The House met at 2 p.m.
Hon. W. Newman: On a point of privilege, Mr. Speaker: My reply yesterday to a question concerning the farm products appeal tribunal hearing appeals on prices set by marketing boards was not completely correct.
Mr. Sweeney: And now you are going to prove it.
Mr. Cassidy: Another redefinition of the record.
Hon. W. Newman: Its authority in this respect only applies to prices paid to producers or the local boards for regulated products. The tribunal has no authority to hear appeals on fluid milk prices at the wholesale or retail level. I apologize for that error and I want to put the correction on the record.
Mr. Speaker: We have a very distinguished guest in the Speaker’s gallery today, and I hope his presence will have a very salutary effect on all members, in the person of His Excellency Petter Graver, the Norwegian ambassador to Canada. Would members please welcome him?
Mr. Nixon: They don’t fool around in the Norwegian parliament.
STATEMENT BY THE MINISTRY
Mr. Speaker: The Minister of Correctional Services would like to make a statement on something he considers to be of urgent public importance. Do we have unanimous consent to revert to ministerial statements?
GUELPH CORRECTIONAL CENTRE
Hon. Mr. Walker: Mr. Speaker, I beg the indulgence of the members of the House in that I have a statement to give but I have not sent the statement to the leaders of the opposition parties. I prepared it only in the last few moments, having returned from Guelph a few moments ago.
I wish to serve notice that the Ministry of Correctional Services will not tolerate the kind of behaviour by inmates which led to destruction, estimated at approximately $37,000, at Guelph Correctional Centre last night. Disciplinary action will be taken against those inmates found responsible for the damage and, where warranted, criminal charges will be laid. One way or another, the inmates involved will pay for the damage done.
The destruction at Guelph Correctional Centre began at approximately 10.30 p.m. and eventually involved two dormitories, each accommodating approximately 60 inmates, a cellblock with approximately 62 beds and a few inmates from another unit. In total, approximately 180 inmates became involved before the disturbance was brought to an end at 1:57 a.m.
During the incident, inmates destroyed plumbing and furniture, including beds, property, canteen boxes, tables, windows, et cetera. Fire hoses were used by the inmates to drench all the areas involved. Chairs, furniture and mattresses were used as barricades and small fires were started in the various areas. Some time during the confusion seven inmates escaped from a dormitory corridor and absconded from the property.
The correctional officers and managerial staff at Guelph Correctional Centre responded magnificently to this potentially very dangerous situation. As I have indicated, there were 180 inmates involved in four different areas, each one of them with the potential to get out of control or to lead to a physical confrontation in which both staff and inmates could have been seriously injured. It is a credit to the staff that within approximately one hour, one of these units was completely under control; within the next hour and three quarters another area was secured, and approximately 35 minutes later the disturbance was effectively ended. There were no injuries to staff and no injuries to inmates, although one or two inmates received some minor cuts from breaking glass.
I would also like to pay tribute to the Guelph fire department, the Guelph police department and the Ontario Provincial Police, who responded quickly and remained on standby throughout this situation. The institution and the ministry are indebted to them for their outstanding co-operation. I should make it clear that the correctional staff were responsible for quelling the disturbance and the police, including the Guelph police tactical squad, were there to provide any additional assistance should it have been required.
As I stated at the outset, the inmates who took an active part in this disturbance will be penalized to the severest extent open to this ministry. The inmates involved will be interviewed by the superintendent of Guelph Correctional Centre to determine their exact involvement in the incident. Any inmates who are found to have had direct involvement in the disturbance will be dealt with fairly, but they will be made to understand that their behaviour will not be tolerated in the provincial correctional system.
I have authorized and directed the superintendent of Guelph Correctional Centre to order the forfeiture of the earned remission which is standing to the credit of any inmate who was involved. The loss of remission will be proportional to the inmate’s degree of involvement in the disturbance. Furthermore, I have instructed the superintendent that the inmates must pay for the damage they have created.
Therefore, any inmates involved will forfeit any weekly incentive allowance which they have had standing to their credit. In addition, those inmates who may have been ringleaders in the incident will be placed in segregation with a complete loss of privileges. Some of the privileges that will be involved include restricted visiting rights, the loss of television privileges, the loss of mattresses in the cells and the loss of library and smoking privileges. Finally, the inmates who destroyed the institutional property will be ordered to clean and repair the damage there is as soon as possible.
It is my opinion that this action indicates that the Ministry of Correctional Services will deal swiftly and severely with unacceptable inmate behaviour which may arise in any situation similar to the incident at Guelph.
Mr. Lawlor: Why don’t you work at the cause?
Hon. Mr. Walker: It is my intention that the penalties that have been authorized will require inmates to accept responsibility for their inappropriate behaviour by participating in the cleanup and by making restitution to the ministry. I toured Guelph Correctional Centre this morning to see the damage and to apprise myself of the general situation. When I left an hour ago, the situation had been well in hand.
Mr. Speaker: That time will be added to the question period.
Mr. S. Smith: Mr. Speaker, is it possible through your good offices to have something more than a third or a quarter of the ministry show up for a question period? It isn’t even a Friday morning and there are eight ministers present in the House. Is there something you can do about this, Mr. Speaker?
Hon. Mr. Davis: Mr. Speaker, I understand the Leader of the Opposition, and I regret what happened Friday. I would point out to him, however, that ministers of the crown do have certain responsibilities.
An hon. member: In the House.
Hon. Mr. Davis: I notice the member for Rainy River (Mr. T. P. Reid) is absent. Normally he is not, but as he is in this instance I wonder if this could be relayed to him. This government has been invited to send a number of ministers to a meeting of the northwest chamber in Atikokan on Friday. Perhaps the Leader of the Opposition might consult with his colleague and inform us if he wishes the ministers not to attend so they can be here. I think there are seven who are planning to attend that northwest chamber meeting.
Further, four ministers of the crown have been invited to attend, and are probably attending, the Ontario Chamber of Commerce annual meeting in Ottawa.
The Minister of Correctional Services (Mr. Walker), if my memory is correct, will be here, but he is in Guelph at this moment. The whip of the Liberal Party, who is normally here, may be concerned about this issue, and if he feels a minister of the crown should not be involved or interested in that situation then that is a fair assessment to make. But ministers here are discharging very onerous responsibilities, and there are very few questions that cannot be --
Hon. Mr. Davis: Do members want the Minister of Correctional Services to try to resolve the problems at Guelph or not? The answer is yes, of course they do. It is fine for the Leader of the Opposition to have his fun on occasion, but I just want to make it very clear that ministers of the crown do have other responsibilities as well as their responsibilities in the House. I think it’s necessary for us to remind ourselves of that on occasion.
Mr. Speaker: Does the Leader of the Opposition have any questions to put to the ministers who are present?
Mr. Riddell: Les Frost would never have permitted it.
Hon. Mr. Davis: I would like to say to the honourable member who raised a great fuss on Friday and wasn’t here on Monday, I could tell him I was here when Mr. Frost was here and there was an understanding in the opposition, and an intelligent Leader of the Opposition who understood that ministers of the crown do have responsibilities which they are sometimes asked to perform by members opposite or in their ridings.
Mr. Riddell: On a point of order. Mr. Speaker: I just want to correct the record. I very definitely was here on Monday. I may have appeared 15 minutes late, but I was here.
Hon. Mr. Davis: So did a lot of ministers get here 15 minutes late.
Mr. S. Smith: I would like to speak to that point of order, Mr. Speaker. It’s all very well for the Premier to lecture us about the fact that ministers of the crown have other responsibilities, we’re very well aware of that. Many times every one of us has other public responsibilities and we’re all absent from time to time, but many times I have faced the ministry here with half the ministers present and have made no comment; even with less than that, with only a third of the ministers present I have made no comment; but when we get two or three days running with less than a third of the ministry here the question then arises as to the purpose of having question period at all.
Hon Mr. Davis: That is not true.
Mr. Speaker: Order. Bantering back and forth like this is counter-productive. If the Leader of the Opposition has any questions to put to the ministers who are here I will recognize him; otherwise I will go to another member.
NUCLEAR PLANT SAFETY
Mr. S. Smith: I will ask the Premier, in the absence of the Minister of Energy (Mr. Auld) and in the absence of the Provincial Secretary for Resources Development (Mr. Brunelle) if he is aware of some objections which have been raised in the area of Renfrew county and in the Ottawa region concerning the Rolphton nuclear station. Is he aware that questions have been raised concerning the ability of the emergency core cooling system of that particular reactor to handle a loss-of-coolant accident? Is he aware that a protest has been launched with the Atomic Energy Control Board regarding the fact that Hydro continues to operate that particular station in a manner that is thought by some to be unsafe?
If he is aware of this, will he tell us what the government’s action will be in this regard? If he is not aware of it, will he kindly ask the Minister of Energy to reply as soon as he returns?
Hon. Mr. Davis: Because I think in fairness the Leader of the Opposition would want to acknowledge that unlike himself we do suffer from human frailty on this side of the House, I would point out that the Provincial Secretary for Resources Development is unwell, that is why he is not here. Ministers of the crown sometimes do suffer those human infirmities that strike all of us on occasion.
With respect to the particular question, I would say to the Leader of the Opposition I think there is actually some longer history to this. In fact the member for Renfrew North (Mr. Conway) who is not normally absent but isn’t behind his leader today --
Mr. Roy: He’ll be here in five minutes.
Hon. Mr. Davis: I’m sure he will. I’m just pointing it out; that’s all. We all must retain our sense of humour.
Mr. S. Smith: The member for Renfrew South (Mr. Yakabuski) is not here behind the Premier either.
Hon. Mr. Davis: I would say that I am not aware of the complexities of it. I am aware that a concern has been raised. Information is being obtained and will be made available to the Leader of the Opposition and others, I would think on Thursday afternoon. I can’t commit myself totally to Thursday afternoon in case it takes some time longer, but it is in preparation and will be here as soon as possible.
Mr. S. Smith: Supplementary: Is the Premier aware that because of problems with the emergency core cooling systems Douglas Point is operating at only 70 per cent and Bruce is operating at only 88 per cent; and it is felt that the Rolphton reactor may not be able to operate at all because of the problems of the emergency core cooling system? Can the Premier explain why, since the system appears to be the same at Pickering as at Bruce, Pickering has been permitted to continue operations at 100 per cent?
Hon. Mr. Davis: Mr. Speaker, I think the Leader of the Opposition probably knows the answer to the question he has asked. It has been public information that Douglas has been operating at that percentage, Bruce at roughly 80 per cent of capacity and Pickering has been approved by AECB to operate sometimes at very close to 100 per cent. I’m not sure it operates at 100 per cent at all times. This has been done with the approval of AECB. I’m sure the Leader of the Opposition is aware of it, as are his colleagues who were on the Hydro select committee.
Mr. S. Smith: Why?
Hon. Mr. Davis: In reply to the supplementary question, which I assume it is, because AECB says it’s quite proper and fit for Ontario Hydro to operate Pickering at 100 per cent capacity, and it’s working and working properly.
Mr. Cassidy: Supplementary: In view of the fact the information which has been prepared by the Atomic Energy Control Board’s directorate of licensing indicates that the NPD reactor at Rolphton in Renfrew county is not capable through its emergency core cooling system of preventing fuel failure, as was put forward in the original licensing permission by AECB; and in view of the fact that reactor is now shut down for certain overhauls, will the government intervene in order to maintain that reactor shutdown until there can be a full inquiry into the matters of safety raised in respect to that particular reactor?
Hon. Mr. Davis: Mr. Speaker, I understand the normal procedure, when the Rolphton reactor is closed down as it is presently for renovation or whatever, would be that before it is given permission to start again it has to have the approval of AECB; I understand this is the normal procedure. I can assure the leader of the New Democratic Party that the procedures will not be altered. There’s no way Hydro will start without the approval of AECB, on the assumption this is the procedure and that all safety policies or any safeguards will be maintained. I can give him that assurance.
Mr. J. Reed: Supplementary, Mr. Speaker: Will the Premier direct the Minister of Energy to present to the House documents that show the differences between the Pickering plant and the Rolphton plant that might establish the reasons why Pickering is operating at close to 100 per cent and Rolphton can’t?
Hon. Mr. Davis: I would think the chairman of the select committee --
Mr. J. Reed: The select committee doesn’t have that information.
Hon. Mr. Davis: I’m trying to be as helpful as I can. I am sure that after seeing the documentation the member for Halton-Burlington will be more than satisfied and perhaps take some pride in the fact that Pickering has turned out to be one of the most efficient plants anywhere in the world. There is no question about it.
In terms of the documentation showing the differential in terms of what they are permitted to use in terms of capacity, I genuinely think this documentation can and would be presented to the select committee on Hydro, members of that committee would have a chance to take a look at it; I have no objection to that.
Mr. Cassidy: Supplementary, Mr. Speaker: Since the present shutdown of Rolphton is for reasons which are unrelated to the matters raised right now, that is the safety of the emergency core cooling system, and since AECB in deciding that the plant can reopen or not in a month’s time will not be looking at the question of the safety of the emergency core cooling system, will the Premier and the government intervene in order to support the demands of citizens in the Renfrew county area that the plant remain shut down until there can be a full public inquiry into all these matters of safety; or is it the policy of the government that the legitimate concerns of the public will be ignored when it comes to matters of nuclear power?
Hon. Mr. Davis: The leader of the New Democratic Party can use all the rhetoric in the world he wants, I would restate what I said here a few days ago. No one is more concerned about the safety of our systems, whether it’s nuclear power or anything else, than the government of this province. The member can phrase his questions as subtly and as sarcastically or in any way he wants, but he will not succeed in getting this government to say we are not concerned about the safety of the citizens of this province.
Ms. Gigantes: Go and tell it to Emily Post.
Mr. Lupusella: Why don’t you do something about it?
Hon. Mr. Davis: I said on that occasion, and I repeat it during this discussion, that I think it is incumbent upon all of us to be logical, intelligent and to look at these things objectively. I think that’s the responsibility of government and members of this House.
Mr. Cassidy: That’s what the citizens are asking for.
Hon. Mr. Davis: I’m not so sure the leader of the New Democratic Party foresees that as his responsibility.
Ms. Gigantes: Mr. Speaker, I would like your advice. I think we missed a question because I misunderstood procedure. I just draw that to your attention.
Mr. J. Reed: I had asked a supplementary.
Ms. Gigantes: I would like to ask a question of the Premier. Has the Premier read the documentation of danger at the NPD reactor contained in the leaked papers on the reactor and accelerator of the licensing division of AECB? Has he informed himself of new information that has been leaked to the Ottawa Citizen from staff at the NPD site which outlines hazardous procedures which have been carried out at the NPD reactor?
Has he finished yawning?
Hon. Mr. Davis: Mr. Speaker, on a point of order: I never yawn.
Ms. Gigantes: Is he aware that the Renfrew county emergency committee, which is responsible for carrying out contingency plans in the event of an emergency, is totally unprepared for an emergency involving the safety of the public, having met only twice since 1973?
If he is aware of all these things, or if he has not been bothered to make himself aware of this responsibility that he should feel, how can this House feel assured that his government is showing adequate concern for public safety?
Mr. T. P. Reid: The honeymoon must be over.
An hon. member: Whose honeymoon?
Hon. Mr. Davis: Mr. Speaker, I do not want the honourable member to think I am not taking her question seriously, because I am. But I have to say to her that some of her colleagues in the front row were smiling, which made me smile --
Ms. Gigantes: They smile or they cry.
Hon. Mr. Davis: -- some members opposite were saying to me the honeymoon was over, and I wanted her to know that I did not share that point of view.
Hon. Mr. Davis: They said it; I didn’t.
Mr. Speaker: Does the Premier have an answer to the question?
Hon. Mr. Davis: Mr. Speaker, I do not have a complete answer to that question. If the honourable member feels there is some information that should be brought to my attention, if she would do so, I would suggest that is a question that might best be put on the Order Paper. But now that we have notice of it, I will get her a full and comprehensive answer -- or the Minister of Energy (Mr. Auld) will -- for Thursday next.
Ms. Gigantes: Supplementary, Mr. Speaker: Can the Premier tell us where he feels any personal responsibility, as the head of the Ontario government, for public safety in questions of this nature?
Hon. Mr. Davis: Mr. Speaker, as head of government, I feel I have responsibility for many things.
Mr. T. P. Reid: You certainly do. You don’t take it; but you have it.
Hon. Mr. Davis: I certainly do. I have some thrust upon me that does not legitimately belong to me. I confess that.
Mr. Ruston: Yes. Like Joe Clark.
Mr. T. P. Reid: Or the Argonauts.
Hon. Mr. Davis: That latter one hurt.
Mr. Speaker, I would only say to the honourable member who mentioned my national leader that I am out supporting Joe Clark, unlike the members of the Liberal Party of Ontario, who are hiding from Pierre Elliott Trudeau. Where have they been?
I expect to see all of them on that stage at Maple Leaf Gardens tomorrow night. I expect to see the Leader of the Opposition holding up --
Mr. Speaker: Order.
Mr. S. Smith: The Premier can be sure I won’t compare him to the Argonauts. He can be certain of that.
Mr. Martel: On a point of order, Mr. Speaker: When you cut the Premier off, he still had not even started to respond to the question raised by the member for --
Mr. Speaker: It had nothing to do with political leaders or football teams.
Mr. Martel: That’s three times you have bailed him out today.
TRUCK DRIVING LICENCE
Mr. S. Smith: Mr. Speaker, I’d like to direct a question to the Minister of Transportation and Communications. Is the minister aware of an application by one Marla Ellery, a woman who is a truck driver, to renew her truck driving licence? Is he aware of the fact that she has been turned down on the basis that she is a diabetic? Is that, in the minister’s view, a sufficient reason to turn down an applicant for a truck driving licence, especially in view of the fact this particular applicant received 98 per cent, I believe, when she took the rigid and demanding examinations to prove her ability to meet the requirements of being a truck driver, and in fact had acted as a driver for some time before her diabetes became a known factor?
Hon. Mr. Snow: I am not aware of that particular application. It hasn’t been brought to my attention, but I can understand the circumstances.
I don’t have the regulations and legislation in front of me at this time to recite the particular paragraph, but on the advice of the Canadian Medical Association, and the Ontario Medical Association, diabetes is considered to be sufficient reason to not grant the higher class of licence required to drive a large truck or a bus.
I am somewhat concerned about this particular clause, because in the legislation when the classified drivers’ licences were brought into force, anyone who was driving a truck prior to the particular date -- I can’t recall it exactly at this time, about two years ago -- who had controlled diabetes and a doctor’s certificate to that effect, was, one could say grandfathered into having a licence granted because they had proven they had controlled diabetes.
Because of my concern for a case such as the member has mentioned, and other cases that have been brought to my attention -- the honourable House leader had a similar one from his particular area about a year ago -- I asked the Canadian Medical Association to review their recommendations on this particular matter. A meeting was set up with two specialists in this particular field -- I don’t recall the doctors’ names; one was from London and the other was from Kingston or Belleville or somewhere in eastern Ontario, and they were recommended to me by the Canadian Medical Association as experts on this particular disease. I met with them in my board room. We had a long discussion, together with my senior staff, and we expressed our concerns at depriving someone of such a licence because of this. At that time, one doctor would not budge, shall we say; he still felt very strongly opposed. The other doctor said that under certain circumstances or certain medical evidence he could consider recommending a person with diabetes for a class D licence, that is for the normal straight truck as we call it, but he would not recommend that we should consider changing the regulations for anything higher than that. Based on these two opinions, and discussing it with my senior staff and the medical review committee of the ministry, it was decided we would not change the regulations at all.
Mr. S. Smith: I’m accepting that the minister appears to have been seeking medical opinion on the matter -- and I’m certainly pleased about that. Would the minister not agree, however, that for most people with diabetes the illness can be kept under control and, provided that is attested to, the public safety would appear not to be in real danger? It’s hard for us to imagine that Bobby Clarke, for instance, would be refused the possibility of driving a truck.
Mr. T. P. Reid: He plays like one.
Mr. S. Smith: In fact, this is a very serious matter. One can only wonder whether the minister is just going to leave the matter there or seek a wider range of medical opinion -- perhaps by introducing a bill and sending it to committee, or perhaps by calling in a much broader number of experts. Surely the minister would agree with me the present situation is most unfair to persons who have proved their ability and whose illness is under complete control?
Hon. Mr. Snow: The points made by the Leader of the Opposition are the exact points I made to my senior officials in the ministry. It’s like a driver with one eye. A neighbour has been driving a truck since he was 16 years old, and he has one eye. If I could see as much with my two as he can with his one, I’d be pretty good, I think.
Mr. T. P. Reid: He’s got a whole brain.
Hon. Mr. Davis: How would you be able to distinguish that?
Hon. Mr. Snow: I’ve had similar circumstances brought to my attention in which a person suffered a heart attack to some degree and was deprived of his licence for that reason. In this case there has been substantial medical opinion from the family doctor that this individual is fully recovered.
I did consult the Canadian Medical Association. I thought that in consulting the association, with all its expertise, I was really getting about as broad a consultation as possible. If the honourable leader has some other body that he would suggest, I’d be pleased to look at it. The last thing I want to do is take someone’s licence away.
I really don’t think, with all due respect, that a committee of the Legislature would be as well qualified -- and I realize we have medical members of the Legislature and doctors here too -- to discuss this matter and to give the type of opinion the professionals I have consulted have given.
It’s a problem that is of concern to me. I really don’t have an answer at this moment.
Mr. Breithaupt: Supplementary: Would the minister undertake to the House to review these various regulations with respect to health concerns on the issuance of licences to ensure the regulations are fair, can be equitably applied and will allow persons who have particular health problems, although they are under control, to carry on operating vehicles if the public interest would allow that?
Hon. Ms. Snow: Certainly. We are reviewing this type of regulation all the time. We review the regulation as it relates to each individual case of this type that is brought to my attention.
As I recall, in my discussions with these two specialists, who were referred to me by the Canadian Medical Association, they made a strong argument about someone suffering from diabetes, driving a large tractor-trailer on long hauls, and perhaps not eating regularly, as truck drivers sometimes do. I’m not an expert. I myself don’t know anything about diabetes; but I understand that if you don’t eat regular and proper meals a sudden attack might come on that might disable a driver from maintaining control of the vehicle. I’m sure this would be of major concern to all of us, if it were to happen.
I get letters from people who have lost their school bus driving licences because they have had a heart attack and they are pleading to get their licences back. I am I sure the member would agree that is something I just cannot consider, because we wouldn’t want that type of unfortunate situation to develop.
INDUSTRIAL ARTS PROGRAMS
Mr. Cassidy: I have just returned from Chapleau in northern Ontario, an isolated community which feels 5,000 miles away from Queen’s Park rather than just 500, and which is in fact 200 kilometres from Timmins and 120 kilometres from Wawa and Michipicoten --
Mr. Speaker: Could we have a question rather than a lesson in geography?
Mr. Cassidy: My question is directed to the Minister of Education. Is the minister aware that the high school in Chapleau, which was intended to offer a wide variety of industrial arts programs when it was built in 1966, has stopped offering any program in industrial arts for its 340 students effective in September of last year and has no plans to offer any program in industrial arts next September?
Can the minister explain why this high school, which is serving an isolated northern working-class community, should be offering purely academic programs, and how does she think students in Chapleau can qualify to enter skilled trades when none of the necessary groundwork is available at the secondary school level?
Hon. Miss Stephenson: The decision regarding the programs offered within any school is the responsibility of the local board, and the local board, obviously for reasons which it has decided are valid, has made that decision. It would seem more appropriate, in the light of the requirements for skilled trades, particularly in northern Ontario, that those schools with the capability of providing for basic education in the technical skills should do so.
I shall be pleased to talk to the members of the local board to do whatever I can to see if there is some way, in the light of the modifications which we have made to the grant regulations this year, to assist the school at Chapleau to consider seriously the provision of such courses.
Mr. Cassidy: A supplementary: Can the minister explain how she expects a small isolated school board, which is already providing bilingual programs because of the French-speaking population of that area, also to offer an industrial arts program when she admitted on Friday that she does not have the money to offer or will not offer the money to these isolated northern boards?
Hon. Miss Stephenson: That’s not what I said.
Mr. Cassidy: The minister stated on Friday that we don’t have any more money at this point to make additional grants. Is the minister prepared to make a commitment to basic high school programs in all the communities up in the north that will include industrial arts as well as the basic academic programs?
Hon. Miss Stephenson: There are times when I must admit I admire the capacity of the honourable leader of the third party to distort and to take out of context the statements I have made. That remark was specifically directed in response to a question regarding the additional grant requested by the Toronto school board and to nothing else.
I had also made the statement in response to a question on Friday or on Thursday, I am not sure which day, that we had added to the general legislative grants this year specifically in support of industrial training programs within the secondary schools. There was an increase in the weighting factor in order to assist the schools to upgrade the tools and the equipment which they required for those programs.
There is also a small-school-board special weighting factor this year for schools such as the schools in the area of Chapleau, which provides extra funding for those schools where the enrolment is below a certain level and the decline in enrolment has been at a percentage level above the provincial average. I shall be happy to look at all of those factors which are available to us under this year’s GLGs to see if there is something that we can do, but I did not make that statement about schools like Chapleau.
Mr. Laughren: Knowing the Chapleau area very well, I’ll ask the minister if she’s aware that since September 1978, 69 students have dropped out of the Chapleau high school, a number which represents about 20 per cent of the student population. Is she not aware that when that happens, when they have not been trained in any of the industrial arts programs, we’re really creating in that community a reservoir of unskilled labour that will go to work in the bush or in the sawmills? Does the minister really think that through her Ministry of Education she is providing opportunities for students in the Chapleau area equal to those that students have in major metropolitan areas such as Toronto?
Hon. Miss Stephenson: I am aware it is the intention of the general legislative grant program to provide equal opportunity on the basis of the equalized mill rate across the province. I am aware that there has been some concern expressed in some areas that indeed the equality may not be what it is perceived to be, I have been examining this problem and will look even further.
I would remind the honourable member who is supposed to be representing Chapleau, however, that there are many reasons for students leaving secondary school and we have done major studies in this area. One not too long ago I think provided some information that would lead all of us to believe there are multiple factors involved -- some related to the educational program, some which are entirely different, and some over which none of us has any control; the family has more control than do many institutions.
I will be happy to look at the interesting figures which the member representing Chapleau has presented to see if there is something that we can do.
HOSPITAL BED ALLOCATIONS
Mr. Cassidy: I have a question for the Premier arising also out of the trip I had to make in the Cochrane, Timmins, Chapleau area over the course of the last couple of days.
Is the Premier aware now of the enormous concern in every community of northeastern Ontario because of the hospital bed cuts which have been decreed by the Minister of Health? Is the Premier aware by now of the fact that these northern hospitals in isolated northern communities have to meet many needs which are not required of hospitals in the southern part of the province and, therefore, that the four bed per thousand standard being imposed by the Ministry of Health bears no relation at all to the needs of that particular area?
Is the Premier aware of the fact that in the areas which I visited, Lady Minto Hospital in Cochrane is going to lose 38 per cent of its beds after it loses a 10-bed cushion this year according to the Minister of Health’s (Mr. Timbrell) decree? Is he aware that the hospital in Hearst will lose 36 per cent of its beds, the hospital in Iroquois Falls will lose 37 per cent of its beds, the hospital in Chapleau will lose 35 per cent of its beds, and these hospitals stand to have further cuts when the next level of cuts is imposed by the Ministry of Health?
Will the Premier admit that these decreases represent a disaster in terms of the provision of health services in northern Ontario? Will the government act to stop any further cutbacks in active treatment beds and will the government agree to retain the 10-bed cushion on a permanent basis in these isolated northern hospitals?
Hon. Mr. Davis: Mr. Speaker, I have some slight difficulty in remembering the multitude of questions the leader of the New Democratic Party raised in his speech to the House. I think one question --
Mr. Warner: He’d be happy if you answered one.
Mr. Grande: We deal in details.
Hon. Mr. Davis: Pardon? I heard a supplementary then.
Mr. Speaker: Just ignore the interjections, please. Even the question was far too long; maybe the Premier could just deal with the question.
Hon. Mr. Davis: Mr. Speaker, you did acknowledge the fact that the question was far too long and you will understand if my answer, as a result, will have to reflect the length of the question.
Am I familiar with northeastern Ontario? Yes, I am familiar with northeastern Ontario. The fact that the government side has the members for Cochrane North, Cochrane South and Timiskaming is clear evidence that we are aware of that part of northeastern Ontario. In fact, I’m delighted to know that the member goes up there once every couple of years to see what’s happening. Am I aware of what’s going on in Cochrane? Yes, I was there. I am not sure it was the same hospital but I attended at the opening.
Mr. Warner: Will you be there to close it?
Hon. Mr. Davis: Am I aware that there are certain differentials between northeastern Ontario and Toronto, or the Island or the city of Brampton? The answer to that is yes.
Am I aware that there has to be a certain flexibility in terms of government policy as it reflects many regions of this province? The answer to that is yes. If the honourable member is asking me whether we intend to deliver a high-quality health care system to the people in northeastern Ontario, the answer to that is yes; in fact, the answer is yes to that right across the province.
Is there anything else members want to ask me about what I know about northeastern Ontario? I would be delighted to try to answer it.
Mr. Cassidy: Supplementary, Mr. Speaker: In view of the engagements and the commitments that have just been made by the Premier, will he turn around one day and direct his Minister of Health to withdraw the bed cutbacks in northern Ontario which are having the effect of drastically undermining the quality of health care in the northern part of the province?
Hon. Mr. Davis: Mr. Speaker, I think I have heard that question before.
Mr. McClellan: We have never heard an answer yet.
Hon. Mr. Davis: Mr. Speaker, they really are interjecting a lot over there today, don’t you think?
Mr. Speaker: Yes, I do.
Hon. Mr. Davis: I should ignore it?
Mr. Speaker: Please. I am trying to.
Hon. Mr. Davis: I will do my best. I know you are trying. You are a very patient Speaker.
The answer is, as I stated in the answer to the first question, this government will make sure there is a high-quality health system in all regions of the province, including the northeast.
Mr. Warner: Tell the Minister of Health (Mr. Timbrell) that. He’s the one who’s destroying the system.
Mr. Wildman: Is the Premier willing now to make the same commitment as the Minister of Health that hospitals with fewer than 50 beds would have a minimum of 5.3 per cent increase in budgets this year? Will he make that commitment that those grants will be covered and will he also commit the government to extending the 10-bed cushion past the end of this year?
Hon. Mr. Davis: I tried to answer that when I answered the leader of the third party’s rather comprehensive question on northeastern Ontario. I really include Algoma. I guess really Algoma is sort of north-central Ontario. Is it north-central Ontario --
Mr. Warner: You are wandering again.
Hon. Mr. Davis: -- and as the Minister of Northern Affairs (Mr. Bernier) says, politically in jeopardy as far as the sitting member is concerned. We understand that as well.
Mr. Martel: He doesn’t know where it is.
Hon. Mr. Davis: I recall being up in northeastern Ontario before the member was, to help the people in some of those communities with some of their flood problems. I didn’t see the member there. Why didn’t he visit? They would love to have seen him. Why didn’t he have a look around?
Hon. Mr. Davis: Oh, I see. The member for Sudbury East was there.
An hon. member: You are the Premier. He is the House leader.
Hon. Mr. Davis: I didn’t see him there either. The answer to him is very simple.
Mr. Speaker: Order, order. I would like to draw the attention of all honourable members to yet another distinguished guest in the Speaker’s gallery. It is an honour for me to draw to the attention of members the presence of the Honourable John R. Harrison, Speaker of the House of Representatives of New Zealand and president of the Commonwealth Parliamentary Association. Speaker Harrison is accompanied by his wife, Margaret, and by the secretary-treasurer of the Canadian region of the Commonwealth Parliamentary Association, Mr. Ian Imrie -- also by our distinguished Deputy Speaker, the member for Perth (Mr. Edighoffer).
Hon. Mr. Davis: On a point of order: I hadn’t really finished answering the question.
Mr. Speaker: I thought you had.
Hon. Mr. Davis: I was just getting warmed up.
Mr. Speaker: You had answered it to my satisfaction anyway.
GUELPH CORRECTIONAL CENTRE
Mr. Bradley: Would the Minister of Correctional Services, who has taken the action which this House would expect he would take in this instance, explain to the House if drugs or alcohol did get into the hands of inmates in Guelph Correctional Centre and, if so, how they manage to get hold of these products? If this is the case, is the minister satisfied with security in the Guelph institution as it relates to the smuggling in of these items, or to the escape of inmates from custody?
Hon. Mr. Walker: This is a medium-security facility and inmates who are kept in dormitory surroundings often have access to the community. They often have access to the grounds. It is very easy for some form of contraband to be injected into the actual institution. We think there may have been the involvement of some form of amphetamines, likely secreted in the body, brought in in the person’s stomach, and we think this is the manner in which some of this was imported into the institution.
The drugs, or alcohol, or whatever was the basis of the small uprising will be determined by an investigation which the ministry is in the process of conducting at this very minute and it will be available to members in due course.
We feel we have a very secure institution. In fact, considering that it was built about 1913 and is a very old facility, we are satisfied that the security is adequate. We do recognize, of course, that seven inmates did leave during the height of the riot. This was after a considerable period of time, when they were able to pry open a window after some two hours of effort. We were not able to prevent that, and the people did escape.
I am prepared to say that at any moment now we expect at least one inmate to be recaptured. I left the scene a few moments ago and they were closing in on one person. I assume we will be able to report good results shortly.
Mr. Bradley: Supplementary: Does the minister intend to have all of the equipment that was damaged during this rampage replaced, or does he see withdrawal of some of these facilities or equipment as being retributive justice in his opinion, as it relates to this incident? Would he comment on reports that the mattresses, which are fireproof, were set afire, and just how they stood up to the fire?
Mr. Conway: Call Sheriff Drea.
Hon. Mr. Walker: Four television sets were destroyed; they will not be replaced for the benefit of those who did the damage. In other words, those people who took part in the riot will not have the benefit of any television facilities.
Mr. Makarchuk: They may have been watching the Tory ads.
Mr. Cassidy: Withdraw the ads, save our prisoners.
Hon. Mr. Walker: There have been other appliances destroyed, and they will be eliminated as well. With respect to the mattresses, members will recall just a few years ago the very unfortunate incident in Stratford. I have to tell you, Mr. Speaker, that a number of mattresses were set afire, but because they were the flame-retardant ones manufactured by the ministry at Mimico they did not produce the toxic fumes which would have been produced had the mattresses not been replaced just over the last couple of years. It is fair to say that many inmates are alive today who would not have been had the mattresses been the same as they were prior to 1975.
Mr. Roy: Supplementary: Having listened to the minister’s statement and being in agreement with him that all legal steps should be taken against the inmates, which would include prosecution under the Criminal Code of Canada of the people who caused damage, can the minister nevertheless assure the House -- as I understood from his statement, some 180 inmates may have been involved, if that is the correct figure -- that in an occurrence such as this all steps will be taken to ensure that the inmates who are responsible will be the inmates who will be punished, and that inmates who were in the peripheral area and were not involved will be protected and not unduly punished?
Hon. Mr. Walker: Only the inmates involved will be punished.
Mr. Cassidy: Supplementary: Now that the minister has outlined the very severe sanctions which are being taken against the inmates who have been involved in this particular disturbance at the Guelph centre, is the minister prepared also to make available any ministry reports about shortcomings in the operations of that particular centre which may have contributed to the unrest that blew up in the disturbances that he has been talking about?
Mr. Lawlor: Did he forget about that?
Hon. Mr. Walker: I am prepared to supply to the member for High Park-Swansea (Mr. Ziemba), who is his party’s critic for this ministry, and to the member for St. Catharines (Mr. Bradley) whatever reports are produced from the investigations.
Mr. Conway: Mr. Speaker, in the absence of the Minister of Natural Resources, I would direct my question to the ubiquitous Premier.
Hon. Mr. Davis: Who?
Mr. T. P. Reid: You had better get shots for it.
Mr. Conway: My question concerns the area of Rolphton, but it does not deal with the nuclear power station there. Could the Premier explain at this time how it is that along the Ottawa River in the area of Westmeath, south of Pembroke, through to and including the town of Mattawa, we are continuing to experience high water conditions that are creating serious flood conditions in the areas of Pembroke and Mattawa? Could he explain how it is that the control agencies to which the Ontario government has input are allowing these high water conditions to continue?
Hon. Mr. Davis: The member who represents one part of that area reminds me that the federal agency has certain judgement decisions to make in these situations. If the honourable member is asking me as a layman if I know the reasons why there are higher water levels than usual, the explanation I received in other parts of northern Ontario last week was that we have had an excessive amount of rainfall. There were two or three days of higher than normal temperatures where the runoff was greater than was normal. There was a fair amount of rainfall last summer, which incidentally resulted in fewer forest fires throughout the north. The water tables were up and the absorption ability was less. This explanation was in general terms and did not necessarily refer to the Ottawa River, but I think it has some application and is part of the reason for the excessive water at this present amount, If that is true of the area around Field, the Sturgeon River and elsewhere, the reason is probably the same at Mattawa on the Ottawa River.
I am not as familiar with what is causing the flooding in Manitoba, I have to confess, other than some experts say it is basically --
Mr. Peterson: Too much water.
Hon. Mr. Davis: Yes, it’s too much water. The member for London Centre has made the most perceptive observation in his term of office here in the House: Flooding is caused by too much water. I’ve got to tell him that’s the most profound statement I’ve heard him make.
An hon. member: It is the first time he was right.
Mr. Peterson: There’s too much water over there too.
Hon. Mr. Davis: As it relates to what can be done about it, I certainly will make some personal inquiries for the honourable member and see if there is any further information I can impart to him.
Mr. Conway: I appreciate what the Premier said about too much water.
Hon. Mr. Davis: He said it, not me.
Mr. Conway: In that connection, would he undertake to explain clearly to the people of the upper Ottawa Valley how it is that with flooding in Pembroke and in Mattawa, the huge Ontario Hydro dam at Rolphton has all-time low water conditions immediately behind it? How is it that such an anomalous condition could obtain there with flooding below and above the dam, in Pembroke and Mattawa? Clearly the people of the Ottawa Valley expect the kind of explanation, which has not been forthcoming to date from this government.
Mr. Breithaupt: It’s too little water.
Hon. Mr. Davis: I assure the honourable member to the best of my limited ability I will get an explanation as to why the water levels to the north are higher than they should be or normal while to the south and in the middle they are not. I certainly will endeavour to get that information for the honourable member and convey it to him.
Mr. Laughren: You even know how to make it rain.
HYDRO TRANSMISSION LINES
Mr. Stong: Mr. Speaker, in the absence of the Minister of the Environment and the Minister of Energy, I have a question of the Premier.
With the growing legitimate public concern over the safety of nuclear-generated power and, indeed, even the need for such power and, more particularly, the need for the 550-kilovolt transmission line between Nanticoke and Pickering, and keeping in mind the undertaking given by the Minister of the Environment (Mr. Parrott) to the clerk of the town of Markham, in a letter dated April 11, which said, “I would like to assure you that future Ontario Hydro undertakings in your area will receive the full treatment under the Environmental Assessment Act,” will he now cause to be conducted an environmental assessment hearing into the development of the proposed 550-kilovolt transmission facilities going through the town of Markham?
Hon. Mr. Davis: Mr. Speaker, I cannot give the honourable member that commitment. Knowing the way he approaches most issues, with logic, I think he will understand that the preface to his questions really is not relevant to the concern he is expressing on behalf of his constituents.
There is a need for the 500-kilovolt line. The 500-kilovolt line from Pickering to Nanticoke is essential in terms of the distribution system for Ontario Hydro. One can debate its specific location but I think it’s fair to say -- and I’m only going by memory now -- that part of this routing, though not necessarily the specifics, was determined to be through Markham as a result of Mr. Solandt’s study, which made a determination as to the approximate location. The need for an environmental hearing in this instance, I would suggest, is one primarily of an aesthetic nature.
I went through this. There were three routes proposed through the former great riding of Peel, now Wellington-Dufferin-Peel and Mississauga North, and I know exactly what the issue is. To a certain extent, it’s the same issue as that being conveyed to me by the member for Halton-Burlington (Mr. J. Reed) where one determines, through an environmental hearing, a question of its environmental acceptability.
In this particular situation, if my recollection is correct, we’re really talking about whether it should be going through or on a particular corridor, or be moved. I have to say to the member my experience has been that while the problem can be resolved for the residents who are directly affected by location A, when it is moved to location B, another group of people are understandably upset.
So, I cannot give an undertaking that there will be an environmental assessment as to the location of that 500-kilovolt line. I met with some of the member’s constituents as it related to another aspect of the 500-kilovolt line -- I think this was near Richmond Hill -- to see if we could work out a more acceptable crossing. He may not be aware of it, but on that occasion, I endeavoured to find a more acceptable way for the crossing of Yonge Street, I believe. Perhaps he will recall the particular situation.
I’m quite prepared to explore any reasonable way to assist the ratepayers concerned, but I cannot give the member an undertaking that there will be an environmental assessment hearing on the question of the transmission line.
Mr. Stong: A supplementary: I’m sure the minister is aware that one of the other features of an environmental assessment hearing would be to consider the safety feature of the transmission line and not just the aesthetic quality. In view of that, and since the parkway belt west plan --
Mr. Speaker: Question.
Mr. Stong: -- has not been approved by cabinet beyond highway 48, does the Premier not feel that he should call an assessment hearing to determine the effect on the greater number of people who would be affected by the line where it’s already proposed?
Hon. Mr. Davis: I really don’t think the member is suggesting that the environmental assessment hearing would determine the safety of the 500-kilovolt line. The safety factor of the 500-kilovolt line has been reasonably accepted. Heavens above, that same line is going through communities two miles south, or less, of the great city of Brampton. We have had some of these debates. It’s going through Milton.
While the parkway belt west hasn’t been finally determined, I guess in some respects it is as close to finality as it can be and would not alter the proposed route or corridor through Markham. That is my understanding. So, while I am sympathetic to the concerns being expressed by the member on behalf of his constituents, I can’t honestly say to him that there would be an environmental review.
Mr. Samis: I have a question of the Premier, Mr. Speaker, in the absence of the Minister of Labour (Mr. Elgie). Could the Premier report to the House the status of negotiations between his government and the province of Quebec on the long-standing problem of Quebec construction workers? More precisely, could be say whether or not there have been any negotiations since February and whether he has any realistic hopes for a negotiated settlement?
Hon. Mr. Davis: Mr. Speaker, I always live in hope. I even live in hope that the member’s party will maintain some consistent posture with respect to this particular issue which --
Mr. Samis: Don’t forget the question.
Hon. Mr. Davis: -- incidentally, they have not done to date. They were ready to lead the crusade.
Mr. Samis: The question.
Hon. Mr. Davis: They wanted to declare a major incident with respect to this issue.
Mr. Samis: I asked about negotiations, not the bill.
Hon. Mr. Davis: Now they want to see some negotiated settlement. I have a long memory, I know exactly what was said. I know they’ve changed their position and that is not unique.
Mr. Laughren: You’re getting silly.
Hon. Mr. Davis: They do it very regularly.
Yes, discussions have been going on since February.
Mr. Samis: As the negotiations or discussions have been going on for almost 18 months without any solution, could the minister assure the construction workers of eastern Ontario that if there is no settlement his government will proceed with its commitment to introduce a legislative settlement as was done preliminarily 11 months ago without any solution to it?
Hon. Mr. Davis: Our statement and position on this, unlike that of the member’s party, has not altered. We want to see a solution. The member should check with his leader --
Mr. Samis: What are you going to do?
Hon. Mr. Davis: -- to see whether he in fact wants to see legislation, because that’s not what he’s been saying.
Mr. Warner: We want to know what you’re going to do. You’re not going to do anything.
Hon. Mr. Davis: Oh, come on. You people have been all around the bush.
Mr. Martel: You introduced it and then withdrew it.
Mr. Roy: A supplementary to the Premier, if I can have his attention. Would he advise the House, and possibly get a response from his Minister of Labour, in view of the fact that the Minister of Labour and Manpower in Quebec, Mr. Johnson, has made a number of statements to the National Assembly in Quebec to the effect that there has been a negotiated settlement, and, secondly, that the proposed legislation, which we supported on second reading, and on which the position of this party has been consistent, which the Premier will admit if he does have that good a memory --
Hon. Mr. Davis: I do. It was one of the rare times.
Mr. Roy: Would the Premier advise the House and get a response from his minister about whether in fact there is movement towards a negotiated settlement; and, secondly, about whether his Minister of Labour agrees with the Minister of Labour and Manpower in Quebec to the effect that the Ontario minister has withdrawn his legislation and does not intend to bring it forward again?
Hon. Mr. Davis: I think I can say this to the member for Ottawa East, there have been certain suggestions made and there have been discussions. My understanding is that there is, as yet, no finality.
COLLEGE EXAMINATION MARKS
Mr. Sweeney: A question to the Minister of Education: Given that one of the fundamental principles of good education is that students be allowed to know how well they are doing in their course, how can her ministry possibly justify the order that instructors at George Brown College are not to give the graduates of the stationary engineering course the marks they received on their exams?
Hon. Miss Stephenson: Mr. Speaker, I gather that the request was made of the ministry by the trade itself at one point, because it felt it was more appropriate to have those who passed simply know that they had passed and those who failed know by how much they had failed in order to spur them to greater efforts. I do not think it’s a good policy and I have already directed that indeed it be changed.
Mr. Sweeney: Supplementary: Would this have anything to do with the experience of last December when exams set by this ministry which were deemed to be inappropriate resulted in 42 out of 42 students at George Brown, and 21 out of 22 at Mohawk College, and nine out of 10 at Niagara College failing those exams? Is there some connection there?
Hon. Miss Stephenson: No. It’s my understanding that the policy has been in place much longer than that, as a matter of fact.
Mr. Sweeney: One year.
Hon. Miss Stephenson: It’s been longer than that. It has nothing to do with that.
INTRODUCTION OF BILLS
VETERINARIANS AMENDMENT ACT
Hon. W. Newman moved first reading of Bill 80, An Act to amend the Veterinarians Act.
Motion agreed to.
Hon. W. Newman: Mr. Speaker, the purpose of this bill is to make a minor amendment to the act to provide for class membership in the Ontario Veterinary Association and to remove the maximum amount of the penalty that may be prescribed for late payment of annual membership fees. This takes in the veterinarians who are doing work at our Ontario Veterinary College at the University of Guelph and will allow them to take part in the medical practices going on in the labs, which they are now doing but maybe not properly.
HUNTER DAMAGE COMPENSATION AMENDMENT ACT
Hon. W. Newman moved first reading of Bill 81, An Act to amend the Hunter Damage Compensation Act.
Motion agreed to.
Hon. W. Newman: The purpose of this bill is really to remove from the act the maximum payments for hunter damage to livestock and to allow us to do it by regulation. From time to time the price of livestock changes, and rather than having to bring in a new piece of legislation each time it will be done by regulation in the future. This will move it up or down, whichever the case may be, according to the livestock market.
DOG LICENSING AND LIVE STOCK AND POULTRY PROTECTION AMENDMENT ACT
Hon. W. Newman moved first reading of Bill 82, An Act to amend the Dog Licensing and Live Stock and Poultry Protection Act.
Motion agreed to.
Hon. W. Newman: This serves the same purpose here as the Hunter Damage Compensation Act. It allows the municipalities to pay, by regulation of the government, a higher return for animals or poultry killed by dogs. It is really just the same as the hunter damage bill.
BOROUGH OF EAST YORK ACT
Mr. J. Johnson moved first reading of Bill Pr12, An Act respecting the Borough of East York.
Motion agreed to.
TOWN OF NIAGARA-ON-THE-LAKE ACT
Mr. Kerrio moved first reading of Bill Pr1, An Act respecting the Town of Niagara- on-the-Lake.
Motion agreed to.
GOVERNMENT PURCHASING ACT
Mr. Makarchuk moved first reading of Bill 83, An Act respecting the Purchase of Goods and Services by the Government of Ontario and Government-Supported Institutions.
Motion agreed to.
Mr. Makarchuk: The purpose of the bill is to ensure that the Shop Canadian program is seriously followed by the government and publicly-financed institutions. Businesses that make a bona fide offer that is within 10 per cent of the price of foreign-produced commodities or services and have the offer rejected, then the businessman, through the courts, will be able to extract compensation from the government or institution amounting to 10 per cent of the cost of the foreign-produced commodity or service.
MASSEY HALL ACT
Mrs. Scrivener moved first reading of Bill Pr13, An Act respecting Massey Hall.
Motion agreed to.
ORDERS OF THE DAY
CORPORATIONS TAX AMENDMENT ACT (CONCLUDED)
Resumption of the adjourned debate on the motion for second reading of Bill 59, An Act to amend the Corporations Tax Act, 1972.
Mr. Charlton: Thank you, Mr. Speaker. Through you to the Minister of Revenue (Mr. Maeck), I’m rising to speak for our caucus in opposition to Bill 59. I won’t be too long in my comments today as we’ve gone on at length on all of the revenue bills at this time and a great many of the comments I would normally have made on this bill were made during the course of debate on the other revenue bills. However, I must say that with respect to this bill, an Act to amend the Corporations Tax Act, 1972, we were extremely disappointed in the government, in the Treasurer (Mr. F. S. Miller) and in the Minister of Revenue. The corporations tax is probably the one tax we in this caucus would have felt comfortable about seeing increased substantially at this time.
We tend to agree with the minister’s federal leader that at this time we should have been doing everything we possibly could to return tax dollars to consumers, at the very least to hold the line on taxes that affect consumers directly. Unfortunately, all of the other tax increases which this government has implemented in this budget have been direct taxes on consumers: the gasoline fuel, tobacco, liquor, retail sales, land transfer taxes have been imposed directly on consumers. Although we don’t always agree with the federal leader of the Conservative Party in terms of method, we at least agree with him that this is the sector we should be attempting to stimulate at the present moment, putting money back into the pockets of the consumers of the province of Ontario and Canada; this is the tax we should have been using to raise the additional revenue the government nickeled and dimed out of all the other taxes.
I always find it strange that when this government imposes tax increases in consumer areas, or fee increases in consumer areas, they can find the audacity, as they did last year, to propose an increase in OHIP of 37.5 per cent in one shot and then reduce it to 17 per cent and think they’ve given somebody a real break. This year they turn around and increase gasoline taxes by nine and a half per cent and land transfer taxes by 33 per cent, but when they come to the corporations tax they increase it by 7.6 per cent. I know the minister is going to tell me that in the case of the banks the increase was 33 per cent, but overall it’s the smallest tax increase in this budget. It’s true that in that one instance it has been increased by 33 per cent, but the overall basic increase in the corporate income tax is only 7.6 per cent.
Why is it that when the Treasurer and the Minister of Revenue deal with corporations’ income, corporations’ ability to pay taxes in a year when we are seeing all kinds of records in corporate profits, that they deal with them less heavily than they do with the average consumers in this province, the consumers that we all know are extremely hard pressed already without any of the tax increases we have imposed this year? I and the people in our caucus find it just somewhat dismaying that we have to sit here and debate a tax increase of only seven and a half per cent to corporations, but also find that most of the consumers in one way or another are being hit with a tax increase that’s substantially greater, and in more than one area.
Then the minister and the Treasurer turn around and exempt many of the corporations in this province from this tax increase altogether. The tax increase will apply only to the retail sector and to the service sector. It’s strange to note again that those two sectors that are getting the increase are also the two sectors that are going to directly affect the consumers. Everything this budget has done has a direct impact on the consumers of this province and takes money out of their pocket, either in a tax increase or ultimately in a price increase that results from a tax increase.
We are not increasing taxes for the manufacturing sector. We are not increasing corporate taxes for the mining sector. In fact, we are not only not increasing them for the mining sector but we are giving them additional tax breaks in the Mining Tax Act as well. But the two sectors that are going to directly affect the consumers of this province, the retail sector and the service sector, those sectors which the consumers buy directly from, those sectors which in some way are going to implement price increases as a result of these tax increases to make up and probably, as they usually do, collect more in price increases than what the tax costs them, are going to affect consumers directly.
It’s our view that this is a tax where this government should have done just a little more in order that perhaps there didn’t have to be any of the other -- or fewer at least of the other tax increases which were proposed and are being implemented presently. We would like to have seen the two per cent increase in the corporation income tax across the board. I have said it before, our Treasury critic, the member for Nickel Belt (Mr. Laughren), has said it before, our leader has said it before; we would have preferred to have seen a two per cent increase in the corporation income tax across the board, because from what we have seen in the last year or year and a half the corporations in this province and the corporate profits which they have been pulling in for the most part, are considerably on the upswing; and that’s the sector that for the most part isn’t complaining about taxes, not in the same way that the consumers of this province are complaining about taxes and being hurt by taxes.
We would have liked to have seen the increase in this bill from 13 to 15 per cent instead of from 13 to 14 per cent; and we also would like to see the exemptions which the Minister of Revenue and the Treasurer have built into this bill for the manufacturing, mining, processing, farming, logging and fishing industries removed from the bill so that it’s an across-the-beard increase that deals with all of the corporate sector in the same fashion.
We have no quarrels with the changes in the other sections that have upped the small business exemption to correspond to the tax increase so that they stay at an effective rate of 10 per cent. We are prepared to work with the government on protection for small business and assistance and incentive to small business; we do not have any problem with that. We all understand very well the kind of pressure that the small business sector has been under as a result of the ever-increasing size and almost unbelievable strength of the large corporate sector.
We were also somewhat disappointed with the very small increase in the capital tax on banks, although the minister, as I say, is probably going to respond that in this instance it is a 33 per cent increase. But with the kinds of profits the banking sector has been making over the last number of years, it is a sector that I think we could effectively tap in terms of increased revenues for this government without doing any serious harm to that sector; instead, we increase taxes to consumers where the pressure for some at the lower end has been so intense that they do not know where to turn.
In concluding, I would just like to say that, although I did not want to carry on too long here, we are somewhat disappointed in the government because of the approach they have taken in this budget, and this bill reflects it very clearly. This is the tax area that could have been effectively used so that this government could have eliminated all or a lot of the other tax increases that they have imposed in this budget -- tax increases which affected the sectors already most in trouble from taxes. We are going to oppose this bill because of those reasons.
Mr. Haggerty: Mr. Speaker, I want to address myself to Bill 59, An Act to amend The Corporations Tax Act, 1972, particularly as it relates to the general rate of corporate tax, which will be increased to 14 per cent. Exempted from this increase is income from manufacturing, processing, mining, fishing, logging and farming, which will still be taxed at 13 per cent. The low 10 per cent rate will be maintained on small business income. The Treasurer said that he anticipates $36 million in new revenues will be generated by this tax hike, which takes effect April 11. In addition, the capital tax on banks has been raised from three-fifths to four-fifths of one per cent, effective April 11; as a result, banks will pay an additional $5 million in taxes.
In going back into some of my older files of past announcements and press releases by the government of Ontario, I was particularly interested in the report Ontario Proposals for Tax Reform in Canada. I believe this was tabled in the House on April 6, 1971. There are some interesting comments in that particular report, which was tabled in the House by the then Treasurer, who I believe was the Hon. Charles MacNaughton. This report deals with the white paper on taxation of corporations and shareholders, and it relates to personal income tax too. The Treasurer said:
“What these papers and studies make clear once and for all is that, while there are three levels of government, there is only one taxpayer. This means total tax burdens at all levels of government -- not just one taxpayer at one level of government -- must be taken into account, if increased fairness that means anything to the people is to be achieved.”
Looking at that particular comment, certainly the introduction of the budget here recently indicates that all the tax increases and tax shifts have gone to the people, and not to the corporations or to other areas where perhaps taxes could be raised.
Quoting again: “It means that public-sector expenditures must be restrained so that relief in one set of taxes is not offset by increases in other taxes.”
This latest budget brought down by the Treasurer is in direct contrast to his predecessor’s original proposals back in 1971.
Quoting again: “It means that tax reform should make a positive contribution to economic growth, if both the unemployed and employed are to reap any benefits that matter.”
If members followed the election in Great Britain, if I am not mistaken that was one of the keynote issues that brought about a Conservative victory, namely, to reduce tax rates to spur production and to give money back to the general public to go out and buy the goods, if necessary, to create buying of consumer products that create employment later on in industry.
This government is in direct contrast to the Conservative policy.
It was a rather interesting statement by the former Treasurer. He said: “Finally, it means that the joint use of tax fields requires a partnership sharing of revenues which reflect soundly developed spending priorities at all three levels of government.”
I suppose that particular document that was tabled in the House at that time led to the Edmonton commitment. We have heard much about the Edmonton commitment, but there hasn’t actually been a fair sharing of the tax basis in Canada or in the province with the local municipalities. If we look at the increases in municipal taxes throughout the communities in Ontario compared to increases in corporation tax or income tax, it is once again the average person in the province who is carrying the tax load as a result of the government’s increases through the tax proposals in the budget statement.
I bring that to the attention of the minister. On previous occasions we have had the opportunity to review the Corporations Tax Act and the amendments that followed over a number of years. Talking to people in my area particularly and from the information that was passed on to me, I find there is still a difficulty in the two tax levels with regard to corporation taxes. We have it at the federal level and we have it at the provincial level. For some unknown reason, this province and this ministry still have not accepted the principle accepted by a number of the other provinces that there should be only one tax collector in this area, that is the federal government. Trying to decipher the intent of the legislation at the provincial level and also at the federal level just adds confusion on top of confusion.
There are two sets of accountants in Ontario and throughout Canada. There are the corporation accountants, and the regular accountants who deal with almost anything. It is rather confusing in this particular area for these persons to have to try to decipher all the different rules and regulations that apply to corporation taxes.
The present income tax method is simple. One government level collects it, namely the federal government. Then on a sharing basis the provinces get their piece of the action. There is no reason why this couldn’t also apply to corporation taxes. Other provinces in Canada have agreed to permit the federal government to collect the tax on a sharing basis. It is a simple method and it is time this government integrated the two systems. It would make it much easier for the small businessman and even the corporations. It might also give an opportunity to plug some of the loopholes that are there over interpretations of both acts. I bring that to the attention of the minister.
The other matter I want to bring to the attention of the minister relates to the budget paper entitled Strengthening Fiscal Management. Page seven refers to corporation income tax and says: “Higher than anticipated costs of recent federal initiatives have contributed to lower revenue growth.” If Clark ever makes it we are going to have a further reduction in revenue growth in Ontario because he is promising the world.
The paper goes on: “These include the three per cent inventory valuation adjustment and fast writeoff for production machinery” -- I think we have that in Ontario -- “measures that were paralleled by Ontario.
“An equally important factor is that from the mid-1970s until recently corporate profits before taxes have performed poorly.”
In some cases they may have; in other cases I don’t think I have to tell members about the huge profits that are being seen in the oil industry and in other key industries in Ontario and throughout Canada.
The quotation continues: “Furthermore, there has been some shifting of the tax base to the west. More recently these factors have been modified in some degree by the lower value of the Canadian dollar.”
That’s taking a short route out of solving the problem. We have seen that many industries, and perhaps many trust companies I suppose it is, and other persons in the financial world, moving to Alberta where there are certain tax concessions given.
Then again I suppose that could apply to foreign investments and foreign industries and foreign corporations here in Ontario and throughout Canada. Wealth generated from industry in Canada is going out to develop offshore industry. Let’s take, for example, Inco Metals Company and their involvement in Guatemala and Indonesia and places like that. It has taken resources revenue from this province and gone out to generate jobs and businesses in other countries. We are now having the impact here in that we have to compete with that offshore industry.
I think in this case the ministry should be taking a close look at this matter of foreign investments and make sure they do pay their fair share of taxes here in Canada. If not it means the Canadian taxpayer again is subsidizing the large corporations.
I mentioned previously on one of the bills that the banks now in Canada are going offshore to develop foreign markets, but the capital has originated in Canada, even in Ontario.
Mr. Philip: Where do you get all this socialistic propaganda?
Mr. Haggerty: If the member listens he might learn something yet.
All I am suggesting is that if the House is going to make tax changes in this area it should be looking at the offshore operations for which the wealth is generated here, it could mean the taxpayer would be subsidizing that industry. In a sense, as I say, I’m a shareholder in one of the banks, and I appreciate my return. Perhaps it could be a lot higher than it is. But when I go back to the matter that they’re going offshore to develop further operations in other countries, then as a shareholder, particularly in that bank, I’m looking for higher returns on my capital investment.
I suggest that in this area, where the government is only going to be raising $5 million from the banks, it just doesn’t portray the corporate profitability. It is only a measly amount the government is gaining from that. There is a new tax area here and perhaps next year we will see it increased to maybe 1.5 per cent or something like that. I imagine that is the case; it is a new area, the government has found a new avenue to increase revenue; and I suggest there’s nothing wrong with it, but I just question the small amount being raised. Hopefully the government will give further consideration to some of my comments.
When I look at the situation today, almost all the tax increases certainly hit the average citizen in the province. I feel there are other areas you should have been looking at, particularly in the matter of the capital tax rate increase for banks from three-fifths of one per cent to four-fifths. I think definitely that is an area the government could have broadened out a little bit further.
Based upon those comments, we will support the bill.
Mr. Makarchuk: Mr. Speaker, I would like to comment briefly on the bill. In the first place, I look at tax legislation as a means of implementing job creation, to bring about transfer of incomes, to create industrial strategy, to create new industries and so on. This is the purpose that corporations’ taxes should be used for, and when we look at the increase in this particular tax that’s introduced now we find it performs none of those functions.
We notice that, outside of the farming area, which deserves a break, the others who are getting the break are the mining, logging, fishing, processing industries. These are the industries that are doing quite well at this time. If we were to look at their last quarter profits, they were up over 50 per cent compared to the previous quarter.
It’s the smaller businesses, the smaller manufacturers who really need the assistance and they are the ones who are not getting it. It boggles the mind to figure out just exactly what inspired the government to provide assistance for the ones who are making it, and making it quite well right now, and ignore the other business sectors of society, particularly in view of the fact that it’s the small businesses that create most of the jobs, in terms of the total number of jobs and also in terms of the jobs per investment.
The other factor that has to be taken into account when we look at any type of tax legislation is whether it has the ability to plug various existing loopholes. Once again, if we listen to some of the experts -- and one of the most notable ones, I would presume, would be Eric Kierans, who points out that, despite everything, corporations get away with a minimal amount of taxation and they do not pay their fair share of taxation.
We look at a series of articles in the papers -- the most recent one was in the Sunday Star about two weeks ago -- pointing out that a clerk in a bank pays the same rate of taxation as the bank does, because of certain loopholes. One would think if we had a really alert government and an alert Treasurer and an alert Minister of Revenue, we would try to snaffle onto that extra funding that’s available. As far as I can see, there’s absolutely nothing to prevent the government from trying to collect some of that extra money the banks are getting right now through certain loopholes. Why that money shouldn’t go to the province is something I cannot understand. The government has the power to bring in that kind of legislation, and it certainly would have raised quite a few millions of dollars, considering the fact that a lot of business transaction activity is carried on in Ontario.
The other factor in the loopholes is, once again, the matter of the multinational corporations, the fact that they can transfer unit costs from a parent corporation in a foreign country to Canada, charge the local firm a price that is not really related to the actual value of the article, and in that way control the taxation or the profitability of corporations existing in Canada, as opposed to other areas.
I think the significant thing about it is it was a matter I kept raising every time we discussed corporations taxes or whenever we discussed the estimates of the Ministry of Revenue. The Ontario Economic Council has recently brought in a report which says there is a considerable possibility for erosion in the fact of the transfer of payments, that they are able to evade taxes and there is really no fair way to assess what is a fair charge for patents or royalties, management fees, licensing fees and so on.
It also states that despite the fact that we have a withholding tax it still does not deter the corporations from doing these things. It points out that the automobile industry is one of the places where this could be a matter of serious consequence, in that they may not be paying their fair share of taxation for living in a good society, and other people have to pay taxes in order for the good society to exist.
I wonder why the minister, after this is a matter that has been hashed over for a number of years, still does not make a very serious effort to try and plug some of these loopholes, to try and discover, at least, just exactly what is happening in these transfer payments, to find out just exactly how the multinationals operate in the market, and to try to collect what I consider is the fair tax owing to us that they should pay. I can’t understand it.
The only conclusion I can come to, when we look at the so-called free enterprisers, if we look at the examples of free enterprise, the two major countries that stress the free enterprise system -- they have a character disorder which I call strictly free enterprisers -- Canada and the United States, have the highest unemployment rate, the highest inflation and the lowest growth rate.
In other words, all the economic arguments indicate they just can’t operate the economy. Perhaps the fact that they can’t operate the economy also indicates that they can’t really write a decent corporations tax act that would ensure that everybody pays his fair share. We’re not asking that the corporations pay more than anybody else, we’re saying they should be paying a fair share and this tax bill really doesn’t do that.
Mr. Nixon: Mr. Speaker, I just want to speak briefly about one aspect of the tax. It was covered very well by my colleague from Erie, however I want to reiterate my dismay that the province is not in a position to extract a larger amount of revenue from banks.
I’ve been reading the sections under section 16 of this bill which re-enact sections 131 and 132, and they’re completely meaningless to me. I have a feeling my good friend and colleague the Minister of Revenue has studied them and they are meaningful to him, but it is the worst salad of legalese and gobbledegook you could possibly put together. One can only get an interpretation from two sources; what the Treasurer has said in his budget and the fact that the banks have said nothing.
I wish we could tax them so that they squeak a little bit. All you have to do, Mr. Speaker, is walk down to King and Bay streets and see the kind of capital and power in the financial community that lies in their hands. It’s strange and difficult for me to understand why we in this country have such a commitment to the sanctity of the banking corporations. We’re famous the world over as great buyers of insurance, investors in government bonds and savings bonds and contributors to savings deposits.
Mr. Haggerty: There was $47 billion in the first part of the year.
Mr. Nixon: There was an interesting article last week which said the banks were transferring an untold number of billions to the holders of savings deposits because at the end of April, the interest was credited to these savings accounts. I had a small credit myself and was very anxious to see just what it amounted to. I’ll tell you, Mr. Speaker, there is absolutely no way of calculating what the banks owe you without a computer. You simply look at the number in the passbook and say, “Oh, is that all?” It is; it’s that phrase that always goes with life, is that all it is?
This interest payable on the minimum monthly balance accruing once every six months has to be the damnedest machinery for the benefit of the banks that was ever contrived. They can certainly calculate the interest we owe them to the nearest minute with their computers, and I have a feeling the great Liberal Party of Canada would not be in the position it is now, although we agree that they’re going to be re-elected, if they had taken some sort of a reasonable, normal, up-to-date position with regard to rewriting the Bank Act.
Anybody who says the government of Canada is headed by some wild-eyed radical is certainly wrong when honourable members see the way the banks have been treated by the Liberal government in this country over many years. It leaves the field wide open for an enterprising Minister of Revenue to do something, to reach in there and get some of this revenue that we should be getting.
I won’t bore you, Mr. Speaker, or the minister, by talking about the obvious wealth, opulence and power controlled by the Canadian banks, both here and internationally. We can talk about international conglomerates with their muscly hands around the economic necks of businesses and others, one can go almost -- well and poor, downtrodden labour union members too -- one can go almost all over the world and bankers are doing business in this great style.
I’ve been trying to determine why governments in Canada are so fearful of going at the banks in such a way that we might get some reasonable revenue out of them.
All I can think of is that there was a time when many politicians -- I suppose now gone to their reward -- were forming their ideas and concepts and that a bank here, the Home Bank, failed. Nobody has ever heard about it, but around the dinner table at home I used to hear about the Home Bank failing and that there were a lot of little depositors who were left high and dry by the governments of the day.
There is a very famous historical account, written with a provincial government subsidy, about the Treasurer of Ontario back in the early 1920s being subverted by the banking officials of the day. They came to see him and said they understood the tremendous pressures he experienced in his new responsible position as Treasurer and that a lot of people did not understand the many expenses he had, and they left him a cheque for $15,000 to assist him. He did net take it, I hasten to say to the Minister of Revenue in case he was thinking he had better look up the precedent. He said, “I can’t do that,” of course. But some weeks later he found the cheque in his desk. As he told the judge later, he did not know what to do with it; so he deposited it to his account.
The bank which had made this contribution failed, and the political uproar associated with that did not die down for a long time and, in fact, may have sensitized politicians in the 1920s, 1930s and 1940s -- many of them existed and were active even longer than that -- to the fact that the bank simply had to have lots of capital and not too much political or tax interference. That is the only thing I can think of. I do not think any other country in the world has a banking system anything like ours.
There are those who are very proud of what we have done here, because we have erected these huge, powerful, monolithic, financial institutions which we worship in one sense or another. They are changing a little bit. They are finding competition is affecting some of the facts of life as far as they are concerned.
The Bank of Montreal -- “my bank” to a million Canadians, including me -- was having a tough time. But now they are marketing their services with lotteries, fancy advertising gizmos and lots of stuff on the television, and I understand they are doing very well indeed.
The one saving grace as to the profits of the bank is that anybody who can get together a few bucks presumably can buy some shares of these banks. But, even then, the dividends that come to the shareholders do not reflect the fabulous profit positions that the banks have found themselves in. They certainly should be paying interest on the minimum daily balance and compounding it. It could be done simply by an act of Parliament, in my opinion. They have the machinery and the structure for doing it. Many near-bank institutions can do this now.
I regret that we in this province seem to have followed the leads of many other governments in Canada and have not taken what is even a reasonable, let alone hard-nosed, position vis-à-vis the banks.
It seems to me that many successful politicians as they move out of the Legislature tend to move on to the boards of banks, such as the former Treasurer from Chatham, the former Minister of Agriculture and Food from north of London and the former Premier. As a matter of fact, when Leslie Frost left here, he went on the board, I believe, of the Bank of Montreal.
Hon. Mr. Bennett: I think it was Victoria and Grey.
Mr. Nixon: Oh, that was a very small responsibility in comparison. But I had the impression that when he went down to the boardroom of the Bank of Montreal he ran that place. It was not, as we sometimes think, the great honour that is given and a few bucks attending regular meetings of corporations, with the politicians sitting in the back and maybe expressing a view now and then.
Maybe it was Mr. Frost who took this initiative, but the Bank of Montreal directors asked political leaders down to have lunch with them. I went once. The honourable member for York South (Mr. MacDonald) went once, if you can imagine a raving socialist being asked into the boardroom of the Bank of Montreal. I guess they figured they had so many Tories there over the years that it would not hurt to bring in a couple of outsiders. We had a nice lunch which, of course, I would comment on, but when the board meeting began I do not think they did any business other than very routine business.
The Honourable Mr. Frost certainly took a leading role. The big cheeses from Montreal had flown up in the company jet to take part in this meeting and I was overwhelmed by it all, I can tell you, Mr. Speaker. But I wasn’t overwhelmed to the point where I can’t urge the Minister of Revenue and anybody else listening to tax more money out of the banks. This change, which increases the take by $5 million, is just a joke. I wish we could do more.
Mr. Laughren: I rise to support the remarks of my colleague the member for Hamilton Mountain. I do so with some trepidation for fear the minister will dredge up some remark made by himself or his staff about it being humbug. I was offended the other night for one of two reasons when the minister claimed that his staff thought the remarks made by my colleague were humbug. If the minister’s staff said they were humbug, fine; but why does he pass the responsibility for the remarks to his staff? Does the minister not have the courage to say it himself? Is that the minister’s problem? The minister is responsible for the comments of his staff.
Hon. Mr. Maeck: Right, I accept full responsibility.
Mr. Laughren: The minister didn’t hesitate to say it was his staff who said it, though, did he?
Hon. Mr. Maeck: That was a slip of the tongue.
Mr. Laughren: Yes, a slip of the tongue.
Hon. Mr. Maeck: Just the way your own slips most of the time.
Mr. Laughren: Yes, yes; sure, sure. Mr. Speaker, I will proceed with the debate on the bill and perhaps when the minister responds, he could give us his views on the comments we make on the bill and not those of his staff.
As my colleague from Hamilton Mountain indicated, and we stated this before the budget came down, we think corporation taxes should have been moved to 15 per cent across the board. That would not have made Ontario uncompetitive in this confederation, which is what the minister and the Treasurer would have us believe. Manitoba and British Columbia each have 15 per cent corporation tax; Newfoundland and Saskatchewan have 14 per cent. One would think it would be the underdeveloped provinces which are attempting to attract investment into their provinces which would be worried about having too high a corporation tax. Ontario is not in that position. Ontario is not in the position of having to compete with Newfoundland for corporate investment; that’s not the case at all.
The other thing that bothers us is the arbitrary exemptions which the minister applied to the increase. He says there is going to be an increase to 13 to 14 per cent except for the mining, farming, logging and fishing industries; and the retail and service sectors stand up, look at the minister and say, “What are we, chopped liver?” Why this in- crease in the retail and service sectors and not the others?
I suppose the minister will say it’s because they want to encourage investment and employment in those particular sectors. I haven’t heard those sectors complain that the reason there’s unemployment in this province, or the reason there’s a decline in manufacturing employment, or the reason that a substantial proportion of our domestic demand for products is being met by imports is because of the taxation level in Ontario.
I haven’t heard them say that. Perhaps the minister has some information for us. Perhaps when the minister replies he could tell us what information he has that the taxation level in the province of Ontario is causing our economic problems. Otherwise presumably he wouldn’t be discriminating against the retail and service sectors and saying they have to pay 14 per cent; but that mining, farming, logging and fishing do not. We are saying to the minister we don’t believe that and we could quite comfortably have a corporation tax level of 15 per cent across the board in the province of Ontario.
The member for Brant-Oxford-Norfolk (Mr. Nixon) commented about the tax on the profits of the banks in this country. They really are remarkable. They must be inspirational to the free enterprisers in Ontario. I looked at a story in the Globe and Mail of April 21 of this year -- I think that’s the one the member was referring to -- about banks skirting the embarrassment of applying for tax refunds. They paid a tax that averaged 20 per cent. Does the minister know what his increase in the tax on banks is going to do? It is going to raise $5 million. That’s $2,000 for every $1 million of capital. The minister really shouldn’t be so savage, he really shouldn’t be so tough on the banks!
What a lot of nonsense! The banks have had an unparalleled record of profit increases in this country and he is afraid to tackle them. Given the level of tax at which they pay -- the Royal paid at a rate of 14.5 per cent; the Commerce, 14.4; Montreal, 24.3; Nova Scotia, 26; and Toronto Dominion, 23.7 -- it is strange that he is allowing one of the most profitable sectors in the economy to get off with that kind of tax rate. He certainly doesn’t allow individuals to do so.
When I was doing some reading on corporation tax, I came across a document put out by the Department of Finance in Ottawa dated November 1978, so I would think its contents are most appropriate today and they make some rather interesting comments. They do some comparisons with other jurisdictions.
The document is entitled, The Tax Systems of Canada and the United States:
A Study Comparing the Levels of Taxation on Individuals and Businesses in the Two Countries. On page 40 of that report, they talk about corporation taxes as a percentage of profits. That’s a pretty straight, easily understood percentage they are talking about, and it runs from 1972 through the year 1977. In Canada in 1972 corporation taxes as a percentage of profits -- these are unadjusted -- were 36.2 per cent, United States, 41.1 per cent. In 1973, 32.8 per cent in Canada, 40 per cent in the States. In 1974, 35.1 per cent in Canada, 38.7 in the US.
Mr. Nixon: Average?
Mr. Laughren: Yes. In 1975, 37.8 per cent in Canada, 38.8 in the States. In 1976, 36.6 per cent in Canada, 39.1 in the States; and in 1977, 33.4 per cent in Canada and 39.4 per cent in the United States. Those are the corporation taxes as a percentage of profit, so it’s clear that we are competitive with the United States in case the minister is going to stand up and tell us that the reason he’s doing it is not because of the other provinces but because of competition in the United States. The evidence is clear.
They go on to say on page 48 of the report that in comparing firms in Ontario and Ohio the difference in tax rates is some 10 percentage points of book profit in Canada’s favour. The difference arises from the combined effect of the more generous capital cost allowance system, including the two year write-off on machinery and equipment used in manufacturing and processing -- the minister will remember that write-off -- the low rate of tax on manufacturing and processing income, and the three per cent inventory deduction, which together more than offset the higher value of the investment tax credit under the US tax system, and the ability of the US firms to use LIFO -- which I gather is last in, first out accounting -- for tax purposes.
In retail trades also, where the minister is raising the level, the tax rates are lower in Canada. The generosity of the CCA -- the capital cost allowance system -- and the lower statutory tax rate in Canada more than offset the value of LIFO relative to the three per cent inventory deduction. However, the differences in tax rates that do emerge are not very significant in this case, especially when it is noted that the variation within the countries is at least as large as between the two countries.
Then there’s a chart provided; this is “Taxes as a percentage of book profits,” divided into manufacturing and retail trades. It’s the manufacturing area that was one of the sectors the minister was attempting to protect.
In Canada, taxes as a percentage of book profits -- in Alberta, 30.2 per cent; in Manitoba, 32.7; and in Ontario, 31.9. In the United States they are considerably higher -- in Texas, 37.6; in Ohio, 41.3; and in New York, 43.1. Taxes are a much higher percentage of profits in those states than in Ontario. I don’t think the Department of Finance is trying to embarrass the Ontario government with these statistics. I suspect they are quite objective.
For retail trade, in Alberta the taxes as a percentage of book profits were 41.5; in Ontario, 43.2; in Manitoba, 45; while in the United States, in Texas, they were 40.1; in Ohio, 43.6; and in New York, 45.4. Those were for typical large corporations in 1978.
Hon. Mr. Maeck: Could I have a point of clarification?
Mr. Laughren: Yes.
Hon. Mr. Maeck: On the first figures the member gave, when he was comparing percentages with Ontario and the United States, was that the net figure or was that gross? Could he give me that again?
Mr. Laughren: I will try. It is a bit thick for me. The first set I gave was aggregate corporation income tax, as a percentage of corporation profits. I am not sure I can answer the minister’s question, but perhaps the small print in the document, The Tax Systems of Canada and the US, would provide the information for the minister’s staff at least, if he wants to pursue it further.
Those were typical large corporations. If we look at the small manufacturing corporations at book income of different levels, for $20,000 the taxes as a percentage of book profits in Ontario were 13.4 and in the United States, 18.9. That is using Ohio as the base in the US and Ontario as the base in Canada. For book income of $50,000, it is 13.4 per cent in Ontario and 19.4 in Ohio. For $100,000, it is 13.4 in Ontario and 27.4 in Ohio. That is in the manufacturing sector.
In retail trade, it is 22 per cent for $20,000, $50,000 and $100,00 levels of book income in Ontario. In Ohio it is 22.3, 22.8 and 29.9, respectively for those three levels of book income. The minister can see in every single case, even for the small business sector, the percentage of taxes on book profits are lower in Ontario than in those jurisdictions. The minister should rethink some of his talk about being competitive with other jurisdictions. We understand very well the need to have a competitive system in this province.
In the conclusions of the federal department report, they say: “The paper leads to the general conclusion that the Canadian tax system compares favourably with that in the US. In aggregate, while tax revenues of all levels of government were 1.8 percentage points of gross domestic product higher in Canada than in the US in 1977, Canadians had the benefit of publicly provided health care services and emigrant transfer payments in the form of family allowances and old age security pensions. The dollar value of these three programs, which do not have any counterpart in the US, was about $11.7 billion measured in terms of government expenditures in 1977-78 and far exceeded the difference in relative tax levels between the two countries.”
They go on further to say: “Aggregate personal income taxes, social security taxes levied on persons and estates, and gift taxes are lower in Canada as a percentage of personal income than in the US. This conclusion applies in each of the years 1972 to 1977, with the exception of 1975, when a temporary tax cut was in place in the US. In Canada, personal income taxes are a higher percentage of personal income than in the US, but this is more than offset by lower levels of social security and estate and gift taxes. Canada and Switzerland are the only” -- get this -- “two OECD countries without a federal estate and inheritance tax.”
I won’t debate that because we are talking about corporation taxes, Mr. Speaker, and you would rule me out of order very quickly. Nevertheless, the point is made, and we will be talking to the Treasurer about that when we get to his abolishment of the succession duties.
Further, the report states: “Effective corporation income taxes, which are taxes as a percentage of corporation profits, have been consistently lower in Canada than in the US over the 1972-77 period. In 1977, the overall effective corporation tax rate in Canada was some six percentage points lower than in the US. This advantage in favour of Canada results from both the more generous depreciation allowances and write-offs and the lower statutory tax rates. In both countries the effective rates of corporation income tax have fallen over the period.”
Did the minister hear that? In both countries, the effective rates of corporation income tax have fallen over the period 1972-77. The minister shouldn’t be so bashful about going up two points. It would not wreak destruction upon the private sector of Ontario.
Further in that report: Most industrial sectors enjoy lower effective corporation income tax rates in Canada than in the US. For the manufacturing sector, the effective tax rate was over 11 percentage points lower in Canada than in the US -- 31.7 per cent of Canadian profits versus 43 per cent in the US in 1973, the latest year for which data by sector are available.”
There is evidence that we are not out of line with other jurisdictions south of us. The reason we have a high unemployment rate and the reason we have a devalued dollar is not because of the level of taxation of corporations in Ontario or anywhere else in this country. The minister should know that the reason we have high unemployment in this country is because such an enormous proportion of our domestic needs are met by imports. That’s one of the main reasons. We are not producing our own goods; a $12-billion deficit in manufactured goods last year, an all-time high. And the Treasurer has the nerve to stand up in this Legislature and say that we are looking forward to a great future, that there was a spurt in manufacturing employment in 1978. What a lot of nonsense.
We have had a disastrous decade in manufacturing employment. As a proportion of total employment, manufacturing is lower than it perhaps has ever been, and the Treasurer has the nerve to stand up and hand us that kind of fogbound line. It really is a lot of nonsense.
The minister has missed the mark in his attempt to revitalize the Ontario economy. I understand that this is the Treasurer’s move, not the Minister of Revenue’s. But on the other hand the Minister of Revenue has an obligation not just to implement the programs of the Treasurer but to understand them, and hopefully to make some arguments in cabinet that this won’t solve any of our problems, and that there is tax room there in the corporate sector, particularly in the banks.
The minister can’t justify what he has done by increasing the level of taxes on the banks by $5 million. That’s downright silly.
Mr. Makarchuk: It isn’t even petty cash for them.
Mr. Laughren: I want to say, before I sit down, that there are people on the government side who look upon New Democrats as people who would tax the private sector until we did them damage. Perhaps it needs to be said that we look upon corporation taxes as a way in which to extract from the private sector what we think is equitable. We understand that when we form the government in Ontario, whether it is in 1980 or thereafter, we require a healthy private sector if we are going to implement the plans we talk about so passionately.
We understand that any political party in a mixed economy that would destroy the private sector is not talking good sense. So we would implement tax changes, whether it be at the corporate level or at the personal level, that tied in with our idea of an equitable society, a competitive society; because we know it is utter nonsense to have a million people unemployed in this country -- 319,000 in Ontario.
It’s dumb to sit and acquiesce, as the Treasurer has done, with that kind of unemployment staring him in the face. He has done nothing about it and that’s irresponsible. Raising the level of corporate tax from 13 to 15 per cent across the board is a responsible act. It would provide us with much-needed revenue. It would not make Ontario industry uncompetitive with either other provincial jurisdictions or United States jurisdictions.
Besides, the level of taxation is not the source of our economic problems, either in Ontario or elsewhere in Canada. Perhaps the minister should think about that. When he responds I think he has an obligation to tell us why he did not raise the level -- why the level is not going up to 15 per cent. If he wants to be completely the lackey of the Treasurer he could stand up and say, “It’s the Treasurer’s policy, not mine.” But if he wants to show that he has some opinions of his own -- not just those of the Treasurer or his staff -- perhaps he could explain to us why he has raised corporation taxes in this way.
Hon. Mr. Maeck: Mr. Speaker, I will try to reply to the members in the order in which they spoke. The member for Hamilton Mountain was the first speaker and one of the major points he made was that he felt all the taxes in this budget were directed towards the consumers. I guess when one adds up any tax in any program, in the final analysis it’s always the consumer who pays -- even if it’s a manufacturing situation or a farming situation or logging or mining or whatever it might be. The final product is purchased by the consumer who obviously pays the tax.
The member for Hamilton Mountain suggests that the corporations pay only corporation income tax. That seems to be the whole theme of everyone who has spoken; they forget about all the other taxes corporations pay. Sure they pay corporation taxes, but they also pay gasoline tax, they also pay fuel tax, diesel tax, they pay sales tax on any purchases they make, they pay 70 per cent on the average towards the OHIP premiums.
An hon. member: Is it passed on or deducted, Lorne?
Hon. Mr. Maeck: These are all costs to the corporation that these members never think about. They just think about the one tax.
Right now the average corporation’s tax in Ontario is 50 per cent -- the total of federal and provincial taxes. They’re paying a 50 per cent tax. It’s not just the provincial tax they pay.
Mr. Makarchuk: That’s not what Eric Kierans said.
Hon. Mr. Maeck: I’m reading from my chart -- of course I am. Canada, 36 per cent; and if you want to add 14 or 15 per cent, which is the tax we’re imposing, I think in my figures it comes to either 49 or 50 per cent. That’s the information I have before me. The member can argue as to whose information is right. I can argue that the information the member gave wasn’t correct, but I am giving what I perceive to be honest information.
Mr. Laughren: That’s humbug.
Hon. Mr. Maeck: Did the member’s staff tell him that? I would suspect his staff prepared most of the things he read into the record today. Just to let everybody know that we all have staff in the background -- I wouldn’t want the public to assume for one moment that only the ministers have staff.
Mr. Makarchuk: The trouble is you’ve got so many you’re tripping over them.
Mr. Laughren: We have a very good staff.
Hon. Mr. Maeck: The member for Erie again mentioned the fact that consumers were the ones who are paying all the taxes, that all the directions of this budget were directed at the consumers, and he suggested perhaps it would be a good idea if there would be one corporations tax administered by the federal government. But I would remind him that it was only about two or three years ago when we brought in Bill 88, the Corporations Tax Act, which is almost completely consistent with the federal government’s corporations’ tax, with a few exceptions.
We retained those few exceptions because if we were to have one corporations tax this government would have no thrust at all as to which direction it wanted the economy to move through taxation. We would be completely at the mercy of the federal people who, I think the honourable member has to admit, have not done that well.
Much has been said about the banks and the fact that we are only going to collect an extra $5 million. That is quite true; however, I think it is a step in the right direction. It is a 33.3 per cent increase.
Mr. Makarchuk: It isn’t a giant step for mankind.
Hon. Mr. Maeck: No, it is not a giant step. But it is one step further than we were in the last budget. So we are looking in the right direction.
I cannot say I disagree that more money could not be found from the banks. I think that is probably quite true. But the thrust of this budget is not in that direction at this point, except for the extra $5 million.
Mr. Charlton: This is a bank robbery in reverse.
Hon. Mr. Maeck: The member for Brantford mentioned that small businesses need help. I could not agree more. Small businesses do need help. The tax rate we are suggesting here -- 10 per cent -- I think is a very reasonable rate. But several times in debates he has mentioned possible loopholes or leakage as far as taxing foreign companies is concerned. I think we are doing our very best to accommodate that situation and to correct it.
As I have said before, if he has any information about any particular company, we would certainly be happy to look into it. But I am still waiting for information about that company. I would certainly be happy to direct staff to look into it. The laws are in place, and I think we can enforce those laws --
Mr. Warner: Start with Inco.
Hon. Mr. Maeck: Why doesn’t the member resign?
Mr. Warner: You’d be disappointed.
Hon. Mr Maeck: The member for Brant-Oxford-Norfolk talked a great deal about banks. I would like to remind him that if the federal government had passed Bill C-37, and if it had not died on the Order Paper, there might have been a greater amount of tax collected, and the banks would not be showing the excessive profits they are showing.
Mr. Makarchuk: Do you think the Tories would have supported it?
Hon. Mr. Maeck: Yes, they would have. Definitely. As a matter of fact, if the Tories are elected, that is one of the first things they will do, so they tell me.
That is one of the reasons there is a loophole in the present legislation that is permitting the banks to avoid taxation.
The member for Nickel Belt suggested I should have more input in the discussions. I have to inform him that I do have input into these discussions.
Mr. Laughren: That’s all the worse.
Hon. Mr. Maeck: As the member for Nickel Belt knows, we win some and we lose some in any debate. We do not always win every debate. However, in this particular instance --
Mr. Laughren: You either lost them all or you’re as bad as he is.
Hon. Mr. Maeck: No, I do not think so. I think this is a fairly good budget and a fairly good bill.
Mr. Warner: Sure, if you’re the Sheriff of Nottingham.
Hon. Mr. Maeck: The whole thrust of the difference between the 14 and 15 per cent rates, is simply that we want corporations in some areas to show profits because they are the ones that actually reinvest in the economy.
Mr. Warner: We know where they reinvest: Indonesia, Guatemala --
Hon. Mr. Maeck: And they are the ones, through reinvestment, that create the jobs that everyone wants.
Mr. Laughren: They are not doing it here. They’ve had high profits here, but they’re not investing them here.
Hon. Mr. Maeck: Of course they are. The honourable member has heard the figures on the employment that has been created in Ontario. I do not have to repeat those; the Treasurer mentioned them not very long ago. Where does my friend think those jobs came from? A great percentage of them come from the manufacturing sector.
Mr. Makarchuk: Most of them came from small business in services -- not manufacturing.
Hon. Mr. Maeck: No. Not according to the last figures.
Mr. Samis: Look at the record of the past seven years.
Hon. Mr. Maeck: Mr. Speaker, I have nothing further to add to the debate. I think I have answered most of the questions; some of them were rather detailed, and I am not going to go into those kinds of details.
Mr. Laughren: I have one word to describe what the minister has just said.
Hon. Mr. Maeck: What is the word?
Mr. Laughren: Humbug.
Hon. Mr. Maeck: Humbug? Okay. I knew my friend wanted to get on the record.
The House divided on Hon. Mr. Maeck’s motion for second reading of Bill 59, which was agreed to on the following vote:
Ashe, Auld, Belanger, Bennett, Bernier, Birch, Blundy, Bradley, Breithaupt, Campbell, Conway, Cunningham, Drea, Eakins, Eaton, Epp, Gaunt, Gregory, Hall, Havrot, Hennessy, Hodgson, Johnson, J.
Jones, Kennedy, Kerr, Kerrio, Lane, Leluk, Maeck, Mancini, McCaffrey, McGuigan, McNeil, Miller, F. S., Miller, G. I., Newman, B., Newman, W., Nixon, Norton, O’Neil, Peterson.
Ramsay, Reed, J., Reid, T. P., Riddell, Rollins, Rotenberg, Rowe, Roy, Ruston, Scrivener, Smith, S., Stephenson, Sterling, Stong, Taylor, G., Taylor, J. A., Timbrell, Turner, Van Horne, Villeneuve, Walker, Watson, Wiseman, Worton, Yakabuski.
Bounsall, Breaugh, Bryden, Cassidy, Charlton, Davidson, M., Davison, M. N., di Santo, Dukszta, Foulds, Germa, Gigantes, Grande, Isaacs, Johnston, R. F., Laughren, Lawlor, Lupusella, MacDonald, Mackenzie, Makarchuk, Martel, McClellan, Philip, Renwick, Samis, Swart, Warner, Wildman, Ziemba.
Ordered for committee of the whole House.
House in committee of the whole.
MOTOR VEHICLE FUEL TAX AMENDMENT TAX
Consideration of Bill 54, An Act to amend the Motor Vehicle Fuel Tax Act.
Section 1 agreed to.
On section 2:
Mr. Chairman: Mr. Charlton moves that section 3(1) of the said act, as set out in section 2(1) of the bill, be amended by deleting all the words alter “equipment” in the fourth line so that the said subsection 1 will read: “Every purchaser shall pay to the Treasurer a tax at the rate of 5.9 cents per litre on all fuel received or used in Ontario by him to generate power in a motor vehicle other than railway equipment.”
Mr. Charlton: Mr. Chairman, I think we already raised this issue during the second reading debate. This tax on railway equipment is a new tax being imposed by the government and in our view it is not only an unnecessary one but also a tax that will affect public transit right across Ontario.
This government probably had a very justifiable reason for excluding railway rolling stock in the past, and in our view that exclusion should be continued. We do not want to see the tax added. It is going to cause problems which, for what this tax will collect, we do not think are worthwhile.
Hon. Mr. Maeck: Mr. Chairman, we’re not prepared to accept this amendment. It is part of a total package in this budget presentation and for obvious reasons, it’s necessary to collect this tax in order to meet our commitments to the people in the province.
I would remind the members that this is the only province, with the exception of Newfoundland, that has not imposed this tax. All other provinces do have it. Newfoundland doesn’t have it simply because they don’t have any railways. So I think we’re being consistent with other provinces in imposing this particular tax.
Mr. Chairman: All those in favour of Mr. Charlton’s amendment will please say “aye.”
All those opposed will please say “nay.”
In my opinion the nays have it.
Section 2 agreed to.
Sections 3 to 5, inclusive, agreed to.
Bill 54 reported.
LAND TRANSFER TAX AMENDMENT ACT
Consideration of Bill 57, An Act to amend the Land Transfer Tax Act, 1974.
Mr. Haggerty: Mr. Chairman, I want to raise a question with the minister that relates to a suggestion made by my colleague, the member for York Centre (Mr. Stong).
Mr. Chairman: On which section?
Mr. Haggerty: It relates to the date on which the increase in land transfer tax will come into effect. He suggested that the minister should consider exempting those transactions which took place prior to the announcement of the tax increase and include those following the date under the new tax regulations.
Hon. Mr. Maeck: May I make a statement? I did give that matter some consideration and had staff look into it in detail because I had some sympathy for the proposal. But we found that if we accepted that sort of proposal, we would have the doors open for abuse simply because anyone could backdate a sale contract and we would have no way of controlling it.
The other reason, of course, is that it has been historical in this province and in most jurisdictions that when a budget comes down and the tax is announced, it becomes effective on that particular date.
For those reasons, particularly the fact it would create quite a loophole, we have decided we shouldn’t proceed with an amendment in that regard, although I do have some sympathy for the young people who might have been in the process of buying a house when the tax came in and who may have signed an offer to purchase. My understanding is that offers to purchase could go back as far as 30 days and about 1,000 transfers a day go through the registry office, so we’re talking about quite a complicated system.
Had we gone that route we would have had to go to a rebate system, because some of them, obviously, have already been paid and it would have cost more money to refund the money than what would have actually been collected. So for those reasons, we decided not to move on that.
Mr. Chairman: On section 1. Mr. Charlton moves that section 1 of the bill be amended by adding thereto the following subsection:
“(3). Clause (d) of subsection 1 of the said section 1 of the act is amended by adding at the end thereof, but does not include any building used solely for residential purposes.”
Mr. Charlton: Mr. Chairman, this is another issue that we raised during second reading debate on the bill. One of our major objections to the land transfer tax is that it was intended in large measure to deal with areas of land transfer in terms of change of use, speculation and so on.
In Canada, and more specifically in Ontario, in the past seven or eight years, there have been huge increases in housing prices, the restricted ability of average- and low-income people in this province to buy housing and all of the other things that have gone on in conjunction with real estate prices: interest rates, increased legal fees and so on. This is just another tax that effectively goes up with the price of housing, and it is one of those taxes that is a front-end load on purchasers of housing in Ontario.
This amendment is an attempt to deal in part with the problem, because we could not effectively find a way in the bill as it was presented to deal with the whole question of land transfer on residential housing in total. Because section 1 was before us, we felt it incumbent on us, as we did initially, to oppose the increase altogether and, secondly, to attempt to find whatever way we could to reduce the burden on the purchasers of residential housing. That is what this amendment deals with. That is the direction that we feel this government should be going in an effort to help alleviate the problem of people’s inability to afford housing in Ontario at the front end.
We have gone into all kinds of other programs in this province and in Canada to subsidize housing, to subsidize interest rates and to subsidize everything else we can think of. But these systems have not been working, and they have led us into a position today where literally thousands of people are quit-claiming on their government-assisted housing. We have not dealt with the real problems of purchasing of residential accommodation. We have not dealt with the price of housing in any effective way. We have not dealt with any of the things that affect people at the front end, where they have to get in. We have not dealt with interest rates. Now we are turning around and increasing land transfer taxes. This amendment is our effort to try to reduce that burden on purchasers of residential housing in Ontario.
Hon. Mr. Maeck: Mr. Chairman, I certainly can sympathize with this particular amendment.
Mr. Laughren: All the people of Ontario need is sympathy from the minister.
Hon. Mr. Maeck: Let me give my explanation before my friend condemns me too much.
We have done some work on this amendment to see what would happen. Assuming that 85 per cent of the transfers would be residential -- and that is based on an assumption taken from Ontario Real Estate Association data and the Ministry of Revenue assessment division -- the added cost of appraisal, which each resident would obviously have to have to find out what his property was worth in comparison with another house, would average about $100. That’s about the average cost to have an appraisal done on one’s property today.
If that were to take place, if we were to accept this amendment, it would cost almost as much money for people to have an appraisal done to get a breakdown on what part would be taxable and what wouldn’t be taxable. I don’t believe they would save any money on it.
Mr. Charlton: You don’t trust your own ministry. You’ve got appraisals on all those properties with the land and building breakdown already in your assessment office.
Hon. Mr. Maeck: No, we haven’t. Of all people, you should know what condition some of those appraisals are in. You’ve worked in that ministry.
Mr. Samis: The man in the field just told you, that you had them.
Hon. Mr. Maeck: As 51 per cent of the transfers are below $45,000 in value, this amendment would benefit only about one half of the total number of home purchasers and would be of little or no appreciable benefit at all to the low-income people.
We have looked into the situation. As I said, I have some sympathy for this particular amendment, but I don’t see where it would be of any value to us.
Mr. Charlton: The minister’s comments about the extra cost of an appraisal are just a lot of hogwash. The minister may be correct to the degree that the information his Ministry of Revenue already has in terms of appraisals on the total properties are a little bit out of date because they are presently at 1975 market value, heading for 1978 market value. But the assessment division of his own ministry is studying current sales on a daily basis. It would take them a matter of hours to come up with a fairly accurate residential land value. Forget about the buildings. If the amendment passes, we’re only looking at the land. An effective current market value for land in a municipality anywhere in the province would take a matter of hours to work out. There is no need for people to have to have an appraisal done to separate the land and the building. The data are already there in the ministry. It’s just ridiculous to oppose this amendment on those grounds.
Hon. Mr. Maeck: I also oppose it on monetary grounds. There is a revenue loss here that I must account for as well. If we take this amendment into consideration, along with the other amendment that you will propose later on this same bill, we’re talking about $59 million. That’s how much it’s going to cost. That’s the other side of that coin, and we are not in a position to take that sort of a loss.
Mr. Laughren: Maybe you could have a succession duty tax.
I simply can’t let that kind of statement go by. What we’re really seeing is the minister’s true colours now. He is talking about this as strictly a revenue bill because any of the other arguments he used don’t stand up to the face of knowledgeable criticism.
Hon. Mr. Maeck: Of course, it’s a revenue bill. Nobody said otherwise.
Mr. Laughren: The minister tried to flimflam us that it had to do with the cost of assessing.
Hon. Mr. Maeck: No, we really looked into it.
Mr. Laughren: I believe you looked into it, but I don’t think that your arguments for rejecting it are valid. The only argument you’ve got is the revenue one. Don’t talk to us about revenues when you’ve abolished succession duties, for heaven’s sake.
Mr. Chairman: All those in favour of Mr. Charlton’s amendment to section 1 of the bill will please say “aye.”
All those opposed will please say “nay.”
In my opinion, the nays have it.
On section 2:
Mr. Chairman: Mr. Charlton moves that section 2(1) of the said act be amended by striking out “$45,000” in the second line of section 2(1)(b) of the bill and substituting therefor “$70,000.”
Mr. Charlton: This amendment emanates from something we see as particularly unfair and discriminatory in the Land Transfer Tax Act.
Mr. Laughren: That’s why the minister likes it.
Mr. Charlton: The government has realized to some degree the problem in raising the ceiling on the lower level of tax on land transfer. What in effect it is forgetting or leaving out in this amendment to the act, which we are trying to deal with in our amendment, is the fact that in the high cost areas of housing in Ontario, such as Metro Toronto, Mississauga, Hamilton and a number of other major centres in this province, the person buying an average home which in his municipality is priced well above $45,000, is buying a home no different, no more elaborate and no more expensive in terms of which he is looking for to live in than the same house in municipalities in this province, which might be priced below $45,000 because of the land value and because of the lower speculation that has gone on in that area, largely because of its distance from the high priced area in Metro Toronto.
We have a situation where a house in Metro Toronto priced at $70,000 and an identical house in Hamilton priced at $55,000 are both identical to a house in --
Mr. Haggerty: In Fort Erie, they are $45,000.
Mr. Charlton: -- Fort Erie or wherever at $25,000 or $35,000 or $40,000. The minister is going to tell me that the wage earners in Metro and the wage earners in Hamilton earn far more than the wage earners in Fort Erie, or Sudbury, or a number of other areas of the province. There is some differential, but in a large degree we have two factors and people are being penalized twice.
It doesn’t matter whether you have a higher rate on part of the purchase price or not. The guy who buys the $70,000 home here in Metro, even if he pays the low rate on all $70,000, is still going to pay more land transfer tax than the guy in Fort Erie who is buying the same home for $35,000. That argument doesn’t hold water. You are penalizing twice for the high cost of housing in Metro by putting a higher rate of taxation on the last $25,000 of the purchase here or the last $15,000 of the purchase in Hamilton. You are putting on a higher rate.
That’s not effective and that’s not fair in terms of assisting people in this province to buy housing. It’s double jeopardy right down the line, and it isn’t even wholly true that wages in Metro are so much higher than anywhere else in the province. In your own ministry and in the civil service, contracts are negotiated province-wide and everybody gets the same. There are 60,000 of those people and their families out there somewhere. It’s the same in a lot of other sectors as well. In some sectors there are some differentials, but they are not all that great. The fact that the house price is higher here, so the rate of tax they pay is going to be higher anyway, whether there’s a higher rate over $45,000, is inconsequential. You are still going to tax them more here in Metro where the wages aren’t that much higher. The wages in Metro certainly aren’t as much higher than the wages in Fort Erie as the housing prices are. This is penalizing people doubly, and double jeopardy just isn’t acceptable to us as a form of taxation in this province.
Hon. Mr. Maeck: Mr. Chairman, we, of course, reject this amendment. I agree with some of the things the member for Hamilton Mountain is saying. There is a differential in different areas as far as the cost of housing is concerned. But I think we have moved a little bit in the right direction; we have moved up from $35,000 to $45,000. I know those members opposite would like to see us go higher, but we have budgetary demands that we raise a certain amount of money. There is no question this is a revenue source and therefore we must proceed with the program as we have drawn it up.
I do insist, though, that the cost of housing does have a bearing on income to a great degree within this province. If you are living in a low-income area, a house in Toronto or Hamilton would certainly be valued at less money than another of the same type in a better area; but people in those low-income areas would be making less money as well, and therefore could ill afford to pay the same amount.
I feel there are other circumstances that can be taken into consideration and perhaps they will be in the future, but at this time we are only prepared to go as high as $45,000.
Mr. Laughren: Just briefly in support of my colleague from Hamilton Mountain, who has put forth some very responsible and reasonable amendments to this bill. These are amendments the minister could accept if he wasn’t so hidebound and inflexible. What I don’t understand is how the Minister of housing (Mr. Bennett) can sit there and have the Treasurer and the Minister of Revenue impose a housing policy because he has left a vacuum there. I am amazed the Minister of Housing would acquiesce and have somebody else making housing policy for him. There is no doubt this is as much a housing policy as it is a source of revenue for the consolidated revenue fund.
Mr. Chairman: All those in favour of Mr. Charlton’s amendment to section 2(1)(b) will please say “aye.”
All those opposed will please say “nay.”
In my opinion the nays have it.
Sections 3 to 5, inclusive, agreed to.
RETAIL SALES TAX AMENDMENT ACT
Consideration of Bill 58, An Act to Amend the Retail Sales Tax Act.
On section 1:
Mr. Chairman: Mr. Charlton moves that section 1(1)(a) of Bill 58 be amended by striking out all the words starting with “including” in the first line, up to and including “but” in the sixth line, and that the following words be substituted therefor: “but not including community antenna television, cable television and pay television and . . .”
Mr. Charlton: This is a new tax that is being imposed not just an increase as is the case in most of the other areas in this budget. The government is moving into a new field and, as some of my colleagues have mentioned, when you go into a new field you never get out of it. Not only that, but the tendency is to start depending on it for increases over and over again.
This particular area of television, specifically cable television and community antenna television in those communities where that particular device is used to get television signals, is one which is going to affect most dramatically all of the wrong people in the province, such as senior citizens, and all of those for whom television may be their only small pleasure and entertainment. They may live in communities -- and the minister tried to throw this one back at me last week in the debate on second reading -- where they can’t take advantage of some of the tax breaks in the budget because they have no theatre at all; neither live theatre nor movie theatre. Their television may be the only form of visual entertainment in the community, yet on the one hand the minister, in other sections of this bill, is increasing the tax exemption for theatre-goers, but, on the other is adding on a tax for those in the province who may not have access to theatres at all.
As I mentioned, it also affects a number of other segments of society which, for economic reasons, may have an old black and white television as their only form of effective and regular entertainment because it’s all they can afford. Now, it is going to be taxed. It is just not socially acceptable in the kind of cost economic situation with which the people of Ontario are presently confronted.
Mr. Samis: Very briefly I would like to support the comments made by my colleague from Hamilton Mountain. I have already spoken on this bill on second reading and emphasized that I think, first of all, it’s a very inequitable tax; second, that I am sure the tax is going to be increased within the next few years; and, third, that this really hits at the average working class family which relies much more heavily on television for entertainment than other sources of entertainment.
In terms of the $7 million being raised by the telecommunications tax, I would like to ask the minister what percentage of that $7 million is going to come from the cablevision portion of this tax? I think my colleague’s amendment is an excellent one because if it’s going to be $2 million, $3 million, $4 million or $5 million, sure as hell we can get that money from the banks and they can afford it. I know the people in Ontario would support a proposal to impose a $5 million or $3 million tax, two-tenths of one percentage point, I think, which would make up the balance if we were to pass this amendment which, to me, is eminently reasonable.
Hon. Mr. Maeck: Mr. Chairman, to answer the last question first; this package will generate up to $30 million, not $7 million. I think it’s $7 million for cable but the total package is $30 million. So it does generate some revenue.
In our earlier debates I indicated that I have regard for the senior citizens and other people on low incomes in this province, just as members opposite have. That isn’t just their bailiwick; we all have that feeling. But the fact is we’re talking about an average of 46 cents a month for cable television and, if it happens to be an area where they have bulk service it will be about 37 cents a month. We’re not demanding a great amount of money from anyone on this particular increase.
Mr. Samis: Two-tenths of one percentage point at the banks.
Hon. Mr. Maeck: There’s no question that at some time in the future the tax could be raised. It is a sales tax; if the sales tax is raised provincially, this tax would be raised. But I see no reason to believe there could be a special rate of tax for cable television other than the rate that would apply across the province for general sales tax.
Mr. Laughren: The minister should realize that saying he has some sympathy with our amendments on fuel tax; sympathy with our amendments on the land transfer tax; sympathy with our amendments on the retail sales tax, wears a little thin after a while. As my colleague, the member for Hamilton East (Mr. Mackenzie) interjected, actions speak a lot louder than words. He has indeed imposed a tax here that need not be imposed.
When you look at the $7 million the minister is getting at this point in time, Mr. Chairman, it is a petty tax, a petty, mean-minded thing for him to do. What bothers us more than the actual amount is that he’s opened the door, and we can see in the years to come that he’ll be taking a bigger and bigger bite out of this part of the services used by the people of Ontario. That’s why we feel very unhappy about it and why my colleague, the member for Hamilton Mountain, has put in the amendment and why we intend to vote against the minister on it.
Mr. Chairman: All those in favour of Mr. Charlton’s amendment to section 1(1)(a) will please say “aye.”
All those opposed will please say “nay.”
In my opinion the nays have it.
Section 2 agreed to.
On section 3:
Mr. Chairman: Mr. Charlton moves that paragraph 70 of section 3(4) of the bill, which amends section 5(1) of the act, be amended by adding at the end thereof: “and provided that such furnishings or food preparation equipment were manufactured in Canada.”
Mr. Haggerty: Point of order, Mr. Chairman: I don’t have a copy of that amendment. I’ve got the other amendment.
Mr. Charlton: I can send you over a copy, but the copy was given to your House leader this afternoon.
Mr. Haggerty: I don’t have it here.
Mr. Chairman: I’m sure the member can supply it.
Mr. Charlton: Mr. Chairman, on this amendment to the bill, given the kind of debate that’s gone on in this House in the past couple of years about “buy Canadian,” with the kind of talk we’ve had from this government in terms of stimulation to the economy -- and obviously this particular section is intended to stimulate Canadian industry -- why has this government neglected to ensure that this exemption would apply only to Canadian manufactured goods, to things manufactured in Canada, both furniture and equipment?
The minister stated during the second reading debate last week that the vast majority of furnishings and kitchen equipment presently being bought in this sector is Canadian. That’s fine. He only said the vast majority though, he didn’t say all. He certainly didn’t say the situation couldn’t change. Who knows what foreign companies may decide to take advantage of this tax incentive and drop their price a few percentage points in order to attract some Canadian buyers.
Why, Mr. Minister, if it’s desirable to have Canadian buying in this sector, can’t we guarantee it is going to be Canadian? Why is it good enough to say the bulk of it is Canadian right now? That’s fine; but why don’t we ensure it will stay that way? Why don’t we ensure that whatever additional stimulation and additional buying is caused by this exemption will be in Canadian goods, with Canadian persons installing those goods?
This amendment seems not only very important to us as a first step in terms of dealing with this kind of an approach in all the things this government does, but it seems also to be very eminently reasonable to us.
Hon. Mr. Maeck: Mr. Chairman, we covered this item in the debate on principle. I did indicate we could not accept this amendment. I did also indicate that a great majority of the furniture and appliances that will be exempt from sales tax through this section is Canadian, but my staff draws my attention to the fact that it’s perhaps not the best thing for this province to use provincial tax as a sort of hidden tariff.
In line with Canada’s participation in GATT and so on, I don’t know whether we even have the authority to really exempt certain sections and then put a tax on something else just because it happens to be made in a foreign country. I don’t know whether that’s a fair assumption or not. It’s one I’m not that familiar with, however it was drawn to my attention.
I have a further note that with the 1975 retail sales tax rebate on autos it was originally confined to Canadian cars but was ruled unconstitutional by the Attorney General. That is further information I have on it. If that’s the case, obviously it’s the best reason of all not to accept the amendment.
Mr. Charlton: Implement it and let it be challenged in the courts.
Mr. Roy: Mr. Chairman, I understand the intention of the amendment that is proposed by the member from the New Democratic Party. I think this amendment embodies sentiments one can understand and sympathize with. My concern about this amendment is the concern raised at the time of second reading of the bill. The whole way this paragraph 70 is going to be applied, along with the information bulletin you’ve supplied to people across the province, is going to be putting a heavy onus on the people in the retail industry in these products.
I want to speak about that, but I don’t want to spend time on this amendment speaking about the difficulty in applying paragraph 70 on various items. This is not idle speculation, I have been receiving complaints about that. I have here a letter which I intend to refer to at a later time.
The ministry has put out a bulletin of items which will be exempt as long as they are used by people in the hotel, motel and hostel business; resorts, restaurants and so on; in other words to encourage the tourist industry. You run into difficulty with what equipment will be exempt and what will not be exempt. It is going to be very difficult for people in that field selling that type of product to know that one item on the shelf is exempt while another item is not exempt. They are going to have to continually refer to the list.
Not only are restaurants going to be exempt, but clubs, delicatessens and snack bars located in certain areas are not going to be exempt. One can foresee a situation where an individual comes in to buy this equipment from the retailer and the retailer is going to have to find out what sort of business the individual is in. Over and above that, the retailer would now be faced with an additional burden of determining whether the equipment he is selling happens to be Canadian or to be made in the US or someplace else.
The onus on the retailer is going to be much too heavy to start with without having to put an additional onus on him. When taxes are originated by the Treasurer in this province, very often he doesn’t think about the fellow at the other end of the line having to enforce it or do the bookkeeping for the ministry for certain items. I can see real difficulties in this type of amendment.
The minister was talking about another problem involving this amendment. When we are talking about agreements made between countries, the US, Canada and other countries, about tariffs, we have always taken the position that from a constitutional point of view it is not for provinces through their taxation or sales tax to be imposing tariffs on certain items. On that basis it can be a problem, although for political purposes back in 1975 the Treasurer of this province tried to do it in relation to motor vehicles. As I recall the reason he had at that time to extend it to all motor vehicles was partially constitutional and also because the opposition was asking why it should be restricted to only Canadian-manufactured cars.
I can recall there was an awful lot of pressure across the province, put on by dealers selling Japanese, German or other type cars. The tax imposed by the Treasurer at that time was some sort of a breach of tariff agreements and exchanges we had with various countries which were a part of the western world. I can see from a technical, legal and constitutional point of view where if we accepted this amendment there would in that sense be a breach.
I must say we in this party are in favour of encouraging Canadian business and encouraging the sale of Canadian products, but I am not sure we can do it through a sales tax amendment as we do now. There are other ways of doing it without breaching the tariff agreements Canada has with other countries. I can see that being a problem.
For these reasons I think it would be very difficult to accept this amendment, although we think it makes eminent good sense. But, if we are going to be in breach of tariff agreements with other countries, I don’t think we should be taking the initiative at this time.
Mr. Laughren: We are not going to divide the House on this particular amendment, but I think my colleague the member for Hamilton Mountain has made his point very well and, as the member for Ottawa East (Ms. Gigantes) says, his spirit is proper.
This government has done some very strange things when it comes to sales tax exemption. For example, the exemption on production machinery is really a dumb exemption. It is an expensive, dumb exemption which does not create jobs in this province and costs us an enormous amount of tax revenue every year because of the simple fact that a bit of that machinery is produced elsewhere. All you are really doing is encouraging imports. Can you imagine encouraging imports with a $12 billion deficit in this country on manufactured goods? That’s what you are doing.
Hon. Mr. Maeck: We are trying to encourage purchasing.
Mr. Laughren: I know what the purpose of this bill is, but I can tell you, you need to take a long look at exemptions and what they are really going to do. Because of his statements, I think the minister should table the documentation indicating that the majority of the things that will be purchased as a result of this exemption are indeed manufactured in Canada. Presumably the minister has some documentation to substantiate his remarks that most of these products are made in Canada anyway. I would request that the minister table with the House and send over to the two opposition parties any documentation he has on this. I’m sure he wouldn’t stand up and just make the statement. He must have some documentation. I would urge him to do that.
What the government really has to do is start talking about replacing the enormous amount of imports which satisfy domestic demand in the province of Ontario. It hasn’t done that. The government has run around putting little red tags on merchandise in stores that say “Shop Canadian,” without really doing anything substantial about ensuring that an increased proportion of our manufacturing goods is produced in this province. That’s not this minister’s responsibility, but his government’s policies really are bankrupt in this regard.
Finally, I really would appreciate it if the minister would document his remarks that most of these goods are produced in Canada anyway.
Hon. Mr. Maeck: Regarding the last request, I’m not sure whether there are any documents I could give you.
Mr. Laughren: You just have a gut feeling.
Hon. Mr. Maeck: No, not at all. I must tell you that at one point in my lifetime I was in the furniture business. I happen to know that most of the hard furniture that is sold in the province of Ontario is made in Quebec. I happen to know because I was in the business
Mr. Haggerty: It was made in Japan.
Hon. Mr. Maeck: I should tell you also that I was in the appliance business. I happen to know from my personal knowledge that most of the stoves and grills and all of the things that are in restaurants are made in Canada. My staff may have some supporting documents. If there are I’d be happy to give them to you. I have been in the business and I do know from personal knowledge on that particular item.
Mr. Laughren: I would just remind the minister that I don’t know how long ago he was in that business, but he’s been in this place now for almost eight years. I was just doing some reading on one sector, namely mining machinery, where the picture can change so dramatically and so quickly in terms of the amount we import versus the amount produced here that what he may have felt 10 or 15 or 20 or 50 years ago -- I don’t know how long ago the minister was in the business -- may not be appropriate anymore. Really what the minister is saying is that he just has a gut feeling. I think you have an obligation to substantiate your remarks.
Hon. Mr. Maeck: That’s not quite so.
Mr. Laughren: That’s what you’re selling us.
Hon. Mr. Maeck: Let me have a little rebuttal here. I’m observant; I go into hotels and motels and so on and I have a look at the furniture that’s there. I know where it was made. I wasn’t born yesterday.
Mr. Laughren: Is the minister refusing to document his remarks that the majority is produced in Canada?
Hon. Mr. Maeck: No.
Mr. Laughren: Will you table them or send them over to us?
Hon. Mr. Maeck: If there is any documentation, I’ll be happy to give it to you.
Mr. Laughren: If there is not any, will you make a statement in the House that there is none?
Hon. Mr. Maeck: I’ve already said if there are documentary papers I can supply you I will. If you don’t get them I haven’t got them.
Mr. Laughren: The minister hasn’t gone quite as far as I wanted him to go. If there is information will he send it across to us, and if there is not any will he make a statement in the House to that effect?
Hon. Mr. Maeck: You can always ask me a question in the House any time you want to.
Mr. Chairman: All those in favour of Mr. Charlton’s amendment to section 3(4)(70) will please say “aye.”
All those opposed will please say “nay.”
In my opinion the nays have it.
Any further comments on section 3?
Mr. Roy: Yes. I’d like to speak to the minister. I didn’t spend sufficient time on it. I don’t know whether it is the intention of the minister to come back at eight o’clock on this bill.
Hon. Mr. Maeck: Yes.
Mr. Roy: We are to continue with these bills. Maybe I could just start warming up, then, because I want to speak to the minister about clause 70.
It is not the first time this minister has been a member of the Legislature. He has known in the past some of the difficulties we have caused businesses and retailers across this province because of changes in the retail sales tax. I can remember when the honourable Allan Grossman, the father of the present Minister of Industry and Tourism (Mr. Grossman), was Minister of Revenue and the difficulties and complaints that were received from businesses across the province about the selective imposition of sales tax on various items. This is the situation here, Mr. Chairman.
Possibly rather than go into it fully, I can adjourn the debate until eight o’clock and start at that time to give the minister complaints I have received from some of my constituents about the imposition of this tax. The minister knows when I make these comments I certainly don’t attack him personally; but I do attack the ministry. I really think it’s an unfair onus on people in business. They have sufficient problems in coping with their books and everything else. Every time they sell something they are going to have to go through this list.
The House recessed at 6 p.m.