The House resumed at 8 p.m.
SECURITIES ACT (CONCLUDED)
Resumption of the adjourned debate on second reading of Bill 7, An Act to revise the Securities Act.
Hon. Mr. Grossman: Mr. Speaker, with the permission of the member who is about to begin, the member for Kitchener (Mr. Breithaupt), I did want to put on record the fact that this Friday in the weekly summary which is distributed throughout the securities industry, the members of this House will see some information which is headed by the words “Amendments to Bill 7,” the bill we are currently considering. Those are proposed amendments which we are currently considering putting before the committee when it meets to deal with this legislation.
Mr. Nixon: That is a breach of our privileges.
Hon. Mr. Grossman: In order to meet the anticipated comments of the member for Brant-Oxford-Norfolk, I wanted to take this opportunity to point out that we have been following the practice of publishing in the weekly summary notices of all our intended pieces of legislation, amendments and so on, so that we may get a full and complete response from the securities community prior to making a final decision on what amendments to make; and also so that the community will be in a full position to respond at the time we reach committee, rather than find out when we begin at committee that we suddenly have some amendments and they then have a limited time to appear before the committee and respond.
In the interests of that full and complete open process of consultation with the public which I spoke of just last Tuesday night on another matter, I wanted to point out to the members of the House that we weren’t trying to get around the ordinary procedures nor to announce things to the public which we weren’t making available to the House or its members. Accordingly, I am sending copies of these proposed amendments -- not definite amendments -- to my friends across the floor right now. I should add that none of them affects the principle of the legislation.
Mr. Speaker: The hon. member for Brant-Oxford-Norfolk defers to the hon. member for Kitchener?
Mr. Nixon: I do.
Mr. Makarchuk: And they lived happily ever after.
Mr. Breithaupt: I am pleased to present at this time my views with respect to Ontario’s new Securities Act. We will later then deal with the companion legislation. It is indeed gratifying to see this proposed legislation, which has finally come to second reading after its sixth introduction in as many years. In 1972, it was Bill 154; in 1974, it was Bill 75; then it became Bill 98 later in that same year. Finally, in 1977, it was Bill 20 and then Bill 30. I must say that after all of those drafts and the receipt of more than 50 briefs, we should be looking at the finest example of securities legislation ever presented in Canada, or perhaps in the world. Perhaps the only improvement which might come to mind would be if the bill was introduced by a Liberal administration.
Hon. Mr. Grossman: We can hardly wait that long.
Mr. Nixon: You wouldn’t then be fooling around with amendments.
Mr. Breithaupt: The minister says we can hardly wait. I don’t think it would have taken all that much time. The curious thing is that after six goes around we now have further amendments today. I suppose it is a never-ending process. However, I will take the minister, obviously, at his word when he says that these amendments will be dealt with further in committee. In spite of the 23 pages just handed to me --
Mr. Nixon: Rather voluminous.
Mr. Breithaupt: -- they do not, presumably, deal with particular matters of principle within the legislation.
Mr. Nixon: They were put in our hands at the very moment we rise and comment. That’s completely unfair, if not irresponsible.
Mr. Breithaupt: If it is only lawyers’ stuff, as the minister says, then perhaps we can indeed proceed to refer to the bill itself and not worry about them.
The government has had the benefit of time, certainly, in this first draft, which went back to 1972. The government has had representation from the industry in the form of numerous briefs. Fortunately, it has also had the benefit and expertise of two very knowledgeable men in their respective positions as chairmen of the Ontario Securities Commission.
Having watched the progression of these bills, I do feel that the new Act, as redrafted and reintroduced under the overview of Mr. James Baillie, our new superintendent of the securities commission, is really quite fair legislation. It would appear from the comments which we have received that the industry as such, those who are involved particularly with the administration of the securities market within the province, are also generally quite content with the legislation.
I would like to impress upon the minister that I think this does demonstrate the value of seconding one of the most credible persons within the securities industry, namely our new chairman, Mr. Baillie, to look over the proposed legislation and to give it the benefit of his own personal experience. Many of the smaller items in previous drafts which had concerned us have been patched up and corrected. I commend him for his involvement in this.
However, at this point I would like to briefly comment on some of the main areas which still remain points of concern that are no doubt going to be dealt with at the particular stages when this bill goes before the standing committee on justice. The proposed registration of financial institutions, such as banks, loan corporations and insurance and trust companies, with respect to their involvement in securities transactions, has definitely been clarified in Bill 7. The registration is now only going to be required where a financial institution buys or sells to a client, as a principal, from its own inventories; or secondly, if it is an underwriter. Banks and other financial institutions, however, may continue to transmit unsolicited orders on behalf of their clients to registrants for execution. This is vitally important because it provides a service for the public in areas of the province where there simply is no alternative but to deal through the local office of a bank or a trust company in a smaller community.
But at this point I think we should appreciate the nature of a bank’s role in a small town in the province, that it plays a very key role in the financial affairs of such a community. If that role is such that a bank might deem it desirable to be registered, then we would have to consider some of the problems which would arise from this registration. Not only would the situation have to be registered, the personnel dealing in securities would also have to conform to the basic educational requirements as set out by the Investment Dealers’ Association in order to be registered representatives. The problem here is that banks have a very mobile population, each member of which would have to become registered; which would make the whole procedure, in effect, unworkable.
More important, however, if this concept was to be made law and some financial institutions had to become registered, we would still have some distance to go in attempting to adopt the OSC regulation system as it presently stands to this new category of registrants. It appears there will have to be some further discussions on that particular section.
The continuous disclosure program provisions have been clarified to specify when the responsibility is triggered to make such a disclosure, and this was a concern previously. Another detail that has definitely been corrected is the replacement of the term “trade” with the words “purchase or sell” in respect of an underwriter dealing in the securities of a reporting issuer.
This, hopefully, will rectify a situation that could have involved breach of that section 75 by the mere act of the trading department of an investment dealer dealing in securities of a reporting issuer, for which the underwriting department of that investment house may have been aware of a material change without disclosing it. I’m confident that the discussions on that particular section, as they will deal with the in-house difficulties, are going to be interesting when this matter goes to committee.
The new list of exemptions from prospectus requirements has been structured on the expanded timely disclosure provisions. This new pattern of exemptions is detailed in the Act to replace the term “to the public,” which previously had to be defined whenever it was referred to. I suggest this latter is a more logical approach and is one which is to be commended.
I do feel that the financial disclosure requirements of the registered advisers and dealers have been clarified to some extent in this new legislation. However, there is still some room left for discussion on the onerous reporting that may result for this group on circulars, pamphlets, advertisements, letters, telegrams, or other publications issued by them.
If we are dealing with the reporting of inventories held by dealers, there is a danger of misrepresentation of those holdings. Dealers maintain inventories in order to better service their clients and their stocks are constantly changing. To have to report a position of financial interest on one particular day would be superficial in nature, since that position in all likelihood will have changed by the following day and therefore would involve constant revision.
Obviously, the intent here is to catch some who would like to dump a large inventory of a particular security, but surely we can come up with a better way to handle this than to overburden every dealer with a tedious reporting job such as the one which may result from this type of proposal.
In this portion of the Act, section 40 particularly, a technical change may be desirable in that the definition of underwriter goes back to the definition at the beginning of the Act, as opposed to the sectional definition. This would prove to be far too wide in nature, since “underwriter” would then even include members of a selling group. Would it really be worth the benefits of the extra disclosure from so large a group and would the information be useful if we did get it?
In the same section 40, a technical change may be desirable in that further definition could be developed; particularly as I said, in relation to the problems which may arise because an overburdening of additional information may simply not be worth the result.
Many of the proposed changes for the mutual funds industry have been deleted from this bill. This is because the entire mutual funds industry has contracted, having experienced many changes itself in the past few years. Previous changes that would have imposed excessive administrative costs for this industry have been removed. I feel that the new proposals are much more in line with the present operations of the mutual funds industry.
Perhaps the most major renovation of this bill is in the area of takeover bids. The private agreement that had been removed from previous drafts has been reinstated in Bill 7. This is a very important element because there has been a general feeling of uneasiness about the government’s removal of the public’s right to do something. That private deal with fewer than 15 shareholders is once again being permitted, with the trailer that where there is a change of control at a premium over market prices, the purchaser must make the same premium available to minority shareholders within 180 days. This may not be the ultimate solution for the protection of minority shareholders in take-over bids, but it is an attempt at a workable compromise for everyone affected in a take-over situation.
We are concerned at this point at a number of the details contained in this trailer that should be clarified. For example, is the offer to purchase all of the additional securities of the same class intended to include an offer to holders of securities that are convertible into securities for which the offer is made?
Secondly, does “consideration for security at least equal in value to the highest price paid” necessarily mean that the value is to be reflected only in the dollar price being offered, or could it in fact be reflected in another way, such as additional holdings of the companies shares?
We feel, therefore, that while there is a definite need for the protection of the minority shareholder at all times, we would like to be certain the specific details of the proposal in this section will guarantee that all parties, both majority and minority shareholders, will be treated fairly and equitably.
I believe that this new Securities Act is coming into force at a good time for our economy. All three levels of government are said to be practising restraint in their spending. This should free up more dollars for private sector investment. The Treasurer (Mr. McKeough) has announced his intention of redirecting some government pension fund surpluses to the open market-place, which will open up an entirely new source of funds for investment in Canadian securities. Indeed, even the Minister of Consumer and Commercial Relations (Mr. Grossman) has received certain press coverage in this last while, encouraging various of our insurance companies to do the same in their development and changes with respect to their investment policies.
Our economy will be greatly strengthened if we can direct the savings of so many Canadians into the market-place and redirect as well a portion of those government-supervised pension funds or those pension funds available to our insurance companies through our new Securities Act.
In 1976, gross new financing by Canadian governments and businesses through securities markets amounted to some $24.5 billion. This was made up of $15.6 billion from Canadian savings and some $8.9 billion from non-resident sources. This proportion undoubtedly reflects our ability to save, to create new capital, and to attract capital from foreign sources. However, the application of these funds is still a somewhat disturbing factor.
Sixty-nine per cent of the total amount was used to finance the three levels of government. Twenty-eight per cent went to debt and preferred financing, and a mere three per cent was directed to new equity for new businesses. That latter figure is down from 11 per cent a decade ago and it simply must be increased for a healthy growing economy.
It may be that government should play a role in the education of the public towards investing. What people don’t understand they tend to shy away from, and this is certainly reflected in the vast amounts of money Canadians will deposit in bank accounts, whether savings or even in some cases current, before they will in effect invest in securities markets. If we are to have a healthy, functioning Canadian economy, then that role of the government to educate the public in investing may well become a necessary role for this ministry in the future.
The Securities Act also comes along at a time when the investment industry has experienced a great deal of adjustment from the painful stock market situation of the last five years. The personnel involved have now shrunk by some 20 per cent and the number of investment firms is down by almost a third. However, as a result of this, the president of the Investment Dealers Association last year said, “We are now leaner, better managed, more innovative and smarter than ever before.” And that industry is in a good position to grow and face the challenges of some of the major financing that lie ahead, particularly with respect to energy-related projects.
There will be a great need for capital in the near future and there is a job to be done by the investment industry in directing the flow of capital to the desired growth areas of our economy. We certainly hope that this bill will play a role in fostering the investment climate necessary for the future prosperity of our economy.
We are committed, in this party, to the high standards of disclosure and investor protection which will be afforded through this new Act. We’re especially interested in encouraging and protecting the small investor, and we certainly look forward to the ensuing debate, and the amendments which will result when this bill goes to the justice committee.
Mr. Renwick: I have a strange sensation. I feel I know this bill backwards and forwards since it’s been around for so long in draft form. Perhaps with tongue in cheek. I want to congratulate the minister for having disgorged this piece of legislation finally and having it before the House for actual debate. I think the major drawback has been that it has been such a continuously long-drawn out, in-house discussion among the ministry, the industry and the commission that one has a sense of immobility in the commission and in the ministry with respect to matters affecting the securities markets.
If one were, for example, to look at the bill which is presently before us, the predecessor of the bill and the predecessor of that bill, even for a few minutes, one would recognize that the provisions which were necessary for the protection of the markets in securities, assuming that they were necessary, have been missing from the marketplace for a long period of time. I think that raises extremely serious questions about the entrenched nature of the commission and about the entrenched nature of the vested interests represented in the securities industry.
I don’t think there is anyone using any indices with respect to those markets who can today objectively evaluate whether or not they are serving the public interest at a cost consistent with the benefit we derive from this type of overall regulatory authority. I am quite aware that the securities industry has a long history of requiring supervision by government. I know there is a long history involved in the development and evolution of the Securities Commission in the province of Ontario. I know it is bolstered by a very competent staff who have a very real interest in extending the authority of the commission in the field of regulation of the securities market. I know there is a kind of a love-hate relationship between the industry and the commission that prevents the industry from making any onslaught on the commission because they are constantly involved with the commission.
We all know that the industry itself, particularly the special pleaders through my profession, the accountancy profession and others, have long since in the pressure of day-to-day business, lost any sense of an objective reappraisal of what role the commission is supposed to fulfill. It does seem very strange to me that a government which professes now to embrace a fashion of the day related to sunset laws and deregulations should, in a ministry fraught with regulations and with wide powers of regulating all kinds of industry, introduce to us tonight this bill and also Bill 8 dealing with the commodities futures market, which represent an immense extension of the power and authority of the Securities Commission.
I understand that they will tell me that it’s really a rationalization of the process, that the whole purpose of it is to make the impact on the industry less, that the whole purpose of it is to remove the hindrances which the commission imposes on that industry. But when we examine historically the nature and structure of the Securities Act which is again before us tonight, we can see very clearly that through a combination of regulatory requirements with respect to registration and with respect to disclosure, an approval of the existence of the Toronto Stock Exchange in a supervisory role in connection with the rules and regulations of that exchange in the way in which that market accomplishes its purpose, as well as the wide power of regulation granted in the latter provisions of the Securities Act and the power of exemption in various areas related to the securities industry, we can see that the Act is devised in such a way to make the securities industry in Ontario beholden day in and day out to the commission. They are either there trying to find that they fit within the requirements of the registration provisions or that the prospectus meets the requirements of the regulations and the forms which are required by the commission, or they are there seeking to expand and enlarge upon one of the areas of the exemptions so that they can see whether they can escape the net of the Securities Commission, or they are there begging the Securities Commission to exercise the extremely wide discretionary powers vested in that commission.
I just want to say that I am glad the bill is here. I am glad it is going to be passed. It’s late; it’s too late in relation to the evils which many of the provisions were directed towards. It will be helpful in the future, I am not denying that, but I am saying that I have the sense that many people in this ministry and in the commission feel that this is somehow the culmination and the end of the road and that we now have a fine Securities Act which is going to guide us for a long time into the future.
I want at least to implant in the minister’s ear, and in the ears of those members of the commission and its staff who may have occasion to hear or read what I have had to say, that I have a strange suspicion that there are so many questions left with respect to the securities markets in Ontario that it may well be that it is time for an independent body -- not the advisory body; an independent, carefully selected, small group of persons, either as a task force of the ministry or as a commission of some kind -- to investigate it and to ask a number of very pertinent questions about the commission and its role.
I have tried to make some effort to write down what I think that body should try to direct its attention towards. The questions I would like to ask are these: Is it not now time to redefine the purposes and objectives of a corporate disclosure system? Is it not time to assess the present system in the light of those objectives? Is it not time to assess the costs of the present system? Is it not time to weigh those costs against the benefits it supposedly produces? And is it not time now to think about recommending any changes which may be necessary or appropriate in the light of the answers that may come out of such an objective consideration of the role of the commission?
I am not particularly sanguine about any commission, let alone this commission, that has such a wide ambit of authority, a continually expanding ambit of authority and one almost consecrated in the history of Ontario by its existence for at least more than 40 years if not longer. It does seem to me that the minister has an obligation to require the kind of study of that commission towards which I have, at least in very general outline, directed my attention.
I am always struck, when I have occasion to compare the kinds of lucid statements which are made by way of annual reports, releases and other documents by the Securities and Exchange Commission in the United States. They seem to justify their existence by being right up to date. I don’t mean that they’ve solved all the problems in security transactions, but they certainly appear to be current with the problems that require their attention. They are not bogged down in dealing with the routines of the matters which can be dealt with by an efficient staff in the commission. The commission is directing itself towards very real evils.
For example, I have not seen anything -- and I may be wrong -- from the commission dealing with the question of the disclosure by issuers of any illegal or questionable corporate payments. I don’t think any of us, now, in Canada, after the events which were disclosed in Ottawa, are so sanguine as to believe that Canadian industry escaped the very kind of illegal and questionable corporate payments which were made by corporations in the United States. A very real facility was provided through the Securities and Exchange Commission for those corporations to come forward and acknowledge the kinds of payments which had been made, what their purposes were, and to in some way or other exonerate themselves for the future. I know of no such questions which have been raised by the Securities Commission with regard to disclosure for prospectus purposes or for timely disclosure purposes by the companies which are listed on the exchanges.
I know, for example, of no consideration which has been given as to whether or not any pressure has been brought to bear on any of the securities dealers in the province of Ontario with respect to the Arab boycott. I have no knowledge or no idea about those matters, other than what I read in the United States press. There were instances, not within the United States but references with respect to issues abroad. I don’t know whether or not those are matters to which the commission here has ever addressed its attention. I certainly haven’t seen any such current matters.
It is quite fashionable, of course, to say that white-collar crime is very difficult to detect, and very difficult, once detected, to prove in a criminal court. But I do not see any indication that there is any correlative program in the commission here in Ontario, such as there is with the Securities and Exchange Commission in the United States, of an organized crime program to make certain that fraudulent practices do not creep into the securities industry in the province of Ontario.
We have seen no public statements, in any event, of the extent to which this commission co-operates with other enforcement agencies within Canada or abroad in respect of the detection and elimination, to the extent possible, of white-collar crime in the securities field.
I know of no list published in Ontario which is equivalent to what is called the “foreign restricted list” which is published in the United States. I find on that list a number of companies which are designated as Canadian companies and which have been listed for evading United States securities laws.
I have no sense, if I may say so, that there is a vitality and life in that commission which is consistent with the obligations which it has if it is to justify its continued existence and its continued role.
It may well be, and we will have an opportunity in committee, as we go through the various parts of the Act and the various specific provisions of the Act, to touch upon some of these matters. Tonight on second reading of this bill my overall concern and that of our caucus -- the stock exchange is not at the core of socialist philosophy but our caucus certainly is not going to oppose the legislation -- is that it appears essential to us that some group of competent people stand back, take a cold, hard look at the Securities Commission and decide whether or not the cost is equal to the benefit which it contributes to the industry.
I have no problem in recognizing the need for disclosure provisions. I have no problem in recognizing the need for honesty in the marketplace. I have very real problems in deciding, as I read, or try to read, from time to time the weekly summaries and the monthly bulletins of the exchange, the extent to which the commission is alive and alert to the threats that may exist in the marketplace.
I have gone on sufficiently on that particular issue as I know the minister will recognize that perhaps there’s some modicum of thought and necessity in the point which I have tried to put forward. It does seem to me that whether one views the securities market in Ontario as an off-shore adjunct of the United States or whether one views it as part of an expanding and national system of securities regulation, whether it’s done under the aegis of the federal government or whether it’s done by very close and intimate co-operation between the securities commissioners in all of the provinces is not a particularly relevant concern as to how it is done. But if it is going to be part of a national system or if it is going to be simply an off-shore product of the United States, as many people perhaps think it is, then it does seem to me there has to be an awareness and an alertness in the commission to the problems which are involved; and an obligation to publish the areas and to announce the areas in which they have concerns or in which they’re carrying out their investigations.
I think in some ways the commission is at fault. I repeat what I said at the beginning. I quite understand that it is a competent commission. There is no problem about that. I quite understand that it is proud of its history as a protection to the investing public in the province. There is no difficulty with that. But like all people who are closely involved on a day-to-day basis with an industry which has been regulated in a particular manner and for particular purposes over a long period of time, it may well be time to stand aside and look at that commission.
I do not think it would be possible to ask the Wiseman committee to look at it. I would say to them that if they could find some way of dismantling the Securities Commission of the province of Ontario, we wouldn’t have to have any other boards or agencies or commissions of government. This particular commission is in a very special position, next to, side by side with if not ahead of, the Ontario Hydro-Electric Power Commission as an agency of government which is vested in with its interests to such an extent, and with such a pride in the work which it does carry out that one no longer has any real sense as to whether or not they are alive and alert to the problems which must be existing in the securities market.
We’ll have an opportunity, I trust, in committee, to go through the various clauses one by one and see what wonderful changes have been wrought in this bill which has taken so long to come before the assembly.
Again I congratulate the minister for at least having got it in front of us so we can deal with it in the hope that it will become law.
Hon. Mr. Grossman: Mr. Speaker, I want to acknowledge the remarks of the member for Kitchener. He has well highlighted some of the important changes and conceptual turnarounds that have occurred, particularly over the last period of time. I appreciate both his acknowledgement of those and the importance of those. We look forward to the committee stage for deliberation of these items because, as evidenced by the series of amendments that we are still considering at the present time, we acknowledge the complexity of it and the need, now that this bill has finally got this far, for input and dialogue with all members on the committee in order to finally come up with a scheme which is as current as possible.
The member for Riverdale began by noting the fact that we finally disgorged the bill. I feel obligated to note, especially in the presence of my predecessor, the member for Carleton, that but for the election that occurred last year, regardless of who may have been responsible for same, no doubt my predecessor would have had the pleasure of standing in his place last year and having a bill -- I guess it was Bill 30 at that time -- passed last spring; however, here we are today.
Mr. Foulds: That was an unnecessary election, wasn’t it?
Hon. Mr. Grossman: Of course it wasn’t.
In any event, I listened carefully to the remarks of the member for Riverdale. I noted his comments with regard to the fact he was concerned that there had been too close a relationship between the commission, the ministry, and the industry, to permit the full open type of -- to use his words -- “onslaught against the commission” in order to find out the relevancy of the commission or its aggressiveness.
I have heard his challenge put to me this evening to have a committee get into the study of the role of the commission and its place. I say to him that if I, at the conclusion of a lengthy period of time, share those concerns, then I might consider that. However, I think it would be very premature at this time; for a couple of reasons.
First, I think the bill we are discussing this evening, Bill 7, will begin to open up a new era in terms of the relationships between the public at large, the industry, the investors -- small and large -- and the Securities Commission. I think we ought to let that develop before we jump to any conclusions that there is too close or too much of a “love-hate relationship” -- to use the words of the member for Riverdale -- between the industry and the commission.
I also want to say it is premature for a second reason, and that is that we now have on board a very fine new chairman of the Securities Commission. He is someone who comes, as the member for Riverdale well knows, from the streets, from practising law on the other side of the counter, having dealt with, as some would see it, the problems of dealing with the commission, having fought with the commission indeed over a period of years, knowing the administrative problems that have developed.
Mr. Foulds: That proves a love-hate relationship, does it not?
Hon. Mr. Grossman: He is in government and taking this job -- not forever as he will be the first to admit -- but he reminds me very regularly that he is on a short-term proposition to see just what he can do.
Mr. Breithaupt: Of course you may be too.
Hon. Mr. Grossman: Before he and I are both finished, we are quite seriously determined to make a very careful and detailed study of the entire regulatory process through the Ontario Securities Commission. In other words, I am quite prepared to accept the challenge put this evening by the member for Riverdale (Mr. Renwick), and together with Mr. Baillie, I can assure him that we are doing that type of scrutiny to ensure that, in the member’s words, the cost-benefit angle of it is assessed and noted; and that we are sure that the cost, as he would have it, of the entire process, is worth the benefit we get out of it.
I must say that I think the member, probably mistakenly, referred to the benefit as being the benefit to the industry, when in fact the Securities Commission is structured, and its rules and regulations are structured, to provide the major benefit, of course, to the consumer, the small investor who needs the protection of the registration procedure, and the continuous and timely disclosure procedures, in order to make fully-informed wise and careful business decisions. On that count, I have no hesitancy in saying that the cost of the current scheme is well worth the consumer protection that the Securities Commission and Bill 7 together provide.
The member for Riverdale noted, Mr. Speaker, that he thought it was strange that in this period of time a Conservative government would be bringing in legislation that creates an immense increase in the authority and power of the Ontario Securities Commission. I say that, quite the contrary, I think that the thrust of the new bill is to regularize procedures, to remove some of the arbitrary powers of the Ontario Securities Commission and to take some of the guesswork out of the entire industry. We want a situation where investors, businessmen, their lawyers and advisors, are not sitting in downtown Toronto trying to guess what is about to happen with the particular new issue they may have or the particular transaction they have in mind. Rather than having to guess, and risk guessing wrong, rather than have to come, cap in hand, to the Ontario Securities Commission on a regular basis, making a submission for permission to carry on a transaction, this bill would turn things around so that as much as possible in this very difficult field, the rules and regulations are codified. So that the industry, the people affected, can know what the ground rules are, as much as possible, and so that they may know that whatever the Securities Commission does it will be bound by a certain set of codified rules and there will be consistency out there and predictability. At this point in time the economic problems faced out on the marketplace, and in the economy at large, have been noted by the member for Kitchener, and one of the key problems continually identified by all areas of business and the economy at large, is the need for some consistency, some reliability, some predictability with regard to what rules are in place and what the future holds.
We think this is what is done in this piece of legislation, and we think that is a very important concept.
The member for Riverdale has reflected that he is concerned that this is treated by us as the end of the road. Indeed, I think I ought to share with the House some of the concerns that I and Mr. Baillie had -- I hope that is not another globe falling from the top.
Hon. Mr. Maeck: It’s the light-shattering speech you made.
Mr. Breithaupt: Somebody doesn’t like you.
Mr. Lawlor: It’s your halo.
Hon. Mr. Grossman: It’s not slipping again, is it?
The member has reflected that it is not the end of the road, and I wanted to go over what has happened in the last few months with Mr. Baillie and myself. When I first came on board in September, obviously we were just about the stage at which the Legislature was reconvening for the fall session, and I gave some careful consideration to commencing immediately with what was then known as Bill 30 -- obviously it would have had another number had we introduced it last fall -- and trying to get it passed last fall. I consulted with Mr. Baillie -- who hadn’t yet joined the commission, he was to join on January 1 of this year -- at that time we had rather extensive discussions as to whether we would go intact with what was then Bill 30 and worry about amending it and updating it at a later time in accordance with what he and I thought about the philosophical changes that ought to be made in the bill, presuming we could get them through cabinet; that is, to do it in a two- or even three-stage process.
After extensive discussion with Mr. Baillie, he and I reached the conclusion that it would be better to hold the bill off to the spring, until today, in order that we might carefully assess all of the matters referred to by the member for Kitchener this evening, and other matters which are reflected in the bill and in some of the amendments members have received this evening. We thought it important, precisely because we don’t treat this as the end of the road, but precisely because we treat this as an ever-changing situation requiring careful and immediate attention and modernization on a day-to-day basis. Rather than being bound with a lot of sections that had first been written in 1972 and pretending we were doing the world a great service by finally passing that into law, we thought that as the bill had gone through a couple of changes since that time, it was now necessary to make sure that it reflected current economic conditions, current market concerns, current consumer concerns and current investors’ problems. So we held it off to this spring.
I want to tell all members of the House that while I can’t report for the processes carried on in drafting each of the predecessor bills to Bill 7, I want to tell them we have spent an extraordinary amount of time assessing each and every part of this bill. We are pleased with the way it is today, but we are also determined to continue to modernize it, check it out, see how it works, and not to treat this by any stretch of the imagination as the end of the road.
I think proof of that is in the series of amendments I sent across to my friends a couple of minutes ago. Rather than live with a bill, hope that we get it through and then clean it up next fall or next spring, we are determined to continue to follow our consultative process with the public at large, and the industry specifically, and to have the best possible bill we can have at each point in time. We have followed the process right through since the time I came on board, and Mr. Baillie came on board --
Mr. Foulds: What’s with these nautical metaphors?
Hon. Mr. Grossman: -- of publishing in the weekly summaries all of our current thoughts so that everyone could know exactly where we were. We don’t want to close off future options, and we are never going to be in a position in which we rule out any further amendments or changes just because of the hassle, as some would have it, of putting bills through the House. We are going to continue to make it relevant and modern.
Rather than take the time of the House this evening to respond to each and every comment made by the member for Riverdale, many of which will be more appropriately dealt with at estimates when the role and day-to-day activities of the commission ought more properly to be discussed, I did want to close by referring to a couple of things in passing. We want to emphasize at this stage that efforts are in progress now to expand the scope of self-regulation. Draft regulations regarding self-regulation in the area, for example, of portfolio managers’ activities are currently outstanding.
The question of illegal payments was raised by the member for Riverdale. I want to tell him right here that that matter is currently under study by the Securities Commission.
Finally, there was some suggestion that the Securities Commission really is not on the ball, as it were, in terms of investigation. Needless to say, members of the police forces are in constant contact with our staff and our staff is in constant contact with securities administrations, provincial, federal and state administrations, throughout North America. There is close co-operation on a daily basis at that level. Whenever the assistance of local police forces and provincial police forces are required, they are very much available to us.
In closing, I want to refer back to a couple of remarks of the member for Kitchener, because I didn’t acknowledge them and deal with them at the top of these remarks. He referred to the matter with regard to banks in smaller communities, and I want to assure him that we have been discussing this problem with the banking community -- and these active discussions are under way now -- to find a way in which banks can continue to play that important, effective role in smaller communities and still meet whatever the requirements of Bill 7 ultimately are going to be.
Finally, the member for Kitchener also raised some problems with regard to section 40 of the legislation. Right now, I can’t say what we might propose at the committee stage, but we acknowledge that some problem may exist with regard to section 40. Discussions are currently under way between the members of the industry who would be affected and the commission in order to see if we can improve that section somewhat while retaining the amount of consumer protection the section is all about.
I might add that I appreciate the co-operation of the House, at least at second reading stage, in order finally to get this piece of securities legislation through second reading and on to the important committee stage.
Motion agreed to.
Ordered for standing committee.
COMMODITY FUTURES ACT
Hon. Mr. Grossman moved second reading of Bill 8, An Act to regulate Trading in Commodity Futures Contracts.
Mr. Breithaupt: Mr. Speaker, I feel that this is a fairly straightforward and reasonable piece of legislation. There is no doubt that this newly developing type of security transaction requires some basic regulation. The bill before us is not unduly complicated and it reflects the changes which the commodities futures markets are now being seen to have within the Canadian context.
I am confident that as this market matures over the next decade or so there may be more revisions brought in. There may indeed be revisions that the minister will give to us tonight; I don’t know. But at least this new kind of securities requirement is going to require some basic ground rules, and no doubt we will have bills over the years to come which will also deal with this particular subject as the practice becomes somewhat more refined.
We do share with the persons who are involved in this portion of the securities market a concern over the definition of the word “hedger,” particularly in the light of the fact that the American authorities have had very complex legislation on this particular matter for years and they still seem to have definition problems with that word. Perhaps we may be able to come up with some sort of a better and more workable definition in committee; and for that, no doubt, we will have the opportunity of having comments from the members involved in this futures trading operation in the securities market.
There are certainly other mechanical changes which I need not refer to at this time and which can be dealt with at the committee stage. We no doubt will look forward to receiving input from various members of the industry when we have the opportunity to deal with this in the justice committee. We will certainly support the bill on second reading.
Mr. Renwick: Mr. Speaker, we in this caucus are certainly not opposed to this bill on second reading. I don’t pretend to have any special or particular knowledge in the field of commodities futures marketing, but I do, as always, find it eternally fascinating when any market is run as an auction market.
The bill itself, so far as I can understand it, is modelled for practical purposes on the Securities Act which has just had second reading, and again is part of an immensely extended grant of jurisdiction to the Securities Commission. It’s immense in the sense that, as I understand the bill, it will do about half a dozen things. It will require the registration of any commodities futures exchange as a condition precedent to carrying on business in Ontario and will provide for a continuing control over such an exchange when it is established, with the ultimate sanction in the commission of revoking that legislation. It will require the registration of any person that’s a dealer or a salesman or floor trader as a condition precedent to trading in futures contracts. It will require the registration of any person as an adviser as a condition precedent to acting as an adviser in these markets.
Although it’s worded as a prohibition, it will require all trades in contracts to be on a commodities futures exchange registered by the commission or recognized by the commission. It will provide for the recognition of commodities futures exchanges outside Ontario for trading purposes. It will require an acceptance of all the forms of contract as a condition precedent to being traded in Ontario and a continuing control over the form of those contracts. So, in a sense, it is modelled upon the Securities Act and is a very extensive grant of jurisdiction to the commission.
I would appreciate it if the minister, in the course of his remarks, would advise the assembly of the intentions of the industry and of the commission with respect to the establishment of the exchange in Ontario, both as to its physical location and the time at which it is anticipated that it will be established.
I had occasion to look at some of the remarks which were made by the president of the Chicago Board of Trade before the House committee on agriculture in the United States and the subcommittee on conservation and credit at the recent hearings. The establishment of that exchange in the United States was done on the basis of a sunset law and the commission has been required to justify its continued existence and its objectives before any further funds will be provided for it.
I did want to quote very briefly from those remarks, because it is clearly the desire of the Board of Trade in Chicago -- which, after all, if it is not the oldest is certainly one of the oldest of the commodities exchanges in the United States. He believes that it’s not an appropriate function for the Securities and Exchange Commission to regulate this particular industry but that there should be a separate, independent commission having exclusive jurisdiction with respect to that kind of business. In his remarks he said:
“First, let me reintroduce the Chicago Board of Trade. We are the largest of the 10 domestic commodities exchanges and 130 years old.”
They say in parenthesis that this is from the evidence which he gave before that committee on February 22 and repeated in some substance when he reappeared before the committee towards the end of March.
“The 23 million futures contracts traded on the Chicago Board of Trade was 54 per cent of all futures volume in 1977. On some days trading in particular commodities occurred at a rate of five contracts per second; and of the eight most active commodities in 1977, six were Chicago Board of Trade contracts.
“About five million futures contracts of the 23 million traded on our exchange in 1977 were by the ordinary public trader. A similar part of the 1977 volume came from commercial companies hedging in our market.
“But let us not overstate the size of the futures business, as in reality it is a fairly small one, at least in terms of regulatory burden. There are only 10 operating futures exchanges today and all futures contracts, about 60, originate and must be traded there. Clearly the futures business is infinitely more centralized, more easily and inexpensively regulated, than an industry like securities.
“On the other hand, the regulatory task is sufficiently large, and so highly specialized, that it should not become a sideline for another regulatory agency -- ”
If my colleagues would let me have the attention of the minister, I would really appreciate it.
Hon. Mr. Grossman: If you’d let me have the attention of your colleagues for 30 seconds, they’ll be through.
I’m all yours, thank you.
Mr. Renwick: I just want to repeat it because of the point which is being made.
“Let us not overstate the size of the futures business, as in reality it is a fairly small one, at least in terms of regulatory burden. There are only 10 operating futures exchanges today and all futures contracts, about 60, originate and must be traded there. Clearly the futures business is infinitely more centralized, more easily and inexpensively regulated, than an industry like securities.
“On the other hand, the regulatory task is sufficiently large, and so highly specialized, that it should not become a sideline for another regulatory agency, as the SEC has proposed. As the exchange most likely to gain from sound regulation, or to suffer from poor regulation, we offer some observations as well as some specific recommendations concerning the activities of the commission over the past three years.”
Well, obviously, because of the study which was made, the choice was made by the government that this should become an adjunct of the Securities Commission. There is some indication that one of the commissioners will be a person knowledgeable in this field, but that in a very real sense it is the belief and intention of the government that this particular industry, distinguishable very clearly in its essential features from the securities industry, is going to be managed by a commission which does not purport, as I understand it, to have any specific expertise in the field.
I quite understand that the study director for the report of the interministerial committee on commodity futures trading, which was presented in 1975, is with the commission. I do understand that of the interministerial committee that was dealing with it, in their foreword to the report they indicate quite clearly that the only continuing knowledgeable person available to them was from the Ministry of Agriculture and Food.
It is true that Dr. Mohide, from the Ministry of Natural Resources, was available for consultation from time to time, but in fact there is a very clear acknowledgement that the commission does not hold itself out to be knowledgeable in the field; and I would certainly ask the minister to comment again about the point which has been made by the president of the Chicago Board of Trade, that it should be a separate and independent commission.
The next point I would like the minister to perhaps comment on is why, if the ministry would decide that it could be a separate and distinct commission, and because the great bulk of the commodities futures traded on that exchange are going to be from the underlying agricultural market, why it is not possible in some way to relate that commission to the Ministry of Agriculture and Food, even though there are non-storable items which will be traded on that exchange because of the expanding nature of the market for future contracts.
Nevertheless, it is essentially a device for relating and keeping under control the present cash price and the future price of agricultural commodities from month to month. I would like to have some clear indication as to why it is necessary for the government to feel that the Ministry of Consumer and Commercial Relations, through the securities and exchange commissions, believes that it should be involved in the regulation of the market-place, where the basic control and stabilization factor of agricultural prices appears to take place. And I emphasize again some of the sense I have that it may well be, as was the case in the United States until quite recently, that the Ministry of Agriculture and Food has an extremely important role to play in connection with such a commission.
Hon. W. Newman: We’re allowed to look after the agricultural people so that can be balanced off from the process of this bill. No problem.
Mr. Renwick: No, I think the Minister of Agriculture and Food, as so often, misses the point. He sees that agriculture at the one end is the product of the farm and the food at the other end is what the consumer buys and in between is the process by which the prices are established for the basic commodities in the market-place.
I am not asking the government why the Minister of Agriculture and Food doesn’t want the responsibility, I’m asking the government why it doesn’t see fit to establish a separate, independent commission for the purposes of regulation of this particular industry, and establish it under the aegis of the most appropriate ministry, the Ministry of Agriculture and Food.
Hon. W. Newman: I appreciate that.
Mr. Renwick: That was the case in the United States until quite recently with the independent commission which has been established. There were substantial representations, again made just this year by the president of the Chicago Board of Trade Clearing Corporation, that from their point of view it should go back to the Department of Agriculture as the appropriate place for the regulation of that market to take place, despite the fact that there is trading in futures with respect to currencies and with respect to mortgages and all sorts of new gimmicks that have come into that market But the basic underlying part of that marketplace is in fact the agricultural commodities from which and within which it had its origin.
I would hope, perhaps, that the Minister of Agriculture and Food would indicate why he doesn’t want to have that responsibility, and I would like to have a clear explanation, which is not available as far as I could tell in the report of the interministerial committee, as to why the appropriate place is not under a different ministry rather than, if I may use the phrase, cluttering up the Ontario Securities Commission with this new responsibility so far as that particular market is concerned.
I was, of course, very interested to look at the figures as I tried to get some sense of the size of the market. The latest figures I have on the 10 commodity exchanges in the United States show something of the volume and the range of the commodities which are subject to trading in those exchanges: The Chicago Board of Trade, about 19 million contracts traded; the Chicago Mercantile Exchange and International Monetary Market, about six million; the Commodity Exchange Incorporated, about 5.5 million; the Mid-America Commodity Exchange, about 2.2 million; the New York Coffee and Sugar Exchange about 1.175 million; the New York Cotton Exchange, the wool associates about 7,000-odd, and the citrus associates about 1,958, for a total of something over one million contracts. The Kansas City Board of Trade Incorporated about 688,000 contracts; the New York Mercantile Exchange about 640,000 contracts; the New York Cocoa Exchange about 334,000; the Minneapolis Grain Exchange about 228,000 and the Pacific Commodities Exchange about 1,512.
The total of all the exchanges in 1976 was some 37 million contracts. Presumably, from the evidence of the president of the Chicago Board of Trade in 1977, there was a substantially higher number of contracts in 1977.
It does seem to me that with the experience and the expertise in the United States there may well be a good reason to establish a separate commission. From the point of view of the adequacy of the marketplace to protect not only the person who enters that marketplace, but also to protect the ultimate interest of the consumer in the price of agricultural products, as they reach him through all of the various intermediaries in the agriculture business, at his table, perhaps the proper place is to repose the responsibility in the Minister of Agriculture and Food.
There are a number of other matters which undoubtedly we can deal with in the committee, but I would appreciate the minister’s comments on those particular points which I have raised.
Hon. Mr. Grossman: I think it’s fair to say that the essence of the member for Riverdale’s remarks relates to the reasons for not following the route of having a separate apparatus entirely for the regulation of commodity futures contracts. I think a good point of beginning is indeed the Report of the Interministerial Committee on Commodity Futures Trading, 1975, to which the member referred. I’d refer him to page 85 of that report, paragraph 8.21. I think a reading of that section directly is relevant because it sets out quite straightforwardly the reasoning which went into that committee’s deliberations, and which we have adopted and accepted.
Starting at 8.21, and we’ll read all of it, it says: “Three briefs, including that of the Investment Dealers Association of Canada, recommended regulation of commodity futures trading though a separate Ontario commodity futures commission. The OSC itself recognized that the Securities Act was not the vehicle to bring this type of trading under regulation. However, it is questionable that the size and scope of the problem, particularly in the absence of a commodity exchange in Ontario, coupled with the fact that much of the trading is presently done by existing security dealers, warrants a completely new bureaucracy.”
Paragraph 8.22 goes on: “We have concluded that the task of establishing and supervising this regulatory scheme and administering the new legislation should be given to the OSC, utilizing, so far as possible, their present staff. The proposed legislation involves a scheme of registration and supervision. Many of the potential registrants and advisers presently hold registration from the OSC as securities dealers and salesmen. The commission has in place administrative machinery which, it might be suggested in light of the existing securities market, has the capacity to undertake additional licensing tasks.”
I go on then to paragraph 8.25.
Mr. Renwick: I take it that the government has accepted the report of the interministerial committee holus-bolus without any independent consideration of the problem.
Hon. Mr. Grossman: My friend, the member for Riverdale, then presumes that because we have accepted paragraphs 8.21 and 8.22 and 8.25 out of a 127-page report it means we have accepted the entire report, holus-bolus.
Mr. Renwick: I am asking the minister is that what he has been telling us? Is that government policy?
Hon. Mr. Grossman: Specifically, I am pointing out that we have accepted the reasoning set out very well in the three paragraphs I am referring to; and I am picking those three paragraphs specifically because those emphasize the pattern of reasoning which we have accepted and followed in our legislation.
It goes on, in paragraph 8.25: “To duplicate the administrative machinery available through the Ontario Securities Commission’s existing registration program would seem wasteful. The commission and its director would be charged with the administration of the new Act ... ” and so on.
That is the essence of the case. We feel that in view of the scheme we feel is necessary at this time for the commodities futures contract business in Ontario, that the Ontario Securities Commission is the best and least expensive and least bureaucratic type of system we need at the present time.
The member for Riverdale has referred to the United States’ example. I should point out to the member that in the United States the scope of regulation over futures trading -- and by the way cash transactions -- is much greater than is intended in the bill before us this evening.
The sphere of regulation in Ontario, on the other hand, will be limited to areas in which the OSC has a vast store of experience, such as registration of dealers and advisers.
That is the thrust of the legislation tonight and that is the exact area in which the OSC has its confidence and experience.
Mr. Lawlor: You should develop a commodities market.
Hon. Mr. Grossman: As to the regulation of the most important exchanges in the United States on which contracts are traded, this is left to the CFTC, the Commodity Futures Trading Commission, a federal regulatory body in the United States.
Mr. Lawlor: I am only interested in one thing.
Hon. Mr. Grossman: The scheme we have opted for on the other hand avoids the establishment of yet another level of bureaucracy when we feel the job can be done by an existing body.
The member has also questioned why the Ministry of Agriculture and Food is not handling a commodities future exchange. First, the emphasis in this legislation, as is the case in our securities legislation, is protection for the small investor, the person who is going to go into the market and buy and trade these contracts. That is the proper role for the Securities Commission, whether it is dealing in the securities as we’ve always known it or commodity futures contracts.
Hedgers as defined in the legislation are the people who genuinely need the advantage of this sort of market in order to level out fluctuations in prices and to have some consistency and reliability with regard to what their future position is going to be in the very commodities and products which they grow and make their living from. They are properly the subject matter of the Ministry of Agriculture and Food, whether it be through marketing boards or whatever. They are taken out of this legislation, hedgers are not in it. This legislation deals with those people, essentially, who are advising and participation in the speculative angle of commodities transactions.
Mr. Lawlor: You notice the minister has left. He thinks hedger is somebody who jumps over a hedge.
Hon. Mr. Grossman: No, he thinks a hedger is an opposition party which jumps on both sides of every issue.
Mr. Warner: Look who’s talking. Claire Hoy’s favourite.
Mr. Samis: That’s not what Claire Hoy said.
Hon. Mr. Grossman: In any case we see our role as very important as the ministry, and as the vehicle -- that is the Ontario Securities Commission -- which has historically protected the small investor when he is dealing in securities as we’ve known them or an item called a commodity futures contract. We think that this is the appropriate point at which the regulation should occur.
I acknowledge and note the support, at this stage in any case, in this assembly for the need to regulate the commodity futures market.
I urge this bill upon the House as a very efficient, simple, easy mechanism to provide consumer protection, to look after the people who really need disclosure, full information and the protection of the Ontario Securities Commission type of scheme. We think it will work and we think it will do the job without another layer of unnecessary bureaucracy; indeed without the type of duplication that the member for Riverdale was concerned about in the previous bill, Bill 7, without the type of cost benefit concern that may emanate if we set up a separate regulatory scheme on top of the Securities Commission scheme. I urge this type of system on the House.
Motion agreed to.
Order for standing committee.
BUSINESS CORPORATIONS AMENDMENT ACT
Hon. Mr. Grossman moved second reading of Bill 9, An Act to amend the Business Corporations Act.
Mr. Breithaupt: Mr. Speaker, the Business Corporations Act is being amended in a number of ways.
First of all, all elements of investor disclosure, the matters of insider trading and reporting, and the other things which I referred to in my comments with respect to Bill 7, have been deleted from this Act and are now incorporated in that Bill 7.
There are some other changes, such as certain provisions with respect to contents of financial statements for corporations offering their shares to the public, which are as well deleted from the Business Corporations Act and will be incorporated into the Securities Act. We think certainly it is most appropriate to have those particular items all in the Securities Act, where we believe they belong; we certainly support the bill as a companion item to Bill 7.
Mr. Renwick: Mr. Speaker, just as a complementary bill, we would support Bill 9.
Hon. Mr. Grossman: Mr. Speaker, there is obviously nothing to add to this. It’s a complementary piece of legislation. We’ll deal with it in the package in committee.
Motion agreed to.
Ordered for standing committee.
VITAL STATISTICS AMENDMENT ACT
Hon. Mr. Grossman moved second reading of Bill 11, An Act to amend the Vital Statistics Act.
Mr. Breithaupt: Mr. Speaker, we had a lengthy statement from the minister on February 28 when this bill was introduced. It is certainly an interesting item of legislation, particularly as it proposes to deal with several items that have developed concerning registration under the Vital Statistics Act.
The minister has commented with respect to the hyphenation of certain names. I presume there are persons who wish to do that. It is difficult at times to understand how people do get the names they receive; and as I had suggested to the minister, to think of some child having to suffer with a hyphenation such as Grossman-Breithaupt or Breithaupt-Grossman, would be almost cruel and unusual punishment I would think for any small innocent young person.
Hon. Mr. Grossman: Unless they got Renwick in the next generation.
Mr. Warner: Perish the thought.
Mr. Cassidy: I’ve heard of a marriage of convenience, but it is happening between your parties right now.
Mr. Breithaupt: Well at least it doesn’t have the incestuous relationships which are seen in the third party.
Mr. Renwick: It is like Progressive Conservative Party.
Mr. Cassidy: Right; Liberal Conservatives.
Mr. Breithaupt: In any event, Mr. Speaker, the legislation is, I suppose, useful with respect to those persons who wish to enter into this hyphenation situation.
Mr. Cassidy: A bit of a bastard union, I would say.
Hon. Mr. Grossman: How about CCF?
Mr. Cassidy: Now you are talking.
Mr. Breithaupt: So far as the second item is concerned, with respecting to completing certain proposals as a result of medical changes, that certainly appears to be entirely in order and most proper.
We certainly will support the bill. I note that an amendment is to be placed by the New Democratic Party with respect to a change in the bill, and that also appears to be in order as a reasonable modification in wording to that particular section.
Mr. Davison: Bill 11 contains in it two separate and completely different sets of changes to the Vital Statistics Act. Section 1 of the amendment deals with the question of hyphenated surnames, as the Liberal critic has pointed out, and section 2 deals with changes resulting from transsexual surgery.
In regard to the first half of the bill, which resolves a problem with surnames, I would like to extend both my support and my party’s support to the principle. The amendment arises to a large extent out of recommendations made by the office of the Ombudsman and, as such, stands as evidence of that office’s capacity to influence government to act on behalf of citizens with problems.
In October 1976 an individual complained to the Ombudsman’s office because the Registrar General had refused to register the name of a newborn child in the hyphenated surname of both the parents, with the name of the mother preceding the father. On page 533 of the Ombudsman’s report, the complaint’s status is described as follows:
“Upon her marriage in 1974, the complainant had chosen to retain her maiden name and incorporate it with her husband’s surname preceded by a hyphen. In the ensuing year, her name had been recorded in that manner in the deed as co-owner of a house with her husband, on her social insurance card, driver’s licence arid transfer vehicle permit.” Knowing the government’s fine relationship with big business, I might have suspected that if it was good enough for Chargex it would be good enough for the government. But at the time, of course, it wasn’t.
The child was born in January 1976 and the appropriate forms were submitted in March of the same year. The couple was refused in April and they secured the services of a lawyer and finally, in October of that year, of course, went to the Ombudsman’s office. The then director of research at the Ombudsman’s office reviewed the legislation in Ontario, the new legislation in Alberta, the debates of the Ontario Legislature and the Ontario Law Reform Commission report on changes of name.
In November 1976 the Deputy Registrar General was advised of the complaint and then the Registrar General informed the office of the Ombudsman that they would not object to a change in the legislation. Consequently, the Ombudsman recommended that an amendment be made so that the choice would be optional in Ontario.
In December 1976 the Deputy Minister of Consumer and Commercial Relations advised that both he and the then minister agreed with the Ombudsman’s recommendation and proposed to introduce legislation in the next session. The legislation, however, was not forthcoming.
On September 27, 1977, the Deputy Registrar General, Mr. N. A. Vetere, appeared before the select committee on the Ombudsman, and after questioning Mr. Vetere explained that the amendment had not gone forward saying that he felt it was a matter of priorities and that it was his understanding that the legislation had received priority from the ministry now and expected that the legislation would be coming forward in the upcoming session.
On November 25, 1977, the select committee tabled its third report with you, Mr. Speaker, and through you to the Legislature, recommending on pages 50 and 51 as follows: “The committee perceived some urgency to amend the Vital Statistics Act in this way. Accordingly it recommends that the minister table during this current session the amendment as described by the Deputy Registrar General to the committee.”
By December 15 of the same year the Ministry of Consumer and Commercial Relations had still not yet tabled the legislation. That night in the House, as you will recall, Mr. Speaker, we debated the select committee’s third report. The minister addressed certain comments to the recommendations of the select committee. If I might quote them from Hansard of the day on page 3060, he said: “Those reports raised issues of concern to my ministry and I wanted to inform the House of the action taken to date on these recommendations and to assure the hon. members of the House of the continued concern of my ministry. At various times, the ministry has made its position clear on the issues raised. I would like to summarize the commitments we have made to the recommendations outlined in both the recent third report and the earlier second report of the committee which I was pleased to sign, I might add. One major set of recommendations concerns changes to the Vital Statistics Act. My ministry has indicated it will proceed with amendments to this Act.”
With the session scheduled to end in only a number of hours, the minister had rejected the select committee’s recommendation that the amendment be introduced in that session. However, we all have the legislation before us now in spite of fact that the ministry committed itself to the legislation of December, 1976, and it has taken us until April, 1978, to get it into the House for debate. It’s also hard to understand that delay because this particular amendment is a rather uncomplicated, half-page affair, so I really can’t see why it has taken so long to bring it forward.
Now that we finally have it before us, I think it does show one thing that is quite useful, that is that the Ombudsman institution, the Ombudsman process, can work effectively in the province of Ontario when all parties make an effort to make sure it does so. Perhaps in the future, the process can be speeded up, though not all the speeding, it is clear, needs to be done at the Ombudsman’s office. If this ministry and other ministries of the government would move a little more quickly and keep up with the commitments they freely make in terms of bringing in legislation, then the process can work even better for the people of Ontario.
Hon. Mr. Grossman: They can operate as efficiently as the Ombudsman.
Mr. Davison: The Ombudsman finished his investigation in remarkably short order and brought forward a remarkably good recommendation. If the ministry had worked with the same speed, we would have had this amendment before us, debated, voted on and passed some long time ago.
Mr MacBeth: Maybe the House should move at the same speed.
Mr. Breithaupt: Even half an hour ago.
Mr. Warner: It is too reasonable.
Mr. Davison: The second half of this bill, sub-entitled Changes Resulting from Transexual Surgery, is a matter on which I am a bit more concerned about the ministry and the minister’s approach. This part of the amendment also arose in the Ombudsman’s office and from the Ombudsman’s work. It is a case which has evidenced even greater delay and that has caused much more severe and direct hardship to a rather small number of the people in our province.
If I might, as I think it is important, I would like to take some small amount of time to outline the events involved in this issue, as I recall them. The question personally came to my attention only in January, 1977, when I read the Ombudsman’s first report, where it is referenced as a complaint, complaint 31 on pages 403 and 494. This particular man was trying to get a birth certificate which would show his sex as it had been changed by surgery. The individual had been successful in having his name legally changed from a female name to a male name but had been unable to obtain the birth certificate that he sought.
I imagine that all members of the House can quite easily see the difficulty that not obtaining that proper birth certificate presented to the particular individual involved. At the time of the Ombudsman’s report, the Ombudsman pointed out that four provinces in Canada had already moved forward with legislation that permitted these changes in birth certificates. The Ombudsman’s findings were as follows:
“We concluded that since there was no provision in the Vital Statistics Act which would allow a change in the sex designation on the complainant’s birth certificate to bring it into conformity with his present sexual status, the ministry had acted properly and in accordance with the law when it refused the complainant’s request. However, in our opinion, it was apparent that the decision not to change the sex designation on the birth certificate was made in accordance with the law or Act that, in the words of section 22(1)(b) of the Ombudsman’s Act, was unreasonable, unjust, oppressive or improperly discriminatory.”
The Deputy Registrar General and the Assistant Deputy Registrar General, at that time agreed to the suggestion of amendment being put forward by the Ombudsman’s office and the Ombudsman then took it upon himself to write to the Deputy Minister of Consumer and Commercial Relations. The deputy minister, by return mail, informed the Ombudsman’s office that a policy submission was being prepared for the justice policy field, and if approved an amendment would be drafted. These events took place prior to the end of the year 1976.
During the early months of 1977, the select committee on the Ombudsman looked into this matter. The Deputy Registrar General informed the committee that there was at present proposed legislation within the ministry providing for sex designation changes by a person on application, accompanied by proof from a duly qualified medical practitioner that the sex change operation procedures had in fact been successfully completed. The legislation is the bill we of course now have, more than a year later, before us in the House.
On March 28, 1977, the select committee on the Ombudsman reported the following recommendation to this Legislature in this matter:
“The committee therefore recommends that the Minister of Consumer and Commercial Relations introduce legislation as soon as possible to amend the Vital Statistics Act to provide authority to the Registrar General to make such a sex designation change containing the appropriate safeguards to ensure that the effect of the sex designation change not be retrospective.”
On July 14, the ombudsman submitted to the Speaker, and to the assembly, his second annual report. The Ombudsman took that opportunity, because he thought, I guess, that it was a very important and serious matter, to further reference developments in the case. In his report, he quoted in total from his earlier report and he quoted the full comments of the select committee. He then concluded his restatement by saying that:
“As of this report there has been no change in the legislation to the Vital Statistics Act, and the fact that there has not is working a continuing hardship on the complainant mentioned above because he wishes to marry but is prevented from doing so until the necessary amendment is presented to the Legislature and passed.”
As members will recall, the select committee had, in March asked the minister to introduce legislation as soon as possible, and therefore when the committee met again in September to consider the Ombudsman’s second report, the matter of the Ombudsman’s recommendation and the committee’s recommendation again come up for debate and consideration in the select committee on the Ombudsman.
On September 28, 1977, Mr. Vetere again appeared before the committee, on behalf of the ministry. Ms. Cooper appeared before the committee on behalf of the Ombudsman’s office. At that point, she again informed the committee of the individual’s further problem as he was trying to get married and could not because of the sex designation on his birth certificate. The Ombudsman’s office had not considered provisions of the Marriage Act other than that of the sex designation on the birth certificate, and Ms. Cooper said that there may be further legal problems which would have to be dealt with.
Mr. Vetere reported that it was intended to bring the amendment forward at the upcoming fall session which, by the way, also did not happen. This perhaps was because of a conflict in attitudes on the issue between certain people and the minister and the then Minister of Consumer and Commercial Relations, because on July 27, 1977, the then minister had written to the hon member for Carleton East, who had been involved in the original complaint --
If I might, Mr. Speaker, it’s a rather short letter, and I would like to read it into the record of this debate.
Mr. Lawlor: You know it takes so long you could change their mind faster than their sex.
Mr. Nixon: Which are you working on?
Hon. Mr. Grossman: Or for your member to make his point.
Mr. Davison: It’s addressed to Ms. Evelyn Gigantes, MPP. It reads:
“Thank you for your letter of July 20 in connection with our proposal to amend the Vital Statistics Act to provide for recognition that an individual has undergone transsexual surgery. The legislation is ready for introduction. Scheduling is of course a matter for the government and will depend greatly on the agreement between the House leaders as to the time allotted for the legislation in the fall session. I understand that only 25 hours will be set aside for the debate on legislation. If that is the case, it is hardly likely that other higher-priority legislation will be set aside in favour of minor amendments to the Vital Statistics Act. Your comments would be appreciated.”
Mr. Vetere, still on September 28, 1977, and again at the request of the committee members, outlined the situation in regard to the legislation from the ministry’s point of view. He was asked if the ministry had given any thought to whether it would be possible for the person concerned to marry after the sex designation on the birth certificate had been changed. The Ombudsman, in his second report, had put forward the information that in this particular case, from which the recommendation had arisen, the individual did, in fact, want a new birth certificate so as to be able to be married.
Mr. Vetere replied that the position of the ministry was that if they were aware that an individual who had had a sex designation change was making an application for a marriage licence, they would refuse the licence.
I can recall that at least myself, and I think most or all of the members on the committee, were shocked or at least quite surprised by the information as it was put forward by Mr. Vetere, because in the entire process this was the first we had heard of this position on behalf of the Ministry of Consumer and Commercial Relations.
Mr. Vetere, under rather close questioning, said that the change in sex designation was simply to accommodate the needs of the person for documentation, but that it was impossible for the person to legally marry as the change was considered to be anatomical but not biological.
I and other members of the committee argued that there was a substantial change not being recognized by the ministry, that in effect a third sexual category of people in Ontario would be created by the provision of these proposed changes to the Vital Statistics Act.
These people, in this third sexual category in Ontario would not be allowed to marry among themselves, would not be allowed to marry women and would not be allowed to marry men. In short they would not be allowed to marry and in that sense they would be denied some of what I consider to be basic human rights in our society.
Therefore, in my opinion, the proposed legislation did not either meet the needs or solve the problems of the people concerned and in the process limited their rights.
On November 25, 1977, the select committee in its report to this House wrote and recommended as follows:
“The Deputy Registrar General informed the committee that legislation satisfying the committee’s recommendations and the concerns of the Ombudsman, would be tabled in the current session of the Legislature. However, the ministry does not intend the legislation to grant a person the status to marry in any circumstances. In the committee’s opinion, this legislation will create an undesirable result by establishing a third category of individuals who, at least in the area of marriage, have no status in law. The committee has not considered any further ramifications of this legislative change. However, it is certain that the legislation will place the legal status of such persons in doubt in other areas.
“Accordingly, this committee recommends that the minister introduce legislation clarifying and defining the status of persons affected by the sex designation change so as to avoid the creation of a third category of persons in the province of Ontario.”
On December 15, 1977, the Legislature, as I have said earlier, debated that select committee’s report and that particular recommendation of the select committee, and the minister’s response is found on page 3060 of the Hansard from December 15, 1977. If I may I’ll partially quote areas that I have already quoted, so that we can get the full sense of the minister’s response; it’s rather brief:
“At various times the ministry has made its position clear on the issues raised. I would like to summarize the commitments we have made to the recommendations outlined in both the recent third report and earlier second report of the committee.” Which I was pleased to sign on my part.
“One major set of recommendations concerns changes in the Vital Statistics Act. My ministry has indicated it will proceed with amendments to the Act to allow for sex designation changes.”
A bit further down the page we find this sentence from the hon. minister, “We feel this flexibility will deal with the concerns raised by the report and will assist individuals in having the records they desire.”
I thought that the minister had said that the legislation would deal with the concerns raised by the report. But having had some experience in this House, I knew that things are not always as they sound or seem. A short time later that evening, when I was participating in the debate, I asked the minister for clarification, or what I in my mind considered clarification. I’d like to read that short exchange from Hansard of that night, from page 3066:
“Mr. Davison: In regard to the Minister of Consumer and Commercial Relations, I hope the minister when he responded favourably to recommendation No. 18 understood the committee’s concern about the proposed legislation and the possible consequences of creating a third category of people in the province of Ontario when he responded favourably. I hope he responded with that in mind.” The record of that night then shows the Hon. Mr. Grossman saying, “Have we ever let you down before?”
Mr. Foulds: Every time.
Hon. Mr. Grossman: Four bills tonight; have we ever let you down?
Mr. Davidson: Have they ever done anything right?
Mr. Davison: “Have we ever let you down before?” I guess in my lack of experience, I understood that to mean that the minister understood the recommendation of the committee and agreed, and was not going to let us down. I didn’t think at the time that it would have been possible that the minister may have been involved in some kind of gamesmanship --
Mr. Davidson: No sensitivity.
Mr. Davison: -- twisted or otherwise. To this day, although I have often disagreed with the minister, I have always found him to be a decent human being who has always been, with me at least, straightforward and strictly honest --
Hon. Mr. Grossman: Have I ever let you down?
Mr. Davison: Now we have Bill 11 before us; and I really wonder what all that work was worth and all that talk was worth and about, in the past several months in regard at least to this aspect of the bill. It was to me as if they had never existed.
In my opinion, this bill should not be before this House in its present form. All things considered, the minister should not put before this House this amendment to the Vital Statistics Act containing this second section. While I’m going to support it on second reading, when this bill, and particularly this part of the bill, goes to the committee stage, I will at the very least make sure, as well as I am able, that the minister in all fairness to the recommendations of the select committee will do something to clarify and define the status of people affected by sex designation changes.
I’m quite concerned about this matter. I have given notice of an intention to move two amendments to the bill which I believe, without the benefit of a constitutional lawyer or an historian on common law, may --
Hon. Mr. Grossman: You should have asked Renwick; he’d tell you.
Mr. Davison: I don’t want to engage in a discussion with the minister. My opinion of his credibility has suffered somewhat in the past 24 hours.
Mr. Swart: It was pretty low before that.
Mr. Davison: In my opinion, those amendments to this bill will, if they do not solve the problem for the people who will now find themselves in this unfortunate position, at least be a recognition on the part of this House that those people do in fact have a real problem and that some members in the House aren’t interested in playing games with them.
As chairman of the select committee on the Ombudsman, I don’t think that this case shows a particularly useful relationship between a ministry of the government, the Ombudsman’s office and a select committee of this Legislature. I think this is an example that we should not be very quick to follow and it’s an example of behaviour I would personally not like to see again.
I think the minister in this case has shown an unfortunate attitude towards the select committee. I think perhaps he misunderstands the way in which the people of Ontario will best be served by an Ombudsman institution that works with the Ombudsman, the committee, the Legislature, the ministry or the government agency to give people in this province the kind of Ombudsman institution they have every right to deserve and expect.
As an individual member of the House I am offended by the games-playing of the minister. Finally, just as a man and as a member of the human race, there are times when we’re saddened and sorrowed by some people’s disregard for human rights. This, Mr. Speaker, is one of those times.
Mr. Deputy Speaker: Does any other hon. member wish to participate in the debate? If not, the hon. minister.
Hon. Mr. Grossman: Mr. Speaker, I would have hoped that the member would have been a little more thoughtful as he wrapped himself in purity on this piece of legislation. The relationship between the member and myself -- up until right now, as a matter of fact, I didn’t become disillusioned with him in the last 24 hours but just in the last few minutes -- has been pretty good, but when he gets into the junk that he got into in the last few minutes with regard to his corner on the market with regard to human dignity, virtue and human decency, that is, I think, where I become a little bit offended by his remarks.
He may suggest that we are playing games with this legislation. Of course he knows that is not true, he was in the House for the estimates last fall, he knew that the dialogue was going on and that it was a general exchange of views with regard -- really it was a question asked whether we were going ahead with the legislation, and I responded.
He may have refined what he now understands to be the full scope of the Ombudsman committee’s recommendation in one way and more completely, after he has obviously had a chat with some people, than he did last December, but that wasn’t my problem. My problem was that I was always aware of the constitutional powers that the province has and doesn’t have, and where the common law goes and where it doesn’t go, and what the role of the Registrar General is. No one ever held out anything different to the member.
He can talk about the delays in bringing in this legislation; and you know, Mr. Speaker, that is fair politics, he can play that game and I am not going to tell him that the election that his party and the other party caused last spring held up the legislation.
Mr. Swart: Who caused? That is the end of your credibility.
Mr. Renwick: You were doing all right until then.
Hon. Mr. Grossman: Far be it from me.
Mr. Makarchuk: You are out of your cotton-picking mind.
Mr. Foulds: You just blew it, Larry.
Mr. Deputy Speaker: Order.
Hon. Mr. Grossman: But I do think it is fair with regard to the role of my predecessor in the saga that the member felt obliged to roll out should be pointed out; and that is that he, like a lot of ministers on this side of the House, was faced with some problems with regard to timing.
Obviously last spring there was that election; whoever caused it there was an election --
Mr. Makarchuk: Now you are backing off.
Mr. Rotenberg: We know who caused it.
Hon. Mr. Grossman: -- therefore, it couldn’t have been legislated last spring, I don’t care whose fault it was.
Mr. Makarchuk: It cost $5 million to get you elected, so shut up.
Mr. Swart: Could have started the fall session a month earlier.
Hon. Mr. Grossman: And to move you over there.
Okay, look, I don’t care whose fault it was last spring. The fact was there couldn’t be legislation last spring, we didn’t sit long enough.
Last fall my predecessor quite properly pointed out the problems in estimates, and my House leader, together with the other House leaders, co-operated in providing a maximum amount of time for estimates; no question about it. One of the functions of that decision is that some legislation simply had to be put over. That is the pure truth and those are the facts of the matter.
This happens to be one piece of legislation that was put over, and I have no apologies to make for that. I wish all of my legislation could have been dealt with last fall: indeed where I did see a need that couldn’t wait another day, such as the condominium amendment, I did get that through last fall, with the co-operation of the opposition. Where I saw a need for the tax discounters, I did get that through last fall, with the co-operation of the opposition.
I don’t have co-operation on the Vital Statistics Act, and members opposite are quite entitled to their point of view. The fact is that one of the decisions made when the opposition wants a lot of estimates hours, this government agrees to that request, is that some legislation doesn’t make it.
Mr. Swart: The government could have started the fall session a month earlier.
Hon. Mr. Grossman: Members can argue that amounts to political gamesmanship, and that is part of the political process, and they are entitled to make that argument. I, for my sake, just want to read into the record the facts of last year so that my predecessor’s role in this can be shown and mine can be shown.
Mr. Makarchuk: The matter wasn’t even raised at the House leaders’ meeting. Don’t give us that sanctimonious claptrap.
Hon. Mr. Grossman: The member for Brantford may have some more patience than I, in listening to the attempts of the member for Hamilton Centre (Mr. Davison) to bootlick to the Ombudsman to show that this legislation, like everything else we do, is purely an outgrowth of the Ombudsman’s responsibilities and what he says. I sat here and listened to it, and so be it; if he does a really good job, maybe he can become his driver by next summer. But I don’t care; he can do that role, he can play that number, I don’t care.
But, Mr. Speaker, where the member moves on to suggesting that we take this matter lightly, that we don’t care about the implications, that we don’t care about the human dignity elements of this legislation, that is where I draw the line. All the other numbers he has been playing on us tonight are the usual political things, and I forgive him for that; that is the way he sees his role, okay.
Mr. Foulds: You are doing quite a number yourself, Larry, quite a number.
Hon. Mr. Grossman: He can do the Ombudsman number, he can do the gamesmanship’s number, he can do the House time number, I don’t care.
Mr. Swart: Who do you think you are: God, to forgive him?
Hon. Mr. Grossman: No, you are holier-than-thou over there. The idea that only the member for Hamilton Centre or whatever it is cares about the human rights involved in this issue --
Mr. Nixon: Oh, you are holy too.
Hon. Mr. Grossman: -- I just want to reject totally and completely. If he had stopped for one second in his knee-jerk desire to make an amendment to any piece of legislation that comes out of this government and chatted for a moment with his adviser, or I would have hoped his adviser, the member for Riverdale, he perhaps would have got a bit of an education into the BNA Act. The BNA Act specifically reserves to the federal government, in section 91, subsection 26, the subject of marriage and divorce. Nothing I can do in my capacity as Registrar General can change that. I can’t permit people to marry, I can’t forbid them from marrying. All we do is the registration aspect which shows what the registration is. This legislation now permits someone to go in and change the registration. But changing the registration in my ministry, through the Registrar General -- I emphasize the word registrar -- does not by itself change the legal status of the person making that change.
The common law prevails here. The federal government has seen fit not to legislate on top of the common law to change the situation. There has been litigation resulting from matters such as this, litigation which has confirmed that in the present situation it is up to the courts in most cases to decide whether the change that has been gone through has amounted to a valid change in legal status under the common law. I can’t and my Registrar General can’t do anything that changes that situation. He registers a piece of information, and whether one carries around a blue card signed by Norm Vetere and Larry Grossman saying one is of whatever sex one has been able to obtain registration for doesn’t help one when one goes to get married.
I can’t make an amendment to the Vital Statistics Act that helps one do that. I can’t amend any other Acts that I have that would help one do that. I never said I could and my predecessor never said he could.
Mr. Lawlor: You can work on the solemnization of marriage under the Marriage Act.
Hon. Mr. Grossman: That is the plain, simple fact of the matter. It is reserved under section 91 subsection 26 of the BNA Act.
Mr. Lawlor: It is not quite so simple.
Hon. Mr. Grossman: If the member for Lakeshore will calm down and speak to the member for Riverdale, who is really silent in this debate, he’ll find out that that consistently constitutionally pure member --
Mr. Lawlor: If you would just stop talking for a few minutes and listen for a while.
Hon. Mr. Grossman: -- would have no part of this discussion on his side of this argument.
Mr. Foulds: Nobody is speaking on your side except you.
Mr. Rotenberg: We are with him.
Hon. Mr. Grossman: I have the Attorney General (Mr. McMurtry) and I know he will back me up on constitutional arguments.
Mr. Foulds: You are all alone.
Hon. Mr. Grossman: And he rarely, if ever, loses.
Mr. Foulds: But when he loses he loses big.
Mr. Swart: When he loses he really goes down hard.
Mr. Deputy Speaker: Order.
Mr. Lawlor: Don’t get carried away.
Hon. Mr. Grossman: The bigger they are, the harder they fall, In any case, the point is that our interpretation, very strongly backed up by the common law, by case law and by the BNA Act, indicates there is nothing I can do to change the situation. We never held out we could. Whether all of my personal legal background, the government’s legal background and the history of this case and all the resources I have referred to -- and I know I have the member for Riverdale on my side as well --
Mr. Foulds: No, you don’t.
Mr. Lawlor: Just because he is quiet doesn’t mean he agrees.
Hon. Mr. Grossman: And when is he ever quiet? Where we are all right or all wrong is not --
Mr. Foulds: Even you are known to be quiet on occasion.
Hon. Mr. Grossman: You two can’t get through to the middle of that sandwich to say anything. Whether we are all right or wrong is academic.
Mr. Foulds: That is a very bad image, a very bad analogy.
Hon. Mr. Grossman: He feels that way I am sure.
Mr. Deputy Speaker: Order, please.
Hon. Mr. Grossman: I am sure he is very happy.
Mr. Deputy Speaker: Would the hon. minister address the Chair?
Mr. Foulds: You were doing better on the nautical metaphors when we were on the Securities Act an hour or so ago.
Hon. Mr. Grossman: Whether we are all right or all wrong, Mr. Speaker, is not the point I wish to make.
Mr. Foulds: That’s true, you’re all wet.
Hon. Mr. Grossman: It’s a sincere, consistent, understanding and legal opinion we have held and we have never varied from that. To suggest that because that very strong legal position is held and never been wavered from we suddenly don’t care about the human rights or dignities or concerns involved in this legislation doesn’t lie well in the mouth of the member for Hamilton Centre. I reject it entirely and completely.
It’s a totally different story than to disagree and to have a fundamental understanding of the BNA Act and the difference of jurisdictions and powers that lie in us, and in my Registrar General who’s our registrar. That’s a totally different situation and I’ll sit here on many occasions and listen to the opposition suggest that this government is unfeeling, that it doesn’t care -- all sorts of allegations like that happen daily in the course of political exchange --
Mr. Davidson: No sensitivity at all.
Mr. Lawlor: Even worse than that. You hide behind the BNA Act.
Hon. Mr. Grossman: -- and we understand that, because we have even been known to accuse the opposition of those same faults.
Mr. Lawlor: More devious than ever.
Hon. Mr. Grossman: But when it comes to a sensitive matter such as the one we’re discussing tonight, I’m just not going to treat it as in the same area of political give and take, because it isn’t. We could have let this matter lie if we didn’t care about it, suffer through a couple more reports from the Ombudsman committee -- whatever. But we cared about it and we brought it forward and went as far as we are able to go within the BNA Act, within the common law restrictions and everything else.
This isn’t one of those times when the opposition ought to be posturing, wrapping themselves in the flag of civil liberties, human rights and human dignity. We all care about it. I respect the member for Hamilton Centre’s interpretation, mistaken as it may be, and I respect his concern for the issue. I really do. We’re entitled to the same respect from him though, and that has nothing to do with legal interpretations one twit.
Ordered for standing committee.
Mr. Breithaupt: Mr. Speaker, if there is a minor amendment to be placed with respect to this bill, could it not go to committee stage in the House? We’re certainly agreed to it.
Hon. Mr. Grossman: Mr. Speaker, I would prefer it to go to the committee on justice. Perhaps the member for Hamilton Centre wishes to look carefully at the constitutionality of it and perhaps withdraw it. He may not, but I’d like to give him that opportunity.
MINISTRY OF GOVERNMENT SERVICES AMENDMENT ACT
Hon. Mr. Henderson moved second reading of Bill 31, An Act to amend the Ministry of Government Services Act.
Hon. Mr. Henderson: Mr. Speaker, the purpose of this bill is to regularize the procedure that’s presently being carried out by the Ministry of Government Services.
Section 16 of the existing Ministry of Government Services Act requires delegation of the minister’s powers under the Act to be in writing and approved by the Lieutenant Governor in Council. As a simple example, the minister cannot legally instruct his secretary to purchase for his use a pen or stationery article unless the delegation of the minister’s power is by order in council.
During the year the Ministry of Government Services makes thousands of purchases of commodities and services for the needs of the Ministry of Government Services and other ministries as follows:
1. In the fiscal year April 1, 1977, to March 31, 1978, one branch will have issued 11,000 purchase orders in respect of commodities like furniture, furnishings, clothing, police uniforms, business machines, paper and envelopes.
In the printing service division, for the consolidation of statutes, regulations, budget books, and other ministry publications within the Ministry of Government Services and other ministries in 1977-78, purchase orders issued: 6,000 for print, ink, paper, plates and other articles; 1,000 for duplications; 3,000 for government stationery.
In the property management branch, in the fiscal year 1977-78, 24,500 purchase orders were issued by this branch for building materials, moving, repair and maintenance services.
In the same fiscal year, the Toronto head office of this branch arranged 339 contracts -- for example, fuel oil, moving and others -- of which 207 were signed by the minister and 132 by other officers of the branch. In addition, there are contract awards by regional offices of the branch. In a year’s time, the minister would need to sign approximately 40,000 contracts varying from a few cents to several hundred dollars.
Once again, Mr. Speaker, the bill is to regularize the present procedure that is being carried out.
Mr. Ruston: We would have no objection to this bill, Mr. Speaker. From what I gather, it will kind of streamline some of the work and allow the minister or the deputy minister to delegate authority to sign contracts and so forth.
We all know, of course, that the minister is still responsible for whatever happens in his ministry, and this is a known fact in all government legislation. I think I read in the past year or so that some minister in Ottawa tried to avoid some responsibility for someone in his ministry, but the fact remains that the minister as an elected official is still responsible.
Mr. Makarchuk: They’re trying to avoid responsibility for the whole country.
Hon. Mr. Maeck: Be nice now, Mac.
Mr. Ruston: That’s probably one advantage that our democratic system has over the system in the United States, where the officials appointed by the President to his cabinet are not elected and yet they have the authority granted to them to conduct the business of the day. Our advantage, of course, is that those officials must be elected. I suppose our system is a little more political and may at times have some disadvantages, but I think it is a pretty good safeguard in our democratic system.
I do notice that a few things have been added in the bill. One of them, in section 1(2)(iii), relates to “collecting fees fixed by the minister for parking in any area set aside for parking in, on or under any public work, and the minister may fix such fees ... ” In the past, they have made some arrangement for this under orders in council, if I am not mistaken.
The proposed change allows the minister to contract out parking areas if he so wishes and to approve the fees that may be charged in these parking areas. I suppose it could have an effect on areas where parking is or may be supplied for employees in some public buildings but, with the parking situation as it is in many cities, I think I would have no objection to this provision. If it includes employees, I am sure they have the bargaining power to make their agreements and so forth, so I have no objection to this part being added to the bill.
There is some very minor wording in section 6 of the present Act and, to compare it to subsection 1 of the new bill, it reads: “It is the responsibility of the minister and he has power, in accordance with section 8, to acquire, lease and dispose of public works ... ” In the present Act, it is the responsibility of the minister and he has the power, so this is just a little tidying up in this case. We will support the bill.
Mr. Davidson: Mr. Speaker, this in all probability is going to be one of the most important bills that comes before this session of the Legislature. I say that not because of the content of the bill itself but because it is the first bill, I believe, that has been presented by the new Minister of Government Services. Because of that, the importance becomes very obvious.
Mr. Foulds: It may be the last.
Mr. Makarchuk: It must be a sizeable bill because the minister isn’t.
Mr. Belanger: Great man, great minister.
Mr. Davidson: We, in this party, have had a very serious debate about this bill, believe it or not. There were several things in it that gave us great cause for concern and we had to sit down and debate it most seriously before we could decide that we would support it on second reading. I say this because there are certain sections of this bill that do create serious doubts in the minds of people. What we are doing, even though it is under the direction of the minister and his deputy minister, is giving to clerks and servants of the ministry the right to negotiate and sign contracts.
I had to look at that very seriously and I sought some very expert advice as to whether or not this, in any way, could lead to patronage or pork-barrelling. I’m quite sure the minister is well aware of those terms, being one of the politicians from the old school.
Hon. Mr. Maeck: Lorne Henderson would never do that.
Hon. Mr. Henderson: Never heard that term before.
Mr. Davidson: For that matter, I’m still not clear in my mind as to whether or not it could lead to pork-barrelling and patronage. I could very well see that even though the minister does have to administer the order, some clerk in some office away up there in the northern part of the province who is the only representative of your ministry may negotiate a contract with someone in his given area and phone the minister and say: “I’ve got a good deal, boss; here it is; can I have your authority to sign it?” The minister, not even knowing who he or she is talking about, may very well say, “Yes, it sounds good, go ahead, sign the agreement. I give you the authority to do so.
Mr. Foulds: And what’s his party affiliation?
Mr. Davidson: It does lead one to think that perhaps this bill and the amendments that are being made to the existing legislation could be abused. I’m not suggesting that it would be, Mr. Speaker. I’m quite sure that knowing the minister, and in his new position, he would look at every item that comes before him with the greatest of sincerity and diligence and would not allow that kind of thing to happen if he could, in any way, possibly get around it. But the possibility does exist and it was one of the things that caused us a great deal of concern in consideration of this bill.
We did seek some expert advice on the matter and they assured us that even if that was the case and that lonely little clerk up there in northern Ontario got found out, the responsibility would fall back on either the minister’s shoulders or those of his deputy minister --
Mr. Makarchuk: And they are broad shoulders.
Mr. Davidson: Recognizing the fact that the minister has the capability of handling that kind of situation, we thought, “Okay, let’s allow that part of it to go through.”
There are other things in this bill that we have given further consideration to. Section 1(2)(a) speaks to “design, construct, renovate, service, maintain, repair, furnish, equip, manage and administer premises, buildings, and structures that are public works.” We had to look at that very closely because we were thinking about this building itself. I’m quite sure that this building is one that all of the people in Ontario are very much concerned about. Certain sections of this building fall under the control of this ministry while others are in the hands of the Speaker --
Mr. Foulds: They should all be in the hands of the Speaker.
Mr. Davidson: -- and we were almost prepared to come to the minister and negotiate some kind of a deal whereby he would turn his portion of the building over to the Speaker in order for us to give the minister support on second reading. As a matter of fact, I might even take that into consideration at this moment. If this building should be in anyone’s hands it should be in the hands of the Speaker of the Legislative Assembly of Ontario.
Mr. Foulds: In fact, we are going to move an amendment to that effect.
Mr. Davidson: But having had a few moments to discuss the matter with the minister privately, I’m quite sure he is of the same opinion. I’m sure he would far rather have the responsibility taken away from himself and placed in the hands of the Speaker, because the minister would take the hassle for all the other 124 members in this House when that problem arises. I am quite sure the minister would gladly sign an order tomorrow, if necessary, turning the building over to the Speaker, which is the proper place for it to be.
We considered that kind of a negotiation but, knowing the minister and knowing full well his capacity as minister and his own personal feelings on the matter, we thought that would come about without having to negotiate that kind of a deal. We are quite sure that the minister in his capacity as minister will make sure that that does happen. If not, we will be after him again, let me assure him. But overall, in looking at it, it is in fact an excellent piece of legislation that amends the existing Act.
The minister says it regulates the existing legislation. I say it legitimizes something that his ministry has been doing outside of the law.
Mr. Foulds: Illegally.
Mr. Davidson: The ministry has been allowing clerks and servants to sign contracts and documents, though certainly under the minister’s control or under the control of his deputy minister. The minister has been allowing that to happen. I don’t lay the blame on him because he is the first minister who has had the foresight to recognize that the government was operating outside of the law and has brought in a piece of legislation to legalize it.
Mr. Davidson: Having said that, we in this party support this bill on second reading. If we find any serious defects in it, we will reserve the right to raise those on third reading of the bill.
Mr. Speaker: The hon. member for Scarborough-Ellesmere seems to want to comment.
Mr. Warner: Thank you, Mr. Speaker.
Hon. Mr. Norton: Resign.
Mr. Warner: Do you have a better offer? Is that what you said?
Mr. Warner: I might consider it but the people in Scarborough-Ellesmere would be deeply disappointed.
Hon. Mr. Norton: Oh, no, they would be entirely elated.
Mr. Warner: Along with my colleague from Cambridge, I would appreciate very much some comments from the minister with respect to section 1(2)(a) and how that applies to this building.
Hon. Mr. Norton: Sit down and let him comment then.
Mr. Warner: The Speaker may be interested to know that some members of this assembly take the matter of jurisdiction for the building to be quite a serious one and an important matter.
Hon. Mr. Maeck: That is not part of the principle of the bill.
Mr. Warner: In fact, this morning in the members’ services committee there was a motion that the building be turned over to Mr. Speaker.
Mr. Rotenberg: Speak to the bill.
Mr. Makarchuk: The original motion was to condemn it.
Mr. Rotenberg: The building or the Speaker?
Mr. Makarchuk: The minister.
Mr. Warner: I will wait.
An hon. member: They are going to have the Minister of Correctional Services (Mr. Drea) tear it down like the Don Jail.
Mr. Speaker: Does the hon. member have any further comments?
Mr. Warner: Yes, I have, Mr. Speaker, and I intend to make them when the chamber is in a more sombre mood.
Mr. Nixon: You have every right to speak but we don’t have to listen.
Mr. Foulds: We have at least six more speakers lined up. You don’t have to worry.
Hon. Mr. Norton: You’ve got to be kidding.
Mr. Warner: For a couple of reasons, I believe this bill should end up going to committee and it may be necessary to amend part of the bill. It certainly needs to go to committee and we need some explanations.
As I began to say, the motion that was put forward this morning in the members’ services committee, which deals directly with this, was that the entire building should be turned over to Mr. Speaker. That motion was tabled for one week.
What applies to the building is section 1(2)(a) which is pretty explicit in what can be done to those sections of this building which at present come under Government Services. What is disturbing to some members of the assembly, and certainly to myself, is that those kinds of changes could take place irrespective of whatever wishes the Speaker has for the portions of the building which come under his responsibility --
Mr. Nixon: What section is this in?
Mr. Warner: -- and that surely would not be in the interests of the members of this assembly.
Hon. Mr. Norton: Which section?
Mr. Warner: The other part of the bill which concerns me, Mr. Speaker, is section 2. I really think we need a clear explanation as to the lines of authority that are going to be followed. It’s rather vague: “Officers, clerks and servants of the ministry -- ”
Mr. Speaker: It being 10:30, would the hon. member care to move the adjournment of the debate?
On motion by Mr. Warner the debate was adjourned.
Hon. Mr. Norton: That is the most productive thing I have heard the member say today.
On motion by Hon. Mr. Grossman, the House adjourned at 10:31 p.m.