33rd Parliament, 1st Session

L040 - Tue 5 Nov 1985 / Mar 5 nov 1985

INCOME TAX AMENDMENT ACT (CONTINUED)

RETAIL SALES TAX AMENDMENT ACT

LAND TRANSFER TAX AMENDMENT ACT

CORPORATIONS TAX AMENDMENT ACT (CONTINUED)

INCOME TAX AMENDMENT ACT (CONTINUED)

SUMMER WAGES


The House resumed at 8 p.m.

INCOME TAX AMENDMENT ACT (CONTINUED)

Resuming the debate on the motion for second reading of Bill 46, An Act to amend the Income Tax Act.

Mr. Harris: I would like to continue, but I am not sure I recognize a quorum. Is it in order for you to check, Mr. Speaker?

Mr. Speaker ordered the bells rung.

8:05 p.m.

Mr. Harris: Thank you very much, Mr. Speaker. I compliment you and the government for making sure we have enough people to get this House functioning.

I am trying to recall precisely where I was at six o'clock. I believe we were talking about Bill 46. I think we talked about the commitment that was indicated by the Treasurer (Mr. Nixon) in his concluding remarks on Bill 45 on the diminishing requirements from the taxpayers who pay the personal income tax in this province, which is pretty well everybody. He said the diminishing burden they were bearing as a result of his new budget was a move in the right direction.

I pointed out that the member for Muskoka (Mr. F. S. Miller) in his budget for 1983-84 made a move in the right direction from 28.7 per cent of the revenue collected by personal income tax down to 26.5 per cent, and that the member for St. Andrew-St. Patrick (Mr. Grossman) had made a move in the right direction from 26.5 per cent down to 24.8 per cent. In fact, the projections of this budget, according to the document under the name of this Treasurer, do not change that percentage. We are still looking at 24.8 per cent of the revenue coming from personal income tax.

I suggest to the House that when we look at the full effect of all these tax increases -- the federal tax increase, the more than four per cent on top of that and then the three per cent on top of that -- and they are all multiplied, personal income tax will be a greater percentage in 1986-87.

I predict that right now. I am very comfortable in doing so and in having it on the record. It could be thrown back in my face if one wished to do that a year from now. I expect I might be on the other side of the House at that time. I expect to be vulnerable to the type of comment that might be made at that time. I say that because there is a slowing down in the growth of the economy and in the creation of jobs.

There is a slowing down predicted in this budget, and expected in this budget; in fact, it is planned and budgeted for by this Treasurer and supported by the New Democratic Party in its comment that it is a good thing to take money out of the economy and spend it on whatever.

Let me get to some of the difficulties I have with this bill. They were mentioned earlier in this debate by the member for Brantford (Mr. Gillies) when he stated that he understood revenues had to be raised to pay the bills but he indicated the reason he had difficulty supporting this bill was where the money was being spent.

I have difficulty too. I think the Treasurer will be interested because I am trying to make the case for where the money is being spent and where it is not being spent. It is not being spent on housing. It is not being spent on social programs. It is not being spent in the areas that would benefit the economy.

8:10 p.m.

I now turn to page 53 of the budget and look at where the money is being spent. I bring up percentages only because the Treasurer mentioned that the percentage trend in personal income tax was in the right direction.

I look in his document at the trend in education -- schools, colleges and universities -- something members on all sides of this House, including the members of the third party, have said needs some priority and something the Treasurer has indicated; the wonderful commitment to education and the extra money that is going to schools, colleges and universities.

I ask members to look at the percentage of money going to education for schools, colleges and universities; they will see it is down from 19.2 per cent of the budget to 18.8 per cent. I give it in percentage terms because the Treasurer mentioned how proud he was that personal income tax was going down in percentage terms. I addressed that in the earlier part of my comments.

I mention resources and economic development because the Treasurer has made a big foofaraw in this House. He refuses to acknowledge what his officials have told him and that he has the information on how many jobs are lost when taxes are increased and money is pulled out of the economy. The answer he has given this House has been that in the overall budget plan, if one takes that money and spends it in stimulative ways, there will be job creation. He talks about the net figure being -- I do not know what it is.

Hon. Mr. Nixon: It is 108,000, plus 30,000.

Mr. Harris: It is 108,000, considerably down from what was created in the last year, I might add. None the less, that is the answer we get to this specific question.

I have great difficulty with that when I look at the percentage of this budget that is going to resources and economic development. It was 16.8 per cent in the previous budget; now it is down to 16.5 per cent. I am quite certain Treasury officials have indicated to the Treasurer how many jobs are created by the stimulative measures he puts in and how many are lost by the dollars he pulls out, but all we can get is a vague overall answer of fewer jobs being created.

With this new open process, the Treasurer does not seem to want to share with the House or with the people of Ontario the pieces of the pie that go to make up this budget. When we were looking at a specific tax increase, the member for Brantford said, "I have difficulty supporting it, because I do not know where the money is going." To raise money just for the sake of raising money is not good enough.

A budget is made up of pieces of a pie. We take some here, we take some there; and then we spend here, we spend here and we spend here. The Treasurer, when asked specifically in this House how many jobs he is creating by spending here, here and here, will not answer; he will not tell the House, and he will not tell the people of Ontario. Yet I know Treasury officials measure those impacts, and I assume a Treasurer wants to know, the impact of how he is spending that money in the budget on job creation, on new jobs and on the economy of Ontario.

The Treasurer will not tell us, and he has refused to answer about five times. In fact, he has a better count than we have, and when we ask the question again on Thursday he will know exactly how many times he has been asked. He will say, "I have been asked that question," and he will again answer generally that his officials have told him that overall there will be 105,000 plus 30,000 if this wonderful housing program ever gets off the ground.

Hon. Mr. Nixon: It is 108,000.

Mr. Harris: I am sorry; 108,000.

It is important for the people of Ontario and for this House to measure how good a job the Treasurer has done at extracting money from various areas and at spending money in various areas. It is an important measure. People are concerned about jobs. Aside from existing programs and social programs we must fund, what are we doing about jobs?

The Treasurer wants us to support Bill 46. He would like us to support increased taxation, and we might if we thought it were done fairly, if we thought it were taxed in the right direction and if we felt the government was spending the money in the right area. It is particularly relevant when we talk about supporting an additional tax grab of something more than four per cent on top of additional revenue because of the federal increase, plus the three per cent. Where the government spends the money is important.

Community and social services will go from 10.4 per cent of the budget to 10.3 per cent. I do not know where that money is going. It is not going into community and social services; that percentage of the pie is going down. The percentage devoted to education in schools, colleges and universities is going down. With respect to resources and economic development, the Treasurer has been using the argument that the extra money is balanced by how the government spends it; that percentage is down from 16.8 to 16.5.

At some stage of this legislative sitting, if not in this bill or in the next, on Thursday or Friday, the Treasurer has an obligation to share the information his Treasury officials have given him with regard to the number of jobs lost by the tax increases. He has an obligation to share it with this House and with the people of Ontario, along with how he feels his spending programs will increase jobs. That is fair game.

We have to know what he feels those figures are so we can measure whether he has put his priorities in the right place in the opinion of this House and that of the people of Ontario. It is interesting to note that public debt interest is going from 10.9 per cent of the pie to 11.3 per cent at a time when interest rates are significantly lower for 1985-86 than they were for 1984-85. That is money that could be spent on social programs.

My friends to my left will argue that the deficit does not matter. They will argue that the triple-A credit rating is not as important as social programs. They will tell me that it does not build a house and does not put money into social programs or education. However, fiscal responsibility provides millions and billions more dollars which can be put into those programs.

Hon. Mr. Nixon: What about the Income Tax Act? Do you want it higher?

Mr. Harris: No. I would like the Treasurer to look at his spending priorities and the percentages in the various categories.

The overall budgetary policy of this government seeks to extract money from the economy, which will slow down the economy's growth and the ability of small businesses to grow, as well as the desire of individuals to earn more money because more is being taxed away. When we look at the spending priorities, balance those and see where the money is going, we have difficulty on this side of the House supporting these types of cumulative taxes imposed on an ad valorem basis on behalf of the government.

8:20 p.m.

Mr. McCague: I am pleased to join the debate on Bill 46. We are talking about all the revenue-producing bills. I understand we passed Bill 45, on which the Treasurer has made some comments. I want to serve notice to the Treasurer that we will be asking him to explain how he lost $50 million in his so-called breaks to corporations in that tax. I think he needs to do much better. I am giving notice that in committee of the whole House we will be asking him to explain that.

One thing that is a bit of a disappointment in this section of the budget is that I think the Treasurer knows what it is the federal government is going to do -- it has announced it -- in its desire to raise money through income tax. I do not know what the Treasurer thinks of the column that was written by Garth Turner, but it mentions that personal taxes are on the surge again.

"Top wage earners, for example, now surrender 34 per cent of income to Ottawa, another 3.4 per cent is a federal surtax, then 17 per cent more to Ontario and 0.51 per cent as a provincial surtax. That makes the top Ontario tax rate just under 55 per cent and leaves only 45 per cent of earned income in the hands of the guy who earned it. In two years, the top marginal rate has climbed from 51.1 per cent to 54.91 per cent or an increase of 7.4 per cent."

If that is not correct, I would like to know, and I am sure the Treasurer will answer.

"This is just a start. Federal plans call for tax hikes of more than 36 per cent over three years, for example. All this removes vast quantities of money from the system and slows consumer spending, as we keep saying. The heartbreak comes when we realize the taxpayer's sacrifice is not reducing the deficit -- it is going up in both Ottawa and in Queen's Park -- and that funds are being squandered."

What I would like to know from the Treasurer in his reply is this: on page 11 of the budget he has the table "Annual Impact of Personal Income Tax Changes in the Budget." Is that predicated on what he knew to be the federal rate of income tax, or does it avoid anything that has come into force as of the date he wrote his budget?

When one goes to page 33 of the budget he mentions, as he did before, the $50 million he is giving up in corporations tax and an increase of $321 million in personal income tax. Then when one goes to page 54 of the budget, he projects that personal income tax will move from $6,253,000,000 in 1984-85 to $6,777,000,000 in 1985-86.

Is $6,777,000,000 the Treasurer's figure? If it is his figure, why would he choose in the budget to say he is raising in 1985-86 only an additional $28 million? I do not quite understand the difference in those two systems of accounting.

Hon. Mr. Nixon: Would the member like the answer now?

Mr. McCague: I guess I will wait until the Treasurer responds. In committee of the whole House we will be questioning his $50-million tax break to corporations.

Mr. Grande: On a point of order, Mr. Speaker: There is in the east gallery a distinguished delegation from the great riding of Oakwood. I am sure the members of the House will greet the delegation as is the custom of this House.

The Deputy Speaker: That is not a proper point of order.

Mr. Ashe: It is somewhat difficult to stay on just one bill, the one under discussion now, second reading of Bill 46, An Act to amend the Income Tax Act, when we look at the Treasurer's whole thrust this year. When we look at the hoax that he and this government have played on the taxpayers of Ontario, the Income Tax Act is just one small shred of that, but a very important shred that affects everyone in this province. Anyone who has any income of any substance at all at a living level is going to pay more.

A lot of people would say, "What are a few dollars here or there?" Relatively speaking, that is true. But when we add the implications of the increased costs under the Income Tax Act to all of the other taxes that add up to taking nearly $700 million out of the taxpayers' pockets in a full fiscal year, including a major and significant sum of $321 million under the personal income tax system, it goes very much against the way in which that party went around the province, particularly during the month of April this year, criticizing the previous administration's tax policy.

They were going to take care of everything. They were going to put through all of these grandiose promises they made to the electorate in this province. They were going to deliver all the grandiose promises they made to the third party over there, which is no longer an effective opposition in this province. We all know that. An effective opposition has to say something once in a while and has to be an opposition once in a while.

I find it amazing that only one party is speaking on this bill. I remember sitting not exactly where the present Treasurer is sitting, but not too far away, just slightly over, bringing forth bills in the past as Minister of Revenue and time after time, individual after individual, hour after hour, night after night, day after day, the members of the third party got up and ranted and raved about every change in fiscal policy. Obviously now they do not know what to do. They are so frustrated in their position they do not know what to do. They do not know what to say and they do not know how to say it, so they sit on their hands and look over this way.

The Deputy Speaker: Back to Bill 46.

Mr. Ashe: Back to Bill 46, the Income Tax Amendment Act. I appreciate that direction, Mr. Speaker.

Three hundred and twenty-one million dollars. I know the Treasurer is going to say an awful lot of that is going to come from the so-called higher-income group. We know it is in that middle-income group where most of the people in this province reside. The middle-income group includes the small business owners, many of them incorporated, that is for sure, but if they are incorporated they are going to get hit in one way or another again. These are personal taxpayers as well and they are going to pay, as are all of the people in Ontario, for the promises that are nowhere near delivered.

Look at the unfulfilled commitments -- some of them prudently not fulfilled, I must agree with that. But if a promise is made, the money has to be raised, whether it is done through the Income Tax Act, the Corporations Tax Act, the Retail Sales Tax Act or the Land Transfer Tax Act. It is amazing how realism takes over when one finds out one does have to raise the money. It is still $700 million more income and $500 million more deficit to deliver on only a small percentage of the promises.

8:30 p.m.

The members of the third party are not too pleased with references to a local Toronto newspaper, but it said it very nicely and I would like to quote a couple of sentences more from the business editor's column. This is not the same one that was referred to before, but obviously the local paper has a little better feel for the economic climate in this province, a little better feel for what makes the economic system grow. I will not go into the growth in the gross provincial product, that was referred to before; or the job creation inevitabilities that there have been in the last few years that are going to head downhill next year under the economic climate of a Liberal government.

Garth Turner, the business editor, hit it very well in his article the day after that infamous Thursday, October 24. He wrote: "Ontario has turned the comer. In a dirty little attack on capitalism yesterday, Ontario Treasurer Bob Nixon did all he could to wipe out years of boring Tory prudence. He is out to nuke higher-wage earners, bloat the deficit, stick it to the corporations, embarrass the former government and enrage the federal one.

"The bottom line is that Ontario's debt this year will climb by an astonishing 30 per cent, from $1.7 billion to more than $2.2 billion. In a classic Trudeau-like shot at redistributing wealth, the newly taxed assets of the middle class" -- and it is the middle class that gets it in the nose in this budget -- "will finance temporary job creation programs, rental housing units maybe, day care" -- just a touch on what the promises were -- "and expanded educational services.

"With a knee-jerk bow to ideology, the Peterson Grits are dousing any real chances the federal budget has of sparking new economic growth. It is stupid, mean-spirited, socialist drivel. Ontario is being forced in a new direction where those who achieve are penalized for it. The inevitable result will be a sick economy with chronic joblessness and a bureaucracy gone wild. Maybe not this year, maybe not next, but it will come. When it does, we will regret Bob Nixon and we will regret yesterday."

The only thing I have real difficulty with is that we know that is not the real Bob Nixon. It is not the Bob Nixon we heard from for many years who sounded like a prudent fiscal person who was really concerned with the ratepayers he represented in Brant-Oxford-Norfolk, the people around Paris and St. George. I am sure they really thought that what he said was what he felt. But when he comes down with a budget that we will pay for for years, they had the wrong impression of their member. Unfortunately, the people of Ontario have that result.

Hon. Mr. Nixon: The points raised by the honourable members opposite are of varying application and usefulness. I did not like Turner's column the first time I read it and, frankly, hearing it for the ninth time does not make it much better. I would sooner read the Brantford Expositor, although it was not very good either, to tell the truth.

I do not apologize for this bill. It is a necessary way of strengthening the revenue base of the province. As a matter of fact, it is not as big an increase in personal income tax as was imposed by the present Leader of the Opposition (Mr. F. S. Miller) in 1983-84. His five per cent surtax actually took a larger bite out of those dollars than this one does. That does not mean it is correct, but it does mean the people who have been so bitterly critical of this initiative are just slightly unfair.

The Ontario tax reduction program that accompanies this is something in which I take a great deal of pride. While the Conservatives in Ottawa were attempting to move to de-index pensions and allowances for children and the needy, while they were removing the tax reduction program that had been a part of the tax system in Ottawa for years under Liberal leadership, and while they were giving a $500,000 lifetime exemption to the other end of the income scale through capital gains, we were strengthening the tax reduction program here.

I wish it could have been better. It would take an additional $15 million to put it back to where it was; but once again we have at least reversed the trend. If the member thinks that is glassy-eyed socialism, I consider it to be Liberalism with a heart and I suggest the members should support it.

There are 350,000 Ontario tax filers who will pay no Ontario personal income tax and a further 40,000 have reduced tax liability. I wanted to be sure the members were aware that was one aspect of our program which improves the progressivity of an already progressive tax.

I would also like to point out that even with the new increased, raised level of taxation, with the three per cent surtax, Ontario is still third from the lowest level in personal income taxation in Canada. That ought to be a part of the record and I wanted to be sure to mention it.

The member for Nipissing (Mr. Harris) made a significant point when he compared the share of corporate income tax with personal income tax. He and I agree, at least on one thing, that there ought to be a move towards emphasis on the corporate side and at least a removal of pressure on personal income tax. He did not seem to understand, and perhaps I did not make it entirely clear, that the figures I quoted to him were not personal income tax as opposed to corporate income tax, but a distribution of all of the taxes paid by individuals and by corporations.

For example, the sales tax, a very remunerative, regressive tax, was distributed for the purposes of this accounting by the Ministry of Treasury and Economics taxation officials into the sales tax paid by industry and corporations as opposed to sales tax paid by individuals. In other words, they had the distribution of the taxes from the whole ambit of the provincial tax system distributed as they are paid by corporations and by individuals, so the discrepancy the member considered he felt in my figures can be explained that way.

The member for Dufferin-Simcoe (Mr. McCague) also asked about tables in the budget. The one on page 11, headed "Annual Impact of Personal Income Tax Changes in the Budget," refers only to the changes in the budget. That is, the effect of these increased rates plus the surtax have the effect as put forward in the tables on resident taxpayers in the province.

He indicated a discrepancy which he had determined in the overall tables, I think in the C tables at the back. Those do take into account increases in revenue this year from changes made in the federal budget. I hope that in succeeding years there will be increases in those federal effects to our advantage. Unfortunately, there is a clear indication that new federal initiatives will substantially decrease the overall revenues of Ontario.

We have problems with our deficit and with our debt, but the problems at the federal level are even greater. I would predict, and have already predicted in the budget and any time I make a speech to which I can make anybody listen, that unfortunately the processes at the federal level are going to lead to a substantial rate reduction in the revenues transferred from the federal to the provincial level.

I had a couple of other items here, but essentially, as the member for Durham West (Mr. Ashe) mentioned, this tax bill is quite simple: it raises income tax. The revenues are substantial. We believe they are going to have to be.

The allocation of funds among the ministries is one which we believe corrects difficulties experienced by recipients of tax grants and transfer payments and improves this situation for the future. That is a subject for general budget debate or discussion during the estimates before the House that will be reviewed by the various committees.

8:40 p.m.

I would ask the members in the official opposition to reconsider what I consider to be an untenable position put forward by their critic and his supporters. It seems unbelievable to me, and almost unconscionable, that they would be calling for an increase in these programs and an increase in expenditure and at the same time have the short-sightedness, the tunnel vision, in a responsible society to vote against this increase in taxation.

Nobody wants to increase taxes but we do want to improve our services, maintain the quality of our health care, improve the quality of education, provide jobs and opportunities for young people under 24, substantially improve colleges and universities and their extensive program for education for people of all ages. We believe we have the key to improving the economic resilience, depth and strength of the economy of Ontario.

If the members opposite only understood that, I am sure they would join the members of the government and the enlightened third party and vote in favour of second reading. We will give them an opportunity to do that this evening.

The Acting Speaker (Mr. Morin): Hon. Mr. Nixon has moved second reading of Bill 46, An Act to amend the Income Tax Act.

All those in favour will please say "aye."

All those opposed will please say "nay."

In my opinion the ayes have it.

Hon. Mr. Nixon: Mr. Speaker, we request that this vote be taken at 10:15 p.m.

The Acting Speaker: Pursuant to the agreement of the House this afternoon, the division on this bill is deferred until 10:15 p.m.

Vote stacked.

RETAIL SALES TAX AMENDMENT ACT

Hon. Mr. Nixon moved second reading of Bill 47, An Act to amend the Retail Sales Tax Act.

Hon. Mr. Nixon: The bill implements the proposals contained in the budget of October 24 and some administrative amendments. An exemption from tax is provided on infants' and children's car seats. This exemption applies only to child restraint seats that meet the requirements outlined in the Highway Traffic Act.

An exemption from tax is extended to certain feminine hygiene products. These comprise sanitary napkins, sanitary belts and tampons. The bill extends indefinitely the rebate to out-of-province visitors of the five per cent tax paid on transient accommodation. This rebate was scheduled to expire on December 31, 1985.

A tax exemption is provided on prepared food products purchased from an eating establishment for a total price that does not exceed $1. Another budgetary amendment relates to the withdrawal of the tax exemption on Canadian Maple Leaf gold coins.

The bill contains certain administrative amendments, including some measures to simplify the objection and appeal process. For example, the bill ensures that all assessments may be subject to review on objection and appeal. The bill extends the time for a taxpayer to object to an assessment to 180 days from the current 90 days. Provision is made to extend the time limit where special circumstances prevent the taxpayer from meeting that limit.

Other administrative amendments withdraw certain search warrant provisions of the act, establish the time for the remittance of tax collected on admissions to places of amusement and provide for some housekeeping changes.

Mr. Dean: I am pleased, and I know the Minister of Revenue (Mr. Nixon) will be pleased, to know there are some good things one can say about this bill. I think he is very perceptive in the things he has done, with two exceptions.

I am sure we all agree with the exemption for feminine hygiene products. The extension of the rebate to out-of-province visitors for their accommodation is something that was enacted first by our government and has proved to be very worth while. It is worth while to have it made a permanent feature.

All of us concerned about safety on the highway, and especially safety for children, can applaud the removal of the sales tax on the purchase of car seats for children provided they are proper seats. I would like to draw the attention of the House to the fact that this issue was first raised in the previous parliament by one our colleagues, the former member for Scarborough-Ellesmere, and it was made law not long after that.

Having said that, however, I feel it our duty to mention two items that we think are a little strange. One is the exemption level for prepared food products. I suppose if we could find a meal for $1 someplace, we would be grateful to have that exemption if we were buying it.

Hon. Mr. Nixon: Has the member tried Sanssouci?

Mr. Dean: I cannot even get in the door for $1 there.

The thing I find strange about it, however, is that it is a very pale resemblance, almost a ghost-like shadow of the promise made by the government when it was the Liberal Party running in the election. I understood at that point that everything under $4 in the meal department was to be tax free. Perhaps this is within their realm of fiscal restraint -- is that the word? -- prudent fiscal responsibility or something of that nature, which the Treasurer (Mr. Nixon) wants to do.

If this is the best he can do, then that is too bad. I do not think it really is a satisfactory realization of the promises that were made. I also think it has the potential to be a bit of a problem for the lunch counters and other restaurant establishments that will be involved with this. It could lead to a lot of extra paperwork at that end or other undesirable make-work problems for small businessmen. There is also the possibility that it could lead to some higher costs in the changing of automated machinery in those establishments. Its main feature is that it is really a caving in, a disappointment to those who looked forward to the Treasurer being able to keep the word of the party and its leader.

The other item I wish to touch on briefly is the removal of the tax exemption for the Maple Leaf gold coin. I understand some of the reasons for which the Treasurer and Minister of Revenue has said this is taking place. Nevertheless, it does not serve the important gold mining industry in Ontario.

To attempt to say we are supporting the north more and are particularly concerned about the mining industry and then to put a tax back on a product that is one of the very tangible manifestations of that particular aspect of our industry seems to me to be trying to say something that is not practical. There will be a further temptation, I believe, for those who are purchasers of gold in this form to do it elsewhere than in Ontario. We are not only doing something less than positive to our gold mining industry, but we are also running the risk of moving some of the commerce that flows from the manufacture and sale of these coins out of Ontario to some other province -- for example, Quebec, where this tax does not apply.

8:50 p.m.

I think the Treasurer should take another look at that. I feel the sort of atmosphere that goes with those two items I have been critical of will mean we cannot support the bill.

Mr. Foulds: I found the arguments today on the various tax bills intriguing. I found the debate lively. I even found that occasionally, although I profoundly disagree with the speakers on my right ideologically, politically and geographically, they had always argued that there needed to be consistency.

They opposed the previous two bills because there were increases. As I understand this bill, it provides exemption for taxation; in other words, it reduces taxes; but they are opposing that as well. I find that a little difficult to follow.

I understand the profound commitment the Conservative Party has to the sales tax exemption on gold coins, but as we all know, those coins are not manufactured in Ontario and they provide no manufacturing jobs in Ontario. I would be very surprised if they contributed substantially to the employment of gold miners in Ontario, although most of the gold is mined in Ontario.

I do not know what percentage goes towards the gold coins, but I would think it is not a significant amount. I would suggest there are better and more important ways of stimulating job creation programs in the mining industry generally, and in the gold mining industry in particular, other than by a minimal exemption on gold coins.

That being as it is, by and large the people who buy gold coins are not your average lunch-bucket-carrying, ordinary working man and woman of Ontario. They are not paying this tax. Those people who can afford to buy gold coins and salt them away pay the tax.

I agree that nobody likes tax increases, but that party did not like the income tax increase, which is relatively progressive, with the reservations I made earlier. I ask once again, where would the official opposition raise its extra revenue? Where would it raise the revenue for its multimillion dollar throne speech? Would it raise it from the old age pensioner? Would it raise it from an increase in the Ontario health insurance plan premiums? Would it raise it from an increase in sales tax?

If they are going to be responsible legislators, if they are going to be small-c conservatives as well as, may they rest in peace, large-C Conservatives, surely they have a responsibility to tell the people of the province and the members of this Legislature where they are going to get their extra revenue. If they are not willing to tell us, that is fine. We understand they are not willing to engage in that progress.

I have a problem with the bill, but our party will be voting for it. First of all, I want to clarify something said by the previous speaker. It was my colleague the member for Beaches-Woodbine (Ms. Bryden) who first proposed the exemption for child-seat restraints in automobiles, years before the former and forgotten Conservative member for Scarborough-Ellesmere. The exemptions the Treasurer has granted in the sales tax, aside from that and aside from those on feminine hygiene products, are, as he would in his heart of hearts truly admit, very symbolic indeed.

I suspect what happened was that when the government's party was looking at the level of exemptions on the sales tax or the items that it would like to exempt, it was faced with the horrible reality that such a large proportion of the Ontario budget has become dependent on a most regressive form of taxation, the sales tax. The sales tax, which was instituted by the Conservative government originally under the pretext that it would cover hospital care, medicare, was never removed when the Ontario health insurance plan premiums were established. The province's revenues have become --

Mr. Guindon: Now we know where it is coming from.

Mr. Foulds: I am glad we are going to have participation again from the member for Cornwall (Mr. Guindon) in the debate on the tax bill. He has to look only at the chart and tables at the back of the budget to see that the province's revenue under the previous administration had become very dependent indeed on two of the most regressive forms of taxation devised in the western world -- medicare OHIP premiums and sales tax.

I would suggest to the Treasurer, however, that he does have to look at raising the exemption level, because the $1 exemption provides for a cup of coffee --

Mr. Callahan: It amounts to $36 million.

Mr. Foulds: I know the lost revenue was $36 million. Frankly, for the symbolic gesture, it is not worth it.

It was one of those things where the Treasurer, I believe, said, "We have to make some commitment to one of the promises we made during the election campaign --

Hon. Mr. Nixon: Somebody said it.

Mr. Foulds: -- that the leader of the Liberal Party said during the campaign." What was the delicatessen? It was not Shopsy's. Which one was it?

I am referring to the $4 meal that the then Leader of the Opposition and now the Premier (Mr. Peterson) ate at -- was it Shopsy's? Perhaps it was not Shopsy's, but it was one of those delicatessens. There he made the promise that his party would raise the level of exemption to $4.

Hon. Mr. Nixon: Shopsy's.

Mr. Foulds: It was Shopsy's? No, it was --

Hon. Mr. Nixon: Switzer's.

Mr. Foulds: Switzer's, that is right. I think the $1 exemption is just a symbolic gesture that the Liberal Party felt it had to make. It was a quarter-step towards the $4 exemption.

Mr. Callahan: Pretty good, though.

Mr. Foulds: No, it is not because it is not of any practical value.

An hon. member: Useless.

Mr. Foulds: It is absolutely useless. It means that one can buy a cup of coffee without paying tax or get a cheap, low-level, one-scoop ice cream cone that costs under a dollar, which means one cannot get it at Baskin-Robbins Ice Cream any more these days. One might be able in some theatres to get a small container of popcorn.

9 p.m.

I suggest that it is not worth all the lashes the Treasurer has taken for this measure. In all seriousness, he has to start looking at some other fundamental essentials that the former Treasurer, the member for Muskoka (Mr. F. S. Miller), started to tax with respect to getting, if I might say so quite seriously, some progressivity into the sales tax.

I am realistic enough to understand that the sales tax cannot be done away with tomorrow. I am realistic enough to realize that it is embedded in the Ontario budget as a source of revenue for some time to come. I strongly suggest that the Treasurer and his officials begin to look at those items which are compulsory purchases for the working poor of this province, who are more severely hit by this tax than others. They do not have a lot of disposable income and must spend their money on certain essential goods. In the Treasurer's next budget, he should look, as would a Liberal with a heart, as he says he is, at providing those exemptions.

The other items in this bill are acceptable. If it happens by some rare chance to go to committee, I am curious about the provision which seems to be in a number of these bills, the withdrawal of the special search warrant provision, and its going to the Provincial Offences Act. It is probably better to have it located in one area under one statute, but I am curious about why he has taken this step and what the abuses were, if any, when it was in the previous act.

Mr. Ashe: I will be very brief on this bill. Generally, there is not a great deal to see in the bill because it is not much of a bill. There are only two areas I want to dwell on for a moment. When there are only three or four things of any relevance in the bill, two is still a fair percentage.

I mean this in all sincerity. The Treasurer must be truly embarrassed with that $1 exemption on the so-called prepared food products. It is an embarrassment. I can see him sitting at the desk saying, "No, if we cannot fulfil the promise my leader on more than one occasion, and 125 candidates, made around the province that we would bring the exemption up to $4, we are better not to do it at all." I can see him sitting there saying exactly that.

I can see another little fellow down the hall who has "for-$1,000-you-can-get-my-ear" kinds of opportunities, whose name is Peterson or Davidson or something -- whatever he is called down in New York.

Mr. McCague: Anderson.

Mr. Ashe: Anderson; pardon me. He said: "No, Bob, we have to show we are really going to keep the promise." He has heard that reference before. "We cannot keep all the promise on this one, but let us keep the same percentage as the other government got us into with Suncor, 25 per cent of the promise." The Treasurer said: "I am not too sure that is very good. I feel like an ass having to go that way. What can one buy for a dollar?"

I agree. One can go into any restaurant and get a cup of coffee but no toast with it, or one can have toast as long as one does not have butter and coffee with it. As somebody pointed out from the third party, which is no longer the opposition, one might be able to get a small package of popcorn at the theatre or a few things like that.

One can get a package of cookies for less than a dollar at McDonald's. I am not quite sure about anything else one could get. That must be an embarrassment. If there is one part of this budget which laughs in the face of the electorate of this province, that is it.

Frankly, I would not criticize this if there were no change in the exemptions vis-à-vis the meals. The exemptions he took off the other products are fine, the car seats and the women's products. If he had stuck with this one, we would have added it to the list of unfulfilled promises, but at least it would not have been a kick in the teeth of the electorate of Ontario, one that says: "We told you $4, but we will throw you a buck. We will throw you a crumb in that meantime, even though you cannot buy anything with it."

There is another very important aspect. There is an echo in the corner that keeps saying it is $36 million. There is no doubt it is $36 million of the Treasurer's revenue. I do not dispute that. I know where the figures came from; so I do not dispute them. At the same time, I suggest it will not save $36 million in the pockets of the taxpayers of this province.

Can the Treasurer tell me that when he goes into most corner stores and coffee shops, the coffee that has been selling for 50, 55 or 60 cents, tax included, is going to go down a nickel? He should mark my words: it will not.

We allowed that for convenience, particularly for the smaller stores; it has not been a problem in the bigger restaurants. It is made very clear that sales tax is extra. Most of the fast-food restaurants, most of the corner restaurants, the mom-and-pop restaurants, have taken the advantage we gave them a number of years ago of posting tax-included prices.

If the Treasurer thinks they are going to go to the expense and trouble of changing all those signs down a nickel, or three cents or two cents in the case of products under $1, he is crazy; they will not, and I would not expect they would. The Treasurer has given a real bonanza to somebody, I am not quite sure whom. In the meantime, he must be embarrassed.

When I think of McDonald's, Burger King and all the ones that have computerized cash registers and have to reprogram them, I am sure at some sizeable income for somebody --

Hon. Mr. Nixon: It makes employment.

Mr. Ashe: That is true. If this is the major job creation initiative of this Treasurer, that is fine. It is a temporary make-work program, but I am sure he will count it in his 108,000 jobs created for the coming year -- down significantly from 1985, I might say.

In any event, that is the one major disappointment I have in what the Treasurer has said. I honestly feel for him in his embarrassment on this issue.

On another one, I found great comedy in listening to a member from the north who used to speak out so vociferously about how the north was hard done by. If there was anything against the north and anything against the mining communities in particular, he spoke out extremely harshly. Now the Treasurer imposes a tax on the gold coin that has a direct impact on mining communities, not only in this province but also right across Canada, and he says: "It does not matter. Nobody except the rich buy them anyway."

If he would look at the statistics on the sale of gold coins, he might know that other than one-ounce coins now are sold, and it is the small person who has had a tendency over the past number of years to make a minor investment in that kind of opportunity. Now they are going to cost another seven per cent.

The other thing he may not know is that all the gold that is used in the Canadian Maple Leaf gold coin is and must be mined in Canada. If the Treasurer thinks that is a further stimulus, I remind him that a good majority of that gold is mined in Ontario, not all but a significant portion of it. It really is a dessert to see those fellows on the left, the little tail-end over to the far left, trying to squirm and squiggle around and not criticize their compatriots opposite. In the meantime, I hope the Treasurer feels good about that initiative. We will watch and see what the sales of Maple Leaf gold coins are in Ontario in the coming years.

Other than that, some of the initiatives in the way of housekeeping, the changes in ease of administering the act, are always welcome and I am sure will help the administration of the act.

9:10 p.m.

Mr. Lupusella: I am proud to rise and associate my feelings with those expressed previously and eloquently by our Treasury critic.

It is a little amazing to hear comments coming from the member for Durham West (Mr. Ashe), our former Minister of Revenue. During their 42-year regime in Ontario, the Tories played with the issues affecting poor people in Ontario, exempting taxes with the excuse and implementing the principle that for the benefit of the economy they had to stimulate sales of cars and furniture.

They talked about exempting people from paying thousands of dollars in taxes, but I never saw the benefits from these thousands of dollars going to the consumer. What happened was the exemption took place but the price of the item went up. In fact, the consumer per se did not get any benefits. The Tories were implementing that kind of legislation based on the principle that particular provisions of the act were stimulating the economy and were supposed to help a sector of our economy in Ontario.

The Conservatives have been criticizing us because of the position we have taken. If we were to go back a bit in the political history of their party, we could investigate all the industrial grants given to companies in Ontario with the benefit of repaying those grants in 10, 15 or 20 years time at two, three and eight per cent interest on the total amount.

I urge the former Minister of Revenue to go back a bit to all those industrial grants given by the Tories, I am sure -- I do not like to say it -- to their own friends. Who paid the price for that? The poor people of Ontario did. That is why in previous budgets we saw the cruel approach used by the Conservatives, increasing the Ontario health insurance plan premiums and other things, or closing down hospitals in the name of restraint.

I admit some members might excuse themselves because they were not around when these types of policies were enunciated. They might have an excuse. However, the former Minister of Revenue should have the experience of what his own party did in Ontario for at least the past 10 years.

On this bill, I would like to ask the Treasurer for some clarification about the exemption from tax of prepared food products. I am wondering if prepared baby food products, for example, are exempted. I am talking about food products for kids who are six or seven months old and so on. I would like to have some sort of explanation about whether those products are incorporated in the bill or whether something might be done by way of regulations.

I am a bit disappointed in that if we are trying to help the poor people in Ontario, diapers have not been exempted, for example. That would have been a good approach which the minister could have taken in relation to that item. However, I understand and endorse the other exemptions, which relate to the purchase of infants' and children's car seats and certain feminine hygiene products.

Again, I would like to convey my concern to the minister that these exemptions should be exemptions from which consumers in Ontario will clearly benefit. For example, I would not like to see the prices of these items going up. I hope the minister will play some role in finding out whether the price has been going up as a result of this exemption on these products that have been exempted in this bill.

The other issue on which I would like to express my concern and my endorsement is in relation to clause (e) of the purpose of the bill which says that "assessments may be subject to review on objection and appeal, to extend the time for the taxpayer to object to an assessment and to permit the minister to extend that time where special circumstances prevent the taxpayer from meeting that limit."

This is a very important item in this bill. The Liberals are finally putting an end to the cruel approach used by the previous Minister of Revenue. Once a year, around December, taxpayers in this province used to receive a notice of assessment, and they had 10 days to file an objection to an increase in their assessment or to launch an appeal. That was the cruel approach used by the Tories, not just in 1981 but going back to 1975 and 1977, when the Tories were trying to steal money from the poor and give it away to the rich. Again, I invite the minister to review all the industrial grants given to corporations in Ontario. This is money that has been stolen from the poor people of this province.

Mr. Speaker: Would the honourable member just take a glance at Bill 47 and get back to that bill?

Mr. Lupusella: It is Bill 47, is it? It is clause (e) of Bill 47, unless I am mistaken. I would like to have your guidance, Mr. Speaker. I think I am not out of order.

The final message I would like to send to the Treasurer is that this is a good indication that something positive is coming in relation to the old issue of assessment on properties in Ontario. In the final reply coming from the minister, I hope he will clarify specifically this subsection --

Mr. Pierce: You are talking about industrial rebates.

Mr. Lupusella: I am not out of order. There are explanatory notes for the bill. That is what it is all about, unless I have the wrong bill in front of me. It is Bill 47.

Mr. Speaker: It is An Act to amend the Retail Sales Tax Act.

Mr. Lupusella: The explanatory notes say: "The purpose of this bill is...to ensure that all assessments may be subject to review on objection and appeal, to extend the time for the taxpayer" --

Interjections.

Mr. Lupusella: Do I have the wrong bill?

Mr. Brandt: No, no. Everything is under control.

Mr. Lupusella: I am not out of control. The former Minister of Revenue told us we should be ashamed of our association on this side of the House. I think he should be ashamed for collecting money from poor people across Ontario when he was the Minister of Revenue. It is as simple as that. I do not know why --

9:20 p.m.

Mr. Speaker: Order. I remind the member that the member who was speaking was out of order because he did not have the floor. Go ahead and speak to Bill 47.

Mr. Lupusella: What the hell is he talking about, Mr. Speaker?

I want to conclude my remarks. On this particular subsection, I would like to send a message to the minister that I hope in the near future he will come out with an overall revision of property taxes in Ontario and extend the period for people to appeal the assessments on their personal properties. That is something he should be proud to see created, as I am. In comparison to the approach used by the Tories in the past, I think it is good.

Mr. McClellan: I want to take a minute. I am prompted to join the debate by the remarks of my colleague the member for Durham West when he talked about comedy and embarrassment. Give me a break. This is a member whose government introduced the regressive taxes that are being removed in this bill.

Mr. Ashe: Which ones?

Mr. McClellan: I believe the member for Durham West was a member of the government that introduced sales tax on feminine hygiene products. Am I wrong, Mr. Speaker?

Mr. Speaker: I am sorry, the Speaker cannot reply.

Mr. McClellan: Talking about comedy and embarrassment, I do not know whether to laugh or to blush. The member for Durham West has joined the successive tirade of his colleagues against a number of tax measures that have been introduced.

I have to remind my dear friends in the Conservative Party of their throne speech, which was delivered earlier this spring and which had promises -- I believe I am not mistaken -- adding up to a total of something just less than $ 1 billion in additional expenditures, and the Premier of the day indicated he could pay for all these new programs without raising the deficit and without raising taxes.

Without raising the deficit and without raising taxes, they were prepared to extend an additional $1 billion in new programs. That is Tory economics in a nutshell, and I mean nutshell. Nobody in this province believes any longer in the credibility of my friends to the right, because they have been revealed to be fiscally irresponsible. How else can I put it? How else could it be described?

They are promising additional programs and they are saying they can be paid for without increasing the deficit and without increasing taxes -- voodoo economics at its most crude and primitive. Yet my colleague the member for Durham West has the gall and the audacity to talk about comedy and embarrassment. Give me a break.

Mr. Speaker: The member for Lake Nipigon.

Mr. Harris: Nipissing.

Mr. Speaker: I believe the member for Nipissing has spoken.

Mr. Harris: Au contraire, Mr. Speaker. The member for Nipissing has not spoken, but I will defer to your judgement. Perhaps we will have the government members speak all at the same time, and then the opposition can speak.

Mr. Speaker: I recognize the member for Nipissing because I believe we should have rotation.

Mr. Harris: Mr. Speaker, I agreed with your original decision; I needed more time. But thank you.

I am pleased to speak very briefly on Bill 47, An Act to amend the Retail Sales Tax Act. This is one of a package of bills that seeks to raise revenue for Ontario. It is one of those taxes we call an ad valorem tax. Some members of the third party have referred to it as a regressive tax; however, they are now supporting the continuation of this ad valorem tax that they feel is regressive. Actually, the biggest joke here is their great defence and support of this tax.

Mr. McClellan: I think the member is on the wrong bill.

Ms. Gigantes: He is on the wrong bill.

Mr. Philip: Where is the ad valorem in this bill?

Mr. Harris: The only thing I have heard from the third party tonight that has made any sense at all was when, in reply to the question of how much they are being paid to defend this budget, the member for Port Arthur (Mr. Foulds) replied, "Not enough." I concur; it is not nearly enough, because they are doing a pretty good job.

Hon. Mr. Kerrio: What are friends for?

Mr. Harris: What are friends for? That is right.

A few little things bother us about this bill. One is the Maple Leaf gold coin. The member for Port Arthur, who purports to represent northern Ontario, can say it is not a very significant move against the gold mining industry of northern Ontario. He can say it is detrimental but, in the overall scheme of things, it is not the end of the world in northern Ontario.

Mr. Foulds: How many jobs is it going to cost? The member should put his money where his mouth is.

Mr. Harris: Let me talk about jobs. The member has defended this Treasurer who will not identify the number of jobs his officials have told him every one of these tax increases will cost. This is an increase in the cost of gold and most members will know that the sale of Canadian gold and of Ontario gold are very tricky items in the marketplace. They are having problems. It is a depressed industry as it is. There are difficulties in the mining industry --

Mr. Foulds: Who do they sell it to?

Mr. Harris: I know the member is for forestry. In North Bay and Nipissing --

Mr. Speaker: Order. Perhaps the honourable member would disregard the interjections and address his remarks to the chair.

Mr. Harris: He is not interested in mining, Mr. Speaker, you will have to tell him to keep his comments to forestry, but some of us in northern Ontario care about the mining industry. We care about the jobs in Timmins, in Kirkland Lake, in Hemlo and in Nipissing where the companies that are involved in manufacturing, repairs and service to the mining industry are concerned about what happens in that industry.

This is a negative move. It is negative specific to those areas of mining gold. At a time when the Maple Leaf gold coin was one of the encouraging signs of recovery, when this coin was enjoying an increased market share --

Hon. Mr. Kerrio: That is the main reason.

Mr. Harris: The Minister of Natural Resources (Mr. Kerrio) has interjected once tonight and I am sure the Treasurer will comment that one cannot exempt only the Ontario coin under the General Agreement on Tariffs and Trade. We concur with that, but we were doing very well in the marketplace when they were all exempt. We were increasing our share. We were more than 50 per cent.

Hon. Mr. Nixon: The krugerrand was not exempt.

Mr. Harris: Nobody wants to buy the krugerrand any more. Is the Treasurer promoting the krugerrand? We are doing very well in the marketplace.

We think it is a negative move for northern Ontario. As a member from northern Ontario, I have an obligation to point that out to the Legislature. Other members from northern Ontario may not feel it is particularly significant. That is fine. We respect their point of view. Others of us are concerned about the effects of this budget on northern Ontario.

9:30 p.m.

The Treasurer said in response to another bill that we are the last province to enact a specific measure. In this particular item we lead our major competitor in the stock markets, we lead our major competitor in the gold mining industry by putting this tax on. There will be some effect -- not a significant amount, not the end of the world -- but it still tends to depress activity in Ontario that it will now be desirable to buy the gold coins in Quebec and on the Quebec market. That is the place where the smart investors will go to place their orders for the gold coins.

Hon. Mr. Kerrio: That gold could come from Ontario.

Mr. Harris: It could come from Ontario; that is right. That is fine. But it will be a negative for the stockbrokers. If one looks at the stockbrokerage industry here, it will be a negative in the activity in Ontario.

Mr. Foulds: Is it going to do a stockbroker out of a job?

Mr. Harris: Listen, we are after every single job we can save, and this budget measure generally in that area, with the tax on the gold coin, affects jobs in Ontario. Sure, it is not thousands of jobs.

Mr. McClellan: How many jobs?

Mr. Harris: As soon as the Treasurer opens up and tells us what his officials have told him, I will get that information and the member will. The Treasurer has not done it for five questions, but he will do it on the sixth, the seventh or the eighth. They promised open government, so I am sure that at some time he will share that information with the House. He may not do it voluntarily, but I think the Premier will make him do it because that appears to be their commitment.

Let me talk about another aspect of Bill 47 that we have difficulty with. That is the famous $1 exemption on the tax on prepared foods. It is a joke out in the community; it is a joke in the industry.

Hon. Mr. Kerrio: It is a $38-million joke.

Mr. Harris: That is the problem with it. It will generate $38 million less, and by the time the government figures out the cost to industry of adjusting to the $1 as opposed to the other, figures out all the changes that the member for Durham West talked about with the cash registers and figures out the difficulty of sorting that out, when we add in the $35 million that it all costs, it is a typical, rather bureaucratic move that will not generate a single dollar of good for anybody.

It will cost that amount of money to figure out who pays and who does not, to put out three bills instead of one. Nobody is applauding the move as a great move. The only thing we hear out there is, "They did not live up to their commitment and they gave us this joke instead."

The Treasurer asks where he could raise additional revenue. Surely it would be better to keep the $35 million -- how much is it?

Hon. Mr. Nixon: It is $40 million.

Mr. Harris: Keep the $40 million, because the consumer is not saving this money. The consumer is not going to end up paying $40 million less. The companies are not going to end up saving any money. It is going to cost them that amount of money when one takes all those fast-food companies and all these people who deal in the prepared-food business. That $40 million will be eaten up just in trying to accommodate it. So the Treasurer wants a source of revenue. There is a source of another $40 million instead of a joke on the people of Ontario.

Mr. Speaker, I believe you would allow me to comment briefly on why we are concerned with this bill in the context of where expenditures are going in the overall budgetary policy of the government because this bill is one of those integral parts. If it were not integral, I am sure the Treasurer would not be concerned whether it passed. If he is concerned, then obviously it is integral to the whole budgetary process.

In that light, members of the third party have repeatedly brought up in this debate the question of where the Tories would get the money. That is a comment I have heard.

Let me go to a couple of the charts in the budget. This is not a Tory document. It is the 1985 Ontario Budget prepared by the Treasurer. If members look at page 52, they will see how a Conservative government generates needed extra funds. They will see how revenues went up from 1983 to 1984. If they look at the table on page 63, they will see that revenues went up from 1983-84 to 1984-85 and $2.5 billion more came into the provincial coffers without raising a single, solitary tax and without introducing any budget bills that said taxes had to go up here and there.

That is what increased economic activity will do. That is what happens when the government allows more jobs to be created. That is what happens when it allows the private sector to create the jobs; it gets more taxpayers. That is why personal income tax went up; there were more payers. That is why corporate income tax went up; they made more money and they paid more. There were more payers and more businesses created.

We now have a new plan. We have the socialist Liberal-New Democratic Party plan, the Trudeau-MacEachen-Davey-Coutts-etc. plan. This plan decides to take more money out of the economy and bring it into government through increased taxation. By increasing all those taxes, the revenue is going to be increased by $2.1 billion. The year before the government got $2.5 billion without any tax increases; now, with all the tax increases, it is going to get $2.1 billion. That is $0.4 billion less. Why? The Treasurer has admitted it slows down economic growth. He has admitted that taking it out will slow the economy and slow the creation of jobs. That is why. There will not be the same number of taxpayers.

In the overall context of the budget, I have difficulty with the ordinary, extraordinary and super double-star extraordinary expenditures. It seems fine, but I think we need some explanation. I know I got some tonight and I hope I am being fair. The Treasurer has been good in providing me with information. Perhaps he can confirm that double-star column is the hokey column and really does not mean anything. It is the one that takes revenues from $27 billion to $30 billion.

It is not money he actually gets. The accounting is bookkeeping stuff. Expenditures go from $28.9 billion to $32.6 billion. Those are all bookkeeping entries and do not impact on the budget in a significant way. They are not related to items in previous years. If the Treasurer will confirm that is what they are, I will accept that they belong in a double-star column and really are not of significance to us as we deal with the budget.

I want to add why in the overall plan of things we have difficulty with the tax increases. I have explained how the Treasurer can get more money without pulling all that money out of the economy; at least that is my opinion.

9:40 p.m.

Let me also say that cumulatively -- this bill is part of it -- we are talking about increases in expenditures, as I read it, of almost 10 per cent. Inflation is running at four per cent or a little less than that. Admittedly, the settlements that he has been encouraging around the province have been running around five per cent. We have difficulty understanding that when inflation is running at four per cent. Even his ordinary expenditures are at 7.8 per cent, and when he includes, at page 15, his extraordinary adjustments, which I am sure he will want to claim a reduction from. If he is there to come out with the budget for 1986-87, I am sure we will see the figure of 2.213 at that time, and we will see --

Hon. Mr. Nixon: No; 1.695.

Mr. Harris: I am glad to have that on the record. Would he put it on the record in response if that is the figure he is dealing with in the 1986-87 budget planning process-the 1.695? If he will do that, then I will accept that.

If the expenditures he is talking about are $28,997,000,000, it would be the honourable thing just to reaffirm that tonight. In that case, we are looking at about only an eight per cent increase in expenditures at a time of four per cent inflation. That is part of the overall problem we have with this budget.

Mr. Pouliot: I welcome the opportunity by means of a few short comments to address this distinguished assembly with reference to Bill 47; and more specifically subsection 3(3) which deals with the proposed withdrawal of the exemption from tax for the purchase of the Maple Leaf gold coin.

I should introduce my remarks briefly by mentioning that I came to this assembly with the very vivid and specific purpose of learning a good many things. Tonight, although I had no intention to be on my feet, and certainly no intention to commend the Treasurer of Ontario for having restored the sense of equilibrium and the sense of economic justice in the marketplace in Ontario, I force myself somewhat reluctantly, but nevertheless I find myself being very pleased, to do so.

Concerning both the member for Durham West and the member for Nipissing, with all due respect, we were very patient in listening, and patience is a virtue. We listened to the platitudes, nothing short of that, to the sham. I will not say ploy, I will not say deception. Suffice it to say that even a blind person without the use of Braille could see what was happening on behalf of their friends from the Albany Club, on behalf of their colleagues and confrères from the board of trade. They had the audacity and the gall really to tax our patience without bringing forth any substance when it came to gold mining.

They were not talking about market forces, they were not talking about the 65 per cent of all Ontario's production emanating from the great riding of Lake Nipigon, from Hemlo. They did not give us a lecture about the difference between traditional quartz and sediment formation, they said nothing about market conditions, the way the program is currently in disfavour. They know little -- in fact nothing -- about market analysts predicting that the increase in sales of the Maple Leaf coin will be of the magnitude of 15 to 20 per cent in the year 1986. They did not mention that.

They did not mention that gold presently markets at $325 an ounce and, by virtue or reason of the sediment formation at Hemlo, the cost of extraction, of production is $106 per ounce. One need not be a mathematical genius from our group to calculate that the profits are there. The richest gold mine in the world is in northwestern Ontario, Campbell Red Lake Mines Ltd. If we were to have the production of Hemlo coupled with that from Red Lake, we would find ourselves with fully 80 per cent of Ontario's gold production.

It was high time that a balance was imposed regarding this proposal and the Treasurer has had the courage to do so. I will vote at 10:15 p.m. with my colleagues to render justice and a better balance.

In conclusion, I worked very hard in a mine for 20 years and I feel somewhat saddened that there was no substance tonight only criticism. There was no positive comment. Worst of all, there was no knowledge of mining, our basic industry in Ontario.

Mr. McCague: I am pleased to say a few words on Bill 45, I believe it is.

Hon. Mr. Kerrio: It is Bill 47.

Mr. McCague: Yes. That is close. My mathematics are something like the minister's. Regarding the content of this bill, the subject of prepared food products under $1 has turned out to be a bit of a joke. I hope the Treasurer will see it in his heart, now that he has felt he should impose this exemption, to consider giving the vendors at least some credit so they might be able to recover some of their costs of adjusting to this rather minuscule program. He mentioned in his budget it will save $7 million, along with his other endeavours in this bill, and will save $40 million in a full year.

We agree with his exemption on feminine hygiene products. I hope the Treasurer's answer to his promise to exempt accommodation is not what is included in this budget, which allows only for the rebate of tax paid to people visiting from outside the province if they apply. Nobody can argue with the exemption on car restraint seats for children. That was proposed and just not completed by the Minister of Transportation and Communications some months ago.

Much has been said about the exemption on gold coins. I do not understand, and probably the Treasurer can explain it to those of us who are not from northern Ontario, how he sees the method, which people might use to buy them outside this province, to be fair.

He has mentioned in comments, not for the record, that some of these things were the price of honour. It cannot be the $4 food exemption nor the accommodation tax. I am not sure what he meant by the price of honour. The member for Dovercourt (Mr. Lupusella), who tells me he has two children, mentioned that the Treasurer should have removed the tax on diapers. I have six grandchildren. Based on the odd time I have been sent shopping, I do not think there is any tax on diapers, but he will probably correct us on that and notify the member for Dovercourt.

The only disappointment in this bill is that it does not go as far as we and the people of Ontario were led to believe it would go. For that reason, we have to record our disappointment in it.

9:50 p.m.

Hon. Mr. Nixon: When I was first elected to this House -- I took my seat about February 1962 -- the sales tax was quite fresh and new. The Premier who introduced it, the Honourable Leslie M. Frost, was still a member of the House and sat in seat number one, where the member for Windsor-Walkerville (Mr. Newman) is sitting. I was able to observe him here, and he spoke briefly a couple of times.

There was a rumour that he was so embarrassed and sensitive about having to bring a sales tax into the province at the unheard-of high level of three per cent that he thought it was a good time to make his own political withdrawal. It was good judgement on his part. I have a feeling he could have won the next election quite readily, maybe almost as easily as Bill Davis could have won his next one if he had stayed, but those things we will never know because Mr. Frost had withdrawn at that time.

A sales tax was an extremely big issue, as members can imagine. During the campaign for my election in a by-election, we talked about it constantly. The Liberal position then was that there ought to be a $40 exemption to the tax.

I am not prepared to defend that position tonight, but I can recall the debate in the House raged back and forth that the revenue would be reduced by only a very small amount if there were a $40 exemption because most of the revenue came from the big-ticket items such as automobiles, mink coats for the wives of Tory cabinet ministers and that sort of thing.

It was quite interesting how the innovative accountants could come up with any answer one wanted in that connection. I hasten to tell members that none of these accountants works for the Treasury now. They deal just with the facts as they are.

Sales tax has increased in its tax base and size. It was tempting to say, "Let us increase the sales tax by one per cent and thereby reap $700 million of additional revenue by just changing one little number one little bit." However, the attitude expressed by most of the progressive members of the House, except for the Progressive Conservatives, is that sales tax is a revenue that we want to keep under strict control and, if anything, increase what little progressivity there is by improving tax grants and by keeping it as low as is practicable.

I want to refer to the specific objections put forward by the member for Wentworth (Mr. Dean). The critic indicated that he felt the Treasurer was perceptive in at least some of the exemptions, and I appreciate that. The members on all sides have indicated they support the removal of tax from feminine hygiene items, infants' car seats and so on. I appreciate that and I can understand that is easy to support.

The $1 prepared-food exemption has had quite a thrashing around tonight, almost as much as the thrashing around it had in the boardroom of the Treasury. Many of the arguments that were put were discussed by myself and others because the cost of fulfilling the $4 exemption was approximately $170 million. My judgement was that was too rich for my blood in one shot. The alternative was to take it to $3, $2, $1 or leave it alone and simply say we were not prepared to respond to that promise.

My own judgement was that by moving to $1 we were showing good faith. I am hoping -- not promising -- that we can improve that situation as revenues become more buoyant under the stimulation of Liberal economics. I confidently expect this will be one of the alternatives we can examine.

I do not want to waste time, but I do want to mention that I went to my constituency office last Saturday morning. I tend to run out between clients to the Paris Bakery, three doors down past Harry Wise Men's and Boys' Wear. It is a marvellous bakery with just great stuff, most of it no-cal, and they keep an urn of coffee in there.

As I went in to buy a few little goodies, the baker came out from the back, dusting the flour off his apron. He gets up at 3 a.m. to set the dough; some people really work in this community, believe it or not. He wanted to thank me for making this $1 exemption. He said: "Nothing in here is taxable unless people buy a cup of coffee -- we have an urn here -- and a doughnut, and then it is taxable, but no more, Mr. Nixon. Thank you, Mr. Nixon."

So do not say nobody appreciates it because somebody does. I have desperately tried to find number two, but so far he or she has not surfaced. I think it is an indication of good faith so far as the promise is concerned and I hope we can respond in a more generous way in the future.

I want to mention the gold coins as well. I am very proud to say that 32 per cent of Canadian gold production is located in Ontario. I have been down in the mines and have seen what is going on there. I am very glad the world price of gold has stimulated the reactivity of some of these mines and made it profitable to open others, and they have become very profitable indeed.

The Canadian Maple Leaf coin is well accepted. I have already referred in the House to the matter pertaining to the General Agreement on Tariffs and Trade, of which we are a signatory. It was my judgement that in order to come into compliance with its direction, the tax should be reapplied.

My own feeling is it will have no effect whatsoever on the mining industry or the sale of gold. A member indicated that people can go to Quebec and buy it more easily. That is absolutely true. It may reduce the number of gold coins sold in downtown Toronto or downtown North Bay, but it will have no effect on the amount of gold extracted from Ontario. I am glad to report that industry is thriving and will continue to thrive.

The member for Nipissing, for some reason -- it may have been when the Speaker was not paying direct and strict attention -- wandered off, as he has on a number of occasions tonight, with reference to the budget in general. He talked about table C8 on page 63 and his confusion about the numbers in the pink area of the table, particularly the double-starred numbers.

I know you, Mr. Speaker, my colleagues and other members of the House paid close attention during the budget when I explained that I felt it was necessary to clear off from the books of the province a number of old commitments, particularly those for which we were granting the money to the public structure or facility that owed the money so they could pay us back. It was a left pocket to right pocket to back again, very complex, time-consuming, useless accounting procedure.

At the same time, there were real payments that had to be made such as paying off the Suncor deal, which I decided we should do. In addition, we found there was $90 million that had to be paid for municipal transit for unfunded commitments of the previous government. There were unfunded commitments of a number of hospitals of $15 million and the restoration of cash advances to seven per cent for school boards. Those amounted to $518 million, a special one-time, clean-up-the-books, clean-up-the-act payment, which accounts for the extraordinarily large size of the expenditure outflows of $32,696,000,000.

At the same time, these bookkeeping entries marking down these debts did not involve spending any more money. The money had already been spent years ago in grants to colleges, universities, conservation authorities, the Ontario Housing Corp. water treatment and waste control facilities, the Ontario Development Corp., the Urban Transportation Development Corp. -- by the way, how did Kirk Foley get the extra money? -- the Ontario Energy Corp., the Liquor Control Board of Ontario and so on.

In writing down those debts, since no new money was found, it simply did not cost us money and so therefore it had to be shown as a nonbudgetary revenue. The total of balanced nonbudgetary revenues for budgetary expenditures was $3,181,000,000. That amount, when added to the ordinary revenues in the budget plan on table C8, makes the amount of $30,483,000,000 the opposition House leader referred to.

10 p.m.

I want to point out that the cash requirements this year were $1,695,000,000. This is lower, not much but somewhat lower, than the cash requirement last year. We had to put in the other column because, for a special one-time-only cleanup of the books and the settlement of the Suncor fiasco, we had to spend the extra money. That is the explanation for those two columns.

When next year's budget comes along, if I refer to both numbers, it will be because both numbers are public. They have been well explained and should be understood. Whether the member accepts the procedure is his business. As Treasurer, I have put it forward and will refer to it again.

I also want to point out that the changes in the sales tax will have a negative effect on our revenues. We are reducing our revenues in this way, which makes it difficult to comprehend why the official opposition -- now gathering in slightly larger numbers as we approach 10:15 than the stalwart group of six that was here calling for a quorum at eight o'clock -- would think of voting against it, since this is a reduction in public revenue.

To vote against a reduction in taxes simply does not make sense to me, and I have had considerable experience in opposition. It may make sense to the present opposition. They will have lots of time, many years indeed, to mend their ways. Lesson 1: If taxes are going down, one votes for it; if taxes are going up, one votes against it. It is quite easy, so bear that in mind. In this instance, taxes are going down.

It seems to be eminent good sense on the part of the New Democratic Party, which as usual is using its good judgement in supporting the government on this --

Mr. Foulds: The Treasurer goes too far.

Hon. Mr. Nixon: I am sorry. I take that all back.

I simply indicate to the opposition House leader that when his colleagues finally do sift in, he might turn around and say: "In this case, we are supporting the government. Taxes are going down." That is when one votes for the tax bill. On that basis, I feel sure this bill will get the unanimous support of the House.

The Deputy Speaker: Hon. Mr. Nixon has moved second reading of Bill 47, An Act to amend the Retail Sales Tax Act.

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.

Bill ordered for committee of the whole House.

LAND TRANSFER TAX AMENDMENT ACT

Hon. Mr. Nixon moved second reading of Bill 48, An Act to amend the Land Transfer Tax Act.

Hon. Mr. Nixon: This bill implements the proposals contained in the budget of October 24, as well as containing some administrative amendments. The basic tax rates are increased to one half of one per cent on the conveyance of property valued up to and including $55,000 and one per cent on the remainder of the value. One has to go down to the county to get houses that cheap. The current rates are two fifths of one per cent on the value up to and including $45,000, and four fifths of one per cent on the remainder.

For the conveyance of property containing one or two single-family residences valued at more than $250,000, the bill imposes an additional tax of one half of one per cent on the portion of the value in excess of $250,000 -- also to be found down in Prince Edward.

This additional tax will not apply to a single-family residence on a farm eligible for a farm tax reduction rebate. A refund of the additional tax paid can be obtained where, within three years of sale, the land is used in farming and the purchaser becomes eligible for a farm tax reduction rebate. Sales of apartment buildings and other residential rental buildings containing more than two units are exempt from the additional tax.

As I have mentioned, the bill also contains certain administrative amendments. Included among these are measures to simplify the objection process. For example, the time for a taxpayer to object to an assessment is extended to 180 days from the current 90. Provision is made to extend the time limit where special circumstances prevent the taxpayer from meeting it. Other administrative amendments provide for certain housekeeping changes.

Mr. Dean: I will be very brief, in view of the hour. Again I would like to say that I agree some of the elements of the bill are eminently sensible. The change outlined in section 1 is a good move, in that it includes a structure as well as the land when the building contract is part of an agreement to sell the land. That seems to make sense and is a justifiable addition to the application of this tax. It is also justifiable to exempt the bona fide farm residence and the land that goes with it as the Treasurer has just outlined.

However, the change in the size of the land transfer tax has to give us pause. Granted, it is not a superhuman amount, but nevertheless it sends the wrong kind of message to people, especially young people who may be contemplating buying a house. Anything that adds to the down payment is bad and counterproductive.

Many people, especially young home buyers, need every break they can find to make the down payment. This is not a good signal to people who may be looking forward to the biggest purchase they will ever make in their lives. It appears the government is discouraging them, even if incrementally, by saying, "We are going to continue to raise the level of the tax on the land transfer."

Many people do not consider it when they first go about the business of looking for a house and have the unpleasant surprise of having it tendered along with the solicitor's bill when it comes to the final clearing up of the adjustments. It is not a desirable step in this case to raise that level of tax, and therefore we will not be supporting the bill.

10:10 p.m.

Mr. Foulds: We will be supporting the bill. I understand the basic level of taxation has not been raised since 1977. It does not seem an inordinate amount to pay: one half of one per cent on $55,000 or less, and one per cent. However, I have some questions on the bill I would like answered.

I genuinely do not understand, and it is not a rhetorical lack of understanding, why the bill does not apply to apartment buildings. I wonder if the Ministry of Treasury and Economics officials have done a run to see what kind of revenues would be gained if it did. I would like to know what loss of revenue is involved there.

I would also like to know, because I have not had time since the budget to read thoroughly the Land Transfer Tax Act in its entirety from the beginning, whether this bill applies to the transfer of condominiums.

Those are the questions I would like answered at some stage during the debate on this bill.

Mr. Runciman: I am not in support of the bill, the proposed tax increase, but perhaps the most revealing element in this process is the New Democratic Party's support of legislation such as Bill 48. That is the party that purports to stand up for the little guy. It is standing up but it is standing up with a Liberal government to help it apply another kick in the shins to low-income and moderate-income, first-time home buyers in this province.

Those members should be ashamed, but they have no shame and very few principles. They flushed most of those down the drain last spring, and now they will support virtually anything to delay an election in the vain hope that some miracle is going to come along and save them from their inevitable fate at the polls.

Interjections.

Mr. Runciman: Music to my ears.

Mr. Speaker: Order.

Mr. Runciman: This government is doing everything it can to emasculate the housing industry, and Bill 48 is just another nail in the coffin. Instead of bringing in tax increases, we should be providing incentives for home buyers, especially for low-income, first-time home buyers. People in the lower income brackets are already facing a steady decrease in accommodation options, and this bill will only exacerbate an already difficult situation.

Bill 48 is an error, one of many this government is making with the aid of the PSP, the phoney socialist party, or if one prefers, the principles-for-sale party. I hope this bill receives the fate it merits: defeat.

Mr. Pierce: I stand to address the regressive tax known as the land transfer tax. At a time when our economy demands more affordable housing, this tax, regardless of its limits, does nothing to enhance the housing construction industry.

The housing construction industry promotes jobs not only in housing construction but also in the industries that provide the materials necessary to build houses. In addition, affordable accommodation will be affected. The tax further restricts any home owner from improving his standard of housing, thereby restricting the opportunities of making affordable housing more available to first-time home buyers.

At a time when I believe this government is trying to generate activity in the construction industry, I fail to see how this tax moves towards that end. We know there are people out there who would very much like to upgrade their standard of living by moving into more expensive housing. We know that by moving up, these people would be making room for the first-time home buyers.

One of the main problems facing any home buyer is the upfront cost related to the purchase. The buyer generally knows the amount of money he has available for the down payment, the legal fees, the cost of moving from one residence to another and the purchase of furniture, drapes and rugs that are necessary for moving into his new home. The province realizes the taxes generated from all the incidental items purchased for the new home. I fail to see the need for a further tax on the transfer of a piece of land when one already contributes taxes in many other forms.

I urge the Treasurer (Mr. Nixon) to reconsider the tax and to make the appropriate changes to have the changes withdrawn from Bill 48.

On motion by Mr. Pierce, the debate was adjourned.

Mr. Speaker: The House agreed to defer two divisions, one on Bill 45 and one on Bill 46. As there was agreement for this division, the bells can ring for up to 30 minutes.

10:25 p.m.

CORPORATIONS TAX AMENDMENT ACT (CONTINUED)

The House divided on Hon. Mr. Nixon's motion for second reading of Bill 45, which was agreed to on the following vote:

Ayes

Allen, Bossy, Bradley, Bryden, Callahan, Caplan, Charlton, Conway, Cooke, D. R., Cooke, D. S., Cordiano, Curling, Eakins, Elston, Epp, Ferraro, Fontaine, Foulds, Fulton, Gigantes, Grande, Grandmaître, Grier, Haggerty, Hayes, Henderson, Kerrio, Knight, Kwinter, Laughren, Lupusella, Mackenzie, Mancini, Martel, McClellan, McGuigan, Miller, G. L, Morin, Morin-Strom, Munro;

Newman, Nixon, O'Neil, Offer, Peterson, Philip, Poirier, Polsinelli, Pouliot, Rae, Ramsay, Reville, Reycraft, Ridden, Ruprecht, Scott, Smith, D. W., Smith, E. J., Sorbara, South, Swart, Sweeney, Van Horne, Ward, Warner, Wildman, Wrye.

Nays

Andrewes, Ashe, Baetz, Barlow, Bennett, Brandt, Cousens, Davis, Dean, Eves, Fish, Gillies, Gordon, Gregory, Guindon, Harris, Hennessy, Jackson, Johnson, J. M., Lane, Leluk, Marland, McCague, McFadden, McLean, McNeil, Miller, F. S., Mitchell;

O'Connor, Partington, Pierce, Pollock, Rowe, Runciman, Sterling, Stevenson, K. R., Taylor, Treleaven, Turner, Villeneuve, Yakabuski.

Ayes 67; nays 41.

Bill ordered for committee of the whole House.

10:30 p.m.

INCOME TAX AMENDMENT ACT (CONTINUED)

The House divided on Hon. Mr. Nixon's motion for second reading of Bill 46, which was agreed to on same vote.

Bill ordered for committee of the whole House.

SUMMER WAGES

Mr. Speaker: Pursuant to standing order 28, the question that this House do now adjourn is deemed to have been asked.

The member for Sault Ste. Marie has given notice of his dissatisfaction with the answer to his question given by the Minister of Natural Resources concerning tree-planting contracts. I remind the member he has up to five minutes.

Mr. Morin-Strom: I am pleased to have the opportunity to explain my dissatisfaction with the statement today by the Minister of Natural Resources (Mr. Kerrio) on tree-planting contracts and unpaid wages. On October 24, I asked the minister what he would do to help out the youngsters who worked this summer to help his ministry plant trees in northern Ontario. How will they get compensation for the work they have done on behalf of his ministry?

At that time he said he would look at the matter in detail and report back on how we might be helpful to those young people. His official statement to the Legislature today on this issue is totally unsatisfactory. He has promised changes in practices and procedures for future summers, but that does not help the young people who worked on behalf of Ministry of Natural Resources this summer for up to three months but never got paid. He claims the Ministry of Labour has looked into all complaints and had a good degree of success in obtaining wage arrears.

In October he said orders were issued to two contractors to pay $3,000 owed to employees -- $3,000; he cannot be serious. Today I talked to two students in Sault Ste. Marie who were each waiting for nearly $3,000 individually in wages owed. In Sault Ste. Marie there are more than 70 young people who were not paid for their work this summer. From this one contractor alone, there are about 150 young people and native Canadians across northern Ontario who have not been paid.

This is a travesty of justice which must be corrected. This minister says the government had "a good degree of success in obtaining wage arrears." With two per cent being a success rate, I would like to know what qualifies as a failure for this government. After reviewing the evidence, any objective observer would have to come to the conclusion that it is just as much the government's fault as that of the private contractors. It was student manpower which originally sent these young people up north to work, without knowing the living conditions and the competence of the employer and the MNR.

We have the MNR, which hired a contractor who apparently was not capable of managing the contract. We have the MNR employees, who monitored the contract on virtually a daily basis on site. These inspectors approved the work done with a performance rating of around 90 per cent overall. The MNR employees also confirmed the contractor's contention that there was a problem with some of the invoices but that the contractor would get paid once the jobs were completed. There was no suggestion from MNR that the students would never be paid. The students had their room and board provided and they saw money coming in to pay for food, gas and equipment repairs. Most of them did not doubt they would be paid. After all, they were working on a government contract.

We also had the Ministry of Labour, which recently told the students that money is being held until the contractor brings in papers telling them how much he owes each person. The ministry called the contractor three weeks ago but has not been able to find him since. I bet he would be found if he had a speeding ticket.

I would like to read a quote from one of the 150 young people who are being treated so unjustly in this case. This is just one contractor out of six, I should point out. This student had his letter to the editor of the Sault Ste. Marie Star published yesterday:

"I have lost a lot of faith in these government agencies that cannot handle a small problem like this. But maybe I am to blame. I voted for this government."

I ask the minister to reconsider his response today. Virtually all the trees contracted were planted. These trees are now growing, but our young people who did a job for the government have not been paid. The minister has a responsibility to them and to all of us. He should live up to it.

Mr. Speaker: The minister has up to five minutes to respond.

Hon. Mr. Kerrio: I share the disappointment of the member for Sault Ste. Marie in this particular instance.

Mr. Pierce: A bloody injustice.

Mr. Rae: Disappointment? It is a bloody injustice, that is what it is.

Mr. Speaker: Order.

Hon. Mr. Kerrio: I have something to share with the members. if they want to hear it, I am prepared.

The fact of the matter is the member is accusing this minister of doing something that was entered into by that government.

Mr. Wildman: We are asking you to fix it up.

Mr. Foulds: He is the government now.

Hon. Mr. Kerrio: Just wait a minute. Did the member hear me interjecting when his man was up making his pitch?

Some hon. members: No.

Hon. Mr. Kerrio: He is darned right I did not because it is a serious problem, and I do not think all those people should be over there yelling until they hear what I have to say. If they want to listen, fine, and if they do not, I do not even have to answer the question. How is it going to be?

I have to tell the member that the contracts were entered into by that government. I inherited them. I have a great deal of experience in this field. I have shared with the people on both sides the fact that I am going to do everything I can to change these contracts so this will never happen again. I made that promise, and I will fulfil that promise.

In answering directly, a few things have to be taken into account as well. While we are dwelling on the unfair situation that developed with these people, there were some 90 contractors, many of them good contractors, who did an excellent job and paid many hundreds of people who worked, so things have to be brought into perspective.

I would share with the member the fact that the Ministry of Labour was made aware of this, and this is the report it has brought forward. The fact is the employment standards branch has a great deal more success than the member gives them credit for. I will not go into the preface here, but I would say that Bark Reforestation Ltd. has been investigated, and in September, wage arrears of $14,377 for 11 employees were collected and distributed. Other claims are going the same route, such as one on October 18, 1985, for $20,000 on behalf of 416 employees. Natural Resources is withholding $22,900 payable to William Clark pending settlement of the case.

There have been good things done. It is not good enough, but I am telling the member we cannot straighten out situations that have been developing over 42 years with a government that could not care less about the employees. That is not going to happen now.

I want to share with the member the fact that experience is going to show that next year, before these contracts are let, there is going to be enough holdback, there is going to be enough bonding and there are going to be enough guarantees that this will not happen again.

10:40 p.m.

Mr. Speaker: The member for Fort William (Mr. Hennessy) has also given notice of his dissatisfaction with the answer to a question given by the Minister of Natural Resources. The member has up to five minutes.

Mr. Hennessy: It is all very well to use the former government as a scapegoat, but they cannot keep that up for ever.

Mr. Callahan: Why not?

Mr. Hennessy: I guess they will. Why not? That is it. They will probably keep it up, but with all due respect, the minister said he shares the disappointment. How about the young people who worked all summer? Are they not disappointed? Let us be honest about it. They may be depending on that money to go back to school or to help out their families. The minister says, with tears in his eyes, that he is disappointed. I am sure the many youngsters who called me in regard to this are not very happy with the decision or with the way things have been handled.

The minister mentioned tonight that all of a sudden, out of the clear blue sky, $22,000 is available. That was not mentioned the other day when I asked the question; it was not mentioned until tonight. Did he have it in his sock?

The students who leave school are very ambitious to work, and they work very hard planting these trees. At the end of the year, they have to go chasing from one area to another to try to get their money. Finally, they have to go to their members to see whether they can get the money for them. It is not fair. It is possible that it is not the minister's fault, but as the minister he has to assume responsibility; he cannot blame the guy next door.

I also think, with all due respect, that when the contractors sign, half of them are fly-by-night operators. Two or three of them get together, and the first thing one knows they get all the money, leave town and forget about the youngsters who worked. I would suggest that this government shares some responsibility and should perhaps reimburse these young fellows and these young girls, because it is not that much money.

Hon. Mr. Wrye: I do not believe what I am hearing.

Mr. Hennessy: Does the member want to stand up and speak? When they asked him a question the other day, he did not know what the hell to say. Now he is laughing.

Mr. Speaker: Order.

Mr. Hennessy: When he was in opposition he was the greatest socialist I had ever seen. Now, all of a sudden, he is on the government side and he wants to pinch every penny.

An hon. member: He sounds like a Tory, does he not?

Mr. Hennessy: I do not know. He looks like Santa Claus, but he is not a Tory.

Many people in northwestern Ontario are very disappointed in the lack of protection they are receiving. We are dealing with young people who are just starting out in the world. I would ask this government to give serious consideration to reimbursing them. If the ministry has $22,000, perhaps it could send them a Christmas present with a Christmas card and include their cheques.

These people who do not pay should be prosecuted to some extent. After all, they are depriving these youngsters and not paying them for the job. If we did not get paid, we would all be marching out in front with signs tomorrow morning.

With all due respect, I think the minister should give this serious consideration. I am very concerned about the welfare of these students and I think they are more or less eagerly waiting to see whether something is going to be done. With all due respect for what the minister says about the former government, when it had this problem the last year or two, it was settled.

Mr. Speaker: The minister has up to five minutes.

Hon. Mr. Kerrio: I would like to share the facts with the minister from Fort William.

Mr. Hennessy: Thank you very much.

Hon. Mr. Kerrio: Excuse me. From Sault Ste. Marie.

Mr. Hennessy: Go home.

Hon. Mr. Kerrio: Where is the member from?

Mr. Hennessy: The minister should come up to my riding and say that.

Mr. Speaker: The member for Fort William.

Hon. Mr. Kerrio: I thought that was what I said, Mr. Speaker.

Mr. Speaker: You said "the minister."

Hon. Mr. Kerrio: I would like to share with the member the fact that I will not in future, when I am in charge of developing new contracts, ever make any excuses for contracts I had nothing to do with. The member is talking about making someone a scapegoat. I am talking about the fact that I inherited the contracts we are dealing with. I am not talking about something I had anything to do with. I will not accept that part of the responsibility.

The members who have brought forward concerns about the young people, especially those who have been --

Mr. Wildman: It is a new minister, but it is the same ministry.

Hon. Mr. Kerrio: I do not accept that, either. I am suggesting that when I am in charge of the kind of situation that is going to bring contractors into play, there will be proper protection.

The very important point I want to make, which the member is not willing to listen to, is the fact that when the new contracts are let, we are going to have every potential contractor appear at briefings. There is going to be a test and prequalification. Anyone with whom we have had any trouble in the past is going to be disqualified; as well, the other ones will be prequalified. We are going to be certain because of the high labour content that a 10 per cent holdback is not adequate in these kinds of contracts. That should have been done before.

No one can be protected fully in this society. There are many people on those benches over there who have studied law who know that someone could come in to do something on a person's house, and if he is not careful in making sure that the materials and so on are paid for, there could be a lien against his home for labour and/or materials and he would not be aware of it. Those are the kinds of things that were not protected in the former contracts.

I am also willing to share with the member tonight the fact that we will do everything in our power to collect those wages from those contractors who defaulted. I am also willing to make a commitment here tonight that we will go further than that and do something in a monetary way for those young people who have been taken advantage of.

The House adjourned at 10:47 p.m.