The House resumed at 9 p.m.
GASOLINE TAX AMENDMENT ACT
Hon. Mr. Ashe moved second reading of Bill 72, An Act to amend the Gasoline Tax Act, 1973.
Hon. Mr. Ashe: Mr. Speaker, this bill contains amendments to the Gasoline Tax Act to implement the proposals in the Treasurer's (Mr. F. S. Miller) budget of May 19, 1981, in which the tax on gasoline is established as a percentage of the retail prices of each grade or type of gasoline at a rate of 20 per cent.
The adjustments to the tax base will be established through samples of retail prices gathered by staff in my ministry and will be made on a quarterly basis beginning July 1, 1981. Until such time as this new procedure is implemented, this bill makes provision for an increase in tax from 4.6 cents per litre for all grades to 5.4 cents per litre for regular leaded gasoline, 5.8 cents per litre for regular unleaded gasoline and six cents per litre for premium leaded or unleaded gasoline.
The tax applicable to aviation fuel will continue to be 1.32 cents per litre. However, this bill makes provision that once a taxable price has been prescribed for diesel fuel under the Motor Vehicle Fuel Tax Act, aviation fuel will be taxed at 5.13 per cent of the taxable price per litre of diesel fuel used to propel motor vehicles. Effectively, this is a rate of 19 per cent of the tax payable on diesel fuel.
Mr. Haggerty: Mr. Speaker, I want to address myself to the act to amend the Gasoline Tax Act, 1973, known as Bill 72. I rise to speak on the bill and, in particular, to put forward the viewpoint of the official opposition, the Liberal Party. We want to raise some objections to the procedure the government has taken at the present time of adding a new tax procedure, the ad valorem tax. The explanatory note spells it out, "The bill implements the proposals in the Treasury budget that the tax on gasoline be established as a percentage of the retail prices of each grade or type of gasoline."
After having looked at that, I can say the consumer has been taken again. The imposition of any tax, either by the federal or the provincial government or by the municipality, is of a nature closely guarded in our society, and any proposed changes in taxing statutes must be questioned with deep concern for the welfare of the citizens. To ensure that any tax increases do not become a burden on the majority of the citizens, one must ensure that new tax structure changes such as the Treasurer's new ad valorem principle do not add additional inequities.
The proposed new tax surely indicates that inequities are built into it. The proposed tax enrichment on this particular commodity, the piggyback approach on crude oil pricing per barrel cost, is projected to increase at over $4.50 a year until 1985, with a compensation cost put in there to assist the eastern provinces because they pay the world price for oil.
The Liberal Party cannot support the new tax approach. The Treasurer has singled out an individual sector of the economy, the wage earners, the family supporters, to carry the full burden of Ontario's tax increases. The Treasurer has not missed an area for obtaining additional revenue. There were no promises during the last provincial election campaign that tax increases would be an issue if there were a return to majority government.
I cannot recall the Premier (Mr. Davis), going through the province keeping the promise, telling the people there would be no tax increases. I suggest one follows the speech given by the Treasurer on January 27, 1981. He said:
"Since 1975, Ontario has held firmly to its policy of disciplined budgeting centred upon expenditure control and reducing the government's claim on the economy. This has created the flexibility to finance both demand and stimulation measures I announced in my mini-budget and the $750 million BILD startup fund."
I listened to the Minister of Revenue (Mr. Ashe) before the dinner break when he said the sales tax is an ad valorem tax. I do not think it is. I think he has indexed it. As the price of that commodity goes up, he increases his taxes. If one looks at the retail sales tax, in 1970-71 it was $674.2 million. That was the last year this government came in with a balanced budget and a surplus.
The revenue in 1981-82 for the retail sales tax is expected to be $2.831 billion, a 320 per cent increase or an average of about 29 per cent per year over the 11-year period of this Conservative government. I suggest the minister does not need an ad valorem tax. He is generating sufficient revenue in that area as it is indexed to the cost of the goods being sold to the consumers.
The Treasurer also said: "Looking back on the record, I can say that we have met our fiscal objectives. First, the provincial public sector has been cut back. Second, spending has been pruned and essential priorities maintained. Third, the deficit has been reduced in size." I cannot see where it has been reduced in size. "Fourth, major tax increases have been avoided."
That was before the provincial election of March 19. There was no indication this government was going to bring in about four proposals for enormous tax increases that would hit the average wage earner.
I am delighted to see the Premier is here tonight because I am going to quote from his speech given to the Canada-United Kingdom Chamber of Commerce on September 29, 1979. He said: "There may be evidence that the price increases we have experienced are encouraging more energy efficiency in our society. However, there is no honest consensus that significant oil price increases by themselves lead effectively to reduced consumption."
I recall the Premier was in St. Catharines in the Niagara Peninsula on Saturday or Sunday of this past week --
Hon. Mr. Davis: It was Sunday after church.
Mr. Haggerty: After church, was it?
Mr. Nixon: It was after Sunday school.
Mr. Haggerty: After Sunday school. He said he was defending the tax --
Hon. Mr. Davis: And the Lord's Prayer.
Mr. Haggerty: You need it.
He was defending his government's tax increases by saying the purpose of the gasoline tax and the fuel tax was to conserve energy.
Interjection.
Mr. Haggerty: It has that effect.
Hon. Mr. Davis: That is what the member for London Centre (Mr. Peterson) said.
Mr. Haggerty: No, that is not what the member for London Centre said. Here the Premier is telling us one thing so I question that. The only thing we do know, quoting again, is that, "A massive increase in the price of oil can stall economic activity and slash employment growth." How often have we heard this? "To choose that course when other options are available would be tantamount to restoring bleeding as a medical cure-all.
"I am not about to make any firm prediction about what final determination on this issue will be made in Canada. Nevertheless, we continue to stress that if we move even close to world prices next year without basic economic changes, immeasurable damage could be done to the Canadian economy.
9:10 p.m.
"Surely inducing a recession in Canada is not in your interest, as it is certainly not in ours. Fortunately, the options before the federal government are much more manageable. It has the fiscal and constitutional capacity to permit only moderate price increases." I think the federal government has moved into that area. "Also, it can allow prices to rise at a faster rate and capture the windfall profits which would accrue to the petroleum industry in the producing provinces."
When I look at the statement and the words "windfall profits," I am sure with the ad valorem tax this government is going to get windfall profits every time the price of crude oil increases under an agreement with the federal government and the province of Quebec.
"Few of these approaches could be designed to allow the economy to grow and to protect personal income."
Mr. Bradley: He is part of the conspiracy over there.
Mr. Haggerty: Part of the conspiracy is right.
One has to question the credibility of this government. One can talk to persons who are in the oil industry. I have talked to the federal government concerning the surplus of gasoline and I have raised the question with the minister concerned about the dumping of gasoline at the ports of entry into Ontario. I have not been able to get a clear-cut answer from him about this particular area, but it seems we have a surplus of gasoline in the province and it is being dumped in areas such as Fort Erie.
There is one gas dealer in Fort Erie whose gross return for a month of selling gas in that area is $2.5 million, larger than almost all the gas stations in Ontario combined.
We have a surplus of gasoline and we can afford to dump it in these areas. I think the purpose of that would be so that both levels of government can maintain their tax revenues. There is no other cause for it. It is not because of the tourists who are coming over. I cannot blame the Americans for coming over because they are getting a bargain. It is about a $9 saving on every tankful of gas.
According to the Buffalo Evening News, a study shows that Canadian gasoline is losing its big price edge. With the recent tax increases at the federal and provincial level, they are only going to be able to save about $3.50 on a tankful, but $3.50 is a great saving to a wage earner.
I am saying to the Premier and to the government members that they have permitted this to continue. There is not one offer from this government in any of the tax revenue increases to put the money back to guarantee to the citizens of Ontario, those persons who use it, that we are going to have a secure supply.
In 1974, we had a new Minister of Energy and there was a great fanfare at that particular time. He described what the government was going to do to preserve and guarantee secure supplies of energy for Ontario. They were going to invest $100 million in the Syncrude project. Just recently, within the last year or so, they sold out that interest and cannot guarantee a supply of crude oil to Ontario.
In a sense, this may have offended Premier Lougheed. This government shows no interest in the energy problems of Canada and it has even withdrawn its support of Syncrude. They cannot have it both ways. They made $25 million out of it, but we have not seen the return to Ontario from that as yet.
Now we have this particular bill before us today in which the government wants us to endorse additional costs to the taxpayers and the gathering of more revenue. There will be no limit to this. One of the reasons this party is opposing the ad valorem tax is that there would be no accountability next year or the year after that. They have got it made, because they are going to increase revenues year after year without coming to this Legislature to explain the just cause and the reason for that increase. They will get windfall profits that will fall upon this government of Ontario.
When I look at the government's record for the past 10 years, and the expenditures and revenues generated by all areas of taxation, I can see that they have done well by it. They have increased their revenues in almost every area of taxation by an average of about 28 per cent per year, well above the inflationary trend.
I suggest that this bill will add to the inflationary cost to wage earners in Ontario. I can rest assured that they will be going to the bargaining tables this year demanding higher wages to compensate for the tax increases. The government gains nothing by it. Yet the wage earner in Ontario is being criticized and chastised by all levels of government because he is the culprit in demanding higher wages, adding to the inflationary costs. This is not true. Governments are perhaps the biggest culprits in this area by overtaxing the citizens of Ontario.
I think all the tax increases the government is going to bring about in this session of Parliament are beyond its needs. There is no need to increase taxes and hit the taxpayers in this category. For example, the Treasurer has pointed out, "Most other provinces have moved to this calculation for fuel taxes, and further, because of the rate of inflation Ontario's share of such taxes has been falling with fixed rates."
That is not so. If we look at the government's budget statements year after year we can see that they have increased their revenues because of the inflationary costs of things. They have been able to index the sales and tobacco taxes. All of these things have added revenues to the province without bringing in further taxes.
Because of the rate of inflation Ontario's revenue from its motor vehicle tax has increased by 80 per cent over the last five years. Motor vehicle fuel tax in 1977-78 was $85 million. In 1980, 1981 and 1982 it is $153 million -- a five-year increase of 80 per cent. Gasoline tax, for example, was $523 million in 1977-78. In 1981-82 it jumps to $752 million, as estimated by the Treasurer -- a 44 per cent increase. I do not have to tell the honourable members that within a two-year period the price of gasoline at the pumps has increased almost 100 per cent.
The minister has mentioned the cost per unit of unleaded and leaded gas. This is another area in which this government has failed to protect the consumer. The former Minister of Consumer and Commercial Relations (Mr. Drea) is not in the House tonight, but I recall my dialogue with him in debates on that particular area. There is perhaps no need to have unleaded gas in automobiles today. We are using smaller engines. There are smaller problems with the environment -- pollution, and so on. I can recall his letter to me -- I raised the question in the House -- and he said the reason why there are two different prices in unleaded gas -- there is unleaded gas and super unleaded gas -- is that there was a breach in the agreement between the automobile industry and the gasoline industry as it relates to the type of combustion, the ratio of high octane used in automobiles. They had reached an agreement that a certain engine was supposed to burn a certain type of gasoline. There was a breach anyway, and because the car industry did not make that engine burn the unleaded gas, we had to go to another blend, a super leaded gas, at an additional cost to the consumer. These are the areas this government should be checking to find out if there is a ripoff of the consumer.
9:20 p.m.
I do not have to tell you about the federal report relating to petroleum, Mr. Speaker. It said that much of the evidence submitted to the commission focused on the predatory and restrictive practices pursued at every level of the industry by the major integrated petroleum companies during the period from 1958 to 1973 as a means of reducing competition and a chance of enhancing prices to the detriment of the Canadian consumer.
Everything seems to relate to the consumer, and yet this government has not come through to provide some protection in this particular area. That indicates there has been a ripoff here. This government, through the price of crude oil, has jumped on the bandwagon with Mr. Lougheed now. I do not know what position the Premier has taken now. For a while he was critical of the Conservative federal government for coming in with a high excise tax. He thought that was going to kill the economy of Ontario. The economy was going to drop right down. If anybody defeated the Tory government in Ottawa it was this government here by its reaction to their proposed budget, particularly to the increases related to petroleum costs.
I suggest that one minute the Premier is charging down to Ottawa and saying, "Do not give in to these fellows in Alberta," and the next minute he is coming back here and in this budget jumping on that bandwagon. One would think he is a member of the Organization of Petroleum Exporting Countries, wanting to get whatever the traffic will bear, whatever the consumer will bear, in this particular commodity. He socks it to them. This is what he does. I do not know how long the consumer is going to sit back and take it. I do not think it will be too long. A day of reckoning is going to come when the public will say, "We have had enough." I thought they had had enough in the 1981 election. I am sure if he had brought these proposals to the public at that time he would not be sitting over there now. That is for sure.
He is playing a game with the consumers of this province. If he gets out and talks to people in the street they will tell him what I am telling him right now. They have had enough of this business of using the oil situation in Canada. One minute he is saying we have all kinds of it and the next minute that we have not. I suggest he is using the consumers. We find we cannot support this legislation to bring in tax increases.
Mr. Bradley: I loved the picture on budget night of the Premier smiling while the Treasurer was socking it to the people of Ontario. They loved that.
Hon. Mr. Davis: I always smile. You should learn to do that.
Mr. Speaker: Mr. Haggerty, will you continue please?
Mr. Haggerty: I am looking for another document here. Since the Premier is here tonight I thought I should quote this one, where he was speaking to the special first ministers' conference on oil and natural gas policy on November 12, 1979. He said, "If a new energy policy is to be credible it simply cannot be used as an excuse to raise billions of new tax dollars for general government purposes."
Mr. Roy: Who said that? The Premier?
Mr. Haggerty: Yes. "Further, our government is not looking for windfall revenues from higher prices." What does this tell us down here tonight?
Mr. Roy: When was that again? Perhaps you had better repeat that.
Mr. Haggerty: The special first ministers' conference on oil and natural gas policy, November 12, 1979. Can you recall that?
Hon. Mr. Davis: That was before you people wanted the election. That was in 1979.
Mr. Haggerty: Mr. Speaker, I was looking for one more note I had with me. I was trying to get it from the Carter commission.
Mr. Roy: Give us some more of those quotes.
Mr. Haggerty: There are all kinds of those quotes, but I would suggest to the minister responsible for raising revenues for the province of Ontario that we in this party are strongly opposed to this new ad valorem tax policy or tax structure that the government wants to implement and we suggest there are other ways to raise taxes. We suggest one way is that if they want to raise taxes, they can bring it in every year so they can be accountable for their actions and expenditures and show their need for tax increases.
There is nothing in the budget to tell us why the government is raising these taxes. There is nothing in here to say what they are going to spend the additional revenues on. Are they going to be spending them on further research in areas of conserving energy? I notice the Premier said we should be looking at areas of mass transportation.
If he was down in the Niagara region he would see that is something that has been missed in that area for years. We had it down there years ago. We used to have the old streetcar that ran from Port Colborne to Port Dalhousie -- a great trip -- but it is not there any more. If they want to implement a study or implement a program of rapid transit for moving masses of people, I suggest there are enough abandoned railroads down there that it would not cost this province one cent. They could just put the cars back on the tracks and electrify them and they would solve many of the problems in that area.
We do not want any more of their promises.
Mr. Roy: That is the system they have talked about since 1971. Do you remember?
Mr. Haggerty: The one in 1971 is the one that ran on flat wheels. That is about all I can add to this particular piece of legislation and I think there are other members here who will be expressing their views on behalf of this caucus. We are rather disappointed that the government moved in this direction of tax increases in so many areas just after the general election. This is one promise that they did not keep. The Treasurer said there would be no tax increases, but now they have indicated that all of a sudden we have got to live with it now; so they have to live with it, not us.
I have one point there. I think this bill, as an important piece of tax legislation, should be referred to a standing committee of the Legislature.
Mr. Charlton: Mr. Speaker, I rise to speak on Bill 72 and to say from the outset on behalf of my caucus that we intend to oppose this tax increase very strenuously.
I find myself in a very strange position tonight, having for the first time in my four years here to agree with at least one statement the member for Erie made tonight, that statement being --
Mr. Wildman: That's the man who thought Argentina was a Socialist country.
9:30 p.m.
Mr. Peterson: You are starting to get smart; not very smart but a little smart.
Mr. Charlton: When he said he was sitting down, that was the second statement I agreed with. It is the statement he made earlier about the fact that if this budget had been laid out clearly for the people of Ontario prior to March 19, our friends across the way would not now be sitting there. That is probably the clearest and most accurate statement the member for Erie has ever made.
I would like to take a few moments to deal with a number of statements that have come from the other side of the House tonight, in the budget and over the course of the last three years or so.
The first statement I would like to deal with is a comment the Premier made tonight and a comment the Treasurer has made on a number of occasions over the last couple of weeks since the presentation of the budget, the comment being that higher prices for energy promote conservation of energy resources.
I have a brief here that was submitted to this government by the Hamilton Automobile Club, strangely enough. The brief quotes a number of studies on European countries and the price of gasoline in Europe. This brief quotes seven different studies that have been done. What all those studies show clearly is that higher prices for gasoline do not promote conservation. In every single case, in all seven studies, the consumption of gasoline dropped temporarily after price increases and then rose again to the consumption levels that were true prior to the tax increase and, in fact, went above those consumption levels.
I want to point out to the Premier that during the course of the Ministry of Energy estimates about one year ago, the Minister of Energy (Mr. Welch), a long time colleague of the Premier, said clearly -- the exact quote can be dug out of Hansard; I was there and participated in those estimates last year -- that his ministry was well aware of and opposed to price increases in energy resources and specifically in gasoline because all the things they had looked at indicated price increases were not effective in dealing with conservation.
The comments that have come from the other side of the House tonight and over the course of the last couple of weeks are not borne out by the research this government has done and are not borne out by the research that has been done anywhere else in terms of energy conservation.
For a few moments I would like to hark back to a number of energy pricing and energy taxing statements made by members across the House over the last two or three years.
Mr. Samis: It will be painful.
Mr. Charlton: It may be a little painful, yes. I would like to refer first to some of the responses from the Premier and the present Treasurer in December 1979 as a result of the budget brought down by the government's federal colleagues in Ottawa.
In a statement he made to this House on December 13, 1979, the Treasurer said quite clearly, "It is our belief, however, that the issue of energy pricing and energy taxation will lead to some difficult and serious economic problems." He went on to say later in his statement: "In 1980, most people will pay over $200 more for their heating oil and gasoline. That is about four days' pay before taxes. What does this mean for the average Ontario worker? After taxes, the family breadwinner is going to have to work six or seven extra days just to maintain the 1979 standard of living, or they can all demand that wage increase -- and I think the members know what that would do to the inflation situation. The situation will more difficult by 1984."
I want to deal with a number of things said in there. I want to deal first of all with the Treasurer's reference to energy pricing and energy taxation leading to some "difficult and serious economic problems." I want to deal with that in terms of a number of things that have happened as a result of a number of actions by our federal government and by this province that have left us in a position of having accomplished all the things those of us in this Legislature said quite clearly in December 1979 we oppose, and oppose quite strenuously, including those members across the way.
During the course of the debate in 1979 over the Tory federal budget and the excise tax of 18 cents on a gallon of gasoline, or four cents a litre, one of the things emphasized by the government, by both opposition parties here, and by both opposition parties in Ottawa, was that the price of gasoline would reach $1.29 a gallon by January 1, 1980; $1.43 a gallon by July 1, 1980; and a range of $1.89 a gallon by 1984.
Those figures were quoted both in the media and by politicians from across the way and on this side of the House as well as by politicians in opposition in Ottawa in December 1979.
If you will recall, Mr. Speaker, the government across the way, along with the opposition parties in this House, as well as quoting those prices, quoted to this House the extent to which this province would lose manufacturing initiatives and jobs as a result of that federal budget approach.
Those figures quoted in the media as a result of the federal budget in 1979 have already been surpassed in terms of gasoline prices in this province.
Mr. Wildman: Thanks to the Liberals.
Mr. Charlton: Thanks to the federal Liberal government, yes; but also thanks to the actions taken by the provincial government here in Ontario.
9:40 p.m.
The strange thing is that the federal Liberal government kept its promise about the Conservative budget that was so violently opposed by this government across the way, the budget that caused the election and resulted in the colleagues of these gentlemen to my right being re-elected as the national government.
Our new national government, under the strenuous leadership of Pierre Trudeau, promised that its prices for oil and gas would not go up as quickly as the Tories' budget would have had them go up. That Liberal federal government kept its promise. They kept gasoline and oil prices slightly below what the Tory budget would have caused.
Unfortunately for us here in Ontario the government across the way has ensured that the small margin below the federal budget which the Liberals granted us has now been taken up by the province, and we have accomplished everything that the budget in 1979 would have caused, and more. That makes for a really unfortunate situation and leaves in serious question all that these people across the way say to us.
In that statement on December 13, 1979, the Treasurer referred, as I mentioned, to an additional $200 a year that average families in this province would have to pay for oil and gasoline.
As a result of this budget, and leaving aside for a minute the price increases on gasoline and home heating oil that have been caused by the federal government and the damage they have done, the price increases implemented by this government just on gasoline over the course of the four years between this budget and the end of 1983 will cause an increase in cost to an average family in this province in that one tax area -- never mind the whole oil industry, but in the one tax area of gasoline -- of $116 a year.
On this one item -- forgetting home heating oil and forgetting all the price increases the federal government has already jammed down our throats -- this government alone, which bemoaned $200 a year for an average family as a result of the federal budget, is imposing $116 a year over the course of the next three years.
Over the past several years we have heard a lot of rhetoric from across the way, and the Premier perhaps would say in response that there has been a lot of rhetoric from this side of the House as well. But the honourable members across the way have the power to do something about their rhetoric. Unfortunately, what we have found here in Ontario is that their rhetoric means nothing and that what they say in their rhetoric cannot be believed.
We have heard a lot of talk over the past four years in this House about the problems in the auto industry. We have seen moneys pumped into Ford to try to assist that company. We have seen this government become involved in extensive negotiations over Chrysler --
Hon. Mr. Davis: Supported by the United Auto Workers.
Mr. Charlton: It supported the final position the Premier took, which was also supported by this caucus.
Hon. Mr Davis: I just thought I would remind you.
Mr. Charlton: That is not the point. The point is that all the Premier's rhetoric means nothing. He should sit down for 15 minutes and talk to his Minister of Energy (Mr. Welch) and his deputy minister, two people who I happen to have listened to very closely last year in May during the course of their estimates. They are two people who I happen to think made some sense in terms of what they were saying, not only about energy conservation but also about problems in the auto industry and pricing.
Hon. Mr. Davis: And nuclear power.
Mr. Wildman: You have been listening to them too long. You are confused.
Hon. Mr. Davis: He was quoting the Minister of Energy. and I just assumed he agreed with him in everything.
Mr. Charlton: Obviously the Premier does not; so why should I?
Hon. Mr. Davis: That is where you make a mistake. I do.
Mr. Charlton: Unfortunately, the Premier does not; that is the whole point of the debate tonight.
A year ago, the Minister of Energy said quite clearly that one of the things causing the serious problems we were having in the auto sector, according to a study done by the government, was what was happening in the energy sector in terms of pricing, in terms of cost to the average individual in this country.
Over the past eight years since 1973 we have seen significant annual jumps in the exodus of the consumers of this country and the United States from purchasing cars built in North America. Some of the cars are built in Brampton, some of them are built in Oakville; some of them used to be built in Hamilton many years ago; some of them are built in Oshawa; some are built in St. Catharines, and a lot in Windsor.
We have seen an exodus of Canadian consumers from buying those cars, and a serious jump in the movement each year to buying imports that are fuel-efficient and in many cases less costly than similar cars produced here in Canada or elsewhere in North America.
We saw increases last year, and we are seeing increases in the first quarter of this year. This 21.7 per cent increase in the gasoline tax, and the ad valorem nature of this tax, is going to cause that tax to escalate every year; four times a year it is going to increase the cost of energy and the cost of gasoline in this country. We are going to see this government adding to that cost increase with an ad valorem gasoline tax, adding to the shift of Canadian consumers away from our auto sector and towards the purchase of imported fuel-efficient cars.
The Premier made some facetious crack last year about the Lada cars --
Hon. Mr. Davis: It was not facetious at all.
Mr. Charlton: It was facetious in the context of what the Premier is doing now, most certainly, because as long as fuel-efficient imports are substantially cheaper than fuel-efficient cars being produced here, and as long as energy prices continue to escalate with the Premier's help, then the exodus to those fuel-efficient imports that are substantially cheaper than our own products will continue to increase, and the problems in our auto sector will continue to increase as well.
9:50 p.m.
An hon. member: He wants us to buy Renault.
Mr. Cooke: They don't build those in Brampton.
Hon. Mr. Davis: They will be.
Mr. Cooke: When? That will be the day. You get the plant, we will buy the car.
Mr. Samis: A good Canadian-owned company.
Mr. Cooke: It is owned by the French government. It is better than anything this government would do.
Mr. Charlton: One of the things this government has neglected to realize in terms of the ad valorem nature of this tax, the size of the individual tax increase this year, the recurring nature of the taxes and the recurring nature of the increases in those taxes as our oil prices go up four times a year, is that this tax will penalize two major sectors of our economy.
The government likes to talk about the fact that in its view now, as opposed to its view a year ago, these tax increases will promote conservation. The reality is that this tax is a penalty against those who have already attempted to conserve. This tax will penalize those who have already tried to save money and to conserve fuel by buying small, less comfortable cars than they used to drive. In addition, this tax, like all taxes of this kind that are based on the retail price of a product, will most penalize those on low and fixed incomes and those in the lower middle-income sector of our economy.
We have listened, sometimes with frustration and sometimes with disbelief, to the Minister of Housing (Mr. Bennett) over the last three weeks. He talked about how, if the housing consumers in the Metropolitan Toronto area could not afford housing in the downtown city core, they should bloody well move out to the suburbs where the housing was cheaper. He said they should get out of the downtown city core where the prices were excessive and move to the suburbs where the prices were more reasonable.
He even threw figures at us, saying: "Mr. Cassidy, don't quote us figures from Yonge and Bloor. I will give you some figures from Mississauga and from Bramalea."
Mr. Philip: Brampton.
Mr. Charlton: And from Brampton.
This government, through this tax increase, through the ad valorem nature of this tax increase and by the approach it is taking to taxation in Ontario, is hell bent on ensuring that all the people the Minister of Housing says should move to the suburbs, even if they should move out to the suburbs and buy their homes this year, will find themselves within three or four years in the position where they can no longer afford that housing in the suburbs anyway.
Those people will no longer be able to deal with the interest rates that this government refuses to do anything about, or the gasoline tax and the other taxes that this government imposes upon their income.
As a number of people have mentioned since the presentation of this budget, the Treasurer mentioned that his budget was an inflation budget. I could not agree more. There has not been a budget brought down by this government in the four years I have been here that has added so much to the problem that Tories like to talk about so frequently as being the single most important problem to be confronted by the provinces and the federal government: inflation.
This budget is perpetually inflationary, as is the tax presented in the bill. This budget, as the Treasurer suggested in his comments about the proposed federal budget of December 1979 --
Interjection.
Mr. Charlton: Or they could all demand a wage increase. I think the member knows what that would do to our inflation rate.
In December 1979, the Treasurer was predicting the federal budget would cause an increase in the inflation rate of 1.5 per cent. Unfortunately for the people of Ontario and of Canada, the inflation rate has not gone up 1.5 per cent since that budget; it has gone up three per cent. This government not only is contributing to inflation but also is doing so in a recurring way that will add fuel to the fire each time somebody else adds some fuel to the fire.
This government is turning the fight against inflation into a nonrenewable resource. Perhaps the Premier did not quite catch that. Governments in this country are the only tools we have to fight inflation. As they take actions that fuel inflation and as they burn their bridges by adding to inflation, they are turning our fight against inflation into a nonrenewable resource. We will soon be out of that resource.
We will soon find ourselves in a situation -- as they have done in many other countries of the world -- with inflation rates of 25 and 30 per cent instead of the nine or 12 or 13 per cent we are now confronted with.
Mr. Piché: This is a good speech, but a little too long.
Mr. Charlton: I am just getting down to brass tacks.
I want to make a few comments about the ad valorem nature of this tax. The Premier said something about a week and a half ago in response to a question from the Leader of the Opposition (Mr. Smith) regarding the ad valorem nature of this tax. In response to that question, the Premier admitted to this House, probably for the first time in his career here, that sometimes some of the things done by other provinces make sense in Ontario. That is something he spent a lot of time denying repeatedly in a number of debates that have gone on in this House, at least over the four years I have been here and for a number of years before that, according to the media.
Mr. Gordon: Four years too long.
Mr. Charlton: I will probably be here as long as or longer than my friend.
Mr. Gordon: Don't worry. You will be there for a long time.
10 p.m.
Mr. Charlton: It seems strange to hear some of the comments from the other side. The government across the way just had their best shot at me. They spent as much money and as much of the Premier's time as they could afford, and I am still here -- the member for one of the target ridings. Money cannot get everything one wants to buy.
Mr. Bradley: Ian Deans is looking for that seat. He'll have the best shot yet.
The Acting Speaker (Mr. Cousens): Order. Carry on, Mr. Charlton.
Interjections.
The Acting Speaker: I said, "Order." Mr. Charlton has the floor.
Mr. Charlton: I will go back to what I was saying about the ad valorem nature of this tax. I was in the process of making a reference to a comment the Premier made two weeks ago this Thursday. In response to a question from the Leader of the Opposition about this ad valorem tax they were causing to occur in the gasoline sector, the Premier said, "The other provinces have already gone to an ad valorem tax on gasoline; why shouldn't we?"
As I said at the outset, we are going to oppose this bill. One of the reasons is that the Premier has not yet learned that an argument he has frequently used in this House applies to him as well as to the opposition. There have been a number of occasions when the Premier, the Treasurer and a number of other ministers across the way have argued that one cannot take a particular item in isolation when it is part of a package. "Discuss the whole package," they said to us.
The same is true for them when it comes to their references to what other provinces have done in taxation. This caucus would not be taking the position it is taking on this tax and a number of other taxes in this budget if this government were prepared to give us the kind of complete tax package that has been given in some of the provinces the Premier referred to, where they have also gone to an ad valorem tax on gasoline.
If the income tax increase and the ad valorem tax on gasoline in this budget had been introduced to reduce OHIP premiums, or to eventually eliminate OHIP premiums, or if it had been introduced to enrich the tax credits in this province that are outdated by some seven years now in terms of real inflation in this province, so that low and middle-income people in this province could benefit from this ad valorem tax. Or if this government were taking this ad valorem tax on gasoline in order to add new benefits to the OHIP programs in the province, like dental care for children, or getting rid of the co-payment in chronic care beds or any number of basic social programs that other provinces have, then this caucus would not be taking the position we are taking on this tax increase.
But unfortunately the Premier and the Treasurer want it both ways. They want to be able to take the money-raisers the other provinces use and ignore the rest of the tax packages those other provinces present. They want to be able to ignore the social programs those other provinces pay for in total out of their general taxation without premiums, without surcharges and without extra billing and a number of other things that go on in Ontario. They cannot have it both ways.
So if the government wants to tell us that most of the rest of the provinces have ad valorem taxes on gasoline, they should tell us about the rest of the things the other provinces do in the tax and tax credit sector, and tell us about the other things that some of the other provinces do in the social sector, and that they pay for in total, and we will listen -- but not before then.
This tax, and the recurring increases in taxation it will cause in future, are just part of a very cynical and very hypocritical budget. It is the most hypocritical budget that has come out of this government in a decade. It is just part of the worst trick that has been played on the people of this province in 15 years.
I go back to where I started out in agreeing, for once, with the statement by the member for Erie, that if this government had presented this budget and this kind of tax to the voters of this province before the election, those gentlemen across the way would not now be sitting there.
Mr. Peterson: Mr. Speaker, I am happy to rise and add briefly to the great contribution of our critic in this area. I am very happy to see the Premier here tonight. It is evidence of his lack of popularity after the budget that he is not invited out any more and he has to show up back in the House. There was a day when we rarely saw him here at night, except --
Hon. Mr. Davis: I was invited to join your friends tonight. That is the only reason I am here.
Mr. Peterson: Frankly the Premier embarrasses me. I want him to know that. However, the chap who introduced him did a great imitation; he must admit that.
I do not want to go over all the details, but I want to talk about what I consider the most hypocritical, deceitful kind of manoeuvre this government could possibly have brought about. The honourable members know the atmosphere that was created by this government as the great defender of the consumer in Ontario. I could go on at great length quoting speeches --
The Deputy Speaker: No, but you will not.
Mr. Peterson: Mr. Speaker, I want to do this for your benefit. I know that you will understand this. But I think it is very important that one understands the posture of this government and the impression it created in the electorate's mind before we faced the budget that we did. I have had the opportunity --
Mr. Laughren: Lower prices or not lower prices.
10:10 p.m.
Mr. Peterson: Mr. Speaker, my friend from Nickel Belt is getting a little exercised; I wish you would control him just a mite.
I have had the opportunity of chatting with many people subsequent to the budget and I have talked to no one -- be it expert or lay person -- who feels this is a good budget or who feels these were appropriate tax increases. In fact, the overwhelming sentiment is one of great moral outrage because of the deception. The less charitable people say, "Let the taxpayers or the voters swing for it. Let them pay because they got what they deserved when they voted for this government."
Hon. Mr. Davis: I talked to some of your friends tonight at the same place. They thought you were excellent.
Mr. Peterson: The Premier does not know anyone who would stand up and say it was a great budget because it was not. It was singularly unimaginative except at extracting money out of the public hide in as a deceptive way as could possibly be done, particularly in the atmosphere that has been created.
Hon. Mr. Ashe: Look at that budget. It is courageous.
Mr. Peterson: According to whom? According to the Premier?
I have a few other quotations --
The Deputy Speaker: Mr. Peterson, I know it is difficult to try to avoid interjections, but I would ask you to try to do that.
Mr. Peterson: -- and I want to talk about them. Would you stop interrupting me please, Mr. Speaker?
I just want to put this in the context --
The Deputy Speaker: Of the bill in front of us.
Mr. Peterson: Yes, absolutely.
I want to put this in context. The Premier, speaking in the House last October 31, was referring to the Alberta energy policy and some of the threatened cutbacks and he said this at that time:
"Quite aside from the present increases already planned for, this new compensation burden for more foreign oil will require an additional increase of $2.70 a barrel by 1982. This would, as a result of the liability created by Mr. Lougheed last evening, increase the cost to the consumers of Canada by an extra four and one half cents to five cents a gallon in 1981 beyond those increases already planned for.
"The impact of last night's statement is economic. It imparts an extra financial burden upon an already tight national economy. The burden is not being imposed on Canadians by any foreign power or by any international collapse but by a Canadian provincial government."
Do you see what he is doing, Mr. Speaker? It is quite obvious to you as a semi-rational member of the government in your other incarnation to understand what the Premier is setting up by this exchange. The Premier says, "It is both sad and of deep concern that one provincial government presiding over what is the most rapidly expanding economy in the country should respond to a continued and prolonged disagreement by imposing deep economic penalties on the working men" -- and here he bleeds for the ordinary consumer, for the so-called little man -- "and women, the pensioners, the businessmen and the people of Canada...
"My government has been and will continue to be consistent on the basic issues of price, supply and division of revenues."
That same day a question was asked by my leader and one of the responses was this: " ... the net effect on the national economy is, I think, most unfortunate. It comes at a time when the national economy needs some stimulation, as the Treasurer said yesterday." Mr. Speaker, if it needed it then, it needs it now. That was a major policy piece by the Premier of this province in response to certain external forces.
In a speech on September 27, 1979, to the Canada-United Kingdom Chamber of Commerce, the Premier said the following: "There may be evidence that the price increases we have experienced are encouraging more energy efficiency in our society. However, there was no honest consensus that significant oil price increases by themselves lead effectively to reduced consumption."
The Premier should sit down. He may learn something. He will remember what he said and it might be good for him because we are going to remind him of it.
Hon. Mr. Davis: I have already discussed it earlier with you tonight.
Mr. Peterson: I did not enjoy that conversation but I am enjoying this one because he has to listen for a change.
The Deputy Speaker: I am listening.
Mr. Peterson: The rationalization for these excessive increases and ad valorem taxes on motor vehicle fuels has been lamely positive after the fact. They say it will do something for conservation when, by their own admission some time earlier, they admitted it does nothing for conservation. That is their assertion. Now, they have dramatically changed the rules.
"The only thing we do know is that a massive increase in the price of oil can stall economic activity and slash employment growth. To choose that course when other options are available would be tantamount to restoring bleeding as a medical cure-all." Can you believe it? It is a catchy line, "would be tantamount to restoring bleeding as a medical cure-all."
"Nevertheless, we continue to stress that if we move even closer to world prices next year without basic economic changes, immeasurable damage could be done to the Canadian economy. Surely inducing a recession in Canada is not in your interest as it certainly is not in ours." Again, a very major policy piece by the Premier.
He spoke on November 12, 1979, to the special first ministers' conference on oil and natural gas policy, and said this, "Nor would the idea of indexing ourselves to massive increases in American oil prices, as they approach world levels, represent in practical terms any greater recognition of our Canadian opportunity."
So he is against indexing -- exactly the phenomenon he has introduced with this new tax -- and castigates others who sometimes put forward a point of view that we had to move oil prices up, and who talked about a fair distribution of those revenues. He was against indexing those prices because of any external forces even though he is now profiteering from them.
"Often, admittedly," he goes on to say, "we have little choice but to share America's problems. But to tie ourselves either at a rate of 90 per cent or 100 per cent to their loss of oil pricing independence would seem to us to be arbitrary and unnecessary." But that is exactly what the new tax he imposes has done. He also said at that time, "I must also say in frankness that the oil pricing proposal which is being negotiated between your government and the province of Alberta appears, from what we now know, to be an excessive and imprudent response to the claims of the producing provinces and the petroleum industry."
He goes on to say, "Without equally massive income assistance to consumers, which does not seem to be under any serious consideration, such a decision would in our opinion constitute an unprecedented raid on the consumer; not a meaningful attack on our energy problems."
Mr. Roy: Who is saying that?
Mr. Peterson: I am glad the member asked me. That is the Premier. He was so embarrassed by his previous words that he left the House, as members will have noticed. I am curious at the same time as to why the Treasurer has only been here for two or three days since his budget to defend some of his ridiculous proposals, and leaves the province's chief tax collector to sit here and try to defend his concoctions.
There again he pleads for the ordinary Canadian, the ordinary consumer who is going to be hit very hard by this consumption tax. His response in the mini-budget before the election, as I recall, was some sort of fuel oil subsidy for low-income earners. That is not a budgeted amount, and no one knows what that program is. He is trying to get federal assistance for that program. The federal government has given no indication whether it will participate or not. This government has not budgeted any amount of money for it. Again, the very person he is pretending to protect on the one hand, he is hitting very harshly on the other.
The Premier goes on to say, "I believe the Canadian people are running out of patience with the line that they have been living wildly beyond their means. Perhaps our governments have, but our families certainly have not ... Ontario has made it clear that it opposes any immediate price increase beyond the current January 1980 agreement and will remain opposed until there is a plan in place that guarantees a basic change in revenue flows, and energy and economic policies in order to: achieve national oil self-sufficiency; ... "
This new tax, this raid on the consumer, does nothing for oil or energy self-sufficiency. If the Treasurer had come to this House to put that money in a separate self-sufficiency fund for Ontario, putting it into renewables or conservation or methanol or hydrogen or something a little bit creative, he might have had an attentive ear from this side of the House. But the only thing he was creative at was stealing more money from the taxpayers' hides. There was not one new initiative in this budget either to create a job or to create employment. It was the single most unimaginative budget I have seen in my five or six years in this House.
The second point of his program -- I get carried away, I get so incensed when I read this -- is that he wants to avert an unnecessary recession. It is admitted by every economist, including his own staff, that this tax is inflationary. It will dampen consumption, rob disposable income and help to create a recession if that is in the cards this year. It definitely does not do anything to stimulate consumption.
10:20 p.m.
He wants to avoid undue hardship to the consumer. We have established already through our critic and the critic for the New Democratic Party that it does exactly that. He wants to support industrial adjustment, whatever that means, but there is no indication in his new tax that he has any ideas on that.
He goes on to say, "If a new energy policy is to be credible, it simply cannot be used as an excuse to raise billions of new tax dollars for general government purposes." That is exactly what is in this document. There is not one new initiative. It is only to reduce the deficit. This government did not even touch the expenditure side. If it were serious about assisting the taxpayer, there were a lot of ways it could have cut on the expenditure side. It did not do anything with that.
It is concerned only about balancing the budget at the consumer's expense. Its federal friends in Ottawa were dumped for exactly the same reason. It would never have had the temerity to bring this kind of tax into this House in a minority situation.
I can say in retrospect that minority government worked pretty well. It was a responsible government. History will say that was one of the best periods in the history of that government. It was not pressed. Any time it introduced a responsible program, it was applauded and supported. But this would not have passed in its singularly unimaginative form -- just a revenue grab to balance the budget.
He goes on to say this, "It would be unconscionable for the federal government not to return, honestly, all discretionary new revenues back to the people. This cannot be fudged, particularly in the case of low-income families" -- and again he bleeds -- "and those who have no immediate option but to continue to use the automobile and the oil furnace."
Mr. Roy: When did he say that?
Mr. Peterson: He said that on November 12, 1979, at the special first ministers' conference on oil and natural gas.
The Treasurer and the Premier helped dump their federal friends after the 1979 election and leading into the 1980 election. On December 13, the Treasurer responded to the federal budget with Ontario's comments. I think it will be helpful if we review some of the remarks made at the time:
"The members are all aware of the stand this government has taken with regard to oil and gas pricing. We have strongly opposed, and continue to oppose, price increases which go beyond the current federal-provincial agreement without any changes made to the distribution of oil and gas revenues.
"Many of the proposals of the federal government will not help our economic performance and not advance the capacity of our economy to grow. In the view of this government there must be a positive up-front offset, or a massive reinvestment of the enormous energy revenues to ensure that the economy of this country does not receive a mortal wound in the next year ... "
He goes on to talk about the excise tax and what it would do to the Ontario economy. He says, "In 1980 most people pay over $200 more for their heating oil and gasoline. That's about four days' pay before taxes." He says farther along, "These increases are going to finance Ottawa's deficit and to increase the already bursting treasuries of the producing provinces." What is he using that revenue for? For no other reason than to finance Ontario's deficit. He is now perpetrating himself the very things he castigated his federal friends for.
"There is even some question," as the Treasurer says, "as to whether these measures will produce the energy conservation the federal government is looking for. It has been estimated that for every 10 per cent increase in the cost of energy, ... consumption drops by only one per cent. That is hardly enough to produce the goal of energy self-sufficiency, yet it will place a heavy burden upon our economy."
There are many other reasons why they opposed the imposition of higher oil and gas prices. There are no offsets now.
Mr. Roy: Are you not embarrassed over there to hear all this?
The Deputy Speaker: Mr. Peterson still has the floor.
Mr. Peterson: I am just relying on my friend to interject.
The Deputy Speaker: You have the floor and not your colleague. We would appreciate you continuing your comments.
Mr. Peterson: I think I have successfully paraphrased some of the remarks of both the Premier and --
Interjections.
Mr. Peterson: Mr. Speaker, I should be in my sick bed, and if I was not so incensed at this particular tax measure I would be home recuperating rather than here expressing my complete rancor.
I was not very happy about a number of measures in this budget, and we will have an opportunity to discuss those in detail. But this is the single most iniquitous measure in the whole budget. We have worked through the figures. The Treasurer has stood in his place and said our figures were wrong, but he has yet to produce a rebuttal and I would invite him to do so. Our figures say that with any increase under the national energy program, any increase over the present price, the Ontario government will profit more than will the producing province. We ran through those figures.
Under the NEP there is to be a minimum $4.50 a barrel increase per year over the next three years. Of the $4.50, $2.50 will go to the federal government for the equalization fund; 80 cents will go to Alberta; 90 cents, on an ad valorem 20 per cent basis, will go to Ontario. Adding in the Petrofina refining tax of $1.15 a barrel and taking another 20 per cent of that, it brings the take up to about $1.12 per barrel for every increase for that barrel at wellhead price out of Alberta. That is a reality. That is the best-case scenario; that is the very best -- or the very least worst for the consumers of Ontario. As wellhead prices go up, margins tend to go up -- refining margins, distributions margins, retail margins, any other tax or levy that is imposed thereupon, as Mr. Lalonde has threatened to do this week because of the production cuts in Alberta, of another half cent or so a litre.
My leader stood up in the House yesterday and established at minimum that new federal levy for the oil compensation fund will cost the taxpayers and consumers of Ontario at least another $13.5 million. So for every externally imposed price increase, from whatever cause -- be it OPEC, Alberta, the federal government, the refiners or the retailers themselves -- the consumer in Ontario will pay. We are indexing our taxation system, the very thing he castigates. It is inflationary and it is profiting at the expense of inflation.
It is beyond me how a government could create this atmosphere that I gather they have successfully done over the past number of years. Responsible people were saying, "We must very seriously think about increasing the price of energy in this province and in this country; we must make sure there is a fair distribution of those revenues; we must adjust our industry to that in a meaningful and way."
No one at that point advocated there should be a ripoff by this government, that one should virtually throw in the towel on inflation and say, "We cannot fight it, there is nothing we can do about it; let's join the fight and try to profit therefrom." It really is a question of living off the avails.
That is why it is such a terribly cynical thing. The people I have talked to feel a tremendous sense of moral outrage. They feel deceived, they feel they have been virtually lied to -- and I use that word advisedly. They wake up in the shock of that budget of two weeks ago, and they say to themselves, "How could we possibly have been taken in by those people?"
Mr. Speaker: I direct the honourable member's attention to the clock.
Mr. Peterson: I was just getting good.
Interjections.
Mr. Peterson: I see there is no consensus for that view, Mr. Speaker. I will move an adjournment.
On motion by Mr. Peterson, the debate was adjourned.
The House adjourned at 10:30 p.m.