Hansard Transcripts 1983-Jan-17 | Legislative Assembly of Ontario

Mr. Peterson: Mr. Speaker, I rise on a point of privilege. I believe my privileges and rights as a member of this assembly have been abused. I believe also that there has been a significant breach of the rights and privileges of thousands of Ontario citizens by this government.

It has been revealed that the Minister of Consumer and Commercial Relations (Mr. Elgie) gave information of the proposed takeover of Greymac Trust, Seaway Trust and Crown Trust to several individuals in the trust company industry days before that takeover, and that at least one institution, according to press reports, on the basis of that insider information removed money from Crown Trust just hours before the government takeover. This option was denied thousands of families, pensioners, widows and widowers who have substantial savings frozen in these trust companies.

I would like the minister to account to this House and to those thousands of anxious depositors for the reason he perpetrated such a shameful --

Mr. Speaker: I must point out to the Leader of the Opposition that this is not a point of privilege, and I suggest that the question be put to the minister at a more appropriate time.

SUPPLEMENTARY ESTIMATES

Hon. Mr. McCague: Mr. Speaker, I have a message from the Honourable the Administrator signed by his own hand.

Mr. Speaker: W. G. C. Howland, the Administrator, transmits supplementary estimates of certain additional sums which are required for the services of the province for the year ending March 31, 1983, and recommends them to the Legislative Assembly, Toronto, January 17, 1983.

DEATH OF ALLAN REUTER

Mr. Barlow: On a point of privilege, Mr. Speaker: I would like bring to your attention and to the attention of the members of the House the passing of a former occupant of your chair, a former Speaker of this House, the Honourable Allan Reuter.

Mr. Reuter passed away on December 31. He was held in high esteem, I believe, by all sides of the House. He was a personal friend of mine and one I always looked up to while he served as the member for Waterloo South and then, as it came to be known, Cambridge.

BARGNESI MINES LIMITED ACT

Mr. Speaker: I beg to inform the House that the Clerk has received from the commissioners of estate bills their favourable report on Bill Pr34, An Act to revive Bargnesi Mines Limited.

STATEMENT BY THE MINISTRY

TAKEOVER OF TRUST COMPANIES

Hon. Mr. Elgie: Mr. Speaker, I would like to report to the House on the action taken by the government on January 7, 1983, when, pursuant to an order in council, the registrar of loan and trust corporations took possession and control of the assets of Seaway Trust Co., Greymac Trust Co. and Crown Trust Co.

Let me say at the outset that this is an interim or preliminary report on events to date. As I will relate in more detail shortly, the work of the registrar is continuing and I am not yet in a position to provide a complete report to the House, and it may be some time before I can do so. In the meantime, I undertake to keep the House informed of developments as they occur.

As I stated on January 7, 1983, the decision to proceed under the new powers contained in the amendments to the Loan and Trust Corporations Act made on December 21, 1982, was taken by the province in the belief that, in the case of each of the three trust companies, among other things, "There exists a practice of or state of affairs within the corporation that is or may be prejudicial to the public interest or to the interests of the corporation's depositors, creditors or shareholders."

Without going into any depth of detail, I would mention the following circumstances that were significant influences on our decision to proceed with what undoubtedly was and remains a very difficult and complex operation.

The general scheme of the Loan and Trust Corporations Act is that there are a number of different provisions aimed at protecting the public in respect of their deposits in corporations subject to the act. One of the most basic provisions is that the amount of public deposit liabilities cannot exceed a prescribed multiple of the corporation's borrowing base. This base is computed by determining the excess of the corporation's qualified investments and other assets over its relevant liabilities.

From our review of the transactions involving the Cadillac Fairview properties, we concluded that there was insufficient evidence to warrant an increase in the value of these properties from the $270 million at the time of their sale by Cadillac Fairview to the $500 million claimed to have been placed on them in the course of the sale to the numbered companies.

It would appear that a great deal of the justification for the higher lending value for these properties was based on various assumptions about the ability of Kilderkin Investments Ltd. to ensure that the payments were made on the $375 million in mortgages secured on these properties. We were not satisfied that this ability could be guaranteed or that such a guarantee should be treated as part of the value of the properties being mortgaged.

It was concluded that there were not sufficient grounds to justify a value of the Cadillac Fairview properties in excess of $300 million. As there were already first and second mortgages on the properties aggregating about $223 million, none of the third mortgages could then fall within the 75 per cent of real estate value statutory requirement for the mortgages made by trust companies, and they are, therefore, not qualified investments. As a result, a substantial portion, if not all, of the mortgages placed on these properties could not be taken into account in computing their borrowing bases.

In addition to the Cadillac Fairview transaction, it was apparent that there was a risk of other transactions treated in a similar fashion with a corresponding further adverse effect on the financial condition of each of the companies.

The registrar, therefore, took control of the companies to determine the extent to which these mortgage practices may have prejudicially affected the financial condition of the companies and the depositors, shareholders and other creditors doing business with these companies and, if our opinion about the financial state of the companies was verified, to determine the courses of action that in such circumstance would best serve the depositors, shareholders and other creditors.

2:10 p.m.

I would like to take a few moments to comment upon the process by which the registrar has taken possession and control of the assets of these companies and the steps that have been and are being taken by him to determine the state of affairs in each trust company. The process was a major and unprecedented logistical exercise which was organized and put into place over a very short period of time once the course of action was decided upon.

Cabinet approval to act was given on Friday afternoon, January 7. Beginning around 5 p.m. on that day, teams of the registrar's staff and other persons appointed by the registrar commenced taking possession of the Crown Trust head office in Toronto as well as that company's offices in Brantford, London and Windsor; its three offices in Montreal, Quebec; the offices in Winnipeg, Manitoba, Edmonton and Calgary in Alberta, and Vancouver and Victoria in British Columbia. At approximately the same time, other teams took possession of the three Seaway Trust offices located in Port Colborne, Welland and Willowdale, and another team took possession of the four main Greymac Trust offices in Toronto and Mississauga.

The initial administrative objectives in taking over the companies were to effect a smooth changeover in the control of the company offices, to identify and secure the various records and to commence the process of reviewing the asset portfolios, particularly the mortgage investment portfolios, without delay and without unduly interfering with the normal operations of the offices.

To carry out the various functions involved in this process, the registrar has used resources from a number of sources. To the greatest extent possible, the existing staff of the companies have been left in place to carry on their usual duties and to assist the registrar where necessary.

However, some company officials who might not be sympathetic to the registrar's actions have been excluded from the premises. In this regard, I wish to commend the staff of these companies for their co-operation in what must be a difficult situation for them. I was advised that many of them worked through to 11 o'clock on that Friday night, without complaint, to assist in the orderly changeover.

Approximately 21 members of the registrar's staff, mainly examiners and investigators of financial institutions, have been assigned to work on the review.

In addition, to effect the taking of control of the Crown Trust offices located in five different provinces, the registrar used the services of Woods Gordon. Not only was this company able to supply staff for each of the Crown Trust offices, but also it was able to dispatch immediately to each office in the country a computer terminal that enabled all the Crown Trust branch offices to be directly linked with the head office in a way that would permit an almost instant verification of amounts being withdrawn by various persons who may have deposits in more than one office. In total, approximately 70 staff of this company are involved.

The basic resources for the control of Seaway Trust and Greymac Trust came from Touche Ross. That firm supplied approximately 50 professional staff to secure the records at the head offices and branch locations in addition to using data processing experts to handle the logistics of securing outside data centres used by these companies and setting up and co-ordinating controls to monitor withdrawals made throughout the province.

I would like to draw attention to a group of persons whose services are being supplied without cost to the government. At our request, various trust companies have volunteered the services of a number of their senior mortgage officers. In total, we have had approximately 20 such personnel from eight different trust companies who have been assigned to reviewing the mortgage portfolios of these three trust companies. I think it is fair to say that without this voluntary assistance from the trust industry, it would not have been possible to carry out the review of the three trust companies involved in a timely and effective manner.

There is one other group of people who have been recruited to assist the registrar in carrying out his responsibilities and who deserve special attention. I am sure that their association with the work of the registrar has done much to maintain the public confidence in trust companies. I refer to Allen T. Lambert, a former chairman and chief executive officer of the Toronto-Dominion Bank; Thomas J. Bell, chairman and former chief executive officer of Abitibi-Price Inc., who is in the gallery today; A. Roy Voelker, CA, a former chief financial officer with Great Northern Capital, a land development company; J. David Taylor, QC, a director of Hudson Bay Mining and Smelting Co. Ltd. and a former senior officer with companies in the Anglo-American group; and Ainslie St. Clair Shuve, who at the time of his retirement in January 1980 was president and chief executive officer of Crown Trust Co.

Mr. Shuve has agreed to reassume his former position of chief executive officer of Crown Trust Co., and Mr. Taylor and Mr. Voelker have agreed to assume the same positions in Greymac Trust and Seaway Trust, respectively. This group has been meeting daily to discuss and resolve problems that arise in the day-to-day administration of the trust companies.

In addition to the above, and since December 4, 1982, the government has been advised by a group of lawyers who are specialists in corporation law from the firm of McMillan Binch, headed by W. A. Macdonald, QC, a senior partner of that firm.

We have also had the advice and assistance of J. L. Biddell, the former chairman of the Clarkson Co. Ltd. and one of the most knowledgeable persons in Canada in respect of the type of financial situation we are dealing with in the three trust companies. Mr. Biddell, in addition to providing ongoing advice, has co-ordinated our dealings with the Canada Deposit Insurance Corp. and with the various companies that have expressed interest in any of the trust companies.

One aspect of our operations gave us considerable concern in the planning stage. I refer to the possible reaction of the depositors to the registrar's action. Not having a precedent for what we are doing made it difficult to judge what was likely to happen. We thought we had to be prepared for such possibilities as an extensive run on deposits, altercations at company offices and a substantial demand for information from depositors.

To deal with, these possibilities, a number of precautions or actions were taken. Bell Canada responded to our request for additional phone lines and, even though we were not able to provide Bell with all the information needed until Sunday afternoon, they still were able to install 10 trunk lines and 20 phones at the Crown Trust head office and 15 additional phone lines at Greymac Trust.

It was not technically possible to add more public lines at Seaway Trust; so we were limited to installing additional private lines for use by the registrar's staff, thus freeing up the regular phones for inquiries. In addition, three phone lines in the ministry serving the Toronto calling area were allocated to respond to inquiries, and a Zenith line was installed to provide province-wide, toll-free service.

Most of this work was completed by Bell Canada in the early hours of Monday morning before the trust company offices were open for business. We are very appreciative of the effort put forward by Bell Canada staff in responding so promptly to our requests.

I have already said that the registrar's actions were without a precedent, and this aspect of uniqueness carried over into our dealings with the deposit insurance aspects of the matter.

As I am sure members are generally aware, deposits in trust companies are insured to a limit of $20,000. In all provinces but Quebec, this insurance is provided by the Canada Deposit Insurance Corp. In Quebec, it is provided by the Quebec deposit insurance organization, Régie de l'assurance-dépôts du Québec.

The legislation governing the deposit insurance is basically designed to deal with a situation where the insured deposits are among the liabilities of a financial institution that is being wound up or is in receivership. In those circumstances, it is possible to determine rather precisely the liability of the deposit insurer and the rights of the depositor. In the cases we were dealing with, one of our main objectives was to take action that would prevent some or all of the companies from requiring liquidation or winding up.

In these circumstances, the Canada Deposit Insurance Corp. found that its legislative powers were limited in ways that made it difficult for the corporation to respond as effectively as both we and they wished to. It was these difficulties particularly that caused us considerable concern over our inability to free up estate trust and agency accounts and to allow them to be used in a business-as-usual manner.

2:20 p.m.

In commenting on this deposit insurance issue, I would like to put on the record that the Honourable Jacques Parizeau, Minister of Finance for Quebec, has been most co-operative and helpful. He personally assisted in those early days in working out problems that were encountered in this area.

Under the arrangements made with Quebec and the Canada Deposit Insurance Corp., funds were to be made available to the three trust companies should the withdrawal of deposits exhaust the cash resources of the companies. As a condition of making these backup funds available, the Canada Deposit Insurance Corp. required that we limit withdrawals to a maximum of $20,000, the insurance limits.

To date it has not been necessary to call on this backup funding, and I might add that there have been no problems with depositors wishing to withdraw their funds that required any intervention by the police. I am advised that requests for withdrawals subject to the $20,000 limit are being handled without difficulty and that the daily volume of requests diminished as the week passed. It is clear that the message contained in my announcement got through to depositors that they were fully protected up to $20,000.

As I have indicated, taking control of the trust companies involved three objectives: (1) to carry on the businesses as usual to the extent possible in the circumstances; (2) to review the practices of and state of affairs within the three companies, and (3) to determine the appropriate courses of action to be taken once we have sufficient information from the review to permit us to make this determination.

I believe we are successfully meeting our first objective and that we are well on the way to completing the review. I would point out that Mr. James Morrison has continued to pursue his special examination and has made important contributions to our state of knowledge. He is also benefiting from the large amount of information available in the hands of the registrar as a result of his efforts over the past 10 days. As Mr. Morrison is still in the process of interviewing persons under oath, I am not yet in a position to report further to the Legislature on the progress of his inquiry.

I would like to make it clear that we have not seen it as our responsibility either to initiate or to negotiate any offers that may be made for the shares of Crown Trust Co., Greymac Trust Co. or Seaway Trust Co., and we have not done so. For the advice and assistance of any parties who may be interested in acquiring the shares of any of those companies and so that the public know the position of the Ontario government, we have established the following basic conditions that must be satisfied by any agreement that may be reached with respect to the acquisition of shares:

1. The Canada Deposit Insurance Corp. must approve of the transaction.

2. Any arrangement must result in the trust company being left in an assured financial condition that fully protects depositors.

3. The acquiror must be acceptable to the registrar and to the Canada Deposit Insurance Corp. as one likely to maintain the trust company in an acceptable condition and to operate it in a manner that recognizes the fiduciary responsibility for public funds.

4. The present owners of the trust company cannot receive any direct or indirect payment for their interests unless no public moneys are used or placed at risk to support the financial position of a trust company and all depositors and other creditors have been provided for.

5. No waiver will be given by the province in respect of any existing or future legal responsibilities of any party that have arisen or may arise relative to these companies.

I would now like to give the highlights of the draft interim reports received last Saturday from Woods Gordon with respect to Crown Trust Co. and Touche Ross and Co. with respect to Seaway Trust Co. and Greymac Trust Co.

To deal first with Crown Trust Co., the following summarizes the major comments of Woods Gordon:

1. The company's lending practices since September 1982 have departed from the conservatism practised prior to that date and have resulted in serious deficiencies now apparent in the security underlying approximately $130 million of its investments.

2. At January 7, 1983, the company did not appear to be in compliance with certain liquidity, investment and borrowing requirements of the act under which it is regulated.

3. There was a serious deterioration in the confidence of the financial community and investing public towards the company in the period leading up to and including January 7, 1983.

4. As a result, the company could not be considered a viable going concern at January 7, 1983, in the absence of (a) a substantial injection of additional capital, (b) interim support to assist in meeting liquidity demands and (c) restoration of confidence by the public and the financial community.

Turning now to Seaway Trust Co. and Greymac Trust Co., the following summarizes the major comments of Touche Ross Ltd.:

1. Neither Seaway nor Greymac has any "borrowing base," for the purposes of section 118 of the act, to support its deposits and other borrowings.

2. The basic cause of this situation in each company has been its mortgage lending and investment practices.

3. In the case of Seaway, the total mortgage portfolio as at December 31, 1982, has a book value of $273 million, of which approximately $151 million appears to be related in some way to Kilderkin Investments Ltd.

4. In the case of Greymac, the total mortgage portfolio has a book value at December 31, 1982, of $192 million, of which $78 million appears to be related to Kilderkin.

5. In most, if not all, instances of Kilderkin-related mortgages, the Seaway or Greymac mortgage is subsequent to a first and sometimes to a second mortgage and represents a loan in excess of 75 per cent of the value of the property as permitted by the act.

6. The books and records of both Seaway and Greymac were found to be seriously lacking in accuracy and completeness and are not up to date.

I now turn to an important and positive announcement which provides encouraging confirmation of the wisdom of the steps taken by the Ontario government on January 7, 1983.

I and my special advisers, J. L. Biddell and W. A. Macdonald, concluded early last Saturday morning, on the basis of the results of the Woods Gordon investigation of Crown Trust Co., that in the interests of protecting depositors against any possible losses and of seeking to support the operations of Crown Trust Co., a new arrangement should be made between the registrar and the Canada Deposit Insurance Corp. and Régie de l'assurance-dépôts du Québec, the Quebec deposit insurance board.

It would be the intent of those discussions that such an arrangement would enable Crown Trust to make payments to its depositors without restriction in amount as such deposits become due. The arrangement under discussion also would contemplate an early transfer of the company, or its business and assets, to new acceptable ownership. Without the backing of the deposit insurance institutions, this would not be possible because of the absence of a borrowing base in Crown Trust Co. on which to justify continuing any loan or trust operations.

Messrs. Biddell and Macdonald explained these conclusions late on Saturday morning to representatives of the Canada Deposit Insurance Corp., as a result of which active discussions have been carried on with that corporation during the weekend. I am confident that these discussions will be brought to a successful conclusion within the next few days so that there will be no restrictions on the ability of Crown Trust Co. to meet all its obligations to depositors as they fall due.

In the course of these discussions, some of which are still under way, I have undertaken to the Canada Deposit Insurance Corp. and the Quebec Deposit Insurance Board that at an early date I will introduce legislation related to Crown Trust Co. to confirm that the registrar, in pursuit of the objectives of protecting all depositors and creditors, has the full power to sell all or part of its assets and undertaking or make other appropriate arrangements.

2:30 p.m.

It is our objective that, notwithstanding what has happened to the company during the past few weeks which made government action to protect depositors necessary, the new arrangements respecting Crown Trust would mean that all depositors, estates and trusts with Crown Trust would be safe and secure and that business could thus carry on in a normal way. The preliminary assessment of Seaway Trust and Greymac Trust indicates that they are in a more difficult financial position than Crown Trust, but it is too soon to say with certainty what might happen to them.

In my statement to the House on December 21 past, I said we should be addressing a broader range of issues than was covered by the unnumbered bill proposing amendments to the Loan and Trust Corporations Act that was put out for discussion by my predecessor. I also stated I believed that the most appropriate method of proceeding would be by issuing a white paper on these issues. This view has been strongly reinforced by our experiences of recent weeks. The registrar has obtained a great deal of information respecting the operations of each of Seaway Trust, Greymac Trust and Crown Trust that will be very useful in developing proposals for that white paper.

Without wishing to prejudge any issues or to limit the scope of the white paper as it is subsequently developed. I think it is clear we must address the question of ownership of trust companies, the definition of inappropriate non-arm's-length transactions, the impact of rapid changes in interest rates and real estate values on the operations of trust companies, and other related issues. I do not believe it overstates the situation to say we should rethink the basic scheme of the act and ensure that the requirements placed on the owners and operators of trust companies are consistent with the needs of the current business environment and with the fact that there is no inherent right to operate a trust company independent of a corresponding obligation to protect the public moneys entrusted to it.

It is a privilege to be permitted to seek deposits from the public and only those who fully accept the fiduciary nature of the business should be able to operate a trust company in Ontario. The goal of trust company legislation must be to ensure that only such persons are allowed to operate a trust company and that they meet this fundamental requirement in their business conduct. A first and necessary step was taken on December 21 with the enactment of the requirement for registrar approval of trust company share transfers where more than 10 per cent of its voting shares are involved.

It is also apparent that the $20,000 limit on insured deposits should be changed immediately. In this regard I am encouraged by the recent statements of the Honourable Paul Cosgrove, Minister of State for Finance, that Ottawa is considering this issue. I would strongly encourage him to urge his colleagues to move now to announce a substantial increase in the insured limits that will be made effective immediately. I have just received a note indicating that the Honourable Paul Cosgrove is at present announcing to the House of Commons that there will be a new $60,000 limit that will be effective as of today.

It has also become apparent to me and my staff that there is an urgent need to review in depth the administrative procedures and the resources allocated to the supervision of financial institutions. I believe our current legislation and administrative procedures are designed in large part to deal with honest and responsible business administrators conscious of their financial responsibilities, which has been the overwhelming majority of those operating trust companies in Ontario.

They have not hitherto been designed to deal with those who can so structure their affairs that it is exceedingly difficult to detect irregular or illegal activities. It would appear to me that in the past we have relied on the records of companies being what they appear to be. We may, in the future, have to commit greater resources to the review of financial institutions to enable us to make more detailed and extensive examinations of some operations on a more regular and routine basis.

In consultation with my deputy minister and the executive director of financial institutions, it has been decided that a complete review of our administration and procedures in the area of financial institutions will be carried out. As a preliminary step, an internal but independent review has been initiated.

In addition to the general objectives I have just indicated, this review will also be designed to raise issues related to administrative procedures that should be addressed in the white paper and, further, to determine whether the review should be supplemented by a review carried out by an outside organization that is very familiar with the operations of financial institutions and the problems that arise in the course of administering regulatory legislation.

I attach a high degree of urgency to the preparation of the white paper and I have asked my staff to give it all possible priority. In saying this, I trust the members will realize that the current review of the three trust companies has monopolized just about all the time of the senior staff working in this area. However, as I have indicated above, this experience will provide them with insights into many of the problems that should be raised in the white paper and should therefore assist them in this task.

CONSIDERATION OF REPORT

Mr. Peterson: Mr. Speaker, I have a point of order which I would bring to your attention.

It is our belief that this entire trust company matter should be examined by a complete royal commission and also, at the very least, by a committee of this Legislature.

The annual report of the Ministry of Consumer and Commercial Relations is not a statutory annual report and cannot, therefore, in the normal course of events be referred to a committee by a petition of 20 members. Nevertheless, that report has been referred to a committee by this House in the past, a reference which formed the basis of the examination by the standing committee on administration of justice of the Astra/Re-Mor affair, which I am sure you and government members will recall.

My point is that a reference to a committee of the annual report of the Ministry of Consumer and Commercial Relations has a very significant precedent. A reference of this affair to a legislative committee would require the unanimous consent of the House. As a consequence, I would like to seek the position of the government House leader on this issue as to whether the government will consent to this matter going before a legislative committee.

Under standing order 33(b), I have a petition which reads, "We, the undersigned, petition that the annual report of the Ministry of Consumer and Commercial Relations for the year ending March 31, 1982, be referred to the standing committee on administration of justice." I ask the government House leader to give this unanimous consent.

Mr. Speaker: I must point out to the Leader of the Opposition that this is not a point of order and I must rule that it is out of order.

Mr. Nixon: Mr. Speaker, on the point of order, if you will permit me, I think my leader has pointed out to you that there is a precedent for the report of the ministry to be sent to committee. Surely it is sufficient for the Leader of the Opposition to ask you to put to the other members of the House that a similar reference could take place at this time so that the justice committee could proceed, without delay, to review the matter.

Mr. Speaker: I must point out to the House leader of the opposition that nothing is out of order. It is not a point of order, as I said before, and therefore I rule the motion out of order.

ORAL QUESTIONS

TAKEOVER OF TRUST COMPANIES

Mr. Peterson: Mr. Speaker, obviously this statement raises a great number of questions. From what I can determine, about half of it is describing a military operation in taking over these companies and the rest of it is self-justification.

It is already out of date, as I am sure the minister is well aware. On page 4, he states that the objectives are to continue the business in an ongoing state even though the circumstances are unusual.

The minister is aware that Mr. Rosenberg has issued a statement today saying that he has instructed the lawyers for Greymac Credit to proceed with the voluntary winding-up of Greymac Trust Co. So the minister's information is already out of date.

The critical question is at page 17 of his statement where the minister says the practice has "resulted in serious deficiencies now apparent in the security underlying approximately $130 million of its investments." Is the minister saying there is $130 million missing from Crown Trust Co., and if he is saying that, where is it?

2:40 p.m.

Hon. Mr. Elgie: Mr. Speaker, first of all, on this side of the House we are getting a little tired of the member's dribs and drabs techniques. This daily habit the member has been indulging in of dropping a little information to try to leave the false impression that this minister, this ministry and this government have not been in control of things, depicts the kind of thing that is questionable about their whole performance this week.

Mr. Epp: Tell us about Re-Mor.

Mr. Breithaupt: How about Argosy? What about British Mortgage? You said it would never happen again and it is happening.

Mr. Speaker: Order. The Leader of the Opposition has asked a question. The minister will reply, please.

Hon. Mr. Elgie: Mr. Speaker, I have received the statement made by Mr. Rosenberg at 11 o'clock today and I am aware of his intentions. Those will be legal matters the parties will have to look at, but as of this moment the registrar is running those companies and is in control of the assets.

With respect to the member's other statement regarding the assets of Crown Trust, I want to make it very clear that because of the principle that I outlined clearly in the statement with respect to valuation and the value of mortgages, in our view those mortgages are overvalued and have seriously impaired the borrowing base of that company.

Mr. Peterson: Is the only irregularity here then the questionable mortgaging practices, which I am sure the minister knows have been going on for several years in some of these companies? Is that all the minister is saying today, or is he saying there are some assets which cannot be accounted for? The minister is aware of press reports indicating that a substantial amount of money is missing from the assets of these companies. Indeed, is that or is it not the case?

Hon. Mr. Elgie: I think I have made it very clear to this House and to the public that as further information becomes available to me, I will relay it to this Legislature. When that information is available to me, I will provide it to this Legislature.

Mr. Rae: Mr. Speaker, there seems to be an ambiguity in aspects of the minister's statement. On page 24, he refers to the fact that the laws "have not hitherto been designed to deal with those who can so structure their affairs that it is exceedingly difficult to detect irregular or illegal activities. It would appear to me that in the past we have relied on the records of companies being what they appear to be."

I would like to ask the minister if he is saying there has been a process of deliberate concealment or fraud with respect to any one of these three companies.

Hon. Mr. Elgie: I think the statement is quite clear. What I have said is that the legislation has "not hitherto been designed to deal with those who can so structure their affairs that it is exceedingly difficult to detect irregular or illegal activities." That is what I said. When I have more to report to this House with respect to these three companies, I will do so.

Mr. Peterson: Is the minister saying he does not know if there is any money missing? The police have been investigating this for some time. Mr. Morrison has been in there for close to nine weeks now. Surely he owes us more of an explanation than he has given us today. What is the state of those deposits and the assets? He has a responsibility to this House to tell us. This is the first time he has had an opportunity to become public. This is a very inadequate response to the information people in this province are demanding.

Hon. Mr. Elgie: I am well aware of my responsibilities, as I am well aware of the obligations of a minister of the crown, because 'minister" means "servant of the public."

I am reporting to this House and therefore to the public on the information that is currently available. The Liberal Party can play the games it has been playing for several days -- political opportunism, self-serving, self-righteousness, whatever it wants -- but the facts, as I can relay them to this Legislature within the limits imposed on me by legal obligations or other matters, will be reported to this House.

Mr. Peterson: The minister has learned nothing in his ministry.

Let me refer him to page 18, where he is discussing Seaway Trust Co. and Greymac Trust Co. In point two, he says, "The basic cause of this situation in each company has been its mortgage lending and investment practices." Is he aware now that this has been going on for two years right underneath his nose? Why were his regulators not there to find out this series of transactions before we had to come to this calamitous action he had to take in the past few weeks?

Hon. Mr. Elgie: Mr. Speaker, the calamitous action the member refers to results from legislation that the Legislature passed in this House on December 21. To talk about the results of that legislation producing calamitous activities I think is so inappropriate that that young man should go out and talk to his advisers, because if he knows who he is talking to he should look over his shoulder.

Interjections.

Mr. Speaker: Order.

Hon. Mr. Elgie: Got you going, eh? The Leader of the Opposition should be grateful to the member from St. David; that adviser of his is over his shoulder all the time, baby.

Mr. Speaker: Order.

Hon. Mr. Elgie: The statement I made is reported and taken out of the Touche Ross report. When there are more results of those investigations and those examinations to report to this House, I will report them.

Mr. Peterson: Let me ask the minister a simple question. When did he first find out that these strange financial practices were going on in the subject companies, that is Seaway and Greymac? Did he just find out after Touche Ross went in or did he and his ministry know before? In particular, I would remind him that Seaway came before cabinet for two or three orders in council to increase its authorized share capital. I would also remind him that the registrar's responsibility is to issue an annual report looking into these companies. Did he know before or did he just find out?

Hon. Mr. Elgie: I am satisfied that the registrar has been conducting his activities very effectively.

Mr. Rae: Surely the minister will agree there is a basic problem here. On page 18 he states, "The basic cause of this situation in each company has been its mortgage lending and investment practices." The minister will also know that the cabinet, twice in 1982 alone, authorized an increase in the capital base of Seaway Trust. In the light of those two facts, I would ask the minister, would he not at least agree there has been a fundamental breakdown of the regulatory process with respect to this company?

Hon. Mr. Elgie: I indicated quite clearly in the statement that I have asked for an internal review of the administrative practices and procedures of the ministry and have also indicated that, in addition to using that information for inclusion in the white paper, if circumstances warrant it I am prepared to have an external review by someone competent in the financial institutions area.

Mr. Peterson: I just cannot figure out whether the minister is saying he is happy with the regulatory performance of his ministry or he is not, but let me tell him that I am not. Let me also tell him these things have been obvious to prudent people for some time.

Mr. Speaker: Question, please.

Mr. Peterson: Is the minister prepared now to submit this entire matter to a royal commission inquiry to look into not only the financing practices of these companies but also the performance of his ministry, to make sure this never happens again in this province?

Hon. Mr. Elgie: We have the Morrison special investigation going on. We have possession of the assets by the registrar with 100 to 150 people involved in obtaining information and, in the midst of this, here is the member calling for a royal commission. I have to tell my friend that the information that will come out of what we have under way today will be far more effectively obtained as it is being obtained today and will produce results far more effectively than any royal commission.

Mr. Speaker: The member for York South with his first question.

Mr. Rae: Morrison may not give us the answers with respect to the minister's conduct and the ministry's conduct, which is a separate problem.

SALE OF RENTAL UNITS

Mr. Rae: Mr. Speaker, my question to the minister has to do with the tenants of the original Cadillac Fairview buildings. Let us get back to basics. As I read the statement, the minister is saying that in his view there were not sufficient grounds to justify a value of the Cadillac Fairview properties in excess of $300 million. What does this judgement and finding with respect to the mortgage question and the valuation question do to that entire transaction? Can he tell us now, since it is mentioned nowhere in the statement, exactly what the status of that transaction is and who those numbered companies are? We still have not got an answer to that question, and we have been waiting three months for an answer.

2:50 p.m.

Hon. Mr. Elgie: Mr. Speaker, with respect to the obiter dicta at the beginning, I am quite confident in my own performance in this ministry and in any ministry I have been in in this government. If the honourable member is slurring or imputing a slur --

Interjections.

Mr. Speaker: Order.

Hon. Mr. Elgie: -- on the civil servants in this ministry, I have to tell him they are the finest, most dedicated and hardworking people I have ever encountered in my life, who have worked way beyond the duties required of them. So if that is what he is saying I resent it personally and on their behalf I resent it.

With respect to the tenants, the member knows very well that the reason the government moved as it announced on November 16 was to protect tenants who might be exposed to increased rentals on the basis of financing charges as a result of sales or resales such as this while the whole issue was reviewed by Stuart Thom.

As to the legal effect the statements made by the particular companies involved, that I have reported to members today, have on that transaction, those are matters that will obviously have to be looked at as the days and weeks go by, and as I have further information I will report it to him.

Mr. Rae: I wonder if the minister could tell us why the tenants should have to pay any increase at all, let alone five per cent, three per cent or two per cent, when from the minister's own statement the transaction is something of a bogus transaction because it is based on hyperinflated mortgages. When Leonard Rosenberg's profits are beyond reach and Mr. Player's profits are apparently beyond reach and we still do not know who the numbered companies are, why in goodness' name should the tenants have to pay anything?

Hon. Mr. Elgie: In his haste to put his question I suspect the honourable member has overlooked the fact that the legislation puts a five per cent cap on rent increases related to financing charges, but the guidelines introduced by the commission limit financing charge pass-through for a period of five years to the first sale. That is the option they have, and the legislation clearly states that it shall be the lesser of the two if the commissioner in charge makes that decision. So tenants are not faced with increased costs relating to the resales of those properties, and it is inappropriate to suggest they are.

Mr. Peterson: Mr. Speaker, I know the minister wants to protect the tenants in the circumstances because he has constantly told us he cares about them. Perhaps he would care to explain to me how he intends to handle the following problem. The minister is aware, of course, that Mr. Player is unable to bank at the moment, so it appears that no banks are prepared to take the 25,000 or 30,000 rent cheques that he handles on a monthly basis. The minister is also aware that he has over $2 billion in financing, paper that is coming due and has to be refinanced, and a lot of the financial agencies are not prepared to touch him.

What is the minister doing to make sure these buildings are refinanced in the orderly course of business? What is he doing to make sure that those cheques are received and distributed appropriately and to make sure that these buildings, if Mr. Player cannot refinance them, are going to be well managed and the rights of the tenants protected in those circumstances?

Hon. Mr. Elgie: Mr. Speaker, I think the Leader of the Opposition understands quite clearly that the decision by various banks with respect to Mr. Player and Kilderkin's banking practices has nothing to do with this government. That is their decision.

Mr. Peterson: It is becoming your problem.

Hon. Mr. Elgie: You may think so, but I am telling you those are decisions not made by us and over which we have no control; in any event, Mr. Player will have to make the best arrangements he can. With respect to the other obligations that other people have vis-à-vis their mortgages, they will have to seek legal counsel.

Mr. Rae: Can the minister tell us how he intends to find out who owns the numbered companies? Can he tell us when he is going to find this out and when he is going to give the House and the tenants of Cadillac Fairview this kind of information so they will know who their landlords are and we will know who the ultimate owners of these buildings are?

Hon. Mr. Elgie: As the leader of the third party knows, the Morrison special examination is still going on. They are still examining people under oath, including persons who should have that information. In any event, I believe it has been made clear to members of this House and to the public that in circumstances where the Residential Tenancy Commission deems it important to have information about ownership it will require it.

Mr. Rae: It would be interesting to know what basis in law that has. It would be immediately challenged, I would suspect.

TAKEOVER OF TRUST COMPANIES

Mr. Rae: Mr. Speaker, I would like to ask the minister if he can confirm the news reports which say that he met with "representatives of a select group of trust companies on January 4, 1983." Can he tell us exactly what information was given to those present at that meeting, three days before the takeover of Crown, Greymac and Seaway? Can he also inform us of any other meetings with trust company officials prior to January 7, 1983?

Hon. Mr. Elgie: Mr. Speaker, first, the cabinet met on Tuesday, January 4. Unfortunately, because of flight arrangements I was unable to be there in time for the cabinet meeting, and discussion and decision on the matter before cabinet was postponed for further consideration on Thursday and again on Friday.

I am advised and I accept that in view of the possibility that a decision might have been reached on that Tuesday, January 4, the trust industry association was contacted, not individual trust companies. They, in turn, brought representatives to a meeting following the close of business. At that time they were advised that cabinet had contemplated some decision but the nature of the decision was not relayed to them and further discussion about anything related to that matter before cabinet was not put to them.

They were not recalled until I requested the president and the administrative executive of the Trust Companies Association of Canada to meet with me again on Friday after the close of business, when I advised them of events that had happened and went on from there.

With respect to other meetings, to the best of my recollection, there was one meeting which the Premier (Mr. Davis) and I attended -- I believe it was the day before legislation was introduced -- in which we indicated to them our intentions but did not ask whether they wanted us to do it. We were there to tell them what our intentions were and to receive their views. I believe that after the legislation was introduced there was a further meeting with the trust industry by a representative on my behalf, again not with selected trust companies but rather through the industry representatives.

Mr. Rae: I wonder if the minister would care to comment on the propriety of the alleged withdrawal by the Trust Companies Association of Canada of $64,000 from Crown Trust and the attempted withdrawal by Guaranty Trust of a 51-million deposit certificate, also of Crown Trust. How does he feel about that?

Hon. Mr. Elgie: Again, I do not want to be critical, but I got into the habit when I was a practising physician of finding out the facts before I operated. I think the first step to take is to find out the true facts of those accusations.

Mr. Breithaupt: Which end are you starting at this time?

Hon. Mr. Elgie: I have cracked a few heads in my lifetime too, and yours might be the next. Mind, I think the skull would be a little thinner and it would not be as much work to get the bone flap up, but you would not find anything beyond the skull.

Interjections.

Hon. Mr. Elgie: Is the member for Hamilton Centre (Ms. Copps) shocked? That was my job. I am sorry to tell the member, but that is what I did.

As soon as the facts of those reports are ascertained, I will make a determination as to whether or not the issue should be reviewed further. If they are as reported, certainly I have the same concerns as the member has about it.

Mr. Peterson: Mr. Speaker, the minister has had some time to find out. It happened last week, 10 days ago. Would the minister investigate and report to this House tomorrow whether any of the people who had inside information and knew about his takeover -- and there were a lot of them -- used their insider information to withdraw money prior to his takeover of those companies?

Surely he should be concerned about the propriety of this situation. One of the whole questions we are dealing with here is insider information -- the improper use of information for self-serving purposes. Surely he has to be clean in this matter and so far he has not been. Will he come back tomorrow to this House and report on everything that transpired?

3 p.m.

Hon. Mr. Elgie: Mr. Speaker, unlike the Leader of the Opposition I like to find out facts before I try to get political Brownie points.

Mr. Peterson: No you do not. You have been --

Mr. Speaker: Order. Will the honourable Leader of the Opposition please resume his seat?

Hon. Mr. Elgie: I have indicated what I will be doing. I will first of all be verifying the facts of the reported story and if they are found to be so I will be making decisions about other measures which should be taken. When I have the information required for a report to this House on that matter I will make it.

Mr. Rae: Mr. Speaker, my final supplementary has to do with the contrast between those with insider information and those who do not have it. I refer to the advantage those on the inside have apparently -- or allegedly -- been able to take compared with a retired couple in Ottawa who sold their house and invested the proceeds in guaranteed investment certificates of various trust companies. They use the monthly interest of those GICs to pay their rent. I am told $20,000 of their GICs are with Seaway Trust and they have discovered that no one will cash their monthly interest cheques which they need for their rent.

The minister should be aware there is a real concern over what is happening here, a perception of a genuine inequality. Certain people were able to take advantage of insider information, take out $64,000 before the companies were taken over, and other people --

Mr. Speaker: Question please.

Mr. Rae: -- who need the money for their rent are not able to do anything about it. So the minister should be aware of that.

Hon. Mr. Elgie: Again, I would think that on reflection the member would say it is alleged there were withdrawals on the basis of insider information. He did not quite say that -- if he looks at Hansard he will not find that. I am sure that is what he meant to say but in his haste -- I understand all that.

I am very sympathetic for the plight of people like those he has described in Ottawa. We have done and continue to do our best to allow the company to operate in as normal a fashion as possible, taking into account the constraints under which we are operating. As the member knows, those people are quite able to withdraw up to the limit of insurance at this time.

Mr. Peterson: The minister is no doubt aware that under the Ontario beef cattle financial protection program, all dealers in Ontario must be bonded under the Ministry of Agriculture and Food legislation. This deposit is intended as protection for livestock producers who sell their products to these dealers.

I want to bring to the minister's attention an example of his failure to act to restore confidence in the current situation which arose last week. The livestock commissioner of the Ministry of Agriculture and Food assessed Bright Veal Meat Packers of Toronto that on the basis of the size of their operations they should post a $280,000 bond as required under the current legislation. That was on January 11 and 12 of last week, Tuesday and Wednesday.

Bright Veal Meat Packers then tried to use a guaranteed investment certificate of $500,000 issued by Crown Trust as collateral. All the appropriate directions were obtained, yet the Ministry of Agriculture and Food refused to consider the Crown Trust certificate as security although they were prepared initially to accept other trust companies' --

Mr. Speaker: Question please.

Mr. Peterson: The question is are these companies in business? Why are his colleagues in other ministries not accepting security on the basis of those companies? What is the status of those companies? Are they going on or are they not? What instructions is he giving?

Hon. Mr. Elgie: I indicated very clearly, in the depth that I am able to at this time --

Mr. R. F. Johnston: Let somebody else ask some questions.

Mr. Speaker: Order.

Hon. Mr. Elgie: -- the extent to which businesses have been operating under the severe constraints that we all have during this period of assessment. When there is further information to report to the Legislature I will be glad to give it. In the meantime, if there were concerns about why that was not acceptable as a bond I think the member should address that to the minister involved.

Mr. Nixon: You are the minister involved.

Mr. Speaker: Order.

Mr. Peterson: He is the minister. He shut down the operations. He has jeopardized the security so people cannot carry on a normal commercial transaction. He should take this opportunity to make a statement of how people in this situation should act. What can they do? No one is providing any answers and I want the minister's answer right now. Is that good security from Crown Trust and the other trust companies or is it not?

Hon. Mr. Elgie: I understand the game the member is playing. We all understand the game he is playing. I have clearly reported to him the present information that is available on the three trust companies and have indicated the intentions of the government regarding discussions that are taking place at present relating to Crown Trust. When all those matters are resolved and when I have further information to report to this House, I will do so.

Mr. Rae: Mr. Speaker, I wonder if the minister could at least agree to negotiate with the banks and with members of his cabinet with respect to some of their activities? Will he negotiate with the banks concerning their obligation to at least cash the GIC monthly interest cheques instead of standing back and allowing them to close ranks, not simply against the trust companies but against the trust companies' depositors? That is the issue. The minister should know that cancellation of a GIC costs money.

Hon. Mr. Elgie: That is one of the issues we have been discussing with the banks. To date it involves not just us but primarily the Canada Deposit Insurance Corp., which has put guarantees of backup funding and made that available to the trust companies. It is an issue we are aware of. It is a very difficult one, I understand that. If it can be resolved, it will; if not, I hope to be able to report to the House when I have further information.

Mr. Speaker: New question, the member for Welland-Thorold.

Mr. Swart: Mr. Speaker, on the same subject, I have a question for the Minister of Consumer and Commercial Relations.

On page 21 of the minister's statement he makes this comment: "The new arrangements respecting Crown Trust will mean that all deposits, estates and trusts with Crown Trust are safe and secure and that business can thus carry on in a normal way." The next statement is, "The preliminary assessment of Seaway Trust and Greymac Trust indicates that they are in a more difficult financial position than Crown Trust, but it is too soon to say with certainty what might happen to them."

Is the minister telling us that there is not the same kind of hope, or that there is very little hope, of working out a plan to secure the depositors with Greymac and Seaway?

Hon. Mr. Elgie: I am really not saying any more than I reported in the statement. The preliminary information we have to date on the basis of the interim report indicates they are in a more difficult financial position. Clearly, as I stated at the outset and as I repeated today, if any way can be found to keep any or all of these companies viable, it will be found. When I am able to report to the House with that information I will do so.

Mr. Swart: I think the minister said the increase to $60,000 in the deposit insurance that he announced would be effective today. Will it apply to the three companies so that all depositors will get their $60,000 -- including the depositors at Greymac which announced its dissolution today? If the federal deposit insurance does not apply will the minister change his legislation to ensure that this province will give that $60,000 guarantee on deposit return, in view of the fact his legislation and policing are inadequate to meet these problems?

Hon. Mr. Elgie: I simply reported a phone message to the Legislature. I will have to get further details. The information I have been given is that the new $60,000 deposit limit would be effective as of today. Certainly I will be pleased to report to the House what that means in terms of the questions the member has asked.

I am sure the member, as a great reader of parliamentary history, will recall that in 1967 this government raised the issue of deposit insurance, introduced legislation and prompted the Canadian government to bring in the whole issue of the Canada Deposit Insurance Corp. Having done that and having commended the federal government for doing it, as a country we now look to the Canada Deposit Insurance Corp. to provide nationwide coverage with respect to deposits in trust and loan institutions and in banks.

Mr. Peterson: With respect to the health of the various trust companies, no doubt the minister is aware that a number of people have been withdrawing their assets from these companies and indicating their intentions to so do. Pension fund lawyers are withdrawing their estates from Crown Trust and the others as well. Does the minister know how much has been withdrawn? What are the indications to date of how much that will be? What is the accounting, after the first week, of how much those assets have deteriorated?

3:10 p.m.

Hon. Mr. Elgie: Mr. Speaker, it is wrong to believe there was in any sense of the word a run on the trust companies, either these specifically or trust companies in general. I do not have the figures before me yet but when they are available and when I am able to report them to the House I will. It has been made clear to me that the number of withdrawals diminished rapidly as the week went by. To date, I would suggest there has not been any serious impairment of any of the companies from withdrawals. Again, I would have to await a further report on this.

Mr. Peterson: The minister is aware that Ian Outerbridge, the lawyer for Mr. Rosenberg, wrote a letter on or about January 9, 1983, to David Richardson, the president of Clarkson Co., who are acting as agents for the government in the control and takeover of the assets of Crown. In that letter it is indicated that with respect to the potential sale of Crown, Mr. Rosenberg was prepared to put up $35 million from the purchase price for a two-year period to secure "a list of particular transactions which you indicated to us were presently advised soft."

Would the minister indicate which transactions of Crown Trust are considered soft? Is it just that Cadillac Fairview deal and all the transactions attendant thereto, or are there other transactions in the Crown portfolio that are considered soft?

Hon. Mr. Elgie: I have indicated in a general way the number in dollar terms with respect to those elements of the mortgage portfolio in which there may be some overvaluing. However, until further information is available to me I will not be reporting on this issue further.

Mr. Peterson: When did the minister first find out about this whole matter? Was it after the Cadillac Fairview deal, or did he have any indication beforehand that this was going on?

Hon. Mr. Elgie: I do not intend now or at any time to get into a detailed review with respect to the financial affairs of trust companies in this province. I have indicated that an internal review of the practices and administrative procedures is under way and I have indicated what I intend to do after that.

CLOSURE OF CHRYSLER PLANT

Mr. Cooke: Mr. Speaker, I have a question to the Minister of Industry and Trade regarding the Chrysler situation. I would like to ask the minister if he is aware that Chrysler is today announcing the closure of the spring plant in Windsor? This puts 300 people out of work as of July 15, 1983, in addition to cancelling contracts sourcing parts from SKD, National Auto Radiator, Cardon Press, Tecumseh Metal and several other companies within Ontario. Thus it means several hundred other jobs will be lost. What contact has the minister had with the corporation?

Perhaps he could also indicate the position of the provincial government on the cancellation of the negotiations on the loan guarantees. Where does the Ontario government fit in on this and why has the minister been so silent on this very important matter?

Hon. Mr. Walker: Mr. Speaker, I am aware of the impending closure of the spring plant in Windsor and, of course, virtually everybody is aware and has been aware for many months that this was likely.

I was in touch with officials of Chrysler this morning and I have been in touch with them a number of times in the last few weeks, particularly as it related to the spring plant. I am aware that Chrysler is the last company of the automobile firms to be manufacturing at their own spring operations. AMC, Ford and General Motors have completely phased out that operation.

Second, I understand that Chrysler was losing $5 million per year on this plant, and these figures have been verified by the federal government. It has been inevitable that the closure would occur; it has been known for the last year. Today it has taken effect. I am informed the employees of that plant will all find work within the system in the next while.

Chrysler at the moment has a disproportionate share of its employees working in Canada as opposed to those in the United States. It is anticipated that all of the employees who might have been phased out of the spring plant in Windsor will be deployed in other plants and I am informed that virtually nobody will be out of work.

I am aware Chrysler has something like 11,000 employees working in Canada at this moment, some 8,500 of whom are in Windsor, so in many respects they have lived up well to that particular obligation of maintaining employment contracted for some time ago.

Mr. Cooke: Mr. Speaker, it does not matter what a corporation does in this province. They can always count on the Minister of Industry and Trade to protect them and defend them in this Legislature.

Mr. Speaker: Question, please.

Mr. Cooke: Does the minister realize the seniority clause within the contract means the 300 employees at the spring plant will probably be protected but that they will bounce other employees and 300 people will be thrown out of work? Does he not even realize that basic fact?

What is the provincial government's position on the renegotiation of the loan guarantees? What role does the minister plan to play? Does he intend to encourage the federal government to designate all the van wagons, the T115s, that are produced in Canada as trucks so that Chrysler Corp. has to maintain the production of cars in Canada, which is crucial for that corporation and for the employees? What are his expectations? Does he know what the seven demands of the corporation are with respect to the amendments to those loan guarantees?

Hon. Mr. Walker: Mr. Speaker, I think it would be a little easier to deal with one question at a time. The honourable member might find it a bit easier to ask them that way than to go through about nine different questions at once.

Let us go through the questions the member has posed as much as I can remember them. In the first one he talked about the people who will be displaced. At the moment there is an attrition, I am informed, of 75 Chrysler employees a month. When added up that will equal the 235 hourly-rated employees who will be laid off in the process and the 43 salaried workers who are currently working at the facility. So I think it is fair to say that by the attrition process there will not be an absolute displacement. What will happen, of course, is that there will not be a restoration of that employment.

Mr. Cooke: You will probably redefine that as job creation.

Hon. Mr. Walker: I think the member has to pipe down long enough to hear the answer, then respond if he would like. Would he give me the benefit of that? I was extremely quiet when he was speaking and I would like him to do the same, if he would not mind. It would be beneficial to the House if he just kept his trap shut for a few moments.

With respect to the T115s, as the member knows that program is going forward and they intend to have that conversion in place. It will mean the displacement of the automobile production.

We are at present attempting to get Chrysler to source its automobiles somewhere in this province. The member has heard about the alternatives: there are other plants that are readily available and well known to him. We would expect Chrysler to maintain its obligations under the loan arrangements. Mr. Lumley has indicated there will have to be a renegotiation of the terms. We have not paid one cent out relating to the diesel plant. As far as understand the federal government has not paid out one cent either. So we are fully protected from that point of view.

Mr. Wrye: Mr. Speaker, I have a supplementary to the minister, who is either incredibly naive or incredibly uncaring about the unemployment problem in Windsor.

Let me take him back to December 23. At that time there were going to be 1,000 new jobs at a diesel engine facility he was so grandly down in Windsor in August to co-announce; there were 300 jobs in a spring plant; so today we are short 1,300 jobs in a city with 18 per cent unemployment already.

What contacts has he had with M. J. Closs, the president of Chrysler Canada, and/or Lee Iacocca, the president of Chrysler Corp.? Has the minister agreed to a meeting that was requested on January 12 of this year by Local 444 to discuss all these matters, specifically the cancellation of the diesel plans and the cancellation of the spring plant?

Since he has always cared about moving forward with jobs and with announcements he and his government have made, whatever happened to the $20 million research and development facility we were to get, which his predecessor, the current Minister of Health (Mr. Grossman), announced? The government was to put in $10 million. Is Windsor going to get that facility? If so when are we going to get it?

3:20 p.m.

Hon. Mr. Walker: Mr. Speaker, Chrysler has not drawn down anything with respect to the original loan agreement for that research and development facility. It had the option of drawing down on the $20 million. It has not drawn down any of the funds and I would assume there will not be an R and D facility there.

There was to have been a $10 million R and D facility in relation to diesel technology. Presumably that is not going forward because obviously the diesel plant in Ontario is not going forward. I will be meeting with Mr. Gerard on Wednesday of this week to discuss the situation. I have had approximately five discussions with Mr. Closs in the last three and a half weeks in relation to the question.

REGULATION OF TRUST COMPANIES

Mr. Peterson: Mr. Speaker, I have a question for the Minister of Consumer and Commercial Relations. The minister has said he is satisfied the registrar and his staff have been doing a good job, yet on page 19 of his statement he says, "The books and records of both Seaway and Greymac were found to be seriously lacking in accuracy and completeness and are not up to date." From what period are those books inaccurate and not up to date? How long has the ministry known; or is that the kind of behaviour the minister condones, believing as he does that his ministry is doing a good job?

Hon. Mr. Elgie: Mr. Speaker, those again are matters that will be reviewed both by the internal committee and through whatever other advice I can get from those who are at present in possession of the assets of those companies. When I have that information I will report it to the House if there is no constraint on my doing so.

Mr. Peterson: Given the seriousness of the charges the minister has levelled against his own staff on the one hand --

Hon. Mr. Elgie: No.

Mr. Peterson: Well, he is saying the books are inaccurate, are seriously lacking in accuracy. On the other hand, he is saying they are doing a good job. I maintain he should have known about this some time ago and we must get at the root of why his ministry failed. Will he use his influence as minister at least to allow this matter to go to a committee of this House for a thorough review of his ministry's behaviour throughout this whole matter?

Hon. Mr. Elgie: I have indicated the steps I am taking with respect to a review of the procedures and the administrative practices of the ministry.

Mr. Renwick: Mr. Speaker, I want the minister to tell us, in response to the attempted question by the Leader of the Opposition, did the registrar --

Interjection.

Mr. Renwick: It was a good question. It was the minister's failure to answer that made the problem.

Prior to the minister's appointment of Mr. Morrison under section 152 of the Loan and Trust Corporations Act, did the registrar of loan and trust corporations take either of the actions permitted to him, which are his responsibility under section 51 of the Loan and Trust Corporations Act, with respect to obtaining reports with respect to Seaway and Greymac; or did he make any report to the minister under section 158 with respect to the adequacy of the assets of those companies? I emphasize again to the minister, this is prior to his appointment of Mr. Morrison.

Hon. Mr. Elgie: Mr. Speaker, I do not want the member to think I am avoiding an issue, but I have indicated clearly that I am carrying out an internal review at the present time. When I have information from that, and if there are no constraints, I will be pleased to report to the House.

RAILWAY CAR INDUSTRY

Mr. Mackenzie: Mr. Speaker, the Minister of Industry and Trade was here a moment ago. Oh, he is still here.

Is the minister aware of the concern of the workers at National Steel Car in Hamilton where more than 1,000 of them are currently laid off? In the railway car industry generally there is a large unused production capacity. Now those workers have gotten the announcement that Canadian National is considering upgrading its own Winnipeg facilities at a cost of several million dollars to build the 890 gondola cars that are supposedly going to be ordered in the marketplace shortly. Has he any comments on that matter?

Hon. Mr. Walker: Mr. Speaker, I am very disappointed in the federal government. In effect, it is Canadian National which has made the decision to acquire the vehicles from another source in another province. I find that disappointing, particularly when we have excess capacity here in Ontario. I have registered my objection in the strongest way with the federal government and directly with Canadian National.

Mr. Mackenzie: Other than just laying the blame on the feds, where some of it may belong, has the minister responded to the union's request that he meet with them as well as the federal minister in an effort to straighten out this matter? What specific steps has he taken to see we do not have the ludicrous situation of spending tens of millions of dollars to build another plant when we have three such plants in Canada not operating right now?

Hon. Mr. Walker: Yes, I am prepared to meet with the union and to attempt to meet with the federal government on that very issue. The federal government has off-loaded the decision on to Canadian National and claims Canadian National had the authority to make the decision and did so. Presumably Canadian National would indicate it was done on a variety of grounds.

Whatever the case, in light of the fact that we have that idle capacity here in Ontario, an existing plant facility capable of producing a very fine car, I cannot possibly understand what would cause Canadian National, which is really a very distinct limb of the federal government, not to purchase from the Hamilton works. It is beyond my imagination.

I think the decision is ludicrous. I have registered that opinion and I am prepared to take what other steps seem reasonable under the circumstances. If the member has some suggestions on this, I would be glad to assist him.

Ms. Copps: Mr. Speaker, could we ask the minister to do a little bit more than simply registering a strong objection? Could he take the initiative and organize a meeting with the federal minister as well as with Canadian National to discuss an issue which is critical to the employment situation in the Hamilton area?

Hon. Mr. Walker: I expect to be speaking today to the responsible minister of the federal government in this case and I will be talking to him in those terms.

DEPOSITORS' ASSETS

Mr. Peterson: Mr. Speaker, I have a simple question for the Minister of Consumer and Commercial Affairs that will require a simple answer.

Is the minister now saying that he is guaranteeing that no depositor in this province, in any of these companies will lose any money as a result of these takeovers and all these strange transactions? Is he making that statement clearly and simply?

Hon. Mr. Elgie: Mr. Speaker, I do not think I have said that anywhere. What I have said is that a final report on the examination of these companies that are now in the possession of the registrar will be made to this House when that information is available to me. That is the kind of information I will provide when it is complete, not while we are at the interim report stage. The Leader of the Opposition really does not expect that.

Mr. Peterson: Just so I understand it very clearly: The minister is not guaranteeing there will not be losses and there may indeed be some losses by the depositors of these various companies.

Mr. Speaker: Question, please.

Mr. Peterson: I want the answer: I am asking the minister. He is running the companies and I want to find out the state of the depositors' assets at the present time.

Let me ask the minister this question: What, in his opinion, is the extent of the jeopardy? Is it $130 million? Is it less? Is it more? What are the projected losses of these companies? How much public money will be at jeopardy through the federal deposit insurance corporation as well as any guarantees this province may be called upon to make some time in the future?

Hon. Mr. Elgie: As I have indicated to the Leader of the Opposition and to members of this House, when I have that information it will be reported to this House. It will not be made on the basis of incomplete information at the present time. It will be made when there is complete information.

Mr. Rae: Mr. Speaker, without attaching any personal blame whatsoever, there is at least a possibility it is the process of regulatory breakdown that has caused the problem with respect to these three companies.

I refer the minister to page 18 where he talks about Seaway and Greymac. He says, "The basic cause of this situation in each company has been its mortgage lending and investment practices" -- presumably over the long term.

Can the minister tell us why any innocent investor or depositor should suffer as a result of this regulatory breakdown, which is surely the responsibility of the government alone?

Hon. Mr. Elgie: That seems to be a conclusion the member has reached. It is not a conclusion I have reached.

WELFARE COSTS

Mr. R. F. Johnston: Mr. Speaker, my question is for the Treasurer and is with respect to welfare numbers across the province.

Is the Treasurer aware that in London, from December 1981 to December 1982, there has been a 51 per cent increase in the number of people on welfare? There are 1,240 more on welfare in London this year than last year; in Ottawa, an increase of 1,305; in Hamilton, an increase of 1,310; and in Kitchener, an increase of 1,391, or 45 per cent.

Is the Treasurer also aware that month over month, just from November to December, there have been increases of 10 per cent in Sault Ste. Marie, 8.49 per cent in London and 13 per cent in Peterborough?

3:30 p.m.

If the Treasurer is aware of these incredible, continuing, skyrocketing numbers on the welfare rolls, will he tell us whether he now is ready to move and give the extra help that he said in many newspaper reports across the province in December might be available? And if he is ready, which of these areas is he going to help with these incredibly increased costs to the municipalities?

Hon. F. S. Miller: Mr. Speaker, I am aware of the increases in welfare costs across the province, and I am sure my colleague knows they are shared by all three levels of government. I think the sharing formula is fair as long as the tax base of the municipality is able to pay its share.

I have been quite aware that there might be municipalities, particularly municipalities in single-industry cities or towns, that would be faced with pressures that were too grave for them, and in that kind of instance I would be guided by advice from the Minister of Municipal Affairs and Housing (Mr. Bennett), who would be in a position to tell us whether the municipality could or could not pay its share.

One should try to put all this cost in perspective on average. That is why on average there may not be a problem but in specifics there may be. We have to have that ability to differentiate between the average and the specific. On average, I am told, it has added about one per cent to the total costs of municipal government in the province, but for certain municipalities it is going to be adding a considerable amount.

Before getting rid of or greatly modifying a system that has been proven to work surprisingly well over the years, I would ask for that kind of advice. We said months ago that if it were demonstrated that a specific municipality honestly could not raise the taxes, then we would be listening to proposals.

Mr. R. F. Johnston: If the Treasurer feels it is not a problem of the system but, rather, something that may just affect some individual municipalities across the province, what is his response to the fact that in response to a letter from me suggesting that property tax no longer should be the basis for welfare costs, the municipalities of Sarnia, Guelph, Timmins, St. Catharines, Sault Ste. Marie, Durham region, Etobicoke, East York, Scarborough, North York, Belleville, North Bay and London have all endorsed my suggestions and suggested that it is time we got welfare off the property tax? In fact, it is the system itself that is wrong.

Hon. F. S. Miller: With great respect, if we petitioned any municipality in the province and asked whether, for example, education should be on the property tax base, we would be told it should not be. If we asked them whether roads should be on the property tax base, they would say they should not be. They simply transfer the base, naturally, to any other level.

FINANCIAL INSTITUTIONS

Mr. Peterson: Mr. Speaker, since the Minister of Consumer and Commercial Relations (Mr. Elgie) has chosen to leave, I will ask a question of the Premier.

I am sure the Premier is concerned about the deterioration of confidence in trust and financial institutions in this province in the past little while, and I am sure he has followed all these events with great interest. What is the Premier going to do and what is he prepared to do to try to restore confidence, particularly when one of his own ministries is not prepared to accept as security the certificates of one of the subject trust companies? Can he tell me what his responsibility is in that regard?

Hon. Mr. Davis: Mr. Speaker, I have complete confidence in a general way in the financial institutions in this province. I have always felt this and I continue to feel it. There are those situations that on occasion disappoint and concern us, but I think one has to keep it in perspective. If one looks at the history and traditions of our financial institutions in this province, and I know the honourable member can always seize upon four or five examples, but when you take that as a part --

Mr. Sweeney: Astra, Re-Mor, British Mortgage, Atlantic and Argosy.

Hon. Mr. Davis: Listen, I am as aware of them as the honourable member is; I have been here a lot longer than he has. But if the member really canvasses the views of people in other financial centres outside Ontario, in spite of the problems we have experienced on rare occasions, the integrity or the trust or the competence of the financial institutions in this province is regarded very highly.

I think it is important during the current discussions, in relation to the minister's statement and to some of the questions emerging from the Leader of the Opposition, that the members of this House and the Leader of the Opposition do not create the impression that there is far more difficulty than, in fact, exists within the financial institutions in this province.

I think it is fair to state, if members want my general observation, that I have confidence in the basic financial institutions in this province. If that is what the member is asking me to say, I have that confidence.

Mr. Peterson: I take seriously the advice of the Premier that it is important that I, my caucus and no one else in this House should create an unnecessary panic. But I also feel, and I am sure the minister will agree with me, that absence of information, stonewalling, not returning phone calls, not explaining what is going on to the public in themselves create anxiety.

The Premier now has admitted that the legislation needs a complete overhaul, something that should have been done some years ago; that we have had some 10 or 15 financial collapses in this province under that legislation in the past 10 to 15 years, roughly the time he has presided over this province as Premier; and that he now is going to have to investigate his own regulators and see whether they are well financed and competent enough to handle the difficult job they have.

Given these facts, does the Premier not feel that he personally could help create confidence in these institutions if he were prepared to stand up in his place today and say, "No depositors will lose money in these situations"? Through the Canada Deposit Insurance Corp. and his own guarantee, should it be necessary -- I gather we do not know the extent of that liability yet -- he could say, "We will make sure no one will lose as a result of the trust companies." As a result of that, people across this province will have faith in all the institutions he wants them to have faith in.

Hon. Mr. Davis: The next thing the Leader of the Opposition will be suggesting is that we guarantee as a government, or I stand up and personally guarantee, everybody who invests in the stock market in this province. I have to tell him, we are not prepared to do that.

I think it is fair to state that the minister has made it abundantly clear today that his ministry and he personally -- and members can interrupt or heckle me if they want, but I want to give public credit to the Minister of Consumer and Commercial Relations for the way in which he has handled this very difficult situation in the past three weeks. He has done it with great confidence, and I want to express my public appreciation to those who assisted him. He has done it extremely well.

I say to the member that because of the minister's actions there is no question that the interests of the depositors in the three companies that have been a subject of this discussion are in a much better position and have been enhanced.

Of course I am not in a position to guarantee everybody about everything.

MOTIONS

HOUSE SITTING

Hon. Mr. Wells moved that, commencing January 19, the House will not sit in the chamber on Wednesdays unless otherwise ordered.

Motion agreed to.

ESTIMATES

Hon. Mr. Wells moved that, in the standing committee on social development, the estimates of the Ministry of Citizenship and Culture be taken before the completion of the estimates of the Ministry of Health.

Motion agreed to.

COMMITTEE HEARINGS

Hon. Mr. Wells moved that standing order 72(a), respecting notice of committee hearings, be suspended for the consideration of Bill Pr27, An Act respecting the City of Ottawa; Bill Pr42, An Act respecting the Corporation of the City of Pembroke; Bill Pr48, An Act to revive Glanworth Investments Ltd.; and Bill Pr51, An Act to revive Beth Sholom Synagogue by the standing committee on regulations and other statutory instruments on Thursday, January 20, 1983.

Motion agreed to.

3:40 p.m.

RESPONSE TO WRITTEN QUESTIONS

Mr. Wrye: Mr. Speaker, before the orders of the day and while the government House leader (Mr. Wells) is here, I rise on a point of order.

I notice in looking through the orders and notices, and I will not even enumerate them, that dozens or perhaps even a couple of hundred questions remain unanswered. The answer to question 191 was to be available to my colleague the member for Essex South (Mr. Mancini) back on October 15, 1982, and most of the remainder were given interim answers.

The approximate date the information was to be available was December 17, which coincided quite neatly with the day we had expected to be out of here. Since it is now January 17, 31 days later, may I ask the government House leader on a point of order whether he could report to us when those questions will be receiving answers?

Mr. Speaker: I must point out to the honourable member that it is not a point of order. However, I am sure the government House leader will take it under advisement and will respond as quickly as he can.

SECURITY OF LEGISLATIVE BUILDING

Mr. Conway: Over the holidays, Mr. Speaker, I read with a great deal of personal upset that the government House leader, in consultation with others in the House leaders panel, has considered the possibility of installing plexiglass in this chamber at very considerable public expense. I do not know where the debates are, although my colleague the member for Brant-Oxford-Norfolk (Mr. Nixon) informs me there has been some discussion. I just want to quickly indicate my very strong personal disapproval that anyone, anywhere, is thinking of that kind of scheme.

Mr. Speaker: Again, I must point out to the honourable member that it is not a point of privilege --

Mr. Roy: Isn't it? I thought it was.

Mr. Speaker: No, and he knows it as well as I do. However --

Mr. Conway: I will accept that.

Mr. Speaker: Thank you. Just for the information of all honourable members, several options are going to be reviewed by the Board of Internal Economy in the near future.

Mr. Breithaupt: Mr. Speaker, on that point: Might we ask when there may be some report on that theme and what the input might be?

Mr. Speaker: At the next regular meeting of the Board of Internal Economy.

Mr. Roy: I will tell you --

Mr. Speaker: Order. Will the member for Ottawa East please resume his seat?

MOTION TO SET ASIDE ORDINARY BUSINESS

Mr. Rae moved, seconded by Mr. Renwick, pursuant to standing order 34(a), that the business of the House be set aside to discuss a matter of urgent public importance, namely, the real concerns of thousands of Ontarians who are tenants in buildings formerly owned by Cadillac Fairview and depositors and customers not only of Greymac Trust Co., Seaway Trust Co. and Crown Trust Co., but other financial institutions; the failure of the government to give a full and complete explanation of its actions, including the implications for legitimate savers and innocent investors in the three companies; the continuing mystery surrounding the Cadillac Fairview apartment deal, and the role of Greymac, Seaway and Crown, and some of their principals, in that deal; the history of failures and problems concerning loan, mortgage, trust and finance companies in Ontario, such as Atlantic Acceptance, British Mortgage, York Trust, Re-Mor, Astra Trust, District Trust and Argosy; the obvious inadequacy of the Loan and Trust Corporations Act; the failure of the government to regulate the industry in an orderly and competent way; the refusal of the government to act on the problem of concentrated ownership in the financial institutions sector in Ontario; the ramifications of this entire issue on the tenants of Ontario whose buildings are used as trading chips for unknown interests; and the refusal of the government to call a full public inquiry into all aspects of this issue.

Mr. Speaker: I would like to ask the co-operation of all members in limiting their personal conversation. It is very difficult to hear the person who is speaking.

I am pleased to accept the notice of motion under standing order 34(a). The notice was received in time. I shall be pleased to listen to the member and to others for up to five minutes as to why the ordinary business of the House should be set aside.

Mr. Rae: Mr. Speaker, I can think of few issues that have caused greater concern, both to the general public and to those people who are directly affected by these transactions and the problems facing these companies, than the Crown Trust, Seaway Trust and Greymac Trust affair, which has preoccupied many of us in the Legislature for some time.

There is a very real contradiction in the statement the minister made today. That contradiction is simply this: at the end of his statement, the minister recognizes there is a serious and severe problem with respect to the trust company industry and with respect to the legislation that governs trust companies.

He says, for example: "I do not believe that it overstates the situation to say that we should rethink the basic scheme of the act and ensure that the requirements placed on the owners and operators of trust companies are consistent with the needs of the current business environment and with the fact that there is no inherent right to operate a trust company independent of the corresponding obligation to protect the public moneys entrusted to them. It is a privilege to be permitted to seek deposits from the public and only those who fully accept the fiduciary nature of the business should be able to operate a trust company in Ontario."

The very fact the minister had to state that, as if this was somehow a dramatic change or shift in public policy, is in itself an indication of how far removed this government is from its obligations with respect to this industry. When the Premier (Mr. Davis) stated today that there was somehow a comparison between risks and gambles taken on the stock market and investments that are made in trust companies in this province, that in itself showed just how far removed this government is from the average, everyday concerns, beliefs and views of the average citizen of this province.

I do not think the average citizen of this province thinks he should be taking a gamble, or that he is taking a gamble, when he goes into a trust company. The average citizen of this province thinks that "trust" in the words "trust company" should mean something, that those people who have the right to manipulate other people's money have strong fiduciary obligations, and that the money they deposit in trust companies should be safe and should be guaranteed.

There is a fundamental contradiction in the statement by the minister today. It is not simply that half its content is almost like an academy awards speech -- for example, congratulating Bell Canada, saying how many phones it set up and what a wonderful job everybody has been doing, giving us all manner of information that does not give us any further insight into what has happened or with respect to whether there has been any concealment or fraud.

There is no insight as to precisely what action the government plans to take. There is no indication whether it is going to find the identity of the numbered companies and whether the Cadillac Fairview deal still stands or whether it has been set aside because of the fact the mortgages have been overvalued. There is no indication as to the exact position of the depositors and the tenants, as to what the future of loan and trust reform in this province is going to be and whether there are any criminal investigations under way or whether the government contemplates laying any charges. That is the kind of information we expected today from the minister; that is the kind of information we did not get.

The minister has admitted there is a profound problem with respect to regulatory reform. He admits there has been an ongoing practice for a number of years with respect to at least two of these companies which is unsatisfactory and which causes problems, and yet at the same time the cabinet agreed twice in 1982 to a dramatic expansion of the capital base of one of those companies.

The minister can take it as personally as he wants. I suggest to him he should not take it personally and should not see it as a personal attack on him or his ministry when we in this party say we are not satisfied with the process of regulation of the trust industry, that there have been too many problems for too long a time, that it is something that has gone on for a very long time in this province, and that people in this province do not think the trust industry is a gambling, stock market or speculative industry. The people in this province do not think people who speculate should be in the trust business; that is the assumption we have.

The concern we have is that this government, if I may say this to the minister in all frankness, has waited too long to act; it should have had some information which it has not had. If the minister is saying, as I understand him to be saying, there is a possibility there has been direct concealment or concealment in some way with respect to the conduct of those companies, I hope he says it very soon. I hope he says it clearly and publicly.

3:50 p.m.

Mr. Speaker: The honourable member's time has expired.

Mr. Rae: I am prepared to accept, as the minister says in his statement, that "it is exceedingly difficult to detect irregular or illegal activities." What I am indicating is that the statement of the minister today is not satisfactory; we do need a public inquiry, an inquiry that is independent of the government and independent of the minister. I hope very much that the government will agree to this motion being heard and that the members of the Liberal Party will agree with it as well.

Mr. Breithaupt: Mr. Speaker, of course the official opposition feels that this is a matter of urgent public importance. We are delighted the third party is finally involved in this area. Certainly the member for Riverdale (Mr. Renwick) said from time to time that they did not have the resources to dig into these kinds of themes, but the fact that they get paid 30 for 22 has perhaps allowed a bit of research money to be otherwise available.

There are three themes here. One theme is to ensure that depositors and investors are protected by the province in accordance with the legislation that now exists. The second theme is to ensure that the tenants of the province, particularly the occupants of those some 10,000 units, are going to be protected so that any resultant shortfall in this financial wheeling and dealing does not impinge on their obligations, which otherwise are being unfairly imposed on them. The third theme is the ultimate responsibility for these kinds of events.

As members well know, during my 15 years in the Legislature I have been involved for my party in a number of financial critic roles in Treasury and Economics, in Consumer and Commercial Relations, as chairman of the public accounts committee and, over this past year, as acting critic for the Ministry of Consumer and Commercial Relations during the convalescence of my colleague the member for Essex South (Mr. Mancini).

Throughout these years I have observed from time to time on the variety of financial disasters that have occurred and are cited and highlighted in the motion that is before us. As you well know, Mr. Speaker, as do other members of the House, as a director of a trust company I have some knowledge and background in these kinds of circumstances and some of the difficulties that can arise.

We have seen, therefore, these three themes. Let me look at the third one first, which I believe will make the Premier's office an area of ultimate responsibility in this matter.

We know that the member for York East (Mr. Elgie) now has been Minister of Consumer and Commercial Relations for a year. We have seen the member for Scarborough Centre (Mr. Drea), the member for London South (Mr. Walker) and the member for Brock (Mr. Welch), in their terms, be ministers of this ministry. We know of Eric Winkler's involvement. We have seen two or three others over the eight or 10 years during which this ministry has existed. Ministers come and go with great regularity. It is a ministry that is responsible. I believe, for some 72 pieces of legislation, and it seems to me that the only consistency throughout this piece has been the involvement of the Premier as first minister, with the responsibility that perhaps is a little too much for the revolving-door ministry involved to accept.

The Premier has the ultimate responsibility, and I am sure he accepts it. He knows full well that a variety of financial institutions are going to be put under pressure because of these events. But from time to time on each of these occasions, whether it is Astra and Re-Mor, whether it is Argosy, whether it is the British Mortgage situation, we have had the minister of the day say, "Well, it will never happen again." Unfortunately it seems to continue to happen.

There is a web of regulatory agencies that exists. We should know --

Interjection.

Mr. Breithaupt: That is true.

Hon. Mr. Davis: In fact, I do not think we had the ministry then.

Mr. Breithaupt: No, we did not have the ministry there, but I think the Premier has had some responsibility for a fairly long time around here.

Mr. Speaker: One minute. This is not a debate.

Mr. Breithaupt: There is a web of regulatory agencies that should be protecting us in this province. Properly employed, they should be able to deal with these kinds of problems. The registrar under the act, the superintendent of financial institutions, of course, can require quarterly filings. There is a duty to review assets and to disallow overvalued assets. We also have the Ontario Securities Commission with its disclosure requirements that are applicable to Crown Trust and Seaway Trust, and the ability to call hearings and to investigate.

We have information available to this government not only under the Canada Deposit Insurance Corp. but also under the Mortgage Insurance Corp. of Canada with respect to its filings and its requirements, a variety of information that should enable us, through the ministry's overview, to decide whether companies are acting properly and appropriately.

Finally, we also have had the occasions of Seaway Trust going for its capital increase. So we have had a variety of these themes. I believe they are worthy of discussion, and I hope this urgent public importance will be seen by the House so that we may have a debate.

Hon. Mr. Elgie: Mr. Speaker, my remarks will be very brief. First, I hoped the long statement given today with respect to the state of affairs, as we know them to date, would have indicated to honourable members the ongoing concern and the serious way in which the government looks at the issue before it. Certainly no one can say -- and I suspect none of the members opposite could say -- that the government has not acted promptly and expeditiously in a way that has to be seen to be very appropriate to the problems that presented themselves to it.

I also believed the members opposite would have appreciated that there was an ongoing special examination by Mr. Morrison, with ongoing investigations now being carried out by the registrar and others while they are in possession of the assets, and that they would be able to provide information that would make this debate even more meaningful.

Having said that, and understanding that the opposition parties view this as a matter that has to be discussed today for their own reasons, whatever they may be, and with this government understanding the seriousness and the import of this issue to the public, certainly we will not object to the debate proceeding. But I want it very clearly understood, to reinforce what the Premier said, that this government and the public of this province have the greatest respect for the trust and loan industry in this province in general as to its stability. To cast broad nets and aspersions indicating otherwise shows a degree of irresponsibility that warrants careful consideration before anyone makes those statements.

Mr. Speaker, this government will not object to the debate proceeding.

Mr. Roy: We have concerns about the government's responsibility.

Hon. Mr. Elgie: It is Monday. What is the member for Ottawa East doing here?

Mr. Speaker: Order.

Mr. Roy: That is an important issue. That is why we are here. Some of us came back from down south.

Mr. Speaker: Before I make a ruling on this matter, I would like the indulgence of the members to make some observations.

I point out that a notice of motion under standing order 34(a) should, according to the rules and precedents, pertain to a specific event of recent occurrence which is of an emergency nature, requiring immediate attention and not readily debatable under some other procedure. I conclude that the specific event contemplated is the takeover by the government of certain trust companies, and on that basis I am going to allow the question to go to the House as to whether the debate should proceed.

I point out at this time, however, that the additional subjects, such as the various references, are out of order in the notice and will have the effect -- and this is the important part -- of precluding debate on those subjects on another occasion under this standing order.

I find the motion in order. Quite obviously, everybody is in agreement that the debate should proceed; so the debate shall indeed proceed. I am told we have to put the question anyway. The question before the House then is, shall the debate proceed?

Motion agreed to.

4 p.m.

TAKEOVER OF TRUST COMPANIES

Mr. Renwick: Mr. Speaker, I find it difficult to deal with the Minister of Consumer and Commercial Relations (Mr. Elgie) when he is under the gun like this because he is so defensive about his comments in relation to these matters. We share with him and with the Premier (Mr. Davis) the concern about the respect that is due to the trust operations in Ontario.

Indeed, Ontario and trust companies are in a very real sense synonymous. It is important for us to be able to say to the government that when one examines the statement made today -- and our emergency resolution was drafted in anticipation that the minister would be forced by circumstances to make a statement to the House today -- we were very concerned to make certain of a number of questions.

The questions are myriad and I do not have any skill or ability to outline all of those questions before the House, but there are two or three areas that have to be dealt with and have to be answered by the minister, and with which, with great respect, he has not dealt in his statement to the House. I have not memorized his statement; I have only listened to him read it.

I have a copy of it and I do not intend to address all of the matters in it. First of all, in no particular order, I say to the minister, the Premier and the government here today that the start of this, the transaction which led to all of these problems, still relates to the real estate and the apartment buildings in Ontario. That is the fixed point. Nobody can take them away. What I am suggesting, and I know the Premier and the minister will say that they know very little about the law, and I know very little about the law, particularly the law of mortgages, but in very simplistic terms --

Hon. Mr. Davis: I do not believe that.

Mr. Renwick: Believe it. If the Premier knew how little I know about mortgages he would be surprised. It is about the same as he knows about them, I would think.

Hon. Mr. Davis: I was hoping you knew more.

Mr. Renwick: No, but we can talk in very simple terms. The registrar of loan and trust corporations has possession of documents which reflect what I am going to call third mortgages on real estate in Ontario on which apartments are built and on which there are between 10,000 and 11,000 units. Those apartments have tenants. Those tenants are paying rent. Who is the rent being paid to? That is not a rhetorical question, because what I am saying to the Premier is that the ranking on those properties is the first mortgagees, the second mortgagees, the third mortgagees and whoever it may be that at this point in time holds the equity of redemption. The tenants are paying their rent and as I understand it they are not paying their rent to this government or to any of the trust companies.

If this province is interested in the security of those mortgages, for whatever they are worth, and the validity and subsisting nature of those mortgages, for whatever they are worth, and if it is interested in the tenants of the province, it will now, as it has done with the assets of the three trust corporations who hold the mortgages, and if necessary by legislation, take possession of and manage and receive the income from the apartment buildings which are at the root of this problem.

It will have certain beneficial effects. It will assure the tenants that the management and operation of their buildings is being carried out properly. At least, I think it would. I think it would assure that the rents were coming to the third mortgagee, which is to the trust companies which hold whatever there is on the value of those properties, because if the third mortgagee's interest is of no value then it is fair to say that the equity of redemption is of no value.

Whatever the procedures are, my first point and a very simple one is that the government should take possession, now, of the land, buildings and apartments and provide for an orderly method to assure the tenants of security. I emphasize again taking possession of those buildings, because the real estate is here and the apartments are here. That is my first point.

My second point is also a very simple one. The member for York North (Mr. Hodgson) chaired a select committee related to loan and trust corporations some years ago. It is appalling to me to find that, at this time, the Minister of Consumer and Commercial Relations ends his statement with the kind of language which was of concern to us in 1974 and 1975, with respect to the adequacy of the staff, with respect to the skills and abilities of the regulatory authority vested in the government and with respect to this long, drawn-out process which is going to take place before there is an adequate Loan and Trust Corporations Act in force.

The minister did not disclose today what steps, if any, had been taken by the registrar of loan and trust corporations prior to the ministry's appointment of Mr. Morrison, who is to report to him as the responsible minister. Whatever we may have to wait for with respect to Mr. Morrison's report or any of the other reports that we are going to get at some point, this assembly is entitled to know whether the registrar or the minister discharged the responsibilities which were imposed on them under the Loan and Trust Corporations Act. I say that particularly with respect to Greymac and Seaway.

There is an interesting dichotomy in this statement which my friend the member for Welland-Thorold (Mr. Swart) picked up on. In some way, the government is making a distinction between Crown Trust and Greymac and between Seaway and Greymac. The distinction appears to me to be very clear.

Woods Gordon, referred to in the minister's statement to the House today, talked about September 1, 1982, as being the date on which the problem started to appear in Crown Trust with respect to its practices and the procedures it was following. But with respect to Greymac and Seaway, there is no such statement as to the time at which the trouble started to take place.

I am going to level, in as easy and simple a way as I can. Until I am satisfied otherwise, I am going to assume that there was serious default by the registrar of loan and trust corporations with respect to the investigations of Greymac and Seaway. I am talking here about questions relating perhaps to concealment and fraud, to adopt the phrase used by my leader. I want to know and I think the public of Ontario wants to have some sense about the rumours which have been floating about with respect to the sources of money that has been finding its way into the trust business.

I note that Meyer Lansky died in Florida over the weekend and I want to know whether the skills and knowhow which he brought to the laundering business have found their way into Ontario and whether perhaps some laundering has been done which ultimately will lead to fraud and concealment.

Next, in addition to the takeover of the three trust companies, I want to know, very clearly, what other actions the minister has taken with respect to any other trust companies as a result of the legislation which was passed in this assembly on December 21.

We have been concentrating upon the three trust companies. We know, by report, that a transfer of shares of another trust company was stopped. I want to know what, if any, further steps were taken by the minister, in the light of the authority which we willingly gave because of the gravity of the situation in which the government had either found itself or placed itself on December 21.

One could read with interest the concluding words of Mr. Justice Hughes at the time when he completed his royal commission on Atlantic Acceptance, because we are repeating here today in Ontario the kind of situation which he indicated could be adequately dealt with by proper public regulation properly enforced.

Those are the matters which lead us, as an emergent matter, to require this debate today because the minister has failed to answer the substantial questions of which he already has full and complete knowledge.

4:10 p.m.

Mr. Breithaupt: Mr. Speaker, in my opening comments before the Speaker allowed this debate, I did refer to the web of regulatory opportunities which at present exists within Ontario and which, in my view, should have caught some of these transactions before they had blossomed into the problems which we have before us today.

The superintendent of financial institutions -- that is to say, the registrar under this act -- has the quarterly filings required and a duty to review assets and to disallow overvalued assets. Second, the Ontario Securities Commission has certain disclosure requirements, applicable particularly to Crown Trust and to Seaway Trust, and the ability to call hearings and to investigate.

I referred to the Canada Deposit Insurance Corp. and the Mortgage Insurance Corp. of Canada arrangements and then finally to the matter of the increased capitalization for Seaway Trust, because if the capital is improved within a trust company it then allows, on a variety of multiple opportunities, up to 20 times borrowing power, based upon the capital involvement in the company.

These are the kinds of areas where the persons who are responsible to investigate and to have reports made to them are able to make value judgements as to the activities and actions of a variety of trust companies.

This matter first came to my view with rather a jolt last Sunday morning when, having returned from church, I received a call somewhat after 11 o'clock from the treasurer of the city of Kitchener, and Mr. Eby reported to me that $1 million belonging to the city of Kitchener was involved in Crown Trust. This was a payment of money put in on December 24 which was going to be due on January 10. Would the money be available? Are the funds going to be paid out the next day?

I could only tell him that I would contact the office of Mr. Murray Thompson first thing next morning and try to find out everything I could. I did that. I got an immediate reply. The relationship there is not at all in question. I was able to tell the treasurer of the city of Kitchener that he could take $20,000 out but the best he could do with the rest was to roll it over on a day-by-day or perhaps a week-by-week basis until the air had cleared.

Then we heard the city of Brantford had some $4 million involved in like consequence. The regional municipality of Waterloo has some funds, and there are others; be that as it may, moneys which are and have been acquired through tax collections and otherwise, and not immediately needed for the payment of salaries and other municipal obligations. That is just fine; that is a prudent way of putting out funds, benefiting from interest and as a result benefiting the citizens of the community.

But what about the circumstances where a person might not receive a variety of cheques payable on interest-bearing accounts or on guaranteed investment certificates? The city of Kitchener, I believe, can afford to wait that couple of weeks to see how things may work out. I certainly hope that the funds will ultimately be there to deal with that obligation, but at this point all I could tell the treasurer was that I did not know. I did not know whether the city would get its funds on January 10 if at all. It is not a very cheery message to have to bring to someone.

These matters have been raised in this House since October 26, when my leader first urged the minister to investigate the Cadillac Fairview sale by way of a select committee or a committee of the House. That request to submit the matter to a committee was reiterated on almost a daily basis throughout those first few weeks in November and indeed until it was learned, almost too late, that the sale had closed about 11 days early, November 5 and 8, 1982.

The focus of concern at that time was the extent of rent increases that would be permitted under the existing guidelines. The figures released regarding the sale price at first seemed to justify, at that point, expected rent increases of 30 to 50 per cent rent. Going back to the themes I raised, we not only had to protect the depositors but we also had to consider protection for tenants who might otherwise be called upon to cover these skyrocketing obligations.

Our policy would have restricted rent increases to five per cent during the restraint period imposed under Bill 179. Those changes in the rent review legislation were ultimately approximately accomplished.

The sale by Cadillac Fairview to Greymac, the involvement of Kilderkin, the machinations of Mr. Player and Mr. Rosenberg, all these other circumstances have been burdens that have been dumped upon us in great bundles over the last several months.

We talked about the circumstance in London and the armoury's location. The matter of the head office building of Greymac was raised. The curious financing of City Park Apartments in Toronto was brought before the House.

A variety of these questionable transactions where overvaluation of assets and greater mortgage financing might well pyramid up the expected value of shareholders' equity, which shares could then be sold, was going to be a problem that might see another kind of "Ponzi" scheme that would ultimately result in the bubble bursting.

I hope the minister is familiar with section 193 of his act. I would like to read it. "The registrar may request any corporation to dispose of and realize any of its investments that are not authorized by this act, and it shall within 60 days after receiving the request dispose of and realize such investments, and if the amount realized therefrom falls below the amount paid by it for such investments, its directors are jointly and severally liable for the payment to it of the amount of the deficiency, but if any director present when any such investment is authorized, forthwith, or if any director then absent, within 24 hours after he becomes aware of such investment, and is able to do so, enters his written protest against such investment, and within eight days thereafter notifies the registrar in writing of his protest, the director may thereby, but not otherwise, exonerate himself from liability."

I hope the minister will look at section 193 and report to this House as to how many documents have been filed under that section, as to how many directors, if, as and when they have found out about some of these soft loans, have fulfilled their obligation to report and thereby relieve themselves of personal liability.

It will be interesting. A public inquiry would, of course, find that out. I presume the variety of inquiries the minister is now seeking is going to find out that particular thing as well. There may well be liabilities here even though they may not be able to be paid if the valuations of these varieties of securities seem to collapse and dissolve as in the morning dew.

The minister has made a number of statements over time. He has made a number of comments as to the obligations he believes it is his duty to provide. I am looking at October 26 when he said, "I think our obligation . . . is to make sure there is no collusive relationship between people selling properties." Then he said, "I personally have concerns about reports of rapid turnover of properties, and I will continue to look at those issues to see if there is any appropriate approach that I might recommend to the government if it is indeed a real problem that is facing people."

It would appear that an appropriate approach was certainly reached by the minister. As a result, we have the control of three trust companies in this province passing effectively under the obligation of the Minister of Consumer and Commercial Relations.

I dare say it has not been a lot of fun these last few weeks to be the minister involved with this kind of problem, knowing full well that these other problems commented upon in the past, the other trust companies, British Mortgage, Astra/Re-Mor and all these other sorts of things, were obviously going to be raised again.

4:20 p.m.

My colleague the member for Riverdale has referred to the select committee report and the comments made in 1974 and 1975. Yet even the acceptance of those obligations and those recommendations at that time might well have led us along a different path in this matter, which is certainly a matter of urgent public importance. We must ensure that what we do here, not only in this debate but in how we treat the revelations as they appear, will attempt to confirm the faith I think many people of this province have in the financial institutions, faith that has taken a long time to build up and can be readily knocked down in a 24-hour period. The minister has a difficult task. Unless he comes to grips with it, then all the comments that have been made in the past as to faith in institutions are going to be severely shaken.

The Deputy Speaker: I thank the member for abiding by his time, and also the previous member. The member for Carleton.

Mr. Mitchell: Mr. Speaker, I am going to try to ignore the comments from the other side, because frankly I thought my minister's comments this afternoon were sufficient in themselves to prove why a public debate at this time is somewhat unnecessary.

Interjections.

Mr. Mitchell: The work of the registrar of loan and trust corporations, Mr. Murray Thompson, is still --

Interjections.

Mr. Mitchell: Members opposite want to do all the work on the floor of this House rather than where it should properly be done.

The work of the registrar of loan and trust corporations, Mr. Murray Thompson, is still under way and further details of his findings will be brought before the Legislature at the earliest possible moment.

In my view, an emergency debate now could not truly be considered free and open. Indeed, the opposition critics may feel free to say whatever they please, but how can the Minister of Consumer and Commercial Relations respond frankly without jeopardizing the investigation and any actions that may come out of it? To quote one newspaper columnist: "No responsible person can really expect Dr. Elgie to comment on substantive matters while the investigation is still going on. Anything he says now could only prejudice the investigation."

I cannot help but note that the leaders of the two opposition parties have not missed an opportunity to make political hay out of this unfortunate situation, knowing full well that while an investigation is under way little or nothing can be said by this government. Knowing the opposition as I do, I know the logic of what I have said so far will likely fall on deaf ears. These nabobs of negativism would have this House believe that they and they alone are motivated by concern for the interests of the public. The fact of the matter is simply this: if they got what they wanted now, full disclosure of everything the government has so far discovered in its investigation of the three trust companies, the public interest could be the first to fall victim.

Before dismissing the motion of the member for York South (Mr. Rae) out of hand, however, I will touch on some of the specific points he makes. He speaks of the real concerns of thousands of Ontarians who are tenants in the buildings formerly owned by Cadillac Fairview. I have no intention of speaking for the next hour in review of the actions taken by this government to deal with those same concerns. Has the member forgotten about the five per cent limit placed on rental increases attributable to financing costs incurred during the purchase of a rental structure? Has he forgotten about the commission of inquiry led by Mr. Stuart Thom into the whole issue of rent review legislation?

It seems he may have also forgotten the announcement by the new owners of Cadillac Fairview buildings that they would seek an average increase of 13 per cent over the next year, not the 50 per cent rental hike predicted by some of the people over there. I would also remind him that the Residential Tenancy Commission has postponed all hearings on applications for rental increases in the former Cadillac Fairview buildings.

If members have not seen it, there was a press release on Friday, I believe, which reads: "Rent review decisions in cases involving any of the five trust and mortgage companies over which the federal and Ontario governments took control on January 7 are being held in abeyance pending the completion of the government review of the companies' affairs. This was announced by the Residential Tenancy Commission.

"Phil Williams chief tenancy commissioner said, 'The review of proposed rent increases in buildings where recent mortgage financing has been provided by Crown Trust, Greymac Trust Co., Seaway Trust Co., Greymac Mortgage Corp. or Seaway Mortgage Corp. will be delayed only where the reasonableness of the financing or of the sale price of the property to which the financing relates is one of the issues in the case.'"

There is more, but I just draw attention to that.

The member for York South goes on to speak of the concerns of the depositors and customers of Seaway, Crown and Greymac trust companies. If the Morrison inquiry into the financing of the Cadillac Fairview deal by these three trust companies and the government's current actions in seizing the companies do not show concern for the depositors and customers, I cannot imagine what would.

I will admit that until the results of the investigations are made public there are those who will not rest easy. When depositors' personal finances are at stake, we can all appreciate their concerns. But all we can say right now to those people is to ask them to bear with us. We acted to protect their interests, not to endanger them.

The member's motion speaks of the inadequacy of the Loan and Trust Corporations Act. He is aware of the ongoing study of the entire act and the white paper that the ministry will publish this year. In the meantime, we have proved we are willing to act quickly in changing the existing legislation on short notice and I would remind him again of his co-operation in giving speedy approval on December 21 to the amendments to the act which permitted us to move in the public interest as was done on January 7.

His motion speaks of the concentration of ownership of financial institutions and what he calls the failure of this government to regulate financial institutions. Regulation is what the ongoing study and the white paper are all about. I might add that our actions over the past weeks show how far this government is prepared to go to regulate and control financial institutions. There has been no refusal to act. If anything, it would appear that the opposition parties have been more reluctant.

The motion asks about the ramifications for Ontario tenants. The Thom commission is studying that very question in its wide-ranging inquiry into how rent review legislation should be shaped in this province to protect tenants and give landlords and tenants a fair deal through the 1980s.

The member concludes his motion with a call for a public inquiry. It is apparent that any such move now could only jeopardize the ongoing investigation. This government has nothing to hide. In fact, it can look with pride on the speed with which it reacted to a very confusing situation. The member would be better advised to hold off on his demands for a full public inquiry until all of the facts are in.

I think I have dealt fairly with the motion. To quote a certain Toronto columnist, "Everybody knows emergency debates lead nowhere, solve nothing and if anything will serve only to make customers of the besieged trust companies even more uneasy."

Mr. Swart: Mr. Speaker, I am pleased to rise to speak in this debate because I feel rather strongly about what is taking place, and more particularly about what has taken place and what may take place with regard to losses by depositors in Seaway Trust and perhaps the other trust companies under investigation.

I feel more strongly about this matter than some other members of this House, particularly on the Conservative side, may feel. Seaway Trust originated in the Niagara Peninsula and I suppose we have a higher percentage of investors in Seaway Trust living in the Niagara Peninsula than in any other part of this province.

If the depositors do not get the full return on their deposits -- and this has been indicated, or at least a doubt has been left today by the Minister of Consumer and Commercial Relations -- then a lot of people in the Niagara Peninsula are going to be damaged.

The incidents that have taken place and the situation that exists today confirm what we on this side of the House had suspected for some time and what the minister took pains to deny in the first month or two of the Cadillac Fairview flips: that it was a conscious scam on the part of the people involved in the flips to get vastly more money out of the tenants in those Cadillac Fairview apartments. What has taken place today leaves no doubt that the sale was a deliberate attempt to do just that.

4:30 p.m.

I would point out the comments made by Leonard Rosenberg -- I will quote from his statement, the third paragraph of page 2:

"Ever since the introduction of rent control, the only way an owner could escape from the inflationary cost spiral was to sell. A new owner could obtain the rental increases denied to the former owner scaled to his financing costs."

To reword that a little bit, what he really means is: Ever since the introduction of rent controls the only way an owner can get more than the intent of the law is to sell. A new owner could obtain the rental increases denied to the former owner scaled to his financial costs, whatever they may be. That is exactly what he was saying.

The minister himself admits that scam, although he denied it in the House back in November when he spoke of these properties being mortgaged for $375 million. He stated: "It was concluded that there were not sufficient grounds to justify a value of the Cadillac Fairview properties in excess of $300 million." Yet they changed hands for $500 million. The intent of those involved in that flip was that the tenants should pay the pass-through for the total of the $500 million involved, even though those properties, according to the minister's own admission in this statement, were only valued at some $300 million.

By a scam, those tenants were to pay for a $200-million value that did not exist. The documents we have had submitted to us today by the minister and by Leonard Rosenberg leave no question about that. Nevertheless, apparently there has been no attempt, even after the seizing of the property, to find out who are the beneficial owners of that property. The minister has not made that announcement here today.

This is almost inconceivable coming from a minister who last fall stated there was no need to know, there was no reason to suspect, there were no Arab owners. In fact he stated in the House there were Arab owners. Today, after all that has taken place and he has had to step in and seize ownership of those companies, he does not tell the House who the owners are.

Now that those companies have been taken over I simply cannot believe the minister could not have found out, if he had wanted to, who those owners were. I suggest it is simply that he does not want to find that out. In fact I suspect there may be very little money involving Arab owners. Other people have said they thought that was the situation right from the beginning and more and more it is beginning to appear that is the case.

It is important to know who is involved in this, at least to find out how immoral this deal has been. If it was Arabs who came here and bought those properties at $500 million there may be some excuse for them. They might have had a surplus of funds they wanted to invest some place. They may not have known the value of properties here, although I doubt that very much. At least there might have been some excuse. But if this has been financed almost entirely by the principals involved in Greymac, Cadillac Fairview and Seaway Trust then I suggest it is much more immoral. I think the minister would want to find that out.

The member for Carleton, who just spoke, said in defending his government there was no refusal on the part of the government to act. Of course there was no refusal. They acted, but I think we all realize they acted too late on this matter. We are faced with a very serious problem now. It is an almost insoluble problem because a transaction has taken place. We have $200 million of fictitious value. Where is that money going to come from?

Is that money going to come from the depositors in those trust companies? Are they going to lose it? Is the government going to proceed over a period of time to take that money from the tenants by allowing a five per cent increase per year and perhaps some more flips? Is that going to be taken from the tenants?

Is the government going to find some or all of that $200 million in the public treasury? I do not know how much of it is lost but certainly, from the minister's statement today, a lot of it is not there and we cannot account for it. The $200 million is going to have to come from some place. Can one turn the clock back?

It is time we had an impartial investigation to find out the negligence of the government, if nothing more. In recent times it has permitted people to be victimized in Co-operative Health Services, in Argosy, in Re-Mor and in Astra Trust. Such an impartial investigation should not be done by the minister's people but should be out in the open so the government can be held accountable for what is taking place here.

The minister has now indicated he is going to --

Acting Speaker (Mr. Cousens): The honourable member has exhausted his 10-minutes of allocated time.

Mr. Swart: Let me finish my sentence, Mr. Speaker, if you will.

The minister has indicated he is now going to reimburse the Re-Mor victims. That would never have taken place if we had not had a minority government and if it had not been proved incompetent, inefficient and extremely negligent. I suggest we need the same kind of public investigation so that, if it is proved there has been the same degree of incompetence, those victims will be reimbursed as well.

Mr. Spensieri: Mr. Speaker, I appreciate the opportunity to make some contribution to this emergency debate. The danger we face, one we perceive clearly on this side of the House, is that we are now engaged in a plethora of commissions and review bodies -- the Thom commission, the Morrison commission, the blue chip commission and the agents appointed by the registrar. The real danger in all of this is that through this diffused and all-pervasive combination of review processes, the true aspects are bound to get lost in the shuffle. The true aspects, as we see them, are the aggressive investment schemes and policies which have been engaged in by these companies and which have resulted in their stunning growth.

4:40 p.m.

There are really three very basic procedures. I have seen all three of them at work in my own riding of Yorkview. The first is the Cadillac Fairview one where they deliberately overvalue a property. They then conduct what used to be called in the trade a few years back the "Oklahoma routine." They allow the third mortgagee to purchase from a man of straw and then go back into possession as a mortgagee in possession. In that situation they do not have to repair the plumbing any more; they can get very lax in providing those services tenants have come to expect in a high-class type of dwelling such as the University City complex.

If we engage in a true observation of these facts, if we engage in a true royal commission, if we engage in a true debate before the justice committee, we will see that what has been perpetrated here is no more than a high-class, high-flung Oklahoma scheme. Under it the government, because it has taken over the assets of Greymac and of various other lenders, will now become the one holding the bag, the one who will have to go in. I can just see the glimmering picture of Ontario, as third mortgagee in possession, sending one of its agents out to do the plumbing or cut the grass. That is what we are facing.

The second favourite method which has been used by these aggressive lenders is the old system of saying that as long as they have the ability to meet their payments on the mortgage they are fine.

In my own riding of Yorkview, there is a little office complex, not a residential complex, which only had enough cash flow to produce approximately $1.5 million of mortgage borrowing. Through an ingenious and collusive scheme with a man-of-straw purchaser, once again some funds were deposited with Greymac to catch up on the shortfall in the cash flow. More than the qualifiable mortgage was secured through that mechanism and once again there was a situation where a term deposit held by the lender was being used to supplement the cash flow from the building.

Now we have Ontario going in and saying these term deposits are going to be relatively secure, as the minister indicated a while back. I submit there is a great danger that by returning some term deposits to the alleged bona fide investors, the province will have been an unwilling participant in this fake income flow scheme designed to get mortgages. I caution the minister not only to ensure the deposits are returned but to look very carefully at whom they are being returned to before he does.

The third aspect which should form part of this emergency debate is the relationship between the lending institutions and the construction trade. There is no easier way to build up assets, these tremendous reserves which can form the basis for future lending and the so-called lending base, than to engage in advancing frivolously and imprudently when construction projects are under way.

In my own riding of Yorkview we have seen this neat little gimmick at work as well. The mortgage company, the lender, advances substantially in excess of what the project may be worth at any one point. It will then show on its books X number of dollars having been advanced. Then, of course, the lien holders, or the people who have carried out the construction, are the ones who have really contributed to the wealth, but because of quirks in our present Mechanics' Lien Act -- which we hope will be remedied soon -- those people who have contributed the wealth will be wiped out when the unsuspecting owner, who is of course a party to the whole sham, calls on the mortgage lender to foreclose everyone concerned, including the lien participants.

That is how these assets have been built up. Those are the concerns we have. We feel this plethora of review bodies which have been introduced by the ministry will fail to look at the real concerns.

The last point I wish to make is that for psychological and for very practical reasons the tenants in my riding, primarily in the University City complex, feel they now have a right to know who the owners are. I think there is no quicker way than for this province, now that it has become, in effect, the third mortgagee, to ask that the rents be delivered to the province. Then we will see who picks up the cheques and will know who the owners really are.

It seems to me if we are serious about an investigation of this very dubious and far-reaching set of circumstances, we certainly ought to encourage the government to accept my leader's request for a full royal commission and also for an immediate referral of all these matters to the justice committee. Then not only the propriety of the conduct of the lenders and the borrowers in this case could be reviewed but also the propriety and the competence of the ministry in monitoring its responsibilities and duties under the act.

Hon. Mr. Elgie: Mr. Speaker, I am pleased to have an opportunity to take part in this debate and to indicate to the House and to the people of Ontario that this government is acting in a responsible manner to deal with a series of events that go well beyond any series of quick answers that one might propose.

Much work remains to be done, but I am confident that the government will soon be able to determine the complete set of actions that must be taken to protect the public interest and the interests of many individuals who are affected by these matters.

As is often the case in matters of this kind, the opposition parties have taken delight in taking every side of the issue. Members have claimed one moment that we have not acted swiftly enough, then say the next moment we have taken drastic action and used a heavy hand, thus calling into question the very same type of action they were calling on the government to take.

I think it would be helpful if we took a moment to review the history of this matter leading up to this debate this afternoon. During the first week of November there occurred a series of transactions that resulted in the sale and subsequent resale of a large number of apartment units formerly owned by Cadillac Fairview. At the time these transactions took place the government recognized the need to protect those tenants who as the ultimate result of this very complicated deal might be forced to bear an unacceptable burden.

Steps were taken to protect those tenants; and they were taken, I might add, quickly yet carefully. While I can understand that opposition parties, along with others, feel the government may not have gone far enough I think we did what was responsible in the circumstances. We took into account the legitimate concerns of tenants and at the same time recognized the need to be sensitive and balanced in our approach with respect to the long-term interests of the people of this province and their housing needs.

In short, the government acted within a week of the Cadillac Fairview transactions to limit the extent to which financing charges arising out of a sale or resale of apartment buildings could be passed on to tenants. In addition, the Residential Tenancy Commission acted swiftly to change its guidelines, altering the pass-through of financing costs.

Further, as this House knows, the Minister of Municipal Affairs and Housing (Mr. Bennett) has undertaken a wide-ranging review of housing programs while the government has initiated a complete review of the system by which rents are regulated in this province. Finally, the government appointed within one week of that series of transactions Mr. James Morrison, who has been asked to examine the operations of several trust companies involved in providing mortgages to those Cadillac Fairview buildings.

I can only say in response to the various demands for action from the leaders of the opposition parties it is far more difficult to understand the need for balance and sensitivity on all accounts when you do not have the responsibility for all the effects of what you say and what you do. This is particularly true in the case of the Leader of the Opposition (Mr. Peterson), who, as the Globe and Mail put it recently, has more reverse plays than the Toronto Argonauts when it comes to this and many other issues. That same party. which had earlier advocated the phasing out of rent controls as vacancy rates increased, now says the government has not done enough.

4:50 p.m.

Turning to the aspects of this matter that relate to financial institutions, I should point out that it is perhaps difficult for the Leader of the Opposition to understand, consumed as he is by the desire to seek political opportunity, that an investigation into the affairs of these institutions has been under way since November 17. It seemed prudent to me, and to my colleague, to allow that investigation to proceed in a thorough yet expeditious manner and in a legitimate way.

The government has been extremely mindful that the powers contained in the amendments passed by this House before Christmas are large and important powers requiring extreme care in their exercise. Legitimacy in the exercise of government power in the public interest is fundamental, in the view of this government. The action taken on January 7 was only done after careful deliberation and a thorough assessment of all the facts available at that time.

I suppose it is this aspect of the events of the past few weeks that trouble me most. An investigation into the affairs of certain financial institutions was in place on November 17. I was receiving regular, albeit informal, reports of the progress of that investigation from that time forward. Then in December we introduced legislation giving certain broad powers to the government. The government acted on those responsibly, I believe, on January 7.

I have, to the extent I am able, tried to bring this House and the public up to date on the progress of those inquiries earlier this afternoon. However, that was only after a period of 10 days during which the Leader of the Opposition in particular, but followed closely by the leader of the third party, criticized me daily as a result of a purported failure to appear on a regular basis to offer a blow-by-blow account of the investigation and how it was proceeding.

I can only suggest it would have been irresponsible in the extreme for me to have made a daily series of revelations based on the latest and necessarily incomplete reports provided to me by the investigators. It would have been irresponsible to have made any statement whatsoever which dealt with the facts at issue in the absence of even an interim report, let alone a final report. It could only have led to confusion on the part of the public at large, and depositors in particular, which is precisely what we sought to avoid and which we largely did avoid.

Indeed, I think the reaction of the public to the events of the past two weeks has been one of understanding. I think it proved, to some extent, the wisdom of the governments decision to proceed in the manner it did rather than issuing public statements and coming up with instant reactions of the kind demanded by the opposition parties.

I would like to turn for a few moments, if I may, to the question of the broader range of issues arising out of the regulation of financial institutions by this government. I have indicated earlier this afternoon that there is clearly a need to address several important issues in the immediate short term. These include such things as the ownership of trust companies, the definition of transactions that are inappropriate and not at arm's length and the impact of high interest rates and real estate values on the operation of trust companies.

But I think it is important to make one further point which I touched upon in my statement. It relates to what may well be a significantly different role that government may have to play in the regulation of these institutions in the future. It has always been a privilege to operate a trust company in this province, or in most other places for that matter. With that privilege goes a responsibility on the part of those authorized to carry on the business. A large measure of responsibility for carrying on a business properly, ensuring compliance with the law, and indeed serving the public interest in the broader sense, must be borne, to a degree, by those who have the privilege of operating a trust company or other similar institution and the professionals upon whom they rely.

There are undoubtedly improvements which can be made, some of which we already made in December, to the manner in which the legislation is administered. This is a situation like so many others where there must be a great deal of responsibility placed on those who have been given the privilege of operating those institutions.

Neither this government nor any other government or agency could ever put itself in a position, whether through legislation or through a massive team of investigators, as this situation has shown us, where every single transaction, loan, mortgage or otherwise could be scrutinized by government in order to determine precisely whether or not there had been compliance. I think it would be difficult, if not impossible, for any trust company or any bank to operate within such a framework if it were even remotely practical for the government to put it in place.

As I have said, the current legislation and administrative procedures are designed, in large part, to deal with honest and responsible business administrators. We are not trying to structure their affairs in such a way as to make it difficult to detect irregular or illegal activities. In the vast majority of cases these people have taken their fiduciary responsibilities seriously, and have acted both within the law and in a manner that serves the public interest and respects the public trust they have.

That sense of public sense and ultimate responsibility will have to play a large role in the future in terms of the regulation of the affairs of financial institutions. I recognize we must proceed immediately to review completely our administration and procedures in the area of financial institutions. As I said, a preliminary internal but independent review has already been commenced.

I am hopeful our efforts, which are aimed at getting all the facts in this matter while at the same time identifying the problems that exist and moving to solve them, will be successful. I ask for the understanding of all members of this House as we pursue this difficult process in a manner designed to be fair yet diligent, sensitive yet firm and which, above all, reflects our ongoing concern for the public interest.

The Acting Speaker: The member for Bellwoods; no, the member for York South.

Mr. Bradley: You can't be browbeaten that way.

Interjections.

Mr. Rae: I am sorry to disappoint the members.

Interjections.

Mr. Rae: That is right. It is terrible the way we take over.

I think the minister should understand that we, in this party, do not regard this problem and this issue as in any way a personal issue with respect to him or anybody else. Attempts to turn the issue in one way or another into a personal vendetta really get away from the fundamental problem.

The basic problem we have been raising for some time has to do with the problem of concentration of ownership, inadequate disclosure requirements, inadequate regulations and a government so determined to protect the privacy of corporate life and the privacy of corporation decisions that it has proved unable to protect the public interest when that interest has to be protected. That is the issue.

The issue is not whether somebody is a political opportunist or whether somebody can call somebody else a name. That is really not the issue. It does not give much comfort to the tenants involved, the depositors involved or the savers involved for accusations to be going across the floor of the House with respect to the personal attitude, conduct or motives of one individual or another.

The real issues are a little bit deeper than that. I do not think the minister should take the criticisms we are making as personally as he does. He should see them as an attempt to deal with a problem which he, in his own statement, indicates is a very real problem; that is the question of regulation.

What do we still not know? We do not know who the owners of the Cadillac Fairview buildings really are. We do not know the identity of the landlords. The Morrison inquiry has had one heck of a long time to make an inquiry into that question and we have had no indication from the minister or from the inquiry whether it is even attempting to answer that question.

Contrary to what the Premier said at one moment in this House in answer to a question from me, we on this side of the House and in this party happen to believe that ownership matters, that the identity of owners matters, and that tenants have the right to know who the heck their landlord is.

We do not know something as fundamental as whether this transaction still stands. We are no closer to knowing that today than we were nine weeks ago when the Morrison inquiry was established. I can say to the minister that we are prepared to be very understanding, very tolerant, very sensitive and all those words which he uses from time to time, which I subscribe to as a basis for conduct, but we are not prepared to put up with this undue delay any longer. We think the people of Ontario are entitled to know the identity of the numbered companies and that is an issue which transcends political boundaries. We also happen to think the tenants are entitled to know whether the transaction which has taken place actually stands, really exists and is still in effect.

The disclosure problem is not simply a problem relating to the Cadillac Fairview deals. As the minister will know, one of the reasons for the speedy agreement by this party with respect to the legislation which was passed at the end of December was our concern about the possibility of other smaller companies being bought up by interests which cannot be identified.

We know, for example, according to press reports, that an offer to purchase the Dominion Trust Co. was made by Mr. Vince Lanzino, who is 20 years old. We know no more about that person and that transaction than we knew the day it was reported in the press.

5 p.m.

Yes, we do have concerns about these kinds of transactions. We have concerns, for example, when in a report in the Financial Post a number of trust companies and their owners are listed and there are many companies for which it simply says that information is not available with respect to who the owners of these companies are. For example, for Counsel Trust Co., Toronto, 1960, the information with respect to ownership is not available. Then there are a number of other companies that are owned by properties that are simply numbered companies, where one individual owns 100 per cent of the shares.

The minister says he is concerned about ownership, but the minister cannot just make a vague statement and say he is concerned about ownership. He should tell us what his concerns about ownership are. Is he prepared to move on financial disclosure or not? Is he prepared to move on requiring that trust companies be widely held or not? Is he prepared to establish a 10 per cent limit or is he not? These are legitimate questions.

I may say that by seeking a quick fix with respect to the Crown Trust situation, the minister is only compounding the problem. He is not resolving the problem of ownership or of the concentration of ownership; he is simply guaranteeing that some individual company -- we do not know which one, Victoria and Grey or some other company -- on the basis of what information we do not know, may make an offer to purchase and it may be accepted by Mr. Rosenberg.

I wonder if having Hal Jackman or some other individual play the role of fairy godmother is really going to solve the problems of the trust company industry. I do not believe it is. We in our party think that what is required at present is fundamental reform to provide for exactly the kind of protection and confidence the minister has talked about, which we think is absolutely essential.

The minister has suggested that by raising these questions publicly, by asking the minister to make statements publicly and by asking him to give some reassurance to the people of this province publicly, we in the opposition are somehow acting irresponsibly. These are always questions of judgement, but I do not think it is quite as simple as that. An opposition does have an obligation to ask questions and to present an alternative point of view, and if the answers do not add up then I think the opposition is entitled to state that the answers do not add up and do not make any sense.

The Premier stated today in response to a question in the House that the government would not guarantee the deposits in Crown Trust, Greymac Trust or Seaway Trust any more than it would guarantee somebody who was making an investment in the stock market, as if an investment in the stock market is in any sense analogous or similar to an investment in a trust company. That in itself indicates how far removed this government is from the feelings of ordinary people on this issue.

The fundamental issue is whether this government is going to pay the price of its own lack of vigilance. It is inconceivable to me that any beneficiary of an estate or of a guaranteed investment certificate or anybody with a legitimate investment or deposit in one of these three companies should have to pay the cost of the government's own lack of vigilance.

The government has not been vigilant on its own evidence, in the evidence it presented today in the minister's statement. The minister said at the end of his report not only that there was a basic problem with respect to Seaway and Greymac, not only that there was a basic problem in the overvaluation of some of their properties, not only that there was a problem that some of their properties were too closely held or tightly linked to one company, the Kilderkin company, but also that there was a basic problem with the law in Ontario.

I say that if there is a basic problem with the law in Ontario, the responsibility for that situation lies clearly with the government; it does not lie with an innocent depositor or an innocent investor who cannot even find out until he actually makes the deposit or the investment who the directors and shareholders of these companies are.

This is not a recent issue. This is not a problem that has suddenly developed. The government has had warning signs galore, warning signs going back to the mid-1960s with the collapse of Atlantic Acceptance, carrying through with the collapse of York Trust, which the Premier mentioned today, and carrying through with the collapse of a number of other companies -- Argosy, the Astra/Re-Mor situation, problems at both the federal and the provincial level.

Both the Liberals and the Conservatives have failed to provide the kind of protection that is necessary for individual depositors and investors. I think the facts are very clear with respect to federal Liberal regulation as well as to provincial Conservative regulation. The government just cannot claim, when any of us say this is a basic issue which reflects some underlying problems in the trust industry that this is a problem that has suddenly arisen; it cannot get away with saying that, because the minister and the government have had a lot of warnings and there are a great many questions that still remain unanswered.

We did expect more reassurance than the minister has given. The minister has a different point of view. The Premier clearly has a different point of view in his statement today that it is not the government intention to guarantee anything at all. We do not think it is right to force individual investors to take the government to court. We think it is something that should be the result of the government's actions, recognizing there has been a problem, and it has not acted.

I believe we need a public inquiry into the conduct of the minister and the ministry to determine: when the minister knew what, when and how; when the ministry knew what, when and how; when Mr. Macdonald knew what, when and how; what other individuals knew and what their involvement and advice have been? There are a great many questions that remain unanswered and that I believe only can be answered not by the minister conducting an internal inquiry but by a public inquiry.

If, as the minister said, he has never done a bad job, he has always done a good job, he has always been a good guy, he has never been a bad guy; if he is so confident that is true, why does he not let an independent public inquiry decide, rather than pat himself on the back and tell himself what a clever boy he has been these past few months?

There are great many people who have suffered as a result of what has gone on in this interest. The government should be taking more action than it is and its actions should be subjected to the scrutiny of a public inquiry.

Mr. Peterson: Mr. Speaker, I rise to share with you a few thoughts I have. I was going to leave the presentations from our party in far more capable hands, but it seems to me I am obliged to respond to some of the remarks of the minister and the leader of the New Democratic Party. Essentially I agree with most of the things the leader of the New Democratic Party had to say before he got a little sanctimonious in there. I think he presented the case fairly well.

I am happy to have this opportunity to have a public airing, using the limited devices we have in opposition. Believe me, it has been most frustrating over some period of time when we take the whole discussion back to the original property purchase. I may be a little self-serving, but those of us who were a little more forward-looking than the minister and his advisers at the time could see that, on the face of it, there were some very serious problems presented, and not only for the tenants.

Given the nature of the transaction and the information that was being shared with the minister and his obvious embarrassment in this House and in committee as we discussed these things, I would have thought another human being in similar circumstances would have wanted to get to the bottom of the facts and find out everything that was going on. Because we all remember and because we like the minister, we have shared with him some of his embarrassment at having been given half-truths and inadequate information from the various players.

We have a minister with no particular commitment to this portfolio and no particular knowledge about it, and that in itself creates a problem. A number of people with a business sense, with a sense of how the marketplace works, came to me. These were people who generally would be described as Tories and as supporters of that particular philosophy. They came to me and said: "There is something wrong here. It is untoward. We must look into all aspects of this particular deal." On the face of what was transpiring, I am suggesting, prudent people were encouraged to suggest that there should be more information forthcoming.

Originally this started off as a tenants' issue; that issue is still inherent in this whole transaction and will not go away. The bottom line from that side is that we have to make sure the tenants' rights are protected. What we are finding here is that if the owners of those buildings, whoever they are, or the property managers who really have financial responsibility under the head leases are not financially secure, and there is some question about that, then we are going to find the tenants' rights are increasingly in jeopardy. Who is going to fix a leaky faucet? Who is going to pay the heating bill?

It is not illogical to see that, because of the problems that have surrounded the ownership through Kilderkin, which I am told now is unable to bank and is having trouble refinancing a lot of its properties as they come due and could end up with an insoluble problem on its hands, it might end up back in the lap of the government. I am warning the minister of that now so he can set in motion a contingency program. I have made several predictions along the way, and I suggest that every one of them has been absolutely accurate.

5:10 p.m.

Knowing what we knew with our limited research budget, albeit we have the ablest researchers and investigators in the business today and a caucus that is conscientious and devoted to rooting out the truth, why did the minister not know more of the facts about what was going on? The facts are going to have to come out in an inquiry of some sort, because internal inquiries do not satisfy me, my friends to the left or anyone else who is fair-minded about this situation.

We have seen a shocking lack of confidence in this minister. That really bothers me more than anything. I have said on more than one occasion that there was evidence one or two years ago that this kind of thing was going on. We found it. Why could the minister not find it?

We did not have access to their assets. We did not know what their asset values were. We did not know the list of the mortgages. But on more than 10 occasions we were able to determine a pattern of behaviour that threatened not only the tenants but also the depositors of the companies that were involved in financing some of these transactions.

We were constantly walking a fine line. I will share with members now the difficulty I had as Leader of the Opposition. I knew enough that had we made any misstatements we could have created a panic that I did not want to create. We had to walk very carefully, on the one hand, to preserve faith in financial institutions and to maintain the integrity of that and, on the other hand, to force the government to move.

After a long, painful, thoroughly researched effort, the government finally moved. When the minister called me to the Premier's office in December and asked for our compliance, I had to assume that he knew far more than I did, and he persuaded me that it was in the interests of the people of this province and of the depositors to allow that piece of legislation to go through unscrutinized.

That is contrary to every instinct I have as a politician. But, that being said, when the Premier says there are problems that need to be addressed through emergency legislation with these sweeping powers and the minister in his presence asks the same thing, then I would have been less than responsible not to agree to that.

There is no question that the leader of the New Democratic Party and I have come under criticism from a number of people for not insisting on a thorough review; but as a question of what is more or less responsible, he in his judgement and I in mine deemed that it would have been less responsible not to comply with that government request.

There are questions now about the adequacy of that legislation, its drafting, the sloppiness and all of that. We did not have a technical discussion that day, with the exception of the member for Riverdale (Mr. Renwick) who pointed out some of the problems therein. We knew we were walking into a serious situation. I made the prediction the next day that there would be a takeover within a month and, of course, that came to pass. I did not have any inside knowledge of that; I was putting two and two together, as I suggest that prudent people were able to do in the circumstances, to understand what was going on.

Very frankly, the minister's response has not been one that I take all that seriously, because it has involved mostly personal attacks on me, the leader of the New Democratic Party and a variety of others. His speech today and the speech he had written for his parliamentary assistant were rehashes of a few quotes out of various newspaper articles suggesting we were irresponsible, have a variety of positions or whatever.

He decided he wanted to attack me and say I was irresponsible. He called me impertinent in this House for bringing the issue up. There was another occasion when he wanted to indulge in fisticuffs. That is okay; I do not mind that. What it showed to my colleagues and me was that here we have a man in such pressure, so over his head, so overwhelmed by the events that have taken control of the situation that he did not know how to adequately respond.

For all those reasons, I was sympathetic to him personally, even though it is unfortunate under the parliamentary system -- in his case at least -- that the minister is responsible. I am not saying it is exclusively his responsibility as the minister; these things should have been monitored beforehand. The previous minister said at one point -- and I do not have the exact quote -- that everything was fine after Astra/Re-Mor. We have had 10 or 15 huge financial collapses in this province in the past decade. He said it was all fine then.

Is it our responsibility that we have not called forth legislation on the Loan and Trust Corporations Act or is it his? I ask members that. It is the minister's responsibility, and the fact that his regulators were not there trying to find out what was going on was his responsibility, not my responsibility.

I can tell members that when the text is written on this whole sorry affair, and it is going to take time, I fear that we will have lawsuits for the next few years over this, going to the Supreme Court and back again; it looks like everybody will be suing everybody. Whether the minister is going to use his power with Mr. Rosenberg and the other players, trading off criminal charges against divesting themselves of those assets, I do not know. I do not know what is going on back there. I have some hints, but I do not know what is going on.

When the record is written, it is going to be one of the saddest chapters in the history of that government. It has the capacity to bring him down, because he has not handled this very competently. I have no judgement whether it was right or wrong to move in. I said at the time that the minister was going to remain responsible for his actions at that time, but I have a number of strong opinions on the way it has been handled in the past 10 days.

The minister's statement a week ago, with no further information, was irresponsible in view of the circumstances. He invited a run-up to $20,000 with his terse statement. Then the Premier disappeared like a mole down to Florida and let the poor minister hang out to dry. The minister is expendable, and I am sure he has thought about that in his own mind when considering his own career, but depositors are not expendable. We still have no assurance of the state of those deposits.

I will make another prediction. That government is going to have to come good for the shortfall, because it is negligent and it is going to be sued for it. They have two choices: they can guarantee the assets as they are sold to someone who is competent and knows how to administer them or, on the other hand, they are going to have to guarantee those deposits some way or other.

Where I disagree with my friend, the leader of the New Democratic Party, is this: it is not the government's money; it is the taxpayers' money. It is the taxpayers who will be paying -- who knows how much, $130 million? We do not know the softness of those assets. It is going to be the taxpayers who will be paying for the government's irresponsibility. We are going to remind people who was really responsible.

Mr. Gillies: Mr. Speaker, I have had the benefit of hearing only the last couple of minutes of the comments made by the Leader of the Opposition, but I think they are rife with contradictions and a number of points that are in complete error.

The Leader of the Opposition is being intensely critical of this minister for moving in on January 7 to ensure that the interests of the depositors and those who have dealings with the three trust companies were protected.

Mr. Peterson: On a point of personal privilege, Mr. Speaker: I did not say that. He may want to read Hansard and retract that so at least we can debate this thing in a factual way. I was very critical of the way it happened. I said the minister is responsible for going in and all the circumstances thereof. I did not say he should not have gone in. The member should get the facts straight before he debates in this House.

Mr. Gillies: Mr. Speaker, I will indeed check Hansard. But the point remains that the Leader of the Opposition has been critical of the handling of this affair despite the fact that the minister and Premier took him and the leader of the third party into their confidence prior to the introduction of the legislation on December 21.

Mr. Peterson: He didn't tell anybody what was happening.

Mr. Gillies: Good Lord, when the position of his party is to allow a bill to be put through this Legislature in one day which gives the minister the power to do certain things and then in the next instance he is critical because the minister does it, I suggest that there is indeed a contradiction on the part of the Leader of the Opposition.

When the minister moves to protect the interests of the depositors and the people who have their savings and retirement nest eggs in these three trust companies, I do not criticize the minister for that. I praise him for moving in a decisive fashion to protect the interests of these people.

Mr. Breithaupt: What about Brantford?

Mr. Gillies: The member for Kitchener asks, "What about Brantford?" I will indeed speak briefly about Brantford, because my community has a very large and active Crown Trust office. I have been talking with dozens of my constituents and working with them and trying to reassure them in the past week as to the security of their deposits and the state of this company.

5:20 p.m.

Again, when we were trying to provide factual information and tell the depositors exactly what was going on in terms of the government's actions and the investigation that was under way, I had depositors calling me because the Leader of the Opposition said, "Credible people have said that investors in these companies may be facing major losses." He said that in advance of any statement from this minister or any concrete information from the investigation that is under way. The Leader of the Opposition sees part of his responsibility to be scaring the devil out of the depositors in those companies and take the severest exception to that.

Mr. Speaker, you can well imagine that this minister acted to ensure the integrity and the credibility of the loan and trust company system in this province and he acted as he did to maintain confidence in that system. Every effort has been made by the government to avoid panic on this issue. I am sure I am not alone. Many other members of this House had inquiries from their constituents and they attempted to provide them with the best, the most up-to-date and factual information available.

Indulging, as certain members of this House did in the last week, in conjecture --

Mr. Laughren: Name one.

Mr. Gillies: The Leader of the Opposition for one; conjecture, rumour: "I heard that credible people." Who are the credible people? I would suggest this type of statement was not in the interest of the depositors, it was not in the interest of Crown Trust and it was not in the best interests of the integrity of the system itself. I think the minister has been very straightforward and was quite right. He exercised his responsibility by not indulging in conjecture and trying to second-guess the investigation that has been under way in the past week.

After the government moved on January 7 he said that he would bring a statement before the House to bring the most up-to-date, factual information before it and he has now done so. I and my constituents in Brantford who have deposits with Crown Trust can take some direct comfort from his statement today. He has pointed out what is seen to be a deteriorating state of affairs in Crown Trust, a feeling that perhaps the security of some $130 million in assets may not be adequately protected; having facts in hand from the investigation, he has voiced concerns about capitalization, the liquidity and public confidence in these companies. Now that the investigation has been made and facts are before this Legislature, now is the time to make statements about it, not in advance of any concrete information.

The minister also pointed out that in his estimation, subject to certain negotiations under way, the full amounts of the deposits will be secure and the people in my riding and others who have their savings in Crown Trust will be able to draw, if they wish, on the full amount above the current $20,000 ceiling imposed by Canada Deposit Insurance Corp.

Mr. Cunningham: Thanks to the feds.

Mr. Gillies: I might add, while I am being heckled by a member of the Liberal Party, that the $20,000 ceiling on depositors' insurance has not been changed since 1967 when that particular apparatus was put into place by the federal government. In some 15 years, the Liberal government of this country never saw its responsibility to at least increase that ceiling with the rate of inflation. A federal parliamentary committee in 1982 recommended a move to a minimum of $60,000 coverage and finally Paul Cosgrove has now moved because he sensed that it might be politically hot and --

Mr. Laughren: Look who's talking.

The Deputy Speaker: Order. The member for Brantford has the floor.

Mr. Gillies: -- perhaps after 15 years the time has finally come to make a move to protect adequately the savings these people have in these companies. It is 15 years later when the government of Canada decides that $20,000 is not a reasonable level of protection for these deposits. I suppose that is the kind of swift action we have come to expect from the federal government but we laud the announcement made by Mr. Cosgrove now. I will not be critical of that except to say it is long overdue.

Interjections.

Mr. Gillies: That particular legislation, as the member for London North (Mr. Van Horne) well knows, is not the responsibility of this province's Premier but the responsibility of the federal Parliament. So I would ask the members over there not to try to slough off their problems on to us. Finally, the federal government moves.

Last week, the member for Renfrew North (Mr. Conway) and I were on a radio program during which I said, sincerely, that I would not be critical of the Leader of the Opposition for his actions through the fall months in asking questions about this transaction, in trying to get information before the House and in pressing for further information in the best interests of the depositors of the three companies involved.

I would, however, be critical of his actions in the past number of weeks. I believe his legitimate concerns have given way to political concerns, to the possible hay that can be made with this. He has moved into the realm of conjecture and alarmism. That is how I see his present posture.

Then we have this particular emergency debate, moved by the member for York South, which I think indicates genuine concern on the part of many members of the House. I would certainly not be critical of the member for York South for moving this emergency debate. I am pleased it is taking place.

However, the motion before the House alludes to the alleged failure of this government to deal with the problem of the use of apartment buildings as trading chips.

The Deputy Speaker: One minute.

Mr. Gillies: On that very point, members will recall that on November 16 of last year the government moved that the Morrison inquiry investigate the business conduct of these companies in terms of the sale of the Cadillac Fairview apartments.

At that time the minister assured the House, and I quote, "If other steps were indicated, they would be taken and they would be taken quickly and responsibly." That has been done. I feel that the minister has fulfilled his obligations. He has lived up to the commitment he made on November 16 and, indeed, the further steps have been taken.

It is in the direct interests of the depositors in those companies, of the trust company industry and of all members of this House that the investigation go forward and that the facts be brought out. That is being done. I think the minister has acted in the best interests of the province. I feel that the criticism levelled against him is unwarranted and that when all of the facts are known, it will be found that the minister moved in a proper and appropriate fashion.

Mr. Philip: Mr. Speaker, it was only a couple of years ago that I chaired an inquiry in the standing committee on administration of justice into the demise of Re-Mor Mortgage and Astra Trust. The sad part of all of this is that the present situation we are facing likely could have been prevented. As the member who just two years ago chaired that inquiry into the demise of Re-Mor Mortgage and Astra Trust, I recall the public outrage over the chummy relationship between the government and private financial institutions and the editorials which called for an end to it and for reform so that a similar situation would never happen again.

It is ridiculous that one can find out more about what is happening in the marketplace by going to the Albany Club than by calling the Ministry of Consumer and Commercial Relations.

The most recent case, of course, is the one that we are looking at now and which began by the sale of properties owned by Cadillac Fairview Corp. This sale would not likely have taken place had the Liberals and Conservatives not combined on November 4, 1976, to defeat our party's amendment to the Corporations Information Act which would have required disclosure of information about any corporation in which a company held more than a five per cent interest. If the amendment had passed, much of the mystery surrounding the Greymac deals would have been cleared up. Indeed, the whole fiasco might have been prevented.

During the last few days, I have received telephone calls from anxious constituents who have deposited money or taken out investment certificates or registered retirement savings plans with Greymac Trust Co., which happens to have a branch in my riding. Many are relieved to hear that they are protected up to $20,000, including interest, on each amount or savings plan, but a few have had more than that invested.

5:30 p.m.

I recall during the Re-Mor inquiry the case of a farmer who had sold his farm for $150,000 in order to retire at the age of 56, not an unreasonable desire for a man who had worked hard all of his life. He is now living on welfare as the result of the inaction and the poor supervision of this government, and here we have a repeat of this kind of fiasco.

It is little wonder, then, when one considers that the Conservatives during the election campaign, and indeed the Premier, promised those who were losing or had lost money under Re-Mor that they had nothing to fear if the Conservatives were re-elected, that people remembering that case and remembering what in fact has not happened should have some anxieties today.

The statement today by the minister gives little reason for optimism or confidence, nor does the statement by the Premier. The Premier compares investing in a registered retirement savings plan with playing the stock market. How little this government has learned. How similar the statements that are made now by the Premier are to those that were expressed by him and his ministers during the early days of the Re-Mor inquiry.

Tenants can take little comfort from the statements today by the minister. There was no assurance that tenants would be protected in the long run. The minister stated that depositors and investors would be protected; but as far as tenants are concerned, they should be content to pay for these sales over five years instead of three, and they will likely face only an 11 per cent increase this year instead of the 25 or 35 per cent increase that would likely have happened if tenant groups, municipally elected officials and the New Democratic Party had not made it too uncomfortable for the government not to take some action.

During the debate on Bill 198 we moved amendments that would have protected tenants, not just those in Cadillac Fairview buildings. The amendments dealt with the issues that we in the NDP caucus have been raising for a number of years in this House: the problem of illegal rent increases; the problem of who owns buildings and the right of tenants to know; the problem of the exemption of certain buildings from rent review, and a number of other issues that we dealt with in that bill.

My colleague the member for Riverdale has pointed out that if tenants are to be reassured the government should now take possession of Cadillac Fairview buildings, collect the rents and otherwise operate the buildings. But it should do more than that. As the Federation of Metro Tenants' Associations has pointed out, the government should move very quickly on the kind of amendments we proposed with Bill 198.

The power and scope of loan companies has grown tremendously in recent years. The latest figures published by the Ontario government show that trust and loan companies registered in the province have assets of more than $49 billion. Public liabilities are nearly $44 billion, and in addition trust companies are administering in excess of $60 billion through estates, trusts and agency funds.

It is not good enough for the minister to say that the Canada Deposit Insurance Corp. coverage should be raised to $60,000. Indeed, if one looks at the US experience, coverage under the Federal Deposit Insurance Corp. in the US currently stands at $100,000 US and has been revised upward over the years on a regular basis. Tom Delaney, a spokesman for the Consumers' Association of Canada, feels that the level of coverage in Canada should be increased to at least match the US level in view of inflation and the higher per capita level of savings in Canada.

Indeed, there is no mention by the minister that either he or his predecessor has ever approached the federal government to express concern about the very low level of protection that is offered by it. Therefore, it is not appropriate for him simply to pass the buck and say it is the federal government's problem. It is his problem if he and his ministry have not gone to the federal government and revealed their concerns on this issue. It is time that we treat the trust companies as the powerful financial institutions they are, with legislation to provide real and substantial protection for millions of Ontarians dealing with these companies.

There is certainly a need for restrictions on the number of shares that can be owned by one person or corporation in a loan or trust company. There should be tougher and broader disclosure rules for consumers, for investors and for the public's information. There should be limits on investments in corporations by loan and trust companies. There should be a requirement that proportions of investment portfolios be set aside for social capital.

In general, what we are asking for, and why we are so disappointed in this government, is new legislation recognizing that trust and loan companies are major economic players in Ontario now with control over billions of dollars in capital. These corporations, as do all other financial corporations, have a wider social responsibility than simply playing with other people's money.

The statement today by the minister, his responses to the questions in this House and, even more disappointing, the response and insensitive answer by the Premier, give little encouragement to tenants. It gives little encouragement to working people who have deposited their savings and have been planning for their retirement through registered retirement savings plans.

More particularly, it showed the government has learned little from the Astra/Re-Mor fiasco. It has learned little from the other fiascos we have experienced in the interim. We see here the same arrogance that tried to prevent a public inquiry by a committee of this House into the goings-on in the Astra/Re-Mor fiasco, the same arrogance that compares legitimate, hardworking investors to speculators.

It is that arrogance, that lack of action which requires the government to take responsibility for what is happening today and not to blame the opposition for being alarmist when we are simply expressing the same things the government has been told for years by members of this House, by members of the public and, I dare say, by people in its own ministries.

Mr. Conway: Mr. Speaker, I am pleased to rise in this debate on the motion introduced in the name of the leader of the New Democratic Party. I do so with feelings of anger, not as someone who has had great experience in terms of the committee that looked into the conduct of the Astra/Re-Mor situation as I do not have as much experience as other members with respect to some of the conduct of financial institutions, but I want to say I rise with no little bit of anger in my heart.

I am very surprised when I look around this chamber and see good friends of mine on the other side. I am thinking particularly of the distinguished senior member for Stormont-Dundas-Glengarry (Mr. Villeneuve) who through all this debate, although he is not here now, has nodded his head in some approval of what has happened. I cannot believe the good people of Kenyon township, whom he knows only too well, would in any way want to condone the conduct of this government that has led us to this unfortunate situation.

If I might, I would like to highlight quickly some of the issues the minister addresses in his 22-page statement. The minister reminded us of the underlying concern he had for the intervention on January 7. He said, "There exists a practice of or a state of affairs within the corporation that is or may be prejudicial to the public interest or to the interest of the corporation's depositors, creditors or shareholders."

Having said that, and after having done what he had just done, he certainly created a climate of legitimate concern all across this province.

I am mindful of some of the pathetic toadyism we have been subjected to here today from the likes of the member for Brantford (Mr. Gillies) who had the gall to stand in his place and somehow cast blame on the Leader of the Opposition who, together with others on this side of the House and some over there privately, are alone in protecting the public against what in many respects is an all too predictable tragedy. I suspect we have not heard the end of that.

For example, on page 9 of his statement, after thanking Bell Canada and a host of other good and wonderful people, the minister draws our attention to the help afforded him by Mr. W. A. Macdonald, QC. I have something to say about the performance of Mr. Macdonald, whom I do not know. I found it an incredible want of good judgement that the Minister of Consumer and Commercial Relations would, in so sensitive a matter and one in which there were so many public questions and concerns, take on at a critical juncture as his private and personal lawyer a man who sits on the board of Victoria and Grey Trust Company.

I do not want to recite what the president of Victoria and Grey Trust Co. said about his company being all that stood between chaos and order in this matter. The Minister of Consumer and Commercial Relations takes unto himself no less a person than a board member from one of the companies which has a stated interest in taking over one of the principals involved in this. I would ask the member for Stormont, Dundas and Glengarry what kind of judgement was that.

5:40 p.m.

We read in the press this very day that there is clear, almost irrefutable, evidence of inside information that was acted upon by many of the principals. What have we heard from the Minister of Consumer and Commercial Relations about that? Yes, there is suspicion; and I would argue all too much evidence to justify that suspicion over here and elsewhere across this province. I would have liked the Minister of Consumer and Commercial Relations to have addressed some of those concerns in his statement.

I found this next statement from the minister incredible, given the fact it was being read to us at 2:15 this afternoon. I quote from page 12 of his statement: "In the cases we are dealing with one of our main objectives was to take action that would prevent some or all of the companies from requiring liquidation or winding up."

Two and a half hours before the honourable minister stood in his place and said that, Mr. Leonard Rosenberg, a principal in Greymac Credit, issued a statement, the first line of which says, "I have instructed the lawyers of Greymac Credit Corp. to proceed with the voluntary winding up of Greymac Trust Co." Does that not speak eloquently of one of the principals of the minister's action? I would have liked to have heard something from the honourable minister of financial institutions on that apparent contradiction.

He says on page 14, "We wish to carry on the business as usual to the extent possible in the circumstances." He is referring to the three companies subject to the seizure. My leader stood in his place this afternoon and drew to the attention of all honourable members the fact that only three or four days ago the Ministry of Agriculture and Food would not accept a $500,000 certificate held by a citizen of this province in the name of Crown Trust. What does that say about business as usual?

Everyone from the Premier to the member for Brantford invites members of the opposition to be responsible and serious-minded about this matter. At the very same time, a department of the same government will not accept a certificate of one of the affected companies. This is the company, we are led to believe from this statement, that is the healthiest of the three, yet no explanation is given by that department. Maybe somebody over there, perhaps the member for Brantford, would explain why the Japan-bound Minister of Agriculture and Food (Mr. Timbrell) is not prepared to honour the certificates of Crown Trust. Maybe somebody over there would want to satisfy my concern about how that squares with business as usual.

Then we have the extraordinary statement on pages 18 and 19 about Seaway and Greymac. We have extraordinary things, and I am not going to recite them all, but if ever there were evidence to indicate a gross dereliction of duty by the regulatory arm of the Ontario government, surely it is stated by the minister himself in the six points on pages 18 and 19.

As the member for York South properly points out in his resolution, this is not the first time. I would be very willing, almost indulgent, to give more latitude to the members opposite and to my friend the minister in this respect if we did not know that two years to this week, this Legislature was seized through one of its more hard-working committees with a reference that brought us to the kernel of this very issue. Maybe our mistake on this side -- and I can remember a few Tories as well -- was in believing the then minister, the current Minister of Industry and Trade (Mr. Walker), when he said it would not happen again.

What makes me so angry, what just disgusts me, is that two years ago we had this exact parallel and we were told it would not happen again. Some of us believed. Some of us were prepared to give this government the freedom to do something, forgetting all that had preceded, and the litany has been eloquently put out in the resolution standing in the name of the member for York South. What has happened? Has that promise been kept?

Today I was reading some of the comments made by Murray Thompson in the committee 18 months ago. I am sickened to think that these people who prided themselves on management competence, having been faced with that whole plethora of failures and in some cases worse, are coming here today to say to honourable members on all sides, "Trust us. Give us time. We will protect the public interest."

I cannot easily give anyone, including the minister of Consumer and Commercial Relations, that kind of assurance as happily as I might have some time ago. Nothing is so eloquent as a want of confidence in the regulatory arm of the Ministry of Consumer and Commercial Relations than the statement read by the minister, that six-point reference on pages 18 and 19.

I am told I am almost out of time. There are answers this Legislature must have. I have old men and young women in Renfrew county who are coming to me with certificates in the name of Seaway and Greymac that they received from the Province of Ontario Savings Office. What does that say about one arm of this government? The minister knows of my concern.

I cannot believe my anger is an individual circumstance. No amount of toadyism the like of which we heard from the member for Brantford is going to be an adequate response to the legitimate concerns of thousands of Ontarians who are at risk because this government failed drastically and routinely in the discharge of one of its most fundamental public responsibilities.

Mr. Brandt: Mr. Speaker, my colleague the member for Brantford put forward a rather eloquent defence of the government's position with respect to this matter just a few brief moments ago. I raised his name in part to just correct the record so that we would know from what jurisdiction that member does come. I recognize perhaps some of the frustration and difficulty the opposition have in this issue because they do tread a very fine line. That line is one between legitimate questioning of a very difficult and complex issue -- I think they have a responsibility to do that -- and perhaps raising unnecessary and perhaps false concerns among the public at large. I think there has been an element of that as well. I would suggest the members of the opposition carefully tread that very difficult path when they are making public pronouncements with respect to a matter that has a great deal of financial impact on thousands of Ontario residents. Any other course I think is not only unfair but is totally uncalled for.

It is the responsibility of the Minister of Consumer and Commercial Relations to respond to public concerns as the information is available to him and he is trying to do that; as the investigation is carried out, he is releasing that information to the public. He attempted earlier this afternoon to make a very comprehensive statement in connection with this whole question.

It is interesting that prior to the minister making his comments today in this House, the motion we are debating at this time had already been proposed some days ago by the leader of the third party. What that suggests to me and to my colleagues on this side is that quite obviously none of the words, comments or the positions the minister was going to put before this House were of any concern whatever to some of the members on the other side. They had made up their minds and they were not going to be confused by the facts; and that is as simple as it was.

5:50 p.m.

Interjections.

The Acting Speaker (Mr. Cousens): Order.

Mr. Bradley: A perfect statement for two years ago.

Mr. Brandt: I can only say to the member for St. Catharines that I was not here in this House two years ago, but I can tell him --

Mr. Nixon: You were a Liberal then.

Mr. Brandt: Oh no -- that was many, many years ago. As a matter of fact I cannot even remember those days they are so far in the past.

My colleagues on this side have listened very carefully as this whole situation has unfolded with respect to the three trust companies under debate here today, and I speak for them all when I say that we have nothing but the fullest confidence in the Minister of Consumer and Commercial Relations in his handling of this matter. We have complete confidence not only in the way in which he has handled it but in the way --

Mr. Wrye: You may be the only 69 or 70 people in the province who do.

Mr. Brandt: Oh, I would not say that. One of the frustrations of members on the opposite side is that there has not been the run on the trust companies that I think some of them expected. As a direct result of that depositors have not created the kind of hysteria they hoped for. The calm, cool, collected and very responsible statements of the minister have allayed the fears of the public.

Mr. Nixon: On a point of order, Mr. Speaker: One of our standing orders prohibits any member from imputing motives, and the honourable member has just done that. Certainly we reject that, but you should call him to order so he would withdraw that imputation and not repeat anything similar.

The Acting Speaker: I thank the member for Brant-Oxford-Norfolk and I will ask the member for Sarnia to withdraw the imputation of motives.

Mr. Brandt: I will withdraw the comment, Mr. Speaker, if I have injured the feelings of any of the members opposite.

The reality is that in respect to the Greymac, Crown and Seaway affair the minister reacted very expeditiously. This is particularly so with respect to the concerns of the tenants that were raised when this whole matter first came up about the flipping of mortgages and the refinancing of this whole property. Not only was he on top of it but he immediately brought in legislation to control any situation that would have taken advantage of the tenants of those properties. He allayed the fears of the tenants in that respect.

As this matter proceeded and it became obvious there were some problems with respect to the operation of these companies, the minister took the actions he did in the last few days. Those actions are totally supported by the people of this province. Most members on both sides of the House are not getting a rash of telephone calls expressing concern about this matter, unless they are exaggerating the situation. I have had very few questions raised by the constituents I represent about the minister's handling of this matter.

Mr. Cunningham: They know better than to call you.

Mr. Brandt: I appreciate that, but the fact of the matter is that when they call me they get some results. That is perhaps something they do not get when they call that member.

Mr. Riddell: We are getting your calls.

The Acting Speaker: Order.

Mr. Brandt: The decision to act was made in consultation with the Canada Deposit Insurance Corp., as the minister indicated, in the belief that in each case, "There exists a practice of or state of affairs within the corporation that is or may be prejudicial to the public interest or to the interests of the corporation's depositors, creditors or shareholders."

When the minister had information brought to his attention that made it abundantly clear there could have been problems relating to the statement I just made, he took the necessary action. To suggest he could have taken some action two weeks ago, four months ago or two years ago is totally irresponsible on the part of the members on the other side. How can one respond to a problem before the problem is obvious, as it was in the case of Greymac, Seaway and Crown?

I would reiterate in closing that the members on this side of the House have nothing but the utmost confidence in the actions of the minister. We recognize this is a difficult and complex issue, but we believe he is handling it in an appropriate and positive way, and none of the members on the government side have any difficulty whatever in supporting the actions that have been taken to this point.

Mr. Cassidy: Mr. Speaker, in the few minutes remaining in this debate, I just want to make a few comments on what the situation appears to be right now. I think we all recognize that the ramifications of the Greymac, Seaway and Crown Trust affairs are going to be with this Legislature for a very long time. Regrettably they may well be with this province for a long time as well. People from outside Ontario are going to be looking at this province and saying: "How the devil could that have happened in Ontario? Who was asleep at the switch over the years in which this was allowed to develop?"

It is a fact that the regulators in Ontario were not really regulating at all. This was because of the cosy kind of relationship that seemed to exist between the regulators and the trust companies that came under provincial regulation. It was because of the kind of attitude the minister talked about in his statement today where it was assumed that everybody was working in the right direction and everybody was going to work in a gentlemanly fashion. So while the guard of the government was down, the regulators were not really regulating at all.

They were overlooking a situation where second, third and fourth mortgages were being piled one on top of the other; where companies were being allowed, or were putting all their eggs into some very questionable baskets, putting 30 or 45 per cent of their total assets into mortgages in control of one group, the Kilderkin group. That, quite apart from anything else, is bad business. Certainly it is bad in terms of the financial probity of the companies that are involved. It is bad in terms of depositors, and it is certainly bad as well in terms of the ultimate victims of all this -- the tenants. I still fear that one way or another they are going to find themselves having to pay higher rents because of the laxness of regulation of this government.

The government now is busily trying to close all the stable doors regardless of the fact that for the most part the horses have fled. There do seem to be signs that some of the horses that fled are looking at very fat bank accounts -- money that has effectively been taken out of trust companies and has been put into private pockets. This could have been done in a way that may have benefited individuals but which is going to cost us all in the province -- tenants, depositors and the public at large -- a great deal over a long time.

Some years ago, when I was a financial journalist, I followed all the ramifications of the Atlantic Acceptance affair. In the wake of that incident, there was a long inquiry followed by the creation of deposit insurance in the province. But it is significant that the commitment of government at this level and at the federal level to the concept of protecting depositors was so great that between that day and today not a penny was added to the value of the deposits that would be protected under deposit insurance. It was $20,000 in 1967, and $20,000 until 1:55 p.m. this afternoon. It is finally being raised now by the federal government in the wake of the findings of the Seaway, Greymac and Crown Trust affairs.

This is reactive government, reacting to problems it should have been able to anticipate, when the people regulating the industry had a responsibility to know what was going on. One has to ask why it was not raising questions about the probity and about the actions of the people who were playing all these games.

Why was it not listening to what was happening on the street? Why was it not looking at the overmortgaging that was taking place long before the Cadillac Fairview deal? Why was it not looking at the fact that more and more of the assets of some of these trust companies were going into the hands of particular individuals? Why was it not looking at what seemed to be a sporting game in the business sector, a sporting game where people with speculation in mind could have the multi-million dollar assets of trust companies and toy with them as though they were their own personal fortunes?

This appears to be the situation to which we are now catching up because the government finally decided something should be done. It speaks ill of the government that the situation would have gotten to this --

The Acting Speaker: Time.

Mr. Cassidy: -- stage by now and that so many people are still being threatened with being hurt. The responsibility, if anybody is hurt, will be on the shoulders of the government, the Conservatives over there.

Hon. Mr. Wells: Mr. Speaker, I thought I would just indicate to the House that, of course, we will be sitting tonight. At eight o'clock we will deal with the supplementary estimates of the Ministry of Community and Social Services in committee of supply. When those estimates are concluded, we will move to order 43, the concurrence in supply for the Ministry of Community and Social Services.

The House recessed at 6 p.m.