The House resumed at 8 p.m.
House in committee of the whole.
TORONTO FUTURES EXCHANGE ACT
Consideration of Bill 7, An Act to incorporate the Toronto Futures Exchange.
On section 1:
Mr. Chairman: Mr. Mitchell moves that clause 1(c) of the bill be amended by adding at the commencement thereof, "commodity."
Mr. Breithaupt: Mr. Chairman, it may be that in this some explanation would be needed, because the term "commodity futures contract" and the term "commodity futures option" are apparently to have similar meaning. Are we now adding a third item so that we are reading "commodity," "commodity futures contract" and "commodity futures option" to have the same meaning? Is that the intention?
Mr. Mitchell: Mr. Chairman, was a further amendment, an eighth amendment numbered 1(f), circulated to the honourable member, perhaps late yesterday?
Mr. Breithaupt: I received a series of amendments that came to the office yesterday.
Mr. Mitchell: There was an amendment 1(f), which is an addition. The member will find that amendment 1(f) brings the whole thing in line following his question.
This is a housekeeping amendment to coincide with the introduction of the term "commodity" in subsection 4(1) of the bill.
Mr. Breithaupt: So this in effect makes three component parts in clause 1(c) with respect to the amendment?
Mr. Mitchell: That it does.
Mr. Chairman: Will somebody read it the way it should be read now?
Mr. Breithaupt: Mr. Chairman, it would appear that clause 1(c) would read as follows: "'commodity,' 'commodity futures contract' and 'commodity futures option' have the same meaning as in the Commodity Futures Act."
Mr. Mitchell: That is correct.
Mr. Chairman: Thank you.
Mr. Swart: Mr. Chairman, the honourable member who just spoke is correct. I am sure he understands that there is a definition of commodities, commodity futures contract and commodity futures option in the Commodity Futures Act. This puts the definition, therefore, exactly in line with that act.
This act would be incomplete if we did not give a definition to "commodities." Nobody would know what one was talking about if one were talking about commodities. So it is very important that we have the definition in there if this futures exchange is going to work.
It is precisely for that reason that we will vote against the insertion of the word "commodity. We oppose this bill in principle and, therefore, we do not particularly want to see it working well. But if the bill is going to work it is necessary to have the definition of "commodity" in the Commodity Futures Act.
The definition is: "'Commodity means, whether in the original or a processed state, any agricultural product, forest product, product of the sea, mineral, metal, hydrocarbon fuel, currency or precious stone or other gem, and any goods, article, service, right or interest, or class thereof, designated as a commodity under the regulation."
We find that makes a very broad definition and the Commodities Futures Exchange will be able to deal in all those items, plus anything the minister may want to add in the regulations.
Precisely because there are futures exchanges around the world, if there is no futures exchange here, there is still going to be the trading necessary under the present system.
We should be moving away from the principles of manipulators in the market and towards international futures agreements that put stability into prices. Therefore, we have voted against the bill and will be voting against this amendment as well, because it makes the bill more functional and it is the function we are not in agreement with.
Mr. Breithaupt: Mr. Chairman, we will support the bill. We recognize the necessity and the requirements for a commodities futures exchange. The member for Welland-Thorold (Mr. Swart), in his lonely approach to speaking on this bill, has missed the requirement to have this kind of framework in place to deal properly and appropriately with these circumstances in which the agricultural and other operations of the world exist. We will be supporting this amendment.
Mr. Chairman: All those in favour of Mr. Mitchell's amendment will please say "aye."
All those opposed will please say "nay."
In my opinion the ayes have it.
Motion agreed to.
Mr. Chairman: Mr. Mitchell moves that clause 1(f) of the bill be struck out and the following substituted therefor:
"'Futures member' means a member of the corporation who conducts the business of trading commodities, options on commodities, commodity futures contracts and commodity futures options and who is admitted to membership in accordance with the bylaws."
Mr. Breithaupt: Mr. Chairman, I am prepared to accept the amendment.
Mr. Swart: Mr. Chairman, we also will accept this amendment. It is a definition that does not fundamentally affect the bill. It is a necessary definition.
Motion agreed to.
Section 1, as amended, agreed to.
Sections 2 and 3 agreed to.
On section 4:
Mr. Chairman: Mr. Mitchell moves that subsection 4(1) of the bill be struck out and the following substituted therefor:
"The object of the corporation is to operate an exchange in Ontario for trading in commodities, options on commodities, commodity futures contracts and commodity futures options by the members of the corporation and other persons authorized under subsection (2)."
Mr. Breithaupt: Mr. Chairman, in this circumstance, the changes with respect to the option of the corporation seem to be appropriate as they now include the three portions of the terms that were referred to in the original definition section. I am quite prepared to accept the amendment.
Mr. Swart: Mr. Chairman, I realize this change is made to incorporate into this subsection the word "commodities" as well as "commodity futures contracts" etc., and once again it is necessary. However, the principle is outlined thoroughly in this one section that tells what the commodity futures is all about, and because of that we will vote against this section.
Mr. Cassidy: Mr. Chairman, there has been some discussion about this before. Our party expressed concern about the nature of the bill at the time it came up some time ago for second reading. I want to say a few words about what is really happening here.
The government has moved once again and has decided to accept the representations made from Bay Street with respect to the creation of this commodity futures market, the Toronto Futures Exchange, which will be linked to the Toronto Stock Exchange but which will be to some extent independent of it.
In the course of this, not only will there be trading in commodities and in commodity futures but also, and I believe this is new for Ontario, in options on commodity futures which, as the parliamentary assistant to the minister knows, are a means of gambling with almost no money down at all. When you buy an option, you pay a very low price. If it goes up, you make a lot and if it goes down, you lose virtually everything put in.
What the government has done is to add another financial or gambling instrument into the structure of Toronto's financial network. It seems to me an argument could be made that perhaps this is a sensible thing. That might be so if this had been a government which over the course of 10 years, or the time prior to the creation of the futures exchange, had been actively at work to make sure there was a future for commodities in Ontario.
Instead, what we have is a government that is prepared to create a commodity futures market so people who live in North York or Forest Hill, people who want to gamble or, as some would argue, perform a function in the market, although I am not sure what it is, people who want to play with money around real commodities are facilitated, while people who simply want to produce commodities in Ontario and make a decent living from that find themselves unable to sell their commodities. They find the commodities they sell are not price-supported; therefore, they do not have assurance against the kind of vicissitudes of the market which have existed for so long. They find this is a government that is not prepared to back them up.
A few days ago I spent a bit of time in England visiting my wife's relatives. When I was there, it seemed to me that under Margaret Thatcher one could see very much the same kind of thing we can see here in Ontario under the Progressive Conservative government. Mrs. Thatcher and her government are very much prisoners of the City of London. They are very concerned about the status of sterling, the status of the Bank of England and the status of the financial and commodity markets in the City of London. They are so transfixed about what happens in London and in the financial industry in that country that they have completely forgotten about the need to ensure there is a future for commodities and manufactured products and the people who make them in Britain. That is a situation that is happening here as well.
If there were to be a balanced policy, then the government would say: "We have an intention of creating a market for commodity futures, but first we are going to make sure the men and women, the families and the communities who depend on those commodities are going to have a decent, assured future and that will be our priority. We are going to take action with respect to all those miners who have been more than half a year without work in Sudbury to ensure they can have a decent future for themselves, their children and their families. We are going to take action for those farmers who were so hard hit by the increase in" --
Mr. Chairman: I have allowed the honourable member to continue on at great length. I think it is time I got him back to the subsection.
Mr. Cassidy: Mr. Chairman, this is very much on the subsection. It says, "The object of the corporation is to operate an exchange in Ontario for trading in commodities, options on commodities, commodity futures contracts and commodity futures options by the members of the corporation and other persons authorized under subsection (2)."
Not only is this a broad definition, but also it is this kind of commodities trading which in the past has been used to bankrupt decent, ordinary people who are producers of corn, oats, barley and other commodities. All commodities are provided for in this legislation.
You may find it uncomfortable, Mr. Chairman, but perhaps occasionally in this House we should pause, step back and look at what can only be described as mistakes that have been made in the past in terms of the victimization of ordinary people by the powers of finance capital. I am sorry to use those words, but that is what is facilitated by the creation of this futures market.
The minister's parliamentary assistant can say, "There are some economies in the world that are inflexible, that have no give and take at all and that do not work particularly well because they do not have some mechanisms such as the mechanisms that are proposed in the futures exchange." That may be, but that is not the situation here. In this province, are we to give priority to the needs of people or to the needs of finance?
What this amendment does -- and I hope the parliamentary assistant responds to this -- is simply to underline the intention of this government to make sure the people who deal in pieces of paper and make fortunes therefrom will have priority over the needs of people who deal in real things and are finding their existence very tough.
I found the whole procedure, the whole series of events that surrounded the exemption from action against Conrad Black not curious at all when it comes to the priorities of this government, when it comes to somebody whose only useful purpose in society has been to dicker around with trading in shares and trading in commodities. People like that could come in, they could talk to the minister, they could get exemption. They could do all kinds of things that would be quite unconscionable. On the other hand, when it is somebody such as one of those poor farmers who in the end had to resort to direct action because nothing else was around --
Mr. Ruston: There are a lot of farmers in Ottawa.
Mr. Cassidy: I have the richest farm land in the province in my riding of Ottawa Centre. I hope the honourable member will recognize that. When it comes to the needs of those farmers, people who have been driven to the wall by high interest rates, by high costs of inputs and by inadequate returns for their products, can they walk in to see the Attorney General (Mr. McMurtry)? Can they even dream of having an interview with the minister of whatever it is and with one or two of his assistants to bring their plight before him? No, they cannot.
It seems to me that is the kind of priority we are getting from the Conservative government. We have seen today or yesterday how the actions and the attitudes of this government, and in particular of its leader, eventually catch up with them. It is poetic justice to me that it was the inaction of the Premier (Mr. Davis) with respect to the rights of Franco-Ontarians and the way the Premier treated the legitimate concerns of western Canada that finally came up to haunt him and to drop him from becoming leader of the Progressive Conservative Party and possibly Prime Minister of Canada.
Mr. Chairman: The member for Ottawa Centre is going a little far afield.
Mr. Cassidy: I am just about through, Mr. Chairman. I only want to suggest that the priority this government gives to the needs of financiers over the needs of ordinary people is going to catch up with it one of these days.
Mr. Mitchell: Mr. Chairman, I feel I have to respond to the member for Ottawa Centre in that there is a farmer in this Legislature who spoke on second reading. I refer to the member for Kent-Elgin (Mr. McGuigan). I think he defended this for the benefit of the farmers out there. I stand to be corrected, but I seem to recall him speaking very emphatically in support of this bill. The bill is a form of protection to make sure that what is being carried on at present becomes regulated.
Mr. Breithaupt: Mr. Chairman, it was interesting to note that the interjection by the member for Ottawa Centre comes from what I believe is the exact same seat where Dr. Shulman, the former member for High Park as it then was, sat during his years in this Legislature. During those years I recall he was quite a champion of a variety of economic opportunities from which we read that he did rather well.
Certainly one is told that in this life the best way to make a million dollars is to write a book about making a million dollars, or by starting one's own new religion. Those two things aside, the mechanics of operation that clearly exist in the marketplace to balance and deal with the expectation of commodity futures are the realities of the world in which we live. To ignore that is something we would do at our peril.
As I recall, the parliamentary assistant quite clearly reminded this House of the learned and particularly professional contribution my colleague the member for Kent-Elgin brought to the second reading debate on this subject.
You may recall, Mr. Chairman, that after my introductory remarks and those of the member for Welland-Thorold it was indeed a delight to hear someone who knew something about the bill speak. Accordingly we welcomed not only some additional and intelligent comments but also the necessity to deal with these problems of agricultural development in a balanced and reasonable way.
Certainly the whole object of this bill, which is in subsection 40, is something with which we on this side of the House can agree, because we know the necessity of planning and dealing with commodities in Ontario.
In spite of the cri du coeur from the member for Ottawa Centre, we will be supporting this amended section.
Mr. Chairman: I am going to ask the member for Kent-Elgin (Mr. McGuigan) to --
Mr. Nixon: Repeat his speech?
Mr. Chairman: -- to have a little kick at the can here.
Mr. Swart: Mr. Chairman, is there rotation here?
Mr. Chairman: I did not see anybody stand up over there.
Mr. McGuigan: Thank you, Mr. Chairman. I hesitate to enter this debate because I felt that --
Mr. Swart: When will you recognize me, Mr. Chairman? I will make it easy for you.
Mr. McGuigan: Mr. Chairman, I really do not want to repeat that speech and I hesitate to enter the fray at all because I thought it was evident to anyone who calls himself a financial expert that the honourable member has been spouting a great deal of nonsense as to breaking and enslaving the farmers of Ontario.
I would certainly concur with him that I would not want to be part of any bill that was going to do that, but what we are talking about here is simply a system that is a part of doing business.
Today, a farmer planting beans or corn or a number of these main crops in Ontario could contract that crop on the futures market at a pretty reasonable price. He could calculate his costs, because he knows what his fertilizer, gasoline and all those things are going to cost him right now. He could work out his expected yield and he could determine by selling it on the futures market today at a certain price that he would come up with a profit.
Of course, if he wanted to gamble, he would not go into the futures market. He would accept whatever price was available in the fall, be it high or be it low.
When one is talking about gambling -- and I think in the last debate our friend referred to farming as something akin to prostitution, although I do not know that prostitution and gambling have any connection -- the greatest gambler in the world is the farmer.
He plants his crop and gambles that in the fall there is going to be a certain price on the world market available to him. He can decide then whether he wants to sell it in the cash market, or he can gamble further and store it on his own farm or in a hired elevator, hoping that a few months down the road the price will be higher. But he is dealing in a gambling operation; one takes the gambling out by referring to the futures commodities market.
Just to give a hypothetical example: suppose someone came up with a new recipe for breakfast food that had been test marketed and tried by the nutrition people and the health people and they decided there was a good market for it.
Then he would go for financing and he would tell his bankers: "Well, it is going to cost so many thousands or millions of dollars to put in this processing line. It will cost certain amounts for advertising. There should be, according to our figures, a profit when this is brought to the market some two or three years down the road from now."
Of course, the banker would say: "That is fine based on the prices you have shown us for the basic raw material, but how do you know that two years down the road you can buy that basic raw material at the prices you are currently quoted?"
Of course, the person could answer: "Well, I can lock myself into a contract right now that will tell me two years from now I can buy that commodity at that price and, therefore, I have taken the gambling out of it. I am going to make my profit simply on the narrow margin between the cost of operation and the selling price." One takes the gambling out of it.
Someone else, of course, assumes that gamble. They are the people I think our friends are disparaging, those people who have money and are willing to take some chances. They provide the liquidity for the whole market system because, when I deliver my corn in the fall of the year, I do not phone the elevator and say, "Are you accepting corn today?" "Are you paying for corn today?" I do not bother with that. I know they are accepting corn today and I know they are paying for corn today. I go in and I can sell my grain on that cash market for the cash price of that day.
Certainly, that money does not come out of the huge endless pool of money that operator has because they simply do not have that kind of money. We are talking about millions and billions of dollars. That liquidity comes from the people who are willing to take a chance and they serve a very useful purpose.
I have some hesitation myself about the matter of options because, if there is anything evil in that system, it has to be in the matter of options. That is a highly levered situation. Anybody who goes into an option contract and does not know what he is doing is laying himself open to committing financial suicide or laying himself open to making millions of dollars. As long as it is done for a useful purpose, it does serve a purpose.
If I could go back to the case I mentioned, the fellow with the breakfast food. The banker might say to him: "You've only got so much money to invest in that two-year contract. What are you going to do beyond that?" He could say, "I have taken out options to go beyond that because, for a small amount of money, I can buy a lot of options." Of course, it is dangerous, as I explained. Nevertheless, there are commercial applications for it. I certainly assume that under this act and the other act there are guards and systems in there to prevent abuse of the system.
Remember a few years ago when the Hunt brothers decided to corner the silver market? They got silver up to about $50 an ounce. I am not aware of the exact price today, but it is something in the $5 or $6 range. They decided to corner the total silver supply in the United States and they came awfully close to it. In fact, they had billions of dollars invested in it. The only thing is there was still silver on the market when they ran out of dollars and they could not get that last ounce of silver. That last ounce of silver killed them. It collapsed the whole market and they had to divest themselves of vast quantities of holdings and stocks amounting to hundreds of millions of dollars.
They had violated the Securities Act in that an individual person or corporation or even a family -- it was a family that was involved in the Hunt group; I am not sure now whether charges were laid against them or whatever happened to them, but they had violated a rule that said a group could only acquire a certain percentage of the total supply. If we have those rules in this instance and they are looked after and enforced, those terrible things should not happen.
I want to close by saying that what we are talking about is, in general, giving the opportunity to those people who want to take the gambling out of their operations. They can lock themselves into certain prices on either buying or selling and they know what they are doing. This provides the liquidity that is required to carry those stocks that provide the food, clothing, shoes and all the various minerals and lumber that we all use in our daily lives.
If one wants to talk about international commodity agreements, the most recent one that has been violated -- there was a piece in the paper today; I think it is Iran which has agreed to a $2 discount in the price of its oil. What it really comes down to is that international agreements, though written in blood, are not worth a nickel. They are just not worth anything because how do we enforce an international agreement if one of the participants says, "I am opting out of it." Do we send in the marines? Who do we send in to enforce that agreement?
Mr. Breithaupt: Verbal agreements aren't worth the paper they're written on.
Mr. McGuigan: I will not try to upstage that one.
International wheat agreements collapsed in the early 1970s. There was simply more wheat available than there were markets. It is a natural thing that, if one has a supply of a commodity, one is hungry for money and is trying to sell it. If one can sell it for two cents under the market and move a volume of that commodity, that is going to happen. That does happen in international commodity agreements, whether they are signed by socialist countries or by capitalist countries. Whoever signs them, they are not worth a nickel.
Mr. Swart: Mr. Chairman, I am kind of pleased the member for Kent-Elgin spoke first, because I think he did put this whole thing into some kind of perspective, although I may not agree with all the comments he made.
When he speaks about the future purchasing of commodities, having a contract between the producer and the purchaser down the road certainly is not evil, it has some real benefits. But that is not what this futures exchange would provide. It provides for the manipulation of the sale and resale of those contracts.
Mr. McGuigan: It provides the liquidity.
Mr. Swart: Yes. They can be sold over and over again, and they can be traded. As the honourable member has so ably pointed out, not only is this really a sort of sale of these in the exchange, but there can also be manipulation; and there is manipulation of the price. Somebody can corner the market.
He used the illustration of silver. Even in the companies that produced the silver, which were the beneficiaries of that tremendously high price, it was not the workers in those silver industries, regardless of where it was in the world, who perpetrated the ripoff of the public -- and that is what it was; it was the speculators, the people who tried to corner the market. This has been shown to be the case over and over again when one gets into these futures exchanges and people have looked for alternatives to them.
Nothing is perfect in our society. I am the first one to agree with that. International agreements are broken. But by and large those international agreements on commodity prices have brought stability for a period of time to those commodities.
I do not think there is anyone who can deny that the efforts by the producing countries, and the purchasing countries too, to set commodity prices for both coffee and sugar have had some beneficial effect by taking them out of that commodities exchange, where it was left solely to private sector investors who would corner the market to determine what the price was going to be at any given time. I think those are the kinds of goals we have to work towards.
I am old enough to remember, and I am not sure whether the member for Kent-Elgin is, the controversy when we set up the wheat board. An awful lot of farmers opposed it and they gave some of the arguments the member gave here today. But a majority of those farmers determined they could no longer leave it to the futures exchange and the exchange market, so they tried to get greater stability.
It is not directly related, but it has a real bearing on what we are talking about today. They had control over that price. If we could do that further through the international market, we would have greater stability and there would be more for the producers than some manipulation by the financiers by getting prices way up to some fictitious level so they benefit themselves and not the producer.
We in this party think those are the kinds of directions in which we should go. To further facilitate this trading in contracts, particularly now in the options of contracts, without any efforts being made for the stability of commodity prices through international agreement or whatever means can be used, just seems to us to be going in the wrong direction. That is why we oppose this bill and why we are opposing this amendment.
Mr. Nixon: Mr. Chairman, I gather from the way you recognize me that you are less than enthusiastic about the continuation of this fine debate. I think it is one of the best ones we have had in this House since this afternoon. However, I wanted to be sure you had the benefit of my personal experience in this connection.
I am one of the farmers described by my colleague the member for Kent-Elgin who grows corn and soybeans. In fact, the availability of futures contracts removes some of the gamble in what I, my wife and family are undertaking on our 100 hectares. The prices of the corn and beans in our market depend almost exclusively on what happens in the Chicago grain exchanges.
Many people in this House and in this country somehow think of Canada as the great breadbasket for the hungry world. We should be aware that Canada produces three per cent of the grain in the world, that all of Canada --
Mr. Chairman: Stay on topic.
Mr. Nixon: All right. I have already told you this, but I have not told everybody.
The state of Iowa grows more grain than all of Canada put together. We have some strange idea this commodities futures exchange to be established downtown in some boardroom in the new skyscraper the Toronto Stock Exchange is building is going to have very much to do with prices. I think we are really off track. If we wanted to object to something we might well object to the effect the Chicago grain exchange has had on our prices where the Moguls, so graphically described by the socialist on our left, perhaps have from time to time had an unwarranted effect on the prices.
Mr. Chairman, do not fool with your gavel.
Mr. Chairman: Okay.
Mr. Nixon: They have had an unwarranted effect and influence on the prices that we long-suffering farmers have had to contend with. The only thing that has provided the least hit of buoyancy in the market we are now in -- that is for anybody smart enough to hold over his or her corn or soybeans, and I am not in that group, I am sorry to say.
Mr. Breaugh: We would have known that without the confession.
Mr. Nixon: Right, but the only thing that has provided any buoyancy is once again an initiative by the government of the United States with a program that they call the payment in kind program.
I know, Mr. Chairman, that you will not want me to spend a lot of time talking about that, although you have permitted a full range of discussion as to why the Premier (Mr. Davis) did not run for the federal leadership. That did not seem to faze you so I know you can stand a moment or two of this. It is directly associated with the importance of the establishment of a futures exchange here in Toronto.
The payment in kind program established in the United States is a result of the American federal government buying, particularly in corn surpluses, over the last few years. This is an effort to maintain the world price of corn for American farmers.
Any buoyancy we have had has not been a result of any initiative by the Minister of Agriculture and Food (Mr. Timbrell) in Ontario or any other minister of agriculture that I know of offhand. Instead, the prices, depressed though they have been, have been maintained at that level because of the initiative of the government of the United States. They have bought millions of bushels of corn, put them in storage at public expense and they decided, and I really congratulate them for this sort of initiative, that they were going have to phase this out. They put forward a program to the corn farmers of the United States saying, "If you will not plant an acre of corn, we will give you the amount of corn you would have grown for nothing." That is out of the corn the government has bought and is storing.
This has resulted in a decrease of 20 per cent in the acreage to be planted, much of it already planted. Of course, the futures exchanges, realizing the amount of corn being grown is reduced, immediately responded by raising the future prices and that affected our price here. Therefore, the so-called payment in kind program of the United States has a dramatic effect here.
On the other hand, we are very much the tail of the grain-producing dog in that respect. We can take advantage of world prices but we have little influence on world prices unless we find ourselves in a political circumstance where the President of the United States says to Russia and lots of other countries, "We do not like you because of what you are doing in Afghanistan" -- or some equally far-fetched argument to make the farmers suffer -- "and we will not sell you any grain."
In those instances, on some occasions it is possible then for Canada to take advantage of an artificially skewed American market. But as far as we are concerned in our own farm operation, we sell up to 50 per cent of our crop in advance to a local grain dealer. It happens to be a branch of a fairly large company, an international company, but we do business with it and we have a great deal of confidence in the people who handle the local office.
Sometimes I feel I make a mistake not doing more business with small grain dealers because most of them are good supporters of mine, at least they have been until they read what I am saying. We must be aware many of them are trying to get into the future grain market business and the deserve a good deal of credit because they are full of initiative and they provide a tremendous service to the farm community.
The only place I have some agreement with the finger shakers and the quiverers from the socialist party is when there is some idea that some few cents from each one of the contracts I enter into with some local grain dealer is going to be skimmed off for some approval of a marketing supervising bureaucracy here in Toronto on the 32nd floor of the new Toronto Stock Exchange. There will be some people who have nothing whatsoever to do with the cultivation of the land skimming off some sort of ridiculous fee, supposedly a professional fee, that is simply going to reduce our profits.
I believe there will be substantial safeguards, however, established for the farmers and for the grain dealers on both sides. I suppose that as long as one is dealing with a company as large as Cargill, which I believe is the largest in the world and now has offices in most areas of Ontario, probably there is no fear that the farmer is going to be taken, in some financial way, on the delivery or the storage of the grain. However, it is quite true that smaller operators, with the very best of intentions, find themselves six months or a year down the road unable to fulfil their commitments. This has happened in the past and I believe certain safeguards are necessary.
I would also say that, rather than sit back and let the grain Moguls of the Chicago Stock Exchange dictate all the prices and policy and remove any profit that is in that aspect of the business, we might as well have our share of it here. As the former member for High Park, Dr. Morton Shulman, pointed out repeatedly in this House, anybody who is not dabbling in the futures market is somehow stupid and all one has to do is do what he does and make a million. I tend to do what he does about six months late, that is the only thing wrong. However, one of these times, my ship is going to come in.
Mr. Cassidy: Mr. Chairman, I listened with interest to the comments from the member for Kent-Elgin and also the member for Brant Oxford-Norfolk (Mr. Nixon). I do bear in mind the fact they are practising farmers, or have been in the past, and that my profession, my trade, has been otherwise.
However, I would like to bring to the members' attention the fact this is not a simple market which has been created just for people who want to get some security against the risks of farming with respect to their crop between the spring when they plant and the fall when they are going to collect it. This is a market which can deal, and on which people are entitled to deal, in all forms of commodities. I think perhaps the House would be interested in knowing just how wide that actually happens to be.
The definition of commodities is actually in the Commodity Futures Act which this House adopted a few years ago. It says, '''Commodity' means, whether in the original or a processed state, any agricultural product, forest product, product of the sea, mineral, metal, hydrocarbon fuel, currency or precious stone or other gem, and any goods, article, service, right or interest, or class thereof, designated as a commodity under the regulations."
I have not had the opportunity to peruse the regulations at great length, but I think some of my friends from the Liberal Party may have and maybe my former colleague from High Park knows them well as well.
I would like to point out the purport of that definition is that any manufactured product of any kind would qualify. Any type of processed, as well as unprocessed, food and any type of processed, as well as unprocessed, naphtha products would qualify.
The reference to service can be defined under the regulations. To take a perhaps ridiculous example, this means one could have an option about how much it is going to cost in five years' time to send a kid to university, or to have day care for an infant to protect one's self against that kind of a risk.
I said earlier what I thought was wrong was the sense of values in terms of the kinds of things this government gives priority to. We have already had a bill on commodity futures. It seems to have given the Ontario Securities Commission ample powers to permit the Toronto Stock Exchange to clone or spawn the futures exchange, or something very similar to it, without reference back to the Legislature in terms of this particular legislation.
For example. the futures exchange that is being created here will have the power to have futures in interest rates, if that is provided for under the regulations. It will certainly have power to have futures in such commodities as gold and silver. My friend the member for Welland-Thorold has given me some comments here about a teasing article by Merrill Lynch, Pierce, Fenner and Smith, the thundering herd, with respect to the kinds of gains speculators can make by speculating in gold futures.
They say, "Consider the profit potential demonstrated by precious metal futures in 1979." That must have been a good year because they used it as an example.
"During the year, the 1979 gold futures contract advanced from $237 to $510 an ounce. The dollar value of this range was about $27,000 per contract. The margin to contract ranged from $2,000 to $8,000." In other words, by putting down $2,000 one might have made $27,000. That is a heck of a long way from the kinds of modest services to the farmer performed by speculators as the member for Kent-Elgin was talking about when he talked about a farmer trying to protect himself against the price fluctuations toward the end of the year. In the case of silver, the gain per contract could have been as much as $100,000 in 1979, and the amount of money that was actually required to be put down was $1,500.
Those are futures. When it comes to options, the fact is the amount required in terms of margins is a good deal less again. Therefore, we should probably put it under the Ontario Racing Commission and suggest a 14 per cent or 15 per cent parimutuel tax be exacted on this kind of trading by the government of Ontario on behalf of the people. That is the kind of business it happens to be.
It was interesting to me, looking at some high roller who said he was going to come back into the commodities market here in Ontario after he was kicked out by the OSC back in 1977 that, according to an article by Jim Foster in the Toronto Star in February, two-thirds of the people who buy commodity options, who choose to speculate that way, lose their investment within six months.
That is a long way from the kind of simple risk hedging described by the member for Brant-Oxford-Norfolk and by the member for Kent-Elgin. This is speculation, pure and simple. It is speculation in commodities that have nothing to do with the forest, the fields and other natural resources we base here in Canada. It is, as I said earlier, a form of the purest kind of finance capitalism.
I suppose there may be people who sit in their beds, like John Maynard Keynes used to do back in the 1930s, speculating in currency futures on behalf of King's College, Cambridge, and also on his own account. In an hour and a half he managed to secure both a personal fortune and the fortune of that college. I suppose there are people like that.
I do not happen to think it a particularly useful type of function, and that is why we are objecting to this bill as a whole and to subsection 4(1) which defines the objects of the exchange in such broad terms that almost anything could, under the regulation, be subject to legitimate gambling without even being taxed by the Ontario government on the Toronto Futures Exchange.
Mr. McGuigan: Mr. Chairman, certainly there are cases where people have got into the market purely on a speculative basis and have made large amounts of money. The old story is when they go to the race track, they never tell about the races they lose. The statistic that is widely quoted in the commodities business is that 70 per cent of the people who go in to speculate lose their money.
I would like to submit this is generally beneficial to the primary producers because, when people go in to speculate, they generally go on the positive side of the market. There is a negative side and a positive side. Because we always like to think prices are going to go up, we tend to go in on the positive side and those people who are speculating generally buy in at a future price.
There are very few people who go in and do what is called selling short. Those are the people who believe that six months down the road the price will be much lower than it is today. They might look at the grain market and say: "Look, the grain market is overpriced. We are paying these farmers too much money. I believe six months down the road I can buy grain for 50 per cent less. Therefore, I will sell grain at a low price."
They go in and make a quote into the market for six months from now to sell grain at a low price, betting or hoping that when that contract comes due the actual cash market will be down lower. They will buy from the cash market and they will make a profit on the difference between the cash market and that commodity market at its expiry date.
They assume a great risk when they do that because they are gambling about what happens to crops on the other side of the world. We must remember in the other hemisphere there are crops coming off at the opposite time of the year, and we must remember in the warmer climates of the world there are crops coming off any time of the year because there is no difference between winter and summer. There are rice crops, and rice is one of the huge commodities in the grain market. It is now second to corn and not too long ago it was first. They are gambling on what happens six months down the road out in those fields all over the world.
If there should happen to be a real shortage, if a disease or drought comes along, and they gamble wrongly on agreeing that six months from now they are going to sell so many thousands of bushels at a price, they could be scrambling out in the market to cover that sale and their losses know no limit. They may have agreed to put a figure on it that next fall they will sell corn for $2 a bushel because they think the price of corn is going to go down. Instead, there is a huge shortage next fall. They have to come up with that corn at $2 and they might have to pay $10 for it. There is a huge risk in selling short.
There is not nearly the risk in being long because, if they said the price was $3, the maximum they could lose on any contract if the price went down to zero would be $3; assuming the price went right down to nothing, they could not lose any more than $3. But if they sold short, the losses they could suffer would really be unlimited. The result of this is that very few people sell short, and it is on a short sale that the terrible things our friends are talking about happen to primary producers. So I would submit that most of what happens in the market is on the positive side and helps the primary producers.
There are dangers in setting up a market. We certainly would not want to set up a market for a commodity that is handled in very small quantities. If it is a very small quantity, there is a terrible danger that with a little bit of money and manipulation someone could get a good-sized portion of that market. We do not want to handle that sort of situation. We want, of course, to have the safeguards we have already talked about.
I do have certain fears about options, because about a year ago a young constituent came to me who had been sold options by a high-priced boiler-room type of salesman in the commission market. The person who had bought the options was in no position to take that kind of gamble. He lost, of course, as most people do in those situations, and it put him in a very bad state of affairs.
I would submit that any salesman who would force options on a person or would even sell options to a person in that sort of situation is one who has absolutely no ethics, and surely I would think that under our regulatory process something could be done with that kind of operation. But again, we are responsible to some extent for our own mistakes, and one does not do those sorts of things a second time.
But I want to emphasize that in general one can make a very good argument, and I think it can be backed up by the facts, that people who speculate in the market generally contribute to that market. I do not mind a bit taking money from a doctor or a lawyer or anybody else who thinks he is going to get rich off me. I do not mind taking his money one bit.
Motion agreed to.
Section 4, as amended, agreed to.
Sections 5 and 6, inclusive, agreed to.
On section 7:
Mr. Chairman: Mr. Mitchell moves that clause 7(1 )(b) of the bill be struck out and the following substituted therefor: "(b) Two public directors or, where the bylaws so provide, up to four public directors."
Mr. Mitchell: Mr. Chairman, this is to ensure that there is adequate public participation in the decision-making process in the exchange.
Mr. Breithaupt: Mr. Chairman, I recall that when we were looking at this legislation earlier on there was some discussion of an increased opportunity for public directors beyond those persons who were particularly involved in the exchange itself.
I would like to hear from the parliamentary assistant as to the immediate plans. If we are to have two public directors now and eight others, so that the total number of the governors would be 10, perhaps he could advise us if the intention is to increase that now to 12; or just how we are to have this legislation available, whether or not it is going to be used immediately with respect to the increase in the number of public directors.
Mr. Mitchell: I stand to be corrected, but my understanding is it will be governed by a board of directors of 11, which may be expanded to 13 at the request of the Ontario Securities Commission. My understanding is they must be appointed by the Lieutenant Governor by order in council. Five of the directors will be elected by the trading members, three directors will be elected by the Toronto Stock Exchange, which is the sponsor member, and two public directors are to be approved by the Lieutenant Governor in Council, and that number is expandable to four. The president is appointed by the rest of the board after nomination by the TSE.
Mr. Breithaupt: I was incorrect when I said 10. I should have said 11 at that point, Mr. Chairman. I appreciate that explanation, and I presume this opportunity for increase is something that is going to depend upon the experience of the board as it sorts itself out and develops over the next several years.
We have been given at least the option in legislation and it is certainly one we welcome. I think a balanced public interest of not 50 per cent, but something more than just two of 11 is a good idea. We have been given that opportunity and I look forward at least to a consideration after a year of operation of this and some statement or comment in estimates, if not otherwise, by the minister or the parliamentary assistant as the case may be, as to how things are sorting out and whether the positive requirement for additional public directors is seen as a useful result of the experience of the governors.
Mr. Mitchell: In response to the question raised by the member, I can say without question that the minister would be pleased to keep him aware of what is happening and how the futures exchange has been operating and whether there has been proven to be the need to expand to the additional two directors. I am sure he will be able and only too happy to provide all that information.
Mr. Cassidy: Mr. Chairman, this bill does not have any kind of a sunset clause. It is interesting that when it is something that serves the needs of the financial community sunset clauses seem to get forgotten. When it is something that serves the needs of the people, the Minister of Industry and Trade (Mr. Walker) and people of his temper of mind within the government party seem to be very keen to put an end to it within a very short time.
With respect to this subsection, I would like to point out for the record exactly what the process is concerning the so-called public directors. It is true that the public directors cannot be trading in futures and cannot be members of the stock exchange, nor can they be associates or insiders of members of the exchange, if I remember correctly; however, to call them entirely public is a misnomer.
In order to become a public director of the Toronto Futures Exchange there are no fewer than four hurdles of acceptance that must be passed. In the first place, the candidates must be recommended by a nominating committee that contains at least two people, the president of the futures corporation and the president of the Toronto Stock Exchange. I would suspect that those people are not guilty of too many heresies with respect to the interest of the futures exchange. They are not likely to get somebody to oppose them, who is going to rock the boat too far as a public director.
The second hurdle is they have to get by the president of the corporation and the president of the Toronto Stock Exchange, and maybe somebody else from the nominating committee as well.
The third hurdle is that the nomination has got to be accepted or approved by the cabinet and by the Lieutenant Governor in Council. We all know how these things work. It would be ludicrous to think that the cabinet as a whole sits around and scratches its collective ears and decides at length on every such appointment. There is a patronage secretary or an appointments secretary or somebody like that who works close to the Premier and whose job it is to vet those kinds of appointments if that is what is required in the legislation, or in fact to dig into his or her files and find appropriate people to be appointed to these kinds of quasi-public positions if there is not a matter of approving somebody else's nomination.
Therefore, somebody who works for the Premier and whose job among other things is to make sure that friends of the Conservative Party are kept happy and get their due share of the rewards or spoils of office, has the responsibility to look over the recommendation coming from the president of the stock exchange and the president of the Toronto futures corporation.
Of course, it is not my experience that the mindset of those particular individuals is going to be that much different from the mindset of somebody who makes appointments or proposes appointments on behalf of the Lieutenant Governor in Council.
Then the matter has to pass a fourth hurdle, which is that it actually has to go through the cabinet, although that is basically a formality. The Premier says, "Look, my guys say it is okay." The cabinet says. "Fine," and it is done.
When we have passed that fourth hurdle there is to be a fifth hurdle. The fifth hurdle is that after all this is done we do not even have an appointment. All we have is a nomination of a public director or two and, according to subsection 8(3), the public directors will then be elected annually by the board of directors. In other words, the public directors have to be acceptable to the president, to the chairman of the stock exchange, to somebody who works near the Premier, to the cabinet and to all of their other fellow directors.
Those people are meant to represent the interests of the public and make sure the futures exchange is not forgetting it has responsibilities to the public at large. It has a responsibility to small investors who may choose to have a little fling on the speculative market in commodities and options. It has a responsibility to make sure that crooks or near-crooks do not gain a haven in the financial markets of Ontario by being able to play in the futures market.
But the people who are there to keep the futures exchange honest on behalf of all of us must, in fact, run that gauntlet, possibly every year, I am not quite sure, in order to get appointed or reappointed.
It is my understanding that if it comes to a conflict between some big general idea of public wellbeing or public good, and pleasing the people who are responsible for one to stay in that particular office -- who either name that person, propose that person or validate the nomination -- one is more likely to look to those people who have the control over whether that person can keep on coming back, maybe who have control over the per diems that person receives for doing the job -- maybe it is an honorific post, I do not know and it does not particularly matter -- - but it seems to me that these public directors are public in name only and in fact they do not genuinely represent the public.
I would have liked to have seen this government take perhaps a radical point of view, but look around to see whether there were not some other people or groups representative of the people of Ontario who might be appropriately asked to make nominations to the futures exchange, and then strip away all of this other business of three or four levels of approval before they could get in.
It would be interesting if the Catholic bishops of Ontario, to take one example, could be asked to make one nomination to represent the public on the Toronto Futures Exchange; it would be interesting if the Ontario Federation of Labour could be asked to make one nomination of a public-spirited individual to be a representative on the Toronto Futures Exchange; it would be interesting if the Ontario Public Interest Research Group, which has done some excellent work, mainly through the universities, could be asked to make a nomination of a third public director to the Toronto Futures Exchange.
One can think of other groups. Perhaps the association of mayors and municipalities, or the Association of Municipalities of Ontario, could be asked to make an appointment. Who knows where one might find some possible, legitimate sources in this society. Perhaps -- and I think this would be a good idea -- the Ontario Federation of Agriculture would be one since obviously its members, as has been argued by the member for Kent-Elgin (Mr. McGuigan), do have some interest in there being some modest amount of futures trading taking place in Ontario.
There are just four suggestions for legitimate nominators of public directors who would be perceived by the public much more obviously as being public and working in the public interest than this kind of system the government has come up with.
Whether we vote against it or not does not particularly matter. What is important now is to put some ideas on the record. I say to the parliamentary assistant and his minister that I intend to pursue this matter since I am now critic on of financial and commercial affairs. There is a real question of legitimacy in terms of many of the institutions that govern our society.
If we were the government, we would be making the kinds of changes I suggest. Were we not in a position to change the institutions outright, we would seek to try to change them so that they would genuinely reflect the public interest and not just the interests of self-serving interest groups, which seems to be the government's idea of how these things ought to operate.
I have begun to do some thinking about the kinds of institutions we need in our society, looking ahead perhaps 10 or 20 years. It may not be possible to change or transform those institutions entirely, but it should be possible to find ways of reflecting the public interest, the interests of employees and workers, consumers and owners of capital in the various institutions that make up our very complex and prolific economy.
We should be looking towards that kind of thing rather than seeing a situation where there is a continuing and increasing polarization, where poor farmers, for example, feel, perhaps unlike some of the Liberal representatives of farmers in the Legislature, that their interests are no longer being served by the institutions that have bankrupted them with high interest rates, Liberal interest rates; unlike the situation where consumers find themselves increasingly radicalized and turned off by the lack of protection they get in the marketplace, unlike the situation where workers grow more and more fearful because of the increasing number of toxic substances that are used almost wantonly by their employers and they have no effective powers to fight back and make sure their work place is a healthy, safe and decent kind of a place.
We can change that. We should be talking about changing that. In this province, the Premier (Mr. Davis) is never without a quip about how we are the finest --
Mr. Chairman: Getting back to the section.
Mr. Cassidy: -- the richest, the most progressive province in Canada, in North America, let alone the world. He is wrong about that. None the less, we do have some opportunities in this society to experiment with ways in which the interests of the whole society and not just particular interests can be represented.
I would say to the parliamentary assistant very seriously that when he is drafting this kind of bill and looking at the public interest, for goodness' sake do not let the stock exchange and people there define what they think is the public interest. Have some independence for once and look at the public interest in terms of all the people of the province.
Mr. Mitchell: Mr. Chairman, I would like to take a couple of moments to reply to the member for Ottawa Centre. The minister and I, when I was taking the Business Corporations Act through committee, gave a commitment to attempt to resolve an issue raised by the member's caucus, that is, the independence of one third of the board of directors. I assure the member that the sort of thing he is talking about is being looked after.
I should point out that the Toronto Stock Exchange has had public governors for 14 years. It is my understanding they have consistently proven that they are public representatives. Election in this Toronto Futures Exchange is going to be identical to that which is carried out within the Toronto Stock Exchange.
Mr. Cassidy: Election is by the existing board, which means it is self-perpetuating. There are a couple of controls in the sense there is a nomination from outside, but it is only from down the hail in the office of the chairman of the exchange and the president of the futures exchange. While there is some kind of rubber stamp that comes here, the most that can be done there is that the Lieutenant Governor in Council and the Premier's people will ensure that it is a Conservative public director rather than, God forbid, somebody who happens to have Liberal connections or perhaps even be nonpartisan -- or even, my God, somebody who had been active in some way with the New Democratic Party. Those are the kinds of controls.
I would suggest that something a good deal more vigorous might be experimented with here. The Toronto Futures Exchange is brand new. It does not have, I dare say, the type of reputation and perhaps the goodwill that has been built up or the traditions that have been built up by the Toronto Stock Exchange, which has, after all, been around for a long time. But I would also remind the minister that it has had its share of scandals and problems within, as well as prior to, the last 14 years.
This question should be looked at more seriously than to say, "We will do something about seeing that at least one third of the directors in each corporation are independent of the corporation, that is, are not directly affiliated financially with it." That is not good enough.
Mr. Chairman: We have all heard the amendment to the section. All those in favour will please say "aye."
All those opposed will please say "nay."
In my opinion the ayes have it.
Motion agreed to.
On section 8:
Mr. Mitchell: Mr. Chairman, I propose an amendment to subsection 8(5).
Mr. Chairman: Mr. Mitchell moves that subsection 8(5) of Bill 7 be struck out and the following substituted therefor:
"No person shall be elected as a public director unless the person's nomination for election is approved by the Lieutenant Governor in Council on the recommendation of a nominating committee constituted in accordance with the bylaws and co-chaired by the president of the corporation and the president of the Toronto Stock Exchange."
Mr. Chairman: The member for Ottawa Centre.
Mr. Cassidy: I am happy to yield, as the member of the Liberal Party intended to go first.
Mr. Breithaupt: Mr. Chairman, in looking at this amendment, it would appear that instead of having the joint recommendation of two persons who are going to be particularly involved in the operation at the exchange, there is now a general nominating committee which will take that place.
The co-chairmen of that committee are going to be the two persons otherwise represented, but I would like to hear from the parliamentary assistant as to the makeup and numbers of persons expected to be on this nominating committee.
I agree with the comments made by the member for Ottawa Centre concerning the hurdles, as he referred to them, for a public representative to become a member of the governors of this exchange. It is important we ensure the public members of this group are seen to be readily and clearly appointed without any difficulty that might occur by the filtering process that may develop in the hierarchy of steps that has to be followed under the present system.
I would like to hear as to the strength and background of this nominating committee to ensure the process is as open as possible, realizing the ultimate requirement of any of these appointments by order of the Lieutenant Governor in Council is a decision by cabinet that has clear political overtones involved along with the responsibility and abilities of the persons to be nominated.
Mr. Mitchell: I do not have the exact makeup of the nominating committee, as the chairman will note by the amendment. It is a nominating committee as structured under the bylaws of the exchange.
Mr. Cassidy: Mr. Chairman, what that means, in effect, is it would probably perpetuate the idea of a self-perpetuating board. The nominating committee would likely be struck from the existing board of directors, except for the fact that the president of the Toronto Stock Exchange would become a co-chairperson of the nominating committee with the president of the Toronto futures corporation.
I have basically made the comments I wanted to make on this item. This is not a means by which we get public directors; this is a means by which we get directors who are in harmony with respect to the way they view the world and with respect to their social, class and financial background with the people who will be the directors of the Toronto Futures Exchange.
The only difference between the public directors appointed by this process and the directors who are elected by the members of the exchange as a whole will be the fact that they are not directly involved as participants in or as members of the TSE or the TFE. That is the only difference. Apart from that, nothing at all is different.
We are going to oppose this section. I could have spoken perhaps a minute or two ago on subsection 8(3), pointing out that --
Mr. Boudria: But you didn't.
Mr. Cassidy: No, I didn't, because in the interests of seeing this whole committee stage through --
Mr. Chairman: I will give you a minute now.
Mr. Cassidy: Thank you, Mr. Chairman. I was pointing out there that, rather than have the public directors elected by the board of directors, which means they are a self-perpetuating kind of thing, they should be selected by some outside body and appointed to the Toronto Futures Exchange if they are to have any genuine independence at all.
With respect to this section, for the reasons I have given before, we do not think these are public directors at all; and if the government's idea of the public interest is this and nothing else, then they are pretty poor protectors of the public interest.
Mr. Breithaupt: Mr. Chairman, just to follow through on the comments made so far, it seems to me the amendment we are bringing in could be seen to be insubstantial in that, if the two persons referred to are the nominating committee, we really have not changed anything. We have said that A and B will make a joint recommendation in the subsection as it was printed; now we are saying there is a nominating committee which shall be chaired by A and B. Of course, they could be, in fact, the nominating committee with no other additions, so I want to make sure we are not giving the appearance of a broader nominating committee and not just really subverting it and keeping it the way it was.
I do think we should hear what the expected bylaws are going to be as to the size and makeup of this nominating committee, because I think it is important that it be done quite clearly with expectations of involvement now rather than replacing two persons with a committee chaired by two persons who may be not much of a replacement.
Mr. Mitchell: Mr. Chairman. I would just like to assure the member for Kitchener, and I think I can do this in all honesty, although I cannot -- and I say this quite directly -- give him the precise numbers, that it most definitely will be made up of the president of the corporation, the chairman of the Toronto Stock Exchange and several members; but I am unable to give the honourable member that number at this time. I think I can assure him it will be broader than just the two members. In fact, part of the rationale is to broaden the nominating committee.
Mr. Chairman: All those in favour of Mr. Mitchell's motion will please say "aye."
All those opposed will please say "nay."
In my opinion the ayes have it.
Mr. Cassidy: The Liberal Party voted nay and members of our party voted nay.
An hon. member: They voted aye.
Mr. Cassidy: They voted aye, did they? I beg your pardon. They were together, just like this afternoon. Okay. Thank you.
Section 8, as amended, agreed to.
Sections 9 and 10 agreed to.
On section 11:
The Acting Chairman (Mr. Stevenson): Mr. Mitchell moves that subsection 11(2) of the bill be amended by striking out "a member" in the third line and inserting in lieu thereof "any person or company of a class referred to in the bylaw."
Motion agreed to.
Section 11, as amended, agreed to.
Section 12 agreed to.
On section 13:
The Acting Chairman: Mr. Mitchell moves that section 13 of the bill be struck out and the following substituted therefor:
"13. The corporation may acquire by purchase, lease or otherwise and may hold for any period of time any land or interest therein, whether or not such land or interest is necessary for its actual use or occupation or for carrying on its undertaking, and may sell, charge, lease or otherwise deal with or dispose of such land or any interest therein."
Mr. Mitchell: I have just a brief explanation, Mr. Chairman. As members know, the Toronto Stock Exchange is moving to new quarters and the Toronto Futures Exchange will be a part of that new facility. The purpose of this is to ensure that the Toronto Futures Exchange, together with the Toronto Stock Exchange, has the corporate power to participate in the development of its new premises in downtown Toronto.
Mr. Cassidy: Mr. Chairman, I find this amendment more difficult. The commodity futures exchange is to be a body without share capital, and it is to be a body that does not have the purpose of making a profit, interestingly enough. In fact, in section 5 it says, "The corporation shall be carried on without the purpose of gain for its members, and any profits or other accretions to the corporation shall be used in promoting its object." Its object, as we went through before, is to provide for the operation of a commodity futures or futures options exchange. It is a rather narrow type of purpose.
The difference between the amendment and the original section is that, in addition to buying and holding property, it says the corporation may sell or dispose of it. If you are going to buy it, I suppose you have to be able to get rid of it. What bothers me, though, is that the original subsection of the original section allowed the corporation to acquire land or interests in land, whether or not such land or interest was necessary for its actual use or occupation.
I begin to ask myself what the devil we are doing that for. Why is it that the futures exchange is being put in a position where, having no share capital of its own, it can effectively speculate in land or in interests in land and property -- basically in office buildings, but it could buy a mine in northern Ontario, I suppose, if it felt like it -- for which it had absolutely no purpose at all and for which it had absolutely no need at all? The minister's parliamentary assistant may say: "It is not likely to do that." My response to that would be: "If it is not likely to do that, why the devil give it the power?"
Perhaps, before I continue, the parliamentary assistant could explain why on earth those words have been put in, because if they stay in, we are going to oppose this section. I do not see why we should create some type of monster which (a) is there to encourage speculation and (b) has been empowered by the Legislature, and does not have to pay corporation tax or meet other obligations that other corporations have to do, to speculate in property itself.
Mr. Mitchell: Mr. Chairman, I should point out that the Toronto Futures Exchange is going to be a participant in this development in downtown Toronto. There have been some requirements that the stock exchange has had to meet in being able to acquire the building and move into it.
I cannot give the member all the ins and outs of that. Suffice it to say that I think the basic premise behind this motion is to allow the Toronto Futures Exchange to acquire premises larger than it currently needs so it will have them available as it grows.
Mr. McGuigan: Mr. Chairman, a similar situation comes to mind. I do not know whether I have the correct name of the act but I believe it is the Ontario Food Terminal Act which governs and runs the food terminal on the Queensway. The food terminal was built some time in the early 1950s, not too many years after the Second World War, to accommodate the fresh fruit and vegetable market, and it replaced the old St. Lawrence Market in downtown Toronto.
It was not too long after they were operating that they realized the thing was such a success that it was expanding and needed more land. I cannot give the members the date or anything of that sort, but it was probably about 20 years ago that they bought land north of Toronto. I think it is somewhere up around Highway 400, and it was to be used for future expansion. They held that land for a number of years, but the pressure to expand became less, and the efficiency at the food terminal became greater as they moved to bigger trucks and handling equipment, faster movement through the terminal and so on.
A couple of years ago or so they sold that property at a big profit and reinvested the money back into the food terminal. The Premier (Mr. Davis) was out there about a year ago. There were a lot of pictures taken with him and the then Minister of Agriculture and Food opening up the new section of the terminal. Instead of expanding the area horizontally, they went vertical. They put parking garages and a number of facilities on several layers.
I suppose without that provision one could have argued at any time during the period that they held land that really was not required. Of course, events might have been different if they had lost money on the holding of that land rather than making money. But, in either event, the intent when they bought it was to take care of future expansion as they felt they were going to be forced out of that area of Toronto. However, that did not happen. One could have argued in the interval that they had land that was not required for their operation.
Unless there is something devious in here that all of us are missing -- and I certainly would not want to be any part of such a plot -- I do not have any trouble supporting this section.
Mr. Cassidy: Mr. Chairman, this section empowers the Toronto Futures Exchange to purchase and acquire the farm that currently belongs to the member for Kent-Elgin. That is what it does.
If, for example, it had said, "The corporation may acquire any land or interest therein which is necessary for its actual use or occupation, but which may be required for its future use, and may sell" --
Mr. Mitchell: Carrying on its business; carrying on its business.
Mr. Cassidy: That is right. "Which is necessary for its actual use or which may be necessary for its future use."
Mr. Mitchell: But it is very specific -- "in carrying out its business."
Mr. Cassidy: No. It says it may acquire now, whether or not that land or interest is necessary. In other words, it is directly the opposite. Perhaps the parliamentary assistant would like to explain.
Mr. Mitchell: As I tried to point out, the Toronto Futures Exchange is moving into the new building in a partnership, one could say, with the Toronto Stock Exchange. This section, I am assured by the staff as well, is purely to allow them to acquire space which is perhaps larger than they can immediately use but which will be there when the need definitely arises. It is for nothing any more sinister than that. I find the amendment quite clear when it says, "necessary for its actual use or occupation or for carrying on its undertaking."
Mr. Cassidy: I say to the parliamentary assistant, since his staff have assured him of that, why on earth does the section not say that? We have a problem in this House with legislation that is drafted and goes through the legislative committee of the government, giving powers we should not be giving. Surely the futures exchange does not want the farm of the member for Kent-Elgin. I understand that.
There is nothing particularly wrong, if we are going to have the damned thing, with the futures exchange acquiring a bit of extra space in the new stock exchange building to accommodate future expansion. There is nothing particularly wrong with that either. There is no reason why the legislation could not say that.
What I would like to propose is that by agreement we stand down the subsection, we stand down the committee stage, we go and do a couple of the bills the parliamentary assistant wanted to get through tonight, and then he can come back with an amended section which says what he tells us he wanted to do. That would make an awful lot more sense than saying, "Well, we know it is sloppy, we know we were wrong, but we are going to bull it through because we have the votes."
Mr. Mitchell: Mr. Chairman, with respect, I do not intend to stand the bill --
Mr. Nixon: On a point of order, Mr. Chairman: If you will permit me, I want to bring to your attention that the Globe and Mail of tomorrow's date, printed tonight, contains substantial detail of information purported to come from the budget to be presented to this House next Tuesday.
The basis of all the objections on any budgetary leak -- and this is apparently a leak of many of the important budgetary documents -- is that the rights and privileges of members of the House are transgressed.
Since the House is in committee and it is not your responsibility to respond to a point of privilege of this importance, I would move that the committee rise so that the matter can be brought to the attention of Mr. Speaker without delay.
Hon. Mr. Wells: Mr. Chairman, I am sure we are all very concerned with the story that is purported to be in the Globe. I have not seen the paper; I gather my friends have it over there. I am sure it would bother all of us, but I do not think it behooves any of us to discuss it in detail at this time without the Treasurer (Mr. F. S. Miller) here or any other members here at the present time.
I would have to say we should continue with the business of this House until we have a chance --
Mr. Elston: No. There is a motion on the floor.
Hon. Mr. Wells: I am suggesting the committee not rise and report. I am suggesting the committee continue on.
Mr. Nixon: Mr. Chairman, on a point of order: It is very clear. Standing order 85(a) says, "A motion that the Chairman leave the chair is always in order, takes precedence of any other motion, and is not debatable."
The whole point is that the matter should be brought to the attention of the Speaker without delay. I suggest the government would be ill advised to stand in the way of such a report to Mr. Speaker.
Mr. Renwick: Mr. Speaker, on a point of order: While the rule appears to be pre-emptory, it would not be the first time that a pre-emptory rule of this House did not quite mean what it said. If there is a problem about the meaning of that rule -- and I doubt that anybody in this House knows anything other than what it says -- I suggest it may be appropriate to recess the committee for 15 minutes to allow the Chairman to consult about the matter.
Mr. Chairman: I would like to do that. I will leave the chair for 10 minutes. The House will resume at 10 o'clock.
The committee recessed at 9:47 p.m.
Mr. Chairman: At this point, I would like to thank the member for Riverdale (Mr. Renwick) for encouraging me to leave the chair for 10 or 15 minutes to re-evaluate the chair's position on the motion made by the member for Brant-Oxford-Norfolk (Mr. Nixon). I would like to thank all members for their patience.
Under reading of standing order 85(a), I have no choice but to accept the motion. The motion is not debatable. As a result, I will accept the motion that the chair now rise and report to the Speaker.
All those in favour of the motion will please say "aye."
All those against will please say "nay."
In my opinion, the nays have it.
Call in the members.
Mr. Chairman: Order. To refresh everyone's memory, I am dealing with the motion that has been brought forward by the member for Brant-Oxford-Norfolk under section 85(a) of our standing orders, that I do now rise and report.
The committee divided on Mr. Nixon's motion, which was agreed to on the following vote:
Ayes 90; nays 0.
On motion by Mr. Nixon, the committee of the whole House reported progress.
Mr. Nixon: Mr. Speaker, I want to bring to your attention a matter --
Mr. Speaker: Order.
Mr. Nixon: This is the first opportunity --
Mr. Speaker: Order.
The House adjourned at 11:26 p.m.