31st Parliament, 2nd Session

L013 - Tue 7 Mar 1978 / Mar 7 mar 1978

The House resumed at 8:15 p.m.


Mr. Van Horne: Mr. Speaker, today is the 100th anniversary of the founding of the University of Western Ontario, and those members of the House who are alumni of that institution are joining with me this evening in wearing a symbol of that birthday.

The University of Western Ontario, which has graduates across this country and across this province, in my opinion has made a fine contribution to the spiritual, intellectual, cultural and scientific life of our community.

I would ask, Mr. Speaker, that the province extend best wishes for a happy birthday to the University of Western Ontario.

Hon. Mr. Davis: Mr. Speaker, so there is no misunderstanding, I would like to thank the hon. member for London North for the presentation of this birthday flower, which I am sure was grown in Brampton --

Mr. Reid: You must have had an honorary degree.

Hon. Mr. Davis: -- and to make it abundantly clear that while technically I qualify, I want to make sure that everybody understands it was an honorary degree and that my earned degree actually comes from the University of Toronto. I must say, however, there are some days I think I earned the honorary degree more than I did the initial degree.

Mr. Roy: On some days it is not obvious you have any degree.

Hon. Mr. Davis: But I do want to say, on behalf of two people I know rather well who are undergraduates at that great institution, they notified me that this was the 100th anniversary at the same time as they made a plea for further student assistance, so I knew of this event taking place.


Hon. Mr. McKeough moved that this House approves in general the budgetary policy of the government.

Mr. MacDonald: Sight unseen.

Mr. Lewis: Michael Cassidy doesn’t like this budget. I have read his press release. It’s an outrageous budget.

Hon. B. Stephenson: Michael Cassidy doesn’t like anything.

Mr. Martel: You won’t even like the budget when you hear it.

Hon. Mr. McKeough: Mr. Speaker --


Mr. Foulds: Enjoy it, Darcy. It is going to be the last round of applause you get tonight.

Mr. Martel: Darcy, throw them another fish.


Hon. Mr. McKeough: Mr. Speaker, this is my sixth budget.

Mr. di Santo: Too many.

Mr. Martel: That’s why the province is in such a mess.

Hon. Mr. McKeough: Some would say I have developed a sixth sense when it comes to preparing them; others would say that after six I should have the sense to quit.

Mr. Foulds: Agreed.

Mr. Lewis: Carried?

An hon. member: Dispense.

Hon. Mr. McKeough: Interestingly enough one member of the press pointed out earlier today that it was my sixth budget and inquired how much longer I was prepared to carry on delivering budgets and asked did I get tired.

Mr. Martel: Until the Premier steps aside.

Hon. Mr. McKeough: I said no, I didn’t think I would keep at it all that long. They said, “Will you continue to deliver budgets for Mr. Davis?” I said, “In that case he is going to be around for at least 10 more years, so I have 10 more budgets.”

Mr. Cassidy: God save this province.

Hon. Mr. Bernier: That’s the first bit of good news.

Mr. Lewis: Wait for the next election.

Hon. Mr. McKeough: I of course also want to thank my deputy minister, Rendall Dick, and my staff. I know I am joined by the Chairman of Management Board (Mr. Auld), who with me thanks the ministers and the ministries that have worked very hard to bring both this budget and the estimates which will be tabled together in one place.

I hope you might acknowledge, Mr. Speaker, that we have two former treasurers of Ontario with us tonight, Mr. John White and Mr. Charles MacNaughton, in your gallery. Stand up.

Mr. Cassidy: Would they were back.

Mr. Foulds: I never thought I’d see the day. Bring back Charlie MacNaughton.

Hon. Mr. McKeough: Mr. Speaker, we have a third former treasurer of this province, I think much younger than both of the gentlemen who are in your gallery. Mr. James Allan and Mrs. Allan would like to have been here tonight but they are in Sri Lanka on a holiday and couldn’t be here, which says something about Mr. Allan.

Mr Reid: How come the Treasurer is so healthy?

Hon. Mr. McKeough: All members will have followed closely the proceedings of the first ministers’ conference held in Ottawa from February 13 to February 15 this year. Ontario played a constructive role on this important occasion in developing a set of economic policies appropriate to today’s economic reality. The Premier of Ontario put forward a specific 10-point plan of action for economic growth and development. He also tabled a document entitled “An Economic Development Policy for Canada,” which contained a number of solid proposals designed to encourage price stability, improve the business climate and increase private investment, promote exports and replace imports, and reduce regional disparities.

The conference communique reflects in considerable measure the Ontario proposals. Let me comment on some of the more important actions we are taking. First, to encourage price stability, to improve business confidence and to provide room for job creation in the private sector, we have firmly checked growth in the province’s spending. Expenditure growth is down for the fourth successive year, and we are holding to our plan to balance the budget by 1981.

Mr. S. Smith: Sure.

Mr. Martel: Even the Premier doesn’t believe it.

Hon. Mr. McKeough: Second, to increase private investment we have introduced substantial tax incentives; we will maintain in this province a competitive tax climate. This budget contains new tax initiatives to further stimulate economic activity. Third, my colleague, the Minister of Industry and Tourism (Mr. Rhodes), will be directing this government’s buy-Canadian campaign to promote further exports and replace imports. Fourth, we are encouraging research and development with new initiatives in a number of areas. Fifth, the province of Ontario, having made a substantial contribution to reducing regional disparities in Canada, will continue to encourage and support federal efforts in this most important endeavour.

Let me also comment on the consultative process. For a number of years, this government has been advocating a more open approach to decision-making; we have called for a genuine consultative process. The first ministers’ conference and the preparatory meetings of ministers represent substantial progress towards this goal. There will be more frequent meetings in the future, giving the opportunity to assess our actions and build upon the progress already made.

That progress is considerable. Ontario strove for a consensus and, for the first time, a consensus has been arrived at that constitutes a framework within which Canadian economic policy can be developed on a co-ordinated basis. There is a recognition of the need to set explicit objectives, to pursue taxation and expenditure policies consistent with moderating inflation, to improve the business climate and to deal head-on with sectoral problems. All of these things must be done to provide for stable growth of the economy, to create the large number of new jobs needed to employ all of our labour force and to ensure our continued prosperity.

The economic prospects for 1978 and 1979 are favourable. The economy is on a recovery path. Despite concerns about unemployment, inflation and national unity --

Mr. di Santo: What else?

Hon. Mr. McKeough: -- Ontario recorded considerable progress in expanding job opportunities and restoring competitiveness to the economy in 1977.

Mr. Cassidy: That’s why unemployment grew.

Hon. Mr. McKeough: Employment grew by 73,000 jobs or two per cent. December 1977 over December 1976 employment was up by 109,000 jobs or three per cent. Seventy per cent of the new entrants to Ontario’s labour force, which grew by 2.9 per cent in 1977, were youths or females. Unemployment among young people between 15 and 24 years of age has confirmed that jobs for youth continues to be the major challenge facing governments both in Ontario and in Canada.

Mr. Eakins: Shame. Shame.

Mr. Cassidy: So why don’t you act?

Hon. Mr. McKeough: Our expectations for 1978 are for a stronger provincial economic performance, with real growth of 4.3 per cent.

An hon. member: You said that last year.

Hon. Mr. McKeough: This forecast is close to the middle of the range of current projections coming from a number of private and institutional sources. The Conference Board in Canada, for example, has recently forecast a more optimistic growth rate of 5.1 per cent for Ontario. The general view of increasing strength in the economy as the year progresses is consistent with my own. I see the process evolving at a moderate pace, with considerably stronger growth of 5.5 per cent in 1979. Essentially, I look forward to a strong export performance in 1978, reinforced by more buoyant consumer spending and renewed business investment in 1979. On the employment front, I expect that 100,000 new jobs will be created in 1978 and that the rate of unemployment will show a small decline.

Our recovery from the 1975 recession has been sluggish and irregular. Consumers have been uneasy in the face of high levels of both unemployment and inflation, and have been hesitant to expand significantly their own spending plans. Investment expenditures have been particularly slow at providing strength, reflecting uncertainty about our economic future. In addition, the concerted national effort to break the cost and wage spiral reflected in the anti-inflation program, coupled with general recognition of the need to restore a balance to our economy, has brought forth a sustained effort to limit the growth of government and reduce its involvement in the economy. All of these factors limited our growth last year.

Turning to 1978-79, consumer confidence is on the upswing according to recent surveys. While personal savings are still at historically high levels, the potential for a continued expansion of retail sales is excellent and very encouraging. Moreover, improvements in Canada’s trading balance are expected to make a major contribution to growth in Ontario’s economy in 1978. Continued strength in the economies of our major trading partners will provide strong stimulus for our exports.

In addition, the major improvement in the competitive position of Ontario industries, brought about by the more realistic level of the Canadian dollar and the substantial improvement in our cost performance, has yet to be fully realized. Ontario manufacturers now face a major opportunity to compete with imports in the domestic market and to make new inroads in foreign markets. In addition, I foresee considerable growth for our tourism industry as the year progresses.

With moderating government expenditures, an improving cost performance and a restoration of consumer and investor confidence. Ontario will be poised for a strong revival of private sector capital outlays in late 1978 and into the next year. Capacity utilization should improve significantly in a number of key sectors and new job creation can be expected to keep pace with a rapidly growing labour force. A better profit performance and an ample supply of credit will provide the base for a more substantial resurgence of investment. Moreover, I look forward to continued strength in investment through 1980-81, as major energy projects across Canada get under way and make their contribution to healthy demand in Ontario. My expectation, therefore, is for a steady expansion of private sector jobs, private sector incomes, and private sector prosperity of lasting benefit to all our citizens.


Ontario and Canada, then, are well positioned for an economic expansion based on private sector initiatives. I would be less than frank, however, if I did not acknowledge the continuing drag on the economy caused by the worrisome uncertainty surrounding Quebec. That uncertainty has hurt confidence and investment, not only in Quebec but throughout Canada.

The first ministers and ministers of finance agreed that general stimulation in the form of increased spending by governments would be counter-productive. It is desirable to hold the trend growth in government spending below the trend growth in the economy. There was also a clear recognition that large-scale tax cuts could not be afforded, because government deficits are already too large.

This message was evident in the extensive discussions I held again this year with representatives of various groups in the economy, including labour, business and the professions. Their informative comments have deepened my perspective of the year just past and focused my attention on the problems ahead. I would like to express my appreciation and that of my staff to them for their participation in the budget formulation process.

On February 16, my ministry released a staff study entitled “Reassessing the Scope for Fiscal Policy in Canada.” That paper raises serious questions about the capacity of provincial governments to stimulate employment by further increasing their deficits. The paper shows that both the federal and Ontario governments face large deficits even at high levels of employment.

In reading this staff study, one reluctantly comes to the conclusion that the taxpayers of Ontario would only see marginal returns to the provincial Treasury when government stimulates the economy through general measures. Nearly all of the budget dividends arising from the resulting job creation flow to federal coffers in the form of savings on unemployment insurance.

Accordingly, the fiscal actions of this budget are framed within the realities of Ontario’s overall budget capacity. They aim to be selectively stimulative as we continue on our program of balancing the Ontario budget by 1981.

The maintenance of competitive industry is of paramount importance to Ontario, and this government recognizes the vital role of investment and profits in the economic growth process. Taxation is an important element of business costs, and it is essential that tax policies reflect the realities of international competition. The fiscal measures I am proposing in this budget have been developed in full recognition of their impact on Ontario’s competitive position.

I would like to call the members’ attention to the study that I am tabling with this budget entitled “Ontario’s Retail Sales Tax Exemption Program for Production Machinery and Equipment: An Economic Assessment.” This document is a report to the Legislature on the economic impact of that incentive. It is an important study which represents the combined input of the corporate sector, the Institute for Policy Analysis of the University of Toronto and Treasury staff.

The results are strongly positive. The tax incentive stimulates investment, output and final demand. It also creates jobs.

Mr. Cassidy: That is not true. You destroyed 15,000 jobs this year. A loss of 15,000 jobs.

Mr. Havrot: Shut up, supermouth.

Mr. Speaker: Order.

Mr. Martel: Throw him another fish.

Hon. Mr. McKeough: The results are strongly positive The tax incentive stimulates investment, output and final demand. It also creates jobs.

Mr. Cassidy: Not according to your study.

Hon. Mr. McKeough: In fact, the institute concludes its assessment of the program with these words --

Mr. Warner: Your programs have never created a job.

Hon. Mr. McKeough: “It would be difficult to think of any other policy which, if taken at the provincial level, would stimulate production levels to as great an extent.” This is evident in the high benefit cost ratio of the incentive, which shows $3 of income generated for $1 of tax forgone.

The retail sales tax exemption improves Ontario’s competitive position by lowering front-end costs. This study shows that in Ontario --

Mr. Foulds: What did you get from Denison?

Hon. Mr. McKeough: -- our taxation levels compare favourably with those of nearby jurisdictions with which we compete. We cannot be complacent in this regard, however, as tax levels can quickly change and offset our advantage. In the United States, for example, President Carter has recently proposed a package of tax changes which would, among other things, reduce the rate of corporate tax by four percentage points and make the US investment tax credit considerably more generous. If changes such as these are implemented, the province and the federal government must be prepared to review our combined tax levels to ensure that we remain competitive.

The impact of inflation on profits is also of concern to this government. In 1976 we established the Ontario Committee on Inflation Accounting to study this particular problem. The committee’s report was made public in July 1977. The Canadian Institute of Chartered Accountants has a central role to play in further developments in this area and I would ask them to pursue more aggressively improvements in financial reporting.

The federal and provincial governments have made substantial progress in the consultative process. Greater understanding and stronger relationships between all groups in our society -- labour, business and government -- is one of the keys to success in the eighties. The Partnership for Prosperity Conference was convened in February 1977, and the Premier’s Advisory Committee on Ontario’s Economic Future formed shortly after. As well, the federal Minister of Industry, Trade and Commerce has announced that he is forming joint committees of labour, business and governments, in which Ontario will play a full role, to study and make recommendations for various sectors of the economy. These are important initiatives.

Mr. Mackenzie: Put some of the unemployed on those committees and they’ll make good use of the dollars.

Hon. Mr. McKeough: Ontario must be prepared to meet the challenges of the eighties and to develop economic policies which will ensure the continued growth and prosperity of our key sectors, particularly agriculture, resources and manufacturing. We must deal with the economic adjustments that will follow tariff changes. In these important tasks, the government needs advice from all participants in the economic process.

I propose three selective and essential actions to expand employment for Ontario’s youth, to improve the situation in the mining industry and to stimulate the hospitality industry. The government of Ontario has led the way in Canada in providing employment opportunities for our energetic young people. In 1977 we implemented a five-point program which provided jobs and introductory training to the labour market for some 47,000 young people at a cost of $65 million.

Of these Ontario initiatives, perhaps the most successful was the Ontario Youth Employment Program, which paid $1 per hour towards the wages of young people aged 15 to 24. The response by Ontario businesses and farmers to this new employment incentive was overwhelming; more than 12,000 employers participated in the program, creating 21,500 new summer jobs.

Mr. Cooke: What about all the ones you laid off?

Hon. Mr. McKeough: Ten thousand of these employers replied to the Premier expressing their satisfaction with OYEP and indicating strongly that they would like to see it operate again in 1978. I propose to reintroduce OYEP in 1978 and expand it in two significant ways. The incentive grants will be increased to $1.25 per hour, and the program will run for a full 25 weeks as compared to 16 weeks last summer.

Furthermore, all employers who created jobs under the program last year will be eligible for the $1.25 subsidy on both their 1977 level of OYEP jobs plus new job creation. An initial funding level of $17.2 million has been provided in the 1978 estimates, with the expectation that OYEP 1978 will generate some 30,000 jobs for young Ontario people. If additional funding is required it will be forthcoming.

The government will also expand significantly in 1978 its other youth-oriented employment programs. Funding for the Ontario Career Action Program will rise 33 per cent to $9.3 million, allowing some 5,750 young people to gain the work experience which will help them to secure employment upon leaving school. The capacity of our Junior Rangers’ camps will be expanded to the maximum to provide places for an additional 300 applicants and the Experience program will be enlarged by some 2,100 jobs, for a total of 13,500 positions for young people seeking a rewarding summer in public service before resuming their studies. Altogether, Ontario’s commitment to opportunities for youth will involve a total expenditure of $78 million for 1978, generating more than 60,000 jobs.

Mr. Martel: Now for the bad news.

Hon. Mr. McKeough: These Ontario actions will help reduce the unacceptably high unemployment rate among our 15 to 24 age group. But more permanent programs are needed.

Mr. Sargent: What is your program for permanent jobs?

Hon. Mr. McKeough: No amalgam of public job creation programs, however well intentioned, can provide the challenges, the rewards and the career prospects which our young people deserve. That is why the Premier at the recent conference of first ministers urged the federal government to find ways of diverting UIC payments to youth into private sector incentives --

Mr. Peterson: Where did you get that idea?

Hon. Mr. McKeough: -- which create productive and lasting jobs to meet the legitimate expectations of these new adults in our society.

Mr. Peterson: It’s a very creative idea.

Hon. Mr. McKeough: The mining industry has played an important and innovative role in the development of our economy in terms of growth, foreign exchange --

Mr. Cassidy: Another sellout

Mr. Martel: Listen to what the people in Sudbury say.

Hon. Mr. McKeough: -- support of secondary industry and regional development.

Mr. Warner: It should also buy Canada.

Hon. Mr. McKeough: This sector is now in a serious slowdown. Many mining companies appear to be directing their new activities to Third World countries, which are still largely unexplored and where more attractive incentives are available.

Mr. Bounsall: And we paid for it.

Hon. Mr. McKeough: I’m disturbed that Ontario’s mining exploration expenditures in the last five years have declined and very few mines have been developed. The first ministers have agreed on the need for a joint federal-provincial review of the taxation of the resource industries by finance and resource ministers.

Mr. Martel: The gall.

Hon. Mr. McKeough: My colleague the Minister of Natural Resources (Mr. F. S. Miller) and I will be participating in this important review. However, some interim action is essential and I am therefore proposing the following amendments to the Mining Tax Act, effective March 7, 1978: An exemption for new mines and major expansions of existing mines --

Mr. Martel: You couldn’t even put up $3 million to save jobs.

Mr. Davidson: You’re giving away the store again.

Hon. Mr. McKeough: -- the carry-forward of unused processing allowance and the removal of mandatory minimum deductions of depreciation and exploration and development expenditures and full allowance of foreign processing costs incurred in the processing of Ontario ore.

Mr. Lewis: That’s not what they asked for.

Mr. Warner: What a giveaway.

Mr. Martel: You will export some more jobs.

Mr. Mackenzie: How many more are you going to put out of work? It’s the sickest budget we have ever had.

Mr. Martel: You gave the store away and look what happened.

Mr. Sargent: Denison Mines excepted.

Hon. Mr. McKeough: These changes will encourage the search for and development of new mines in Ontario and even out the burden of the mining tax over the metals cycle. As an additional incentive, I am also proposing to allow certain expenses related to social assets.

Mr. Wildman: Inco didn’t even ask for that.

Hon. Mr. McKeough: To attract and retain employees, mining companies located in isolated regions of the province provide housing, social and recreational facilities. Operating and maintenance costs of social assets in Ontario will be allowed as a deductible expense after April 9, 1974.

Mr. Cassidy: What a windfall! That goes back four years.

Mr. Martel: You are giving the store away.

Hon. Mr. McKeough: I estimate these measures to assist the mining industry will cost $5 million in 1978-79. In years of stronger markets, they will yield considerably greater tax savings to our vital resource industry. Equally important, these measures will provide a climate of certainty and confidence which is essential to high-risk investments. They will benefit small and medium-sized operations as well as the large integrated mining corporations.

Mr. Sargent: That is a long way from Denison’s profit.

Hon. Mr. McKeough: In the case of uranium for Ontario Hydro, these measures will apply only to new contracts.

Travel costs and costs of accommodation in Canada have risen considerably over the last few years --



Hon. Mr. McKeough: -- even faster than the general cost of living. Travellers from the United States and abroad, as well as Canadians themselves, have been turning more and more to alternative destinations and as a result, the nation’s balance of trade in travel has deteriorated seriously. Ontario, as the principal Canadian destination of both Canadian and non-Canadian travellers, has, of course, felt this impact most directly.

To counteract these trends, I am proposing to suspend until the end of 1979 the full seven per cent retail sales tax on all taxable accommodation.

Mr. Swart: Build another Minaki Lodge.

Mr. Martel: You are now going to open Minaki Lodge, are you?

An hon. member: This whole government has become a Minaki Lodge.

Hon. Mr. McKeough: Mr. Speaker, this change will be effective for all guests checking in after midnight tonight.

Mr. Breithaupt: What are people going to do for the next three hours?

Hon. Mr. McKeough: It will also apply to the full price of hospitality services sold as a package deal under the American plan, with the exception of charges for liquor. It will provide a total tax saving for travellers and tourists in Ontario of about $30 million in 1978-79. This tax saving, coupled with recent currency developments and the industry’s own efforts to restrain costs, will result in significant reductions in average room costs.

Here in Toronto, for example, the price of a room has already been effectively reduced by 15 per cent since November 1976 for our American friends and by as much as 40 per cent over the same period for visitors from Japan and western Europe. This tax exemption will also lower the cost of charter arrangements for Canadian travel recently announced by the federal government.

Mr. Davidson: If you keep talking, they will believe they can save some money.

Hon. Mr. McKeough: The hospitality industry, as the second largest sector in the Ontario economy, can be expected to experience considerable benefits from these changes. The spillover effects in terms of employment growth, new construction and improvements to existing facilities should be substantial as visitors and Canadians alike experience the pleasures of an Ontario vacation. These beneficial effects will be realized most directly in the restaurant industry and retail trades.

I am confident that the hospitality industry will respond with vigour and imagination to this new opportunity to establish Ontario as a prime international vacation centre.

An additional incentive to strengthen the economy in the form of a 100 per cent tax credit for new jobs in industrial research, development and design, was proposed by the Premier in Ottawa. It would cost $100 million or more a year for the next five years in terms of tax revenues forgone by federal and provincial governments, but would generate tangible benefits to our economy. It would build up our capacity for essential innovation, improve our productivity and export performance and make Canada less dependent on foreign technology. It would also pay large dividends in terms of better jobs for talented young people --

Mr. Davidson: If it is such a good idea, why don’t you do it?

Hon. Mr. McKeough: -- jobs which fully utilize the skills of our college and university graduates.

Mr. Cassidy: Where have you been for 34 years?

Hon. Mr. McKeough: This research and development tax incentive should be implemented on a national scale with full participation of both the federal government and the provinces. I have already informed the Minister of Finance that Ontario wants to proceed along these lines immediately and that we are willing to assist in the formulation of a powerful incentive program.

In passing, let me point out that the R and D program should be available to all corporations doing business in Canada, both large and small. We cannot afford to let concern about a “branch plant economy” limit the potential benefits which will flow to all Canadians. The program should also apply to a broad spectrum of --

Mr. Wildman: R and D and branch plants don’t go together.

Hon. Mr. McKeough: -- research and development, including, for example, a draughtsman in a tool and die shop or other project designers.

Mr. Nixon: Then do it.

Mr. Martel: What was that? A throwaway paragraph?

Hon. Mr. McKeough: Mr. Speaker, you will recall that on September 16, 1977, I outlined the broad dimensions of the government’s 1978 spending plan. The key feature of that plan was a target of 6.9 per cent for our expenditure growth rate in the 1978-79 fiscal year. The government has stuck to its target. The Chairman of Management Board will table estimates which hold our spending growth rate for 1978-79 to seven per cent.

Mr. Cassidy: Regardless of the consequences.

Mr. Foulds: We haven’t even finished last year’s supplementaries.

Hon. Mr. McKeough: This will be the fourth year in a row that Ontario has progressively reduced its spending growth rates.

Mr. Cassidy: On the back of municipalities.

Mr. Warner: While pushing up the property taxes.

Hon. Mr. McKeough: We have proven that government can reduce its claim on total resources. This message is finally beginning to sink in at Ottawa as well.

Mr. Foulds: You sink in a quagmire.

Hon. Mr. McKeough: Perhaps the most significant result of the first ministers’ conference was the agreement to restrain government spending below the growth in the economy. That is one of the essential policies we have been advocating for building a stronger economy in the years ahead. We are targeting for a balanced budget to make room in the economy for the private sector to grow and to flourish.

Mr. Peterson: And to juggle the books. You are selling off your assets, you know that, Bill.

Hon. Mr. McKeough: The government has made difficult decisions, and we have substantially reordered the priorities to hold our spending growth to seven per cent, but I believe we can continue to maintain essential public services. Indeed, in a number of areas there are improvements in levels of service.

Mr. Martel: He’s more right wing than Genghis Khan.

Mr. Cassidy: He makes old Genghis look like a Marxist.

Hon. Mr. McKeough: Health care, for example, has been allocated additional funding of some $276 million in 1978-79, or 29 per cent --

Mr. Davidson: You’ve just raised the premiums.

Hon. Mr. McKeough: -- of the total spending increase of $952 million. That represents an increase of 8.1 per cent. To accommodate our priorities and the unavoidable increases for such items as public debt interest and pension contributions, we have reduced our government operating costs and our payroll budget to the minimum. Let me reiterate that at seven per cent, unlike the government of Canada we are actively eating inflation.

Mr. Makarchuk: What is the increase in OHIP premiums?

Hon. Mr. McKeough: Mr. Speaker, I’m only a plumber, not a psychiatrist.

Mr. Roy: You are much too modest.

Mr. Makarchuk: Which way does it flow, Darcy?

Hon. Mr. Davis: There’s nothing wrong with being a plumber.

Mr. Warner: This plumber puts the economy down the drain.

Hon. Mr. McKeough: Mr. Speaker, I work under the old math, not the new math; but seven per cent is a lot more than the eight per cent we heard about from those people last fall.

Mr. S. Smith: Where will they find $300 million?

Hon. Mr. McKeough: I have included for the information of members a table which compares Ontario and federal spending since 1974-75. I have also included a table which illustrates how the government rationed its limited funds among these competing expenditure claims. To those who would say to us the job can be done better --

Mr. Martel: You are getting all flustered, Darcy.

Hon. Mr. Bernier: Repeat it, Darcy, they missed it.

Hon. Mr. McKeough: To those who would say to us the job can be done better --

Some hon. members: Right.

Hon. Mr. McKeough: Right, eh? Well, I would suggest that they lay the specifics before this Legislature so that the school boards, the municipalities, the public service unions and citizen groups, each of whom claim they deserve more, can respond. Put it in front of us.

Mr. Roy: We have.

Mr. Cassidy: Boy, it is group against group and region against region.

Hon. Mr. McKeough: Mr. Speaker, as members are aware, the province --

Mr. Cassidy: Abdication of your responsibility.

Hon. Mr. McKeough: -- allocates some 30 per cent of its budget to support local government under a revenue-sharing formula known as the Edmonton commitment. Last September 16 --

Mr. Swart: It is called the Edmonton twist now.

Mr. Breithaupt: You don’t really believe that, do you?


Mr. Cassidy: The charter of Bramalea is going next.

Mr. Warner: Commitment always was a joke to you.

Hon. Mr. McKeough: Last September 16, I announced Ontario’s financial assistance to local governments would be $4.23 billion for 1978-79 and I provided a general outline of our transfers so municipalities could commence their 1978 budget planning. In our estimates process we have made some adjustments to the distribution of our transfers and raised the total, despite the fact that revenues have come in considerably below the forecast level upon which the Edmonton commitment was based. Total financial assistance for 1978-79 is increased to $4.39 billion.

For the information of members I have included a table which shows the Edmonton commitment distribution of $4.23 billion announced in September and compares it with the total of $4.39 billion contained in the printed estimates. I detect that some representatives and employees of some local governments are reluctant to share our commitment to expenditure restraint.


Mr. Cassidy: Fancy footwork.

Hon. Mr. McKeough: They protest that I have redefined the commitment to cutback on provincial transfers.

Mr. Cassidy: That’s right, you have.

Hon. Mr. McKeough: The facts prove otherwise.

Mr. Peterson: Nonsense.

Hon. Mr. McKeough: Over the five years since this revenue-sharing arrangement has been in operation -- that is from 1973-74 through 1977-78 -- the province has delivered $13.581 billion in actual transfers to local governments --

Mr. Wildman: Only on paper.

Hon. Mr. McKeough: -- versus a cumulative entitlement under the original Edmonton commitment formula of $13.583 billion. That’s a shortfall or underdelivery of $2 million, or one-fiftieth of one per cent.

Mr. Swart: You have changed the rules of the game.

Mr. Peterson: You are just telling little lies, eh?


Hon. Mr. McKeough: I would be ecstatic, sir, if the province came anywhere close to such a balance in its financial arrangements with the federal government. I make no apology, sir, for reformulating the Edmonton commitment --

Mr. Cassidy: Now you admit it.

An hon. member: Destroying it.

Mr. Cassidy: You short-changed them.

Mr. Roy: Reformulated it!

Mr. Cassidy: Manipulating.

Mr. Wildman: Who did you hold discussions with, Darcy?

Hon. Mr. McKeough: I make no apology for reformulating the Edmonton commitment to include major elements of provincial assistance --

Mr. Warner: How can you call it a commitment if you keep changing it?

Hon. Mr. McKeough: -- which should have been in the formula right from the beginning. In particular, I added our provincial payments to the teachers’ superannuation fund, which are just as valuable a form of financial assistance to school boards --

Mr. Swart: Unilaterally, without discussion.

Mr. Cassidy: No consultation. Good grief.

Hon. Mr. McKeough: -- as are general legislative grants. On the revised and more realistic basis, the province has been more than fair to local governments --


Hon. Mr. Davis: Margaret, don’t get upset.

Hon. Mr. McKeough: -- overdelivering its commitment by some $444 million through the end of 1977-78.

Mr. Swart: On your formula.

Mr. Cassidy: Your figures. Only you believe that.

Mr. Lewis: Somebody better give John White a Valium.

Hon. Mr. McKeough: Mr. Speaker, with declining school enrolments and with population which may not be growing, I question whether or not school-board and municipal spending needs to increase more than our own.

While on the topic of local government I would like to briefly discuss several other important matters of longer-term significance.

Mr. MacDonald: So long-term you will never get around to it.

Mr. Cassidy: Property tax is going up.

Hon. Mr. McKeough: First let me clarify how the government is proceeding with the complex matter of property tax reform.

Mr. Martel: Ten years now, Darcy.

Hon. Mr. McKeough: I have established a working committee of local elected representatives who are to report back by March 31, 1978.

Mr. Martel: Should be good for another three elections at least.

Hon. Mr. McKeough: They are to make recommendations on the fundamental issues of implementation of market value assessment and the tax principles set out in the January 4 white paper. After we have agreement on an acceptable way to implement market value assessment and property tax reform, then the province will proceed to the complementary matters of grant reform --

Mr. Makarchuk: We will have an election and then we will decide.

Hon. Mr. McKeough: -- and a revised revenue-sharing arrangement with local government. The overall tax burdens on residences --

Mr. Breithaupt: In the fullness of time.

Mr. Swart: You will change it again.

Hon. Mr. McKeough: -- will not increase due to reform and there will be a phasing-in process, particularly for single-family dwellings. I have cautioned the committee, however, not to look for an easy way out by loading more of the burden on to industry.



Hon. Mr. McKeough: Ontario’s tax system must remain competitive, not just at the provincial level but at the local level as well. I am aware that some American jurisdictions are using the local tax base as assistance for industry. I do not think, however, that what is, in effect, a municipal giveaway would be appropriate in Ontario.

Mr. Swart: No, they get a provincial one.

Hon. Mr. McKeough: Second, I expect to act on the findings of five important studies on the reform of local government structure -- Metropolitan Toronto, regional Niagara, regional Ottawa-Carleton, the county of Northumberland and the district of Parry Sound.

Mr. Sargent: You have been kicking this thing around for 15 years. And you know you are not going to do it this year.

Hon. B. Stephenson: You wouldn’t know, Eddie; you are never here.

Mr. Roy: The minister doesn’t contribute anything even though she is here.

Hon. Mr. McKeough: These studies represent an important contribution to the task of making local government more responsive and efficient.

Third, I would like to indicate my intention to pursue the matter of reciprocal taxation. As members know, Ontario entered into a reciprocal tax agreement with the federal government as of October 1, 1977; it is working well. Under this arrangement, governments pay taxes to each other on those purchases and other activities which are taxable in the private sector. This minimizes special exemptions and greatly simplifies tax administration. Under property tax reform, the province will be paying full local taxes on its properties, hence it is logical for local governments to pay provincial taxes --

Mr. Swart: And taking it away in transfer payments.

Hon. Mr. McKeough: -- that is sales tax, fuel taxes and licence fees. In the long run, this will streamline the overall tax structure in Ontario and simplify our statutes.

Mr. Cassidy: You take with one hand and you take with the other. There is no fairness at all there.

Hon. Mr. McKeough: Let me turn to another aspect of our commitment to reform of the property tax. At the recent first ministers’ conference, Prime Minister Trudeau singled out Ontario’s tax credit system for high praise. Let me share with the House this quote from Mr. Trudeau’s speech on February 13.

Mr. Makarchuk: Dispense.

Hon. Mr. McKeough: “Many of you, in your own jurisdiction, have been equally creative. Premier Davis, your government in Ontario has introduced a refundable tax credit system to provide relief from property and sales tax” --

Mr. Peterson: You really like that man, don’t you, Darcy?

Hon. Mr. McKeough: -- “for low- and middle-income taxpayers. Perhaps this is a model that should be pursued on a broader scale.”

Mr. Roy: What did Joe Clark say?

Hon. Mr. McKeough: Budget Paper B, appended to this statement, explains in detail how our tax credits work to relieve property tax burdens in the most equitable and efficient way. We propose to build on this proven system to meet our commitment in a charter for Ontario, which promises this government will --

Mr. Breithaupt: The Bramalea bombshell.

Mr. Nixon: Another charter.

Hon. Mr. McKeough: -- “reduce the municipal tax burden on senior citizens, and work towards the ultimate elimination of this particular tax for the majority of Ontario’s senior citizens.”

Mr. Reed: And plant two trees for one.

Hon. Mr. McKeough: In conjunction with the implementation of property tax reform --

Mr. Martel: This should be worth another 10 years, Darcy.

Hon. Mr. McKeough: -- the basic tax credit to senior citizens will be enriched from $290 to $510, thereby offsetting in total --

Mr. Martel: Ten more years.

Mr. Makarchuk: Give us the date.

Mr. Martel: You were talking property tax reform when I came in here 10 years ago.


Hon. Mr. Welch: I think the Treasurer should repeat that.

Hon. Mr. McKeough: Mr. Speaker, some may have missed that. So let me repeat it.

In conjunction with the implementation of property tax reform, the basic tax credit to senior citizens will be enriched from $290 to $510, thereby offsetting in total more than 80 per cent of their property tax burden.

Mr. Swart: It’s a long way down the pike.

An hon. member: When?

An hon. member: Before the next election, of course.

Hon. Mr. McKeough: Within the economic and financial objectives the government has set for this year I have decided it is necessary to raise additional revenues. Having examined various alternatives I am proposing a balanced and equitable package of tax actions to raise an additional $374 million. These actions will not detract from the economic recovery nor will they impair Ontario’s competitive position.

The control of health costs continues to be a high priority of this government. Expenditures on insured health services increased 14.5 per cent in 1976-77 and 9.2 per cent in 1977-78.

Mr. Warner: You’ve got a mess over there and you can’t clean it up.

Hon. Mr. McKeough: For 1978, we expect an even better performance. Nevertheless, the financing of health costs continues to be unbalanced --

Mr. Cassidy: What does that mean?

Hon. Mr. McKeough: -- with the share covered by OHIP premiums steadily declining. Premiums retain a visible link with the cost of services.


Mr. Warner: The highest in Canada.

Hon. Mr. McKeough: Consequently, I am proposing to increase OHIP premiums to restore the balance in financing.


Hon. Mr. McKeough: We have considered other alternatives and rejected them. My colleague in Health, and my former colleague in Health have both worked hard to control costs. They have argued eloquently against deterrent fees, quite rightly pointing out that such a policy would deny access to our high quality health care system for those least able to pay.

An hon. member: Thank God for small mercies.

Hon. Mr. McKeough: Effective May 1, 1978, OHIP premiums will increase by $6 per month --

An hon. member: They can’t even afford OHIP.

Mr. Warner: Cruel punishment.

Hon. Mr. McKeough: -- for single subscribers and $12 per month for families.

Mr. Cassidy: Do they call you Scrooge?


Hon. Mr. McKeough: That will produce new premium levels of $22 per month and $44 per month for single persons and families respectively.


Hon. Mr. McKeough: At the same time, our system of premium assistance will be enriched to ensure that this increase does not impact on low and modest income families.

Mr. Makarchuk: You’re hitting the working poor.


Hon. Mr. McKeough: I would also point out to members that while the OHIP increases will raise payroll costs to employers, our Ontario companies will still enjoy a considerable advantage on this score over their US counterparts.

Mr. Davidson: Why don’t you talk yourself out of work?

Hon. Mr. McKeough: Even with the higher premiums, the effective rate of payroll taxation in Ontario is below that in the US, and this differential in our favour will widen when the American social security financing amendments take effect in 1978 and subsequent years. This necessary adjustment --

Mr. Cassidy: Necessary adjustment?

Hon. Mr. McKeough: -- to OHIP premiums will generate an additional $271 million. As a result --

Mr. Cassidy: It is far more than an adjustment.

Hon. Mr. McKeough: -- premiums in 1978-79 will again cover one-third of the costs of insured health services, which approximates the long-run norm recently recommended by the joint advisory committee on methods to control health costs.

Full details of these OHIP changes are provided in appendix C to this statement.

Mr. Cassidy: The worst committee this province has seen for years.

Mr. McClellan: Very representative committee, wasn’t it?

Hon. Mr. McKeough: I also propose to raise additional revenue from alcohol and tobacco.

Mr. Foulds: Why isn’t Lorne Henderson applauding this one?


Hon. Mr. McKeough: Effective April 1, 1978, the gallonage fee on beer will be increased by seven cents per gallon, and the markups on spirits, wines and imported beer will also be raised.

An hon. member: Easy money.

Hon. Mr. McKeough: The markup increases will be slightly smaller on imports, as we begin to neutralize over the longer term what has been, in effect, an Ontario tariff. These increases will generate about $40 million in additional revenues in 1978-79.

As of midnight this day, the tax on cigarettes will be increased 2.8 cents to a total of 22 cents per package of 20, and the tax on cigars and pipe tobacco will also be raised.

Mr. Martel: You will have to quit smoking your pipe, Bill.

Mr. S. Smith: Now you have gone too far.

Hon. Mr. Davis: And healthier for all of us.

Hon. Mr. McKeough: I estimate that these new rates will produce $30 million in additional revenue.

Mr. Martel: Throw your pipe away, Bill.

Hon. Mr. McKeough: Following the practice of past years, full details of these changes are set out in the tax appendix to this statement.

I am also proposing to increase the compensation paid to appointed tobacco tax collectors from the present maximum level of $700 to $1,000 per annum, effective April 1, 1978.

While on the subject of compensation, I would point out to members that the level of compensation paid to motor vehicle agents has not been changed since 1972. As an incentive to encourage motor vehicle agents to tighten up their appraisal of used cars and generate higher tax collections, I am now proposing increases in compensation, effective April 1, 1978.

Mr. Davidson: Talking about compensation, what about workmen’s compensation?

Hon. Mr. McKeough: I am proposing two further measures to raise revenues.

First, effective March 8, 1978, the retail sales tax exemption for railway rolling stock will be withdrawn and the seven per cent tax will be applied on the basis of miles travelled in Ontario. Similar tax treatment is now in effect in Quebec, Manitoba, Saskatchewan and British Columbia, and these provinces -- unlike Ontario -- also levy a tax on the diesel fuel used in locomotives.

Second, the capital tax levied on loan and trust companies will be changed to parallel the treatment of banks, effective for fiscal years ending after March 7, 1978.

I estimate that these two changes will increase our revenues by $18 million.

Let me turn now to measures relating to our tax structure and collection procedures.

The federal changes to the Income Tax Act, as implemented by Bill C-11, will be paralleled in most instances in our corporate income tax. Our schedule of instalment payments under the Corporations Tax Act will also be changed to match the federal schedule. This will simplify the work of business accountants and also result in a onetime cash flow adjustment of $70 million in favour of the province.

I would like to inform members that some Ontario-based insurance companies have been forced to pay retaliatory taxes in the United States as a result of the 1976 increase in our premiums tax from two per cent to three per cent. This has put them at a competitive disadvantage in selling life insurance and sickness and accident insurance in the United States. In view of these developments, I propose to move Ontario’s premium tax back to two per cent on life insurance and sickness-and-accident insurance effective March 8, 1978.

Mr. Swart: There is no insurance company that makes that profit.

Hon. Mr. McKeough: Moreover, I have requested that the federal government, in its negotiations of the Canada-US tax treaty, seek an exemption for the provinces from these retaliatory tax provisions. Ontario will also parallel the federal changes to the income taxation of insurance companies. These two measures, taken together, will cost a net of $5 million in 1978-79.

The Ontario economy is steadily adapting itself towards energy conservation.

Mr. Cassidy: We’re creeping. One of the reasons is your government.

Hon. Mr. McKeough: To assist in this process, I propose to remove the retail sales tax from storm doors and storm windows, effective March 8, 1978.

An hon. member: Whoopee.

Mr. Peterson: What about toilet seats?

Mr. Cassidy: What’s the point of keeping in heat you can’t afford because you’re unemployed?

Hon. Mr. McKeough: This measure will cost $15 million in 1978-79 and bring the government’s total package of energy conservation exemptions to $25 million per year.

I am pleased to announce that Ontario’s personal income tax rate for 1978 will remain at 44 per cent, the second lowest among the 10 provinces.

Mr. Swart: But a $270 million hike in OHIP premium taxes.

Mr. Deans: Why don’t you add all the other taxes? Come on, Bob; tell him. Add on the other taxes.

Hon. Mr. McKeough: I would also like to inform the members that Ontario intends to seek amendments to its tax collection agreement --

Mr. Deans: It’s a lot of nonsense. It’s hypocrisy.

Mr. Warner: Why don’t you just close the shop? You’ve mortgaged it all; just close it.

Mr. Havrot: Go home and grow a beard.

Hon. W. Newman: Why don’t you buy a razor?

Mr. Martel: I’m going to rush out and buy a door.

Hon. Mr. McKeough: I would also like to inform the members that Ontario intends to seek amendments to its tax collection agreement with the federal government -- amendments which will ensure direct provincial participation in the preparation of annual income tax estimates and payment flows and guarantee our access to the necessary tax data.

Mr. Cassidy: That’s because you blew it last year.

Hon. Mr. McKeough: Would the hon. member give me a list of those people who voted for him? I’d like to write them all a thank-you letter -- a great big thank-you letter.

Mr. Cassidy: I’m a lot closer to the premiership than you’ll ever be.

Mr. Speaker: If the Treasurer would stick to his text, he might be less provocative.

Hon. Mr. Welch: How do you know he’s not?

Hon. Mr. Davis: Michael, you really asked for that.

Hon. Mr. McKeough: I have real sympathy for the leader of the third party. My staff have received two brown envelopes from the NDP research staff.

Let me summarize the tax changes that I have outlined. The tax increases I have proposed amount to some $359 million in total, plus the $70 million in cash flow from acceleration of corporation instalment payments. The tax cuts for mining, tourism, insurance and energy conservation amount to $55 million. Altogether, these tax actions will contribute $374 million towards Ontario’s financial requirements for the 1978 fiscal year and bring us back on course towards a balanced budget.

Mr. Warner: You created the debts.

Mr. Deans: Darcy, you created this deficit.

Hon. Mr. McKeough: The government’s success in trimming the public sector provides the opportunity to develop complementary borrowing and investment strategies. Accordingly, in this budget I am introducing a number of significant changes in the province’s long-run financial planning. These changes are explained in detail in budget paper C and in budget pager A.

Mr. Warner: You created it, now you explain it away.

Hon. Mr. McKeough: Consequently, I shall only deal with the main features in this statement.

First, the province will reduce its borrowing from the Ontario Municipal Employees Retirement System in the form of non-marketable debentures to $100 million in 1978-79 and to zero in following years.

Mr. Kerrio: He had to do that.

Hon. Mr. McKeough: This will leave OMERS free to invest its entire surplus in marketable securities in the private sector and in other marketable securities. I understand that OMERS will redeploy a substantial part of this additional capital into Ontario Hydro bonds.

Two, the direct lending activities of the Ontario Mortgage Corporation will be phased out as current commitments are completed. The province will commence immediately to sell back to the private sector institutions the large mortgage portfolio that OMC has acquired.

Mr. S. Smith: Just sell your assets -- $120 million.

Hon. Mr. McKeough: You ought to think about this before you say too much. You know, you’ve got more positions -- you’ll flip in the morning -- you’ve got more positions than Nadia Comaneci. You really have.

Mr. S. Smith: You flopped tonight.

Hon. Mr. McKeough: I said if he had more positions than Nadia Comaneci.

Beginning in the 1978 fiscal year, the province will switch its capital assistance to universities, school boards, hospitals and sewer and water projects from amortized loans to up-front grants. The Minister of Industry and Tourism (Mr. Rhodes) will re-examine the role of the Ontario development corporations as direct lending agencies --

Mr. Breithaupt: And a good thing too.

Hon. Mr. McKeough: -- and explore with the private sector alternative financing mechanisms such as loan guarantees.

These changes are of fundamental significance. In particular, the redevelopment of internal pension funds into private sector investments is an important achievement. This is directly attributable to this government’s success in reducing both our spending and our reliance on deficit financing.

The financing of Canada’s economic growth is itself a major challenge which we have to face. The trimming of government deficits is a necessary contribution to stable credit markets. In Ontario we have not borrowed in the public market on our own account for the past two years. We are not just concerned about the impact of government borrowing and of regulatory policies, but also the overall flows of funds in the economy.

Consequently my ministry will be expanding its analytical work in this area to provide fuller information to the government on the availability and cost of credit.

Mr. Foulds: If you don’t want to govern why don’t you resign?

Hon. Mr. McKeough: Mr. Speaker, the balanced package of tax proposals I have put before you, along with our restrained spending plan, will keep Ontario’s finances in sound shape.

Mr. Warner: Is this the best you can do?

Hon. Mr. McKeough: The revenue shortfall we experienced in 1977-78 represents only a temporary setback to our goal of a balanced budget. For the 1978 fiscal year I am estimating our overall cash requirements will decline to $1.55 billion --

Mr. Makarchuk: That’s what you said last year.

Mr. Swart: Same figure as last year.

Hon. Mr. McKeough: -- which is within $200 million of the target set in last year’s budget.

Mr. Makarchuk: This is starting to sound like a record that is stuck in its groove.

Mr. Cassidy: What about your budgetary deficit? How big is your budgetary deficit?

Hon. Mr. McKeough: This prudent fiscal plan means that once again Ontario will not need to borrow in the public capital market.

Mr. Peterson: You are proud of the stupidest things, Bill.

Hon. Mr. McKeough: Our non-public sources of funds will be more than sufficient to finance our cash requirements.

Ontario’s economic outlook is encouraging, however an early federal budget is important. I would expect that the federal Minister of Finance will introduce measures flowing directly from the first ministers’ communique --

Mr. Peterson: Under your leadership, of course.

Mr. Warner: Darcy for Premier.

Hon. Mr. McKeough: Ontario stands ready to respond to important federal initiatives.

Monsieur le Président, avant de terminer, je tiens à dire aux membres de cette Assemblée que le présent discours marque un moment important dans l’histoire d’Ontario. Pour la première fois au cours de 111 années que compte maintenant la Confédération, le budget de l’Ontario est publié dans les deux langues officielles du Canada. Monsieur le Président, je suis fier de remettre des exemplaires du budget en langue française au Premier ministre Davis, aux chefs des partis d’opposition et à mon collègue, le député de Cochrane Nord (M. Brunelle).

Mr. Sargent: You should have stayed in bed.

Mr. di Santo: The accent is terrible.

Mr. Peterson: Get the job of Diefenbaker.

Mr. Martel: Except in Ontario.

Mr. Makarchuk: It is still deficit even if it is in French.

Hon. Mr. McKeough: Mr. Speaker, very simply --

Mr. Makarchuk: You are a bad debt in any language.

Mr. Sargent: You should be on the Gong Show.

Hon. Mr. McKeough: You over there make a mockery of what your leader said; you really do.

Mr. Martel: Why don’t you recognize it officially then?

Hon. Mr. McKeough: For the first time in 111 years this budget has been produced in both official languages of our country --

Mr. Martel: That is called progress, it only took 111 years.

Hon. Mr. McKeough: -- something which I think we can all take some pride in.

Mr. Speaker, in conclusion, this equitable and constructive budget is thanks to the sound management and prudent financing policies of this government. It reaffirms our commitment to balance the budget and to promote a healthy economy.

Mr. Cooke: Throws people out of work.

Hon. Mr. McKeough: It builds upon our achievements at the first ministers’ conference.

Mr. Makarchuk: That’s what you said last year and the year before.

Hon. Mr. McKeough: It expands significantly Ontario’s job programs for young people; it cuts taxes to help tourism and the hospitality industry.

Mr. Cooke: It throws civil servants out of work.

Hon. Mr. McKeough: It introduces new long-term incentives for expansion of the mining industry; it restrains spending, yet meets the social and public needs of our people; and it prepares us for the challenges of the eighties. With faith in private enterprise and our control of the public sector. and with the leadership of William Grenville Davis, I believe our citizens can be confident of the future.


Mr. Peterson: Mr. Speaker, to give the assembled throng some relief, I move the adjournment of the debate.

Hon. Mr. Davis: Why don’t you say what a great budget it was?

On motion by Mr. Peterson, the debate was adjourned.



Hon. Mr. McKeough moved first reading of Bill 24, An Act to authorize the Raising of Money on the Credit of the Consolidated Revenue Fund.

Motion agreed to.

Hon. Mr. McKeough: This is the usual bill which we bring in at this time of the year to authorize our borrowing from the Canada Pension fund and certain other places.


Hon. Mr. Maeck moved first reading of Bill 25, An Act to amend the Tobacco Tax Act.

Motion agreed to.

Hon. Mr. Maeck: The purpose of this Act is to provide for the increase in the tobacco tax as indicated in the budget and also for an increase in the compensation to the tobacco tax collectors.


Hon. Mr. Maeck moved first reading of Bill 26, An Act to amend the Income Tax Act.

Motion agreed to.

Hon. Mr. Maeck: This bill is administrative in nature and is required under the terms of the tax collection agreement between Ontario and Canada.



Hon. Mr. Maeck moved first reading of Bill 27, An Act to amend the Retail Sales Tax Act.

Motion agreed to.

Hon. Mr. Maeck: Mr. Speaker, consequent to the Treasurer’s budget statement, this bill is to amend the Retail Sales Tax Act and includes provisions to enact proposals in his budget, but in addition the bill includes provisions to clarify the treatment of promotional giveaways and other similar material.


Hon. Mr. Maeck moved first reading of Bill 28, An Act to amend the Corporations Tax Act, 1972.

Motion agreed to.

Hon. Mr. Maeck: Mr. Speaker, this bill is to amend the Corporations Tax Act and it contains provisions to enact the Treasurer’s budget proposals, but in addition it includes several tax simplification measures and other administrative measures to bring Ontario’s law even closer to that of the federal government.


Hon. F. S. Miller moved first reading of Bill 29, An Act to amend the Mining Tax Act, 1972.

Motion agreed to.

On motion by Hon. Mr. Welch, the House adjourned at 9:35 p.m.