Energy and the Premier, they don’t ask the right questions. I don’t think they’ve understood what has taken place.
I can understand that the policy of the government of Ontario, in all its areas of expenditure and of so-called concern, is to decelerate the rate of escalation. That seems to be what it does in every field and that’s all it is doing with this very complex problem it has introduced in the statement the minister has put before us.
The statement, in substance, says that what is now a political question we will again transform into a formula which no one will ever understand.
I would have assumed that, even with the government’s knowledge of the collective bargaining process, this is the time it would have been quite intransigent in relation to the government at Ottawa and the proposals as put forward -- certainly as reflected, presumably unexpectedly, in the reiteration of the strategy released by the government of Canada a few days ago.
I don’t see this government as ever able to understand that so long as it persists in misconceiving what has taken place in the world since 1970 and particularly since 1973, it can ever conceivably ask itself the right questions.
I want to deal with a basic proposition -- not ideological -- and I ask the minister and the Premier to detach themselves from their conception of our ideology about the oil companies and simply listen to the facts as they exist at this time and why the government of the Province of Ontario is only saying, “Let the price rise but let it rise in a more moderate way than the federal government proposes.”
I’d like to disabuse the government of this term, “the international oil price” or “the world price.” It isn’t an international price and it isn’t the world price and until we learn that we won’t understand what took place in 1973.
For the years until 1970, there’s no question about it, the governments of the western world defaulted to the oil companies in the world of the diplomacy of the oil industry. The posted price, I think at Beirut, was always considered to be the price which was called the world price, or international price of oil and to which everything else was related. The governments of the western world accepted, including the government of Canada -- and I don’t suggest the government of Canada or the government of this province has all that capacity to influence what takes place, but it is fair to say that the governments accepted the proposition that the price of oil throughout the western world was sufficiently low that the cartel operated by the seven leading oil companies in the world was providing oil at what could be called a bargain price and that that was quite sufficient and quite satisfactory.
Let us understand what then took place. This is not by way of criticism of the OPEC countries. It was exacerbated at the time because of the embargo aspect related to the Arab-Israeli war, but don’t think for a moment that was the cause of the increase in the oil prices at that particular time. It is quite clear that the price of oil as set by the OPEC countries, and as agreed to and parallel with the interests of the seven major oil companies, is the price which determines a substantial part of the price of crude oil in the world economy. I’m not suggesting it isn’t, but it’s their price and we must understand the nature of that price as it was set, and we must understand the relationship of the oil companies to the countries operating the OPEC scheme. Because if we don’t understand that, we can’t possibly answer the right questions.
Let me put the most up-to-date information that I have on to the record -- not for the purpose of total exactitude but for giving some indication to the government of the magnitude of the seven oil companies in the world distribution of crude oil. And let me then try, if I can, to show that what has taken place in the changing relationships between the oil companies and the producing countries in OPEC, let alone their relationship elsewhere.
If you rank the 15 largest corporations in the world by way of assets, you will find that Esso, as we know it, or Exxon, is the largest corporation in the world, ranked by assets. Shell Oil is the second-largest company. Texaco is the fourth-largest company. Gulf is the seventh-largest company. Mobil is the eighth-largest company. BP is the 11th-largest company and Southern California is the 12th-largest company. That’s rated by assets.
If you rate them by their sales, Exxon is the second-largest company, Shell is the fourth-largest company, Mobil is the eighth-largest company, Texaco is the 10th-largest company, Gulf is the 12th-largest company, Southern California is the 14th-largest company and BP is the 15th-largest company.
Let’s set aside the so-called “known” giants in the other fields, General Motors, Ford, IBM, ITT -- those particular companies -- and you will get some conception that you are talking about the largest and most influential and most powerful corporations in the world, which until 1970 ran the oil industry of the world and still run the oil industry in the world, as I will try to indicate, despite the changed relationship which they now have with the countries in OPEC. Because I assert categorically that the seven oil companies, along with the countries forming OPEC, want the price to remain high and stable, and they are in agreement that that is what will happen and that is what is taking place.
In 1972, just before the dramatic quadrupling of the price that the OPEC countries were charging for their crude oil on the world market, those seven companies controlled 40 per cent of the US production, they controlled 77 per cent of the OPEC countries’ production, and on a world basis excluding eastern Europe and China, they controlled 70 per cent of the world’s production.
That is the magnitude of what we are talking about when we talk about the right questions about what can or should be done about this particular problem.
I think it is worthwhile to review very briefly the change which has taken place and to capsulize it, and, without pretending to be an economist, I simply say that the world had lived with a cartel for a long period of time. The difference now is that they are dealing with the OPEC countries which are operating what this government calls and what everybody would call something like a near-monopoly, and it is only within that near-monopoly of the OPEC countries that there is any minor competition between the seven large oil companies. The price is being fixed -- not artificially; arbitrarily maybe, but not artificially. The price is being fixed for the oil which comes into Montreal from Venezuela, as one of the OPEC countries, as well as it is being fixed by the other countries forming part of OPEC, at a level at which they know they can sell their oil in the world market.
I noticed in the statement of the minister that he talks about The Economist’s forecasts which said at the beginning of 1975, “Instead of the shortage of 1973 the supply of oil is so great that there is going to be a glut on the market,” and, The Economist pointed out, the price will drop.
Now, the funny thing is the price didn’t drop.
Hon. Mr. Timbrell: There is a surplus now.
Mr. Renwick: Yes, I am saying that. There is a substantial surplus of oil in the world market today but it is not moving on to the market at other than that price because, despite Milton Freedman and those people who admire the free market system and the free enterprise system, when they all thought it was going to drop, it didn’t drop.
Hon. Mr. Timbrell: I didn’t argue that.
Mr. Renwick: I didn’t say the minister did, but he quoted The Economist because he wanted to use this bogy of whether the price was $7, 10, $20, $50, or $70.
I want to tell the minister that they operate within a very real world in the OPEC countries, a lot more real world than we’re operating in at the present time, and their price at this point in time is about four times -- if you recall, for practical purposes, the price went up by four times in two months. There has been a lot of talk ever since about whether it was going to break, whether the cartel could maintain its position -- that is the OPEC countries -- what the relationship of the oil companies would be to it.
The fact of the matter is that oil is priced, and will be priced, at the price at which it can be put on the market of the world under whatever the rationing system may be by which they cut back production that will maintain that price. That will be a price which is under the price at which we can develop the resources of the frontier in Canada, whether they be oil or natural gas or synthetics. That price today is under any projected price which we can posit for the future to try and match in any way by supplies from our frontiers with available cost of energy at something below the so-called world price of oil at the present time.
In is interesting that the minister in his statement admits that. He admits that his blended price policy may very well mean that at some point in time the Canadian price -- if I can so call the result of his blended price -- will be higher than the world price. Well, all right.
Hon. Mr. Timbrell: No, I didn’t say that.
Mr. Renwick: I didn’t say you said it, I said you admit the possibility that that would be so.
Hon. Mr. Timbrell: Mr. Speaker, on a point of order. Just to clarify this for the hon. member for Riverdale, what I said was that some elements of the blending could in fact be higher than world prices -- that in fact when the Syncrude plant comes in or when the Mackenzie Delta supplies come in that prices could, in fact, be higher, but in the blending, with the various levels of price, imported old and new, there is a relationship to cost and that one of the principles, of course, would be that that stay below the American price anyway.
Mr. Renwick: All right, whatever the mixture is, the fact of the matter is that the minister is quite certain that at some point the so-called Canadian component of the blended price, whether it is old oil or new oil, whatever be wants to call it, the fact of the matter is that his policy concedes that that price will go substantially above the world level. But it will still maintain, if he blends in the world price, a price lower than the world level, so that there will still be an advantage.
Hon. Mr. Timbrell: Because of the old oil price.
Mr. Renwick: Yes, because of the old od price. The minister is saying within a very constrained world that he doesn’t think our Canadian price under his blended formula will ever go higher but that it may very well so far as its Canadian component is concerned, be substantially higher than the world price. The only advantage we will have is the old oil price. All right, we can discuss that at some other time.
The Ontario proposal might result in the per-barrel price of oil from costly sources exceeding the world price but because the “old” oil would be held to a lower price the Canadian advantage could still be maintained.
That is what the minister said.
Hon. Mr. Timbrell: The way to blend.
Mr. Renwick: That’s right. That is mere speculation on the hon. minister’s part because what will happen is that the OPEC price will become the price at which the OPEC countries can sell their oil on the world market in competition with any new sources of energy.
The reason why that is significant and appears to have escaped the minister is that we cannot, in Canada, afford the luxury of the kind of escalation of price to the world level -- that is the OPEC price -- and then say that we can, out on the frontiers, develop oil sufficient to give us a two-thirds degree of sell-reliance or independence, and maintain a price for Canadian energy from oil and natural gas that will be less than the world price of the OPEC countries. Because they’ll adjust their price every time to meet that problem.
I must say, I’m inclined to give the government of Canada some credit for recognizing that the myth of independence or self-sufficiency, as it was then called, is in fact a myth, that we are going to be a net exporter of oil or at least going to break even by either exporting and importing and there will be a balance. They come around to this new phrase called “self-reliance.” They had to come around to that because in March of this year the United States, which first came out with the slogan of “Operation Independence,” indicated quite clearly that they have imported, for the first time in their history, more crude oil than they have produced.
They have also indicated quite clearly that 00 the new oil formula -- and I am not equating the minister’s new oil pricing mechanism to the United States’ pricing mechanism at all in 1974, when they went to the new oil theory, with all of its variations, that the production in the United States dropped by about 600,000 barrels per day and that for practical purposes no additional exploration and development took place. The reason it doesn’t take place -- and perhaps the minister will never understand and perhaps the government will never understand -- is that the decision about the extent to which the major oil companies will engage in exploration and development work, in Canada, on the frontiers, will not be determined by the extent to which they share in the price increases which this government and the federal government aid and abet -- the provincial government in Ontario with their rationale, the federal government from the point of view of the conference next week, with their rationale.
The minister is not going to get the exploration and development he wants because the interests of the oil companies at the present time are parallel with, coincide with and are supported by the OPEC countries. Mutually they support each other. The only problem the OPEC countries had was to agree among themselves where the cutbacks would take place in their production in order to maintain the production at a low enough level to maintain the price which they had fixed. Of course, In and behold, they found the oil companies, owning and controlling the distribution system, were the ones who decided that they would distribute and allocate the available resources among the customers in the world and maintain that price.
One of the “Catch-22” arguments with which we are faced in the energy field is that, in some way or other, unless the price is high we can never bring expensive forms of energy on to the market. Therefore, you must have a very high price which is paid to the oil companies for their basic commodity of crude oil and you must keep paying a higher and higher price otherwise they will never have the incentive to go out and get this expensive energy. The catch, of course, is that whether it is produced from the Arctic tar sands or from shale rock or from any other source, whether it is synthetic or indigenous in the course of time, either in Canada or in the United States, it will only become economic to get it at the point in time when the price of crude oil has been allowed to go to an exorbitantly sky-high level.
We can’t get away from that and I don’t underestimate the problem but we are certainly not going to come anywhere near solving it by this response -- that’s all I dignify it as -- of the Ontario government to the federal government’s programme, which is this blended price formula which will result in a $1 price increase instead of a $2 price increase.
Hon. Mr. Timbrell: Nineteen cents.
Mr. Renwick: All right. That is on the example the minister used and I know he carefully refrained from indicating that it is a forecast and so on. That is what it is, $8.94 as I read his report, as against $10.
Hon. Mr. Timbrell: Compared to $8.80 at present.
Mr. Renwick: Yes, that’s right.
Mr. S. Smith: Toronto price; only 14 cents.
Mr. Renwick: That’s right. What I want to try to say to the minister is -- let me deal with an aside.
I am not going to deal with the natural gas price. I don’t pretend to know all the intricacies of it. Let me make a couple of points about what little I do know about it. One is there is no living reason why there should be any indexing of the natural gas price to the crude oil price let alone the minister’s statement, “We mustn’t let it go above 85 per cent.” I don’t know why there wasn’t a categorical statement by the minister, at least as part of an intransigent policy with the federal government, on this issue, that there is no relationship other than the fact that the major oil companies control the great part of the natural gas resources of the Arctic gas fields.
Hon. Mr. Timbrell: We opposed that at that time.
Mr. Renwick: I know you opposed it at that time, but I think it is time the government categorically made the point in Ottawa that it doesn’t believe in the relationship between natural gas produced in Canada and the price of crude oil which is determined by a great number of other factors one way or another.
Mr. Speaker: Order, please; may I inform the hon. member he has two minutes left.
Mr. Renwick: I have two minutes left? Let’s go on after 6 o’clock; after all this is an important matter. We had two hours’ notice of the debate the other day; surely we can speak a little bit about it? I can’t finish my remarks in two minutes but I will try to be as polite as I can.
Mr. Speaker: All right. For clarification, I say that I understand there is general agreement among the three parties to each use up one hour and we are just trying to keep within those confines. It is not my ruling; it’s the House leaders’, Thank you.
Mr. Renwick: As always I will try to agree with the matter but I trust you don’t expect to complete my remarks in two minutes.
Mr. Roy: Do you people stand by an agreement or don’t you?
An hon. member: Go ahead.
Hon. Mr. Timbrell: I wouldn’t have been so brief.
Mr. Speaker: I am sure the hon. member can work toward that end, please.
Mr. Renwick: All right. Let me try to reorganize the --
Mr. Nixon: It’s not two minutes now,
Mr. Renwick: -- few thoughts I was going to try to put in as usual, and compress them within the two minutes which are available to me. I hope we won’t count the time of the Speaker’s warning to me in that two minutes.
If the minister is serious about what he’s doing, he’s got to understand that it isn’t just the consumers in the Province of Ontario who get hurt by any proposed increase in the price of oil. The places that really get hurt are the non-industrialized countries of the Third World. If this government really wants to understand the problem it had better start looking at it from that perspective.
We in this party think that going into this particular bargaining session -- we can’t dignify it as anything other than that; it should be dignified in some other way, but we can’t -- the minister should be intransigent. We agree with members of the Liberal Party and the Conservative Party that the time has some that, subject to whatever variations for transportation costs there may be, there should be a single price across the country. Then all oil to us is old oil; the oil which is imported is where the blended price should come. The Borden line should be dismantled as quickly as possible and the flow, if necessary should be reversible across the country. That part of it is quite all right.
But we insist that the minister cannot play the new oil price game. If the minister will allow me to say, even he admitted that trap. He is not only saying one new oil price, he’s saying the possibility of a series of new oil prices. That’s just an absolutely wonderful understatement of our concern expressed in Tory terms. The method of checking the veracity of reports from refiners is of some concern. However as ESAB has been performing this function for some time, it is assumed that the capability is available. It is also assumed that the expertise of ESAB in correlating crude oil quality differential is adequate for the purpose of the blended price system.
Mr. Speaker: I’m sure the hon. member’s time has expired.
Mr. Renwick: Let me say, Mr. Speaker, if I may, we disagree with that. I think the minister disagrees with that. I don’t think he can transform his proposal for pricing in the Province of Ontario in those terms. I think he has to understand very clearly that the kind of protection the consumers here in Ontario and across Canada have -- in the face of the production of crude oil in Canada and elsewhere and the price we’re going to pay for it -- is dependent on government intervention.
Mr. Speaker: Thank you.
Mr. Renwick: It’s dependent on an understanding by this government that it cannot understand what’s taking place if it thinks there’s an element of competition between the oil companies in Canada, or it permits them the joint venture route, or permits them to exploit the resources which are available. Whether the minister likes it or not, and we’ve spoken about it before, the difference in the OPEC countries is that they now own the resource. One of these days we’re going to have to understand that to get the maximum benefit for us in Canada and the fairest benefit, we’re going to have to own those resources and determine the terms and conditions under which they’re exploited.
Mr. Speaker, thank you for your courtesy.
Mr. Reed: I will do my best to stay within the time constraints, so if the minister is interested in these remarks I would ask him to listen very carefully.
We’re here to endeavour to help the minister bring as much new thought as possible to a very difficult problem. Looking back on our use of petroleum resources, we see with alarm that 100 per cent of our oil will be consumed on this planet in a span of time that represents about one-thousandth the time man has been on this earth. And when it is finished there will be no more.
On the other hand, at the present time we have a good supply of petroleum on stream and will continue to have for at least the next decade.
It seems to me there are two challenges which face this government: One is to try and spread the consumption of this finite resource over as long a period as possible and do so without waiting until the end of the easily available petroleum. This would be an event which would throw a wrench into the economy of Ontario as no other. The other challenge is the generation of longer term supplies of energy. It seems to me the two factors must be recognized.
Firstly, since we are an energy-deficient and energy-intensive province, any policy or stance adopted by this government should support the development of the new supplies. The other, of course, is that since we recognize that this resource is finite, that the resource is not found in abundance in this province, we should immediately begin to look at the alternatives.
The alternatives available to Ontario lie in technologies that are in their infancies at the present time. I refer to the whole field of renewable resources. Are we going to wait until our economy is so run down by the high cost of petroleum that we must then berm to develop the field of renewable resources? The government must realize that in a province that imports 80 per cent of its energy requirements, our long-run future lies in renewable resource development, and that when increases in the price of petroleum are made, a designated portion should be awarded to that development.
I would urge the oil companies to consider this as a new kind of exploration, one with a guaranteed result and one which could ensure their prosperity in the years to come. I do know that some of these companies are doing renewable resource development work in other countries of the world. I urge the Minister of Energy (Mr. Timbrell) to understand that it would be far healthier for the Province of Ontario to have the money spent right here, since I am convinced that the renewable resource industry will have a future which rivals the automotive industry today. We must take steps to ensure that the profits from Canadian energy resources are invested in Canadian development of renewable energy sources. I support my party’s position that further increases should be allocated in the areas of exploration and renewable development.
The government’s proposal on blended pricing does nothing to ensure long-term supplies for the Province of Ontario. The minister has not told us how he’s going to secure the co-operation of the other provinces. On the surface, the plan may have some expedient political qualities, but I sincerely ask if it is not, in the long run, irresponsible.
In the area of renewable resource development the federal government’s performance to this date has been weak and pathetically underfunded. The provincial government’s performance in this area has been disastrous. How can we, in the province of opportunity, continue to ignore the reality of our energy deficiency?
Finally, may I mention the subject of conservation, since I feel that it relates directly to petroleum. What are we doing in the Province of Ontario to conserve this non-renewable resource? As far as the general consumer is concerned -- that is the householder, those people outside of industry -- the only thing we’ve done is to remove the sales tax from insulation. We still license our automobiles according to the number of cylinders instead of according to their weight. We appear to have no plans in mind for, for instance, assessment relief for those people who wish to install solar components in their homes. We are not making a job of educating the public, either with the realities that confront us or with the opportunities and the alternatives that are available.
Finally, let me say that we are still, in terms of petroleum, drawing on our capital, capital that earns no interest. We do not know how much longer we can draw on it until it runs dry, but we do know that it will come to an end. To allocate some of this cost for the development of renewable resources would make that depleting capital earn interest for us, and in so doing, be the means of generating new wealth and new prosperity. I urge the government, through the Ministry of Energy, to come to that realization now. Thank you.
Mr. Ruston: Mr. Speaker, I’d just like to speak briefly on this matter. As we are all aware it’s a very serious matter throughout Canada at this time, and especially in the last three years when the world’s large exporters of oil decided to raise the price.
There was some talk at that time that some of the Arab people went out to buy wheat and they found that the price had gone up to $5 a bushel from about $1.80 of the year before, so they went home and thought they better start raising the price of their oil.
I don’t know if there is really too much of that but that was what they classified as the world price of wheat, $5 a bushel, so they thought that oil should be $10 or $11 a barrel at that time. It did throw a great deal of stress on many countries of the world as well as our own.
Of course, in Canada, we decided a number of years ago that we should use the resources in Alberta. I can recall being in Alberta in 1939 when the Turner Valley fields opened up and there wasn’t any oil in the Edmonton area. I hitchhiked a ride on an empty gas truck from Edmonton to Calgary to get supplies, so at that time there wasn’t any flowing even around the Edmonton area. Very shortly after it did open up.
Canada felt, of course, that Alberta’s resources should be used. In effect we used the Ottawa Valley as a dividing line; to west of that line all our supplies would come from Alberta and to the east we would import oil. For many years, I suppose, we could have imported oil cheaper than what we paid Alberta, but since we should support Canadian industry and Canadian resources, it was a feeling that we were doing the right thing.
After helping Alberta for many years to become a great “have” province -- and, as was mentioned earlier, many people would like to live in Alberta because of the richness of the province -- now we find that they are wanting to kind of give us a little, well I won’t use the word, but you know --
Mr. Nixon: Screwing?
Mr. Ruston: -- they are kind of taking us down the line as far as the price goes, since they have seen what the Arab countries and Venezuela and countries like that are now asking for oil.
On the other hand, we don’t think that people in Nova Scotia or New Brunswick should be paying $1.30 a gallon for gas, when we are paying maybe 75 cents here. It’s a large country and we have to look at some things. This, of course, was a rationalization of the federal government in assessing the 10 per cent excise tax on gas which we have now, plus the large amount that they tax oil going out of Alberta into the United States for export and so forth. Bringing up the Canadian prices to what we classify as so-called world price -- I suppose the world price is whatever the traffic will bear -- is a matter of whether one can even rationalize in any way that our price should be at that level. I don’t think we can.
Mr. Speaker: The hon. member has 30 seconds.
Mr. Ruston: No, I think I understood, Mr. Speaker, I had seven minutes.
Mr. S. Smith: Renwick took four of those minutes.
Mr. Speaker: We are just trying to divide it out evenly.
Mr. Ruston: I thought Mr. Renwick’s time would go on after 6, and see, he didn’t have the approval of the House to do it.
Mr. Speaker: I will give the member an extra minute or two here.
Hon. Mr. Henderson: Thirty seconds has now gone; a minute and a half.
Mr. Ruston: The key thing here that no one has mentioned very much, but which I want to mention, is that the Conservative Party in Canada has never made a policy on oil. The present leader has never said a thing about prices of oil and natural gas; he has kept his mouth shut all the time.
Mr. S. Smith: That’s right, strangely silent.
Mr. Ruston: So he bows to Mr. Lougheed. He bows to Mr. Lougheed and says nothing.
Mr. Ruston: We should have had a debate in Ottawa to see where those fellows stand down there. That’s why the government members are kissing cousins and so forth; they have problems with them and Lougheed. And Mr. Clark -- where does he stand?
Mr. Reid: He is a junior Arab, is what he is.
Hon. Mr. Timbrell: Where do you stand?
Hon. Mr. Davis: Mr. Speaker, I will try to live within the 11 minutes that I understand was left for the government.
Mr. Roy: It takes you that long to say hello.
Mr. Speaker: Order, please.
Hon. Mr. Davis: I will attempt not to be provoked by any of the last utterances and try and deal basically with some of the --
Mr. Ruston: Pont of privilege, Mr. Speaker. I don’t want to interrupt the Premier, but I adhered to your request, I was allowed seven minutes. You told me I couldn’t have it. Now the Premier says he is allowed 11; that was what time he had left.
Mr. Speaker: No matter what way you put it, there are only 60 minutes in an hour.
Mr. Ruston: I hadn’t much to say but the previous speaker from Riverdale used more time than was allotted to him, and I object.
Hon. Mr. Handleman: Have all your communications broken down over there?
Mr. Speaker: Actually, you may just quickly answer the hon. member. This is two minutes over the time which was marked by my predecessor in the chair, so we’re about even. The hon. Premier.
Mr. di Santo: Nine minutes.
Hon. Mr. Davis: Mr. Speaker, I should at the outset express my apologies to the leader of the Liberal Party for not being here at the outset of his contribution. I would observe to him something which perhaps is known by his colleagues -- I am able to listen to him. Unlike being at the Windsor Badminton and Racquet Club, I do have communication here with the House and I can hear what contribution was made.
I think it is fair to say that as I listened to these observations this afternoon --
Mr. B. Newman: Now you know why you don’t have a member for Windsor with comments like that.
Mr. Ruston: Where is your member for Windsor?
Hon. Mr. Davis: -- the observations made by the member for York Sooth (Mr. MacDonald) were predictable and they were consistent. They were traditional. The basic philosophy there, I think, is evident. It’s something on which we basically disagree and I don t think I have to deal any farther with that issue. I did appreciate the constructive way in which he presented them.
The member for Riverdale (Mr. Renwick) has a fairly substantial grasp of this issue but, I say this respectfully, I don’t think he totally understands the proposal. It is the only proposal made by any government, I should mention to all members of the House, with some form of mechanism for dealing with oil and natural gas pricing. We’ve been in this position now for three years.
It was the government of Ontario which first brought this to the attention of the people of this province and to the government of Canada. We have sought some formal mechanism to deal with this over the period of the past two years and we have had no response from any other government of Canada, including the members’ close friends at the federal level. I find this is one of the most regrettable portions of this whole exercise this coming Thursday.
Mr. Roy: What about your friends in Alberta?
Hon. Mr. Davis: Once again, we are going to the nation’s capital. We will have a delightful luncheon with the Prime Minister and the other provincial Premiers and that group will be responsible for discussing a very important matter for consumers and the economy of Canada generally. I think it is very regrettable --
Mr. S. Smith: If you are going to keep on talking about our friends in Ottawa, why don’t you talk about your friends in Ottawa?
Hon. Mr. Davis: I would say to the leader of the Liberal Party that it is fine to make fun of the only constructive proposal which has been made.
Mr. S. Smith: You are right.
Hon. Mr. Davis: But (a) he doesn’t understand it and (b) hasn’t given it any thought. His proposals this afternoon which, I have to say, are in contradiction to those of a guy who’s given some thought to this matter -- the member for London Centre (Mr. Peterson) -- to me, were totally contradictory and without any degree of a practical approach.
Mr. S. Smith: They are not a contradiction.
Hon. Mr. Davis: Do you know anything about NASA? You say we should have something comparable to NASA. I haven’t heard a more ridiculous suggestion in this House. NASA functions as an agency of the federal government of the United States. It has nothing to do with the state; nothing to do with any sort of priority setting or anything else. I couldn’t understand it. It was beyond me.
Mr. S. Smith: Of course, it is beyond you.
Mr. Roy: It is not the first time you have failed to grasp issues.
Hon. Mr. Davis: Maybe my mentality isn’t up to that of the leader of the Liberal Party --
Mr. Speaker: Order, please. The hon. Premier has the floor.
Hon. Mr. Davis: -- but I got the impression that there is a policy in London Centre, where there is some understanding of the private sector, which is totally disregarded in Hamilton West. It’s the only way one can read it. It is fine to get up and say that’s a kindergarten document --
Mr. S. Smith: That’s what it is.
Hon. Mr. Davis: -- but the fact remains that our neighbours to the south with some alterations -- and I’ll recognize the mechanical difficulties inherent in any blending proposal -- are operating today with a form of blended price which is giving them a lower domestic price than we have in this country at this precise moment.
Mr. S. Smith: That’s both false and incorrect.
Hon. Mr. Davis: The great problem in all of this. Mr. Speaker -- come on. Let’s be realistic; let’s be practical.
The solution for this problem lies directly in the control of the federal government of Canada. It has not exercised the degree of responsibility required. It has no policy. There is no mechanism.
I will be going there Thursday and I will be suggesting our formula as at least something the people of Canada could understand; there is some degree of rationality. We will not be supporting an increase in price.
The member didn’t even touch on natural gas. Does he know what that means? Does he know the question of indexing at 85 per cent? Does he know what this means to the consumer if this goes up? Not only to the consumer but to the industry based on this? Does he know the impact of the policy decision made by the federal government two years ago or a year and a half ago?
Our industry today is paying a higher price than industry in the State of Michigan which is in some instances, using Canadian natural gas. Let the member explain that to me. We opposed this vigorously a year ago. We didn’t hear much from those people over there. We heard from them in a totally --
Mr. Roy: Have you talked to Lougheed?
Hon. Mr. Davis: -- non-practical sense, I must add. Totally non-practical.
Mr. Martel: We’re always practical.
Mr. Mackenzie: Totally practical.
Hon. Mr. Davis: All I say to the members opposite is it’s fine to belittle the position being taken by the government of Ontario, but it is the only constructive proposal that has been made in this whole basic issue. And it was this government that first drew the attention of the federal government to the issue. We said these things three years ago. I could take verbatim some of the things said in the House here this afternoon and I can show you where they were said three years ago in this House; three years ago in this House.
Mr. S. Smith: Why didn’t your federal party draw their attention to it? Why didn’t the federal party do it?
Hon. Mr. Davis: Let’s be very realistic. We’re going to Ottawa on Thursday at noon. There is no constitutional or legal way to -- It’s fine for the leader of the Liberal Party to say, “Nothing more for the producing provinces.” Great! We said that a year ago. Give us something new, something constructive, something tangible.
Mr. S. Smith: Well, this is pretty new. Now you are giving them money. Don’t increase the wellhead.
Hon. Mr. Davis: It may come as a hit of a shock to the member but the fact is this Legislature doesn’t have the competence to say that the people of Alberta will not have an increase in royalties. That may come as a surprise, but it’s factually true.
Mr. S. Smith: Don’t increase the wellhead price -- that’s all. Because the wellhead price goes to the province and to the companies.
Hon. Mr. Davis: I want to just put one or two other points on the record, not to be controversial at this moment.
Mr. S. Smith: Not you! Never!
Hon. Mr. Davis: No, I’m putting this in a general context. I suggested this debate because I thought it might be helpful if we could -- and I didn’t really think we would -- get some degree of consensus here as to the position Ontario might take.
Mr. S. Smith: Sure, that’s the reason for the debate.
Hon. Mr. Davis: I respect, I understand, I disagree with the point of view of the members opposite, the official opposition. They have no faith in the competence of the private sector. Fine. Here we totally disagree.
Mr. Warner: What are you saying?
Mr. S. Smith: Don’t you play dumb. Good type-casting, but don’t do it.
Mr. Speaker: Order, please.
Hon. Mr. Davis: I can’t analyse, I really can’t, the position of the Liberal Party.
Mr. Speaker: Order, please.
Hon. Mr. Davis: What I am saying is this: Ontario has always played its role in Confederation. The part that gives me concern about these discussions on Thursday is the fact that they are related, and very basically related, to the whole question of equalization, the whole question of fiscal sharing, fiscal transfers, and that for this issue to be treated separate and apart from those other major discussions that should be going on at this precise moment, to me, is very regrettable.
Mr. S. Smith: I agree.
Hon. Mr. Davis: But I can assure the members of this House that I have, along with my colleagues, always taken the position, that, in terms of the economy, last year was no time for a price increase. Didn’t hear it too much from over there. Last year was no time for an increase.
We are interested in the consumers. I don’t agree with the member for Hamilton West that there is an inevitability to a major increase in the price of oil and natural gas. I happen to agree with the member for Riverdale that we’re talking about an international cartel.
Mr. S. Smith: It’s going to fall apart, I suppose, just because you say so.
Hon. Mr. Davis: It’s great to say that our formula won’t work -- to pooh-pooh it. I would say to him with respect: It’s probably the only constructive proposal that’s been made. But, we’re prepared to make, in this province --
Mr. Roy: You are repeating yourself now.
Mr. S. Smith: The cartel will fall apart because you say so.
Hon. Mr. Davis: Listen, I say to the member for London Centre: We know the other provinces, some of them, won’t like it. We know the federal government won’t like it because it doesn’t solve their financial problems. We know the companies don’t like it because of the cash-flow difficulties, which we think can be overcome.
Mr. S. Smith: It is not their problem. It is the country’s problem.
Hon. Mr. Davis: So we know why they will oppose it, but that doesn’t mean that they’re right and we’re wrong.
Mr. Peterson: The trouble is, it won’t solve industry’s problems.
Hon. Mr. Davis: I say, with respect, if you’d studied carefully, there is the germ of a formula idea there that makes practical sense --
Mr. S. Smith: I hope it’s not contagious.
Hon. Mr. Davis: -- but whether it does or not will not be totally up to this Legislature or to the Premier.
Mr. Reid: Now I know where you were getting your research from -- germs.
Hon. Mr. Davis: The one thing that we will continue to support in terms of this country, because it is something of a national issue and we in this province are prepared to make some degree of sacrifice in the national interest: We support equalization in terms of price across Canada, but at the same time I reiterate that we do not comprehend or understand the lack of federal programme, the lack of initiative and what has not happened in the past two or three years.
Mr. S. Smith: In either party. In either party. Be honest!
Hon. Mr. Davis: I’m not here to defend or promote the Progressive Conservative Party of Canada.
Mr. S. Smith: Then why are you always attacking us as if we’re the government of Canada.
Hon. Mr. Davis: If the member for Hamilton West wants to continue to defend the government of Canada, then be my guest.
Mr. S. Smith: You are attacking. You are doing the attacking.
Hon. Mr. Davis: I will not, I shall not. That is the position I will take Thursday afternoon.
Hon. Mr. Welch: Mr. Speaker, I assume that since the time has now expired, this particular order can be discharged from the order paper.
Mr. S. Smith: So is the government.
Mr. Speaker: Yes. This order is discharged now.
Hon. Mr. Welch: Mr. Speaker, tomorrow Motion agreed to. we will go to the order paper and consider the legislation, starting with the rent review legislation. Then tomorrow evening we have budget debate.
Hon. Mr. Welch moved the adjournment of the House.
The House adjourned at 6 p.m.