The House met at 10:02 a.m.
STATEMENTS BY THE MINISTRY
Hon. Mr. Grossman: Mr. Speaker, the report on the Canadian automotive industry by Mr. Simon Reisman, commissioner, was tabled yesterday in the House of Commons. I will be giving the report further detailed study, of course. As I indicated to this Legislature yesterday, however, I would like to make some remarks based on only a preliminary brief review.
The report deals with the Canadian automotive industry in total, that is, in relation to the United States and to third countries. Consequently, it involves activities related to the Canada-US automotive products trade agreement, or the auto pact, as it is commonly known, as well as non-auto pact matters.
In regard to the auto pact, the commissioner does not believe that this is a good time to attempt to renegotiate it with the US government. The auto pact does provide a framework within which the industry can continue to develop. Further, any consideration that the pact might be modified or discontinued suggests to potential industrial investors a factor of instability and uncertainty that may adversely affect investment decisions. In my opinion, all Canadian governments should support the auto pact as an ongoing reality within which we must now actively push for balanced trade.
Incentives: The Reisman report is critical of ad hoc grants to automotive manufacturers and recommends that the Canadian government try to obtain agreement with the governments of the United States and other countries to cease industrial subsidization. We question that this is achievable.
It must be remembered that the automotive industry in the USA has many more established production facilities. Consequently, US companies frequently have opportunities in that country to provide additional manufacturing capacity by expanding existing facilities. Canada does not have the same degree of existing industry infrastructure, particularly in the parts segment of the industry.
Therefore, new productive capacity here more frequently involves entirely new plants at obviously higher cost. The Ford V-8 engine plant in Windsor is a case in point.
The Reisman report however seriously underestimates, I think, the significance of the huge investment currently being planned by the North American vehicle manufacturers to develop and produce the new down-sized, more fuel-efficient automobiles. Canada must obtain as much of this investment as possible.
Those investment decisions are being made now and over the next 18 months. I suggest we cannot wait for multilateral or bilateral agreements to be negotiated and implemented if we are to take advantage of these potential opportunities.
Parts manufacturing: The Riesman report does not recommend the degree of support for the Canadian parts and component manufacturers that we would have anticipated.
This sector of the industry is in a position to make the greatest contribution to increasing Canadian value added and to reducing the trade deficit because of its immense export potential. In addition, parts manufacturing has been shown to offer more diversified opportunities for research and development as well as jobs requiring higher levels of skills than the vehicle assembly. It is our contention that both the capabilities and capacities of the parts manufacturers in Canada need to be improved.
This government wants not only to attract new facilities and assist existing companies to expand but also to stimulate entrepreneurial ventures in the production of parts and components not now made in Canada. It is for this reason that we have been urging Ottawa to work with the provinces to develop a comprehensive federal-provincial automotive investment assistance program.
The Reisman report recommends that the federal government utilize the enterprise development program, although recognizing that this may become unwieldy and excessively bureaucratic. I do not disagree with federal funds being administered under the aegis of EDP. We do, though, insist that a program be specially tailored for each segment of the industry, that it be developed through federal-provincial consultations and agreement and that the procedures be streamlined. My ministry made earlier recommendations in this regard.
I refer the honourable members to Ontario’s submission to the Reisman commission, which I am tabling herewith.
Duty remission: The Reisman report recommends that duty remission programs such as negotiated with Volkswagen be terminated. It recommends a new concept of establishing a “designated vehicle importer.”
Under such a scheme, vehicles made by producers not qualifying under the auto pact would be permitted duty-free entry into Canada under certain conditions. A designated vehicle importer acting on behalf of a foreign vehicle producer would have to achieve a level of Canadian value added related to the cost of sales in Canada of such vehicles. This CVA would be achieved through purchases from independent or captive parts manufacturers in Canada.
A major concern of Ontario is that such an arrangement could have an adverse impact on potential growth in vehicle assembly operations, thereby leading to serious adjustment problems. An intensive study would be required by all concerned before this proposal receives serious consideration.
Research and development: I am pleased that the report gives serious attention to ways and means of stimulating research and development in the Canadian automotive industry. A number of optional incentives are outlined in the report, but if these should fail the report suggests that a restraining measure might be taken by limiting the amount of research and development payments to foreign affiliates which may be deducted for income tax purposes.
I heartily endorse any move to increase R and D activity, but because of its importance I would want to carefully consider whether the measures proposed will produce the desired results.
These then are our initial reactions to the Reisman report. Ontario will welcome the opportunity of pursuing these important matters with the industry and with the federal government to gain for Canada the share of industrial benefits commensurate with our contribution to overall North American sales.
MALARTIC HYGRADE GOLD MINES (CANADA) LIMITED
Hon. Mr. Drea: I wish to comment regarding the complaints made by Mr. J. S. Belton, president of Malartic Hygrade Gold Mines (Canada) Limited, as to the operations of the Ontario Securities Commission. Members should be familiar with these complaints, having been the recipients of a number of letters and accompanying material from Mr. Belton, who alleges a deliberate and far-reaching conspiracy involving the officials of our commission and its Quebec counterpart to the detriment of his company.
Mr. Belton’s comments are becoming increasingly virulent and irresponsible. They are not limited to the letters that members have received, but include letters to the Premier (Mr. Davis), to the chairman of the Ontario Securities Commission, and to my predecessors as Ministers of Consumer and Commercial Relations.
Mr. Belton’s unwillingness to back up his allegations is indicated by his failure to reply to a letter from securities commission chairman James Baillie, dated February 22, 1978, asking that Mr. Belton suggest any specific steps he feels the commission should take that it is not now taking and reminding him of the availability of judicial remedies if his allegations have merit. I am tabling a copy of this letter.
What troubles me most about Mr. Belton’s approach is the manner in which he impugns civil servants who are not in a position to defend themselves. I consider this reprehensible. I have not yet been the recipient of letters from Mr. Belton while in my new position, but I have several times in many others.
If and when I do receive any correspondence, I do not propose to reply. I further suggest that the honourable members of this House also ignore any further letters from this gentleman. If Mr. Belton can prove he has not been properly treated, let him do so through the courts or let him reply to Mr. Baillie’s invitation.
Mr. Nixon: Take him out and belt him one.
Mr. S. Smith: The Minister of Industry and Tourism was here a moment ago. I heard him.
Mr. Warner: He is hiding.
Mrs. Campbell: It is a little hard to see him.
Mr. S. Smith: I see him now. I would like to ask a question of the Minister of Industry and Tourism, following the statement which he has made after a preliminary view of the Reisman report. I take it from his statement he shares to some extent my disappointment that the Reisman report, although saying we need to have a good auto parts industry and emphasizing how important it is, really does not come to the nub of the problem. I ask the minister how he proposes to come to the nub of that problem, which is basically how the large manufacturers, the big three or the big four, are to be persuaded to buy a proportionate share of parts, a balanced share of parts, from Canadian auto parts manufacturers, no matter how well these auto parts manufacturers plan for the future and use aluminum or plastic or whatever.
Since these companies have the ability to set up their own internal arrangements so easily, how does he propose to bring together the auto makers and make them buy Canadian parts? That’s the nub of the question.
Hon. Mr. Grossman: These are some of the matters that will come out in the next few months. I particularly noted that the federal government neither embraced nor rejected Mr. Reisman’s recommendations. We would hope they would show some leadership in this sense, using the clout of Canada. To the extent that Canada has some real clout with the US auto manufacturers, it has to be exercised at a national level. I don’t pretend that Ontario can exercise enough clout, as Lord knows, Canada has enough trouble in exercising clout.
I think Mr. Reisman referred to that in suggesting now is not the time to renegotiate the auto pact. I think he was determining that we may not do too well in a renegotiation. Clearly, we’ll be making some specific further recommendations, further to those we outlined in the submission I tabled this morning.
One of the things we think is important is to deal with some of the capabilities and capacities of the Ontario auto parts producers. I think we’ve got to put them in a position to actively compete for some of that business on a fair basis. Certainly, Mr. Reisman has recognized this part, and I know in studying the remarks he made in his press conference yesterday, he’s also acknowledged that’s an important thing we could do to put them in a more competitive position.
Again, we’ve long been on record as asking for an automotive investment program and indicated our willingness to participate on a one for two basis with the federal government. I think that would go a long way to getting our fair share of the action in auto parts. We’ll be saying more about some of the specifics after we’ve had a chance to study the Reisman recommendations in more depth as well.
Mr. S. Smith: By way of supplementary -- and this is the first time I’ve heard of the one for two offer -- would the minister not feel that despite the preferability of working with the federal government in this regard, that it might be necessary for Ontario, as potentially the largest gainer in this business, to act on its own in certain instances and, particularly, in research and development?
Was the minister not as concerned as I that Mr. Reisman seemed to speak of the importance of auto parts and yet suggest what looks to me like a 200 per cent writeoff for the assembly operations and is, indeed, a 75 per cent writeoff in parts? It’s almost a disincentive to the big companies to involve themselves in the parts area. I may have read it wrong; it’s hazardous after only one day on a complex report to question the minister on it.
Is the minister not prepared to act swiftly, with or without the federal government, to help our auto parts manufacturers and to make sure they have access to balanced markets, their real fair share, in terms of being able to sell parts over the next several years?
Hon. Mr. Grossman: Yes, obviously the long-term health of any part of the Ontario economy in manufacturing, especially in the automobile area, depends more upon our ability to innovate and to do research and development here, than upon any long-term artificial government subsidies or incentive programs. For the long-term health -- and this is something we’ve been arguing for quite some time -- you’ve got to look at R and D. That’s where the thrust should be.
As I indicated in my statement, Mr. Reisman’s report does outline a number of optional ways we could approach that thing, and finally says that as a last resort the federal government might consider limiting the amounts of R and D payments to foreign affiliates. That’s a sort of heavy-handed and non-creative approach. That’s your last gasp. I am very much concerned that we must approach encouraging R and D to occur here in a positive fashion.
I might add that any time we get into these discussions with regard to, for example, the Ford situation, obviously one of the things we’ll be looking at in any instance in which there is Ontario money involved in an incentive program is to try and make part of the deal, to the extent possible, a commitment with regard to the amount of R and D that’s going to flow to Canada. That will always be a situation in which we’ll have to bargain as best we can, but as far as I’m concerned, that will be a very high priority on the shopping list when people come in to participate under our incentive program.
Finally, I should point out that most recently, in the Barrie area I believe it was, the Hayes-Dana plant got some direct assistance from this government and they’ll have some of those features resulting from the moneys that have been made available to them through Ontario Development Corporation. We’ll be approaching that and establishing that as a high priority whenever funds from this government are made available to any firm coming into the industry.
Mr. Laughren: How is it possible for the Minister of Industry and Tourism to view this document with such complacency, given the fact that it completely downplays the negative effects of the auto pact and, as the Globe editorial said, does an end run around the whole question of fair share? The minister admittedly has had as short an opportunity to review it as we’ve had. How does the minister see in that report, or what does he read in that report that I certainly don’t read, that would allow us to do as the Premier of this province said earlier this year, and I quote: “My view is quite clear in this matter. This is a Canadian market. The federal government made a pact with the companies and the US government. The companies have received millions of dollars in rebates and import duties as part of that arrangement and we expect that in return for their dominant share of sales in our market, we have a fair share of the investment in jobs in the North American industry.” This was in a letter to the Prime Minister.
Perhaps the Minister of Industry and Tourism could tell us what he sees in that document, that abominable document, that says we are going to get our fair share of trade -- a neutral trade balance -- research and development, capital investment and skilled jobs in the industry? What is it the minister sees in this documents that no one else seems to see?
Hon. Mr. Grossman: Nothing. I don’t see any great solutions lying in the document. If the member listened carefully to my statement this morning, he would have noted that I had hardly embraced it as the be-all and end-all. In fact, I am rather disappointed that more aggressive measures were not developed after that lengthy study -- for example, to tackle the research and development situation.
I don’t think, for example, it is very helpful to point out that we ought to be negotiating a treaty with the United States to get out of ad hoc incentive business. I would have hoped the report would have dealt more constructively with some immediate steps we might take, in this particularly important time when all the new investments are being considered, to get our fair share.
That is still our goal. Quite frankly, to be as blunt as possible, I am disappointed there aren’t many more creative ideas developed by the Reisman report to tackle that problem. It is interesting to note that at least the ground rules under which this is going to be developed are changing a little bit. I think one of the positives that has come out of the thing is at least to shift some people from arguing that the thing should be renegotiated entirely to an understanding that we have got to do what we can within that framework to get a better deal than we are now getting.
Indeed I must say to the member for Nickel Belt even his party has given up apparently saying it should be entirely renegotiated. Yesterday he was saying that they agree now that it’s not the time to renegotiate. That’s just the change from the last three months.
Mr. Kerrio: Just like regional government; we are stuck with it.
Mr. Speaker: A final supplementary; the member for Windsor-Walkerville. We have spent 10 minutes on this first question.
Mr. B. Newman: May I ask the minister if his government is prepared to increase research assistance to the parts manufacturers so they could get an advance jump in that field and increase our fair share?
Mr. Foulds: Yes, they are so poor.
Mr. Mackenzie: How many giveaways do you want?
Hon. Mr. Grossman: We will be having more to say, as the Treasurer (Mr. F. S. Miller) indicated yesterday, with regard to any steps we might take to deal with some of these problems after the first ministers’ conference in Ottawa next week.
I must repeat that the Liberal leader said it was the first time he had heard of it. I don’t know why that is the case. To be fair, I don’t know in what form it was originally presented. The Ontario government has indicated its willingness to participate on a one-for-two basis with the federal government up to $50 million on our part as part of a comprehensive automobile investment program. So the sort of things we are talking about in R and D for the auto parts industry would well fit into that sort of program.
Mr. S. Smith: That was the one that was mentioned when we were talking about Ford last time. I recall it now.
Mr. S. Smith: I would like to ask a question of the Premier, who has had quite a preoccupation with federal matters recently and who commented to one provincial Premier, Mr. Lougheed, on the matter. Why has the Premier not come out publicly and strongly in support of the purchase by PetroCanada of Pacific Petroleum? Does the Premier not recognize, as Premier of a consuming province, that the Ontario public can only benefit from the insight that such a purchase could give us into reserve forecasts, exploration prospects, and production costs so that we need no longer be at the mercy of very questionable information provided by multinational giants? Ontario is best served by having an exposure in this industry. Why doesn’t the Premier support the Petrocan acquisition of Pacific Pete?
Mr. Martel: Another Trotsky plot.
Hon. Mr. Davis: Pacific Pete, eh? Well, well, you have really got the lingo.
An hon. member: He had a call from Gillespie last night.
Hon. Mr. Davis: I am very interested that the Leader of the Opposition is apparently taking up the cudgels once again for the federal Minister of Energy or the national crown corporation, Petrocan. I think it demonstrates a clear lack of confidence by the Leader of the Opposition in our own National Energy Board. It lacks complete confidence in the federal ministry.
Mr. Ruston: And the Ontario Energy Board.
Hon. Mr. Davis: I can understand that on occasion. I would point out to the Leader of the Opposition that I think one has to consider very carefully the use of taxpayers’ dollars, when capital is limited. I guess in excess in this case of $1 billion odd would be required. One has to consider whether this is an appropriate place when that investment is already there or could be maintained by the private sector.
Mr. Kerrio: How do you explain Hydro?
Hon. Mr. Davis: I know that the Leader of the Opposition speaks lovingly of the private sector when it suits his point of view. Today quite obviously he has total lack of confidence in it. I guess my point of view is that one should be very careful before coming out enthusiastically in support of taxpayers’ dollars going into a project of this nature.
Mr. S. Smith: Are you for it or against it?
Mr. Nixon: You are on both sides.
Mr. Haggerty: Tell us about Ontario’s interest in the tar sands.
Hon. Mr. Davis: Whether the Leader of the Opposition is trying to prepare the groundwork for next week’s discussions or whether he feels the federal government is on rather shaky ground on two or three of these issues, I don’t know.
Mr. Kerrio: You ought to know. You are on the same ground. You are right there with them.
Hon. Mr. Davis: However, I do have to observe to him that he is not going to get me coming out enthusiastically in support --
Mr. Nixon: Or against.
Hon. Mr. Davis: -- of tax dollars going into an investment which could be just as easily maintained by the private sector --
Mr. S. Smith: Are you for or against? Hon. Mr. Davis: -- when there are so many other projects that warrant the government’s consideration. I am really quite intrigued by the fact that the Leader of the Opposition is now saying that Petrocan should buy Pacific Pete.
Mr. S. Smith: For or against? What are you saying?
Hon. Mr. Davis: This is exactly what I said.
Mr. S. Smith: Supplementary: Why is it in a matter of this considerable public importance, particularly in a consuming province like Ontario, the Premier of this province is unable to stand on his feet --
Mr. Martel: He wishes to buy uranium.
Mr. S. Smith: -- and state clearly one way or another whether he is for or against the purchase by Petrocan of Pacific Pete? Why does he have to waffle on a matter as important as this?
Furthermore, when he rises to his feet -- I hope this time to answer the question -- is he prepared at that time to say whether or not he understands that the funds for this takeover, like all commercial funds for all business takeovers, will come from banks and are not available for help to the aged or for welfare or for any of the other lofty aims of which he likes to speak from time to time?
Is he prepared also to say to this House whether he agrees with his federal leader that Petrocan should be sold off entirely to the private sector, presumably to United States interests, which seems to be what his federal leader is saying? Say whether you are for it or against it, protect the people of Ontario for a change, instead of the corporate people, and make sure they are not misled by this nonsense about homes for the aged.
Mr. Speaker: The question has been asked.
Mr. Martel: On a point of order, Mr. Speaker: Since the leader of the Liberal Party was making a speech in his run for leadership, would you add five more minutes to the question period? There were no questions there whatsoever.
Mr. Speaker: I distinctly heard a three-part question.
Mr. Martel: I lost count at the end of a dozen.
Mr. Kerrio: Which side are you on?
Mr. Mackenzie: Balancing on the edge.
Mr. Breithaupt: Are you going to do it or not?
Hon. Mr. Davis: Am I going to do it?
Mr. Speaker: Order.
Hon. Mr. Davis: I should point out to the very distinguished member for Kitchener, who interjected to ask am I going to do it or not, that the answer very simply is that I have no control over it whatsoever.
Mr. S. Smith: Lougheed says he’s against it. Are you for it or against it?
Hon. Mr. Davis: I see. In other words, what the Leader of the Opposition in this House is interested in knowing is whether I agree or disagree with the Premier of Alberta.
Mr. S. Smith: Are you for it or against it?
Hon. Mr. Davis: Unlike the Leader of the Opposition, who is able to make instant judgements with a total lack of knowledge in some situations, like the Niagara Escarpment, I would only suggest --
Hon. Mr. Davis: Did you really disown the member for Grey (Mr. McKessock)? Is he leaving your caucus? He would be very welcome over here.
Mr. S. Smith: Just answer the question.
Hon. Mr. Davis: Did you hear what he said about you the other night?
Mr. Cunningham: Just answer the question.
Hon. Mr. Davis: He disowned your bill totally.
An hon. member: Tell us what day it is.
Hon. Mr. Davis: It’s Friday; it’s Friday at 10:30.
Mr. S. Smith: Answer the question.
Hon. Mr. Davis: I think there were three parts to the question; there may have been four.
Mr. Bradley: Yes or no?
An hon. member: Are you in favour of it or not?
Hon. Mr. Davis: Do I agree with Joe Clark?
Mr. S. Smith: No, that was not the question. The question is, does the Premier understand that the funds come from banks and not from funds that could be used for old-age welfare?
Mr. Martel: You don’t understand the question.
Mr. S. Smith: These are business-making, profit-making funds that would provide the money for that takeover.
Mr. Martel: Will you throw him out?
Mr. S. Smith: Now answer the question!
Hon. Mr. Davis: Mr. Speaker, on a point of order: Am I totally wrong? Did the Leader of the Opposition not ask me whether I agreed with Joe Clark’s point of view --
Mr. S. Smith: In selling Petrocan.
Hon. Mr. Davis: -- that Petrocan should be sold or not sold?
Mr. S. Smith: Yes, that’s correct.
Hon. Mr. Davis: All right. I was just trying to answer that before the Leader of the Opposition so rudely interrupted me. He should have let me finish the sentence.
Mr. S. Smith: You wouldn’t have answered the question.
Hon. Mr. Davis: Oh, I would have.
Mr. Breithaupt: It was an exceptionally long sentence.
Hon. Mr. Davis: I was just taking them in reverse order.
Mr. J. Reed: This is not one of the Premier’s better days.
Hon. Mr. Davis: Do I agree with Joe Clark’s point of view that perhaps Petrocan should be sold?
Mr. S. Smith: Not “perhaps.”
Hon. Mr. Davis: I agree with Mr. Clark on a number of issues. I must confess to the Leader of the Opposition I have not assessed in depth whether, when Joe Clark becomes Prime Minister, he would be advised to sell Petrocan. That’s my answer.
Mr. S. Smith: You don’t know. He knows, but you don’t know.
Mr. Yakabuski: You are terribly thin-skinned, Smith.
Hon. Mr. Davis: With respect to whether Petrocan should buy Pacific Pete, my interest is with the consumers of this province; and we have dealt with this far more effectively in terms of our policies than the members opposite ever have or ever will.
Mr. Samis: it shows at the gas pumps too.
Hon. Mr. Davis: The real decision for Petrocan, the government of Canada and those directly involved in it, is: Is it in the public interest? We are interested in terms of price in this province; we are interested in terms of security of supply.
Mr. Laughren: Tell us about oil.
Hon. Mr. Davis: I would say to the Leader of the Opposition -- and I don’t pretend to be an expert in this area -- that the one function I see for Petrocan is involving itself in those projects where the private sector probably is not interested. I think this is part of the rationale initially for Petrocan.
I would have to say to the Leader of the Opposition, before he goes out and, rather blithely and perhaps with little consideration, says he would support the spending of $1 billion, that whether the money is coming from the major banks or wherever it is coming from, it is capital; it is money that might be used by the private sector. Petrocan’s indebtedness shows, just as ours does when we borrow money, whether it’s Ontario Hydro or some other crown corporation.
For him to make an instant judgement without full knowledge of the fads is very unwise. If he is going to be disappointed because he will not get me to commit myself to a subject where actually I have no say in any event I just have to disappoint him.
Mr. S. Smith: As a final supplementary: In view of the fact that the Premier now says that, since he has no say in the matter, he will not give his opinion to this House, may I ask him how come he has been spending so much time lately commenting on nothing but federal policy, as far as I can make out; and why he will not recognize that Ontario suffers when we are at the mercy of a few multinational companies that give us their forecasts of oil reserves and exploration costs, and when we have no exposure in that field ourselves to know what the real facts are? Why doesn’t he protect Ontario?
Hon. Mr. Davis: Mr. Speaker, I guess the Leader of the Opposition isn’t aware of the process. It is ultimately the National Energy Board that makes these forecasts and determinations.
Mr. S. Smith: Using the multinationals’ facts.
Hon. Mr. Davis: If the Leader of the Opposition is saying that the National Energy Board is totally irrelevant and totally incompetent, that’s his judgement to make.
Hon. Mr. Grossman: Who appointed them anyway?
Hon. Mr. Davis: When I state that I don’t have any say, this government doesn’t control what Petrocan does. It has no control whatsoever, and he well knows it.
I have been making some comments about federal policy, yes.
Mr. S. Smith: Indeed.
Hon. Mr. Davis: The people across the floor want to defend them left, right and centre, and it varies from those extremes to the others depending on the day of the week. Be my guest.
Mr. S. Smith: I’ll defend the purchase of Pacific Pete; that’s for sure.
Hon. Mr. Davis: I will be having some more comments about federal policy next Monday, Tuesday and Wednesday.
Mr. S. Smith: But you don’t have the guts to state your position on this one.
Mr. Cunningham: You don’t have a position.
Hon. Mr. Davis: Listen, the member will be surprised at one or two things I may say next week. He may even disagree with them. He may even agree with one or two for his own political interests.
Mr. Cunningham: You don’t have a position.
Mr. Kerrio: It’s a time for strength.
ONTARIO HYDRO BORROWING
Mr. Laughren: Mr. Speaker, at great risk to the collective sanity of the chamber, I have a question for the Premier. He talked about Ontario Hydro in his reply and about the limitations on capital availability. I wonder if he has any concerns about the recent issue offered by Ontario Hydro -- $250 million with an interest rate of over nine per cent in the United States with a payback of something like $950 million over 30 years? I wonder if the Premier thinks it’s a good idea to do that, given the fact that according to Ontario Hydro themselves we are going to have excess capacity up to 1985, and given the fact as well that documentation by the Treasurer shows there is going to be a lack of capital availability for Ontario Hydro by the early 1980s?
Hon. Mr. Davis: I don’t say this at all facetiously, but I think if the member consulted with his colleague from York South (Mr. MacDonald) he would find that the $250 million capital requirement of Hydro for this year is to pay for capital expansion that is already in progress. This money is being borrowed to finance the operation of Hydro for construction projects, transmission lines, most of them providing employment which members on that side of the House along with ourselves want.
Mr. Kerrio: It is in direct competition with the free-enterprise people.
Hon. Mr. Davis: I would also say to the acting leader of the party, when these funds were borrowed the rating for this province was reviewed; it is still triple-A; it is without question, in terms of today’s marketplace, a very advantageous issue. I think the members of this House should be proud of the financial position of this province that enables Ontario Hydro to borrow this amount of money in the capital markets of the world at a rate that is very competitive and where the triple-A rating of this province was still maintained.
Mr. Kerrio: Money lenders love big spenders.
Hon. Mr. Davis: You might find some of them in your riding; be careful.
Mr. Laughren: Is the Premier not aware of the excess capacity in Ontario Hydro? Further, would he comment on the suggestion by Ontario Hydro that if the availability of capital does become limited in the early 1980s revenues could come from taxation or from pension funds in the province? Does he agree with that?
Hon. Mr. Davis: I am aware of some of these things. I would only say to the acting leader of the party, and I think he should be very careful -- I am not going to turn the question around, but what the acting leader of the party is really saying is that Ontario Hydro should not borrow this $250 million to complete or continue some of the projects under way. If he is saying to us --
Mr. Laughren: No, that is not what I said.
Hon. Mr. Davis: That is exactly what he is saying. You have to have the dough to pay the bills. Ontario Hydro needs the $250 million to maintain its capital program.
Mr. Laughren: To continue the expansion plans.
Hon. Mr. Davis: If he wants us to close them down, if he wants several thousand people out of work, then he should stand up and say so.
Mr. Laughren: Don’t be so foolish.
Hon. Mr. Davis: Certainly consumption is down somewhat, but the capital program is there and must be continued and that is what this $250 million is for.
Mr. Warner: Don’t be silly; you know better than that.
Hon. Mr. Davis: I really don’t think he wants us to say to Ontario Hydro, “Cut back further on your construction program.”
Mr. J. Reed: Understanding that the utility is now overbuilt over peak annual demand -- according to the Premier’s own ministry figures, by 44 per cent and accordingly to a calculation I have made, applying it to the thermal system, 60 per cent overbuilt --
Mr. J. Reed: That’s right, arid the figure is credible. Where on earth is the Premier going to close the gap between the utility and the ministry so that this kind of overbuilding and this kind of overrun is going to stop and not simply carry on like some great avalanche -- that’s a good word -- that cannot be slowed down? When is the Premier going to bring some rationale to the utility?
Hon. Mr. Davis: The honourable member can be critical of Ontario Hydro, that is his privilege. I would say to him that Ontario Hydro has reduced its expansion program. If the honourable member is suggesting that it be further reduced -- that there be cancellation of programs that are under way -- it is his right to say so. Just tell us. Does he want Wesleyville to stop? Does he want Darlington to stop? Just what over-capacity is it that he is concerned about? Which particular project is it that he wants stopped?
Mr. Nixon: The Bruce heavy water plant.
Hon. Mr. Davis: Why doesn’t he come out and say so?
At the same time as he is doing his analysis of the extent of capacity over peak, and these projects he enumerates for us that he wants cancelled, would he please calculate for us the job impact in those particular communities across this province?
Mr. S. Smith: You don’t like being the government. Shift it over, Bill.
Hon. Mr. Davis: I think that would also be very interesting as part of any analysis the member might make.
What happened to your eye?
Mr. Breithaupt: He was talking when he should have been listening.
Mr. Foulds: Supplementary, Mr. Speaker: Can the Premier tell us what steps the cabinet has taken to remedy the situation where they approved capital projects such as the heavy water plants at Bruce at about a third of the figure of the final cost so that they get an escalated price? Can he tell us why the Minister of Energy (Mr. Auld) is so determined to proceed with the absolute completion of heavy water plant D on the Bruce Peninsula, in view of the federal government’s announced intentions to at least negotiate with Quebec to proceed with La Prade? This will give both Ontario and the federal government an over-supply of heavy water which we will not be able to use in any way, shape or form.
Hon. Mr. Davis: If the honourable member is saying to me, about government policy here and our concern about heavy water and Ontario Hydro, that we should be -- shall we say -- at the beck and call of the whims of the government of Canada with respect to La Prade, then I am very disappointed because I didn’t think he would take that point of view.
Mr. Foulds: You have over-produced for your own needs.
Mr. Nixon: What about your own members? Don’t you listen to them?
Hon. Mr. Davis: I think the decision to move ahead with La Prade, whenever that decision was made, you know our point of view on it. If the government of Canada says today, for whatever reason, La Prade should go ahead, I think that is a mistake. We have made that point of view known.
If the member is saying to us we should back off, we should let the pressures mount so that La Prade can go ahead and we can stop activity here, I think that would be very disturbing to a number of people who are involved in the project. I would just say to the honourable member, we are not going to allow the government of Canada to sort of jockey people around. That’s not the way they should be doing business.
Mr. Deans: That chicken game is silly.
Mr. Foulds: That chicken game is costing us millions of dollars.
Hon. Mr. Davis: So you want us to play chicken and get out. That’s what you want.
Mr. Nixon: Sell it to the LCBO. Sell the water to the LCBO.
Mr. Foulds: What are you going to do with the heavy water? Are you going to swim in it?
Mr. Laughren: I have a question for the Provincial Secretary for Social Development.
In view of the fact the Ontario Association for Children with Learning Disabilities has presented a brief to her government indicating that only one child in eight with learning disabilities in the province of Ontario is receiving the kind of education they require, could the minister tell us what action she and her colleagues in the Social Development field are taking to rectify this really deplorable situation?
Hon. Mrs. Birch: This has been a very difficult policy decision to make. I am sure the member is aware of the many diverse opinions from those people who are involved in this particular area of providing help for children with learning disabilities. I think that in the not too distant future there will be a policy statement issued by the Ministry of Education.
Mr. Laughren: As a supplementary, in view of the fact that there is a common agreement -- there may be diverse opinions, but there’s a common agreement that something should have been done long before now -- could the minister tell us how it is that 40 school boards have no programs at all for special education and -- this is really distressing
-- 120 school boards have no program for early identification of learning disability problems? Would the minister do a very constructive thing when she’s dealing with this whole problem and call forth for third reading the bill that was brought into this chamber by my colleague from Carleton East (Ms. Gigantes) and passed by this entire chamber? Why doesn’t the minister do that? That would solve part of the problem.
Hon. Mrs. Birch: I would just like to point out there have been funds within the Ministry of Education budget for those various school boards to provide programs in this area. Not all have taken advantage.
Mr. Foulds: Make it mandatory.
Hon. Mrs. Birch: As I pointed out to the member, I expect that the Ministry of Education will be making an announcement in this area very soon.
An hon. member: You didn’t answer the question.
Mr. Van Horne: Supplementary: In the light of the minister’s response to the member for Nickel Belt, would she indicate to us if in fact there will be some sort of encouragement for school boards to spend money on special education? In fact, they only get the grants if they spend money. Is she going to alter the grant structure so they would be encouraged to spend money on special education?
Hon. Mrs. Birch: If the encouragement means financial incentives, yes, that would be possible.
Mr. Martel: Haying been just this week with a child who was attempting to get to the Gow school in the United States, and with respect to the fact that the Sudbury Board of Education indicated they had the facilities for such a student -- I don’t believe it and indicated such -- would the minister tell me how often the Ministry of Education is looking into those school boards which say they have the facilities so as to determine exactly what types of programs are being offered? I think most of them are most ineffective.
Hon. Mrs. Birch: I would imagine that is a judgemental value those school boards have made. It is a very sensitive and very emotional issue. It is very difficult to explain to parents who are unwilling to accept the fact that indeed those school boards do have the capacity to provide for their children. It is a very difficult issue, but we hope to be able to resolve it in the very near future.
Mr. Warner: There’s no leadership over there.
Mrs. Campbell: Mr. Speaker, my question is to the Minister of Housing. Would the minister explain why it is that Grace-MacInnis Co-Operative Incorporated has been forced since January 1978 to use its limited resources to maintain the supplement units while awaiting its provincial grant? When can they expect their provincial grant for the supplement purposes?
Hon. Mr. Bennett: Mr. Speaker, I would inform the House that Grace-MacInnis Co-Operative Incorporated made an application, through the ministry, to Central Mortgage and Housing Corporation back in September 1971.
I understand my predecessor indicated to the board of directors that he was prepared to review their application seriously and in depth and to try to facilitate what they had asked for.
I might also say that the information had to go on to CMHC and, to the best of my knowledge, it was not until very late in September 1978 that all of the information requested of the co-op was supplied and transmitted to our friends at CMHC in Ottawa. It has only been in recent weeks that our ministry has got down to some further discussion with the board of directors of the co-op.
I hope that within the next period of weeks we will conclude our agreement on the type of subsidy we will afford to this particular co-op. Indeed, I might say that Grace-MacInnis is not the only co-op in the Metropolitan Toronto area --
Mrs. Campbell: I know it.
Hon. Mr. Bennett: -- that has been requesting a more substantial percentage of rent-geared-to-income or rent supplement units within their co-op. There are a number of them, and we are trying to review each and every one.
The policy of the ministry has been -- and I think it has been generally accepted -- that we would go to a maximum position of 25 per cent of the units in any given co-op. In the case of most of the co-ops we are having difficulty with, very clearly they want to go somewhat beyond the 25 per cent factor.
Mrs. Campbell: Supplementary: Is it not a fact that they asked for the increase early last year because they had to get the minister’s approval -- I myself participated in that request, so I am aware of it -- and the request, for an increase from 25 per cent to 38 per cent, was acceded to? Why, then, is the minister only dealing with it as of now?
Hon. Mr. Bennett: I think I covered that in my first answer to the member. Very clearly, I said there had been an application by the co-op board of directors, indicating what they would like to have as support factors from the provincial and federal governments for their co-op. I also said that all the information required to arrive at a final determination of what governments are going to participate in in the given project was not supplied.
Eventually it came to CMHC in the late months of the current year -- August or September -- with a report back to my ministry in late September. Since then, as I have already said, our people in the ministry have been negotiating with the board of directors of the co-operative group to try to find a reasonable settlement.
I am not going to go into it any further at this point, because we are still coming to discussions with them. I hope that in a matter of weeks I will be in a position to go before Management Board of Cabinet to request funding for that particular co-op.
ONTARIO ECONOMIC STRATEGY
Mr. Swart: In the absence of the Treasurer, my question will be to the Premier. He will know that the average residential property tax rate has increased by 55 per cent in the last four years and he must know also that this excessive rate of increase, far above average wages and salaries and the inflation rate, is due more to the reduced percentages of transfer payments paid by the province than to excessive spending by municipalities. Won’t he realize then, that the further reduction of transfer payments to five per cent --
Some hon. members: Question.
Mr. Swart: -- as announced by the Treasurer yesterday, doesn’t reduce overall taxation in the province, but simply shifts yet more taxes to property tax payers, a regressive move --
Mr. Speaker: Is there a question there someplace?
An hon. member: Speech.
Mr. Swart: Yes, I just asked one, Mr. Speaker. It puts a bigger share on the lower income earners. Won’t the Premier intervene with the Treasurer and assure a more adequate level of transfers?
Hon. Mr. Davis: Mr. Speaker, I appreciate the very distinguished member reading part of a speech he’s probably going to deliver tonight somewhere, --
Mr. Deans: Good speech though.
Hon. Mr. Davis: -- or perhaps delivered last night somewhere, or probably has been delivering with changes of words for the last year and a half.
Mr. Speaker: That wasn’t the question though.
Hon. Mr. Davis: No, it really wasn’t, was it, Mr. Speaker?
Mr. Cunningham: This isn’t the answer.
Hon. Mr. Davis: No, it’s not the answer yet either. I’m aware of the concern the honourable member feels. I live in a municipality that shares these same concerns. The Treasurer pointed out yesterday that we’ve appreciated the co-operation we’ve had from the municipalities and school boards in an effort to restrain. We’re not suggesting that --
Mr. Foulds: Been trying our patience.
Hon. Mr. Davis: -- our transfer payments will enable the municipalities to expand their services et cetera. We know it’s difficult. I must say to the honourable member that I really am quite prepared to talk to the Treasurer any time, but I think the figure there is what we believe to be reasonable under the circumstances and the figure that we’ll be working with.
While I’m on my feet, as a matter of personal privilege, in the absence of the member for Rainy River (Mr. T. P. Reid), I would like to congratulate him and through him his brother who has now become the new federal Minister of Federal-Provincial Relations, which may mean a great thing from our standpoint. I’d like to do that.
Mr. Breithaupt: It may mean a great thing from his standpoint.
Mr. Swart: May I ask the Premier by way of supplementary if he’s had a chance to examine closely the statement of his Treasurer yesterday in which he said that he would meet the request of the Provincial-Municipal Liaison Committee in its resolution that transfer of provincial funds to municipalities in 1979-80 would be commensurate with the rate of growth of provincial transfers. Then on the next page he says, “The estimated overall growth of expenditures would be about six per cent in total.” Yet he says he’s only going to give municipalities five per cent.
Does the Premier not think that is a bit of chiselling on the part of the Treasurer to withhold that $40 million that he promised just one paragraph before?
Mr. Mancini: Easy now.
Hon. Mr. Davis: I don’t want the honourable member to become exercised or too upset. I know he’s going to be here for the Treasurer’s estimates which will be on in five or 10 minutes. The Treasurer will be here and it would be an excellent subject to discuss with the Treasurer at some length. I wouldn’t want to take up the time of the question period on this issue --
Mr. Swart: Just say you will pay the $40 million.
Mr. Cassidy: Then sit down.
Hon. Mr. Davis: -- when the honourable member has this opportunity with the Treasurer in just a very few moments.
Mr. Swart: No answer.
SANCTUARY PARK CEMETERY
Mr. MacBeth: I have an inquiry for the Minister of Consumer and Commercial Relations.
Mr. Mancini: Oh, careful; talk to Frank.
Mr. Kerrio: Topless waitresses.
Mr. MacBeth: It concerns Sanctuary Park Cemetery in Etobicoke and the minister’s powers under the Cemeteries Act. Will the minister review the plans of the cemetery to construct an extensive wall of aboveground, three- to four-tiered burial vaults along the southwestern border of its property? Further, will he give consideration as to whether this form of vault construction is both desirable and suitable for cemeteries in urban areas within the province of Ontario?
Mr. Bradley: That’s what he asked you last night, Frank.
Mr. Deans: There is a great diversity in that ministry, isn’t there?
Hon. Mr. Drea: Mr. Speaker, I would appreciate the indulgence of the House for a few moments. This is a rather significant problem.
Mr. McClellan: Why don’t you make a statement then?
An hon. member: He’s going to, right now.
Mr. Nixon: Look out, he will take you outside.
Hon. Mr. Drea: In this case, Sanctuary Park, which had relatively low or conventional types of memorial markers, went to the borough of Etobicoke some time ago and received permission to build up to six 20-foot-high mausoleum-type crypts. Subsequently, the borough of Etobicoke decided it had been in error in giving the permission. They discovered their error after they saw the first part of the first mausoleum under construction.
At that time, the borough of Etobicoke quashed its building approval and the case went to court. The courts have now ruled that Etobicoke didn’t have the right, after giving approval, to take it away, construction having begun.
Last week, construction began on phase two of that first mausoleum. I issued a stop-work order on the grounds that the court decision had not yet reached the cemeteries branch of my ministry. I am not going to give approval to further construction of this type of mausoleum until the proprietors of this cemetery work out their difficulties with their neighbours.
An urban cemetery fulfils a very personal and a very vital need in our society.
Mr. Deans: It certainly does.
Hon. Mr. Drea: It reflects the feelings of people toward those who have passed away. 1 don’t want new types of construction or new types of programs, albeit at one time they were approved by a municipality, to turn a cemetery --
Mr. Breithaupt: Into a highrise.
Hon. Mr. Drea: -- and a neighbourhood into a fractious, adversarial arena.
In order of the questions asked by the member for Humber: number one, yes, we will review this type of construction, particularly in urban areas; second, I am withholding the approval of the ministry on the additions on this site until the cemetery and the borough of Etobicoke can satisfy our branch that it is in conformity, as much as possible, with the wishes of the neighbourhood.
Mr. Speaker, that is going to be policy from now on in any of these affairs. It is a very serious, very sensitive matter and it should be handled in a way that it doesn’t become a political football in the middle of a neighbourhood.
Mr. Gaunt: I have a question of the Minister of the Environment, with respect to --
Hon. Mr. Davis: How about turkeys?
Mr. Gaunt: We’ll get to that later -- with respect to contamination of water in Port Loring.
Why haven’t residents who have been affected by the contaminated wells had blood tests, since this spill took place over two years ago? Even though this question was asked yesterday, it wasn’t answered: why did the ministry not issue an order under section 17 of the Environmental Protection Act to clean up this spill?
Hon. Mr. Parrott: I said yesterday that we thought the chance of contamination from the water from the contaminated wells that was consumed by the residents, was very slight. I also said that if the residents feel they would like to have those tests, I’m sure the Minister of Health and I are agreed that we are more than prepared to have that done.
I think the residents would agree the chances of their being injured by this water, since they’ve had a fresh supply ever since this spill, are rather slight. However, if they want those tests done we’re certainly prepared to do so.
The reason we didn’t issue an order was simply because the negotiations were proceeding favourably. The residents did have a supply of water; granted not as convenient a supply as they had prior to the spill. The company was making those efforts and now has constructed the well.
There was no point to the order if things were moving satisfactorily. And in our opinion, they were. The order could do very little more than to speed up what in our opinion was going satisfactorily.
Mr. S. Smith: He didn’t even ask his own supplementary. He only asked one question. I’d like to ask a supplementary.
Mr. Foulds: This is the leaders’ day you know.
Mr. Speaker: We spent about 30 minutes on leaders’ questions and we’ve just had our first go-around.
Mr. Foulds: And 24 of them on those of the Leader of the Opposition.
Mr. S. Smith: Could the minister please get his facts straight? Can he explain to the House why these poor people there have had to hire their own lawyer now?
Mr. Eaton: The Leader of the Opposition asked that yesterday.
Mr. S. Smith: Why have they not received a cent in compensation? Why is it that, despite a consultant’s report which says the longer the cleanup is delayed the more spread will occur at the spill? Why has the cleanup not been done? And will the pipes get through to the new well before the freeze-up?
I asked this yesterday and the minister hasn’t answered it. Could he please get the facts about this and make us aware whether this matter is going to be settled? Just by the way, did he know that this spill occurred a year before the ministry heard about it? So there was consumption of that water.
Mr. Mackenzie: Will the Leader of the Opposition end the speech?
Hon. Mr. Parrott: The Leader of the Opposition had a great container in the House that was 95 per cent gasoline. We know there was 100 per cent concentration of gasoline in the well. No one, I think, was likely to be unaware they were drinking gasoline. I think the member himself has a problem in getting some of his facts straight. It doesn’t flow one way.
Mr. S. Smith: I said that when I brought it in, Harry.
Hon. Mrs. Birch: Well why did you bring it?
Hon. Mr. Parrott: Why would the member bring it? That was the implication he made.
I would hope this ministry is not expected to go around to every single well in Ontario, day after day, making sure there was no contamination. If the people want our assistance I think the onus is on the residents to call the ministry and ask for help. I think that’s a logical, reasonable approach to take.
Mr. S. Smith: They did that a year ago.
Hon. Mr. Parrott: And as soon as they did we made every effort to assist the residents.
When it comes to the legal requirements for redressing the inconveniences they had, I don’t think that’s the responsibility of the ministry. I believe that should be settled in the courts of law. Surely, that’s what our legal system is all about.
We have an obligation to make sure that it is not a continuing problem. We accept that responsibility. There has been a good deal of soil removed and we are continuing to monitor and attempting to control the spill the best way possible. But if the Leader of the Opposition is asking us as a ministry to go into the courts of law to redress any inconvenience on the part of the residents, I think he is asking for something that shouldn’t be done in our system.
Mr. Dukszta: I have a question of the Minister of Housing. Will the minister comment on the discrepancy between his statement and the statement of the Attorney General (Mr. McMurtry) regarding the sub judice rule on the Cantrakon decision? On October 30 he said during consideration of Housing ministry estimates: “I have indicated clearly and supported the documentation of sub judice by the Attorney General and by outside legal counsel.”
On October 31 he stated: “I have been advised by the Attorney General’s office that the matter is sub judice and, therefore, it is inappropriate for me to reply at this time.”
On November 7 he stated: “I have been advised by the Attorney General’s office that the matter is sub judice and, therefore, it is inappropriate for me to reply at this time.” This was in answer to my written question.
On November 20 I received an answer from the Ministry of the Attorney General: “No specific legal opinions have been prepared in relation to the Cantrakon decision, which is an application to the divisional court for judicial review pursuant to the Judicial Review Procedures Act.”
Mr. Martel: Do you understand that, Bill?
Mr. Dukszta: Could the minister explain that?
Hon. Mr. Bennett: Yes, Mr. Speaker, very simply. At the time the whole item became a legal operation with the notice of a court hearing, my ministry inquired of the Attorney General through the deputy minister in that ministry for advice and guidance. As I indicated in a reply to the member back a few weeks ago, advice and guidance is exactly what we were given.
Mr. Dukszta: I have quoted three statements by the minister stating he has referred this matter to the Attorney General. I also quoted the answer dated November 20 from the office of the Ministry of the Attorney General, which says it had not been requested.
My question was, why is there this discrepancy? My next one is, what is he hiding? Has he committed something so gross that he has to hide behind the sub judice rule? In fact, he has to tell us he has consulted the Attorney General when in actuality, he has not.
Hon. Mr. Bennett: I can assure the member for Parkdale I would hide absolutely nothing. Even if I did give it to him, he wouldn’t understand what it was all about to start with.
Mr. Martel: He has forgotten what you will never know.
Hon. Mr. Bennett: Are you all cheering for the Alouettes or for Edmonton? Have you made up your minds yet? By the sound of it, you are at the game already.
Hon. Mr. Bennett: I tell you, if I threw you a pass, you would fumble it as well, so don’t worry.
Mr. Laughren: Is he the acting Premier?
Hon. Mr. Bennett: No, but I will tell the member that he is not a very good acting leader, so be shouldn’t worry about it.
Mr. Martel: Bill, if you only had a few more bodies you could replace him.
Hon. Mr. Bennett: I made the inquiries of the Attorney General’s department. I think if the member reads the statement, very clearly it said there was no written reply given to my particular ministry. There were discussions by my deputy, who is a lawyer by the way, along with the lawyers in the Ministry of the Attorney General.
Mr. Speaker: The Minister of Labour has the answer to several questions previously asked.
THREAT TO ELDORADO EMPLOYEE
Hon. Mr. Elgie: Recently the members for Sudbury East (Mr. Martel) and Port Arthur (Mr. Foulds) asked me about a newspaper report that suggested a worker would be fired by his employer should he appear at an environmental assessment hearing in Port Hope regarding the construction of a facility for Eldorado Nuclear. Officials of my ministry have spoken to the federal government officials from Environment Canada to obtain more information about this case. I have been informed the assessment hearing has been ordered as a result of a federal cabinet directive and thus, as it falls under no federal statute, there is no protection for reprisal for individuals who wish to appear at such bearings.
Furthermore, I understand the individual or individuals involved were not represented by a trade union. However, as I understand the situation, be would still be able, under recent revisions of the Canada Labour Code, to grieve any reprisal that might occur. However, in this particular situation, I am informed that despite the threats the individual did appear at the hearings and no reprisals will take place.
I believe, however, this issue raises a question of whether there should be some legislation to protect from reprisal workers who appear at various hearings or report violations of any laws or regulations to government agencies. I am discussing this question with officials in my ministry.
Mr. Foulds: Could I ask the minister if the discussion with his officials with regard to this matter includes either an amendment to the Employment Standards Act or an amendment to the Human Rights Code?
Hon. Mr. Elgie: The exact route that might be considered has not yet been discussed.
LUNG CANCER CASES
Hon. Mr. Elgie: Last week the member for Hamilton East (Mr. Mackenzie) asked me several questions regarding claims for lung cancer cases for foundry workers currently before the Workmen’s Compensation Board. I have checked with the board who inform me the figures I gave the member at the time regarding the number and disposition of claims, were correct.
As to the second part of the member’s question inquiring where in the foundries exposure took place, I am advised, as I announced in the House on November 12, that comprehensive detailed investigations regarding all foundry worker claims are currently being conducted by the board. Once these investigations have been completed, it will be possible to detail when and how exposure took place in the case of each of the claimants.
Regarding the member’s inquiries about lung cancer cases among silver workers, I am advised the board is not aware of any claims currently before it on behalf of silver workers. Should the member have any information about such a claim, I would be pleased to hear it.
Mr. Mackenzie: With regard to the answer the Minister of Labour has just given, the figure he gave me was 22 cases plus six at Algoma, which, to the best of my knowledge, are all deceased. There is obviously at least one, Mr. Polowy, who I am dealing with myself, who is still living. I am wondering whether or not the minister’s figures are complete.
Hon. Mr. Elgie: I think if the member would look at the record, I did indicate that there was one surviving claimant.
PROBE OF CAR PURCHASES
Mr. Mancini: In the absence of the Attorney General, and in view of the concern this matter has caused in my riding, I would like to direct my question to the Premier.
Mr. Nixon: He is talking to the chairman of Hydro.
Mr. Foulds: Whose appointment is he approving?
Mr. Mancini: I wonder if the Premier is aware, or if the office of the Attorney General is aware, that Revenue Canada has asked some Essex county car dealers to supply the names of people who bought expensive cars in 1976 and 1977 so that checks can be made against the buyers’ income tax statements. Would the Premier not agree with me that this type of activity is, first of all, silly and, secondly, infringes upon the civil liberties and the confidentiality of Ontario citizens?
Mr. Handleman: Why don’t you call Ottawa?
Mr. Havrot: Talk to your friends in Ottawa.
Hon. W. Newman: You don’t know what you are talking about.
Mr. Mancini: Would the Premier have the Attorney General take all the necessary steps to inform Revenue Canada that this type of activity is not acceptable in the province of Ontario? Would the Premier also find out if there is any legal authority that the Attorney General would have to stop Revenue Canada from this type of activity?
Hon. W. Newman: Speak to Joe Clark on it.
Mr. Handleman: Call Joe Guay.
Mr. Foulds: Who is Joe Guay?
Hon. Mr. Davis: I must confess I wasn’t familiar with this situation. It is my hope that the member himself wasn’t one of those who bought one of those very large cars.
Mr. Mancini: But not quite as big as yours.
Hon. Mr. Davis: I won’t go any further. I’ll certainly speak to the Attorney General, but I wouldn’t count on anything.
Mr Samis: I have a question of the Minister of Correctional Services. In view of the report last week by a special inspection panel which stated it could not help but be appalled by the condition of the Cornwall Jail, which it described as “a primitive detention centre in a very modern and prospering city,” can the minister inform the House when something will be done to remedy the deplorable situation of the ancient Cornwall Jail and when the United Counties can have a decent modern treatment facility?
Hon. Mr. Walker: I appreciate the question raised by the member for Cornwall. I understand that he had an opportunity to tour the jail last week and mentioned to the assistant superintendent how impressed he was with the improvement over the last two years. In fact, he found the newspaper reports were grossly overexaggerated.
Mr. Samis: You should have seen it two years ago.
Hon. Mr. Walker: I am impressed that the member would say that
Mr. Foulds: It just moved from the 17th to the 19th century.
Hon. Mr. Walker: I do want the member to know that we will continue to improve it and he can expect a continued increase in its general rate of appeal.
Mr. Samis: Supplementary: I appreciate --
Mr. Speaker: The time for oral questions has expired.
NOTICE OF DISSATISFACTION
Mr. Dukszta: Mr. Speaker, I would like to give notice that I am dissatisfied with the answer given by the Minister of Housing to my question and I would like to debate it at the next opportunity.
Mr. Speaker: That will be on Tuesday at 10:30 p.m.
ORDERS OF THE DAY
House in committee of supply.
ESTIMATES, MINISTRY OF TREASURY AND ECONOMICS (CONTINUED)
On vote 11O1A, ministry administration program; item 1, main office:
Ms. Bryden: I would like to ask the minister, now that we have a new minister, whether we can expect a change of policy by the government on the question of the amendment to the Canada Pension Plan which has been requested by nine provinces and by the federal government but has been vetoed by the Ontario government. I refer to the amendment which would make it possible for any parent who stays in the home to look after young children to drop those particular years out of the calculation of their eligibility for a pension. It is an eminently desirable amendment in that it would recognize that people who engage in child-rearing are performing a very valuable, if unpaid, function. This contribution should be recognized and should not decrease the pension to which they would otherwise be entitled, if they had stayed in the work force.
Mr. Deputy Chairman: Could I point out to the member for Beaches-Woodbine that this question properly belongs under vote 1102, item 2, fiscal policy, and ask that she hold her question until we reach that vote? We are dealing now with the main office vote.
Ms. Bryden: Mr. Chairman, I thought under main office one could discuss the general policy of the government.
Mr. Laughren: Carry on.
Mr. Deputy Chairman: Order please. I would point out to the honourable member and to the members of the committee that on April 25 this House passed a motion which was a direction to this committee. It indicated that in the committee of supply, critics be permitted considerable latitude when speaking to vote 1, item 1, and that thereafter members adhere strictly to the particular vote and item under consideration. It asks that when you have a question on a particular vote and item that it be maintained.
These are the instructions of the House. I would ask the honourable members, if they could, to stick to those instructions. When we get to fiscal policy, there will be ample time to debate this question.
Ms. Bryden: Mr. Chairman, is this not vote 1, item 1?
Mr. Deputy Chairman: Vote 1, item 1 is on main office and the instructions of the House are that only the critics, in their opening statements, are allowed to discuss wide general policy.
Mr. Laughren: That’s not what that says.
Mr. Deputy Chairman: After that, all members are instructed to adhere to the vote in question. Those are the instructions of the House as laid down on April 25.
Is there any discussion under vote 1, item 1, main office?
Mr. Laughren: Yes. I must say we are not interested in delaying the proceedings. As a matter of fact, we’d like to get on to the other votes, but I do think it’s appropriate to comment under the first vote on some of the policies emanating from the minister’s office. That’s the point we’re trying to make. I won’t dwell on that
There is a policy which came from the minister’s office just yesterday in a statement he made to this chamber dealing with the grants to municipalities. My colleague from Welland-Thorold (Mr. Swart) raised it today. The point that needs to be made is the minister quotes the Provincial-Municipal Liaison Committee as requesting certain things from him: for example, that grants be based on the growth of provincial expenditures. Then, the minister makes the claim he is acceding to that, and he is actually going to do that, and then he takes it away from them in the very next paragraph.
Mr. Deputy Chairman: May I again point out to the member, this also belongs in the next vote under fiscal policy? The House has instructed the committee to do it this way. If the House wishes to change its instructions, I am also quite willing to change instructions, but this is what the House has instructed the committee to do. I think it would be more efficient for committee business if we deal with all the fiscal policy matters together and not jump from policy to policy. It will give much greater continuity to the debate if we do it that way.
Mr. Laughren: Fair enough.
Mr. Deputy Chairman: Is there any further discussion under vote 11O1A, item 1, main office? Shall that item carry?
Item 1 agreed to.
On item 2, financial services:
Mr. Peterson: I gather we are now into the debt management of this province and I guess that is what you’d like to discuss. Is that right, Mr. Chairman? Do I have your permission?
Mr. Deputy Chairman: Debt management comes under public debt and public financing, vote 1102A, item 1, Treasury. If you read the notes that are below each vote, that would be in vote 1102A, item 1; public debt and public finance.
Mr. Peterson: We are on vote 1101A, item 2 now. Is that what you’re telling me?
Mr. Deputy Chairman: Yes.
Hon. F. S. Miller: Yes, we are.
Mr. Peterson: Okay. I’ll just wait until we are a little further along then.
Mr. Laughren: I’m a little confused. I thought my colleague from London Centre was correct in that this is where we deal with the question of public finance.
Mr. Deputy Chairman: We’re dealing with vote 1101A, item 2. Vote 1102A, item 1, which is Treasury, is the vote under which we deal with public finance, public debt, et cetera.
Mr. Martel: It says fiscal policy.
Mr. Deputy Chairman: I think the minister may clarify for us just what comes under financial services.
Hon. F. S. Miller: In the briefing books which are supplied to the critics, on page 12 there is a description of the general kinds of things being handled under this particular vote. May I refer you to that page so you can see the items to be discussed?
Mr. Peterson: I have no further comments on anything under 1101. I was under the impression, subject to the agreement of my friends, that we were going to move right on to vote 1102. I am in your hands. If someone has something to say on this vote, let him go ahead.
Mr. Deputy Chairman: Vote 1101A has eight items, and we have to deal with each item individually. Item 2 is financial services.
Item 2 agreed to.
Items 3 to 8, inclusive, agreed to.
Vote 1101A agreed to.
On vote 1102A, finance program; item 1,
Mr. Peterson: Before I start in on a diatribe, maybe I can ask the minister some questions so we can perhaps see if there is any agreement in our possible views.
We chatted the other night about Ontario’s involvement in the Canada Pension Plan and your thoughts on it. I gather you are not very happy with indexing of any type in the public sector. You are, as I am, worried about the source of future funds to this province, particularly with respect to the Canada Pension Plan. Could you tell me, very specifically, what your thoughts are about contribution rates and what you are doing about it?
Hon. F. S. Miller: The member and I do share very real concerns. The royal commission on pensions is currently studying all these matters; in fact it is expected to report some time early in 1980 with luck. I assume this was undertaken by my predecessor because of concerns this government had about these matters; I think it will bring the details into public view for examination.
Subject to whatever that commission finds, I can only say that I believe the average contributor to a pension fund in Canada does not really want to be hoodwinked. I believe those funds were intended to be self-supporting; unlike old age security payments or unlike the income supplements attached to them, which in effect are coming out of general tax revenues, these funds are ones where people get a benefit related to their contributions across their lifetime of work.
There is a general belief, and properly so, on most contributors’ parts that the moneys they pay and the moneys their employers pay on their behalf, when put out and invested should at maturity cover the benefits they expect. Any plan that does not do that is putting either the recipient at risk, in that some future government may refuse to pay the benefits because of lack of funds, or putting future taxpayers at very real risk because a new generation of workers will be expected, through the tax process, to make up the unfunded requirements of the pensions being paid in a given year.
If one takes the demographics of the Canadian situation and looks at the tremendous bubble, or whatever one wants to call it, of ages currently entering the employment market and passing through to about the year 2000, one can see how dramatically the age composition of Canada’s society is going to change; how, unless there is a dramatic change in the birth rate or in the number of people emigrating from other lands to Canada, we will have fewer and fewer people in the work force expected to support more and more people on pensions.
These pensioners in turn will have every reason to believe that the money was set aside and is there for them. Unless we address those problems some time shortly, it won’t be.
Mr. Peterson: Have you had a chance to study the COFIRENTES report from Quebec on the pension issue and are you aware of their conclusions?
Hon. F. S. Miller: I would have to say I haven’t studied it. I would defer to my staff and ask if they have studied that report? I am being told they haven’t. There may be others within the ministry who have but the two gentlemen here have not.
Mr. Peterson: Probably your man Tris Lett has studied this; and I must say to you very frankly he is one of the most sophisticated people in the business today and I compliment you on having him. I am glad that he lost the federal nomination, because hopefully he will stay with you. He is, in my judgement, making more sense on this issue than anyone else who’s speaking in public life.
One of the things that disturbs me about this issue is there is so little attention paid to it on a political level. We are seeing a massive division in society on this issue; fortunately it’s getting more attention than it has been heretofore, but not from political people.
We see on one hand the financial managers, the people who understand the future ramifications of the legal obligations that governments and companies have created, and they by and large have a great story of doom and gloom, saying, “where are we going to go?” Things are grim; I am glad the minister shares my deep concern for the problem. On the other hand we see another great sector of society, saying we need expanded public plans, we need to greatly increase our pension benefits because in reality there are a substantial number of pensioners today in very serious financial trouble. It is estimated that one out of two pensioners in this province today is living below the poverty line.
So we have these two very strong, competing social needs; and one is fearful of potential bankruptcy.
Interestingly enough, I have read one wag who says the potential unfunded liability in the Canada Pension Plan as it’s currently constructed is $400 billion. Now assume he’s out $100 billion, if you looked at it the way an insurance company would in terms of making it actuarially sound -- and one analyst I read suggested that there are many assumptions built into that and he could be dramatically wrong, he could be out $100 billion or $200 billion; and I give von that number only to show that I think is the proportion of the problem -- it is grievous and it is serious.
I understand you are sitting back and waiting for the royal commission. It’s now about a year and a half or so. I’m looking forward to great things from that commission, because they are a sophisticated group.
However, one of the problems with creating that royal commission is that it has deferred action for a couple of years; I am hoping when that report comes down you are going to be prepared to take some tough action. Is it on your agenda next week to discuss the Canada Pension Plan with the other first ministers and the other financial ministers? If it isn’t, would you consider putting this item on the agenda at your next meeting of financial ministers of this country?
Hon. F. S. Miller: First, with great sadness, I will tell you Tris Lett is no longer on my staff.
Mr. Peterson: Where is he?
Hon. F. S. Miller: He has gone into business for himself as a consultant. He is now giving me advice but --
Mr. Peterson: Too bad you lost him. May I ask who has replaced him? Do you have a replacement?
Hon. F. S. Miller: As yet that person hasn’t been named. He only left within the last three weeks. I happened to attend a meeting recently where he appeared for almost the first time in his new position in business for himself; and more power to him, because --
Mr. Peterson: I am sorry for the province.
Hon. F. S. Miller: -- he’s a very bright young man and for the very short time I had the opportunity to work with him I fully enjoyed his contribution. I might say that the ministry’s full of people like him, that’s one of the joys of being Treasurer.
Mr. Peterson: Name one other. No, I am just kidding.
Hon. F. S. Miller: Name one other; I was thinking if I don’t name the deputy first, he’ll sulk.
Mr. Peterson: I don’t like to see Rendall sulk.
Hon. F. S. Miller: Seriously though, the ministry is full of bright young people who are relatively unfettered by the bureaucratic process, who have open minds and freewheeling ideas. They have been a great source of satisfaction and joy to me, because I haven’t been used to that in normal circles.
Mr. McClellan: In Health, for instance.
Hon. F. S. Miller: I will say this, since you asked me the question about the Quebec report, that a notice came out saying that Tris Lett’s group did have the report, are studying it and are preparing a summary of it for me.
Mr. Peterson: I’ve got one if you want it.
Hon. F. S. Miller: The question of whether we have raised, or whether we will raise the Canada Pension issue at Ottawa has been dealt with. When I had the first opportunity to become involved in the pension plans and started to sense the problems you talk about -- and they are political problems, we both agree on that -- I asked that we request Ottawa to discuss this problem. I understand we may be getting a report next week, although at the finance ministers’ conference where I expected it -- there was none.
Mr. Peterson: Is it up for discussion next week?
Hon. F. S. Miller: It is not likely to be discussed in front of the first ministers. Before we went to Ottawa three weeks ago we did ask that this matter be reported on, but it was not at that time. I suppose we didn’t give them enough advance notice. I had about that time just really started being involved in these details and requested we start taking action on it.
I can’t tell you how accurate the figures are that have been bandied about. It seems to me it would require between eight and 10 per cent of total payroll to fund the plan.
Mr. Peterson: One figure is 7.75 per cent, but who knows?
Hon. F. S. Miller: Yes. Obviously, we are not halfway there at a 3.6 per cent rate. You and I have a responsibility, I think, not as opponents but as people interested in letting our electorate know the truth, to say in a nonpartisan way that in fact this must be faced before it is too late. In fact, we have to work with the federal government and with the other provinces to see that the true interests of the beneficiaries of these plans are being served.
I am prepared to do that; I suspect you are. I am not going out in an attempt to get my federal friends in Ottawa, or you. I think we can for once say we have a common purpose, and we do need to make people aware of the problem first of all.
As I said in one of my weekly reports when I became aware of this myself, I really don’t think the average Canadian, particularly the Ontario citizen, wants to be fooled on that kind of matter. I really think when politicians feel they can have a short-term benefit by hiding a long-term cost with the kind of impact that may have on the eventual economy, they are kidding themselves.
I think the citizens, when it is explained, are going to make one of two choices: Either raise the premiums or adjust the benefits. One of those two has to be done. I think you would agree. Otherwise, you are automatically paying them in phoney dollars. There is no alternative.
Mr. Peterson: Mr. Minister, may I ask if you have read the book called Pensions and Survival by Geoffrey Calvert? I seriously recommend it to you as good bedtime reading. Just to put the problem, I regard one of my jobs here today as being to impress on you how serious I think the issue is.
Just to quote our mutual friend Grant Reuber, the past chairman of the Ontario Economic Council, he will tell you that as he sees it as an economist, the “pension crisis” has greater economic implications for the future of this country than, in fact, does the energy crisis. I think we have to put it into proportion.
Some people think Calvert is an alarmist; they think he is a little too negative. Other people happen to think he is making a lot of sense. However I highly recommend it to you, Mr. Treasurer. George, why don’t you lend him your copy? I think once the Treasurer reads it, being a serious man and concerned about the future of this country at least he will start the ball rolling, and that’s what you have got to do.
One of the things we are finding, and we are going to find about this problem in the future, is that the longer we defer it the more difficult it is to get out of it. If we start today and do intelligent things for 10 years then possibly, and only possibly, will we have a chance of extricating ourselves. If we leave it another three or four years it is going to be increasingly difficult.
The decisions required are massive in terms of public policy and they reflect on every part of our economic life. We’re going to have to make judgements together, and I’m sure that a lot of the judgements will be different on philosophical or party lines or political lines. That’s fair enough. There are going to be different answers to it, different solutions to the problem, because there’s no easy one, but I would say that anybody aware of the gravity of the problem would say they have to address their minds to the problem immediately.
I’m very sure that my good friend the member for Armourdale (Mr. McCaffrey) who is sophisticated in these matters believe me, would agree with every single thing I have said. We have chatted on this and I know that with his financial background he appreciates as deeply as I do the nature and the proportion of the crisis we are facing here.
I hope you’ll get that book. I’ll give you my copy if you’d like it, because it would be good reading if you can’t sleep some night. You have a particularly serious responsibility, as I pointed out. This is not a federal problem. It’s only partly a federal problem, in the sense that they are the collectors and the payers-out, in the sense they have that financial obligation. They are the designers, but with constitutional approval of the provinces. Under the BNA Act it was the provinces that had this responsibility.
I know that Ontario, at the time they entered into this, was so incredibly unsophisticated. I don’t blame the province, most people were. We know things today about this crisis that we didn’t know 10 years ago.
Pensions and universal security programs of this type are a relatively recent phenomenon. It’s not something we have been wrestling with for 50 or 100 years. I emphasize “of behalf. But type”; there are different types.
Mr. McClellan: It’s new in Canada.
Mr. Peterson: Yes. We had old age security since 1923 but that’s a different kind a system, that’s a pay-as-you-go system. It comes out of current revenue; there’s been no attempt to insure or fund it or anything else, it’s a different philosophy.
There are people who argue the Canada Pension Plan, in fairness, should have an identical philosophy, that it should be a pay-as-you-go system, that current receipts match current disbursements. That’s one philosophy. It doesn’t happen to be mine on this particular issue, but it is one.
You have a special responsibility in you that have the authority under the terms of the agreement to veto anything, or to force the federal government into adopting policies you think are correct. Ontario is the biggest contributor and the biggest borrower from that that fund. As I understand it there is now something like $12 billion in the fund on a national basis. Ontario has borrowed something like $7 billion of that, so you are the biggest borrower and that necessarily gives you the most power in negotiating for some of thing that is sensible for all of us.
I think when we look back in retrospect that Ontario made some terrible decisions. I can see John Robarts there -- I know for a fact he wasn’t completely happy with it, but he felt it was in the interests of Canadian unity to go along with that program suggested by the federal government. Rendall Dick may disagree with me, but that’s my understanding of the case at the time.
In a sense it was a worthwhile and important thing to do for the sake of the country. The provinces at that time saw this massive fund of easy money; and of course they had immediate access to this. I have argued the thesis before, that almost every penny you’ve spent in this province has available at below market rates. You’ve had this availability-fed demand; you add up everything you can borrow from the Canada Pension Plan, from teachers’ superannuation, OMERS and everybody else, and then you spend it. You have just deferred these problems. It bought you 10 years’ worth of government, it brought you 10 years’ worth of expenditures. We’re going to be in a different situation in 1983 or 1981, depending on how you view the situation.
The previous Treasurer was aware of the problem, I know he was. I know that Tris Lett in some of his speeches -- and I’ve read most of them -- was probably the most progressive person speaking on the government‘s behalf. But unfortunately he always exculpated himself in the first paragraph of a speech say, “I’m speaking as a private citizen, I’m not speaking for the government.” Then McKeough would come about a quarter of the way or a tenth of the way along the road and say, “Gee, we have a problem here; maybe we’ve got to do something about it.”
It’s just like the whole issue of contribution rates. Who knows what Darcy McKeough’s position was on that? He had about six different positions and he changed them at different times. I know, as you know, that it’s going to be extraordinarily difficult to raise those contribution rates. Anyway you take it that’s a tax; and anyway you take it, in a real sense it’s almost a regressive tax.
Hon. F. S. Miller: Could I just interrupt? I don’t sense that we’re disagreeing with each other at all, but I don’t think the word tax in that case is right. That’s a point I want to touch upon.
Mr. Peterson: Do you think the OHIP premium is a tax? If you don’t, you and I might have a disagreement.
Hon. F. S. Miller: I’ve always thought of it as a tax.
Mr. Peterson: Of course it is.
Hon F. S. Miller: But in this case I don’t think that is true. I think it’s a form of income that is deferred for the person. It’s part of the benefit for the daily work being performed by that person that he or she, either by choice or by default, has delayed until some other part of their life.
I think it’s very important that we start to appreciate that in the total concept of pensions, because all too often that is the part of the package being negotiated or being arranged. And often it isn’t negotiated on behalf of employees. It is something about which they are not consulted too much and about which they may not know too much. They simply have assumed that the people who have made these decisions have made them wisely. Let me just for a second refer to the federal package. I don’t have our own; I’m not trying to say theirs is worse or better than ours but I happen to have seen details on the federal pension package. You may have heard me cite these figures.
For each dollar of current income coming to the person in cash, the pension benefit is worth 34 cents. Of that 34 cents, if I can recall my figures correctly, somewhere around 15 cents is being set aside by a combination of federal payments and employee deductions. The balance is a liability for future taxpayers. It’s a guaranteed plan by the government.
I would suggest that we should start thinking about -- don’t accept this as policy -- we should start thinking about the need to have the value of the pension packages clearly in front of the workers at the time salaries are being negotiated. I’m told the federal government is moving towards this plan of total compensation so that employees are aware they are deferring today’s cash for tomorrow’s benefit. I suggest to you that with some of the pension plans being stacked as they are, and getting as rich as they are in some areas with indexing, et cetera, some employees may elect to have the money today instead of the rich pension tomorrow.
The fact remains that either the employer should understand his future liability -- in many cases they haven’t, whether the plans are public or private; or the employee should; and preferably both. Then when they sit down and make a deal that involves some future pension benefit they will understand its current value and what they either have to forgo now or later on in terms of other benefits. I think that is critical.
The other thing I would like to say is that yes, Ontario had a vital part in the creation of the Canada Pension Plan. In fact without Ontario there would not have been one. It wasn’t necessarily a happy marriage, I’m told.
Mr. Laughren: No, Robarts didn’t like it.
Hon. F. S. Miller: That’s right, I’m told he did not. Just as he did not like, I’m told, the universal health insurance plan when the time came. I think history in both cases has vindicated his original suspicion about those plans.
Mr. Laughren: Are you serious?
Hon. F. S. Miller: Oh yes, in terms of the way it was funded and grew.
Mr. McClellan: Why don’t you campaign on that? Why don’t you have the guts to campaign on that? Go to the people on that.
Mr. Laughren: Now you are hedging, you are extricating yourself.
Hon. F. S Miller: Just calm down and let me have a reasoned argument with a gentleman who at least understands.
Mr. McClellan: What we say in an empty House and what we say outside are so different.
Mr. Laughren: The jolly Miller from Muskoka.
Hon. F. S. Miller: You know that Québec opted out of the federal Canada Pension Plan. When Quebec opted out it meant that if Ontario also opted out there would be no package at all. So, as you said in your own comments, with great reluctance perhaps, but in the interest of a national plan, Ontario went in.
We do have veto power. I’m told that we do not have the alternative to that, the right to insist on certain changes, they have to be negotiated with all the other provinces; but we do have veto power and we have used it.
We’ve used it wisely. I understand that was Ms. Bryden’s question to me earlier today, or it may have been the import of what she wanted to say to me. That will be argued on the merits of our own belief and not on the question of our competence or lack of competence. It is simply what we believe should be the basis of a plan.
I can only say to the member that my own position will be to make sure we negotiate as quickly as we can, subject to the advice I get in the royal commission report, changes in the Canada Pension Plan, and others for which government is responsible; changes that will take away that liability on the part of future taxpayers so that we are funding adequately today.
Mr. Peterson: There are a few things I want to discuss. I don’t want to get into a semantic argument, but in my opinion the contributions on that level are principally a tax. We have no choice, we pay them; they are extracted out of the hide of the corporation and the individual, and that’s how I define tax. But it doesn’t really matter. You can call it a tax, you can call it a premium, you can call it anything you want to call it, it’s compulsory and it has to be paid. We are disturbingly aware of the fact that fund is only partially funded, and we are disturbingly aware of the fact that by the year 1995 we’re going to be out of it.
I just want to respond to a couple of things the minister said.
It is my impression that Mr. Robarts wasn’t totally happy about it. He exercised a judgement in favour of the national priority at the time. Frankly he didn’t go into those negotiations with a hell of a lot of expertise behind him. As I was trying to make the point earlier there weren’t a lot of experts. There are a lot more experts around in the business today than there were 10, 12 or 15 years ago.
I don’t think he fully understood the import of what started us into either, in this chain of incredible spending, consuming every dollar of pension fund money, for want of a better word, on current consumption. I know you’re going to argue it was all for capital items. I’m going to argue there is always going to be a need for capital items and they’ve got to be treated differently. I can argue also that contrary to the information yon and the previous Treasurer tried to present to this House, you haven’t spent on capital items what you have borrowed in total financing every year -- but that’s another story for another time.
Hon. F. S. Miller: Not every year.
Mr. Peterson: The last two years you have financed more than you’ve spent on capital items. In 1975 that was not the case. That’s the last year when you spent on capital structure. Of course that was the election year, as I recall, when a bunch of very funny, distorted things snuck into that budget that somebody presented to the people.
But let’s take this Quebec pension plan system. As you know, in my opinion that’s been the interesting irony of all ironies. They have been the most sophisticated in the handling of the thing. They have set aside about 30 per cent through the Caisse de dépôt et placement du Québec and they have spent that on private enterprise-building; they’ve invested in equity and debt, building the capital infrastructure of that province. I gather that they are today among the biggest shareholders of the Toronto-Dominion Bank, and the Bank of Montreal. They have made a real investment in free enterprise. Lots of studies are out on the handling of those pension funds but had that been done with all of the $12 billion available, we wouldn’t have the economic problems in this country that we have today.
Mr. McKeough gave me figures at one time. The 1975 total capital markets of this country were $19 billion. Of that, $13 billion were spent by government. It’s a disturbing amount of money. It’s a disturbing encroachment into the capital market. What have we got? I’m a fairly pragmatic guy. If I felt socialism worked, or if I felt that more government expenditures worked, I would go for it. But I can tell you, the evidence is, and I guess this is where I disagree with my friends to the left, that it doesn’t work very well. You have committed some of the great sins over the past seven or eight years in spending every one of these dollars.
Your problems in your own provincially- controlled pension plans are a microcosm of the federal problems. You have criticized federal indexed pension plans because in effect the effective contribution rate is about 34 per cent. I don’t happen to like indexed plans either. I’m not against indexing, I’m against plans that aren’t fully funded; there is a difference, If a guy wants to fund indexing, that is clearly his prerogative, as I see it. He makes the election to set aside enough today to look after him in the future and take care of the contingency of inflation, whatever that rate is. As a taxpayer, I resent having to carry the can for a privileged class of people. One wag has equated it to the crew of a sinking ship getting first access to the lifeboats. I think that is fundamentally unjust.
Whatever is to happen there, you are not a heck of a lot different here in the province of Ontario. You talk about the massive unfunded liabilities in Ottawa. You have at this point about $2 billion worth of unfunded liabilities. The Treasurer is not listening, and I am actually making a very fine speech.
Hon. F. S. Miller: I really listen with one ear to you and one to my staff.
Mr. Peterson: I just want to impress these things on you.
Hon. F. S. Miller: Really you are impressing them very much. That’s why I am talking to them.
Mr. Peterson: Maybe it is not worth doing but you have the same problem here. You have $2 billion worth of unfunded liabilities. The teachers’ superannuation fund has an effective contribution rate of about 21 or 22 per cent. Actually, the funded part is only about 15 per cent -- six plus one from the teachers’ contributions and seven per cent from the province, as I recall. It is adding up to about 15 per cent. You have to come up with these block payments every year -- it was a couple of hundred million last year -- to bring the funds up to actuarial scratch.
That is an indexed plan too. It is not an open-end index, it’s an eight per cent cap with a banking provision that, in effect, almost comes out to a fully indexed plan. Let me say that the problems you have here are not dramatically different to the problems they have in Ottawa. You have to do something about that. The teachers are incensed about it and the taxpayers are incensed. Any way you cut it, the taxpayers are going to end up paying for those legal obligations you created to the civil servants, the public servants and the teachers in this province. You have the same problems. Granted the federal problems are worse, but they aren’t all that much worse, given the relative size of the jurisdictions.
I agree with your point about knowledge very strongly. I think there is an abysmal lack of knowledge on this particular problem. Very few people understand the proportions of it. Every employee and employer should have an obligation to make sure people are aware of what they are actually involved in. That’s more important to governments and leaders. They are at least aware of it and can start doing something about it. If we perpetrate this ignorance, then it is our responsibility.
Mr. McKeough talked occasionally about the problem; Tris Lett talked about it, He made a speech about three weeks or a month ago, saying we should be diverting pension funds into small businesses. I happen to be attracted to that proposition. I would like to see you set up the structures for doing it. There are models in the world for doing that kind of thing. Sweden does it very effectively.
There are two dangers, of course, in icreasing the contribution rate for the Canada Pension Plan. One is that governments will borrow every penny of that money available and thus not cure the problem but defer the problem for another 10 years. If that happens, if we increase the contribution rates and governments are allowed access to that for current consumption, then I will fight to the death against that proposition. It is fundamentally wrong. Those funds have to be liberated. The reason we are into problems now -- and I have not got into repayment problems which I will be into in a minute -- is that you have spent all of the dough.
The second problem is if that is the case, then we would have probably the largest free pool of capital in Canada. That’s one of the problems our friends have in Alberta today. I understand they have in the Alberta Heritage Savings Trust Fund, the largest free pool of capital in the western world and they don’t know what to do with it. They run a very tight ship and they don’t know how to handle it. It is tough to move. The problem with it is that it is all liquid. They want to keep it liquid. They are not investing in long-term security.
They are not really investing very much in the unity of this country. There is $50 million to New Brunswick and $50 million to Newfoundland. I understand that according to set-aside agreements, they have the capacity to set aside something like 15 per cent of that fund. They have spent about 20 per cent for health centres, infrastructure and things like that, all of which are very worthwhile. They are sitting with incredible pools of liquid cash.
They have a very serious management problem; and I only used that as an example to demonstrate the serious management problem that the Canada Pension Plan would have if it increases contribution rates. If one has that problem, one goes to Tris Lett’s model -- and it’s a good model -- the Swedish model; one makes sure the pools of capital are relatively small and widely dispersed, and puts them out to fund managers on a competitive basis. The only discipline would be the market discipline; the guys who return the highest rate of return to the taxpayers of this province, or to the beneficiaries of the pension plan, they would be the winners. We would set all this capital moving and working and building jobs and creating a productive economy. We have such a great need for that today.
So I think there are ways that problem can be handled. But I only wanted to mention those two provisos because, if the Treasurer goes to Ottawa and starts arguing for an increased contribution rate, he should make sure that those two restrictions are placed on it.
I want to get the Treasurer’s thoughts on the repayment. Does he agree with the basic proposition -- and I am just talking in round numbers -- that by about 1981, given current borrowing rates, we will owe the Canada Pension Plan about $10 billion, give or take $1 billion?
Hon. F. S. Miller: We’re at $6.8 billion right now.
Mr. Peterson: About $7 billion; so we are talking about $1 billion a year.
Hon. F. S. Miller: I would assume about that.
Mr. Peterson: Okay; about that. And would the Treasurer agree with me -- just so we are getting our terms right -- we will owe about $1 billion a year in interest? Maybe $900 million, or something in that order.
Hon. F. S. Miller: Yes.
Mr. Peterson: Then we are going to be in a negative cash flow position in 1981 or 1982. Does the Treasurer agree with me on that?
Hon. F. S. Miller: Yes, that’s right. The year is 1985.
Mr. Peterson: Then he agrees with me that disbursements for the fund are going to start exceeding receipts in about -- and I know these are all approximations -- 1983 or 1984?
Hon. F. S. Miller: I am told it was 1985 for the interest, for the cash flow --
Mr. Peterson: So at that point we are going to be paying $1 billion a year, we will be in a negative cash-flow position, and we are going to owe them roughly $10 billion in capital. Then, by 1995, the fund is going to be completely depleted; there will be no more assets left in that fund, barring some major changes in the fund.
Mr. McClellan: We could start by getting contributions from people like you.
Mr. Peterson: That means over a 10-year period, because this is basically call money -- is it three-month call money, Canada Pension money? I think it is -- we are going to have to start paying it back. Let’s just say, for sake of argument, we are going to have to pay back $1 billion a year in capital, plus interest, which is running about $1 billion a year -- obviously it is going to be declining as capital is repaid. But on average over a 10-year period, between 1985 and 1995, it will be roughly $1.5 billion to $2 billion a year that we are going to have to pay back to the Canada Pension Plan. Would the Treasurer agree with me?
Hon. F. S. Miller: Mr. Chairman, all those figures are accurate in general terms. Certainly the scenario is accurate. And those are the kinds of things that led me very quickly to sense the gravity of the situation.
I am a new Minister of Finance, and it is going to take me some time. I don’t ever pretend to be an expert the day I assume a portfolio. I will never probably have the expertise some members of this House -- perhaps the honourable member himself -- have in this kind of an area. My job, naturally, will be to deal with the specifics through my experts and to use whatever general skills I have in assessing the problems.
But I have to tell the member, first, I appreciate that he and I sense the problem in the same way; and, second, I am going to continue to welcome his comments on this, rather than be defensive about the issue, I simply feel, as my predecessor did, and as I think he tried to point out in some of his budget papers, that the thing needs to be addressed, needs to be understood and needs to be tackled before it is too late.
I would only say one thing before I ask that the committee rise and report, and that is this: The honourable member, through all the references to the debt, has assumed that, if we hadn’t had the money from the pension funds to borrow, that money would not have been spent. I think that is where he is wrong.
Our friends in Quebec are in the marketplace borrowing money today in quantities that make my head spin. No matter how they may be playing with their debt -- and I think it isn’t quite as neat as the honourable member’s description of Caisse de dépȏt -- the fact remains that in the past few years, because of the demands, the proper demands, of the people of Ontario for a lot of services, because of the growth of the education process in the early 1960s and the late 1970s, and because of the growth of the health system, particularly in the 1960s and 1970s, a great number of demands were placed upon this government.
I would suggest to the honourable member that, since the current total debt on a per capita basis is 29 per cent of a person’s annual income in Ontario versus, say, 50 per cent in two or three provinces like Manitoba, although the money was borrowed from future pension plans, it would have been borrowed anyway and would have been owed to other people in order to have what I consider one of the best infrastructures for a society in the world.
On motion by Hon. F. S. Miller, the committee of supply reported certain resolutions.
Mr. Deputy 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 Assistant: The following are the titles of the bills to which Her Honour has assented:
Bill 104, An Act respecting Motor Vehicle Access to Property by Road;
Bill 142. An Act to establish the Ministry of Treasury and Economics;
Bill 151, An Act to repeal the Land Speculation Tax Act, 1974;
Bill 166, An Act to establish the Ministry of Intergovernmental Affairs;
Bill 172, An Act to erect the Township of Nepean into a City Municipality;
Bill Pr22, An Act respecting the City of Windsor;
Bill Pr25, An Act respecting the Royal Trust Company and Royal Trust Corporation of Canada;
Bill Pr27, An Act respecting the County of Lennox and Addington;
Bill Pr31, An Act respecting Regis College;
Bill Pr33, An Act respecting the Town of Exeter;
Bill Pr43, An Act respecting Sudbury Young Women’s Christian Association;
Bill Pr45, An Act to revive Reg. Booth and Son Limited;
Bill Pr46, An Act respecting the Capuchins of Central Canada;
Bill Pr48, An Act to revive The Royal Hotel (Picton) Limited.
On motion by Hon. F. S. Miller, the House adjourned at 12:03 p.m.