The House met at 2 p.m.
STATEMENTS BY THE MINISTRY
ARTS COUNCIL GRANTS
Hon. Mr. Welch: Mr. Speaker, I wish to clarify for the honourable members the background behind a story which appeared in a Toronto paper last Friday concerning a magazine called Strike, which received partial assistance from the Ontario Arts Council.
The magazine in question began publication in September 1976 under the title Art Communication Edition. It is published in co-operation with the Centre for Experimental Art and Communication, an artists’ co-operative and parallel gallery at 15 Duncan Street, Toronto. The Centre for Experimental Art and Communication was originally established as the Kensington Art Association in 1973.
In its first year of publication, Art Communication Edition devoted extensive coverage to new developments in video, experimental film, performance art, and artists’ books. Along with the Centre for Experimental Art and Communication, Art Communication Edition was committed “to the investigation, retrieval, and production of radical and marginal art,” and in both its appearance and general approach had much in common with similar publications in the United States and Europe.
Mr. Nixon: Have you seen it lately?
Hon. Mr. Welch: In June 1977, Art Communication Edition was one of 104 periodicals which applied to the Ontario Arts Council for funding assistance. These applications were considered by a panel of 15 adjudicators, including writers, editors, librarians and critics in the various arts disciplines. On the recommendation of the panel, Art Communication Edition received a grant of $2,500. Grants ranged from $350 to $17,250 and were distributed to a total of 72 publications following the June 1977 meeting of the arts council.
In January 1978, Art Communication Edition assumed a new editorial policy. It changed its name to Strike and adopted a more aggressive social stance. This shift was, apparently, consistent with more general changes in the avant-garde art movement which characteristically strives to shock and provoke what it perceives to be an indifferent society.
Mr. McClellan: The perils of culture.
Hon. Mr. Welch: In its May issue and the second published under the title Strike, the editors of the magazine have adopted as their central focus the visual and verbal imagery of radical political movements including those which advocate terrorist violence.
Naturally, all of the information produced by the present discussion of the publication will be provided to the arts council and its panel for their consideration in any future assessment of grant applications from Strike or Art Communication Edition. In view of the radical departure from its former editorial format, it is likely that the Ontario Arts Council would want to re-examine carefully any future grant requests from this organization.
Mr. T. P. Reid: Are there any members of the Legislature on the editorial board?
Hon. Mr. Welch: Not to my knowledge.
FEDERAL HOUSING PROPOSALS
Hon. Mr. Bennett: Andre Ouellet, Minister of State for Urban Affairs, at different times, has been announcing important changes to federal National Housing Act programs. I understand there are still announcements to come on what is referred to as community service programs, which include the neighbourhood improvement program (better known by many members as NIP), the municipal incentive grant ($1,000 per unit grants to municipalities for certain approved housing) and the federal loans to municipalities for sewer servicing.
By way of background, the federal proposals were first presented to the provinces at a two-day federal-provincial housing ministers’ conference in Edmonton on January 31 and February 1 of this year. In the broad sense, many of these issues brought forward by the federal government reflect the positions taken by the Ontario government in similar meetings previously: the need to eliminate duplication of agencies delivering housing programs, for example, and the advisability of continuing such programs of integration as rent supplement.
At that meeting the governments agreed better use could be made of available funds in three ways:
1. By restructuring the government housing sector, to direct new and existing accommodation to the most needy;
2. Treating different regions of the nation selectively in regard to capital funds for housing supply and municipal infrastructure; and
3. Consolidating federal-provincial housing programs in accordance with provincial and municipal priorities.
It was further agreed unanimously, by at least the provincial representatives, that such improvements should be recommended to the federal government and should start in 1979.
Arising out of these agreements a task force of officials began the preparation of a global funding agreement, and Ontario drew up a series of proposals we had hoped to have the opportunity of presenting at a second federal-provincial meeting, which was scheduled for early April. However, the federal government cancelled the meeting and in its place has implemented this bilateral approach to individual provinces with the May 1 deadline which has created a certain amount of dislocation of the programs.
Because this is being announced in dribs and drabs, and details are lacking, I telegraphed Mr. Ouellet on May 1, urging our officials get together as quickly as possible to find out the details behind the press releases. As a result, a meeting is scheduled for May 12 here in Toronto. I would then want to meet directly with the federal minister, either myself or with my counterparts from other provinces.
In my telegraph to him I expressed concern that the introduction of new programs in mid-year, with very short notice, would disrupt production. Also, owing to lack of implementation details, we have been unable to assess the proposals properly and, until officials get the details and I can meet with Mr. Ouellet, I would hesitate to make any further statements in relation to the press releases.
ARTS COUNCIL GRANTS
Mr. S. Smith: I have a question of the Minister of Culture and Recreation. How thorough a study did the minister do regarding the Ontario government’s involvement with the Centre for Experimental Art and Communication and its predecessors in terms of assistance that was given and in terms of what the money was used for? Did the minister just ask someone in the arts council to give him an answer and simply transmit it to the House, or did he take a little time to investigate the connections between the government and that particular association?
Hon. Mr. Welch: There’s no connection between the government and that particular association, Mr. Speaker. The minister took a considerable amount of time, from Friday morning until making the statement today, in dealing with the arts council to satisfy himself that he had all the information he needed to share with the House the procedures which the arts council followed in making some determinations with respect to this type of grant.
Mr. S. Smith: Supplementary: Is there any reason why the minister has not reported to us that Wintario, in addition to the Ontario Arts Council, gave a $4,000 grant, approved by the minister on December 7, 1977, to the Kensington Art Association, namely the original association which changed its name as the minister has already indicated to us, when it put out a very similar magazine, the one that he already listed, which eventually gave way to Strike? Is there some reason why he hasn’t mentioned to us the Wintario grant to the same organization?
Hon. Mr. Welch: Yes, there is a very logical reason; it has absolutely nothing to do with the publication in question.
Mr. S. Smith: Supplementary: Since this is the very organization that puts out this publication, and since the grant was for video equipment, which may well have been of assistance in the special effects photographs and so on -- I don’t know; it may well have been -- does he not believe that he has some obligation to tell the House, not only of the Ontario Arts Council grant but also of the Wintario grant?
Hon. Mr. Welch: I think the Leader of the Opposition has to be reminded that the particular question that’s before us now is the grant of the Ontario Arts Council to the magazine in question. Certainly in my statement, I make it quite clear that we have had dealings with the organization, which has a wider interest as far as innovative art forms are concerned and the whole area of experimentation. There is no connection between the Wintario grant and Strike.
Mr. Kerrio: Supplementary: Would the minister take it on himself to make an investigation into the use of Wintario money as it relates to this group and find out if Wintario money was used for such publications?
Hon. Mr. Welch: There’s no question that the Centre for Experimental Art and Communication has other projects. They have been involved in other types of innovative activity, as I have already mentioned in my statement. I indicated in my answer to the Leader of the Opposition that there’s no connection between the Wintario grant and Strike. The organization itself, that is, the Centre for Experimental Art and Communication, is quite anxious to make that distinction between its work and the magazine as well. If the member wants some further information about this particular Wintario grant to which the Leader of the Opposition has made reference, I would be very happy to provide the House with further information.
Mr. T. P. Reid: Some of the people are the same.
Hon. Mr. Welch: It may well be that the people are the same. I wouldn’t want to suggest it, and I am sure the Leader of the Opposition was not suggesting it. I was making an explanation to the House insofar as the magazine Strike was concerned and indicating the relationship between the arts council and that publication and 71 other publications that were the benefactors of some type of grant in June 1977.
In view of the change in the editorial policy and in view of other changes that have, obviously, been made in that magazine, it may well be that the arts council would have a very much different approach, when it is considering the applications of this particular magazine come next June.
Mr. S. Smith: I will spare the House an indication of whether there has been that much change before the minister signed or after the minister signed. We will look at that later.
CHAIN STORE DISCOUNTS
Mr. S. Smith: I have a question for the Minister of Agriculture and Food. Can the minister tell us something about the discounting practice that we have been discussing in recent days as it applies to eggs? Can he tell us anything of what he knows to be the situation regarding the buying of eggs by Loblaws and the mechanics by which this is done and whether this has been common knowledge since members of the egg marketing board themselves may well have been participating in the way it’s done? What is his understanding of the mechanics by which Loblaws buys eggs and arranges the price?
Hon. W. Newman: As far as eggs are concerned, they are under a national supply- management agreement under the Canadian Egg Marketing Agency. All eggs are formula-priced, based on the cost of feed and other input costs. They go as a rule to the grading stations or to the stores. There is a set price for those eggs under the Canadian Egg Marketing Agency agreement. If any producer is discounting his eggs, going into any particular store, he is really breaking the national supply-management agreement.
Mr. S. Smith: Supplementary: Is the minister familiar with what Loblaws calls Intersave Buying and Merchandising Services? From the look on his face, I presume he is not, so I will go a little further.
Mr. Nixon: He always has that look.
Mr. S. Smith: Is the minister aware that certain persons selling eggs to Loblaws at an agreed-upon price receive money from Loblaws for the eggs and then at a later date send a cheque equivalent to two cents a dozen to this company, Intersave Buying and Merchandising Services, although they receive no obvious benefit from that company and never come face to face with it or have any money coming from that company, which is, apparently, a wholly-owned subsidiary of Loblaws?
Can the minister explain, first of all, why he doesn’t seem to know about this and, secondly, why he imagines that Loblaws would do business in this strange way of paying a certain price as Loblaws and then demanding a cheque from the producer to this wholly-owned subsidiary with which the producer has nothing to do?
Hon. W. Newman: I mentioned last Friday, I believe, that the Attorney General (Mr. McMurtry) would be making a statement on the legality of the other aspect of it. Regarding this particular aspect that you are talking about, I know of no such practice. If there was a practice in place, it has been discontinued. We had word last week from both Loblaws and Dominion Stores that they would discontinue all these practices.
Mr. MacDonald: You mean you finally got on top of it.
Mr. Makarchuk: When the minister is investigating this whole matter in the poultry business, would he check to see that this practice is not extended into the broiler business, where in fact the same situation exists with the stores insisting on a kickback for all the broilers that they buy from some of the producers and independent processors?
Hon. W. Newman: If the honourable member would give me the details of the particular situation he is talking about, I would be glad to look into it.
Mr. Warner: You want him to do your work for you?
Mr. S. Smith: Despite the fact that we have been talking about these discounting practices for over a week now, the minister has still apparently not informed himself of these matters. Would he at least please speak to the members of the Egg Marketing Board, as well as to representatives of every other type of producer that is under the aegis of his ministry, and find out exactly what is going on in this area in the province of Ontario, and particularly report back to this House as to whether or not Intersave exists, whether or not these practices are going on, and precisely who has been involved in them -- whether any members of the egg marketing board have themselves been involved in this practice -- and explain to this House why the minister himself seems to know absolutely nothing about it?
Hon. W. Newman: That is not true. As far as I am concerned and as far as the egg marketing agreement is concerned, I know of one individual case where a person was selling eggs at a reduced price, which was contrary to the CEMA agreement. There are set prices for eggs in the province of Ontario under the national supply agreement. As far as any other systems are concerned, we did check on Friday and over the weekend, and we found Loblaws deals directly with only two producers and Dominion Stores has one producer that deals directly with it. Most of them deal through agents or commission houses, or whatever it may be, with those stores.
Mr. MacDonald: Subsection 6 of the Ontario Food Council gives the Lieutenant Governor in Council the power to have the Ontario Food Council investigate what are described as undesirable trade practices. Has the minister considered referring this whole matter that he got on top of only last week to the food council for a broad-ranging investigation; and if not, why not?
Hon. W. Newman: Much of the information that I pass on to this House has been put together by the Ontario Food Council. We are continually looking into and monitoring the situation. Mr. Doug Williams, who is chairman of the Ontario Food Council --
Mr. MacDonald: You mean you are sleeping on it.
Hon. W. Newman: No, we have been working very hard on this whole situation.
Mr. MacDonald: It has been going on for a year and you just found out about it last week.
Mr. Rotenberg: When did you find out about it?
Mr. MacDonald: It is the ministry’s job.
Mr. Makarchuk: In response to the last remark, I wish to point out to the minister that I am not the Minister of Agriculture and Food --
Mr. Eaton: Aren’t we lucky.
Mr. Makarchuk: -- and I would suggest that if he is investigating the matter of kickbacks in the poultry processing industry would he consider investigating the broiler industry to see if the same practices do not in fact exist in that industry at this time?
Hon. W. Newman: In the broiler industry, if you are a processor you go out and negotiate a price, through the boards themselves.
Mr. Makarchuk: With a kickback!
Hon. W. Newman: The broiler marketing board has a price-setting, quota-setting facility at its disposal. They are a producer-elected board. They determine the quota for production each quarter, and exactly what the price will be. Then they will be able to deal with it on that basis.
Mr. Makarchuk: Cheek the independent producers.
Hon. W. Newman: I know all about the independent producers.
Mr. Deputy Speaker: Order.
Mr. Makarchuk: Well, get in there.
FEDERAL HOUSING PROPOSALS
Mr. Cassidy: I have a question of the Minister of Housing arising out of the statement that he made in the House today. In view of the fact that the minister said in his statement that the issues brought forward by the federal government reflect the position taken by the Ontario government in similar meetings previously, can the minister tell this House what specific positions Ontario is taking with regard to the rent-geared-to-income scale, particularly as it affects senior citizens, in view of the fact that Mr. Ouellet’s statement very clearly indicates that the federal government wishes to raise existing rent-geared-to-income developments to the agreed target level; that is, a 25 per cent level related to gross income for everybody, regardless of income?
Hon. Mr. Bennett: Mr. Speaker, very clearly the province of Ontario, and indeed the other nine provinces, agreed with Mr. Ouellet that in due course the rent-geared-to-income level should rise to 25 per cent. I said “in due course”; unfortunately, the statement that Mr. Ouellet has put out at the moment does not appear to be taking into account that position, which the governments of all provinces have accepted. I don’t back away from the clear position set out by Ontario, in complete concurrence with the other provinces and the federal government, that in due course we should arrive at 25 per cent of income for rent in our public housing and senior citizens’ developments.
Mr. Cassidy: Supplementary: In view of the fact that senior citizens now pay a rent that is between 16 per cent and 20 per cent of their income, and in view of the fact that their income with GAINS is about $280 a month -- which is a very inadequate level, given the cost of living that they have to undergo -- can the minister justify why Ontario intends to raise their rent to 25 per cent and when Ontario believes that should take place?
Hon. Mr. Bennett: In response to the latter part of the question, that’s part of the negotiations I hope we will be able to discuss with CMHC and Mr. Ouellet’s department in due course. We have said clearly that we are not prepared to try to set a specific date at this time but we hope, between the provinces and the federal government, we can come to a common date and to an understanding by all as to what it means.
In relation to the 16 per cent, at the moment that’s correct. Between 16 per cent and 20 per cent of income is now paid by senior citizens in relation to senior citizens’ accommodation provided through Ontario Housing Corporation or some of the other non-profit groups in Ontario.
We believe, if one takes into account all the other parts of the package relating to income for senior citizens, that the 25 per cent factor is not unrealistic. May I go one step further and say that, in talking with senior citizens at a number of units we own across the province of Ontario about this very difficult situation of how to bring the cost of providing housing by the governments of Canada, the province of Ontario and the municipalities more into line, there has been no resentment about the fact that maybe they should be paying upwards of 25 per cent of their income to have the residences we are providing.
An hon. member: Upwards of?
Mr. Cassidy: Supplementary: Can the minister explain the government’s change of position whereby seven years ago it accepted the view that, as far as families in social housing were concerned, their rent should vary depending upon their incomes, so that people at the lowest levels of income would pay 13, 14 or 15 per cent of their income in rent, because they could not afford any more?
Why is the government abandoning that particular position, in view of the fact that this affects people living in many cases far below the poverty line?
Hon. Mr. Bennett: Because we are looking at the situation, maybe in a little clearer position, that the rent should be the entire factor, rather than having utilities placed upon it in addition; I’m excluding cable television and a few other personal services. That’s part of the discussion we have going on with CMHC at this moment as to whether, if the 25 per cent factor is taken into account, it will include all of the utilities that are being provided to these people, rather than having to increase them on a constant basis, which we have not been doing in the province of Ontario.
HOME RENEWAL PROGRAM
Mr. Cassidy: Mr. Speaker, I have a second question to the Minister of Housing, and I guess it flows to some extent from the indication that the government is abandoning any commitment to housing for people on low and modest incomes, particularly senior citizens.
Mr. Rotenberg: Ask a question; don’t make false statements.
Mr. Cassidy: I would like to ask the minister about the meaning of a statement which he issued a week and a half or two weeks ago relating to the continuation of the Ontario Home Renewal Program, a program which is one of the few in this ministry which has actually worked effectively. Can the minister explain why the government is saying that the Ontario Home Renewal Program would be extended for one year only and that loan commitments should not be made beyond that period, and can he give some information to this House and to municipalities as to what will be done subsequently in relation to the rehabilitation needs of people who own homes or are small landlords and have modest incomes?
Hon. Mr. Bennett: First of all, let me clear up one statement made by the leader of the third party. In no way did I say that this government or the governments of this country are abandoning the modest income earners for public housing or units being supplied by government for their accommodation.
Mr. Cassidy: That is what is happening.
Hon. Mr. Bennett: In no way, shape or form have we said that in the past nor will we say it in the future. We’ve said very clearly in this House and outside this House that we’ll see to it that the accommodations that are required to house people adequately in the province of Ontario will be supplied by government; maybe not in direct ownership, but through rent supplement programs. I say very clearly to this House that it is the position being taken by every government --
Mr. Warner: When do you start?
Hon. Mr. Bennett: -- whether it happens to be a Liberal government, an NDP government or a Conservative government in the various provinces across Canada. We’re no exception. British Columbia and Saskatchewan and a few of the others have already advanced their positions on rent supplements much more aggressively than we have in Ontario. We think their programs are working rather well.
May I come back to the point on the home renewal program. We have $20 million, and I met with the PML committee a week ago Friday and explained to them very carefully and distinctively that this sum of money was provided for the current fiscal year only and that I was not able at this time to tell them whether we’d have a program the following year or not, but that we were working on it and the details would be given to the Treasurer to come to some conclusions with our back-up information.
The fact is the rental program for home renewal has been withdrawn for this year. We are doing an assessment on it over a one-year period to see exactly how effective it happens to be or has been. Some municipalities were not very convinced that it would do very much for their housing markets and we have some doubts as to whether it really effectively answered the problem in the rental sector. But in home ownership there is no doubt about it that the home renewal program has been most adequate. To make it very clear to this House, one of the reasons that it works so effectively and positively on behalf of the homeowners in this province is that it’s singularly a provincial program. We have no other governments to interfere in its operation.
Mr. Sargent: Supplementary, with regard to the way the minister handles the funds politically. The member of Parliament for Brampton had a cheque for $164,000 given his people and they used only $13,000 but they still kept the money. We have to fight for every nickel we get and the minister won’t even pay out what’s coming to us. Would he tell us about that?
Hon. Mr. Bennett: Mr. Speaker, I think if the member were honest he would say to you he has a complete file from me on this particular case.
Mr. Sargent: The minister’s deputy has.
Hon. Mr. Bennett: He asked the question at the public accounts committee and it was answered both by the deputy and myself. The fact is that in the first year -- the initial year, back about four or five years ago -- it was on a first come, first served basis, and we did not grant --
Mr. Nixon: That explains it.
Hon. Mr. Bennett: -- to every municipality the sum of money that they happened to look for. We gave them about 50 per cent of the amount of money they required, the balance to be paid later. We have constantly tried to review those municipalities and the use of the funds, remembering very well that none of the money comes back to the provincial government. It’s put into a revolving account that continues to be used by the municipality.
I won’t deny to the member that there could be two or three cases in the province where municipalities have not used up all of their funding. But on the other hand, we have cut them off for any additional funding and have prompted them to try to get on with using what they presently have.
Mr. Makarchuk: Supplementary: Will the minister advise the municipalities, telling them definitely how much money they’re going to receive for the year and that way ensure that the municipalities can operate these programs in an orderly fashion so they can plan ahead? Then they can hire the proper staff and they can go ahead and advise the people that the money will be forthcoming, instead of the present rather chaotic method by which he now operates, where he says, “You will get the money and you may spend it,” et cetera and, as a result, the program breaks down in many cases.
Hon. Mr. Bennett: We have told the various municipalities exactly how much money they could be entitled to. We’re not saying they will get the full allotment. They must show that there is sufficient capacity for using those funds. The initiative rests with the municipality to approach the ministry with application for funding. We review the need according to the criteria that have been accepted by both the provincial and the municipal levels and the amount of money that could be available to them. But that does not mean to say, very clearly, they’re going to get that entire sum of money.
Mr. Makarchuk: That’s right. How can they plan their programs then?
Hon. Mr. Bennett: The amount of money we have across this province is $20 million. I think we can properly put it to use. Let me warn the House of this: If you have too much money going into this field -- and this is by the municipalities’ own assessments, not only ours -- it could very well upset some of the very difficult inspection routines they have within those municipalities.
Mr. Makarchuk: That’s a red herring.
Hon. Mr. Bennett: Mr. Speaker, very clearly, the program has been well accepted by municipalities. We have increased it from $15 million a year ago to $20 million in the current year. I think it’s working very well. That’s not to say that other funds could not be found for it as the year goes on.
Mr. Sargent: Supplementary: We all think it’s a good program but there is not enough of it, because it helps the service industry. Would the minister tell me if he’s looked after the answer to my letter? I’ve been waiting about six weeks for an answer on the matter of Keppel township. Will he take it out of a first come, first served basis on the allotment of funds?
Hon. Mr. Bennett: Not only did I answer the member’s letter, I also spoke to the reeve of the municipality.
Mr. Cassidy: Supplementary: In view of the success of the program, particularly with home owners, that the minister has referred to, would he not agree that Ontario is introducing the same uncertainty into this field that he is accusing the federal government of doing with its imposition of new programs? Can he give a commitment that the Ontario Home Renewal Program will continue after the end of this year and if not, why not?
Hon. Mr. Bennett: Mr. Speaker, without being in a position to say how much the commitment could be for the future years, I think that the success of the program, the need of it to upgrade the housing stock in the province of Ontario, is likely the greatest sales tool that there will be for this ministry to use with the Treasurer (Mr. McKeough) and Management Board of Government. The amount of money that we will have available for future years will be determined, but I see the program as continuing in existence.
Mr. T. P. Reid: I have a question for the Premier related to some public opinion polls that have been taken by the government -- particularly the Ministry of Education -- since 1975. Is the Premier aware that since 1975 seven polls have been taken by the Ministry of Education or under their authority totalling almost $340,000 in total costs? Can the Premier indicate to the House what the purpose of these polls are? Will he, in fact, give a policy directive that any public funds spent on such public opinion polls will be made public and tabled in the Legislature?
Hon. Mr. Davis: I think that really the second part of the question is appropriate for me to answer, and I will certainly take the second part of the question on notice. The first part of the question, I think, should really be more properly put to the Minister of Education who is more familiar with this than I am.
Mr. S. Smith: Can we see the polls or not? If not, why not?
Mr. T. P. Reid: May I then, Mr. Speaker, redirect to the Minister of Education. I would have thought that it was the Premier’s responsibility to make a policy initiative that these polls should be made public knowledge since they are paid by the public.
Mrs. Campbell: When does that happen around here?
Mr. T. P. Reid: Has the Minister of Education anything to say on this particular aspect?
Hon. Mr. Wells: As I recall, some of those polls have been made public and the member has had them to read for quite a time.
Mr. S. Smith: What about all of them?
Mr. T. P. Reid: We’d like all of them.
May I ask a two-part supplementary. Can the Minister of Education tell us what is the purpose of taking these polls in the first place? Secondly, can he assure us that these polls have not been made use of by the Conservative Party -- as distinct from the government of the province of Ontario -- in arriving at policy or strategy for elections?
Hon. Mr. McKeough: How could you suggest such a thing?
Hon. Mr. Wells: If my friend is suggesting that these polls were in any way used in the form of partisan party polls, that is completely untrue.
Mr. T. P. Reid: Well, we don’t know.
Hon. Mr. Wells: They were a sampling of public opinion on matters concerning educational policy, for which we like to be informed of what the public of this province is thinking.
Mrs. Campbell: What about the rest of us?
Mr. S. Smith: Don’t you think we’d like to be involved, too?
Mr. T. P. Reid: What about the whole House? Why not the whole House?
Hon. Mr. Wells: Let me ask the member, has he read the Statistics Canada polls that have been published and does he know what the public thinks in those polls?
Mr. S. Smith: You expect us to vote on these things when you propose them. Why can’t we be informed?
Hon. Mr. Wells: I suggest to the member that we believe very much in the participation of the people of this province in the development of policy.
Mrs. Campbell: Other than the Legislature.
Hon. Mr. Wells: I want to tell him that the people of this province participate to a far greater and more relevant degree through the use of properly carried out opinion polls than they do through pressure groups, who from time to time put special pressure on us for certain things.
Mr. Philip: Supplementary: Can the minister tell us whether any polls have been taken which are not public? If so, will he table the results of those polls?
Hon. Mr. Wells: I indicated that certain of the polls had been made public. I think that the polls that are there -- and I am not sure of the number that were taken by Goldfarb Associates -- have not been made public.
Mr. Warner: Answer the question.
Mr. T. P. Reid: Would the minister not agree, since these polls have been paid for by public funds and since they are, supposedly, according to the minister, an indication of public opinion, which has an effect on government policy, they should be made available to all the people in the Legislature and not just the government, since they are paid by all of us?
Hon. Mr. Wells: I don’t necessarily buy that assumption.
Mr. Warner: We need a freedom of information act.
Mr. MacDonald: That is called freedom of information.
Mr. Deputy Speaker: Order.
Hon. Mr. Wells: But I would be glad to look them over and see if it might be possible.
Mr. T. P. Reid: What is so secret about them?
An hon. member: Table them then.
Hon. Mr. Wells: Nothing is very secret about them.
Hon. Mr. Wells: I suggest that if the member thought a little about them he could probably predict what they say.
Mr. S. Smith: You paid a lot of money for them.
Mr. Philip: Utter arrogance.
PAYMENTS TO MUNICIPALITIES
Mr. Swart: I have a question of the Treasurer, He will be well aware that he unilaterally revised the Edmonton commitment last fall so as to deduct teachers’ superannuation payment from local government transfer payments. Because of that, he now says in his budget this year that local governments owe the province $444 million.
Mr. T. P. Reid: It is called recycling.
Mr. Swart: Will the Treasurer assure this House now that the payments to be made by his government to liquidate the $1 billion debt that there is in the superannuation fund will not be deducted from transfer payments to local governments now or in future years or used in any formula of transfer payments so as to lessen transfer payments to local governments?
Mr. S. Smith: We went through all that in the estimates.
Hon. Mr. McKeough: I think it would be unwise to give that sort of a commitment inasmuch as it is some 10 years away before the liability is paid off.
Mr. Laughren: Yes, in view of the government’s track record.
Hon. Mr. McKeough: But if the member is asking if this amount is determined separate and apart from general legislative grants, the answer is yes.
Mr. Swart: Supplementary: In view of the fact that the Treasurer will not commit himself to not reducing transfer payments to local governments because of this debt, does he not think it would have been fair on his part to have informed the local governments of this debt last fall, as he knew there was a debt of $1 billion, and the possibility that it might be deducted in the future from their transfer payments?
Hon. Mr. McKeough: I think it was shown that way, as I recall, last fall. I don’t have the statement in front of me, but I don’t think it was hidden.
Mr. Swart: There was no debt shown.
Hon. Mr. McKeough: No, I am not going to tie my own or my successor’s hands.
Mr. Warner: Are you getting out?
Hon. Mr. McKeough: It may well be that there is an actuarial deficiency, for example, in the legislative members’ retirement fund.
Mr. Warner: There probably is.
Mr. Swart: You’ll deduct that from local government.
Mr. Laughren: Tell us more about your successor. Would you expand on that a little bit?
Hon. Mr. McKeough: Obviously, all those things are taken together. At the moment, there is no guarantee for general legislative grants in education. That is the process of budgeting each year. I don’t think the member on sober reflection would want to put us into some sort of straitjacket --
Mr. Sargent: Why don’t you give the taxpayers a break and resign?
Hon. Mr. McKeough: -- by decreeing what will or will not be in certain budget items.
Mr. Sargent: Why don’t you do us all a favour and resign?
Mr. Swart: By way of supplementary: Does the Treasurer not consider that there is any difference in the sort of commitment he has given to local governments to other general expenditures of the Legislature, that there was such a thing as an Edmonton commitment and that he said last fall he would make no further changes in it without consulting with the local municipalities?
Hon. Mr. McKeough: I’m afraid I don’t follow the member’s question.
Mr. Warner: Of course not. You shouldn’t be the Treasurer.
CHRYSLER PRODUCTION PLANS
Mr. B. Newman: I have a question of the Premier. As the Chrysler motor company has already announced the phase-out of the six- cylinder engine plant in the city of Windsor, resulting thereby in the potential loss of approximately 400 jobs, would the Premier require Chrysler not only to say it will retain the present work force, but also to show how it will retain that work force?
Hon. Mr. Davis: I am more than prepared to urge Chrysler to retain that work force. I have explained in the House, it is sometimes a little more difficult for Chrysler or anyone else to specify exactly how that might happen because it does depend on the market situation, the number of vehicles that Chrysler Corporation will be selling in the 1979 model year. Certainly, I will pursue that for the honourable member with Chrysler.
Mr. B. Newman: A supplementary: Will the Premier require that industry not only gives substantial advance notice of production changes but also that the company involved, if it is in the auto trade pact, proves that its actions do not violate the intent of the pact?
Hon. Mr. Davis: There is no statutory authority for us to say to a company that whatever you do must conform to the auto pact. That, as we have discussed very recently in this House, is a matter that is between the governments of Canada and the United States. I think we can discuss here the question of notice or the question of benefits, et cetera. But the question of saying to an automotive company that whatever decision it makes we can as a Legislature impose our will in terms of what it can or cannot do -- I think the honourable member would understand that is just not legally possible.
Mr. Kerrio: We have the biggest stake in it though.
Hon. Mr. Davis: I would say to the member for Niagara Falls in terms of his supplementary question, which he didn’t get up to ask but I understand what he is saying --
Mr. Ruston: Then you shouldn’t answer.
Hon. Mr. Davis: -- we certainly do. That is why this government has consistently raised it with his friends at the national level and we are still awaiting their response.
Mr. Bounsall: Supplementary: Would the Premier make his concern known to the auto companies that we don’t want to see happen with any of the others what has happened with Chrysler? They are shifting to the United States the lines which are the high volume lines and are leaving in Canada the eight-cylinder engine going into that old six-cylinder plant space. These are lines which are likely to be phased out over the next two or three years. That is a pattern that is emerging. Would the Premier not express his very real concern to all auto companies that that pattern has been detected and that it is a pattern we cannot tolerate in Ontario?
Hon. Mr. Davis: This has already been made known to the auto companies. I think one has to be careful to use one example as a generalization. We have had some discussion with American Motors. While the transfer of the product to Brampton in total numbers will be somewhat less, even those people I have discussed it with in the UAW who happen to reside in that community sense there may be a certain greater measure of job security or in product marketability by having the Jeep manufactured in Brampton rather than one of the passenger vehicles.
The increased market in Jeeps, compared to some other vehicles that American Motors have made over the years, has been I think one of the very real plusses. While the total number of man hours will be down and the total volume of units will be down, the fact of the matter is that a lot of the workers in my home constituency are concerned about the longevity of the particular product that is being assembled. There is a feeling that the Jeep is a pretty marketable product and that the security there may be somewhat greater. So it is not all a one-way street.
I might try now to answer, unless there is another supplementary, Mr. Speaker, the question of the member for Halton-Burlington.
Mr. Deputy Speaker: Is there another supplementary?
Mr. Ruston: Supplementary to the Premier: In his discussions with Chrysler did he or they at any time raise the matter, since they are now in production with small cars and all are manufactured in the United States, that they may be making parts in Canada for those small cars -- the Omni and the Horizon?
Hon. Mr. Davis: We didn’t get into individual vehicles. I was going to mention to the member for Windsor-Sandwich -- and as I say, it is a two-way street. When the Cordoba was a marketable product there is no question that Chrysler retained the production in Canada and that the Windsor community was the prime beneficiary because the Cordoba was probably the best-selling vehicle. The line was operating at peak capacity, whereas at several facilities in the United States the same company had cutbacks in production. So, I’m just saying that market variables must be taken into account. That was one instance where it was a bit of a plus. With respect to the Omni and the Horizon, we did have some brief discussion about it. I can’t really inform the hon. member that anything conclusive emerged from that. I think a good part of those vehicles may be assembled in the United States, I’m not sure. But I think portions of both vehicles are in fact, made offshore. I think I am right in that.
Mr. Cooke: I would just like to ask the Premier when we can expect a full report or a full statement in this House on the meetings he has had with the automobile companies. In particular, when can we expect a statement on his meetings regarding the Windsor problem? Can we expect a statement in the near future? Can he tell us what concrete results have come out of those meetings or have they just been friendly meetings with his corporate friends?
Hon. Mr. Davis: I feel I should really balance these things up. Saturday night I spent a very pleasant night with my union friends who, in my riding, probably vote for me more regularly than they vote for the NDP candidates. It shows their wisdom.
Hon. Mr. Grossman: And with good reason.
An hon. member: No Tories in Windsor.
Hon. Mr. Davis: I would say to the honourable member it breaks down fairly evenly.
Mr. Deputy Speaker: Back to the question.
Hon. Mr. Davis: What do you mean, “Not a very good fisherman”?
Mr. Sargent: Come up our way. You’ll get --
Hon. Mr. Davis: Listen, I’ll tell you this: The smelt of the Musquash are much larger than on the other shore of Georgian Bay, I say to the member for Grey-Bruce -- and in greater abundance. What’s more -- well, never mind.
Mr. Deputy Speaker: Order.
Mr. Sargent: You can eat ours.
Hon. Mr. Davis: I should have brought the member some home. It would be better than some of his diet. I’d be delighted to bring him some.
Mr. Deputy Speaker: Order. Back to the question.
Hon. Mr. Davis: Quite right. What was the question?
I will have a report or some form of discussion here in the House fairly soon. We still have to meet with International Harvester and we’ll be meeting with representatives of the UAW before we finalize some of the observations we might be making to the members of the House to bring them up to date on the various discussions we’ve had.
Hon. Mr. Davis: The member for Halton Hills, Norval -- whatever, raised a question with me on Friday.
Mr. J. Reed: As long as you don’t know, you can be sure I’ll be re-elected.
Mr. Eakins: Think about that, Bill.
Mr. Kerrio: Never mind, Julian, he knows where Niagara Falls is and I got re-elected.
Hon. W. Newman: I heard what you said about the farmers the other day.
Hon. Mr. Davis: I won’t remind the honourable member what he said about the farm community on Friday, but in the absence of the Minister of Energy (Mr. Baetz) he did ask me a question.
Mr. J. Reed: Remind me about that.
Hon. Mr. Davis: It was a rather slow day, but I did read the questionnaire that he was concerned about. His questions were: What purpose is being served by Ontario Hydro’s questionnaire sent to farmers asking for estimates of financial losses if electrical power supplies were interrupted; and secondly, how much did it cost?
The honourable member will recall, having been a member of the select committee on Hydro, that the committee made certain recommendations to the government in terms of getting some forecasts on reliability and amount of reserve power. The Ontario Energy Board, in 1974, as part of its report made certain suggestions on the question of reliability and on matters of reserve. As a result of this, Ontario Hydro set up a committee which has sent out questionnaires to four or five sectors, one of them being the agricultural community, to determine the question of reliability, questions of cost, matters that are really quite relevant to the present discussions of Hydro.
I glanced at the questionnaire and I don’t minimize its complexity but I think the honourable member underestimated the capacity of the agricultural community to deal with such a form. The form is here. The member should really distribute it to his colleagues; I don’t think they’ll find it difficult either. I didn’t find it that tough.
Mr. Peterson: It’s obviously very simple.
Hon. Mr. Davis: In the matter of cost, there were some 26,000 questionnaires sent out. The postage calculated at 10 cents each is $2,600; the responses, 7,000 at 10 cents -- they sent out envelopes so that those questioned could reply -- that’s $700; cost of materials outside envelopes, 26,000, cost $400; return envelopes, 26,000, cost $320; questionnaire forms, 26,000, cost $450; for a grand total of $4,470. I should point out, so the honourable member will have his faith in the agricultural community restored, 70 per cent of the respondents answered the questionnaire with clear cost replies -- no problems -- completed the form and had no difficulties. The 8,000 replies were a fairly high return for any sort of questionnaire.
Mr. J. Reed: Supplementary, Mr. Speaker: I wonder, in the light of that editorialized answer from the Premier --
Hon. Mr. Davis: It was an editorialized question.
Mr. J. Reed: -- if he might comment on an editorialized letter from a farmer regarding that questionnaire. This is from a farmer in Cherry Valley.
Mr. Deputy Speaker: Would the member place the question?
Mr. J. Reed: Would the chair permit me to read this so that the Premier can comment on it?
Mr. Deputy Speaker: It’s not the usual procedure in the question period to read letters.
Hon. Mr. Davis: I could quote the member a lot of letters.
Mr. J. Reed: I’d be pleased. It’s just an editorialized comment from the letter: “I’m sure this kind of nonsense is another reason our hydro bills are so high. I hope you will consider this worthy of note and bring it to the attention of the proper authorities.”
The farmer says: “If you read the questionnaire it is apparent that the person preparing the questionnaire is quite unfamiliar with farming and the degree in which the farm operation relies on electricity. I answered the questions as best I could -- ”
Mr. Deputy Speaker: Would the member place the question?
Mr. J. Reed: “ -- but on a day in January how could one estimate how much milk in the tank, how many sows were due to farrow and how much milk production would drop because animals were not watered or fed silage?”
An hon. member: Not necessarily in that order.
Hon. Mr. Davis: In reply to what was a non-question, but apparently we’re allowing non-questions today, I would only make the observation that I made. I didn’t send out the questionnaire. There was a fairly heavy response which the honourable member must understand because he sends out questionnaires in his riding, I understand. I’ve seen some of them on occasion.
Mr. J. Reed: Name two.
Hon. Mr. Davis: You know, just informal sorts of discussions.
Hon. Mr. McKeough: And who pays for those?
Hon. Mr. Davis: And I would only point out that the response in percentage terms is really quite high and that 70 per cent of the response answered the form rather completely and without any difficulty.
So while I’m sure some farmer has written to the member suggesting that he didn’t think it was a valid investment, I think that $4,400 to get some understanding from the agricultural community as to their concern about reliability and cost factors in terms of their prime energy source, is not such an improper investment. In fact, I think if the honourable member were being totally objective, if Hydro hadn’t done it he probably would have been suggesting they do it.
MAPLE PARK SITE
Ms. Bryden: Thank you, Mr. Speaker. I have a question of the provincial Treasurer with regard to the proposal by Family Leisure Centres of Canada to establish a huge theme- type amusement park on Major Mackenzie Drive near Maple, a proposal Mr. Speaker, which has been approved by the OMB but is now being appealed to the cabinet by a number of groups.
Hon. Mr. Kerr: If it is sub judice then you can’t mention it.
Ms. Bryden: I’d like to ask if the provincial Treasurer still holds the views which he expressed in a letter to the mayor of the township of Vaughan on April 6, 1976, in which he said that a number of ministries were concerned about the size and the nature of the project, particularly the Minister of Agriculture and Food, who had grave doubts about the pressure on prime agricultural land and the Minister of Transportation and Communications had thought that it would be necessary to broaden Highway 401 to 10 lanes, and the provincial Treasurer came to this conclusion in his letter.
Mr. Deputy Speaker: The question has been asked.
Ms. Bryden: I would like to quote what the provincial Treasurer concluded.
Mr. Deputy Speaker: Order. The question has been asked.
Ms. Bryden: I haven’t quoted the exact statement. I would like the provincial Treasurer to confirm whether or not he still supports --
Hon. W. Newman: What is the question?
Mr. Deputy Speaker: Order. The question has been asked. The provincial Treasurer.
Hon. Mr. McKeough: My concern and the concern of my colleagues was that all these various concerns should be well aired. That was the reason there was an Ontario Municipal Board hearing. Whether the concerns of the citizens and ministry were adequately dealt with by the board, I suppose, is something which cabinet will look at when it considers the appeal.
Ms. Bryden: A supplementary, Mr. Speaker. The provincial Treasurer specifically said that this project may be large enough to warrant a hearing and decision by the Environmental Assessment Board. Does he still hold to that view?
Mr. Warner: Oh, a flip-flop. We need an explanation.
Mr. Deputy Speaker: One final supplementary from the member for Beaches-Woodbine.
Ms. Bryden: If he does not, is the provincial Treasurer prepared to add to his budget the cost of increasing Highway 400 to 10 lanes and the additional sewage, garbage and water costs that will be necessitated by this project?
Some hon. members: Oh, oh.
Mr. Kennedy: Revenue makes revenue.
Hon. Mr. Davis: You’re against children having fun.
Hon. Mr. McKeough: Whatever requirements are determined from time to time by municipalities or my colleagues, we do our best to accommodate them in the provincial budget and we also make some attempt to make sure that those things which can be properly charged back to various developments are charged back and municipalities do that quite regularly. I am not prepared to forever simply think that this province is going to stand still, as members in that party would have it.
Hon. Mr. Davis: What have you got against children having fun?
Mr. Martel: We just want jobs for them.
TRIHALOMETHANES IN WATER
Mr. G. I. Miller: I would like to direct a question to the Minister of the Environment. Given the fact that the national survey for trihalomethanes in drinking water done by the Department of Health and Welfare of Canada shows the results were in the same range as those previously reported by the Ministry of the Environment, can the minister inform me whether tests are under way or planned for the monitoring of trihalomethanes in Cayuga?
An hon. member: Yes, no, I will look into it.
Hon. Mr. McCague: Yes, Mr. Speaker, there have been studies done of the Cayuga water.
Mr. G. I. Miller: Supplementary, Mr. Speaker: Could the minister inform me, will there be modifications made to the treatment process in that particular municipality?
Hon. Mr. McCague: Yes, Mr. Speaker, this work is already under way at the request of Cayuga and the region.
Mr. Makarchuk: Supplementary: In view of the fact that a similar modification to the water treatment plant to remove the chemicals did not work in Brantford, what makes the minister think it’s going to work in Cayuga?
Mr. Breaugh: A different climate? I am just trying to help you out, George.
Hon. Mr. McCague: Mr. Speaker, they are still working with the Brantford one and we are satisfied that we will have it corrected.
Mr. Martel: In the fullness of time.
Mr. Breithaupt: Mr. Speaker, a question of the Minister of Consumer and Commercial Relations with respect to the on-going involvement with the province of Quebec and their new no-fault automobile insurance program. Since the question that was asked just a month ago on this particular matter, has the minister now had a response to his letter from Madame Payette? Is he able to table the correspondence and can he tell us how this matter is now to be resolved?
Hon. Mr. Grossman: Yes, my superintendent of insurance met with his counterpart --
Mr. S. Smith: Your superintendent? The people’s superintendent.
Hon. Mr. Grossman: -- I believe it was around April 25 or so and as a result of that conversation both the superintendent here and in Quebec are meeting with their respective ministers to sort out the various positions on it. We are now pointed toward a date of, I believe, the third week in June, if still necessary, for a meeting in Quebec City.
Mr. Breithaupt: At the time of that meeting, will the minister encourage the retroactivity of any agreement to the date when the new Quebec program came into force, so that we can be assured that any person who may have been involved in an accident or is at some internal stage of developing litigation or making a claim would be suitably protected?
Hon. Mr. Grossman: Yes, that was of course one of the topics of discussion between the superintendents. We are trying to refine the common points of discussion and agreement, if any, before that meeting, but that will certainly be one of them.
NOTARY PUBLIC APPOINTMENTS
Mr. Philip: A question of the Attorney General: Would the minister agree that the reason his ministry has not been processing new lay appointments of notary publics is that such appointments infringe upon the legal profession? If so, can the minister tell us why he appears to put the self interest of the legal profession ahead of the convenience of the public?
Hon. Mr. McMurtry: It’s been the policy of the Ministry of the Attorney General for some time not to make new appointments of notaries public except in exceptional circumstances. The reason -- or a fundamental reason or rationale -- behind this policy has been that many individuals in the past have used this appointment as an opportunity to practice law. As a result, citizens have not been well served by individuals who hold themselves out as possessing a certain degree of legal expertise while in fact that is not the case.
Mr. Martel: It works when the lawyer does it.
Hon. Mr. McMurtry: The reason for this policy has been to protect the interests of the public.
Mr. Philip: Would the minister not agree that in certain instances, such as senior citizens’ homes and in certain areas of the ethnic or new-Canadian communities, there is a need in fact for either clergymen or other people in the community to notarize public documents?
Also, would the minister comment on the statement in a letter by Mrs. T. Caldwell, dated February 21 -- she is the supervisor of legal appointments -- that states that the ministry has not been processing new lay appointments as notaries public inasmuch as it is felt that such appointments “infringe upon the legal profession” -- the exact words?
Hon. Mr. McMurtry: I must repeat that they are not my words, and certainly not my reasons for supporting the policy. At the same time, I can say that I have asked the ministry to review the whole matter of notaries public because a number of notaries public have been authorized by the government of Ontario.
I would invite the honourable member -- and indeed any other members of the Legislature -- to let me have their views, particularly in the area of assisting senior citizens or members of ethnic minorities who may require some greater assistance in relation to the whole matter of notarizing certain documents. It may be that we can develop certain procedures that will assist and at the same time protect the public interest, in that certain people not hold themselves out as being able to provide legal services and advice when they are obviously not equipped to do so.
Mr. Haggerty: I direct a question to the Premier. Is the Premier aware of the question directed to the Minister of Energy concerning the water diversion to increase flows from Lake Michigan into Illinois’ water system that will cost New York State Power Authority an additional $45 million to consumer bills to replace hydro electric power loss? The Minister of Energy was kind enough to reply that this proposed water diversion will cost Ontario Hydro an estimated $20.5 million, based upon the 1978 value, a combined cost of $67.5 million.
Is the Premier aware that if approval is granted it would affect other lakes shared with Canada; and is he aware that the question of diversion may well be in violation of the 1909 International Boundary Waters Treaty Act between Canada and the United States?
Mr. Martel: Didn’t you know that, Bill?
Mr. Laughren: Remember that act?
Mr. Haggerty: Secondly, is the government or Ontario Hydro now in a position to oppose the water diversion plan, either on its own or jointly with the New York State Power Authority, or with the federal government?
Hon. Mr. Davis: I will make a note of all of those questions and try to give the same service to the honourable member as we were delighted to give the member for Halton-Burlington.
ALLEGED OPP IMPROPRIETIES
Mr. Lupusella: I have a question of the Solicitor General relating to a number of disquieting allegations made by native people against police officers in and around Kenora, Ontario.
Considering that during one week alone more than 20 affidavits were obtained in which native people related stories alleging improprieties committed by certain members of both the OPP and local police; and recognizing the fact that the Canadian Civil Liberties Association and the Lake of the Woods Pow Wow Club sent a letter jointly to the Ontario Solicitor General about the alleged improprieties, would the minister investigate and report to the House on their allegations and also what measures he intends to take to ensure that police officers in the Kenora area carry out their duties in a proper manner, without losing the respect of the native people --
Mr. Deputy Speaker: Has the honourable member come to the question mark yet?
Mr. Lupusella: Yes -- in the event that the sworn allegations against the police officers are true?
Hon. Mr. Kerr: Mr. Speaker, the letter includes allegations of events that have taken place over the last three or four years, according to Mr. Joe Morrison who is the head of the Lake of the Woods Pow Wow Club in Kenora. They are at least a year old, so the affidavits have been gathered from people who are alleging these incidents over some period of time. I think one of the things the honourable member should realize is that the new street patrol that has been set up in Kenora which includes native people from that area has improved the situation substantially, particularly in the last year or so, and it includes members of the local Pow Wow Club.
However, having said that, upon receiving the letter from the Civil Liberties Association and the Pow Wow Club I have asked the OPP and the OPC to investigate these charges. It will be rather difficult to do so because the native people involved do not want to give their names or the dates at which time these incidents took place or what police officers were involved. So it’s going to be rather hard to have a complete investigation. But in spite of that, the authors of the letter have been interviewed and there is an OPP investigator on the scene right now.
Mr. Lupusella: Supplementary: Can the minister also clarify for us the role of the band constables in the various incidents described in the letter sent to the Solicitor General or were only regular OPP officers or municipal police officers involved? And can the minister tell us what are the individual rights regarding body searches and does the male OPP officer have the right to search women?
Hon. Mr. Kerr: These are part of the allegations and this is the type of thing that will come out as the result of an investigation. I don’t want to comment on whether or not a woman was searched by an OPP officer. That is an allegation. There is no name, the lady doesn’t give her name; we don’t know who the officer or officers were or when that particular incident took place.
There is no question that the letter is written for the prime purpose of moving ahead Bills 113 and 114. That is the motive and intent of that letter. In the meantime, we’ll carry out an investigation.
Mr. Deputy Speaker: The time for oral questions has expired.
STANDING ADMINISTRATION OF JUSTICE COMMITTEE
Mr. Philip from the standing administration of justice committee presented the committee’s report which was read as follows and adopted:
Your committee begs to report the following bills with certain amendments:
Bill Pr7, An Act respecting the City of Hamilton.
Bill Pr21, An Act respecting the City of Cornwall.
ANSWERS TO QUESTIONS ON NOTICE PAPER
Hon. Mr. Welch: Mr. Speaker, before the orders of the day, I wish to table the answers to questions 35, 38 and 39 standing on the notice paper; and the response to petitions presented to the Legislature, sessional papers 66 and 73.
ORDERS OF THE DAY
CITY OF HAMILTON
Mr. Martel, on behalf of Mr. Deans, moved second reading of Bill Pr7, An Act respecting the City of Hamilton.
Motion agreed to.
Third reading also agreed to on motion.
CITY OF CORNWALL ACT
Mr. Martel, on behalf of Mr. Samis, moved second reading of Bill Pr21, An Act respecting the City of Cornwall.
Motion agreed to.
Third reading also agreed to on motion.
House in committee of supply.
ESTIMATES, MINISTRY OF REVENUE (CONTINUED)
On vote 1001, ministry administration program:
Item 1 agreed to.
On item 2, analysis, research and planning:
Mr. Haggerty: Mr. Chairman, I want to direct a question to the minister for clarification. I believe in his leadoff speech he mentioned something about purchasing or finding funds for a new computer system. What was the cost involved in that purchase and were tenders called?
Hon. Mr. Maeck: Mr. Chairman, I am advised by staff that the cost is somewhere in the neighbourhood of $40,000 under this particular vote.
Mr. Haggerty: What would be the overall cost, since the minister is only talking about this particular vote? Perhaps the cost is going to be shared by other areas of his ministry, such as the provincial assessment offices.
Hon. Mr. Maeck: My staff will get that for us. I don’t have it at my fingertips.
Mr. Haggerty: Will this apply to the ministry’s assessment practices throughout Ontario for reassessment?
Hon. Mr. Maeck: No, we’re talking here about computer costs as far as the taxation division is concerned, I presume. If the member wants the total cost for the entire ministry, it will take us a little while to get that.
Mr. Charlton: Mr. Chairman, I’d like to ask the minister, for my own clarification, whether this item 2 is strictly in the administrative area or does it have anything to do with actual taxation research?
Hon. Mr. Maeck: This activity is performed by the ministry’s finance and priorities planning group and involves the co-ordination and development of ministry-wide resource planning and allocation strategies, and operational evaluation and review procedures for the deputy minister and the senior managers. But it’s entirely within the ministry.
Mr. Charlton: It’s entirely administrative planning and research we’re talking about here; it does not have anything to do with policy research in the way of taxation and so on?
Hon. Mr. Maeck: That’s right.
Item 2 agreed to.
Items 3 to 7, inclusive, agreed to.
On item 8, information services:
Mr. Haggerty: I would like to direct a further question for clarification to the minister. I noticed in 1976-77 the actual costs for information services was $86,000. In 1977-78, the actual cost was $152,100. There has been a substantial increase within the last two-year period. This year, it has increased in round figures about $45,000. Could the minister give us an explanation why there is this substantial increase in the cost of information services and what it relates to -- sending out tax bulletin notices on new tax policies?
Hon. Mr. Maeck: The increase in salaries and wages and employee benefits is partly related to converting to classified staff resources previously budgeted and expended through temporary help services. What we have done really is to take temporary people and put them into permanent staff. This, of course, increases the salaries and the benefits.
There is also an increase in supplies, which results from planned expenditures on publications. The decrease in services -- that’s in the manpower part of it -- is due to the conversion of two man years of temporary help to classified staff.
Mr. Ziemba: Although we have an increase in costs for personnel -- a substantial increase over the past year -- I am curious about the personnel that the Auditor has assigned to succession duties. Could you state whether that staff has been maintained at the same level or whether it has been cut back over the past year?
Hon. Mr. Maeck: That will come under another vote. That is not under information services. We are only dealing here on this particular item with information services, which has nothing to do with succession duties at all. We will be happy to answer that question when we get into the succession duties part.
Mr. Ziemba: I was just thinking of personnel.
Mr. Makarchuk: Last year when we were discussing the estimates, I asked the minister at that time whether his department would consider putting out bulletins to various people -- businesses, real estate firms, et cetera -- explaining the ministry’s policy in making certain tax decisions. It was indicated at that time that perhaps it might be something that your department will embark on. In other words, where you make a decision that affects a firm when you put out that information you don’t have to say which firms are involved, but it may be a new landmark or a new concept or new idea from your ministry as to how you will apply certain regulations. It seems to me that to have this information available to the people out there in the province would be very useful. It would probably help to expedite a lot of the business dealings in the community in the sense that they would know exactly how they would be treated for tax purposes should they embark on one deal or another. I was wondering if you have done anything or moved in that direction.
Hon. Mr. Maeck: Yes, as I indicated in my answer to the member for Erie, I said that there was an increase in supplies that resulted from the planned expenditure in publications. That is really what I was dealing with. There are bulletins now for all taxes that have been redesigned in 1977. Bulletins have gone out to corporations and people who collect retail sales tax and anyone that is in the tax field. Bulletins are prepared now. If there is any change in policy or any change in legislation, I am advised -- I don’t know what I am advised here because I am having a little difficulty reading it. But I know that bulletins are going out on all of the tax changes and all of the policy changes and all of the interpretations. If there is an area where there are people who do not understand the interpretation of a certain section or a certain piece of legislation, a bulletin is prepared and sent out.
Mr. Makarchuk: What I am more concerned about in this situation is that there is something, a bulletin, that is similar to what the Securities Exchange Commission puts out, and it is mailed out to all the members, as well as all the people involved in the business. It gives them an indication that if they make a ruling on a certain transfer of a certain business deal, that is the kind of ruling that will eventually apply to other similar business deals and transactions of a similar nature. This is why I wondered, if the Revenue ministry would embark on this and put out that type of bulletin. You may argue on the one hand that perhaps you do not have that many varieties of rulings. But on the other hand we could argue from this House that perhaps there have been some special rulings that are unexplainable -- or that we don’t understand why they were made. However, if you make a ruling perhaps other people can take advantage of it or look at it and say that this is what the government policy is and, thereby prevent any kind of possible conflict arising in the future, should there be a dispute as to a previous ruling or a new ruling that may relate to a transaction.
Hon. Mr. Maeck: I am prepared to look at that. I understand the point you are making now which is completely different from the bulletins we are already putting out. You are suggesting that when we make a decision on a certain problem that a bulletin be prepared and sent out to the people who may be affected in the future so they would know what those decisions are. I am informed that we do that now. But perhaps it could be extended a bit. I will look into that.
Mr. Makarchuk: In that case could I ask the minister to put me on the mailing list for these bulletins? I haven’t seen any of them.
Hon. Mr. Maeck: Sure, we would be happy to put you on the mailing list.
Item 8 agreed to.
On item 9, systems development services:
Mr. Charlton: I would just like to ask the minister about the difference between the 1977-78 estimates in the briefing material he gave us, and the actual expenditure for salaries and wages in 1977-78. We are talking about $70,000 difference in salaries and wages under item 9 between the estimated expenditure last year and the actual expenditure last year. Could the minister tell me what happened there? What is the difference?
Hon. Mr. Maeck: First of all, one unclassified staff is moved up into the permanent category. So that would now show on salaries and wages and benefits rather than on services. That is the first item that would be included in there.
Then there is the matter of -- and again, I think we mentioned it in the debate on Friday -- some of the benefits that were charged through MGS; these are now transferred to each ministry. So that has been taken into account as well.
I could probably get you a little more detail as to exactly what those charges were. But the policy is changed now; not only in this ministry, but every ministry within government. Certain costs that were being borne by the Ministry of Government Services have been discontinued and charged to each ministry.
That is why you will see, as we go through these estimates, that even where there is no large increase in staff, or maybe none, there could be an increase in the funding. Obviously, there are other items to be taken into consideration such as merit awards and the annual increase -- I believe it was either four or six per cent this year -- on salaries and benefits. Every time the salaries go up, of course, the benefits go up correspondingly. And then there are the merit increases that occur annually.
All of those items combined bring us to a figure of about $70,000.
Mr. Charlton: I would assume, Mr. Minister, that the things you were talking about from Government Services were under the benefits area, and that is the item they would be listed under in your briefing material. My question was about last year’s estimates as compared to last year’s actual expenditure for salaries and wages.
Last year’s estimates showed, under systems development services, $438,000 for salaries and wages; and the actual expenditure on the next page in your briefing material was only $365,000. I am just wondering if there was a change in the staffing, other than the one unclassified staff going to permanent staff, which you are showing here. Were there some other changes? Why was the salaries and wages item so overestimated last year?
Hon. Mr. Maeck: I am informed that it is mostly wages and benefits, but there were some shifts in staff as well. Actually we spent less money than we had budgeted according to my figures.
Mr. Charlton: That’s what I’m asking about.
Hon. Mr. Maeck: And you will recall during last year there was a restraint program on as well and we did not increase, as a matter of fact in some instances we decreased the staff; I presume that’s what has happened in this particular branch.
Mr. Chairman: The member for Erie.
Mr. Haggerty: Thank you, Mr. Chairman. My question to the minister is in relation to the terminology “man years” as defined throughout his estimates. Is it similar to what other ministries term man years? What is your explanation of the term man years as related to your ministry?
Hon. Mr. Maeck: I am informed the same policy and procedures apply throughout all the ministries. It’s used throughout government in the same way. A man year is one person hired for 12 months of the year. Services are purchased for a 12-month period, and that is considered to be a man year. In other words, when we say 18 man years it means 18 people, really.
Mr. Haggerty: What would be the average hours of work per week then?
Hon. Mr. Maeck: The average hours of work per week would be 40 hours, the same as any other civil servant.
Mr. Haggerty: It varies in different departments, I am sure you are aware of that. It can vary from 35 to as high as 42 hours per week.
Hon. Mr. Maeck: I am informed that ours is 37¼ hours. I’m sorry, it wasn’t 40, it’s 37¼ hours.
Item 9 agreed to.
On item 10, relocation project:
Mr. Haggerty: The main reason for the increase in the ministry’s administration program is the $678,600 plus $29,400, or $708,000 for this project.
Is this simply payroll costs for salaries, wages and benefits? Because of the nature of this project, what will happen to the staff when relocation has been completed? Is this a one-year entry we are considering?
Hon. Mr. Maeck: These are people who are on contract. There’s a committee of seven people who are the nucleus of this projected move to Oshawa but another 20 contract people will be taken into consideration and I believe hired. That’s what this funding is for. It must be understood that a move of this size creates quite an impact on a community. We are looking at educational facilities in the Oshawa area, we are looking at recreational facilities, we are looking at housing.
We are looking at the office accommodation itself; because Ministry of Revenue is not the same as most other ministries, we require special features in order to facilitate the type of work being done in the ministry. We have to be concerned about whether there is enough telephone service to handle the amount of telephone work that is done within the ministry. Many other items have to be considered. In order to be able to move by 1981, it is imperative that we do some proper planning and that is why this move project is set up. I would presume it would be ongoing until such time as we have physically moved.
There is one other thing I should mention. After the building is completed and we start to move it is not a matter of just closing down the building at Queen’s Park, Toronto, and moving everyone. The ministry must keep on operating while the move is being made, so that we will probably at some point in time have a portion of our staff in Oshawa and a portion at Queen’s Park. In order to move the whole operation smoothly there is going to be a period of time when we are going to have extra people, so that when we begin a certain system in Oshawa, and until it is refined to the point where it can handle the work, the one in Queen’s Park would probably still have to be working. All of those things are being taken into consideration when we’re allocating these funds.
Mr. Haggerty: A further question, since this seems to be rather an expensive item -- almost $1 million. Can the minister indicate when he expects this complex at Oshawa and the actual move to be completed? Are we looking at two or three years? In other words, are we looking at an expenditure of almost $1 million for the next three years if that facility is not available at the present time?
Hon. Mr. Maeck: The member must understand, the building is going to be constructed; it’s now in the planning stages and construction will start shortly. The building should be ready for occupancy in 1981. I have no way of being able to project at this point in time how much funding we will need in the 1979-80 period, but I suspect it wouldn’t be less than what we have here; probably it would be more.
Mr. Haggerty: Further to the minister’s reply, this could go on for a three-year period, to $3 million, and we haven’t actually had any relocation yet to the new facilities. If we’re talking about restraint, is it necessary to have this expenditure in this vote in this particular year and at this time?
Hon. Mr. Maeck: There’s no question it’s necessary, because all of these plans have to be made in advance. We have the cash flow systems which we have to be concerned about; by 1981, they will be $50 million a day to the Treasury. These production facilities must be rebuilt without risk to those cash flows; that’s why we have to be very careful as to how the whole planning is done, and we must have the staff to do it properly.
The Treasury, over a short term, over a period of a year, makes quite a few million dollars out of having the money available when it needs it. If we were to delay that production at all, it would be much more costly than the $1 million, $2 million or $3 million that we’re talking about here in facilitating that move.
Mr. Haggerty: I just can’t quite understand or buy what the minister is trying to tell me. These new facilities are just in the planning stage now -- they could be on the drawing boards, for all I know -- and, all of a sudden, we have almost $1 million set aside here to set up a relocation program to move into this new facility three or four years from now. Who knows how long it will be? It seems to me that the ministry is jumping a little too fast in hiring special staff for this relocation. When I look at the $678,600 for salaries and wages, and the minister is looking for relocation actually to take effect some time in 1981 or 1982, for all I know, it seems that the ministry is jumping a little too fast here.
Hon. Mr. Maeck: As I indicated earlier, we need the staff now to plan for the building so that the building is constructed to facilitate our kind of operation. It’s something that hasn’t been done before, so we don’t have anyone who is expert in the field as far as constructing a building for Revenue is concerned. It means we must have experts from our ministry working and planning the actual building itself, in conjunction with the Ministry of Government Services, because there’s no point in spending $21 million -- and that’s what it’s going to cost in the final analysis -- on a building that’s not going to work for us after it’s built. That’s the reason these people are there now.
Mr. Haggerty: Then I hope we’re not going to run into the same situation as happened, for example, at the Workmen’s Compensation Board complex up on Bloor Street, where they were supposed to have the expertise put into it too, working along with the private developer, and now we find there’s a building up there that isn’t suitable for their type of operation. I think it’s happened in the past in other instances. For some unknown reason, I just can’t accept the minister’s proposals and this expenditure at this time.
I thought that the private developer, the person who is going to construct the building for Government Services, should be able to put the input into the type of building that you want. You’re talking about $21 million, it sounds like an elaborate building.
Hon. Mr. Maeck: With all due respect to Government Services, they don’t know, or they wouldn’t know how to build -- or design I should say -- a building that would be complementary to the Ministry of Revenue. It has to be somebody within the Ministry of Revenue who gives that necessary input, so that the building is designed properly for our needs. That’s not to say they wouldn’t design a proper ordinary office building, but ours is just a little different.
Mr. Haggerty: It must be, at $21 million.
Hon. Mr. Maeck: There are different systems within the Ministry of Revenue that are not normally found in ordinary office buildings. The expertise is lacking in Government Services or any other area for that purpose. The assistance they need and the advice they need and the consultation they need, must come from the Ministry of Revenue, which is eventually going to use that building.
Revenue Canada and Revenue Quebec each worked for three or four years to make sure their facilities fitted their future needs. I believe that in order to have a building that’s going to work reasonably well for us, it’s important to have the input now and not wait until the building is up and then say, “We should have done this or we should have done the other thing; it’s not going to work for us, we have to remodel it.” I think it’s cheaper in the long-run to do it now than it is to try to patch it up later.
Mr. Haggerty: I’m not that familiar with buildings, but I understand that in the new buildings that are being built for the federal government, particularly for the federal government, the design and floor plan are open. Everything is open so you can set up your system the way you want it by putting up certain dividers throughout. In other words, the building is going to be of a rectangular or square shape, you’re not going to change the outside; it’s just a matter of the floor area. I’m just wondering about this expenditure, that’s all; I’m questioning it, I should say.
Mr. J. A. Taylor: Mr. Chairman, possibly the minister could give us the breakdown of that sum of $969,800; in particular as to whether any or all of that will apply to the final cost of the building, which the minister estimates to be about $21 million.
Hon. Mr. Maeck: The $969,800 is primarily for salaries and benefits for the planning group. It’s not included in the $21 million. The estimate to build the building is $21 million, over and above this type of planning.
Mr. J. A. Taylor: Is that out-of-house work that will be done by consultants?
Hon. Mr. Maeck: No, this is not being done by consultants. This is being done by people within the ministry, and we will be increasing that staff. We have seven people who have been seconded within the ministry now, people from the ministry, to head up this committee group, but we will be bringing in another 20 people with expertise in this type of field. That’s why we’re talking about the $969,800. It will be for salaries and it doesn’t come off the $21 million, the $21 million will still be there.
Mr. Haggerty: Fantastic, eh?
Mr. J. A. Taylor: Is that, then, not in terms of architectural drawings or pre-engineering or anything of that nature?
Hon. Mr. Maeck: No; they will be giving advice to the engineers and to MGS as to what is necessary in that building to accommodate the needs we have for the building.
You have to remember that in our ministry we’re not just talking about people and offices, we’re also talking about machinery. It’s not just an ordinary office building. You have to have the layout in such a way that the machinery is operable. You can’t have an assembly line with half of it on one floor and half on another floor and have it working very efficiently. Those are the kinds of things they’re looking at.
Mr. J. A. Taylor: Can the minister give us an estimate of the projected overall cost for the relocation to Oshawa, and how, in his own words, that will accommodate better service in terms of the general public?
Hon. Mr. Maeck: The overall cost, as I indicated, is $21 million.
Mr. J. A. Taylor: But, with respect, the minister said approximately $1 million would be in addition to that. What I am asking is, what additional costs will there be besides the item of $969,800 projected for the current fiscal year? To repeat myself, what additional sums are projected and what will that make the total move amount to in terms of dollars? Will it be $21 million, $25 million or what?
Hon. Mr. Maeck: It’s very difficult to say. I would expect that we would need approximately the same amount next year as we have budgeted this year for the planning group. We are probably talking in the neighbourhood of $21 million for the building and $2 million or $3 million extra, so we are talking about $23 million to $24 million for the complete move.
Mr. J. A. Taylor: Would the minister explain the reason for the move? Is the present accommodation and location not adequate to serve the public? Will it make it more convenient in Oshawa? What is the justification for the expenditure of $24 million or $25 million?
Mr. Haggerty: I suggested farther east. The Bay of Quinte, or some place in that area would be a good location.
Mr. J. A. Taylor: We have an excellent site in Picton. There is no question about that.
Hon. Mr. Maeck: First of all, I should say that the $21 million is not an expenditure that would happen in 1981; it’s one of those lease-back situations where it’s built by someone else and we lease it, and at the end of 25 years, we own the building. It’s that type of property deal.
Mr. Haggerty: With all the headaches afterwards.
Hon. Mr. Maeck: I covered the other part of the member’s question on Friday, I believe, when the move to Oshawa was brought up. But, basically, it’s part of the overall plan of the government to decentralize some of the offices in Queen’s Park to eastern Ontario; that was the reason that Oshawa was chosen --
Mr. J. A. Taylor: Eastern Ontario?
Hon. Mr. Maeck: Yes. That’s part of the --
Mr. J. A Taylor: Do you mean Oshawa is considered part of eastern Ontario?
Mr. Ruston: Almost like Parry Sound being in northern Ontario.
Mr. Chairman: Order. The minister has the floor.
Hon. Mr. Maeck: Let’s put it this way: east of Metro; maybe that would be better. But, regardless of that the primary reason for moving it to Oshawa was to decentralize from Toronto and Queen’s Park and to move east of Metro.
Mr. Haggerty: To the depressed areas.
Hon. Mr. Maeck: The building that we are in is not really a building that was constructed for our purposes. I believe Hydro was in there before us, and it’s not conducive to the best possible Ministry of Revenue work. Certainly there will be a great deal of improvement in the service that we can provide when we get into a new building that has been set up primarily for our purposes. We are able to struggle by, but from time to time I do get complaints from members of this Legislature about the slowness of certain things and part of that is due to the way the building is constructed; it was never built for the purpose it’s now being used for.
Mr. J. A. Taylor: I didn’t want to suggest that a much better location would be Picton or Napanee. What I was getting at was, looking at this objectively, whether the new accommodation and the overall capital expenditure would be necessary in any event, regardless of where the accommodation was located. In other words, what the minister is saying is that his ministry’s physical accommodation now is not adequate to service the general public and, if the ministry is going to make a move, it would be better to make a move outside of Toronto. That’s one thing.
The other question is, in picking your location, what criteria would be used to ensure that the move, in fact, did accommodate the general public. I don’t know what kind of street trade the ministry gets in terms of people walking off the street to visit the ministry or which physical location would be better. It may be that Oshawa is better. It may be that Belleville or Kingston -- I gather that Kingston was chosen in connection with OHIP. I was just wondering what criteria you do use in assessing and arriving at a decision in terms of location.
Hon. Mr. Maeck: I wasn’t involved in the decision-making as to where we were to move to; that decision was made prior to my becoming minister. I think the kinds of things they look at are the amount of housing that is available, the type of educational facilities; we are talking about a thousand people here, which creates quite an impact on any municipality they might move into.
Other criteria which were apparently applied at the time were that the present building would not handle the growth or the work loads any more than for five years hence. In terms of the increasing, the sheer volume of the mail involved, you have to have a location capable of handling that. I mentioned the telephone services earlier; there are also recreational facilities, the housing facilities. All of those things have to be considered when you relocate a ministry of this size with that number of people -- 1,000 people moving into a community create quite an impact.
Mr. J. A. Taylor: I can see that, Mr. Minister. You just can’t move into a little village and expect the infrastructure of that community to accommodate a move of this dimension.
Maybe you could clarify one thing. I think I am correct in assuming that you will not be bankrolling the $21 million in terms of the new capital outlay in ownership of the building. Presumably that will be done through private enterprise and conventional financing on a leaseback arrangement, even though the building will cost in the neighbourhood of $21 million. Is that correct?
Hon. Mr. Maeck: Yes; that’s right.
Mr. Ziemba: Can I assume that tenders have gone out for the new building with regard to the leaseback? Could the minister give us the annual rental that will be paid by the ministry, and let us know after what period of time, 25 years or whatever it may be, the province will take over the ownership?
Also, and this may sound like a small thing, but have you had any feedback from your ministry staff as to any resistance to this move?
Hon. Mr. Maeck: To answer the last question first, we have surveyed the staff. We are continuously, even now, providing them with information about Oshawa and all the facilities that are there, and so on. I must say that --
Mr. Ziemba: But what has been the feedback?
Hon. Mr. Maeck: Most people in the ministry are prepared to move or to commute. I am not saying that everyone is in agreement with it, of course; that would never be. There hasn’t been that much opposition to it, although some have voiced opposition, a very small percentage. Others have indicated that when the move takes place they would like to transfer to another ministry rather than leave government service. Those kinds of things will happen; but I am sure that if that did happen there would be other people in other ministries who would be quite happy to transfer into the Ministry of Revenue and move to Oshawa. I don’t think that’s going to be a very large problem.
We are making every effort to keep the staff abreast of what is going on so that they know what is going to happen and what is now happening, almost on a weekly basis. We send bulletins and memos to the staff, when something new is happening, so they are kept aware all the time. We are trying to be as fair as we can with the staff.
In answer to your first question, there have been no tenders called up to this time. It is still in the designing stage, so there is really no way we can tell you what the rental cost will be. Of course that would be a matter for the Ministry of Government Services anyway. It wouldn’t be a matter for this ministry to negotiate; or even to pay as a matter of fact, the rental would be paid by Government Services.
Mr. J. A. Taylor: Could the minister indicate which ministries might be so closely related that a person contacting the Ministry of Revenue might be sent to Treasury, say, because of the particular problem not being germane to your jurisdiction? It’s presumably this type of thing that would be also considered in decentralization of government. Surely one wouldn’t have to travel from Sudbury, say, to see one ministry, then to Kingston, back to Oshawa and so on. I appreciate the philosophy behind decentralized government, but I also appreciate the convenience to the public that must be maintained. Does the minister have any comments on that?
Hon. Mr. Maeck: First of all, I should tell the member that tax services will be maintained in Toronto. Basically, we’re moving the ministry out, but there will be tax services maintained; those are the special ones, such as the GAINS and so on, where the people do come in off the street. There will be a representative staff to handle people in the Metro area who would normally come in off the street.
We’re not completely stripping everyone out. We want to maintain some service here in Toronto as well; however, it will not be the branch itself but a representation of that branch or those branches that generate people coming in off the street. Most of the rest of the ministry requests, of course, either come by mail or by telephone, so whether they are in Oshawa or Toronto would really make very little difference.
Did the member have another part to his question?
Mr. J. A. Taylor: The minister is touching on it now. What he is saying -- and he can correct me if I’m wrong -- is that we will still have the head office function in Toronto, so to speak. While the bulk of the work will be done outside of Toronto, the ministry will have expertise and a central office here as well, although that office will not provide for any duplication or overlap of operation. Am I correct in that?
Hon. Mr. Maeck: That’s basically correct; that’s what we plan. The minister’s office and the deputy minister’s office will probably remain here at Queen’s Park, along with some of the other offices that provide special services. Let’s say people in the Metro area who walk in off the street could come in directly and still get the kind of services they have been getting. So we’re not going to take that away from Metro.
Mr. M. Davidson: Mr. Chairman, we’ve been discussing the lease-purchase arrangement, which apparently has not yet been made into an agreement. I’m assuming, listening to the figures tossed around here, that the building is going to cost somewhere in the neighbourhood of $21 million. Is it not fair to assume that the overall costs to the province of Ontario through the lease-purchase agreement will be far greater than $21 million, given that the ministry has not yet reached an agreement as to the yearly cost and the number of years for which it is going to be paying?
Mr. J. A. Taylor: It depends on the lease period.
Hon. Mr. Maeck: There is no question that we will be paying interest; that goes without saying, as far as I am concerned. If someone isn’t going to build a building for $21 million and leave their money invested for 21 years without collecting interest, there is no question it will be more costly than $21 million.
Item 10 agreed to.
Vote 1001 agreed to.
On vote 1002, administration of taxes program; item 1, main office:
Mr. Haggerty: Mr. Chairman, I want to direct a question to the minister relating to the increase of $128,400 for salaries and wages and $26,000 for employee benefits, the reason given being the addition of four classified staff. Wouldn’t the minister agree that this is an awfully large increase for four people?
Hon. Mr. Maeck: We are talking here about an increase of four people, but that isn’t the only reason the figures have gone up again. There are funds that were paid by the Ministry of Government Services that are now being paid by this ministry. There are the merit increases of all the staff. You must remember there are merit increases as well as the six per cent this year. That carries on through the benefits as well. If there is an increase by merit or just a straight increase, the benefits go up. You have to take all of those things into consideration and not just the four people who were put into permanent staff.
Mr. Haggerty: Moving from the unclassified to the permanent staff, what category is this and what is their actual occupation? We are looking here at roughly $40,000 per person or per man years.
Hon. Mr. Maeck: I am advised the staff we are talking about here are senior technical advisers. Their salary would run around $25,000 each or more.
Item 1 agreed to.
On item 2, special investigations:
Mr. Haggerty: Item 2 is rather a heavy expenditure. It has increased almost 100 per cent. This is for special investigations. Could the minister inform the members on this side just what investigations we are talking about in this particular area?
Hon. Mr. Maeck: This is a group of people who do special investigations under the auditors in the tax branches. To give you an example of what they do, our legal branch may ask this branch to investigate in great detail any particular problem that may arise. I was reading the estimates of this ministry last year, and because members opposite were concerned about enforcement by this ministry we felt it would be wise to increase this particular branch so that we could maintain the proper investigation level and not fall backwards.
For a few years there has not been an increase in staff in this group at all. As a matter of fact, I am not sure whether there might have been some decrease in it. The idea is to make sure we have enough investigative staff to look into the complicated tax situations that arise.
Mr. Haggerty: The minister says there is no increase in staff, but doesn’t give an explanation as to why we have had an increase in expenditure.
Hon. Mr. Maeck: I did not say there was no increase in staff. I said in prior years there hadn’t been. We are increasing the staff by 11 this year.
Mr. Ziemba: When the minister says the opposition has created a special interest -- I can’t recall the exact words -- can we assume that the Ontario first-time homebuyer grant investigations led to this increase in staff?
Hon. Mr. Maeck: I wouldn’t say so entirely, although we did have to put on considerable extra staff because of that program. This is really a different situation. We didn’t run into that many audits in the Ontario home buyer grant program that would require special investigations. Those were handled almost completely by the regular auditors. I wouldn’t say we could attribute too much of this staff increase to that. We just feel it is time this ministry had enough people around to make sure that we can enforce the tax laws of the province in the proper manner; without harassing people or anything like that, but to make sure the province gets the taxes due to it, that is the reason.
Mr. Ziemba: Can you be more specific, Mr. Minister? Who are these special investigators, and what specifically are they investigating?
Hon. Mr. Maeck: I should point out to you there is a difference between auditing and the investigation branch. The investigation branch are really looking for fraud and that type of thing, to find out whether charges and so on should be laid. In other words, they are sort of a policing branch rather than just an auditing branch. The auditing branch, as you are very much aware, do strict audits and decide whether or not they have to call in special investigators because of fraud or other things. Would you repeat your question?
Mr. Ziemba: What field do they work in? Is it sales tax revenue or gasoline tax, or is it the Ontario home buyers’ grants?
Hon. Mr. Maeck: They work in all fields, wherever it is necessary, wherever they are called to investigate a tax matter. It could be in Ontario home buyers, it could be retail sales tax, it could be corporation tax; any one of the tax fields we look after.
Mr. Ziemba: You say you are cutting back on this staff. Are you just about through investigating the home buyers grants?
Hon. Mr. Maeck: Yes, but we are open to any other ones that might come along. We feel that we have conducted a proper audit, more so than in any other program that we have ever had. We feel the audits now are complete, and if the member has some information that we don’t know about we would be happy to investigate.
Mr. Ziemba: I have one more that I want you to investigate. I’ll send it along to you tomorrow.
Hon. Mr. Maeck: Fine.
Mr. Charlton: I would like to go back to the question which Mr. Ziemba raised about this special investigations staff increase. We are talking about a fairly substantial increase in staff. I suppose that, as a result of the kind of needling that the member for Brantford did last year, and probably for some time before, there is some reason for it.
I think what the member for High Park-Swansea is getting at is are these people just floating investigators? Do they investigate everything? What facts does the ministry have to indicate that there is a need for this kind of a staff increase for investigative staff? Are you on to something? Is there a specific area of taxation you are concerned about where you feel there is a lot of evasion or whatever going on? Is there something specific that has triggered this increase in staff this year?
Hon. Mr. Maeck: No, nothing specific has triggered it. But I would inform the members that since this branch was formed we have actually decreased by two people over the years, instead of increasing as the work load increased. So we just felt it was time it was brought up to the proper complement so it can do a proper job.
Again any auditor can ask these people to investigate a certain company or individual if they feel there is fraud or anything like that involved, as can the legal branch of the ministry, which may be looking at a report from the auditors and may ask these people to conduct a further investigation into it. I have no reason to tell you that there is anything unusual going on that we are trying to correct. I just feel, perhaps because I am a former policeman, that when people owe money to the province they should pay.
Mr. Makarchuk: Excellent idea!
Hon. Mr. Maeck: We need the proper staff to enforce that. Not to go around harassing people or anything like that, but to collect what is due to the taxpayers of the province.
Mr. Haggerty: I just wanted to direct a question which the member to the left of me had raised, concerning the home buyers’ grants. Has it been the policy of the ministry to apply the policy that if you owned property, say in Europe, that you are not eligible for assistance through a home buyers’ grant here in Ontario? Has that been the policy?
For example, I raised the matter with the ministry concerning an inquiry to my office. This person had purchased a home under the home buyers’ grant program and apparently had received the grant and then, all of a sudden, because of some investigations, they said he had to repay it. The reason was that he had owned property in, I think it was Yugoslavia or some place like that. He had come in as a landed immigrant. The government had used that as, I guess, an escape to say that he was not eligible for the grant. Has this applied to any other persons who came in from Europe?
Hon. Mr. Maeck: It applies to anyone, whether he comes from Europe, the United States, Canada, Ontario or wherever. If you owned a home previously, you were not eligible. I would say that 76 per cent or 78 per cent of the people asked to return the money are in that category, that they owned a home somewhere else. It’s not an unusual thing at all.
As I recall it, when we first brought it in that particular section was not in the act. I believe it was brought in at the insistence of some of the opposition members. It was exactly what it said, a first home buyer’s grant, and if they had owned one anywhere they were not eligible for the grant.
Mr. Makarchuk: I was interested and pleased to hear the minister state that those who owe back taxes to the province should pay them. That is not necessarily a new conclusion or a recent one, but I’m glad to see it reiterated.
Hon. Mr. Rhodes: Pay up.
Mr. Makarchuk: In view of the fact that the Provincial Auditor, when he was examining the Ronto situation -- I’m sure you’re aware of that, as are other people -- he did point out that, in his opinion, the people involved in Ronto owe the government something like $493,000-some odd in taxes. If that’s the case, I just wondered when you intend to collect that money, in keeping with your policy that you’ve just repeated recently?
Hon. Mr. Maeck: I’m informed that the Provincial Auditor didn’t really say that.
Mr. Makarchuk: Yes, of course, he did.
Hon. Mr. Maeck: The Ronto question, in my estimation and as far as I’m concerned, has been settled. There was a commission of inquiry which said that the government was quite within its rights to grant that exemption. I’m not prepared to go any further on that one.
I must tell you I am watching those kinds of things very closely within the ministry. Hopefully, we won’t have any more Rontos. But, by the same token, the minister of the day was quite within his jurisdiction to make the decision he made, as I would be today, I suppose, if I decided to make that decision. The commission of inquiry that looked into it indicated that the government was quite within their power and that they had done nothing wrong in the matter.
Mr. Makarchuk: I think there should be some clarification. In the first place, the commission of inquiry didn’t look at what the Auditor looked at. I think if the minister looked at the discussions that were held in the public accounts committee on that matter, he would agree. The Auditor was asked, assuming that all the statements the government made, including that the land was transferred when the government said it was transferred and everything else that flows from that, and that the government was absolutely right in its transactions, and the minister was absolutely right in allowing them the exemptions from the taxes, despite that, in the opinion of the Auditor, they still owe the government of Ontario some $493,000 or whatever the figure is.
What I’m concerned about, and I’m sure everybody else is concerned about, is why are you delaying collecting that money? What is the delay?
The commission was involved but it had nothing to do with this matter. The commission was looking at wrongdoing and to see if there was possibly some influence in the matter. The commission has its opinion in the same way as everybody else has their opinions. These things just don’t happen in Ontario. It wasn’t the gods or the deities that made the decision to exempt the company. It was made by certain individuals. They have the full right to do it. We don’t argue that point. They have the full right because they were the government and still are.
What I am arguing about with you at this time is the fact that the Auditor was asked by the committee to come in with his opinion as to whether Ronto owed the government some money. He said, in his opinion, this is what they owe. Why aren’t you collecting it?
Hon. Mr. Maeck: My understanding is that he merely confirmed the amount that might have been otherwise paid.
Mr. Makarchuk: No.
Hon. Mr. Maeck: He didn’t necessarily say that the money was owed. There’s quite a difference there. Anyway, the decision has been taken on that matter. I would inform you that I have no intention of reversing that decision as much as I’m sure you would like me to. I believe that that was a matter that was investigated fully by everyone concerned at the time. I don’t think I want to go back into history and reopen the whole thing again.
Mr. Worton: Send your number one building inspector.
Mr. Makarchuk: We certainly don’t have to go that far back into history. It’s a matter that is on the books. There is a report from the public accounts committee stating that you should collect this money. The report has been filed with the government and, obviously, you’re flying in the face of everything. I admit it might be a bit embarrassing and you may not want to reopen something that perhaps has been hatched over for some period of time. But we have, on this side at least, on good authority from the Provincial Auditor of all people a statement that there is, in his opinion, cause to collect the money. If you’re not going to collect from them, then exempt all these other people from whom you collect the money. That’s all.
We’re not asking you to collect just to be vindictive about Ronto or anybody else. We’re saying that if you’re not going to apply the tax laws of this province to Ronto, then don’t apply them to all these other people. I’m tired of getting phone calls from people who complain to me how some of your people go into their affairs. They say they’ve gone through everything, including the money they spent in Canadian Tire, to see if it’s a legitimate expense or not. Then they have to pay the speculation tax, even though it may have amounted to about $400 or $500.
Here is a major case and you refuse to move on that. At this time, you have given a closed-mind approach to it. You’re not dealing with the issue. You’re not examining it. What you’re saying, in effect, is that your mind is made up and, to heck with the facts, you’re not going to do anything about it.
I don’t think that that’s a nice way to start off as a Minister of Revenue. After all, we had great expectations of you. We expected, and I’m sure the members here expected, that you would not necessarily toe the line or listen to what the Treasurer or somebody else tells you to do. You’ve shown some independence of spirit and of mind in the past. Perhaps that could be exercised in the future just as easily. I’m not sure what happens when you get into the cabinet that makes you change your thinking so fast or so erratically -- I should say so conservatively -- but obviously it seems to be working and you’ve got the word.
I can assure the minister that this is a matter I’m not going to let die. This is not going to be forgotten. It will be raised on a regular basis. Whenever the situation in the House warrants raising this matter, we will raise it until such time as you do something. In other words, you should treat those people, as far as taxes go, in the same way as you treat anybody else in the province. We don’t expect them to get any special favours.
Hon. Mr. Maeck: As I indicated earlier, this has been investigated by the public accounts committee.
Mr. Makarchuk: That’s not what the investigation was all about.
Hon. Mr. Maeck: It was investigated by a commission of inquiry and, I believe, the minister of the day looked at the facts as they then existed and made a decision. I think he made it honestly. I am not, at this point in time, prepared to reconsider that. I know you don’t agree with that, but that’s fine. We have a difference in opinion. It doesn’t necessarily mean that on other occasions we won’t agree from time to time. I think this particular matter has been raked over so many times and discussed so many times and the decision has been taken -- it was not a decision I made, but a decision that was made long before I became the minister --
Mr. Makarchuk: That’s right.
Hon. Mr. Maeck: -- that as far as I’m concerned, I’m not prepared to reopen it at this point in time.
Mr. Charlton: Referring to the kinds of increases of regular staff that seem to be running fairly regularly through this whole vote 1002 and specifically under item 2 the 11 staff, all regular staff, have all of these people you are talking about increasing your regular staff by under vote 1002 been hired? Are they already on staff?
Hon. Mr. Maeck: On item 2, no; two out of the 11 have been hired at this point.
Mr. Charlton: Are the rest going to be affected by the Treasurer’s freeze?
Hon. Mr. Maeck: We don’t know at this point in time where the priorities are going to be within the ministry. That’s something I indicated earlier in my opening remarks, that I really can’t tell until we have assessed exactly how it’s going to hit this particular ministry, so it’s a little too early to tell. But obviously this group would have some priorities, because I feel it’s important that we beef up this particular group.
Mr. Charlton: What I was getting at though, Mr. Minister, is that you may very well in fact not be allowed to hire all of the people that you have laid out under vote 1002 to be additions to your current staff.
Hon. Mr. Maeck: I don’t think “allowed” is the right word, that isn’t the way it’s going to work. We will set our own priorities within the ministry as to which departments get the additional staff and which ones don’t if we have to cut back. We are not being directed by government itself in such a way as to force us into a position where we have to cut back in this branch and maybe not in another branch. In other words, what I am saying is we can set our own priorities as to where the cutbacks would be.
Mr. Charlton: My question was, though, that when the Treasurer announced the rollback in OHIP, he also talked about a freeze on the civil service. I assume a freeze means there will be no new hiring. If you haven’t hired these people yet, are you not going to be affected by such a freeze since they are new positions and they have never been filled before?
Hon. Mr. Maeck: I believe that the freeze is effective only until such times as each ministry brings out their policy as to how they are going to accommodate the $35 million mentioned by the Treasurer. So it’s not a freeze that’s going to remain permanently. I believe we are going to have -- and I am sure we are going to have -- some latitude as to where we hire people and so on, but we must accommodate that $35 million over a period of time.
Item 2 agreed to.
On item 3, revenue research:
Mr. Haggerty: The question I want to direct to the minister here is that I see it’s a substantial increase again this year. My main concern was with one of the studies which was carried out by the Treasurer. One of Mr. McKeough’s budget statements, related to the matter of research done on the production tax rebate, that is on the sales tax on the purchase of production equipment. A special study was done, by a professor at the University of Toronto I believe -- and I can’t recall the name -- but I believe I can recall in that particular study he had indicated in one particular section of the report that there was no impact on job creation by allowing the production tax rebate. He said it did have some merit, that it could possibly increase employment, but they wouldn’t be sure until the year 1981. Everything is based on the year 1981; I don’t know why, but it must be a rather important year to this government, the year 1981. What other research has the ministry carried out in the matter concerning taxes as they related to job enrichment or job creation programs in Ontario?
Hon. Mr. Maeck: That really isn’t the function of this particular branch. That type of research would be done by the Ministry of Treasury, Economics and Intergovernmental Affairs. We don’t engage in research into tax policy which is the responsibility, as I said of the Treasury, the branch researches how we can operate the tax systems better and ensures that changes made by the Treasury in tax policy are implemented quickly and efficiently. In other words, the type of research done by this group is completely different to the type you are suggesting or asking about. That kind of research is done by the Treasurer’s staff, not by ours.
Mr. Haggerty: Relating to item 3, then, the minister tells me they just relate the research to how to improve the collection of taxes. I don’t think you can make much more improvement on an original bill telling the people or corporations you are going to be taxed for so much. I can’t quite accept the method you have here for research. I thought you would be doing research on how to ease some of the pain applied to the many taxpayers in the province of Ontario.
Mr. Worton: No such thing.
Mr. Haggerty: “No such thing,” the member for Wellington South says. “No such thing.”
Hon. Mr. Maeck: There is no relief from that thing, is there, Harry?
Mr. Haggerty: No. There’s no relief in this $749,000 expenditure in this particular area, either. And if the Treasurer is doing much of the research, and since he calls most of the shots here, you would think that everything would be done from the Treasury instead of having this expenditure on this particular vote.
Hon. Mr. Maeck: Well, as I indicated, this is a different type of research than that done in the Treasury. What we have to do is advise Treasury how we can accommodate a certain tax policy they may want to implement. That’s the type of research we do. We don’t research to see how many jobs it is going to create; that is a matter of policy the Treasurer would decide. But he may want to know, if he does a certain thing, what effect it will have on the tax policy itself, in its implementation and the collection of taxes, that type of thing. That’s what he wants to know from us; and that’s what we have to know in order to bring in the proper legislation, and so on.
Mr. Charlton: Just to follow that up, Mr. Minister, you are saying that TEIGA does the research for tax policy and the analysis of the implications of tax policy; in other words, as you mentioned, the jobs a particular tax change may create or cost or whatever. Essentially, you are doing feasibility research on what kinds of administrative problems a certain policy of TEIGA is going to create. Do you do any research at all, not in a policy sense, but in a follow-up sense? In other words, TEIGA instructs you to implement a certain tax and you go through the procedure and implement it, and you increase the corporations tax by one per cent. Does this research section do any follow-up on that? In other words, do you do the research on the actual effect, or does TEIGA do that as well? Not the estimated effects, but the actual following up of a tax and seeing what is accomplished.
Hon. Mr. Maeck: We do the follow-up yes. There are 13 tax statutes in this ministry, and it is a pretty complicated situation that requires constant appraisal. We are doing that all the time; that’s what this branch does. It needs the constant appraisal of the efficient application so that we know they are implementing the tax policies in a reasonable manner, and yet watching the amount of dollars it costs to produce the revenue, and so on. And also ensuring application to private business so that it conforms with our policy intention. That kind of thing is what this research branch does.
Mr. Charlton: But specifically, do you follow up to see if a tax accomplishes the espoused goal or does TEIGA do that themselves? If TEIGA says that a tax increase is going to create 10,000 jobs or a tax decrease is going to create 15,000 jobs, does TEIGA do the follow-up? In other words, do they collect the data to see what effect the tax has actually had, or do you do that in this section here?
Hon. Mr. Maeck: We can tell them how much tax has been collected, but we can’t tell them how many jobs it created.
Mr. Charlton: You don’t do any analysis in that area at all?
Hon. Mr. Maeck: No.
Item 3 agreed to.
On item 4, corporations tax:
Mr. Young: Mr. Chairman, a couple of years ago I raised the question of deferred taxes for corporations in Ontario, and the then minister gave us some information about it. Evidently there is an arrangement by which the federal government defers taxes for certain businesses in Canada on the basis that they are going to roll that money back into investment and build up the investment structure of the country. Ontario shares in that process.
While we were given in a vague way the total amount involved here, we couldn’t get any breakdown at that time as to what corporations were involved because we were told this is a private matter between the ministry and the corporations concerned.
This problem is one we have to face in a little more detail at the present time, more than a couple of years ago even, because we now are forgoing certain tax income out of the public treasury which would make a great deal of difference to the Treasurer in balancing his budget, as he plans to do by 1981; but he says we’ll forgo that in order to build up the private sector of the economy.
This presents him with certain difficulties. First of all, since in effect it is money out of the public treasury that is doing this, then the question obviously occurs, why is it that the public treasury doesn’t take an equity position in a company when taxes are thus deferred? If I, as an individual, lend a couple of thousand dollars to any company you might mention -- Inco, for example -- either I’m going to buy shares which give me some say, minor though it might be, in how that business is run, or I’m going to buy bonds which again give me an equity position and interest on that investment.
I would like to ask the minister whether any consideration has been given to this matter of equity position. Or, if he doesn’t like that because it smacks a little of socialism, I suppose, there would be some public ownership involved, what’s the matter with acquiring bonds of that company which carry a fixed rate of interest? In that way, part of the income earned by that deferred tax comes back into the public treasury to help the tax situation of all of us. That’s the first question.
The second question, again, deals with what is happening right now. In Canada we’re having a very difficult time economically. I don’t have to stress that point. But we have large investment funds here which evidently are being used, although, when we asked the minister about this a couple of years ago, he admitted to us that there was no monitoring of those investment funds that are coming out of the public treasury to see how the companies are using those funds.
Today, with the present situation, perhaps we should know whether they are using those funds simply to acquire another company here or in another country. Are they using them to buy back their own securities, as some of them are doing, and cutting down the value of investment for the minor stock-holder in that company? But, more important, are they exporting that amount of money, coming out of the public treasury through tax deferrals, to Guatemala, Indonesia, Norway, Africa, Florida, or many other places, thereby building up equity in those companies in foreign lands and exporting employment from Canada to those countries and cutting down on the economic strength of Canada itself?
In other words, by this tax deferral business, are we cutting down our own capacity to invest in Canada and to build employment here? In effect, should we be looking at that and monitoring this gift -- and it is a gift; there is no question about it -- what’s happening to it and how it’s affecting the economy of Canada itself?
Perhaps the minister has some information he might give us in this regard.
Hon. Mr. Maeck: I will try to answer the last question first, about the monitoring. That is the responsibility of Treasury and not this ministry. We do have some figures here; the latest ones are for 1975 which may be helpful to the member.
In 1975, Ontario corporations claimed an estimated $1.47 billion more for tax purposes than for book purposes and deferred about $176 million of Ontario corporation taxes. So the deferral in 1975 was $176 million.
Mr. Young: Mr. Minister, do we have a total, then, of the deferral up to this point on 1975. If those are the last figures we have, have we a total up to the present time of how much money is still owing the public treasury through this device?
Hon. Mr. Maeck: We don’t have that figure. We only have it for the one year, I’m sorry. It would take some work; I could get it for you, but probably not before these estimates are over.
Mr. Young: It might be worth while because of the problem we have with investment funds today and investment in Canada. Here is a tremendous amount which may be flowing out of the country to head offices to be invested somewhere outside Canada.
Hon. Mr. Maeck: The first question regarding tax deferrals for investment or reinvestment, I am informed by staff that this is a very complicated question, as I am sure the member will understand. I am going to quote from the answer the staff has prepared: “Tax deferrals work to aid businesses at the point they are incurring the risk by reducing tax paid at that time. But when investment proves successful, taxable profits go up and we recapture our original loss, plus the tax benefits of increased profits and wages and purchases, et cetera. Thus the tax deferrals are a form of government investment for future economic growth and increased revenue.”
That is the thinking behind the tax deferrals, generated, of course, not by this ministry but by the Treasurer.
Mr. Young: That is true Mr. Chairman. But as I pointed out, if I loan that company money as a person, I take an equity position. I get either shares or bonds, so I share in the prosperity of that company directly as an investor. The public treasury now is an investor, as you have just said, but you look upon it as something second-hand, the country thereby becomes more prosperous and so we are going to share in larger tax revenues. If you appeal to me on that basis as a private person would I invest? Not likely.
Mr. J. A. Taylor: That’s not a correct parallel.
Mr. Young: It’s a perfect parallel, because after all it is tax money.
Mr. J. A. Taylor: The money you have already paid taxes on is the money you are investing. It is not the same with the government deferring confiscation of your earnings.
Mr. Young: We have that explanation, at least, from the member for Prince Edward-Lennox; all right.
Mr. Makarchuk: I don’t think he’s giving government policy.
Mr. Young: We may have wisdom there, I don’t know.
The thing that really disturbs me about this is that so much lately we have heard the criticism of the guy who is getting welfare, the guy who is getting money out of the public treasury to help him if he hasn’t a job, the unemployment insurance overpayment recently by the federal treasury is going to be recovered. We point the finger at these people who lack initiative and have to be fed out of the public purse. In this case it comes out of the public purse, but we hear no criticism because it is hidden. We don’t even know how much these individual companies are getting because it is a matter of privilege between the ministry and the corporations. It just doesn’t add up, it doesn’t make sense.
Hon. Mr. Maeck: I guess our philosophies are not compatible, but the idea behind the whole thing is that if we have tax deferrals, it is for reinvestment; if there is reinvestment, that creates more jobs, it creates more money, and we collect our taxes anyway. But if we were to take away the tax deferrals, I suspect we would have something like Bricklin in eastern Canada; that’s the type of thing we would end up with. We would probably own all the corporations ourselves. Maybe that is not too bad in terms of NDP philosophy, but we here don’t really go for that one.
Mr. Young: But we surely should own what we pay for.
Mr. Deputy Chairman: The member for Erie.
Mr. Makarchuk: Is he going to speak on the same point, Mr. Chairman?
Mr. Deputy Chairman: Are you on the same point?
Mr. Haggerty: Yes, on the same point; I want to follow up on the point of the previous speaker.
On page five of budget paper C there is a section relating to revenue performance in 1977. It says, in part: “Of the deterioration in budgetary revenue, $525 million was attributable to personal income taxes alone. The major source of error was the 1977 personal income tax forecast supplied by the federal government ...” Then it goes on to say: “Revenue weakness was not restricted to the personal income tax as a number of other revenue sources fell below the province’s own forecast. On balance, Ontario Treasury estimates were on the high side by approximately three per cent. Significant revenues which underperformed included the corporation tax ($119 million) ...”
I was a little bit alarmed at the minister saying, apparently without any studies, that the corporation tax deferral grants or assistance, or tax rebates under the present scheme, are a job creation program. Can he tell us just how many jobs are created by this incentive policy of corporation tax deferrals? If this is to create jobs, considering the number of unemployed persons in Ontario, I’d say it has been a complete failure in this particular area. What are the industries doing with these deferred payments in taxes?
Mr. Young: They are exporting them.
Mr. Haggerty: Where is the money being accumulated and when are they going to put it back into the area of some new growth in industry? When can we look for that performance in new growth?
Mr. J. A. Taylor: They may be maintaining jobs that otherwise might evaporate.
Hon. Mr. Maeck: First of all, they have to buy the machinery or the equipment before they get the deferral. So if they buy the machinery or equipment, obviously somebody has to run it and it is going to create more jobs. I really can’t tell the member how many jobs; I have no idea. But that is the general reasoning behind the deferrals.
Mr. Haggerty: I got the clear understanding at the time the bill was passed that it was an incentive to create new industries and to foster expansionary programs in existing industries.
Hon. Mr. Maeck: That’s right.
Mr. Haggerty: But apparently we don’t see that today.
Hon. Mr. Maeck: That’s right.
Mr. Haggerty: When can we expect the taxes to be paid on that amount of money that has been put out in tax deferrals?
Hon. Mr. Maeck: As soon as they start to make a profit, of course, then they start paying their taxes.
Mr. Haggerty: But as long as they sit on it there is no profit to the government or no jobs. That is the point that the member is trying to get at.
Hon. Mr. Maeck: No, that isn’t so. If they are sitting on it, it means they are investing money. If they are investing money in equipment and machinery, obviously they are creating jobs. When they get to the point where they start showing a profit, then we can start collecting the taxes. But in the meantime they are expanding and creating jobs. But don’t ask me to tell you how many jobs. I have no idea.
Mr. Makarchuk: I am glad that the government is giving them so many exemptions and they are working so hard and creating so many jobs. If they work any harder our unemployment rate will go much higher -- what is it, nine per cent right now? -- and with your help and your acquiescence to the demands of the corporate sector, you say we are creating jobs.
Mr. J. A Taylor: It could be 15 per cent.
Mr. Makarchuk: So how come the unemployment? Who is falling down? What is happening?
Hon. Mr. Maeck: Think of how much there would be if we didn’t have it.
Mr. J. A. Taylor: You are looking at it from a negative viewpoint.
Mr. Makarchuk: I am not looking at it from a negative viewpoint. The point that the minister misses, and in a sense what we’re touching on here, is a matter of policy, which of course is not really set by the minister but by the Treasurer; the minister, unfortunately, just has to collect the taxes, or in this case exempt the taxes, for the various corporations. I think we have to point out at this time that if you look at the experience of other western countries where the governments are actively involved in the economy, where they’re using the corporations as an instrument of social policy to create jobs when they’re needed, to slow down growth on other occasions when it’s needed; they use the corporation tax for that purpose.
Over here we let them go, and the government keeps saying -- the government over there particularly, and the government in Ottawa -- “We’ll create the climate for private enterprise to develop.” The private enterprise climate basically looks after itself, and nothing else. The people involved look after themselves very well at this time.
Part of the problem, in this case, is that when you look at the attack on the Canadian dollar, when you look at the fact that something more than $3 billion in foreign exchange of Canadian funds cannot be accounted for, when you balance the imports and the exports and there’s $3 billion of Canadian funds missing someplace, then obviously there’s something wrong. Somewhere you’re falling down on your job as the fair and equal tax collector in the province of Ontario who treats everybody equally, reasonably and according to regulations.
Mr. J. A. Taylor: We don’t do that.
Mr. Makarchuk: Obviously you don’t.
Mr. J. A. Taylor: No tax system does that.
Mr. Makarchuk: You should try to reach some level of perfection. At least you should sit back and say, “We’ve got a system,” when you have layer upon layer of handouts. You should treat the corporation the same way you treat the guy who works in a plant; and if you treated them the same way then perhaps the guy in the plant would pay a lot less tax. That’s something you can’t seem to comprehend over there. When he has more money to spend he might buy some equipment, he may buy a fridge or a stove or furniture; and that creates jobs. That’s something the other communities, the other countries in the western world do.
It’s not the case, as the minister said, where you have to pick up and own all the corporations.
Mr. J. A. Taylor: You need a viable private industry too.
Mr. Makarchuk: In most of those countries you’ll find that the level of public ownership is not any greater than it is in Canada, probably in some cases it’s less, but the government uses the corporation tax as an instrument of social policy, as I said before.
Mr. J. A. Taylor: Right here, it does it here.
Mr. Makarchuk: In Sweden, if a company refuses to invest the money, the deferred taxes, then it’s taxed to a greater extent, to a higher extent than if the money was invested.
Mr. J. A. Taylor: And Sweden is bankrupt.
Mr. Makarchuk: In certain times, during periods of growth for example, the taxation on new investment or on profits might be very high; during periods of lesser growth, taxation is low, in which case it inspires the company. It’s a carrot-and-stick approach. The point is it works; the unemployment rate there is two per cent.
Mr. Haggerty: It’s four per cent now.
Mr. Makarchuk: No it isn’t, it’s two per cent.
Mr. Haggerty: No it isn’t.
Mr. Makarchuk: Assuming you’re right -- you’re not, but assuming you’re right -- if we can get our unemployment rate to four per cent we would say we’ve got an economic miracle around here. I wouldn’t settle for it, but I’d be very happy to see a four per cent unemployment rate in Canada instead of about 11 or 12 per cent, and in some areas up to 20 and 30 per cent.
What is it about this government that every time we get into a discussion of the tax system, of using the corporate tax dollar -- and that’s where most of the dollars are, that’s where the economic leverage is; they’re not in the pockets of the average individual -- why is it that when we start telling the government to get involved, to lever that money into investment in this country to ensure that there are jobs it starts going on the defensive?
You keep saying, “We’ll leave it to private enterprise.” And of course, private enterprise invests in Guatemala and Chile and various other places; and in the United States in terms of Canadian funds. They’re going out of the country because they are seeking areas where they will have a greater return for their profit. That’s understandable, that’s what they’re all about; but somehow I feel that when they’re using our money, made in Canada off the sweat of Canadian people, that perhaps we should have a little say about how this money is invested and where it’s invested. I think we should get some of the benefits in this country for a change and not just leave it to the whim, or to something that may happen someplace, to the so-called free hand of the market mechanism; there’s no free hand.
Mr. J. A. Taylor: No, it’s the invisible hand.
Mr. Makarchuk: When you look, as I pointed out earlier, at the number of banks located in the Caribbean, Liechtenstein or various other countries -- what do you think they’re in there for? They’re in there to evade taxes. It seems to me that there should be a government policy that if a firm, person or anybody who works in this country and gets benefits from this country or this province, then he should be responsible to pay his share for the operation of that society. Right now your tax policies do not follow that; and that’s why it’s unfair, it’s grossly inadequate and it puts a big load on the middle and lower income taxpayer, because of your inadequacies and inabilities -- and your ideological hangups.
Let me tell you, the difference between the socialists and yourself --
Mr. J. A. Taylor: That is why you nationalize.
Mr. Makarchuk: -- is the fact that we’re prepared to acknowledge the fact that an economy could be and should be a mixed economy, that somewhere private enterprise can do its best and should do its best, but we also say that somewhere government can do its best and should do its best. In your case you’ve taken a blind, ideological, head-in-the-sand attitude that’s totally wrong, it’s been proven wrong by every country in the world, and you’re saying we’ll leave it to private enterprise.
The handwriting is on the wall, it’s all over. All you have to do is look at the two countries in the western world that are living with this ideology, the United States and Canada, and both of them have the biggest economic problems of anybody else in the world; and you don’t see it.
Hon. Mr. Rhodes: Tell us about the socialist Utopia in Sweden? Tell us about Sweden, the socialist Utopia?
Mr. Makarchuk: You refuse to acknowledge it. You are the people -- and you too, Minister of Industry and Tourism -- you are the architects of the next depression.
Hon. Mr. Rhodes: Tell us about socialist Utopia?
Mr. Makarchuk: The rhetoric that comes out of you, if you read the books about the 1930s, it’s identical; there isn’t a change. You haven’t changed a word and you’re coming out with that garbage and nonsense -- harmful destruction, the vandalization of our society, that’s what you guys are all about. Unless you start changing and unless you start looking at what the western countries -- you look at Germany, you look at England, you look at Denmark, Sweden or Norway and look at the economic tools that those countries --
Mr. J. A. Taylor: Fools or tools?
Mr. Deputy Chairman: Order. Can I remind the member to please stay on corporation tax.
Mr. Makarchuk: Yes, that’s right. I’m just getting to it.
If you look at the economic tools, the corporation taxes, and how they are using them --
Hon. Mr. Rhodes: You have got to raise taxes on yachts.
Mr. Makarchuk: Right on. You’ll find that perhaps you can pick up a few ideas and start applying them.
Hon. Mr. Rhodes: Guys with yachts should be taxed.
Mr. Makarchuk: Listen, you’re minister of everything that’s been dissolved.
Mr. Deputy Chairman: The member for Halton-Burlington.
Mr. Deputy Chairman: I beg your pardon. Did you want to reply to that, Mr. Minister?
Hon. Mr. Maeck: Only to acknowledge that it is, of course, another NDP philosophy speech we just heard. I’m wondering which companies the member for Brantford wants to nationalize and so on.
Hon. Mr. Rhodes: All of them.
Mr. J. A. Taylor: He wants to put them out of business first.
Hon. Mr. Maeck: We have, as a matter of fact, on this very item we’re talking about, done exactly what he has suggested, we have used it as a carrot to have companies, corporations, invest. That’s what he’s saying it’s all about, and yet he runs off and tells us that we’re not doing that. That is what this particular item is all about; and the particular question that was raised by the member for Yorkview (Mr. Young) was all about. It was incentives; that’s exactly what we’re talking about. It’s obvious that the member for Brantford has given us his ideology on socialistic corporations. That’s fine; we on this side of the House don’t really agree with that, but I acknowledge only one thing --
Mr. J. A. Taylor: He’s terrorizing the government.
Hon. Mr. Maeck: -- and that is that we do use corporation tax for social purposes up to a point.
Mr. Deputy Chairman: The member for Halton-Burlington.
Mr. Makarchuk: I’m not finished.
Mr. Deputy Chairman: Beg your pardon?
Mr. Makarchuk: On the same point, Mr. Chairman, the minister asked which company we would prefer to nationalize. There was a good example just a little while ago; Denison would have been an excellent company, and your own people, staff people of the government, suggested it.
The Minister of Energy over there -- I’m sorry, the ex-Minister of Energy -- if he had anything on the ball besides a lot of wind, he probably would have moved in that direction and might have still been the Minister of Energy instead of a backbencher and not necessarily the best one.
Hon. Mr. Rhodes: It is better to have been a has been than a never was.
Mr. Makarchuk: Yes, but at least I have something to look forward to.
Mr. J. A. Taylor: Don’t kid yourself.
Hon. Mr. Rhodes: You will never live that long.
Mr. Deputy Chairman: Order.
Mr. Makarchuk: However, I have something to look forward to. Being a has been, that is the greatest --
Mr. Deputy Chairman: Could we go back to corporation tax please?
Mr. Makarchuk: Right, Mr. Chairman. I think the point the minister is saying is that deferral of depreciation, capital cost allowances and so on are a necessary part of business and everything else. What I am trying to tell you is that you are leaving it to chance. In other words, you are not using any of the instruments available to the government to ensure that investment is carried out in Canada. That’s what the whole discussion is all about. You give them a handout every so often, more depreciation on equipment and quicker write-offs on equipment. But that does not provide jobs. You have no evidence that jobs are being created this way.
The logical thing for anybody when something doesn’t work is to try something else. But you are not trying anything else; you are still carrying out the same sort of bankrupt policies that have failed in the past and are failing you now, and you are going to continue with the same thing. What I am saying is it’s about time you stopped, looked around, changed your mind and did something else.
Mr. J. Reed: I really wasn’t planning on saying anything, but after a socialist’s diatribe one has to reply. If I could look at it from just a little different point of view, one of the problems is that we are not leaving quite enough to private enterprise. Every time we nationalize something or put it in the public domain, we remove --
Mr. Makarchuk: Like what?
Mr. J. Reed: Like your desire to nationalize Denison, your party’s desire to nationalize the oil industry and so on.
Mr. Hodgson: And Inco.
Mr. J. Reed: What you do is remove the ability to tax. History shows --
Mr. Makarchuk: Where?
Mr. J. Reed: If you nationalize an industry, are you also going to apply taxes to it? Niagara Mohawk, for instance, in New York State pays corporate taxes to the state and also pays a dividend to the stockholders.
Mr. Young: Ontario Hydro pays a social dividend though.
Mr. J. Reed: Admittedly, there’s a social dividend.
Mr. Makarchuk: And it provides cheaper power.
Mr. Deputy Chairman: Order. Will you allow the member to continue please?
Mr. J. Reed: One is beginning to wonder in the case of Ontario Hydro whether that is not being more than offset by the incredible cost of production per unit of power. I have just gone through a few exercises in terms of costing out hydraulic installations and so on. I find that this very highly socialized industry is indeed doing things at probably about twice the cost that could be done by the private sector.
Mr. Deputy Chairman: May I ask the member to stay on corporation tax?
Mr. J. Reed: It’s certainly directly related, with a little latitude from the chair I realize.
The ability of corporations to pay taxes, especially in Ontario and especially at the present time, has to evolve around the kind of commitment that’s made towards research and development. One of the things we recognize and on which we must agree on both sides, at least our party and the party in power, is that one of the long-term goals for industry --
Mr. Makarchuk: Tweedledum and Tweedledee.
Mr. J. Reed: -- in Ontario is going to have to be the development of excellence in technology in order to be competitive on a world base.
Mr. di Santo: Oh come on; you don’t know what you are talking about.
Mr. J. Reed: All right; you don’t want to have any excellence in technology over in the NDP, that’s fine.
Mr. Deputy Chairman: Order.
Mr. J. Reed: Thank goodness you fellows will never form the government so we don’t have to worry about that.
Mr. J. A. Taylor: It’s all hard work over there.
Mr. J. Reed: The fact is that the Science Council of Canada endorses excellence in technological improvement. One of the things I have been critical of the government for in the past is its research and development specifically. In terms of the thing that I know a tiny bit about, and that is the Ministry of Energy, the research and development money that is available in that ministry, while very well intentioned and very much welcomed, is not made available; there is no mechanism for making parts of it available to the private sector for development.
I would suggest to the minister that if that kind of thing were put into private hands, first of all development could take place on probably a more economic basis, and it would put these companies into a position where they would ultimately be paying a greater share of taxes and contributing to greater revenues. I know that the minister won’t be misled by the urge to nationalize, which is pushed upon him by the NDP.
Mr. di Santo: Mr. Chairman --
Mr. Deputy Chairman: I would remind the member for Downsview that we are dealing with corporation taxes.
Mr. Makarchuk: Of course.
Mr. di Santo: I know that, Mr. Chairman. If you had to remind someone, it was the previous speaker, who kept talking about everything else but corporation taxes. We in this party are not talking about nationalizing everything --
Mr. Nixon: Almost.
Mr. J. Reed: Just most of it.
Mr. Hodgson: Just most of it.
Mr. di Santo: Okay, go ahead.
Mr. Deputy Chairman: The member for Downsview has the floor.
Mr. di Santo: Thank you, Mr. Chairman. When we talk about nationalizing certain sectors of our economy, we think we are responding to the needs of the economy of Ontario and Canada. We are not alone in that. As a matter of fact, when we say we have to nationalize the oil industry, we have people like Eric Kierans with us, because there is a definite need in that area to create the conditions to satisfy the needs of Canada.
The corporate tax structure we have now does not respond to the needs of Ontario and Canada. It responds to the needs of the corporations. Those members who are always ready to stand up and speak of free enterprise don’t know what free enterprise is. If they know what free enterprise is, then they are misleading themselves, because there is no longer a free enterprise system in this country. Nobody can compete with Imperial Oil or with the other giant corporations. Nobody can compete with Ford, General Motors and Chrysler. Those members don’t know what free enterprise is; otherwise they would not be asking questions every day of the Premier and the other ministers to try to persuade them to keep a few jobs in Canada. The giant corporations can dictate to the Premier of this province, and to the Prime Minister as well, and the government has no way of imposing conditions on them or telling them what to do; because there is no competition, no freedom in that sector of the economy.
Mr. J. A. Taylor: Your man Kierans couldn’t run the post office, now you want him to run the oil companies.
Mr. di Santo: Going back to the corporation tax --
Mr. Makarchuk: I thought you were right on it.
Mr. di Santo: -- I want to say that, despite what the member for Halton-Burlington said, in Canada right now the private sector doesn’t carry on research at all in a way which would be adequate to the development of our economy. In fact, in Canada as a whole we carry on less research than Ford by itself in the United States. We devote only 0.36 per cent of the gross national product to research and development. The reason is that the companies which operate in this country, especially the multinational corporations, have no ties whatsoever to respond to the needs of the industry of this country and of this province.
Mr. J. Reed: That’s why we have to do the creating here.
Mr. Chairman: Order.
Mr. di Santo: If the member is patient I’ll explain to him why with the present set up it is impossible to create research and development in Canada because 99 per cent of our oil industry is totally owned and dominated by foreign corporations, American corporations, and 60 per cent of our industry is in one way or another dominated and owned by, as the Minister of Industry and Tourism would tell us --
Hon. Mr. Rhodes: Tell us about the Utopia in Italy and how good it is over there.
Mr. Chairman: Order.
Mr. Young: Come on, John.
An hon. member: Free enterprise thinking.
Mr. di Santo: Well, if the Minister of Industry and Tourism is in a joking vein, at this time when the revenues of this province are depleted and are going down perhaps that will satisfy you in your caucus for internal reasons but not, it seems to me, the people of Ontario. We too talk about Utopia in other parts of the world, but let’s now go back to taxation.
I was saying that the reason why there is not research and development in Canada is because our industries are foreign dominated and we have a branch plant economy which has no need to invest research and development money in Canada. In fact the Treasurer of this province produced a study on the auto industry two weeks ago in which he says that if there was research carried out in Canada equivalent to the production of cars in this country we would create immediately 2,000 more jobs. And, of course, we would have part of the profits of the companies remaining in Canada, but that doesn’t happen now. All of you know that in the auto industry the only research carried out in Canada at all is 12 people in northern Ontario testing engines in cold weather and that to me isn’t appreciable.
I think the province should be convincing the companies in the private sector to invest more money in Ontario, but in order to do that I think we should create the conditions to develop an indigenous company which will not only be loyal to the province of Ontario but be accountable to the province of Ontario. With the present corporation tax system we are giving the corporations concessions and we are giving them money that they can spend all over because they have no ties, there are no strings attached, and they operate in the spirit and with the perspective of a multinational corporation.
Hon. Mr. Maeck: The member has made some interesting observations, of course, but I am just wondering if anybody here sits down once in a while and thinks about who the shareholders are in these corporations. You know, there are people, insurance companies, there are private pension funds, there are unions --
Mr. Worton: Lorne Maeck.
Hon. Mr. Maeck: Lorne Maeck might have a little bit in, too. I suspect that Harry might, too.
Mr. Worton: Yes.
Hon. Mr. Maeck: You people look at all these corporations as some large monster out there and actually there are a lot of people in this province who own a little piece of a corporation --
Mr. Haggerty: They don’t put it into 50-foot yachts.
Hon. Mr. Maeck: -- and they are looking for a little return on their investment, which they are entitled to. I think we have to keep this debate in proper context.
Mr. J. A. Taylor: Most of them aren’t large.
Hon. Mr. Maeck: It doesn’t mean there is one person out there who owns the corporation. In most cases it’s the little guy who’s worked hard for his money and invested it and surely he is entitled to a return on his investment
As far as I am concerned it’s all very well to say that we should be directing these corporations to leave their money here in Canada. I am all for that, if they will invest in Canada. But after all, again, we are talking about thousands and thousands of individuals who have made an investment and surely they are entitled to decide where they are going to spend their money. I don’t believe that in this free society we can direct anyone to retain their money and spend it here in the province of Ontario, much as I would like to see them invest every cent. I think those kinds of things have to be taken into consideration. I think we are still living in a free country here.
Mr. J. Reed: They don’t want a free society.
Mr. Makarchuk: The minister makes his plea for freedom and talks about the small shareholder in Canada who would like to invest in Canada. I would like to see the minister over there or anybody in this House try to buy shares of General Motors of Canada; go ahead and try it.
Hon. Mr. Maeck: I have some shares.
Mr. J. A. Taylor: Why? Would you sell?
Mr. Makarchuk: No you haven’t. You may have shares of General Motors but you don’t have shares of General Motors of Canada for the simple reason that you can’t buy them -- or General Electric, or 101 other major corporations that are totally owned by a foreign subsidiary. If you wanted to invest in a Canadian corporation you can’t do it. I think that you should recognize that point, that is the one point that is important.
I am glad to hear or see the member for Halton-Burlington get up and make the plea for technology and research in Canada. It is amazing that he says that; perhaps we could use a corporation tax in this way, say to the corporations, “If you put up two per cent” -- which is normal for what a corporation spends on research -- “and if you don’t spend it in Canada we are going to tax you the two per cent and put it into either the Ontario Research Corporation, or parcel it out to universities or something like that.”
But you don’t move in that direction. The Liberal government in Ottawa -- and he’s a member of the Liberal Party -- doesn’t move in that direction; the provincial government doesn’t move in that direction. You stand up here and say, “Yes, we have to do more research in Canada.” Nobody argues with you on that point, we all agree. We all agree that you have to do research.
Mr. J. Reed: We think there should be research in the private sector.
Mr. Makarchuk: We have to do research in this country, unfortunately you don’t take that one additional step to ensure that you do the things so that there is research done in this country.
You know it is funny, where we shine in the world most of the research is publicly financed. When we talk about our Candu reactors; who does that? That is public finance. We talk about Polysar; that is public finance. We talk about our STOL aircraft; that is public finance. We talk about our satellites; that is public finance.
Hon. Mr. Maeck: Tell me about UTDC.
Mr. Makarchuk: That’s a good question. We’ll talk about that. I would suggest to you that if you are going to put people in charge of public corporations, you put people in charge who have some belief that the public corporation should work and should function properly instead of putting in people who lose a nomination. They can’t get a nomination, so then you put them in charge of UTDC. I don’t think that is the way you should operate.
Hon. Mr. Rhodes: He was there before that.
Mr. Makarchuk: He was there before that, but he was there at the nomination as well.
Hon. Mr. Rhodes: A long time before that.
Mr. Makarchuk: That is the point. The point is, if you have problems with public corporations perhaps you deal with the people who are in charge.
Again on the private enterprise ethic, if you look at this country; the canals weren’t built with private enterprise, it was public funds. The railways were built with public funds. When C. D. Howe was looking around for private enterprise to get an airline going in this country he didn’t find any. He had to get public funds to get it going.
If you look at your railways and the criticism of the CNR, that it never makes money, somehow you forget the fact that you picked it up. It was private enterprise that went bankrupt, and you had a Tory government that paid off the bankrupt owners in exaggerated, gross amounts. We just wrote the debt off the other day or a few weeks ago.
You use examples which are not relevant and are not part of the economic argument at this time. You use those examples to try to buttress your ideas, to buttress your support to your rather bankrupt ideology.
Let’s get back to research. I would suggest that if the minister or the Treasurer insisted on putting on a two per cent corporate tax that would go into research, we would have a considerable amount of research developing in Canada. You know we are no slouches in research. If we look at the record of the Canadian people and what we have accomplished in this country, we can look with some pride.
The first jet air transport was built in Canada. Ferranti-Packard was involved in constructing one of the first computers in Scarborough. Where is our computer industry right now? Where is our jet air transport right now? Where are our fighter plane programs? We’re going out and spending I don’t know how many billions of dollars. We had the research but we had a Tory government which destroyed that thing. The whole American space program benefited because we disposed of our research people in a brutal and a very insensitive way without considering where the future of this country goes.
Mr. J. A. Taylor: Where do you stand on the Arrow?
Mr. Makarchuk: Where did I stand on the Arrow?
Mr. Worton: Right behind it.
Mr. Hodgson: Right on the tail.
Mr. Makarchuk: At that time, for the member’s benefit, I was a flight lieutenant in the air force.
Mr. J. A. Taylor: On the wing then.
Mr. Makarchuk: Yes, I was on the wing.
At this time, when we look at a country like Sweden with its seven million people, it’s able to build its own fighter aircraft and sell them.
Mr. J. A. Taylor: And it’s insolvent.
Mr. Makarchuk: We can’t do it in Canada with 22 million people. The government decides for some inane reason to buy armoured cars. The only reason I can see for that is that they can see riots in the streets of our cities and they’re going to use these cars against their own people. They have to go to Switzerland to get the design of an armoured car which is going to cost Canada, over and above the manufacturing costs --
Mr. Chairman: Order, please. Would the honourable member return to the administration of the corporation tax?
Mr. Makarchuk: Right: We’re talking about the money from corporation taxes that isn’t collected for research. You see the connection, I hope. With your erudite mind I’m sure you could understand these things.
Mr. J. A. Taylor: Why don’t you do something about the armoured cars?
Mr. Ruston: Is this a budget speech?
Mr. Makarchuk: This is an indication. We’re saying that your corporation tax and the way you use it should be a matter of policy for the benefit of this province and this country, and you’re not doing that right now.
Mr. Hodgson: A great contribution.
Mr. M. N. Davison: I must say this afternoon’s dialogue has been a rather interesting lesson for me in the sometimes popular mythology of the economics of the right. I’m not exactly sure what term is now used by this unofficial economic coalition. I think perhaps we’re talking about subsidized free enterprise nowadays.
Mr. Haggerty: The member better read the Star today. It says: “NDP Says That Tax Cuts Would Create Jobs.”
Mr. Chairman: Order.
Mr. Makarchuk: That’s right. Notice that it’s for people not for corporations.
Mr. M. N. Davison: There was a lot of talk earlier today about the possibility of using the corporation tax as a tool or an instrument for social progress. That would be very nice to see. It would be very nice to see it in Ontario as we’ve seen it in other countries and in other jurisdictions. I’m afraid in Ontario we haven’t even yet been able to use the corporation tax as a means of economic progress as we go further and further along the trail towards the sunset.
At the beginning of the debate I understood quite a bit of what the minister was saying. I don’t know if he was having a problem with his microphone, but later on in the debate his words started to jumble up a little bit and made quite a bit less sense to me. I would like, if we could, to go back to a couple of points the minister made earlier and see if I understand them correctly.
When we talk in terms of corporate tax deferral, was the minister saying we’re talking about the government, on behalf of the people, as the steward of public moneys, taking a risk with public moneys and investing in the economy? If that is what the minister was saying, wouldn’t he then agree, as my colleague asked him some 40 minutes ago, that it’s surely the worst kind of economic silliness to invest that kind of money without getting some kind of equity, because without equity you just can’t have control?
Hon. Mr. Maeck: What I said basically is what you have repeated. The deferrals are used for reinvestment. The reinvestment, of course, should benefit the people in the province of Ontario, providing the investment is here. As far as the deferrals are concerned, they are granted only when they buy production machinery and that type of equipment. That, again, should generate work. I don’t really know what question you are asking me. I agree with what you’ve said up to this point, I suppose.
Mr. J. A. Taylor: Careful now.
Mr. M. N. Davison: I don’t want to engage in a debate which may well be pointless now --
Mr. Makarchuk: He is telling you to shut up.
Mr. M. N. Davison: -- but if the minister accepts the fact that he’s investing funds on behalf of the public --
Mr. J. A. Taylor: That’s not a fact.
Mr. M. N. Davison: Even if the former Minister of Energy doesn’t accept it, I think the Minister of Revenue does. If the minister accepts the fact that he is investing public funds and that he’s taking a risk, then I can’t understand why he won’t go that final small step further and say, “When we’re investing public funds and taking a risk, we will require equity so that we can have some direct influence.” Then we won’t have to worry, and the Minister of Revenue won’t have to use words like “should” or “maybe” or “perhaps,” but he can use words like “will” and “would.”
If the minister would just go that step further, it would be quite useful and we would have equity in those on behalf of the people of Ontario whose money has been invested at a risk. It sounds perfectly sensible to me, aside from and regardless of whether the minister wants to call it socialism, subsidized free enterprise or anything else. If we can get rid of all of those names and terms that some people on the government party’s side of the House are hung up with, why can’t we just take equity? Businessmen take equity in investment. Why can’t the people?
Hon. Mr. Maeck: In essence, we do have some equity. We’re talking here about a deferral. We’re not talking about a forgiveness in taxes; we are only talking about a deferral. As the company progresses and starts to make money, it must pay those taxes. So we’re not really talking about the same thing as an ODC loan, for instance, or something like that. We sometimes lend public funds for that purpose and we don’t get a return on our investment if they happen to go bankrupt. Even if we think we’re secure when we lend it, sometimes we find that we’re not. So I don’t think it’s unusual to invest public funds in an investment in the future, and I think that’s what we’re trying to do. We’re not forgiving the taxes; we’re deferring them. I think there’s quite a difference.
Mr. Young: Mr. Chairman, I am sure the minister who is in charge of developing the big industrial base in this province has heard the lesson this afternoon and he knows now where to go to get some of the investment funds he needs. He’s been listening here with a great deal of attention, and certainly that’s a good lesson for him.
Mr. Makarchuk: Economics 1-A.
Mr. Young: The question I’d like to ask is this: On a couple of occasions, the minister said that as soon as the company makes a profit this loan or deferred taxes will be paid. His predecessor, on page 1587 of Hansard for April 22, 1976, said this:
“I am advised that the money becomes a receivable at the time they stop increasing their assets [which, of course, in the case of a great many companies is never]; or when they have depreciated their existing assets to certain levels then these moneys come in.” Then, on page 1592 of the same day, when he was asked about the total amount, he said:
“There is no aggregation of those particular deferrals. Some mature and some don’t.”
That same day, on page 1588, the member for Riverdale (Mr. Renwick) said this in that debate: “There is one of those eternal principles that the closest thing to eternal life is a deferred tax for a corporation. It’s never collected and the history of the taxation statutes shows that it is never collected. It’s not a deferral; it is the immediate conferring of a benefit on the corporations which is unjustified on any basis of social and economic policy.”
I wonder whether the minister has any figures to show just how much of the deferred taxation in Ontario is paid off and how soon?
Hon. Mr. Maeck: I am informed that we do collect some of the deferred tax.
Mr. Young: How much?
Hon. Mr. Maeck: My advisers here tell me that as soon as the investment stops, the deferred taxes are recovered. In other words, as long as they keep investing we don’t collect the tax, but as soon as the investment stops then the taxes are recovered. I don’t know if I can provide you with any estimates or not. I am afraid that I can’t tell you how much is collected.
Mr. Young: Along that line, a company like Bell Telephone for example, which has a very large stake in deferred taxation, not only federally but provincially, never stops investing. It’s an eternal thing. Inco for all its troubles at the present time doesn’t stop investing, either here or Guatemala or somewhere else; the investment goes on and on. So when you get to that kind of corporate structure, my guess is that the income never comes back. I wonder if this is the case?
Hon. Mr. Maeck: Of course that’s the purpose of the incentive, to keep them investing. The more they invest, the more jobs it creates and so on. The better it is for the economy, and that’s what it’s all about.
Mr. Young: Mr. Chairman, if I could just finish with this little point -- I guess I started something this afternoon, Mr. Minister, and we have had a philosophical discussion as well as one on this one.
But if, for example, you don’t allow that deferred tax on 100 different corporations in Ontario, that means that I, as a taxpayer, don’t have to pay as much personal income tax. What they get deferred I have got to make that up in order that you might pay your bills.
Now if I have that much money saved in my taxation, perhaps I can invest in Bell Telephone or Inco, or something else that’s more attractive than Inco at the present time. So private enterprise might enter in right there; the private individual could get more chance for a kick at the profit of the corporation if it weren’t for your policy of putting tax money into this business. That’s one side to this whole thing.
The other side, of course, is that if you insist on this, then let’s see that as a taxpayer I am protected by some sort of equity or bond interest; something whereby I am sharing in this prosperity you talk about.
Mr. Charlton: Mr. Chairman, the minister mentioned they didn’t have any figures on how much, if any, of these deferred taxes ever come in. Could the minister make an effort to get us some kind of an indication of dollars and cents, and/or percentages, of deferred taxes that are ever collected?
Hon. Mr. Maeck: I am advised by staff it would be a very enormous undertaking. We could try.
Mr. Charlton: So, Mr. Minister, the whole situation is that you sit there and tell us that all of this eventually comes back in but you don’t really know at all.
Hon. Mr. Maeck: I would like to correct that statement. I didn’t say it all came back in. I said a percentage came back in. Some was paid, I didn’t say all by any means; there’s a difference.
Mr. Haggerty: Mr. Chairman, I would like to direct a question to the minister relating to corporation taxes. Almost every financial statement that is produced by corporations is based upon the American dollar. Is the Ontario corporation tax applied on the American dollar or the Canadian dollar?
Hon. Mr. Maeck: It would be applied on the Canadian dollars if it’s here in Ontario.
Mr. Haggerty: Is the minister not well aware of -- I think for example of the quarterly report of Inco just recently; they were giving themselves much praise, in a sense, in saying that due to the exchange for the Canadian dollar on the American market that it increased their profits I think, and I am just quoting from memory, by well over $10 million. Should that not be taxable?
Hon. Mr. Maeck: Could the member repeat that, I didn’t catch it?
Mr. Haggerty: They sell their product at United States dollar value. Under the present exchange rate on Canadian money in relation to American money it nets corporations -- and I cited one, Inco, as getting an additional $10 million in profit. Is that taxable under the Ontario Corporations Tax Act, that extra profit?
An hon. member: The exchange.
Mr. Haggerty: The exchange.
Hon. Mr. Maeck: That money, of course, is converted into Canadian dollars and the Canadian dollars are taxable, so they would be paying tax on that.
Mr. Makarchuk: Then, on the other hand, you don’t know. That money could be left in the Bahamas bank, in which case it doesn’t cross the border so the chances are that’s probably where it is left. No corporation in the world that can evade paying taxes is going to put itself in a position where it will have to pay taxes. What I want to know at this time, Mr. Minister, on the fact that there is a great deal of money being transacted in the so-called no-tax jurisdictions, does your ministry do any monitoring to confirm if they are being used to evade taxes? Do you do any monitoring to see if any of these transactions are perhaps illegal or just basically designed to evade paying taxes in Ontario? Are you concerned about that?
Mr. J. A. Taylor: You’re talking about tax evasion; we’re talking about tax enforcement.
Hon. Mr. Maeck: Obviously I am concerned about it. But by the same token, the member keeps bringing up the Bahamas and last year’s estimates and so on. Several times now he has talked about tax evasion or avoidance, but he never has pointed out to me or this ministry which companies it is or anything. If he has this kind of information that he quotes all the time, if he would give it to us we certainly would investigate it. But to this point in time he has not given us any information at all, other than guesswork.
Mr. Makarchuk: Mr. Chairman, I am not the minister. I am not in charge. You want me to do your work for you? I’ve got enough of my own trying to take care of the damned compensation cases you guys create; that takes about 75 per cent of my time as it is.
The point is that Ontario corporations operate in these jurisdictions. You know it and I know it, and everybody else knows it. And why do they operate in there? Certainly not because of any local industry. There isn’t any, outside of tourism. They’re in there for the simple reason that they can avoid paying taxes.
What I want to know is what are you doing to try to ensure that money earned in Ontario -- there may be a change of something over here but the money changes over there, and consequently there are no taxes paid. I am wondering if you are doing anything to examine some of these operations to see that Ontario gets its minimal cut of the transaction.
Hon. Mr. Maeck: I would say that the ministry is investigating all of these things as it goes along. It is doing regular auditing on all of the corporations in this province from time to time. They don’t audit each corporation every year obviously; it would require a large staff to do that. But I think they are keeping an eye on it properly, and we have no indication there is anything going on that hasn’t been going on before and will probably go on in the future.
I don’t know of any large problem that exists at this point in time.
Mr. Makarchuk: On the same point, the fact is that these corporations are located there, as I said, not because of any local economic activity, they are located there to avoid paying taxes.
The other matter that I would like to raise -- and this is not the first time I have raised it with the Ministry of Revenue; again this comes into the discussion that you can have with people who work in management of the various multinational corporations. They will tell you that in their opinion the Canadian taxpayer and the Canadian corporation get taken in many cases because of the management fees, the research fees, the component-cost fees and everything else that is charged from the parent corporation, located in the United States or some place else, against the Canadian operation.
Consequently, the net result is that the corporation in Canada doesn’t make any profit or makes very little profit. Yet the parent corporation can be making a fairly handsome profit on which they should be paying taxes to the province of Ontario; but they are not.
Again I wonder, have you changed any of your policy? Have you really become concerned about this and started looking at it seriously instead of just taking an audited report done by an accountant? All they will do is they will make sure the money was received and the money was paid out. That is all this really tells you. It doesn’t really say whether there was value for that money or whether the payments were justified or not.
Do you look at some of these things and see whether this is a justifiable expense to be charged against a Canadian operation, as opposed to the cost that the parent corporation is charging it?
Hon. Mr. Maeck: There is a special tax on management fees and so on that is taken into consideration. I think that our auditors are efficient when they audit a corporation’s books. They go through them and they examine them in detail. If there is anything suspicious about it we call in the special investigations branch which we talked about earlier in these estimates. We have enlarged the special investigations branch, or we are in the process of doing that. We are in the process of increasing the number of auditors.
So it is not as if we are trying to be lackadaisical or anything like that about this situation. We consider it’s serious and we want to ensure that the dollars that are owing to this province are collected and we are moving in that direction.
That’s not to say that there are a lot of problems out there that we are aware of that we haven’t been able to cover, but we feel that the work load is getting larger all the time as the province grows and we must keep pace with it. We are doing all the auditing and the checking that is normally done by any revenue collector. If there are cases where there are suspicions of something going on we look into it. I don’t know what other assurances the member wants.
Mr. J. A. Taylor: Mr. Chairman, I’m wondering if the minister can clarify a point for me please. We heard the word “corporation” bandied about today as though it was something evil. And, of course, if it’s a multinational corporation then it’s something sinister.
Mr. Martel: It’s even worse.
Mr. J. A. Taylor: I would like to know, Mr. Minister, if you would indicate the percentage of corporations that might have more than 50 employees in this province. I surmise that probably 90 per cent of our corporations have fewer than 50 employees and when you talk about corporations you are talking about farm corporations, all kinds of little businessmen and so on that are striving to make a living.
Mr. Haggerty: Law corporations too.
Mr. J. A. Taylor: That’s right: And so far as I am concerned, somebody has to earn money before the tax collector takes it. And I don’t have a particularly warm place in my heart for the tax collector.
Mr. di Santo: That’s why you are not a minister any more.
Mr. Cunningham: You especially should know.
Mr. J. A. Taylor: Of course, I don’t fault the present minister. It’s his job to collect the taxes. The rules are made for him. But maybe he could indicate to the House just what we are talking about when we hold up the corporations in this province to contempt and ridicule.
Mr. Young: We are not holding them up to contempt --
Mr. J. A. Taylor: You certainly are, you are accusing them of tax evasion. That’s a crime.
Mr. Martel: Tax laws are made for them.
Mr. Chairman: Order.
Mr. Young: We have not been holding up the corporations in this province to ridicule.
Mr. Chairman: Order.
Mr. Young: The tax policy is wrong.
Hon. Mr. Maeck: I am informed that there are some 160,000 corporations in the province. I really can’t tell you what percentage have 50 employees or less. I could get those figures for you, but we don’t have those figures here. But I would think that of 160,000 most of them are pretty small. So when we are talking about corporations certainly the biggest percentage of them are very small, probably with under 50 employees, there’s no question about that. But I’ll get that information for the member.
Mr. Makarchuk: Just on that point, while you are getting the information it might be worthwhile to get the information indicating the fact that there is about 300 major corporations who control about 60 or 70 per cent of the financial transactions. It would be interesting to get that kind of breakdown. I think that should be available. That will give you a more accurate picture as to what we are talking about.
We are not talking about these people that you are raising. We understand, they don’t have branches in the Bahamas to avoid taxation. I deal with them every day. Every member in this House deals with them and we know their problems.
Mr. J. A. Taylor: Then don’t be so loose with your language.
Mr. Makarchuk: It’s the multinationals that we are discussing. It’s a corporation by itself; it’s multinational for example.
Mr. M. N. Davison: I am having some problems with the minister’s response to a couple of questions asked by my colleague from Hamilton Mountain about 10 or 12 minutes ago -- the question of further information on the tax controls.
I understand that we have available to us the figures up until 1976 as to how many millions and millions of dollars were deferred in corporate tax. What we don’t have are any figures indicating how much of that eventually comes back to the government. As I understood the member for Hamilton Mountain’s question, he was asking for that information. The minister originally responded that he would try to get it, but a few seconds later he responded that it was just too much work, that he probably couldn’t come up with it.
Oh my goodness, that’s a devil of a way to run a business. We’re giving out $50 million a year in tax deferrals and it is coming back but we’re not sure how fast it is coming back. We’re really not sure about how it is being reinvested or whether it is being reinvested. We don’t know when it is going to be paid. We don’t know how much is outstanding right now.
As a stockholder in this corporation called the province of Ontario, I am a little bit surprised by that sort of answer. I would hope that the ministry, though it may be a rather difficult job, would be able to supply those figures, not only to my colleague from Hamilton Mountain but to all the fine people of this province whose money has been invested in this deal, so that we can have some understanding of who owes us what and when we might expect to be paid back our investment.
Hon. Mr. Maeck: I am informed that the reason it is so difficult to get this information is, as I indicated earlier, there are 160,000 corporations. Each one of them would have to be gone through for each year. You are talking about a very large job to come up with those total figures that you are asking for. If the member was to ask me for one particular year or something like that, perhaps that could be arranged. To go through 160,000 files and find totals for a period of -- I don’t know, how many years do you want? -- it is almost an insurmountable task.
Mr. M. N. Davison: It is probably my fault for thinking that we run our economic affairs in this province in a sensible businesslike fashion. We should know in effect what our accounts receivable are. If any of the companies in my riding -- be they large or small, from the local Becker’s store to Dominion Foundries and Steel or STELCO -- didn’t know what their accounts receivable were, their stockholders or the owner of the businesses would be quite upset by the fact. I would think that this is the same kind of thing; these are accounts receivable and we have to know in this province what we are owed.
If the problem is that the bookkeeping system you use doesn’t allow you to retrieve that information easily, quickly and by natural course, then what we should be doing is looking at a different bookkeeping system; viewing it from this side of the House, perhaps we should be having different bookkeepers or different people running the business. However, I would hope that the minister would either supply us with the figures sometime in the next few weeks as to how much we are currently owed by these corporations that we have been so generous with -- the total figures, the aggregate figures, for this time; or undertake seriously to make a commitment to change the internal records-keeping system used by this government so that in future years we won’t get into a debate without knowing what the figures are.
We are talking of millions and billions of dollars of public moneys and nobody seems to be able to tell us how much we are owed.
Hon. Mr. Maeck: Of course we are not owed any money until it becomes due and payable. It is deferred, it’s not the same thing as them owing us money. I don’t know how you relate the two but it is a different situation altogether. What actually happens is that when the companies begin to generate a profit, they file a tax return and then their files are brought up to date within the ministry and that company is dealt with. But they are deferrals, as the member for Yorkview has indicated, on a company such as Bell Canada, which develops every year, it would be almost impossible for us to do what the member is suggesting. I don’t think you can refer to those things as debts until they become payable.
Mr. M. N. Davison: Tax --
Hon. Mr. Maeck: When they’re payable, they’re debts.
Mr. M. N. Davison: Tax -- income tax, corporate tax, personal income tax, corporate income tax, or any other kind of tax -- tax is payable, in most cases, each year. This is a special instance --
Mr. Young: If I didn’t pay mine --
Mr. M. N. Davison: That’s right. My colleague is saying if he didn’t pay his taxes he’d really be in trouble, and he doesn’t even get tax deferrals.
Mr. J. A. Taylor: Look at his income.
Mr. M. N. Davison: But that tax is payable that year. The government, as a tool of its economic policy, decides that it will defer that tax payable, so that the money can supposedly be used for the good of the public and allegedly will go into being reinvested and will help out the public in some unclear fashion.
Mr. J. A. Taylor: We could hire more civil servants to investigate it.
Mr. M. N. Davison: The point is that if we defer that tax we know in the year what it was we deferred, and we know at some point in time that we will want to collect that account, which is owed to us -- and it is owed to us, the people; that’s my understanding of it and I’m sure that’s the people’s understanding of it -- then we should understand those things. The ministry should have those figures. Your tax is payable in the year 1972 and it’s deferred; then in 1977 or in 1977-78, we should be able to say: “Yes, that tax was eventually paid in the year 1974”; or “to date that tax hasn’t been paid therefore this company, or all these companies, owe us this amount of money.”
Those figures, Mr. Minister, should be available. You have a responsibility to the public to let them know what you’re doing with their money, and you have a responsibility to the public to let them know where they stand financially; because remember, it’s their money and you’re in a position of trust, you have that responsibility as steward of those public resources.
I think that those statistics, those figures, should be available. If your bookkeeping system won’t allow you to give those out now, then change the bookkeeping system so that a year down the road, or two years down the road, that will be a matter of course and that will be done regularly so that the people do know those figures. I just don’t see any difficulty.
Hon. Mr. Maeck: I don’t know if this is being helpful or not, but as I indicated, in 1975 we do have the figures for that. There were $176 million in Ontario corporation taxes that were deferred; whether that could be construed as a general average or not I don’t know.
Mr. Haggerty: It’s a lot of revenue for that year.
Hon. Mr. Maeck: We have figures prior to that that we could get, but you see they change every year because of the fact that some may pay taxes and so on; it’s very difficult. We have previous years, say 1973, 1974, 1975 and so on, but the ones we would give you for 1973 would not be relevant today. That’s one of the problems, because on the 1973 figures, some of the taxes may have been paid back so it would have changed.
I’ll do my best to provide you with as much information as I can on it and that’s about all I can promise.
Mr. Charlton: Just one thing further so that we can clearly understand why it’s important that these kinds of figures be made available. We’ve got a thing here that the government feels is being used as an incentive to stimulate growth and development. We’ve also got a government that is sure that is happening, but government that can’t show us, in any factual way, that it is.
I mentioned this in my opening remarks, Mr. Minister, and I think it’s important, that if you want us over here to be reasonable and to understand what you’re doing and to say “yes you’re right,” or “no you’re wrong,” in a definite and factual way --
Mr. J. A. Taylor: That’s a confession.
Mr. Charlton: -- show us that it works. Show us, in fact, that at some point these companies are getting to the profit stage and returning that tax to the people of the province of Ontario; show us, in fact, that as an economic tool it does work; because until we know those things it’s going to be difficult for us to support it as an economic tool.
Hon. Mr. Maeck: The member for Prince Edward-Lennox asked about the percentage of corporations with fewer than 50 employees.
Mr. J. A. Taylor: Yes.
Hon. Mr. Maeck: Ninety-five per cent of all corporations have fewer than 50 employees.
Mr. J. A. Taylor: When the NDP talk about corporations they drive them into the ground.
Mr. Deputy Chairman: Order, order.
Mr. Martel: Is he out of order?
Mr. Cunningham: What did your Hydro rates do to them last year?
Mr. J. A. Taylor: Do you want to discuss that?
Mr. Deputy Chairman: Order. If any of the honourable members wish to speak to this item please rise and I’ll recognize them.
Mr. Martel: They’re all growling over there.
Item 4 agreed to.
On item 5, gasoline tax and other taxes:
Mr. Haggerty: I would like to direct a question to the minister concerning the reciprocal agreement with New York State and other states, related to Bill 21 I think, the deregulation of the motor vehicle act, an agreement which the Ministry of Transportation and Communications has with the different states to permit the trucking industry from these states to enter Ontario. How is the minister going to collect the tax on fuel when these trucks enter the different border points in Ontario? Has he any method of collecting the tax revenue on the fuel that will be consumed in Ontario by these truckers now permitted to enter the province, in view of the open approach to industry in Ontario?
Hon. Mr. Maeck: I am given to understand that MTC collects it on their L permits. But to answer the member’s question further, truckers who operate gasoline-powered vehicles between Ontario and Quebec pay tax, of course, when they tank up in Ontario. Also, they’re taxed in Quebec on in-Quebec usage.
The double taxation -- I think this is what you’re getting into -- can be avoided by matching gasoline purchases in Quebec with the amount of miles travelled. That’s about the only way in which it can be avoided. We have had that problem from time to time with the province of Quebec. We don’t have the same problem with Manitoba.
Mr. Haggerty: I just want to follow up on this. The minister said that the Ministry of Transportation and Communications is responsible as the tax collector in this area. Is that another revenue agency that we have?
Hon. Mr. Maeck: I will get you an answer to that in a minute. I’m very confused. I’m being given two answers here. Just give me a second.
Mr. Haggerty: That’s why we’re confused on this side.
Hon. Mr. Maeck: I am informed that American truckers can buy an L permit from MTC and that is a one-shot deal. That’s when they pay their tax on their fuel purchase.
Mr. Haggerty: Does that apply to their mileage here in Ontario? My main concern is I understand that the trucking firms operating in New York State, Florida, Maine and through Virginia and other states, are compelled, once they cross the border of other states, to purchase so much gasoline if the truck is going through that state. When we talk about reciprocal agreements, are we going to have a similar type of agreement with truckers coming in from Florida, that they will have to purchase so much gasoline or diesel fuel here in Ontario?
Hon. Mr. Maeck: If they are regular users, if they are trucks that come in all the time -- the L permits I am referring to is somebody that comes in once -- if they are coming in on a regular basis then we do have the reciprocal agreements, yes. In other words, they pay tax based on the number of miles they are going to drive in the province.
Mr. Cunningham: I would like a question on that subject, because I am concerned about reciprocity, especially in so far as the province of Ontario is really just getting into it. I know it’s a new area for us and it’s confusing to me, as it may be to you.
I have been trying to get a grip on it for a while, but my understanding is that Canadian trucks leaving this country are required to go only with enough fuel to get across the border, primarily one tankful on the double tanks, and then they must gas up on the other side. That, in itself, is one mechanism for the Americans to obtain gas tax from the Canadian companies using their roads. In many states they have a difficult time getting any benefit from trucks, because they just pass right through their state. That happens to be a very legitimate beef that many of the states have, and it has been one of the reasons we have had to accomplish reciprocity.
My question is what is the provision coming back, both for Canadian trucks and American trucks? How do you effect the payment? How is that collected? I want to understand the mechanism of it, and I don’t quite follow that.
I understand the L permit. I believe it’s $50 and it’s a one-shot deal. I understand that; but for a common carrier coming back with fruits and vegetables or bananas or peat moss or whatever, how is that tax collected?
Hon. Mr. Maeck: I am informed that for them to travel on our roads they must be licensed to start with. If they are regular truckers they report to us, the same as any other trucker would on a regular basis. If they don’t do that, of course, then the licence is cancelled.
Mr. Cunningham: I think that answers our collective concern.
I want to move, on this issue of gas tax, to the Quebec situation. I know, Mr. Minister, that as a new minister probably the first guy knocking at your door was the member for Stormont-Glengarry-Dundas (Mr. Villeneuve). He has had, I think, some pretty legitimate concerns on behalf of people who live in his area carrying milk across the border to Quebec. You have probably had some representations from people that operate in the Ottawa area, people who have been really worked over, in my view, with respect, by both Quebec governments -- the latest government and their predecessors, God bless them.
I am just wondering if you have been able to get a handle on that and somehow come up with some agreement wherein these people are not being subjected to double taxation in the future, because they are now.
Hon. Mr. Maeck: We haven’t actually got an agreement as such, but we do have an undertaking that they will not put as much pressure as they did on the small operators. That, in fact is what has been happening. We are not getting the complaints now that we did some time ago.
But the only way to be sure of it -- and we have so advised the operators -- is that whatever miles they drive in Quebec they should attempt to buy that amount of gasoline in Quebec so that they don’t get into the problem. Because Quebec’s policy is not to refund, they will not refund any gasoline taxes. As long as that policy exists, if the truckers are not very careful as to how they handle the situation, they can end up with double taxation.
They may, as you very well know, drive so many miles over there and not buy any gas, or very little, and when they’re checked obviously the Quebec government then wants the gasoline tax on the accumulated mileage. We have been advising them to try to purchase the proper amount in Quebec to avoid that situation. As I indicated, Quebec is not looking so hard at individual truckers that go back and forth across the border as they did at one particular time.
Mr. Haggerty: I have one other question, on which perhaps the minister can give me some clarification, in connection with crown corporations. Maybe I shouldn’t use the term “crown corporations.” I am thinking of the Ontario Northland transportation system. Does the gasoline tax or the fuel tax apply to Ontario Northland, that is to transport vehicles using the highways; and does it also apply to GO Transit buses?
Hon. Mr. Maeck: Do you mean the gasoline tax or the fuel tax?
Mr. Haggerty: Gasoline or fuel tax, whatever they may use; trucks use both.
Hon. Mr. Maeck: All of them would have to pay tax. There would be no exemptions, to my knowledge.
Mr. Haggerty: There are no exemptions then?
Hon. Mr. Maeck: You are really referring to the government-owned transportation systems. There is no exemption there.
On motion by Hon. Mr. Maeck, the committee of supply reported progress.
Mr. Speaker: I beg to inform the House that in the name of Her Majesty the Queen the Honourable the Lieutenant Governor has been pleased to assent to certain bills in her chambers.
Clerk of the House: The following are the titles of the bills to which Her Honour has assented:
Bill 24, An Act to authorize the raising of Money on the Credit of the Consolidated Revenue Fund;
Bill 28, An Act to amend the Corporations Tax Act, 1972;
Bill 31, An Act to amend the Ministry of Government Services Act, 1973;
Bill 42, An Act to amend the Highway Traffic Act;
Bill 49, An Act to amend the Municipal Act;
Bill 50, An Act to amend the Landlord and Tenant Act;
Bill 60, An Act to amend the Retail Sales Tax Act;
Bill 61, An Act to amend the Income Tax Act;
Bill 68, An Act to amend the Corporations Tax Act, 1972;
Bill Pr4, An Act respecting the City of Cornwall;
Bill Pr10, An Act respecting the City of Hamilton;
Bill Pr10, An Act to revive Congregation Beth Am;
Bill Pr15, An Act to dissolve the William Hall Peterborough Protestant Poor Trust;
Bill Pr21, An Act respecting the City of Cornwall.
On motion by Hon. Mr. Maeck, the House adjourned at 5:58 p.m.