Legislative Assembly of Ontario

The House resumed at 8 p.m.

ESTIMATES, MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS (CONTINUED)

On vote 1402, commercial standards program; item 3, financial institutions:

Mr. Chairman: Are there any questions or comments on item 3?

Mr. Davison: I have a couple of matters I would like to raise under this vote. One of the items that caused me some concern was the recent announcement of the AIB decisions in regard to insurance companies and excess profits, particularly the ruling on Allstate Insurance. I don’t know if this is happening in the other insurance companies. Perhaps the minister could address himself to that. What happened in the Allstate example is that after the AIB said its profits were excessive and the excess would have to be returned to the consumer, the AIB sat down with Allstate and worked out a deal. Rather than giving the money back to the people who had purchased Allstate policies, what they would do is reduce premiums for renewals. In other words, for the consumer to get back the excess amounts paid to Allstate Insurance Company, he or she had to renew the policy with this insurance company, which was in its own small way ripping off the consumers.

I wonder if you can tell me if you have looked into this matter and if there are other insurance companies involved in this same little way of repaying back their policyholders; and what, if anything, you think your ministry should be doing about it.

Mr. Lewis: I think I might cross the floor.

Hon. Mr. Grossman: We have no room for you.

Mr. Lewis: This is the first time in my memory in 14 years that there has not been even one single Tory back-bencher to provide support in the matter of a minister’s estimates. Not one!

Hon. Mr. Grossman: It shows you the confidence they have.

Mr. Lewis: You have achieved what your father could never do in this House, complete and absolute desertion.

Mr. Chairman: Order.

Hon. Mr. Grossman: Or total confidence, one or the other.

Mr. Lewis: Good grief. You are an amazing fellow.

Hon. Mr. Grossman: We are allocating our troops where they are needed. Proper allocation of resources is the secret of our success. It is like the restraint program.

Mr. Lewis: Watch them come in now. Wait until that hand reaches five after eight and see them sneaking furtively in through the back door.

Hon. Mr. Grossman: I would settle for them coming in any way; I am not particular.

The answer to the member for Hamilton Centre’s question is that it is a matter for the AIB. That is the system they recommended, and in fact put in under their authority to look after the problem. It was not arranged by our ministry, but yes, you have to renew in order to get the rebate. There is nothing my people can do about the situation.

Mr. Kerrio: The member for Oriole (Mr. Williams) is coming in now.

Mr. Lewis: I said a member, not a facsimile.

Mr. Kerrio: Careful, he just doubled the numbers on that side of the House.

Mr. Davison: With the greatest of respect, my understanding -- and I am quite sure I am right -- is that it was Allstate’s solution and what the AIB did was concur. It said: “Yes, Allstate, it would cause you a bit of trouble to get the money back into the hands of the consumers you have overcharged. For your own convenience as a company we are going to say it is okay. It will meet our requirements if you give the money back only on renewals.”

What I am asking you as the minister in charge of consumer protection is: Is this not an area where consumers in Ontario have been ripped off by auto insurance companies; I suspect in the plural, but I don’t know so I won’t say that.

I would ask you to investigate if that’s the same route being taken by other auto insurance companies. Don’t you think that you, sir, have some responsibility on behalf of consumers in Ontario to make sure the consumers that have been overcharged are the consumers who get their money back and we don’t allow the precedent to be set that consumers have to renew a policy in order to get back excess moneys taken in by the insurance company?

Hon. Mr. Grossman: I’m informed there’s no question it was a proposal put forward by Allstate to solve the problem. The AIB did, admittedly, accept a proposal put out by Allstate, which I suppose of itself doesn’t make it wrong. One of the arguments, I’m told, put forward by Allstate, which seems to be fairly reasonable, is that if they were to pay back immediately, $15 million I think the figure was, it would affect their capacity to write new business.

I know the member is aware of the capacity problem. Ability to write business, especially new business, depends upon liquidity of the company and how it measures up to the ratios set out by my own people. Had they paid out $15 million, in simple terms, it would have drastically affected their ability to write new business in the following year. That’s not a bad argument. In any event, it was an argument which satisfied the AIB; and my people were aware of the proposal and frankly did not object to it.

Mr. Davison: I don’t understand why your ministry wouldn’t raise some objection on behalf of Ontario consumers. We’re not talking about a paltry sum, we’re talking about a fairly substantial amount of money. I understand the sensitivity the Minister of Consumer and Commercial -- stress the Commercial -- Relations has, and perhaps that hearkens back to the point I was making earlier about the difficulty you might be having with the two responsibilities. One responsibility you seem to have is toward the insurance company to make sure they have that $15 million so they have the capacity to write new policy, and Allstate has the capacity to continue to do whatever it is they do so well, that’s one side of the coin; the other side of the coin is that consumers in Ontario have paid too much money through premiums to Allstate, and the AIB has, in fact, ordered a roll-back.

The AIB doesn’t descend on companies with the kind of harshness and regularity with which it usually does on workers. It doesn’t usually have the same kind of impact and we don’t see it with the same kind of frequency. They’re not quite as willing to jump on them as they are on workers. If they’ve made a decision in this case, it’s probably, if anything, not strong enough, by my experience and view of the AIB’s program.

We now have this crazy situation where a consumer has been, in essence, ripped off by an insurance company, and your ministry is saying it’s okay for that insurance company not to reimburse that consumer unless that consumer renews his policy. Maybe it’s just the problem of having to be on both sides of the issue in terms of understanding the consumer problem and understanding the problem of the corporation. You do absolutely nothing about it except sit back and say we’re aware of the problem.

The fact is, though, I don’t see how you can justify that to the consumers who don’t want to renew their policies with Allstate. Surely those consumers have a right to get back that money. You should re-examine your position, because there’s a very strong case to be put for those consumers being compensated. You have a fairly clear responsibility to the consumers in this particular matter.

Hon. Mr. Grossman: The member’s interpretation of our concern is wrong. In fact, Allstate Insurance was going to be out the $15 million anyway.

It was going to be out the $15 million, whether it was done in this way or by way of a direct payment back to the policyholders who had paid the money. So in terms of the financial position of Allstate, it mattered very little whether they were going to pay it back by way of cheques or pay it back by way of taking in less money on renewals in terms of what they were charging for those renewals. They were, and are, out the $15 million.

Our ministry’s concern was who is going to suffer as a result of that $15 million not being available and disappearing out of the insurance pool. If it had been done the first way by way of paying it out immediately in this year to existing policyholders, there’s no question that their ability to service the consumers at large over the province would have been impaired. There’s no secret, either, that Allstate happens to be one of those companies offering cheaper rates than most companies, therefore they’re servicing a special part of the market that most needs the availability of cheaper insurance. I can think of a lot of my constituents, for example, in that regard.

Our choice was to have Allstate out the $15 million and be able to write fewer policies this year. This would have affected the availability of insurance at the very time at which we are pushing and pushing to see that more and more people have insurance rather than paying $100 into the claims fund. We could have it paid back to the number of people who are already insured with Allstate, and who in fact had paid the higher premium. On balance, our ministry resolved that quandary in favour of the consumers at large by saying it was better to retain the ability there to continue to provide cheaper insurance to more people throughout the province, rather than to benefit this group of people.

I think it is also important to remember that Allstate -- I think it’s no secret -- Allstate hardly needed the advantage of being able to pay it back by this route in order to hold its position in the market. It hardly needed this as a hook to hold on to its current business. Far from it, it’s track record over the last several years has been pretty good.

I think it’s fair to say that it was more important that we make sure that the availability of insurance be protected, particularly to a lower-range carrier in terms of the cost of their insurance, rather than making it look like the AIB had been more punitive by forcing Allstate Insurance to write out cheques in the amount of $15 million immediately.

With regard to the member’s other comments, I want to say explicitly I’m far from being here in a position to defend, or desirous of defending, AIB policy in terms of who they treated more harshly throughout the program. That is not only someone else’s problem, it is some other forum’s problem. I’m not going to get at all into a defence of the decisions they have made. Whether $15 million was the right amount or not, that is up to the AIB; whether they’ve chosen the most punitive route or not, that is up to the AIB. As far as my ministry is concerned, we want the route that will least penalize consumers at large over this province while seeing that the appropriate moneys get back out into the economy and out of Allstate’s pockets. We think the route selected is the most efficient and fairest one.

Mr. Warner: That’s an excellent argument for government car insurance.

Hon. Mr. Grossman: You can make that argument.

Mr. Davison: That was a very useful interjection from the member for Scarborough-Ellesmere.

If anyone is to suffer in this whole crazy episode, it shouldn’t be the consumer in terms of insurance at large in Ontario; and it shouldn’t certainly be the poor consumer who bought the insurance in the first place; it should be the people who made the excess profit. So we shouldn’t be in a position, as you seem to view the argument through what I can only consider to be faulty logic, of determining which group of consumers will suffer. If there is any talk of punitive action, it’s in terms of the people who made the profit and not in terms of any group of consumers in Ontario.

I am not addicted to Allstate TV commercials, or their radio and magazine ads; and I have no knowledge about how competitive or non-competitive Allstate’s rates may be. One can only judge the quality of their service from constituents that come to my office to raise with me a matter in regards to that insurance company. Quite frankly, I haven’t found the quality of their service to be anything better than average or run-of-the-mill quality in terms of auto insurance.

[8:15]

Finally, I know insurance companies don’t like or frankly won’t allow people to pay their insurance on an instalment basis, except in unusual cases or on a six-month insurance contract. However, it might be those consumers will be ripped off in this episode by not being able to get back the excess money they have paid. They would have been very happy to have accepted the difference back from Allstate over a considerable number of months, perhaps even interest-free seeing as they claim to get absolutely nothing out of it anyway.

I think the ministry has made an error. I think this is a case where the ministry quite clearly could have stepped in and acted to protect consumers who are, as it seems, going to be ripped off and who are going to have no recourse. They will simply go without the money unless they renew a policy with Allstate. That’s a difference of opinion, quite frankly; I guess perhaps we will have to leave it at that.

Another issue I would like to raise with you, if I might, is the issue of the amount of insurance and coverage set on housing insurance. There has been a lot of talk lately about the necessity to have insurance companies to set amounts of coverage, and the insistence of mortgage lenders on amounts of coverage to cover the total price or total real estate value of a property.

The concern that’s been raised is, on the face of it, an interesting one. That is, why should somebody, when buying insurance on their home, also buy insurance on the land on which the house is sitting? When you buy insurance on the total price that’s in effect what you are doing I suspect this is an especially important thing to consumers in an area like mine, where in many cases the land is more valuable than the house. In older parts of Hamilton you often run into a situation where there is a house that is not worth a great deal, maybe only $9,000 to $20,000, and a piece of property that is worth $25,000. Perhaps it’s not a problem; but I would like to hear from you if there is some reason for it. Why have we permitted these mortgage companies to insist home owners buy in many cases twice as much coverage as their house is worth?

Mr. Breithaupt: Well of course they don’t, they only have to insure the mortgage.

Hon. Mr. Grossman: The answer as provided by the chairman of the select committee on company law is of course they don’t, the simple fact is they don’t. You will find in most instances, in fact, that insurance is bought only up to the replacement value of the residence. I know in my own experience when renewals come along, a careful home owner will be cognizant of a rise in property values. He or she knows it is going to cost more to replace his or her home and they increase the value. A good insurance agent will do the same every time the renewal comes up. Be it three years or whatever, he will check the assessed value or the real value in terms of the marketability of houses on that block or in that area.

I can’t imagine a case, and I certainly don’t know of any cases, where a property has been insured for the full purchase price of the property. Obviously the land is not insured; such a thing is just not within my experience and I don’t think my people here have any knowledge of any examples brought to their attention where 100 per cent of the purchase price of land and building has been required by a mortgage company, nor taken out.

I will say I do recall some instances, in my own knowledge, where for example a home owner may have decided to insure his home to, say 70 per cent of what he paid for the entire property, figuring the land itself was worth 30 per cent. Occasionally, then, he may end up mortgaging for 75 per cent and the mortgage company will come along and say: “Well, I want you to insure to the value of the mortgage.” What you find however, is when the mortgage application is put in a revaluation of the house occurs and the mortgage company gives probably 75 per cent of the new true value, the market value as a total property. The insurance is adjusted upward. It would be very unusual for you to find the mortgage company, or anyone else, demanding insurance for more than the actual bricks and mortar value, the replacement value of the building.

If you have any instances in which that is the case, you ought to send them along.

Mr. Davison: What I’ll do is dig up a few for you. It’s quite common in Hamilton for those of us who don’t have a great deal of money to get pretty high ratio financing on homes, especially if we can get into one of the government programs. I’m convinced there are a large number of people in Hamilton who have their homes over-insured at the insistence of lending institutions. Perhaps it might take up less time if I give you some examples privately and we can deal with it that way.

Another concern I have in regard to mortgage companies is that it is rumoured that in recent months there has been a trend to an increase in default rates on mortgages, although it is difficult to get exact figures. That is causing me some concern, especially since I live in an area where unemployment is really starting to hit home, really starting to be a problem in a city where people who are used to having a job all of a sudden find themselves, in many cases, out of work,

Has the ministry been monitoring this trend; have they detected a substantial increase? If so, are you concerned about it?

Hon. Mr. Grossman: No, we have no knowledge of a marked increase in that practice. I am told there are now four companies offering that type of insurance.

Mr. Davison: I’m sorry, I wasn’t talking about default insurance I didn’t know there was such a thing. The point I was trying to raise in my own inarticulate fashion was the increase in defaults on mortgages and therefore the increase in foreclosures on mortgages. Does the ministry monitor this situation and if so, have you detected such a trend, a doubling in recent months of defaults and foreclosures on mortgages? Are you concerned about that?

Hon. Mr. Grossman: Yes, we have noticed a marked increase, not surprisingly, in the number of defaults on mortgages and subsequent foreclosures. My people have instituted discussions with the trust companies, who hold about 72 per cent of all the mortgages involved. This is also under this vote. With regard to the current situation, I am sure the concern is there.

Mr. Davison: It’s nice to be talking. We seem to do a lot of that in government. Without prejudicing your ministry’s discussions with the trust companies and any future discussions with other mortgage lenders, does it appear there may be some positive action taken by your government, or some positive suggestions you may be able to make to the mortgage lenders so we might be able to do something to lessen the impact of the economic situation on these poor people who first have been tossed out of a job and then find themselves in the position of being tossed out of their homes?

Hon. Mr. Grossman: It is obviously of great concern. The trust companies don’t like to foreclose; it doesn’t do them any good. They don’t want houses back, they want mortgage payments. It impairs their ability to expand further their own business, because they do not have money coming in. They suddenly find they have money going out. As you know, no one likes to throw someone out of their home. Even big businesses don’t like that.

I would be happy to hear from the member any constructive suggestions he may propose. Our conversations entail, by way of what we may propose the trust companies do, fairness to all the parties involved with regard to getting everyone through this difficult time. We have no magic answers. The loan has been made; it’s in default. I’d be pleased to discuss with you any suggestions you might have.

Mr. Davison: I don’t have a clue. I have not been privy to the discussions between your ministry --

Hon. Mr. Grossman: There’s nothing secret and sensational in them. You can speculate -- as can I, I didn’t sit in on them -- as to the discussions. How many foreclosures have you got? How far in arrears are people before you start to move? Do you see a change in the circumstance? Is it because you over-mortgaged originally? Is it because the market’s falling? What steps are you taking?

Those are logical questions. There are no magic solutions proposed by either the trust companies, that don’t like to do it, or our people, who don’t like to see it happen.

Mr. Lawlor: As the economy falls apart under your Caesarity, you just might have to consider moratorium legislation.

Hon. Mr. Grossman: If you want to entertain that suggestion, that’s one of the alternatives.

Mr. Davison: Perhaps one of the alternatives is to make certain that your cabinet colleagues are aware of the critical situation in terms of the effect the economy is having on home-owners. It might be good if you could spark some cabinet debate on the crucial problem behind this factor -- which is really just pointing us to the crucial problem -- the problem of unemployment.

Would it not be possible for you to take these facts before cabinet and say, “Look, Darcy, the economy is in bad shape. Things aren’t going very well. We’ve had a doubling in foreclosures. The economy is really rugged, and it’s time we did something in terms of serious massive job creation in Ontario”? Would you not see that as fulfilling your necessary commitment to consumers, to identify a consumer problem which your ministry have not had many ways of doing anything about, but certainly other ministers of the Crown could do something about? Could you not take it to cabinet and say that this indicates the economy is in very bad shape, something has to be done about jobs, and perhaps spark some cabinet debate as to what could be done in terms of a job-creation program?

Hon. Mr. Grossman: I first want to assure the member that the information I get, not only from this branch of my ministry but all the others, as it relates to the economy, is constantly brought to the attention of not only cabinet as a whole but the various cabinet committees I sit on. They’re well aware of the information I’m giving you tonight. They’ve certainly heard it before.

Second, just so you’ll have it in perspective, at the present time there is really not a great change reflected from what are commonly known as the good times, in terms of mortgage default. That is for the very obvious reason that the last thing most people let go into arrears are their mortgages, because they know there are pretty severe consequences. So at the moment while there is some concern and a slight increase, it is nowhere near a marked increase.

As further evidence of that I know you’ll appreciate that the condominium legislation I introduced last week was partly due to the fact that while many condominium unit owners let their common expense payments go into arrears, and therefore throw the burden of their financial difficulties on other unit owners, they don’t let their mortgages go into arrears. They’re electing to shift the burden of bearing their temporary financial problems upon those who have the least available remedy. So the mortgage situation again is nowhere near crisis situation at the present time.

[8:30]

The facts, as they are, show a slight upturn. Those have been brought to the attention of my colleagues. In the long run, if the situation continues to deteriorate, or the number of defaults accelerates, then we would undertake certain discussions with trust companies and mortgage lenders. For example, the moratorium would be the more drastic action. There would be some discussions about the possibilities of renegotiating some of the terms of mortgages to provide a longer payout period, perhaps amortize them over a longer period, or move to interest-only on the mortgages for a period of months. Those are not only proposals which I would bring to the attention of the mortgage companies at that particular time. In fact, it is a practice that is ordinarily carried on by mortgage companies at all times -- good times or bad times. They just hate to foreclose on homes. Mostly they would get involved in renegotiation if they can see any hope whatsoever, for, say, a period of temporary unemployment to become resolved.

Those are all alternatives we would discuss more and more as the situation deteriorates. We hope it won’t deteriorate. It is by no means at a serious state just yet.

Mr. Davison: My understanding was that the figures in Toronto indicated a 100 per cent increase in recent months in the rate of foreclosure. I would suspect that doubling, or 100 per cent increase, is fairly serious. I think the minister makes a good point though, when he says the last thing that people let go are their mortgages, their house payments. It is then very critical that we understand foreclosure rate increases as being a symptom rather than a disease.

The problem is unemployment more than it is a question of people not being able to meet their mortgage commitments. I would think the least the minister could do on behalf of consumers in Ontario is to make his colleagues in cabinet, who at times seem not to be aware of the seriousness of the economic condition in Ontario, aware of this symptom of the disease -- to see this particular problem as evidence of the need for job creation programs.

If the minister is not wanting to put that before the cabinet so be it, but I think it is another case of an area where the minister could do something positive and could bring that problem to cabinet as an example.

There are three other issues I want to raise under this vote. One is access to credit by women in Ontario. First, could the minister tell me if a credit-giving institution such as Sears or Eaton’s or Woolco or department stores fall in ambit of the financial institutions?

I take it the shaking of the minister’s head means no.

Mr. Chairman: I understand this comes under item 6.

Mr. Davison: They are credit lending institutions but they are not financial institutions.

Mr. Chairman: It comes under business practices.

Mr. Davison: I would make the point they are people who give credit. Therefore, the ministry should have some say in their credit policies.

However, be that as it may, I understand that over the past year or so, or the past months anyway, the ministry has been to some extent patting itself on the back about the opening up of credit to women. I suspect to some extent that is justified. It is a bit easier now for women to gain access to credit.

Are you aware of comments made by Christine Lawrence, who is the manager of the Metro Toronto Women’s Credit Union, when she says that married women are very poor risks? That is evidenced by the fact that they are generally considered bad risks by big money lenders. When they apply for a loan they are required to have a husband as a co-signer. What does the minister think about this practice of lending institutions requiring, in many cases, married women to have their husbands co-sign a loan, as opposed to single women who of course don’t have a husband to co-sign a loan and in most cases don’t require a co-signer?

Hon. Mr. Grossman: I have tried to be as co-operative as possible in including all the jumping around we have done on the early votes, Mr. Chairman. I have staff with me who can assist me in dealing with this. I don’t pretend to have all the answers.

In fact, I’m sitting here trying to assist the member by going through my information which I have under vote 1402, item 6, where it belongs. I’d be happy to deal with it then. We’ll get to it in order. That will make it easier for me to give you more information.

Mr. Davison: I’m sorry. I thought under financial institutions we could talk about things like access to credit.

Hon. Mr. Grossman: If you want to talk about it, if you’ll just give me a few minutes, I’ll dig through the later stuff and get it for you. I don’t want you to think I’m being difficult. I’d be happy to do it now. You’ll just have to wait a minute. It’s your choice.

Mr. Davison: I’m interested in making things easier for the minister.

Something that has troubled me about financial institutions is a past practice of insurance companies which I sure as the devil hope is no longer continuing. A woman came into my office two months ago with an insurance policy on which she had over a number of years paid premiums far in excess of the value of the policy. We all know that insurance companies all along the way make money by lending out that money, so there’s no telling how much of a profit the insurance company had made.

I take it that now when an agent is sitting down with an individual and looking at the kinds of contracts that may be written, we require insurance companies to explain to the individual that it’s quite possible they could be paying many times more or a substantial number of dollars more than the contract is worth -- unless we’ve done something to stop that situation, which I don’t believe we have.

Hon. Mr. Grossman: You’re going to have to develop your question a little bit more because we couldn’t get the essence of your question.

Mr. Davison: A woman who came into my office had paid $1,719 for a contract that was worth $1,000. The insurance company got $619.40 more than the contract was worth, plus all along they made a profit. They still want her to keep paying her payments. If she lives much longer, the company will have doubled or tripled or whatever the amount of money. At the time, she wasn’t informed of that. She was led to believe by the insurers that when she had paid up to the amount, if she lived that long, she would then no longer have to pay premiums. But she still does have to pay premiums.

I don’t think we’ve changed that. I think it’s still possible to write such an insurance contract in Ontario. Have we made it necessary for insurance companies to explain at the time a contract is signed that it’s quite possible one can pay double, for example, in premiums what the insurance is worth?

Hon. Mr. Grossman: From the details you’ve given us, it would appear you’re referring to the cash surrender value in the first year of the contract, the first year being the year in which the agent’s commission is taken out, so that you could conceivably end up with a situation such as you described, where the cash surrender value, which is disclosed in the contract, is less than the figure paid in the first year.

If you send over the details of that particular contract, if you haven’t already written the ministry, then we’ll be able to find out more details about the contract, see if there’s been a specific violation and immediately correct it if that’s the case.

Mr. Davison: I’m sorry. I didn’t give you details of the situation after your previous reprimand. I’ve already been in contact with the excellent officials of your office and have straightened out that the insurance company under the law could quite properly charge her what they did charge her and that in the early days when she wrote the contract there was no law against insurance company agents, who were perhaps a bit sharper than they are now, dealing with her as they had. What I am simply asking, because I have solved this case as much as it can be resolved, do we now have controls over the insurance industry that will prevent the kind of situation that occurred in that case? Must they now fully disclose all possible details and aspects of the contract?

Hon. Mr. Grossman: I presume the answer you got from my people was that all the material and facts were disclosed because you’ve reported to me they were operating within the law.

I must say my people, who are as experienced as you can get in the field have not, from the information you’ve given us just over the floor tonight, been able to identify specifically the problem you’re dealing with. If you want to send over your file, even while our discussions continue on other matters, and even if we get to other votes, then they can have a look at the file. I’d be happy to tell you what they say on the basis of the information you send over. They really can’t identify the specific problem you’re talking about just from what you’ve told me. I’d be happy to co-operate. If you send it over, I’ll give a full and complete answer within minutes.

Mr. Davison: I don’t have a problem with this lady any more. It’s already resolved.

Hon. Mr. Grossman: No, but you may have a very valid concern about a practice occurring out there in the marketplace. I would like to know if there is a practice occurring out there which is within the confines of the current law and which you feel causes you some concern. I would like to know if there is something happening out there that is adversely affecting consumers and which you think is unfair. If that’s the situation, I’d like to know about it because maybe we’ll look at the law. So if you send that over my staff will be able to tell me what the specific problem is and why they’re able to do whatever they’re doing within the confines of the law. We’ll have a look at it. I’d appreciate having that assistance from you.

Mr. Davison: I will turn my notes into some kind of legible document and transmit them at some early as possible date so we can deal with this issue again, perhaps outside of the estimates. We don’t need to dwell on it at great length. Perhaps we can come to a resolution over the next few weeks.

Finally, I think I’m beginning to understand what the Cemeteries Act administration does. Are these the people involved in the incident at the London jail last July? People were involved in digging around the walls and demolishing some walls which was going to lead to the disruption of grave sites. They’re the same people who were involved in the problem with native people burial sites in northern Ontario.

I have two questions. First of all, what are they doing under the financial institutions branch of your ministry? Or for that matter, under your ministry?

Second, what steps have been taken to try and resolve the problem with the native people in native burial sites in northern Ontario?

Hon. Mr. Grossman: Okay. They’re in financial institutions in my ministry because they are a major activity. The perpetual care funds are a major activity which calls for auditing of the statements, et cetera. They need the same protection we give, in a sense, to pensions. That’s what they do in the ministry. They’ve got to be somewhere so someone with expertise can check and see those funds are going to be there to maintain those burial grounds in perpetuity.

Before continuing, I have to get on the record I now have more colleagues in the House, or at least as many, on my side as on the NDP side Unbelievably, the Liberals are one ahead of us.

Mr. Reed: As usual. What else is new?

Mr. Davison: You have, unfortunately, more colleagues to draw upon.

Mr. McClellan: He can’t count.

Mr. Lewis: Yes, you can’t even count. Do you know that? That’s a disgrace.

Hon. Mr. Grossman: There’s five on my side and five on yours. One isn’t in his seat. That doesn’t count.

Mr. Chairman: We are on item 3.

Hon. Mr. Grossman: I was here alone and it was all right. I wanted to set the record straight, fair is fair.

Mr. Nixon: Think of all the people reading this part of the record.

Mr. G. Taylor: Or any part.

Mr. Nixon: There will be your daddy.

[8:45]

Hon. Mr. Grossman: And Michael’s daddy and Stephen’s daddy. We have taken the position that such sites are protected by the Cemeteries Act. When these sites are found they can be protected where they are and they should remain there in the same manner as in any other cemetery.

If they must be moved, and there are some instances in which that is the case -- indeed it could happen behind the Don jail for that matter -- this must be done under the proper supervision, both medical and scientific, carefully and with due respect for the subject matter. In the event the Ministry of Culture and Recreation issues a licence to an archaeologist to remove the burials, then that becomes their responsibility; they have issued that licence. That’s our role in the sense of the burial grounds to which you are referring.

Mr. Davison: But, Mr. Minister, it is not so much the problem at the London jail. There are other special problems with native peoples -- this is not meant as criticism of your government but as criticism of our culture, we have removed and destroyed so much of their heritage. We have come to the last point where without consultation, or apparently without proper consultation, over the past years in Ontario we have been disturbing native burial sites to which they attach a rather special cultural significance -- a significance which our culture does not attach to those sites.

The concern was raised over the past years that it was incumbent on the ministry or the people administering the Cemeteries Act or the people in the Ministry of Culture and Recreation to be very careful and at least have some kind of serious consultation with native people about work on unrecorded native burial sites; I would like to know how the ministries have responded to that. What have you done to make sure we are consulting and working fairly carefully and closely with native people in this regard?

Hon. Mr. Grossman: The practice and procedure followed is to be sure any burial grounds, including those of native people, are given the full protection of the Cemeteries Act and I have said, they should remain where they are found, protected and respected the same as any cemetery.

If they have to be moved, the utmost consultation goes on. We are very, very careful about this. It’s a delicate subject which is handled carefully. We make sure the removal, if it does occur, is done with the understanding and consent of all those people involved and done, as I say, with the proper scientific and medical supervision and, importantly, with all due respect and care for the subjects and the items in question. I want to assure the member all the procedures under the Act are not only in place but very carefully and delicately followed to ensure the utmost dialogue, especially in those areas in which you are concerned.

Mr. Davison: Those procedures have been worked out with the native people of Ontario? They are not procedures that you have worked out just in your ministry?

Hon. Mr. Grossman: Yes, that’s it.

Mr. Williams: Mr. Minister, we were speaking earlier about the question of an increasing number of mortgage defaults and the concerns expressed with regard to that accelerating situation. You had started to make comment on the number of mortgage insurance companies in operation, the object of which is to insure the repayment of mortgage loans. You indicated in your response to one of the questions asked there were in fact four such companies operating in Ontario if not throughout Canada as a whole.

I am wondering, Mr. Minister, if you could indicate whether or not your ministry has any way of determining the percentage of real estate mortgage investments in Ontario that are covered by this form of insurance, and whether or not that information is available? Could you indicate to what extent securities have to be maintained by such licensed companies in insuring mortgages? Do they have to have a certain percentage backup reserve of funds to meet their increasing portfolio of mortgages insured? What is the formula that is applied in that regard? While the minister is giving some thought to those questions, I’d like to turn to a related field dealing with the activities that go on under the Loan and Trust Corporations Act.

This is an area in which the activities of the companies that are classified under that Act generate a great amount of capital in the form of real estate mortgages. Loan and trust corporations in particular probably hold the forefront in providing for the investment of foreign capital in our province, foreign capital that comes into this country from many jurisdictions, not only the United States and Japan, but European countries as well.

I am wondering if you could give some indication as to the percentage factor of foreign investments handled by the loan and trust companies as loan correspondents; the relative percentage of moneys that they would administer in the overall flow of mortgage moneys that are invested on an annual basis in the province. I believe they represent a very significant part of the overall investment portfolio held by companies in Ontario real estate and, therefore, act as a barometer of the economic well-being of the province as far as investment by foreign corporations is concerned. To what extent has the ministry an analytical presentation or résumé on the activities that have been occurring in this field in recent months?

It would be particularly interesting to know whether there has been any marked or significant increase in the amount of foreign investment that has transpired since the amendments to our land speculation tax laws and our land transfer tax laws. I am sure the effect of those laws would have some influence on the amount of foreign investment being made in this province. It may be too soon to get any true indication as to a probable improvement in the amount of foreign investment coming in and being processed through the loan and trust corporations as correspondents for these foreign investors.

On the other hand, you may have some preliminary statistics that would be of information and use to us in getting some idea as to whether in fact there has been an increased confidence in the province of Ontario as a good place to invest money in real estate undertakings.

The other statute that I would like you to comment on briefly, if you would, is the one pertaining again to insurance; I am referring to the Ontario Deposit Insurance Corporation Act in particular. I’m not personally aware to what extent the Act has been put to use in recent times in coming to the aid of depositors in member institutions that are registered under the Ontario Deposit Insurance Corporation Act. I don’t know whether there has been any significant call upon the Act since its inception.

Mr. Lawlor: I should hope not.

Mr. Williams: It is a fairly recent form of legislation. I have never heard of any significant call upon the resources of the corporation set up under the Act to assist any of the member institutions which may have found themselves in a financially embarrassing situation. It may be the need for the Act has yet to be proven, although the very fact it’s in place is in itself a form of security we can’t do without.

Those are two or three matters that have been of some concern to me. Perhaps you could make a comment.

Mr. Lawlor: Don’t you realise you are tearing your minister apart and the embarrassment you are causing him? He is a new minister. Take it easy on him.

Mr. Lewis: That’s true. That’s a pretty devastating critique you’re making. Ease up on him.

Mr. Williams: Perhaps you could alleviate some of these concerns in your responses.

Hon. Mr. Grossman: To deal with the questions in reverse order --

Mr. Lawlor: That’s a good way to deal with them. How about doing it inside out?

Mr. Lewis: Try putting the verbs at the end of the sentence. There may be a glimmer of comprehension.

Hon. Mr. Grossman: I can’t do that. To deal with these things in the reverse order, in any case, the Ontario Deposit Insurance Corporation Act is not operative because for some years now they have all been under the Canada Deposit Insurance Corporation Act. Therefore, those figures and those statistics would only be available from the federal ministry.

With regard to the second question, it’s a similar answer because those figures with regard to the amount of American investment would not be available through our loan and trust companies but rather through the Foreign Investment Review Agency, through which most of those dollars must travel. Loan and trust companies do not record, nor are they required to record, the information asked by the member.

On the first matter, mortgage insurance companies are subject to the same criteria for ability to repay, ability to keep in business and their solvency generally as are other insurance companies, which essentially is that twice their premiums must equal their paid-up surplus and that their assets must equal 115 per cent of their liability. Those are two of the major solvency tests. They are the same for those companies as for other companies.

Mr. Williams: Did I understand you to say the Ontario Deposit Insurance Corporation Act is not operative?

Mr. Lawlor: That’s right, because the federals have taken it over.

Hon. Mr. Grossman: Correct. The corporation is not operative. The federal government has taken it over under the Canada Deposit Insurance Corporation Act.

Mr. Williams: If that is factually and technically correct, what is the purpose of having the Act in place if it’s now administered entirely by the federal authorities?

Mr. Reed: Maybe we need a sunset law.

Mr. Chairman: Does the member for Oriole have further questions?

Mr. Williams: Yes, I do.

Mr. Lawlor: You are not serious?

Hon. Mr. Grossman: In case the CDIC should in any extreme circumstance refuse to provide the necessary back-up insurance, then keeping the Act in place in Ontario would provide the Lieutenant Governor in Council with the authority and power to immediately set up a corporation which could step into the breath in the event that occurred.

[9:00]

Mr. Lewis: I think it is about time for an anti-lawyer speech just about now.

Mr. Williams: Then the Act is operative but not operating, is that not more accurate, Mr. Minister?

Hon. Mr. Grossman: The corporation is not operating.

Mr. Williams: Mr. Minister, you indicated there was no way of determining the amount of foreign, specifically American, investment. I was referring to foreign investment as a total package. You indicated the degree of foreign investment was not determinable, yet the superintendent publishes in the annual statements the amounts of foreign investment generated by the individual loan and trust companies in their overall mortgage loan portfolios. These figures are set out quite clearly in the reports I have seen published. On that basis I cannot understand why you would say there is no information available as to the varying degrees of foreign investment being made on an annual basis in this province.

Hon. Mr. Grossman: If you have the figures with you, perhaps you can send them over here. The superintendent cannot remember offhand those figures you have described as appearing in his report. In the event you might be able to supply us with your reference, I am sure the superintendent could explain what those figures do, in fact, represent. But at the moment, as you have described them, the superintendent cannot identify the figures you are referring to.

Mr. B. Newman: Mr. Chairman, I wanted to refer to the Cemeteries Act.

Mr. Lawlor: What a ghoulish subject.

Mr. B. Newman: The minister may not be aware, but the members of his staff can recall the Greenlawn Memorial Mausoleum and cemetery in the city of Windsor -- the mausoleum going into a serious state of disrepair, and those who have had loved ones in the mausoleum being very much concerned. I have been in touch with his officials for about three years now on the problem. The problem still is not resolved. Could the minister tell me and the House when he expects the problem to be resolved?

Hon. Mr. Grossman: Not to raise false hopes, but I am informed that a very important meeting was held last week. It looks as if it should be the final meeting and action on the site should now not be too long removed.

Mr. B. Newman: I hope so, because those involved certainly have waited long enough. I know there were complications trying to establish the ownership in the first place, then who takes over when the owner refuses to maintain the mausoleum. If the meeting last week will resolve it, you will put a lot of people’s minds to rest.

Mr. Lewis: A good subject for a cemetery.

Mr. Reed: A dead issue.

Hon. Mr. Grossman: And I hope in peace. If there is any further delay, I will communicate with you directly.

Mr. B. Newman: Thank you, Mr. Minister.

Mr. Lawlor: Two points under this vote. It has been recently reported to me that there is a practice developing with the mortgage and loan corporations, and I suppose with the trust companies and insurance companies. As you know, from when you were at an earlier time practising law and earning an honest living, most conventional mortgages issued by the corporations have set terms, say five years. In an exigency, or when a sale is taking place you would write them a letter and ask them to release their mortgage or discharge it. They would write back and say, “Yes, we will do that, if the interest rate is low.”

With a mortgage they would like to get out of their portfolio, they would say, “Yes, we will take it. We will not charge you extra interest.” Strictly speaking, under the terms of the mortgage, I suppose some mortgages go right through to the end of the mortgage with respect to accumulating interest.

Very often they’d say three months. Now, I’m told, many of these companies are saying six months. I don’t know whether you find that a bit onerous upon people, and whether it would be at all in your grain to move in somewhat on this practice. A demand of six months’ interest on a mortgage of, say, $15,000 with an interest rate of 10½ or 11 per cent is a very considerable sum of money in the context. Are you aware of this developing new practice?

Second, do you think that your department has some responsibility, not necessarily in moving legislation but in pointing this out to the companies by saying that that extra interest -- the spread on their interest rates between receipts and what they make on the disbursement -- has widened? A number of the companies’ profit margins have been seriously cut into in recent times. This is a device to bolster or expand their whole revenue picture, but it is a questionable device. I would welcome the remarks of the ministry about this.

Hon. Mr. Grossman: I’ll give you the remarks of the minister. I always found the practice rather distasteful when I was out there earning an honest living. Since I’ve been here, I must tell you I wasn’t aware that the practice had expanded to six months. The hon. member for Brant-Oxford-Norfolk is in the House, I suppose we should be careful what we say about when we were practising law. In any case, I do find the practice --

Mr. Lawlor: The hon. member for Brant-Oxford-Norfolk is totally repentant now. He has withdrawn every remark he ever made.

Mr. Nixon: Of course that is a complete and utter falsehood and if you would like me to reiterate them I feel them coming on.

Mr. Lawlor: I don’t want to goad him tonight. I take it all back. I withdraw every remark I ever made.

Hon. Mr. Grossman: I think we’re ready for his remarks.

Mr. Nixon: There is something about your loquacious approach to this that reminds me of what is really wrong with the law.

Mr. Chairman: Item 3, the hon. minister.

Mr. Lewis: Mr. Chairman, we are verging on another spasm of legal bashing. I urge you, sir, to keep order.

Hon. Mr. Grossman: I think the member for Lakeshore and I are prepared to take you on any vote tonight. You can raise it on any vote tonight. You can raise it at any stage in the estimates. We’ll take it up.

Mr. Lewis: Don’t press it. Don’t press it.

Mr. Swart: Don’t count on the member for Lakeshore to back you up.

Hon. Mr. Grossman: Since I’ve been removed from the practice of law for a few years now I wasn’t aware that the practice had crept up from three months to six months. Frankly, I have always thought that a reasonable notice period was quite sufficient without having onerous bonus provisions in mortgages, or in fact having closed mortgages at all. As the member for Lakeshore quite properly points out, they’re nothing but levers which can be used at the leisure of the mortgagor, as the mortgagor or the mortgage company sees fit, depending upon the current rates.

Happily, if the federal government ever gets around to it it will be grappling with this problem. I believe one of the provisions of the proposed Borrowers’ and Depositors’ Protection Act would have called for no closed mortgages and all mortgages would be open on three months’ notice.

I would certainly welcome that sort of legislation. I suppose we can’t wait forever expecting that Act to show up. I do believe it will show up in the not-too-distant future. In the event it doesn’t, I don’t mind saying to the member that although the Mortgages Act of the province does not come under my ministry I would hope that mortgage companies -- and I say it on the record so they can be aware of at least my feeling on the matter, for what it’s worth -- I would hope that mortgage companies would at least be aware that I certainly frown upon the practice.

I hope it doesn’t occur and I hope it doesn’t expand to six months. I would hope that even the existing practice of three months, or a long-term closed mortgage, is not used in an abusive way pending the federal legislation.

Mr. Lawlor: Second question: Are things now running smoothly with the credit unions after your predecessor in office spent a great deal of time and palaver and, I thought, showed a certain element of pretence, in seeking to smooth over and make himself palatable in that one?

Hon. Mr. Grossman: Yes, you will recall that last Friday I announced Ontario’s share in the Canada Deposit Insurance Corporation went into operation, last Thursday, December 1. Its bylaws were in place. All the members were there, present and on board, and it was now very real and functioning. I am happy to report all the optimism of my predecessor has been justified. Things are running just swimmingly so far.

Mr. Lawlor: He lifted a potential burden from yourself.

What is the situation on the trust corporations, and the Loan and Trust Corporations Act?

Hon. Mr. Grossman: First, I presume you are aware that in the financial institutions division of the ministry we have been dealing with the report of a very fine select committee. I know the member will be aware the amendment would be so extensive pursuant to that report that it would entail an entire new Act. We would hope things will be ready not too long from now but we’re also aware it would be timely to await the proposed changes to the Bank Act which may have an effect on the ultimate legislation we might bring down as a result of the report of the select committee.

The review is continuing. I know you’re anxious to get the thing in place pursuant to the report of the select committee but we’re going to continue our deliberations on it in the ministry and wait and see what happens federally and then bring in an entirely new bill.

Mr. Lawlor: I know this will be difficult to answer because it’s a federal question. Are those bank hearings about the near-bank concepts; the fairly hard-nosed attitude of the banking community against the trust community in trying to keep them in their place, so to speak, and certainly not to give them lending powers in order to hold them in line, and to exclude them from a number of areas of financial management, fairly close to being consummated? Your department monitors that, I take it, pretty closely watching the situation. My feeling was those hearings and the recommendations coming through from the minister must be fairly close to being consummated. Would that be true?

Hon. Mr. Grossman: My staff does monitor closely. They’re not terribly sure how imminent or how comprehensive the federal proposals are at this time. Indeed, “imminent” with the federal government on some of these matters doesn’t mean much more than “in the fullness of time.”

In any case, the subject of the Bank Act is on the agenda for the meeting with the federal and provincial ministers which will occur in March of next year. At that time, I will be able to report back to you with regard to some of those details.

Mr. McClellan: I want to ask a couple of questions with respect to the regulation of out-of-province loan or trust corporations which may be providing mortgages in Ontario.

First, since I’m treading on totally uncharted waters as far as I’m concerned, can the minister tell me under what legislation such out-of-province loan or trust corporations are authorized to do business in Ontario? Is it under the Loan and Trust Corporations Act or a separate piece of legislation?

[9:15]

Hon. Mr. Grossman: All those companies lending mortgages in Ontario must register under the Loan and Trust Corporations Act, and they must register in Ontario with us.

Mr. McClellan: There is a certain confusion in my mind. The Loan and Trust Corporations Act requires corporations to establish a head office in Ontario, as I read the Act. Yet at least one company with which I am familiar, City Savings and Trust, does not have a head office in Ontario in the sense that one can do business with that head office the way one would expect to be able to do business here in Ontario. One has to do business through the Vancouver office. Does that requirement mean they must establish a head office in Ontario? Does it mean an Ontario resident is able to do all his business with the head office here in Ontario and that head office is accountable for the actions of the corporation under Ontario law? Because that’s certainly not my experience.

Hon. Mr. Grossman: Nor is it, to my understanding, the requirement of the Act that the head office be in Ontario. What it requires is that all companies doing business in Ontario be registered in Ontario under the Act and all those companies are subject to the same rules, regulations and controls, regardless of whether they are Ontario companies with head offices in Ontario or companies operating, for example, with head offices in Vancouver or Montreal.

Have you got the section of the Act to which you are referring? Perhaps I can help you.

Mr. McClellan: I am afraid I am desperately trying to find it. I was looking at it --

Hon. Mr. Grossman: You can get distracted in these estimates.

Mr. McClellan: Yes, well, be that as it may, I may be able to find it before I complete my questions. The difficulty is this. A mortgage company has lent you a mortgage. You are a resident of Ontario and it’s a corporation with its head office in Vancouver. If you run into a hassle with that mortgage company, you have to deal with the head office in Vancouver. If you get into a dispute with them with respect to your payments, you have to deal with them across the distance between here and Vancouver. If you say, “I have paid my mortgage payments on time every month for the last five years,” and the mortgage is about to close and they say, “No, you haven’t paid your mortgage every month on time for the last five years, you owe us so many hundred dollars for late payments and we are not going to let you close the mortgage until you pay,” the only way you can come to a satisfaction of that dispute is to go to Vancouver and fight it out in the Vancouver courts. I may misunderstand fundamentally the workings of your legislation, but that is certainly the experience.

Hon. Mr. Grossman: Obviously I can’t give you any specific response to the specific problem you have. I would be surprised if the problem you are outlining were the case. Each company from outside the province, licensed and registered within Ontario to do business in Ontario, must have a permanent office in Ontario, a real permanent office, together with a chief agent in Ontario, someone to deal with for precisely that situation, so there is someone and some place in Ontario where you can go to get relief. I would refer you to section 134 of the Act which deals with the subject. It’s under the registration portion of the Act section 134(1): “Where a corporation applying for registry has its head office outside Ontario” -- which confirms what I said earlier that you can have your head office outside Ontario -- “the application shall be accompanied by a power of attorney from the corporation to an agent or agents resident in Ontario.”

You will go on to see subsection 4: “The power of attorney shall declare at what place in Ontario the chief agency of the corporation is or is to be established and shall expressly authorize the agent or agents to receive service of process in all actions and proceedings against the corporation in Ontario for any liability incurred by the corporation therein ... ” and so on. It gives the mortgagee as it were great rights to sue that chief agent in Ontario and be subject to Ontario’s laws in the service of all documents upon that person.

Mr. McClellan: So it is possible then to initiate in all cases a lawsuit against the corporation through their agent who is required to be registered here.

Hon. Mr. Grossman: Precisely. That is the purport of the legislation; that is exactly what it says. If you want to give us the details of the problem you have had, we will look into it, and see why you had to deal with Vancouver.

Mrs. Campbell: I have two questions. One is with reference to insurance practices. I have not had any recent complaints and I don’t know how widespread the practice has been with those insurance companies dealing with the insurance of property as opposed to motor vehicles. That’s what appeared to be a practice of blacklisting properties -- not having the individual blacklisted because of some previous insurance problem but properties -- in a given section of a municipality.

We had this in Toronto over a number of years. Whether it is the new or reasonably new bylaw in Toronto which has changed this, or whether it is a practice in Toronto any longer, I don’t know. I simply haven’t had any criticism. But I wondered whether that wouldn’t perhaps apply to other municipalities in the province of Ontario. Is there any monitoring by your ministry with reference to that practice, which puts tremendous pressure on owners of buildings in some of the given areas?

Hon. Mr. Grossman: My people report to me that their experience, like that of the member for St. George, is that while it may have been a bit of a practice in an earlier stage, they are not aware of that as a continuing problem any longer, either in Toronto or in other municipalities. With regard to the monitoring, I believe it is mostly a problem which comes to our attention pretty quickly. People seem to have no problem when they can’t get insurance, saying there has to be someone to call and locating the office. We wish people were often that anxious to call when they have simple rate problems, but there appears to be no hesitancy to call when they have a problem getting coverage.

I am informed that part of the resolution of that whole problem is the fact that there are now four insurance agencies which specialize in placing what is referred to as substantial risks.

Mrs. Campbell: Are they placing them?

Hon. Mr. Grossman: They are placing them. Most of them are insured under subscription policies, taken by a group of insurers. There is a pooling in order to fill what apparently was a previous reluctance to insure some properties in a given area. The problem has now been solved.

Mrs. Campbell: I’m delighted to know it. May I just pursue that? You say there is now some kind of group; what is it, a community group that gets together in an area? What kind of premiums, what are we talking about? I don’t understand.

Hon. Mr. Grossman: Apparently the insurance companies have got together jointly --

Mrs. Campbell: Oh, they group the insurance --

Hon. Mr. Grossman: Yes, the insurance coverages are pooled. They are all undertaking the risk in order to service the market as a whole.

Mrs. Campbell: The other question is also a residual matter from the old checkerboarding days. I’m wondering what, if anything, has been done about those who hold mortgages and who seem to have been carrying on transactions in them. I’m sorry that I may not be accurate in my description of the company as I can’t locate a file because my secretary isn’t there. Are White Oaks and following White Oaks, Maple Hill, both holding mortgages on properties in the checkerboarding area? We seem still to be having some problems with them. What did your ministry do, or what has it done, about this kind of dealing in land in this province?

Hon. Mr. Grossman: I must say it’s not something that falls into the jurisdiction of the financial institutions branch of this ministry, I believe. I’m familiar with the problem.

Mrs. Campbell: These are mortgages.

Hon. Mr. Grossman: Yes, but I believe the practice you’re referring to was an attempt to use checkerboarding and subsequently the mortgaging of those checkerboarded lots --

Mrs. Campbell: That’s right.

Hon. Mr. Grossman: -- in order to effect something that gets around the Planning Act.

I would suggest it’s a Planning Act matter for the Minister of Housing (Mr. Rhodes). If it were a matter, for example, of an institution going in as part of the scheme to divert the Planning Act then I’m sure we might have a chat with the institution as to whether it had been part of a scheme knowingly to get around the Planning Act. But other than that situation, it is a Planning Act matter.

Mr. G. Taylor: On the subject of driving schools, has your ministry done any investigation as to whether driving schools, both in the educational system and in the private sector, have produced cheaper insurance rates for those people graduating from or attending drivers’ schools?

Hon. Mr. Grossman: Yes, this was a matter we discussed in the House a little earlier, but not in great detail at that particular time. I think it was a year ago when the government approached the insurance industry especially with regard to the high insurance rates for new drivers, As a result, insurance companies began a program whereby those young people, especially new drivers, were able to attend certain driving schools to take approved courses. Having completed those courses and having received the proper certification, new drivers who had participated in that program were then granted decreases in insurance rates of, I think, up to 44 per cent by some insurance companies.

Some problem has arisen and it was raised, quite properly, in the House with regard to the fact that many people taking the courses are unaware that the particular course they are taking is not recognized by the insurance companies in question. We encourage people not only to take the properly accredited and recognized courses, but to make sure they follow up by dealing with insurance companies that recognize those courses. Our advice to new drivers is to check to see which courses are accredited -- I think it’s through the Ontario Safety League -- and then to make sure they go to a company belonging to the Insurance Bureau of Canada, 90 per cent of which will then give the appropriate credit for having completed those courses successfully.

I might say I would hope that more driving schools would be accredited by the Ontario Safety League in order to make this coverage more common and in order that more people would be taking the courses. It’s a two-fold protection and the insurance companies have co-operated by saying that if people take these courses then they’re entitled to the credit, having passed those courses. We would encourage people to take the courses and follow it up with the proper insurance companies. I would hope more and more insurance companies would join up and agree to participate in those courses.

Mr. G. Taylor: Mr. Minister, a further question on the Motor Vehicle Accident Claims Act. There are substantial funds paid out of that each and every year --

[9:30]

Mr. Chairman: I believe your question should probably be withheld until we get to item 4.

Mr. G. Taylor: Oh, that is in item 4. Let us go back to the credit unions, then.

Mr. Minister, some of the credit unions have objects and powers within certain geographical limits. In the area which I represent there could possibly be annexation and one credit union will lose a great deal of territory from the area which they cover. Is your ministry considering any legislation that would assist that particular credit union or other credit unions that fall under this same category when areas or geographical boundaries within which they work are annexed by other municipalities?

Hon. Mr. Grossman: I am informed the new Act does not bind the credit unions to geographical boundaries. It is up to the members of the credit union to deal as they wish. They are not subject to any of the boundary changes under the new Act.

Mr. G. Taylor: There seem to be excessive changes to the objects of these corporations entailing financial consideration to revamp their objects. Would your ministry be considering waiving those provisions where it has not been of their volition that their area has been reduced?

Hon. Mr. Grossman: Well, again their decision with regard to the area in which they operate has nothing to do with annexation or the lack of annexation. It is entirely a decision the credit union members may take from time to time. Whether they choose to do it because the municipal boundaries have been changed or simply because the company they work for has shifted location or whatever, is entirely a decision made by the credit union members. They would have to follow the same procedure.

Mr. G. Taylor: Mr. Minister, to get the point more precisely: Would you require a further filing fee for changing their objects to allow them to conduct their services within geographical boundaries? Naturally, if they do change their objects, there is going to be an increased fee. Is there any provision for waiving that fee?

Hon. Mr. Grossman: As my friend from Renfrew North (Mr. Conway), would say, even the fine burghers of Simcoe Centre are going to have to pay the fee for filing supplementary letters and changing the objects, the same as the good burghers of St. Andrew-St. Patrick, if the situation arises.

Mr. Swart: I have a matter I would like to take up with the minister at this time. It concerns a constituent of mine. I will send him the details of the names and the addresses but there is a matter of some principle involved on which I would like him to comment at this time.

This case surrounds a man and wife who bought a very small home in a locality in the Niagara Peninsula. They paid $500 down and had a mortgage of $9,500. They bought it in January of this year. They made two payments on it, did not keep up the payments and it was repossessed in June of this year; it was total repossession whereby the locks were changed. They had to move out and rent some property.

They were informed by the investment company shortly thereafter that they are still being held responsible for the payment of that mortgage money, in addition to having that home repossessed by this investment company. They have been threatened with being taken to court or having wages garnisheed. Is it possible under present legislation that this can take place?

I would point out at this time the property has not yet been resold. But these threats have been made to these people and their lawyer, so they tell me, has indicated to them that they can be held responsible for this. Does the legislation permit this sort of thing?

Hon. Mr. Grossman: Well, sure, my friend the member for Lakeshore will confirm to you the action to retake property is an action to foreclose on security for a loan. The security is always in a real sense a backup to a personal signature and therefore if it is a foreclosure action in the ordinary course, it is always an action for payment, possession and foreclosure. Payment -- personal payment. Possession -- obviously possession is needed to effect sale of the property. And foreclosure.

They may have proceeded by another route, I don’t know. Property: whether it’s a good pledge to the bank, you may pledge your ear, your gold ring if you had one -- anything. In this case, it happens to be security on real property as evidenced by a mortgage. That is collateral to your signature and where they have not succeeded in selling the property and effecting payment then they are entitled to take whatever step is necessary to get their $9,500 plus interest back from the borrower.

In the event that payments are made on the ultimate sale of the home your constituent will be entitled to get whatever extra moneys might come out, so that the mortgage lender is not in a better position for having foreclosed on the loan.

In essence, the situation is that it’s not a matter of the mortgage company or the mortgagee being required to select his remedy. He need not select to take an action against you personally, or to take an action to recover your home, or your car if you’ve also pledged your car, and sell it to get the assets out of it.

Indeed, to draw one other parallel, it’s often the case a person will get a mortgage on his home and also have a guarantor on that mortgage. For example, on a second mortgage the bank or mortgage company may think there’s not enough equity. They’ll say, “All right. We’ll give you a mortgage up to 95 per cent of the value of your property, if you get Lawlor, QC, to co-sign.” That’s great, but if Lawlor, QC, co-signs that doesn’t mean they’ve elected to go after him. They will go after him, sell the home, and then go after you personally until they have all the money.

Mr. Lawlor: Mr. Chairman, on a point of personal privilege: I don’t mind being made a magnate, a tycoon in the industrial factor, and used symbolically, I hope, with respect to the whole capitalist system, but I would ask the minister at some point -- taking both the home and the money, I would cease and desist, so to speak, and I would ask the minister to do the same. He can use John Q. Public or someone else but not my name.

Mr. Deputy Speaker: I thought you would be honoured to be pointed out in this way.

Mr. Lawlor: Not in that particular context, Mr. Chairman.

Mr. Deputy Chairman: Would the minister use “Stravinsky” from now on, please?

Mr. Lawlor: Stravinsky, that’s all right.

Hon. Mr. Grossman: It’s Stravinsky, rather than Lawlor, QC, who may be judgement proof, but in any event we’re going after the guarantor. It is only another piece of security, as is the property. I might say I’m rather surprised they haven’t effected sale. What often happens in these circumstances -- it is a very common complaint -- is that the property is resold for an insufficient amount. We would often get complaints from someone saying, “Hey, come on. That property is worth $9,500” -- in your case -- “not the $6,000 you sold it for. Now you’re looking at my constituents for the extra $3,500.” The role the courts play in those proceedings is to make sure the price is a fair and equitable one.

Mr. Swart: One further question then: It is quite possible for a mortgage company to loan moneys in excess of the value of the property, then repossess the property and place a guarantee against a person’s wages to recover the rest of it, or if he doesn’t sell it, to continue to recover the amount as best he can up until the time that it is sold, with the possibility that this person can lose his job because of the garnishees -- there’s no legislation to prevent that?

Hon. Mr. Grossman: No, there isn’t. Indeed, let’s look at a situation. The trust companies are mostly the ones who will lend, and can lend only up to 75 per cent of the equity of the property. In those instances you’ll find the trust companies are able, with that 75 per cent -- well, the 25 per cent leverages -- to sell the property and get sufficient equity out to cover themselves. So in most cases they are not obliged to go after and chase the mortgagor personally because they can drop the sale price by one quarter of the estimated real value of the property and still get all of their own money out.

In case the member is leading to a series of questions which really suggests -- and I don’t believe very many of his colleagues would support him in this -- that you cannot continue to pursue the person who personally borrowed the money after realizing whatever funds one can out of the sale of the property, he ought to keep in mind the fact that in very many of these instances, and probably the more serious ones, the second mortgage, which is the one which would be affected, is held as a result of an earlier sale of the property, where not a mortgage company but a vendor of the property sold his house to Stravinsky, as it were, and took a second mortgage back up to 90 or 95 per cent, say, of the property.

I think that innocent vendor would be rather unhappy if that vendor, some years down the pike, found himself or herself having only the remedy of foreclosing against the house which had been sold earlier and finding that property values had stabilized or decreased so that he or she was now out of pocket of the funds and had no right to look to the person from whom the property was bought and upon whom the vendor relied in part in selling the home and agreeing to take a mortgage back. Taking a mortgage back on a sale is often a very important part of the consummation of the transaction, and most vendors would look rather carefully at the person they’re selling to for the precise reason that they know they are relying upon that person -- not just the property, but that person -- to make the payments or to make good a liability owed for the balance of the purchase price on the home.

I think the member should keep in mind when he’s talking about the ability to go after the person who borrowed the money and let’s not forget it’s a person who borrowed the money; in very few instances are we talking about mortgage companies, because they only go up to 75 per cent -- that we’re talking mainly about innocent vendors of property who took back a purchased money mortgage and who would be left holding property which wouldn’t be much good to them; they’d be into the courts with lawyers on foreclosure actions. I think the member would want them to continue to have the right to look to the person personally who understood to pay for the balance of the purchase price by way of a purchased money mortgage back to the vendor.

Mr. Lawlor: Would the minister go this far, though, since I think he’s shrewd enough to know that in the context of this illustration -- I’m not sure of the facts in the very case, but the normal situation is that they’re buying property for $10,000 and they put in $500; of course, they’re asking for trouble by that very fact, and some lawyers should tell them, but very often they sign before and they have to go forward with the thing.

The $9,500 mortgage usually goes back to the vendor who sells it. He doesn’t get $9,500 for it; he gets $8,000, $7,600 or something. I think legislation should be considered restricting them to the return on the actual amount advanced on the mortgage plus whatever interest accumulates thereon in the meantime, and not upon the full face value of the mortgage for which the moneys were never advanced anyhow. I mean, this is a disaster for this individual. Not only has he lost the home and a roof over his head; he loses his job along with it because of a foolish venture. I think that’s too high a price for the average citizen to pay, and fairly often it happens among the people most vulnerable. Real estate men are in cahoots about the thing. It’s one of the things that brings real estate people into disrepute.

When a lawyer comes along, either there’s a signed offer about which, as I say, they can do very little except go forward or pull back and let them do what they like -- perhaps to sue, which is a fairly sensible thing to do most of the time, because you can tie them up pretty badly. Or if you feel that the odds are the other way on a specific performance, then you instruct them to go ahead and resell immediately. Even then they are going to fall short, probably, on the valuation because the valuation has been inflated precisely to pick up the bonus aspect and people are being victimized. It is within your competence to relieve them from a situation which is so obviously gross.

[9:45]

Hon. Mr. Grossman: I don’t think the generalization would apply in all cases. There are many instances, of course, in which the vendor may have taken back a mortgage and, for example, he may have passed away subsequently. Because of a change in mortgage rates between the time of the sale and time of the death, the estate may choose to sell off the mortgage. Because of a change in mortgage rates, perhaps mortgage rates had gone up, then the only way in which that mortgage could become liquid, to satisfy the needs of the estate, would be to sell off the mortgage at a substantial discount in order that the effective rate of interest on the mortgage be back up to the current rate of interest.

That may have nothing to do with the risk entailed in the case in question or in any other case. It may simply depend upon the exigencies faced by the mortgagor at that time. For that reason it would seem to me that all-pervasive legislation may in fact work an undue and uncalled for hardship in some cases where the mortgagor was in a different situation than that laid out here. For all we know that may be the case in the case in question.

Mr. Williams: A short while ago we were discussing the Loan and Trust Corporations Act. I have been endeavouring to identify, through that legislation, a pattern of development of foreign investment in the province that could be reflected in the annual report made with regard to the activities of the loan and trust corporations. The superintendent and the minister suggested there is no such detailed annual résumé of the financial activities of the loan and trust corporations. The reason for that may well be that I had assumed that the registrar named in the Loan and Trust Corporations Act was also one and the same person as the Superintendent of Insurance. It was for that reason that I alluded to the superintendent and, of course, I was referring to the annual report that is required under section 122 of the Loan and Trust Corporations Act. The Act is quite specific as to the detailed information that the loan and trust corporations will file. The relevant subsection of the Act provides that the registrar should prepare for the minister, from statements filed by the corporations and from any inspection or inquiries made, an annual report showing particulars of the business of each corporation as ascertained from such statements, inspection and inquiries and that the report shall be printed and published forthwith after completion.

I have gone to the legislative library and taken an extract from one of the more current annual reports: the one for 1975. This does detail the nature of the financial transactions of loan and trust corporations that are registered with the provincial authorities. The extract I have before me sets out, in columnar form, the various types of assets that are under administration by the trust companies licenced in the province of Ontario, administering either estates, trusts or other agencies which they are qualified to administer.

Under the various headings we have the categories of cash investment on behalf of estates, trusts or agencies. We have the amounts of moneys that each trust corporation has invested on behalf of its clients being estates or trusts or other agencies in the form of bonds. It also lists the total amounts of moneys invested in stocks.

Coming in particular to the type of investments that I was referring to at some length earlier on -- mortgages and sale agreements, in which the trust companies have moneys invested on behalf of their principals -- it was to these annual reports I was referring and about which I again ask a question. From this information and perhaps other detailed information that is made available to the registrar, is it not determinable what portion of those investments in mortgages and sale agreements is attributable to funds being made available by principals who can be classified as foreign principals, that is, non-resident, as contrasted to principals who are Canadian or residents of the province of Ontario?

If the answer is yes, then surely from that one could determine the extent of decline or increase in the amount of foreign investment generated through the vehicle of trust companies, which act in a very significant way as loan correspondents for these foreign investors. It wasn’t without some justification I felt there might be an answer available to that query as to whether one could not determine from the activities of the loan and trust corporations as to how our economic climate was in this area of commerce and investment. With the benefit of that added information, perhaps you could further clarify the situation to me.

Hon. Mr. Grossman: In fairness to the member, I never suggested his question was without some justification or some good forethought as to a reasonable expectation that it might be available. However, a more intimate knowledge of the workings of the trust companies and the information they have at hand and the information they are required to file with the ministry would produce the result that the information is neither available nor in the reports. It just isn’t there; the companies don’t have it. They don’t compile it in that fashion and we don’t have it.

Mr. Williams: To be absolutely clear in my own mind, when you say they are not required to file it, we don’t have it and it’s just not there, I presume what you mean is that the distinction between domestic and foreign investment isn’t broken down in the reports so as to provide the type of information I am seeking. Is that what you are saying?

Hon. Mr. Grossman: It is not sent to us. Therefore, we can’t break it out for the reports.

Mr. G. Taylor: To get back to the mortgage problem which was mentioned earlier, there are many practices in the mortgage industry today, but the one that comes to my attention most frequently is that of amortization and the term of the mortgage. I am wondering under certain Acts of your ministry whether insurance companies, credit unions and other lending institutions have had that brought to their attention to distinguish to the persons that come to them to borrow funds the exact difference between amortization and the term of a mortgage.

I find it most disheartening that every five years or so, or three years now as is getting to be the practice, they have asked the mortgage to be called in, thus causing that individual great consternation indeed through having to go out and find other mortgage funding. They have been told by either the real estate broker or the mortgage lending institution that the mortgage is a 25-year mortgage or a longer period of time, when indeed it is only a shorter period of time, now being the three-year and five-year period.

Has your ministry taken any initiative in bringing this to the attention of those people whose businesses would come under certain Acts of your ministry?

Hon. Mr. Grossman: Yes, we had every opportunity to draw that matter to the attention of prospective mortgagors. One of the little red books put out by my ministry is called “Getting a Mortgage.” Specifically in that little publication we draw to the attention of mortgagors the things they should be looking for and the questions they should be asking when they’re getting a mortgage.

There’s no question but that in dealing with these things the amount of information we give consumers and caution them about is one thing; what happens out there on the streets in terms of how their real estate agents and lawyers are handling this situation sometimes may be something else. I would hope that the mortgage companies and loan and trust companies with which our ministry deals are being very careful and explicit about that sort of problem, because it is a very common one.

As I say, we draw it to the attention of consumers. I think it’s a valid point raised by the member and perhaps we’ll take care to make sure that the institutions licensed by our ministry have it drawn to their attention that they should be careful that their people are well aware of the possible confusion in the minds of the public.

Mr. G. Taylor: On the same subject, has the ministry considered investigating sufficiently to bring about any prosecutions under some of the Acts administered by this ministry of the persons who transgress this provision, which I think is lack of fair play to the mortgage borrower?

Hon. Mr. Grossman: Loan and trust companies have their licences renewed annually by the ministry. If there are any complaints in this regard, then they are brought in and the mailer is discussed with them. In a serious case, if there was a clear ongoing pattern of misrepresentation or abuse, then obviously there would be no renewal issued.

In any case, there is that ongoing contact with the ministry through the annual renewal and at that time, or indeed upon immediate receipt of any complaint during the calendar year there is immediate contact made and discussions held, always with the knowledge that we carry the registration power in the event the discussions are not fruitful.

Mr. Williams: On this same point, on the last page providing the statistics under vote 1402, item 3 -- the question may have been raised while I was out of the chamber -- in looking at the comparative statistics between 1975-76 and 1976-77 regarding the number of complaints that were registered with regard to the activities of loan and trust companies, I notice there were none in the 1975- 76 period and 80 in the 1976-77 period.

Was any reference made to this significant increase in complaints that were filed in a subsequent 12-month period? If not, is there a ready explanation as to the marked increase in the number of complaints that were generated in such a short period of time?

I understand that the nature of the complaints is along the lines that my colleague was talking about earlier, as identified at the bottom of the page, but I don’t know whether the quantitative difference was referred to in the earlier remarks.

Mr. Lewis: What the hell are we doing here?

Mr. Lawlor: It’s an in-house issue.

Mr. Lewis: Will you put that in Hansard? “Lewis asks with existential angst, ‘What the hell are we all doing here?’”

Mr. Williams: That’s what we feel quite often over here, listening to what’s coming from over there.

Mr. Deputy Chairman: Order, please.

Hon. Mr. Grossman: We are missing Monday night football, of course.

Mr. Lawlor: You’re damned right.

Hon. Mr. Grossman: There were no figures. No one kept track of the figures in 1975-76 with regard to complaints and calls coming in on the subject matter of loan and trust companies, so we don’t have a figure in there.

The complaints coming in 1976-77 were mainly queries from the public with regard to problems which apparently arose out of poor communication and the lack of understanding of some really basic legal matters in the minds of the public. But there were apparently a considerable number of complaints relating to increased fees on RRSPs and some of the new high fees charged for mortgage placement and discharge, although I’m sure very few of those discharge fees were charged by lawyers. In any event, those were the inquiries.

Item 3 agreed to.

[10:00]

On item 4, Motor Vehicle Accident Claims Fund:

Mr. Nixon: I would like some information on the accident claims fund. The minister may be aware that I have a private bill before the House which would make automobile insurance compulsory. This would in no way mean this fund would disappear but it would change its function considerably. I wonder if the minister could tell me how many $100 fees were received by the fund last year.

Hon. Mr. Grossman: In 1975-76, there were approximately 125,000. The estimate for 1976-77 -- we don’t have the figures yet -- is 140,000.

Mr. Nixon: Why is that estimate going up so much?

Hon. Mr. Grossman: I presume it is not out of proportion, simply, to the number of new drivers. To the best of our knowledge, that is not out of line with the number of new drivers.

Mr. Nixon: I see you are budgeting for a statutory disbursement of $15 million. Is the $3.5 million strictly for administration of the fund? How many claims were there against the fund this past year?

Hon. Mr. Grossman: In 1975-76, there were 10,818. In 1976-77, we estimate about the same total or a little higher. You might want the figure for payments from the fund. In 1975-76, it was just over $12.4 million.

Mr. Nixon: I cannot divide that. Have you by chance an average claim amount?

Hon. Mr. Grossman: No.

Mr. Nixon: I just thought it might be one of the figures your staff had provided. It is probably meaningless since the numbers you have given are the significant ones.

It seems to me that we ought to be considering, as a House, the establishment of compulsory insurance. We have had a number of select committees and commissions make recommendations here in the province that we should have a compulsory insurance program. I am I sure the minister is aware most other jurisdictions in Canada do have such a program. I was hoping the minister might be giving some consideration to recommending to his cabinet colleagues that this sort of legislation be brought before us, hopefully in 1978.

I think it is quite seriously misleading that so many drivers, particularly the younger drivers, feel they are living up to their responsibilities by making the $100 payment into the Motor Vehicle Accident Claims Fund. It is true for a number of males under 25, particularly if their accident record is not good, that insurance premiums are astronomical, almost frightening. But the companies seem to be making some considerable progress in distributing the risk on what I would consider to be a somewhat fairer base.

What is going on over there? Oh, never mind. Here are my best pearls and they are falling before an inattentive minister --

Hon. Mr. Grossman: Not so.

Mr. Warner: He’s just dozing.

Mr. Nixon: -- rather than the people I usually scatter them before. I really feel that this particular operation is one for which we should not be particularly proud. I have no comment at all as to the efficiency of its administration and so on, but I do believe it is substantially misleading in this province and I would hope we would be giving consideration, as a Legislature and certainly as a government, to establishing this on a firmer footing. It seems to me that young people or anybody else who is going to drive in this province ought to be accepting the full risk of the responsibilities of operating a motor vehicle.

I am well aware that those people who do have a claim before this fund find their driving privileges are removed, unless they can make payments to the full amount of the payment from the fund. This is a kind of risk which is a lot more like Russian roulette than the kind of serious weighing against risk that I feel should be the thing we require under the laws of the province.

I wonder if the minister has any views on this and can he predict that legislation of this type would be introduced?

Hon. Mr. Grossman: Lest the member think I was not listening to his pearls, ordinarily I listen attentively and I even read them in Hansard later.

Mr. Nixon: You must have difficulty sleeping.

Hon. Mr. Grossman: Very much. I just had to do a double-take because I saw one of the items in this part of my estimates book. It says, “Government in favour of the concept of government automobile insurance.” You can understand I fell off my chair when I read that.

Mr. Warner: An excellent notion.

Hon. Mr. Grossman: It shows I don’t just read what is handed to me, or else we’d all be in trouble.

Mrs. Campbell: Not necessarily.

Hon. Mr. Grossman: By the way, you might want these figures. I now have the figures on the average judgements: in 1975, judgements out of the fund were $4,320; in 1976, $5,069.32.

The member is quite right: I was a member of the select committee on company law, which reported in favour of compulsory automobile insurance. So there’ll be no misunderstanding, I want to reaffirm for the record my and my ministry’s position in favour of compulsory automobile insurance. We in the ministry are now working on some of the problems entailed in implementing compulsory automobile insurance.

Some of the deliberations of the select committee set out the problems. Indeed, the former member for Downsview was an expert at telling us all the problems entailed in terms of coincident expiry of policies -- coincident upon expiry of the insurance coverage -- non-cancellability of insurance policies, all of those matters.

Mr. Nixon: He had it all resolved by government operation.

Hon. Mr. Grossman: It is not an easy system to implement, but I want to assure the House that we are working on various ways in which it can be implemented. I hope one day in the not too distant future to be able to rise in the House and report that we have succeeded in following the report of the select committee on company law, in following the bill of the hon. member for Brant-Oxford-Norfolk -- taking his cue, no doubt, from the select committee on company law -- and implement compulsory automobile insurance.

I should add that Ontario, as has been pointed out earlier, currently has 95 or 96 per cent of all its owners insured, a higher figure than in some jurisdictions where there is compulsory automobile insurance. Having said that, I will also confirm what the member knows: even with compulsory automobile insurance there will be some uninsured drivers. But he is quite right, that would eliminate the need for most of the fund and reduce these figures dramatically. I might add that the best we could ever expect, and the experience of all jurisdictions, is to get that figure down from four or five per cent uninsured to about two per cent. Even so, that would be an important change in terms of the number of new persons who would then have insurance. Say it cut the figure in half; almost 75,000 persons would have insurance who don’t have it today.

One of the problems we face is that so many people think that when they pay into the Motor Vehicle Accident Claims Fund they’re buying insurance, which is just not true. They are leaving those of us who have insurance, and have been responsible, at the whim and risk of those who are irresponsible enough just to pay into the fund.

For those reasons and reasons outlined by the member for Brant-Oxford-Norfolk in his pearls earlier, we think it’s necessary to have compulsory automobile insurance. We’re working on something. We hope the day isn’t too far in the future.

Mr. Nixon: Mr. Chairman, I hope the minister isn’t under the impression the committee he refers to was the first committee of this Legislature to recommend compulsory automobile insurance.

Hon. Mr. Grossman: That’s what Vern Singer told me.

Mr. Nixon: Well, you are certainly more gullible than I had thought. Actually, the latest reincarnation of that very committee, in its recent visits to some of the socialist and former socialist jurisdictions in western Canada, as well as to California in recent weeks, has been looking --

Hon. Mr. Grossman: Oh, I missed that.

Mr. Nixon: That’s what happens when you take the Queen’s shilling, or whatever you’ve done. You miss some of these other things.

Hon. Mr. Grossman: I’m sorry I missed that. I missed Regina.

Mr. Nixon: Once again, they have delved into the efficacy of not only compulsory insurance but government-operated insurance.

Mr. Warner: Right. And they were impressed by that.

Mr. Nixon: I was quite appalled, as a matter of fact, by the way some people that I know quite well were impressed by that very matter.

Mr. Warner: The Tories.

Mr. Nixon: However, we can argue that when you hire your own hall.

Hon. Mr. Grossman: I will pay for the hall.

Mr. Warner: Would you like to be invited?

Mr. Nixon: I might be convinced, I don’t know.

The idea that this recommendation sort of burst full blown from the brow of Vernon Singer, QC, and his colleagues in that committee, is not entirely correct, although great credit, of course, is due those worthy members when they thresh that old straw again for the 97th time. I am glad to hear the minister’s response, because it shows that he has not got that philosophical opposition to the concept.

I can’t help but feel that a philosophical opposition has been what’s kept it out of Ontario these many years. I can remember a very heated debate in this House, about 1963, when every reasonable person felt that medical insurance should be mandatory, and that we were not conferring any favour on anybody in this province if we gave them the right to opt out of medical insurance. It was apparent then that no reasonable person, except Lady Eaton who was then alive, could opt out of that insurance on a philosophical basis that she, he or anybody else, would be prepared to carry this expense themselves. We still do not have obligatory hospital and medical insurance; strong-willed people like the minister or the minister’s father, or anybody like that, could opt out if they were so inclined.

Hon. Mr. Grossman: We may want to protest the confidentiality of our medical information.

Mr. Nixon: Yes; of course this is a more recent intrusion of government ineptitude into the life of the province.

Hon. Mr. Grossman: Foresight.

Mr. Nixon: I have a feeling that among the minister’s more antiquated colleagues there is this feeling that any kind of compulsory insurance does not lie well with a Conservative government; I’m glad to hear the minister disclaim any of those thoughts. As a matter of fact he finds them perhaps surprising, but I can assure you that, if not among his present colleagues, among his immediate predecessors this view was held strongly and accounts for the fact that this is one of the few jurisdictions that does not require insurance on the roads.

California is different. I have not had the opportunity to delve into the intricacies by travelling there with a select committee, but I can assure you, Mr. Chairman, that a most superficial reading, of sort of the footnotes of Reader’s Digest, would give you almost the equal amount of information. Down there, of course, they’re so progressive in their conservatism that they will not even allow radar to be used.

Mr. Warner: The secret’s out; that’s where you get your information.

Mr. Nixon: So you can imagine what that does to the Fuzzbuster business. You can’t use radar for detecting speeders at all, because it might be an infringement on individual liberties. As a driver myself I have a certain amount of sympathy with that position.

Of course what sells well in California is the kind of insurance that you buy to cover yourself in an accident which is totally the responsibility of the other driver, who may not be insured and you can’t get any judgement or any assistance from any kind of a claim, and if you don’t have that sort of insurance you’re out with a tin cup. Isn’t that the way it works?

Mrs. Campbell: Sometimes you are out under the fund here too.

Mr. Reed: That’s true.

Hon. Mr. Grossman: That’s not true.

Mr. Nixon: Perhaps we should settle this. Here is a lady to my right learned in the law who says that it is true; and who are you?

Mrs. Campbell: What are your maximums now?

Hon. Mr. Grossman: Not only am I learned in the law but my Superintendent of Insurance is learned in the law too.

Mr. Deputy Chairman: Order, please. The member for Brant-Oxford-Norfolk et cetera has the floor.

Mr. Nixon: Et cetera? Is there more to it than that? My God.

Mr. Deputy Chairman: You’d think you were counting just the counties.

Mrs. Campbell: You might tell the Chairman what your proper title is, because that is hardly parliamentary.

Mr Nixon: Brant-Oxford-Norfolk; no it isn’t, no. The people from Haldimand might not like it, because they might think you think I should be representing all of them as well; and of course it’s not right.

Anyway, I’ve made my point and since it’s almost time to quit, I’ll let somebody else take the situation over.

Hon. Mr. Grossman: I should clarify the record. I never thought that compulsory automobile insurance was an idea that sprung only from the breast of the former member --

Mr Nixon: I said brow.

[10:15]

Hon. Mr. Grossman: -- or brow, of the former member for Wilson Heights. No, indeed it sprung from the brow of many of the members of the committee as well, and perhaps had its true genesis in the earlier select committee on company law studying automobile insurance under the very capable chairmanship of James Allan, who went on to even greater heights than to chair the select committee on company law. I can’t say whether it was a philosophical hangup at any time earlier in the government, and certainly I am happy to report I have no antiquated colleagues in cabinet -- I have some older ones but no antiquated ones. I don’t think there’s a philosophical hangup and certainly under this minister there is not. Perhaps there’s a new day, and I will be around to see the day when I stand up and introduce it.

Mr. Nixon: For a few weeks perhaps.

Hon. Mr. Grossman: It might be that soon --

Mr. Nixon: I just want to say one further thing, if I may -- just in case the minister is here for three weeks instead of two or something like that -- it seems to me that his objection, that the difficulty in implementation is another reason for a delay, doesn’t sit well in this House. The very committees I have been referring to, the ones that preceded the Singer committee by many years, have visited these jurisdictions, met the administrators and found out how it’s done. The minister might even prevail upon our own superintendent and his staff to travel outside the boundaries of this province, if he has never done it before, in order to get some of this information and do it like they did it there, wherever “there” happens to be. I think it started in Finland, Norway or Sweden or one of those progressive jurisdictions.

Hon. Mr. Grossman: It’s probably a good idea anyway.

Mr. Nixon: I would think that if the minister brought that to his attention, he would rush right over there and find out how to do it.

Hon. Mr. Grossman: I may go myself.

Mr. Nixon: He’d better go before the minister goes.

Hon. Mr. Grossman: Indeed, he and I had the pleasure of being together on an excursion to some of those climes just a year and a half ago, although we didn’t get to any of the formerly socialist countries in Europe, I might add.

In any case, I did want to rise in reply to point out to the member for Brant-Oxford-Norfolk that the select committee on company law upon which I sat submitted its first report and not only recommended in favour of compulsory automobile insurance but drew the attention of the public to some of the problems in implementation. I believe some of those problems were so recognized by the committee that the subject was referred over to the second committee to deal with them.

Mr. Nixon: And to be passed on to the third.

Hon. Mr. Grossman: There was some concern, for example, over the effect on rates and whether they would have to move to non-cancellable policies, which again would have an effect on rates, and how you could phase in a non-cancellable policy. My only point is that it’s not something we just thought up to explain why time passes and we aren’t introducing it tomorrow. My point is that it was well understood by the committee upon which I sat and referred to in the report signed by your colleagues and mine. In fact, some of the problems were so serious and difficult that it was referred to the now sitting committee under the very capable chairmanship of the member for Kitchener (Mr. Breithaupt) for some further deliberation on how it could be implemented so the problems are there.

Mr. Nixon: Are you going to Dade county to examine the auto insurance situation there?

Hon. Mr. Grossman: No. We will leave the travelling up to the select committee. We, in our ministry, feel we have enough resources and information to work towards successful implementation --

Mr. Warner: You could travel somewhere else.

Hon. Mr. Grossman: It’s in Florida in January -- to do it without the necessity, unfortunately, for either the superintendent or the minister to take any further trips.

Mr. Davison: Mr. Chairman, I am certain the minister will correct me if I am wrong, but my reading of the statistics he has provided us with is that in 1976-77, in terms of actual revenue and expenditure, the expenditure on running the program was $2,867,870, and $13,933,969, was paid out of the fund, for a total expenditure from the fund of $16,801,839. Estimated revenue in the year 1976-77 was $21 million, which roughly means there would have been a profit from the Motor Vehicle Accident Claims Fund of $4.2 million in that year.

I take it that because of the revised estimates your revenue wasn’t that high. I can’t find in the material you provided me with the actual amount of revenue you got from the fund. Perhaps you could help me with that figure so that I can determine whether or not the program lost money or made money last year.

Hon. Mr. Grossman: The figures you have got are the estimates. The actual figures are as follows: payments out, expenses, $16,801,839; revenue, $17 million. In that sense, there was a profit of $200,000. Those are the actual figures I have just given you.

Mr. Davison: The actual figures I had for revenue were in fact correct. The problem then is that you were out in your estimate of revenue by some $4 million. Is that correct?

Hon. Mr. Grossman: Yes.

Mr. Davison: How did you manage to underestimate your revenue by $4 million, which is a rather big percentage? Was there a considerable drop in that year in the number of people requiring this kind of coverage over the year before? Were your predictions as to the increase in the number of drivers, as you have given to the member for Brant-Oxford-Norfolk, not as high as you had predicted they would be? Is that the problem with the $4 million underestimate that year?

Hon. Mr. Grossman: Yes. In simple terms, more people went out and did the right thing and bought private automobile insurance than was anticipated. In budgeting and estimating, I would expect that since the fund must be funded, obviously, regardless of other budgetary considerations, it would be more appropriate to ensure, if anything, we err on the high side so that there is always money there to pay off any extra claims we haven’t anticipated. If anything, I presume we try to estimate on the high side. Hence, I am happy to report we expected more people to be paying into the fund than did.

Mr. Davison: I am not terribly concerned about the $200,000. I would have perhaps raised some comments as to what you would have done, if you had made $4.2 million, as you had hopefully predicted you would have. I think that clears it up.

Hon. Mr. Grossman: For the edification of the member for Brant-Oxford-Norfolk, I might read from page 242 of the Singer report. “The committee has recommended the adoption of a system of compulsory third-party liability insurance and it will conduct more detailed studies as to methods to be adopted to provide for adequate compliance and enforcement. The committee will also consider more detailed plans for the integration of the compulsory insurance system with the licensing system. The committee will also consider the more detailed implications that compulsory insurance will have with relation to the Motor Vehicle Accident Claims Fund.”

I might also add we are so dedicated in our drive towards implementing compulsory automobile insurance that our ministry is doing the work and not waiting for the select committee to complete its deliberations as to the implications.

Mr. B. Newman: I wanted to ask of the minister, of the some 140,000 individuals who pay $100 into the Motor Vehicle Accident Claims Fund rather than purchase insurance, when they apply for their licences do you not inform them after some fashion that they do not carry insurance at all, that this does not protect them, and that they still can be held liable? Don’t you warn them at all?

Hon. Mr. Grossman: In all licence offices there are signs and publications, such as the ones I have just been handed. I’ve got three different languages here -- the two official languages as well as, I would say, Italian.

Mr. B. Newman: You provide that to individuals?

Hon. Mr. Grossman: Yes. I might say they don’t have the minister’s name on them, strangely.

Mr. Nixon: They all ought to be thrown out.

Hon. Mr. Grossman: But wait till next year. In any case, these are available. It says on the cover, “Your $100 fee does not buy you insurance.”

Mr. B. Newman: Is that provided to the individual, or is it just available to him?

Hon. Mr. Grossman: I’m told it’s right out on the counter in the stores. Quite frankly, I think it should be provided to the individual paying the money.

Mr. B. Newman: My interest is to provide it to the individual, rather than leave it available for him to pick up if he wishes.

Hon. Mr. Grossman: Good point; I’ll look into that.

Mr. Warner: Mr. Chairman, I wish to add to some of the comments raised by the member for Brant-Oxford-Norfolk, and elevate it beyond the Reader’s Digest. I think it should be noted -- and I do appreciate that the minister is interested in having compulsory automobile insurance -- previously the government was not disposed to do this. It seemed to find great difficulty in bringing this about. I am somewhat surprised by the minister’s reaction about government car insurance. Other Conservative regimes have government car insurance and they’re quite pleased with it.

Hon. Mr. Grossman: They inherited it. They are stuck with it.

Mr. Warner: The comment from Mr. McGeer, who is the cabinet minister in British Columbia having responsibility for the plan -- not one of your raving socialists, I might add -- says that “private enterprise could not possibly operate as cheaply and efficiently as our government does.”

Mr. Nixon: Like adopting a baby -- you are always on the defensive.

Hon. Mr. Grossman: All I know is that Renwick and Lawlor told me; they are the raving socialists.

Mr. Warner: You should listen to me.

Mr. Nixon: There isn’t a socialist left in the House.

Mr. Warner: They have left the store in good hands.

Mr. G. Taylor: That can only be Allstate.

Mr. Warner: The minister should realize that the committee first went out there under the false assumption that perhaps government car insurance operates well because of a limited or a small population. The first comment made to them in British Columbia was, “One of the reasons for the success of this program is because we have such a large population to deal with.” There goes the myth that it only works if you have 100,000 people or whatever. Not so.

Hon. Mr. Grossman: Not even a myth.

Mr. Warner: In fact, the larger population, particularly 8.5 million people in Ontario, would suit the program. I’ll add, as a final comment, the minister should also be aware that the public in Ontario increasingly want a good government car insurance plan.

Hon. Mr. Grossman: There’s no such thing.

Mr. Warner: For 38 years there has been a good government car insurance plan in Saskatchewan, you’re aware of that.

Mr. Wiseman: Look at the cost.

Mr. Warner: A Tory government in Manitoba and a Tory government in British Columbia --

Mr. Wiseman: Look at Manitoba. What has happened?

Mr. Warner: I didn’t know I could wake up five Tories in one short sweep. That’s quite amazing.

Mr. Deputy Chairman: Order, please.

Mr. Nixon: You can’t wake up the NDP because there aren’t any in the House. This is where we start, right here the next time --

Mr. Deputy Chairman: Order.

Mr. Warner: The final comment I would appreciate the opportunity to make, is that --

Mr. Nixon: Start right here tomorrow.

Mr. Warner: I am going to put on the record my last comment -- that last year --

Mr. Nixon: It is adjournment time. It is out of order.

Mr. Wiseman: Time! Time is up.

Mr. Warner: -- in my riding of Scarborough-Ellesmere I ran a survey asking people if they wanted a government-run auto insurance plan.

Hon. Mr. Grossman: With lower premiums.

Mr. Warner: More than 60 per cent responded yes, and there were some 11 per cent who were undecided.

Mr. Wiseman: Did they know the cost and what they got for it?

Mr. Warner: But 60 per cent on a sampling of 1,000 were in favour of a government car insurance plan, because they want the rates reduced.

Mr. Deputy Chairman: Could I ask the member to wind up his remarks?

Mr. Warner: I move that the committee rise and report.

Hon. Mr. Grossman: Just quickly --

Mr. Nixon: No, no.

Hon. Mr. Grossman: I do want to move the committee rise before he convinces me. I just want to point out that the small population in BC is probably the reason they lost only $180 million in the scheme.

[10:30]

Interjections.

Hon. Mr. Grossman: At that point, I want to correct a statement for the member for Windsor-Walkerville.

Mr. Deputy Chairman: Order, please. We have run out of time.

Hon. Mr. Grossman: These are given to people with receipts for the $100 they pay into the fund.

On motion by Hon. Mr. Grossman, the committee of supply reported progress.

On motion by Hon. Mr. Grossman, the House adjourned at 10:31 p.m.