The House resumed at 8 p.m.
CORPORATIONS INFORMATION ACT (CONTINUED)
Resumption of the adjourned debate in committee of the whole House on Bill 136, The Corporations Information Act.
On section 3:
Mr. Chairman: Could the committee come to order please? When we rose at 6 o’clock, we were dealing with Mr. Renwick’s amendment. Is it the wish of the committee that I read it or is everybody well aware of what it contains?
Those in favour will please says “aye.”
Those opposed will please say “nay.”
In my opinion, the “ayes” have it.
Mr. Moffatt: You need five people.
Motion agreed to.
Mr. Cassidy: Mr. Chairman, I have a couple of sections. They’re both amendments to section 3(3). The member for Fort William is going to move one of these and I’m going to move the other.
I would move that a new section 3(4) be added to Bill 136.
I’m sorry, Mr. Chairman. The member for Fort William should go first. He has an amendment to section 3(1).
Hon. Mr. Auld: Where is he?
Mr. Angus: I move that a section 3(1)(g) be added to Bill 136 as follows:
“The name, head office location and principal place of business of any corporation and the name and resident address of any person
“(a) which holds directly or indirectly five per cent or more of any issue of share capital of the corporation; or
“(b) in which the company directly or indirectly holds more than five per cent of any issue of share capital and the percentage of shares held in each case.”
Mr. Moffatt: Mr. Chairman, on a point of order, Is there a quorum?
Clerk of the House: There is not a quorum present, Mr. Chairman.
Mr. Chairman called for the quorum bells.
Mr. Chairman: Order, please. We will proceed with the discussion on Bill 136.
Mr. Angus moves that section 3(1)(g) be added to the bill as follows:
“The name, head office, location and principal place of business of any corporation and the name and resident address of any person
“(a) which holds directly or indirectly five per cent or more of any issue of share capital of the corporation; or
“(b) in which the company directly or indirectly holds more than five per cent of any issue of share capital and the percentage of shares held in each case.”
Mr. Drea: Mr. Chairman, before the member starts I have not got a copy of that.
Mr. Angus: You haven’t got a copy? I am sorry, I did send you one by the page.
The purpose of the amendment is to ensure that corporations file information that will indicate whether or not they are involved in other corporations, or whether the individual shareholders are involved in other corporations, so that upon examination based on the other aspects of the bill that a government ministry, for instance, could ascertain whether or not there is a conflict between competing companies in terms of government bids. It can also give an indication of vertical integration. And we believe strongly, and we hope that the Liberal Party will accept our resolution, that this kind of information is necessary in order that the government of the day can have a reasonable control over the commerce of our province.
Some of you I am sure will say that this is an infringement upon privacy and I really don’t feel that that is so. I think that if a company or an individual is doing business in a very honest way and in a method that is beneficial to the province and to the country as a whole, then there is nothing that they have to hide. I think in terms of their competitors it is important that they know if there is conflict within their own jurisdiction so that they may evaluate their own programme.
And so, very briefly, I would ask that the members opposite me, as I stand this way, will accept our amendment or possibly the government themselves, so that we may have a truer situation in terms of corporate information.
Mr. Cunningham: Just to reiterate the thesis of this bill I think it is twofold, if I am not mistaken. One was, albeit, to minimize the expense that was involved I think on a regular basis to private and public companies filing a return and, more importantly and more significantly, I think, to save the government the money of compiling all the forms.
I was supportive of the original amendment by Mr. Renwick. I think it would be in the best interests of the people of Ontario to know just who the companies are and whether in fact the directors were Canadian and just where they operated from. But I find this amendment that is before us at this time to be not only redundant but contrary to the thesis of the bill as it stands before us today.
One thing that really bothers me is that I think this would in fact increase tremendously the amount of government involvement, the expense, and I don’t think we would gain the kind of information that we really require. I think that Mr. Renwick’s amendment would satisfy our needs in that regard, especially as it relates to interlocking directorships.
Just to summarize, I would find it ex post facto by nature; it’s contrary to the nature of the bill and --
Mr. Angus: Ipso facto?
Mr. Cunningham: Pat Lawlor told me all about it one day at lunch.
Mr. Chairman: Would the member refer to other members by their constituency name rather than their own name?
Mr. Cunningham: My friend from Lakeshore --
Mr. Wildman: The member for ipso facto.
Mr. Cunningham: To summarize, I think it would be a great expense to the government of Ontario and through it of course to the taxpayers. At the same time a publicly owned company that traded shares in the stock exchange could be involved in an application process on a continuing basis if this were to be passed and I would find that to be of significant expense. To that end I don’t think that we can support this.
Mr. Cassidy: I would speak to this partly out of my experience as a financial journalist over 10 or a dozen years both in this country and also in Great Britain. The privilege of limited liability is surely met by certain responsibilities. And I know as a journalist, I know as a member of the public and now I know as a politician the kind of difficulties that one has when one tries to pierce through the corporate sector to find out what’s really happening there on matters which affect the public in general.
I also know from experience, and I think many members know this as well, that the ferocity with which the corporate sector fights against efforts to get a minimum of information about their activities into the public domain, surely indicates the value that they see in having the secrecy which they currently enjoy. I would suggest that their desire for that secrecy is not because of a regard for the public interest, but it is because of their regard for their own corporate interests.
I would like to suggest that the principle we have to talk about here -- and I say this to the member of the Liberal Party who just spoke -- is the principle of this amendment; and if the principle is accepted by the Liberal Party, then perhaps we could talk about whether the drafting could possibly be changed.
On the one hand we have to ask whether, in a complicated, post-industrial society in Ontario in the 1980s and 1990s, there is a public need and right to know about such elementary matters as the companies to whom a particular company is related -- both the companies which own shares and perhaps the controlling interest in that company and the companies in which the corporation happens to own a substantial amount of shares. Why is that important? It is important when you need to find out and when you find, as you often do, that you can’t get the information required.
It’s fortunate that the amendment proposed by the member for Riverdale (Mr. Renwick) has been accepted. This will lead to a disclosure of related companies, in a number of cases, through interlocking directorships. However, there will be cases where interlocking directorships don’t happen to exist or where they exist but the companies are not otherwise related. Therefore, the information that will be garnered by that particular route will not necessarily be complete. Nor will we know from that information the degree of interpenetration, or mutual involvement, that exists between two related companies. On the one hand, it could be very slight, almost accidental. On the other hand, it could represent a major interest.
Let’s take a small businessman and see how he is affected by this particular proposal by the member for Fort William. In the first place, many small businessmen don’t even have limited liability and they exist as partnerships or individual proprietorships. But to take those small businesses that are incorporated, the vast bulk of those companies in this province would not he touched in any way by this particular section. Or they would be touched only to the extent that the two or three members of the family who hold a controlling interest in that small corporation would have to declare their corporate interest; it would not be a mystery to anybody anyway.
The typical small businessman in this province does not enjoy the privileges of having a whole range of interlocking corporations with which to help to handle his or her business affairs. Maybe there are one or two subsidiaries because he’s taken on a couple of franchises or a couple of small lines in addition to his main line of business; maybe he’s even got three or four companies; but it goes beyond that for your typical small businessperson.
On the other hand, the small businessman has to deal with a large range of other companies at any point in the week or in the year, and these companies are typically larger than the company run by the small businessman. He is in the business, among other things, of reaching judgements as to the reliability, the honesty and the efficiency of the people with whom he deals. This section is a guarantee that the small businessman and his advisers, if he has them, in case of need can penetrate the corporate veil, behind which his suppliers and some of the companies with whom he’s doing business may be hiding.
We all know the kinds of things that have happened, say with the Holiday Magic group, and with other fly-by-night business ventures that are skirting around the laws put up from time to time by the Ministry of Consumer and Commercial Relations. It is quite typical for them to use long series of interlocking or interrelated companies as means of trying to avoid or bedazzle the law, to prevent legal action, or else to create corporate shells, which in case of need can be put into bankruptcy while the principals take their profits and go off into some other line of business that may become more attractive.
We also know the difficulties that have existed in the past when people have tried to penetrate the corporate veil which has surrounded land speculation. Who is getting the bucks? Who own the property? Does that influence decisions that public officials or private interests may be making in the land market in or around our major cities? We often don’t know.
For the man on the street, that really doesn’t affect him or her directly. It can affect a small businessman. It also affects those people who are out on behalf of the man in the street trying to protect their interests. That includes the press. That includes local chambers of commerce. That includes local citizens’ groups and such like. I would suggest that these are a few examples where your small businessmen and citizens in a community in general would be protected by the knowledge of whether or not companies are related.
To give a final example, let’s take an individual -- not a business person -- who, say, is taking an interest in buying a house or in having some work done on property they may happen to own. Again, in case of need it is important for them to be able to establish whether or not two or three companies that may be coming on and approaching this person and masquerading as independent companies are or are not interrelated. That will affect their judgement about the honesty and worthwhileness of the business deal which is being offered.
I would like to suggest that this particular amendment, which is a good amendment, should be considered as complementary to the amendment that has been passed from the member for Riverdale. I would also like to suggest to the Liberal Party --
Mr. Roy: You don’t know anything about corporations.
Mr. Cassidy: Yes, I do, as a matter of fact. I would also like to suggest to the Liberal Party that if they accept --
Mr. Roy: Your amendment is out of order.
Mr. Cassidy: Then the other amendment was out of order as well.
Mr. Chairman: Will the hon. member please address the Chair?
Mr. Cassidy: Yes, Mr. Chairman.
Mr. Roy: You should know better.
Mr. Cassidy: If the members on my left are prepared to accept that the public has a legitimate need to know in cases where companies benefit from the privilege of limited liability, then I think during the course of this debate we could look at whether that five per cent figure should be 10 per cent or not, and when this information is available by other means. I think specifically of a list of companies which are governed by the Ontario Securities Commission which has relatively stringent regulations to this same effect. When companies are governed under a disclosure regulation under other provincial rules or laws, then we could consider whether they should not also be exempted from this particular clause.
In other words, I am suggesting it’s the principle that is at stake now. The Liberal spokespeople can say whether or not they accept the principle about the public’s need to know. If they accept that principle, then we should go further and talk about the details.
Mr. Good: There are occasions on which it is required that the directors of a company disclose their buying and selling of shares, and this is made available. But why every shareholder of every corporation should have to make public knowledge whether or not he owns over five per cent of the stock of a company to me sounds rather ridiculous and to be carrying the matter of disclosure much beyond its legitimate level. The matter of this buying and selling of shares on the stock market could make such a regulation or rule as this almost impossible to enforce.
The Securities Commission puts out monthly --
Mr. Ruston: The NDP will hire another 10,000 staff.
Mr. Good: -- its tabulations of the acquisitions and sale of shares of all the directors and officers, I believe, as well of every corporation, the insiders within the corporation. At the time of a merger, amalgamation or take-over bid or anything of that nature, the directors have to disclose their interest in the company and their number of shares. There are times when this disclosure is necessary, but to have on record the percentage of the shares owned by an individual, which could change very easily on a day-to-day basis, would be not only an administrative nightmare but it would in my view be something which would serve no useful purpose except to expose the financial standing of the shareholders of a company to public scrutiny. I personally would be opposed to this amendment.
Mr. Roy: I have had occasion to discuss with some of my colleagues the amendment that has been spoken to by the member for Ottawa Centre. It appears obvious from just looking at that amendment itself that it frustrates what the amendment of this Act was intended to do -- to simplify things, to make things easier. For these small corporations, most of which involve families or people involved in limited economic activity, it proposes to stop this charade of having their lawyers every year go through the preparation of minutes -- it was sort of a front -- to some degree a matter of brashness.
So on that basis, if I thought for a minute that there was something useful to be served in supporting this type of amendment, we would be for it. But we feel in so doing, in trying to simplify it with this bill here, we are trying to add on amendments to further complicate things. It just doesn’t make sense, and it’s not logical to us.
If I may say, I feel even from my limited number of years here that as a matter of principle when I find that the NDP or the member for Ottawa Centre is in favour of something, especially when it involves the private enterprise system, there is a presumption for us to be against it. I will tell you that. So on that basis, I have no problem at all in joining my colleagues in not supporting this amendment.
Mr. Angus: I would like to respond to a couple of the comments that have been made -- particularly those by the member for Wentworth North (Mr. Cunningham). He was crying about the need to save money for the small business people and to cut out the paperwork, the red tape and what have you. I would like to point out to the hon. member and to this House that at the most the corporation or business would have to list 20 names. That’s the maximum. If you divide 100, which is 700 per cent, by five per cent, you come up with 20. Now surely that is not going to add reams and reams of paperwork to either the business people or to the government itself.
Mr. Cunningham: What about when it changes?
Mr. Angus: It is not going to cost him any more money because they have to have those records if they want to keep their shareholders informed, and also to match what I believe is the law regarding income tax. I think their arguments are totally ridiculous, if I may say that.
Mr. Roy: What evil are you trying to correct?
Mr. Cunningham: Are you trying to solicit our support?
Mr. Angus: No, I have given up on that. I am working on the government.
Mr. Cunningham: Then sit down.
Mr. Angus: The importance of this amendment, Mr. Chairman, is to ensure that the back-room deals, the back-room agreements, the dummy corporations, can come out into the open --
Mr. Good: There are more back-room deals in the NDP than there are --
Mr. Angus: -- so that the people of Ontario can see who controls what, and in what way they control it. I think that this amendment should receive the support of at least one other party in this Legislature. I think whichever party refuses or if both parties refuse to support it, then I think that they are continuing the secrecy that surrounds corporations, whether they be big or small, throughout this province.
Mr. Angus: And I will say that this type of amendment will not harm the small businesses at all -- the family businesses who have one or two or three shareholders whose names are usually on the application anyway -- because it is a ma and pa situation. If you’re really crying the blues for the small business people then I think you are using that as a smokescreen to protect the big corporations.
Mr. Ferris: Mr. Chairman, just a very brief comment as one who has been involved for about 20 years of filing these returns. I just couldn’t possibly disagree more with my friends to my right that it would simply be a piece of paper with 20 names on it. There is no possible way that any government form that was ever designed would not be done in 19 copies with 17 pages on each one, necessitating 44 guys like me and my staff -- who’ve spent 20 years filing these idiot forms -- to do anything like this. We’re not hiding back-room politics or anything like this; things that are traded on the stock market would necessitate this form being done. I suggest that’s not a very big back room.
Mr. Breithaupt: I was interested in the particular early comments with respect to the view that any of the operations carried on, particularly by these corporations, appear to be a conspiracy generally against what is at least referred to by the members of the New Democratic Party as how they define the public interest. I suggest that nothing is further from the case. In this instance the information which is available has been reasonably asked for, and I think tan be provided in the form with the amendment that has now been accepted by the parliamentary assistant. To have this further amendment accepted, I think, would do nothing to add any real knowledge to anyone, and as a result I certainly could not support the amendment.
Mr. Cunningham: I wonder if the member for Port Arthur would entertain a question here.
Mr. Angus: Fort William.
Mr. Cunningham: Fort William? I’m sorry.
Mr. Angus: Get your geography correct.
Mr. Cunningham: I’ve been there too and I enjoyed it. I’m just wondering on what basis they have this preoccupation with knowing everything about everybody. I wonder if you would favour us with that?
Mr. Cunningham: That was the kind of answer I expected.
Mr. Good: Renwick is going to change his mind. Are you going to change your mind on this one, too?
Mr. Chairman: Order, please. Order.
Mr. Renwick: Mr. Chairman, I think this deserves a brief comment. I think we were doing quite well until the member for Ottawa East spoke, which indicated his usual total lack of knowledge of the bills which are before the assembly because he’s so seldom here.
Mr. Roy: The member for Riverdale is speaking. It is coming from God himself.
Mr. Renwick: This amendment has absolutely nothing to do with what that particular member spoke about when he stood up in the House tonight. He didn’t understand the bill; he very rarely understands any bill. Even if he read them he probably wouldn’t understand them.
Mr. Renwick: This bill doesn’t have anything to do --
Mr. Breithaupt: Like the member for Riverdale’s approach to the last bill; he didn’t understand it either.
Mr. Ruston: You won’t after you finish either, Jim.
Mr. Renwick: -- with more paperwork and that’s what the member was indicating.
Mr. Roy: It’s not that I don’t understand the bill; I don’t understand you, there is a difference.
Mr. Renwick: Just listen. If you can’t understand the written word you may understand the spoken word.
Mr. Roy: Not coming from you.
Mr. Renwick: This bill has nothing to do with additional paperwork, and the amendment which say colleague, the member for Fort William, has proposed has nothing to do with additional paperwork.
Mr. Breithaupt: Just more snooping.
Mr. Renwick: It’s the same piece of information, the same sheet of paper which will be filed. It will simply have two other matters on it. One is, who above has some of the shares of the company -- whether it’s five or 10 per cent is not a matter of great significance -- or who below owns five or 10 per cent of the shares, that’s all. It has nothing to do with more paperwork, nothing to do with filing additional information -- nothing at all to do with that.
Let me deal with the interjection, if I may, of the House leader of the Liberal Party, the member for Kitchener: “Where is the limit to snooping?” I don’t consider that it’s any intrusion on the private affairs of anyone to have him disclose, or of any corporation to have it disclose, whether they hold five per cent or more of a particular corporation.
Mr. Breithaupt: Why is it important?
Mr. Renwick: I certainly don’t consider it snooping to ask a corporation, which hardly has the kind of personality which the Liberals have always endowed on corporations, whether it owns five per cent or more of the shares of some other corporation. There’s no privacy argument that has any validity.
The amendment proposed by the member for Fort William is for practical purposes a complementary and necessary part --
Mr. Roy: Why?
Mr. Renwick: -- of completing the information, which the House in committee passed earlier this evening, dealing with the relationship between directors in particular corporations.
I may say that in all of the deliberations of the select committee on company law, the law was so archaic and so out of date that at no time has that committee ever addressed itself to the question of public disclosure and the extent to which public disclosure should be made, except within a very limited framework which will be introduced in a few minutes by my colleague the member for Ottawa Centre. On one question, and one question only, has public discussion taken place in the select committee about the degree or extent of public disclosures.
I am simply saying that if, as is now required under The Securities Act of the province of Ontario for timely disclosure of significant changes, it is appropriate that companies disclose the shareholdings above and below that have a significant impact on the control of corporations, I do not consider it an intrusion on the privacy either of corporations or individuals to ask people to disclose whether they hold five or 10 per cent or more or whether a particular corporation holds five or 10 per cent or more of another corporation.
That kind of disclosure, whether the members of the assembly approve of it tonight or whether they approve of it five years from now, will in fact come. There will be what we have insisted on at all times, a divorcing of the question of privacy from the question of ownership of corporations which are engaged in manufacturing and commercial operations in the province of Ontario. For those in the assembly who are devotees of the untrammelled free enterprise system, let them just remember that the free enterprise system is founded on a corporate law system passed by democratic assemblies who still have the right to control the extent and degree to which knowledge of those operations is disclosed. There is no such thing as a free and untrammelled operation of corporations in our society. There never has been and there never will be. Let’s understand that.
Mr. Roy: Quit emphasizing the obvious, eh?
Mr. Renwick: As we go into this period when something called “free enterprise” will be touted by the Liberal Party and by the Tory party, let’s always remember what the member for Wilson Heights (Mr. Singer) says: “It’s free enterprise under law.” The law is The Corporations Act, and information about what corporations carry on what businesses, who controls those corporations and who has significant holdings in them, is knowledge that should be disclosed and made available to the public. Those who don’t want to comply with that kind of provision can get out of the commercial and business world. It’s just that simple.
Mr. Roy: With you guys in power, you would drive them out.
Mr. Good: Just as they did in British Columbia under Barrett.
Mr. Renwick: I give my tribute to the Liberal Party. They were trapped at least earlier this evening --
Mr. Breithaupt: By whom?
Mr. Renwick: -- but I give them full credit for their co-operation on the first amendment.
Mr. Cunningham: It made sense.
Mr. Kerrio: It made sense.
Mr. Breithaupt: It made abundant sense.
Mr. Renwick: It not only made sense, but you were co-opted five years ago --
Mr. Ruston: You did a better job on the other one, Jim.
Mr. Renwick: -- to support it and it would have been impossible for you not to do it.
Mr. Ruston: You are not doing a good job on this one. You did a better job on the other one.
Mr. Renwick: I’m saying to you tonight that, by voting for this provision, you will not be deserting your principles or your dedication to whatever enterprise system you may be dedicated to from time to time, either in Ontario or in Ottawa --
Mr. Renwick: -- because the Liberal government in Ottawa has passed much more stringent components of financial disclosure in all of the areas where this right-wing faction of the federal Liberal Party finds it difficult to accommodate itself.
Mr. Ruston: You’re the left-wing faction, are you, Jim?
Mr. Roy: He is out of order.
Mr. Ruston: Which side are you on?
Mr. Reid: I would say he is straying from the bill.
Mr. Ruston: Are you a right wing or left wing?
Mr. Breithaupt: He is sort of centre of the bird.
Mr. Renwick: Can you imagine the members of the Liberal Party in the Ontario Legislature sitting in the Parliament of Canada, in the House of Commons?
Mr. Breithaupt: It so happens we are not. We are having too much fun here.
Mr. Renwick: The Liberal government introduced a bill such as The Foreign Investment Review Act, or the CALURA legislation, and here they are bucking against a mere simple amendment, which says that if you own more than five per cent in a corporation, or the corporation owns more than five per cent you’ve got to put your name on a piece of paper.
Mr. Roy: We are masters of our own destiny right here.
Mr. Renwick: Can you really belong to the Liberal Party of Canada?
Mr. Reid: No, we belong to the Liberal Party of Ontario. We are not a monolithic bunch like you are. Could we have a little order please, Mr. Chairman?
Mr. Renwick: Or is the Liberal Party in Ontario the equivalent of the appendix in the human anatomy, an unnecessary residue of some prehistoric time?
Mr. Reid: Don’t knock it. You have got some of the missing links.
Mr. Cunningham: On a point of order. Mr. Chairman, maybe you can give me some direction on this. Personally, I’m in a great quandary here. I don’t happen to think the amendment is in order, given the nature of the bill. I hardly think this discussion was in order. I wonder if you could give us a ruling.
Mr. Reid: Say he is straying from the principle of the bill.
Mr. Chairman: We have an amendment here to section 3 of bill 136.
Mr. Good: Would you rule whether or not the amendment is in order?
Mr. Renwick: I was searching today for the seat of my colleague, the member for Wilson Heights, in order to pay an election bet to him. and I ran across that powerhouse from the front row of corporate legal talent, the member for Ottawa East, the member for Sarnia (Mr. Bullbrook) and the member for Wilson Heights, all sitting side by side, and yet not a single one of them is prepared to say that the people in the province of Ontario are entitled to know on an annual return who owns five per cent or more of the stock of a particular corporation or whether that corporation owns five per cent or more of the stock of another corporation.
Mr. Roy: You are not doing a good job at all.
Mr. Chairman: Will the member for Riverdale address himself to the amendment and while doing so address the Chair?
Mr. Ruston: You didn’t do very well.
Mr. Renwick: Thank you, Mr. Chairman.
Mr. Chairman: Does any other member wish to discuss this amendment? Are you ready for the vote?
Mr. Drea: Are they all done? I don’t want to be redundant on this amendment. There have been some very eloquent and very sensible statements made by the member for Wentworth North, the member for Kitchener, the member for Ottawa East, the member for London South and the member for Waterloo North. They have very amply stated the case as to why the government should not accept this kind of amendment.
Mr. Chairman: Order, please. Those in favour of Mr. Angus’s amendment will please say “aye.”
Those opposed will please say “nay.”
In my opinion, the “nays” have it. I declare the amendment lost.
Mr. Renwick: We’ll stack it.
Mr. Breithaupt: Do whatever you want with it.
Mr. Chairman: Are there any other comments or amendments to any other section of the bill? If so, which one?
Mr. Cassidy: Mr. Chairman --
Mr. Roy: Here we go, the expert again.
Mr. Good: Listen to this one.
Mr. Chairman: Mr. Cassidy moves that a new section 3(4) be added to the Act as follows: “Every corporation to which subsection 1 applies and which has assets worth over $100,000 or annual sales worth more than $250,000 shall file with the minister, within four months of the end of the fiscal year, an audited statement of profit and loss for that fiscal year and an audited statement of assets and liabilities as of the end of that year in a manner to be determined by regulation.”
Mr. Cassidy: Mr. Chairman, the questions that we have been discussing this evening revolve -- both of these amendments, in fact -- revolve around the question of the public’s right to know in a case where a corporation benefits from the privileges of limited liability. I think we might as well point out that not only does the corporate form of organization provide limited liability and therefore allow a company to bring shareholdings and investments from a much wider range of people than might otherwise take part and to a much greater extent than they might otherwise do, but also a corporation does benefit as well from the corporation tax rules which allow it a number of privileges that are not available to individuals carrying on business, who must file personal income tax returns.
One of the very obvious examples is the fact that a corporation pays a maximum rate of tax of around 50 per cent in this country on its profit, whereas an individual on his or her income can pay a maximum rate of tax that can go up to as high as 80 or 85 per cent if they don’t organize their affairs to minimize their tax. There are a number of other advantages which we give to corporations in this country because we have a government that believes in free enterprise, because the corporation has been proven over a fair amount of time as a relatively efficient means of organizing economic affairs in the private sector.
I don’t want to give a paean to that kind of thing, I just want to say it is true that in administrations of all ideological stripes, some kind of corporate form of organization has been found to be necessary. One has to ask oneself, however, just how much privilege in terms of secrecy a corporation should be entitled to. The Liberal Party of Canada, through the federal Parliament, has ruled that any company --
Mr. Breithaupt: You mean the government of Canada?
Mr. Cassidy: -- the government of Canada, through Parliament, when it was under the control of the Liberal Party of Canada, because it has a majority --
Mr. Cunningham: Still is.
Mr. Breithaupt: Still is.
Mr. Cassidy: -- has passed legislation that requires that any company with assets of over $250,000 or annual sales of over half a million dollars, I believe it is, which is federally incorporated is required to file annually with the Corporations and Labour Unions Returns administration a statement of its assets and liabilities and a statement of its profit and loss.
The screams that greeted that particular proposal back in the 1960s echoed from Bonavista to Vancouver Island. Yet we have now lived under that regime for a number of years. I haven’t noticed that enterprise has suddenly collapsed from the effort of having to unveil its affairs before the public.
Mr. Breithaupt: We don’t know anything more than we did before.
Mr. Cassidy: No, as a matter of fact, we do. What has happened is that when corporations saw that the writing was on the wall, many companies which had previously been very covert in their activities said, “Okay, if we’ve got to do it we will.” Like good corporate citizens they have sought to live up to the law. There are a number of companies whose accounts were previously private, who now not only file annually with CALURA in Ottawa but in fact have made a point of preparing annual reports, just as though they were public companies, which they make available to suppliers, to creditors and to the interested public. Obviously they are to be commended for doing that.
In Ontario terms the set of limits are a bit high because companies in this province tend to be smaller than they do on a national scale. Therefore the limits that have been proposed in this amendment are $100,000 in assets, or $250,000 in annual sales. I think that the House will agree however, that the limits proposed are commensurate with those that have been successfully used under CALURA.
I think it should also be noted, Mr. Chairman, that some of the companies which currently retain the privileges of keeping their affairs private, despite what I would maintain is a legitimate public interest in knowing what they do, have assets and sales that go far, far beyond those particular limits.
One that the member for Riverdale has been mentioning to me is the T. Eaton Company, Limited, Canada’s largest retail department store chain for many years. I guess we don’t know right now whether they are number one or whether they have been overtaken by Simpsons-Sears. This company, because of its closely held ownership, has been spared the need to reveal to its creditors and to the public in general exactly what its profit position has been over many years.
I think it’s important when we bear in mind this company benefits from favourable tax legislation at the federal and provincial levels, the taxes on the individuals in the Eaton family would be far higher if they didn’t have the benefit of the corporate form of organization.
I think that this is a matter of public interest and I think this is true of any other company. I don’t think that members of the Liberal Party can really disagree given the fact that the Parliament of Canada under the Liberal government --
Mr. Breithaupt: We certainly can disagree and we do.
Mr. Cassidy: Then you disagree with your federal brethren. There’s another split in the Liberal Party.
Mr. Breithaupt: So what?
Mr. Cassidy: They can’t even agree among themselves nor can they agree with their federal brethren.
We think that there is an obligation to the public to disclose, where a privilege is granted by a fiat of this Legislature through The Corporations Act, and we think therefore that this information should be made available. We also believe, and I say this as a socialist, that this kind of disclosure is liable to have the unhappy effect of maintaining and prolonging the enterprise system --
Mr. Roy: Radicals.
Mr. Angus: What do you think we are all about?
Mr. Cassidy: Because it will lead to a healthier corporate economy than we now have.
Mr. Drea: Like England.
Mr. Cassidy: I think it is worthwhile knowing that there has been a very strong school of people who have named themselves liberals, who have in the past fought for disclosure by corporations of their affairs as a matter of the public interest -- and as a matter, also, of the defence of the enterprise system. So not only is it a matter of the public’s right to know, but if the Liberal Party votes against this particular amendment, they may also be voting against genuinely free and competitive enterprise.
Mr. Cunningham: Mr. Chairman, again I would remind the member for Ottawa East that --
Some hon. members: Ottawa Centre --
Mr. Roy: Hey, hey, Ottawa Centre.
Mr. Cunningham: We’ll make sure we get that correct. There is a very significant difference there.
The purpose of this bill really is to revise The Corporations Information Act, 1971, and the principle is -- again, Mr. Chairman, I would ask you to make a ruling on this -- that annual returns are to be abolished and a new return required only where the information is changed. I think the fundamental thesis with this piece of legislation, and I think it’s a good piece generally, is to reduce the amount of government paperwork we have right now.
It wasn’t long ago that some members of this party to the right of me and government members, we were all together on a select committee in Washington. It was very interesting. We sat with a small business committee and the most interesting aspect of that whole junket was --
Mr. Angus: The lady with the corncob pipe.
Mr. Cunningham: -- a great statement by the chairman. That was that the most effective thing they did on an annual basis was wipe out needless government forms. I think every member, even the members of the socialist party, all four of them that were there, were very favourably impressed by that. In fact one member isn’t here right now. I won’t name him but he thought that that was just the cat’s meow. A large meow at that.
Mr. Angus: It is only half the story.
Mr. Cunningham: Mr. Chairman, I find this amendment contrary to pieces of the bill. Certainly all this information basically can be provided through our income tax laws. We have annual returns. They are to be audited. They are available to the province of Ontario; they are available to the federal government --
Mr. Cassidy: Do you want those income tax returns to be made public?
Mr. Cunningham: And I am just wondering, Mr. Chairman, what is this preoccupation with this party to know everything about everybody. Really, I can’t get over --
Mr. Angus: The size of your shorts, Eric.
Mr. Cunningham: Well, Mr. Chairman, that’s the kind of remark I would expect from that member really. They would like to know what kind of deodorant is used, what kind of toothpaste is used. It really I think is indicative of where that party’s going. This party won’t support that amendment. We can’t support it in any way.
Mr. Cunningham: It doesn’t make a great deal of sense to me. There seems to be a preoccupation here with the public’s right to know about every company.
Mr. Cassidy: That is a very important right.
Mr. Cunningham: And when we are talking about a small company here you talk assets of $100,000, sales of $250,000. In my riding that might be a large vegetable stand and I really question this preoccupation with the public’s right to know about these terrible corporate citizens. For the most part most of them are pretty decent people providing a great deal of employment here in Ontario.
Mr. Cunningham: This preoccupation I would say to you, Mr. Chairman, and through you to the members to my right, will result I think in a great cost to every taxpayer in Ontario and that’s what this bill is about. This bill is about reducing the cost of government and that is why we are supporting it and that’s why we are not supporting the amendment.
Mr. Cassidy: Rubbish.
Mr. Roy: I suppose some of my comments on the earlier amendment proposed by the NDP would be applicable here. I must say that I really find strange the unrestrained enthusiasm all at once, especially from the member for Ottawa Centre, to want to know everything, to want to include more forms. I think it is typical -- and I should say typical of that particular party because, like every other party, there are shades in there -- but it’s obvious that the direction of the member for Ottawa Centre is radical socialist. That’s the label and it is obvious every day in the House when he puts forward some of these policies and he tries very hard. I have observed him now for a period of years --
Mr. Cassidy: If you say it, I feel better. I thought I was drifting to the right.
Mr. Roy: I have observed him for a period of years and he tries to mellow. He tries to mellow the approach, the image.
Mr. Cassidy: But deep down you know he is left.
Mr. Roy: The hair has been cut since his first days in the House. He washes more often. He puts on a tie once in a while -- the whole bit --
Mr. Roy: -- but when we get legislation like this his enthusiasm --
Mr. Cassidy: I don’t buy a suit every week.
Mr. Roy: -- is unrestrained. His enthusiasm is unrestrained and there he is -- “the right to know.” I say, Mr. Chairman, we could be convinced of something like this if there was an evil that was being cured. Is there something going on? If we knew that there was an abuse somehow by the corporations in not filing this type of thing --
Mr. Wildman: How can you know whether there is wrongdoing unless the information is public?
Mr. Roy: -- but at no time -- and this applies to the member for Riverdale as well --
Mr. Cassidy: If you create a dark place, the maggots will breed.
Mr. Roy: -- they always talk about high principles and I really thought that that party had got rid of the Waffle party, but I guess not. You still see strains of it when you get something dealing with corporations. And the member for Ottawa Centre -- it’s obvious; the minute he hears the word corporation, it is just like showing a bull red, you know. He goes wild. He goes wild and it is obvious from this type of approach --
Mr. Roy: -- especially when he considers these types of limits here -- $100,000 assets. Why, if your own leader was incorporated, he would have to disclose. Even he would have to disclose! Now I ask you, even you, is that fair?
Mr. Cassidy: Sure. Let him tell everything.
Mr. Roy: Is that fair that he should have to disclose? So I say, Mr. Speaker, it’s ridiculous. I mean corporations have to put in income tax returns every year. These corporations have to put in that sort of statement. What is there about filing statement of profit and loss and statement of assets? As my colleague from Wentworth North has said, this would encompass very small businesses. Anybody who owns a building, anybody who is involved --
Mr. Ruston: Pretty good 50-acre farm.
Mr. Givens: Chicken coop.
Hon. Mr. Rhodes: You mean every teacher is going to have to file?
Mr. Roy: And so on, so I say when you look at the principle of this bill and, I say again, when you consider the member who is proposing it, it’s very difficult for us to support it. I say to the parliamentary assistant, it is not as though we are in love with you. You know that -- and I say that fairly to you.
Mr. Drea: Albert, I would never be in love with you.
Mr. Roy: We try to take an objective approach. We are not in love with him, and certainly we are not going to be mesmerized by the amendment of this particular member. It is radical socialist doctrine and we will have none of it.
Mr. Cassidy: Like Pierre Trudeau. Is that right?
Mr. Angus: Mr. Chairman, I have been pressed into replying to the hon. members of the Liberal Party, because I think once again they are misleading the House in trying to indicate what is not correct.
Mr. Chairman: You can’t accuse another member of misleading the House.
Mr. Angus: Oh. I withdraw that remark, Mr. Chairman. My apologies. It was a slip of the tongue.
Mr. Cassidy: He was accusing them all. They are all guilty.
Mr. Hodgson: He hasn’t graduated to a tie yet.
Mr. Angus: Sorry, I can’t hear your mumbles.
Hon. Mr. Rhodes: Well, he’s not lacking in hair anyway.
Mr. Angus: Mr. Chairman, the members of the Liberal Party have commented that our amendment will increase the number of forms that would have to be filled out. That is not what would occur. The amount of paperwork would not increase by this amendment, should it be accepted by this House. The information that would be received by the government would assist the government in understanding the nature of the corporation.
Mr. Roy: How?
Mr. Good: What would they want to know about it?
Mr. Angus: To the comment regarding the change in paperwork, the fact is that as this legislation now stands you only have to file once every five years unless there is a change. How much of a change will occur between the range? Not very much, I would suggest, for the small businesses.
Mr. Shore: What are you going to do when you run out of paper?
Mr. Cunningham: We are going to microfilm it.
Mr. Angus: They are trying to portray an image of protection of the small businessperson, but really what they are doing is protecting their corporate friends at the sake of the small businessperson, because this amendment will give the small businessperson the ability to find out what those major corporations are doing in terms of gobbling up his competitors, his small business neighbours, so that he can understand exactly what is happening and he can take appropriate actions to counteract that.
Thirdly, there was a reference to the tax forms. If they are already doing these tax forms, then it’s not much of a problem to add photocopies or to recopy them and send them in with this submission.
Mr. Chairman: The hon. member for Riverdale.
Mr. Good: This is the last word.
Mr. Renwick: Oh, it’s not a question of the last word!
Mr. Chairman: Can we have some order, please? The hon. member for Riverdale will please proceed.
Mr. Renwick: Mr. Chairman, the conceptual problem that we are faced with tonight is almost overwhelming in the face of the barracking that’s involved --
Mr. Roy: There is an ideological difference-- you are right there.
Mr. Renwick: I would like to engage the attention of the members of the committee just briefly, at least in a reasonable framework to talk about what we are trying to say to the House. We tried to say it on the first amendment, which fortunately was passed. We tried to say it on the second amendment, which is going to be voted on. We are also trying to say it on the third amendment.
An hon. member: Is the member for London North (Mr. Shore) going to be talking on this?
Mr. Renwick: We are not hung up --
Hon. Mr. Rhodes: You ought to be.
Mr. Renwick: -- on the question of what the arbitrary selection of figures may be within the amendments which are put forward, either on the previous amendment proposed by my colleague, the hon. member for Fort William, or upon the criteria as set out by my colleague, the member for Ottawa Centre, on this amendment. That’s not the problem. The problem is whether there is an obligation to have public information made available by certain companies after they achieve a certain size and a certain economic position in the country. That’s all we are saying. I think the dividing line is very clear. I am quite certain that the member for London North, were he to engage in this debate, would be in agreement with this.
Mr. Wildman: He is trying to be inconspicuous.
Mr. Renwick: For example, in The Income Tax Act of Canada and The Corporations Tax Act of the province of Ontario we have tried and tried and tried to provide a tax situation which would be hospitable to something called small businesses that choose to use the corporate form; and there are definitions which define what the small business is, for the purpose of those deductions.
Yesterday or the day before -- I guess it was the day before -- we passed in this assembly Bill 99, which was an amendment to The Corporations Tax Act, to provide that certain “small businesses” as defined in section 125, I think it is, of The Income Tax Act of Canada, would be entitled to certain preferred tax provisions of The Income Tax Act of Canada -- so that the corporation tax here and the corporation tax in Ottawa would be the same.
The interesting thing is that the government, when it’s collecting revenues, is extremely sensitive and extremely interested as to the distinctions they make. The effect of those taxing statutes is to say that there is a division between companies. Those that fall on the one side are called small businesses and are entitled to certain tax credits, benefits, deductions and other things which are designed to implement the development of small business. They get tax relief because they fall within those definitions. If you don’t fall within them you bear the full range of the corporate tax in the province of Ontario.
What we are trying to say, after many years in the House, is that there is a distinction between small business in corporate form and other business in corporate form. The area where the distinction has been found and embedded in terms which are understandable to business, because they must file income tax returns -- not this minor form -- is in the detailed information under The Income Tax Act of Canada and under The Corporations Tax Act of Ontario. We happen to believe that if government intrudes on private business for tax purposes, certainly the public is entitled to have a modicum of that information available to them.
Mr. Shore: Do you want to make your own return public too?
Mr. Renwick: Yes, I’ll make my own return public. I don’t mind that.
Mr. Shore: You do that.
Mr. Roy: Why should it be public?
Mr. Renwick: All that we are saying very clearly -- you’re not listening, you’re talking.
Mr. Deputy Chairman: Order, please.
Mr. Renwick: Do you want to take the floor?
Mr. Deputy Chairman: Order, please. The hon. member will continue.
Mr. Renwick: If we recognize in the taxing structure of corporations that there are corporations which are entitled to the benefit of something called small business definition, we agree. Those corporations should not be required to disclose information for public purposes which is not required of other companies. If, however, regardless of the form of the ownership or the public participation in companies, you go over a certain line, then you are subject to the full weight of The Corporations Tax Act in Ontario and of The Income Tax Act of Canada.
We’re saying that the dividing line should be the dividing line which is used for the purpose of public information. If you are not a small business for tax purposes, you’re not required to make the disclosure. If you are, then you’re required to make the disclosure. Everyone knows that those are changing concepts, but that’s the concept that we’re talking about.
Mr. Roy: Is that the figure, $100,000?
Mr. Renwick: As long ago as 1967 and 1966, in a select committee of this assembly, all of the arguments were put before us, and this is now almost 10 years ago. Without quoting at great length from the particular chapter of the particular report, I want to say what they said. They at least recognized the merits of the arguments on both sides. The assembly tonight in committee is not admitting that there is any other side than the side that the particular position of this party takes. The others don’t understand that there’s some merit in the argument which we’re putting.
At least a committee of this assembly 10 years ago, when this question was not of such public focus and public attention, had this to say: “A compromise between the proponents and opponents of public filing of accounts might be possible if an accurate and workable statutory definition could be devised to divide the class of companies which should be required to file their financial statements from those which should not be so required.”
The committee understood that there was merit in the arguments for and there was merit in the arguments against. The merit of those arguments still stands, both for and against.
Mr. Roy: We don’t like your amendment.
Mr. Renwick: It’s not a simple proposition. It’s a very definite question of the socioeconomic impact of the corporate form of doing business. The committee then said: “The committee does not recommend that the financial statements of all companies be required to be filed with the Provincial Secretary or at any office of public record.”
We admit that. That’s why my colleague gave certain criteria that companies had to reach before they would he required to make that kind of public disclosure. But the select committee 10 years ago, in an entirely different corporate atmosphere than the corporate atmosphere today, at least recognized merit on both sides.
The only area where this government ever shows sophistication is in the area of whether or not they should collect taxes or otherwise from the corporations. All that the committee said was when there’s a workable definition. That workable definition is now enshrined in The Corporations Tax Act of Ontario and in The Income Tax Act of Canada, and that workable definition for tax purposes is a very good definition which we for public purposes should use for the purposes of public disclosure of financial information for corporations, It’s just that simple.
Mr. Shore: That’s right. It’s just that simple, I’ll buy that.
Mr. Renwick: For the members of the Conservative Party, be they a minority or majority government, or the members of the Liberal Party, be they forever a perennial minority party in this assembly --
Mr. Breithaupt: Don’t count on it.
Mr. Cunningham: Let’s bet on it.
Mr. Renwick: -- whatever those views may be, there is a very significant need for recognition that it is not the corporate structure of a company, it’s not whether or not a particular family controls a corporation or does not control it that is of major significance. It’s the extent and degree to which the sales of the company and the assets of the company, as the criteria of the impacts which they make on the social and economic life of the province, should be measured. The measure for tax purposes in our judgement, until there is a better measure devised, which is significantly substantially what my colleague from Ottawa Centre (Mr. Cassidy) said, should be the criterion which determines whether or not a public filing of financial statements should be made.
Let’s not think for a moment that it’s a great intrusion on anybody to have their financial statements available for a company which is subject to the full impact of corporation tax in Ontario and does not qualify as a small business one because, for the great bulk of people, auditor’s statements in this country are not understandable. So we have still an immense amount of work to do, but at least it would be a start if we required the financial information to be available, because then we might have some public discussion as to whether or not financial statements are designed to befuddle the public or whether they’re designed to provide information.
Mr. Drea: Oh, come on. You design a few yourself. Don’t give me that.
Mr. Renwick: I’m simply saying to the parliamentary assistant to the Minister of Consumer and Commercial Relations that there is a legitimate distinction between those companies which should file and those companies which should not file their financial statements. In this day and age, that legitimate distinction is enshrined in The Corporations Tax Act of the province by reference to the federal Income Tax Act. If it’s good enough for tax purposes, it should be good enough for the public.
I ask the members of the ministry to start to open up their minds a little bit to the needs of the economic society in which we live, and not to retire behind some barricade of secret hidden information which should be public. I’m saying to the parliamentary assistant, read that committee report and hear the arguments on both sides. Understand the merit of both sides, recognize that there is a problem, and if you won’t accept it tonight, come back --
Mr. Roy: Where is there a problem?
Mr. Renwick: -- at some point in time with an acceptance of your version of the definition which is required in order to provide adequate disclosure. It used to be said that we had a private company distinction and a public company distinction. That was irrelevant in this province. It was abolished. But the more sophisticated test, the real sophisticated test, is in your Corporations Tax Act. That’s where it is.
If you want to start cutting down paperwork, look at the paperwork under your taxing statutes and don’t worry about the minor pieces of information which are available to the public under the companies division of your ministry. That’s minuscule compared with the paperwork involved in the impingement by the tax structure which you’ve raised under the sales tax and under the corporations tax to impinge on small business. But at least make the distinction. At least recognize the problem. At least have the graciousness to say there is a problem.
Mr. Roy: What is the problem?
Mr. Drea: I’m trying to figure it out.
Mr. Renwick: If the parliamentary assistant doesn’t understand it, I say he’s taking the position that there should be no public disclosure by any corporation in the province of Ontario --
Mr. Cassidy: That’s right, that’s right.
Mr. Renwick: -- of any financial information. That’s what you’re saying because there is no public disclosure now, and this bill says that there will never be any.
Mr. Drea: Nonsense.
Mr. Renwick: All right, deny it if you will.
Mr. Drea: I just did.
Mr. Renwick: But that’s the position of this government: No financial disclosure of information by any company, of any kind in the province of Ontario to the public; no place where the public can go and get the information.
Mr. Drea: You discovered The Securities Act late in life, didn’t you?
Mr. Renwick: That’s what you’re saying, so far as every company under the jurisdiction of your ministry is concerned. The only distinction, the only exception you make is timely disclosure if you’re going to raise money from the public. That’s the only distinction you make.
Mr. Shore: Whoa, whoa, whoa.
Mr. Chairman: Order.
Mr. Renwick: But most people in this province do not invest their money in corporations. They buy the products and they buy the services and they buy the goods which are provided. They are consumers of the service. They are not investing capital in those companies.
Mr. Ferris: You would put a financial statement on every bar of soap.
Mr. Bain: I like that.
Mr. Shore: You could wash yourself with the statement rather than the soap.
Mr. Wildman: Point of privilege: We have complained a number of times about the sound system in the Legislature. It’s been repeated many limes. I just want to complain tonight that there seems to be an echo in here. When the member for London North talked, it sounded as if the noise was coming from over there, and I really wish we could do something about it.
Mr. Shore: That’s a pretty major contribution you just made.
Mr. Chairman: Order, please.
Mr. Cassidy: Mr. Chairman, there are a few comments I want to make before this amendment goes to a vote. The Conservatives, of course, have been able to sit back during the course of this particular debate and listen to the Liberals do their fighting for them, but we may as well establish that if the government party chooses to oppose this particular amendment, it means it is opposed to the public’s right to know --
Mr. Bain: You bet they are.
Mr. Cassidy: -- that’s right -- basic financial information which underlies the whole corporate system that we have in this province. The point has been made, by the Liberals this time, that they think the aim of this bill is to reduce form filling and they are in favour of the reduction of form filling.
Mr. Roy: Bureaucracy.
Mr. Cassidy: They take a bill which requires very basic information to be filed regularly about companies and they say this is not a bill about companies, this is a bill about forms. What has happened is that they ignore the substance of the bill and are looking at the forms and nothing more. They are throwing out the baby with the bathwater. I would suggest that if they are really dedicated to reducing the number of forms --
Mr. Ferris: That is an original line.
Mr. Cunningham: You jump in with the baby and we’ll throw you out.
Mr. Cassidy: -- if they were really dedicated to reducing the number of forms, Mr. Chairman, they would either have opposed this bill in its entirety and said no small business or no big business should have to file any kind of a corporate return, or they would have taken the sections one after another and they would have struck them out all the way through the bill until there was nothing left to file at all, once the company was originally registered.
Mr. Ferris: Surely you jest.
Mr. Cassidy: That is not ridiculous, that is precisely what the Liberal Party is saying. In fact, Mr. Chairman --
Mr. Ferris: I don’t know where you got your expertise, Mike.
Mr. Cassidy: In case you don’t know, I was a financial journalist for the Financial Times of Canada for a number of years. It’s a well-known socialist newspaper, as I am sure you have grasped --
Mr. Deputy Chairman: Order, please.
Mr. Roy: The measure of your expertise is that you are an NDP member.
Mr. Ruston: No wonder 80 per cent of the newspapers were wrong as to who would win the election, if you are one of them.
Mr. Deputy Chairman: Order, please. I wonder if the member might return to debate the clause by clause, and not be too repetitious.
Mr. Cassidy: Mr. Chairman, the party on my left is very rapidly becoming Canada’s first know-nothing party. There’s a great and honourable tradition down in the States and they are joining in it.
Mr. Breithaupt: We certainly aren’t learning anything from the party on our right.
An hon. member: We will never learn anything from you.
Mr. Cunningham: This certainly isn’t a credit course.
Mr. Cassidy: Mr. Chairman, the aim of the bill is obviously to reduce unnecessary form filling. I would like to see the government in fact engage not just on this particular set of forms but also on the whole range of other forms which are required of small business people. Sometimes there are as many as three and four a week they have to fill in. Constantly the pressure is on and it is all done by small businessmen without outside help. If Eaton’s has to fill in forms, they hire an extra accountant. If the guy who runs a small business on Elgin Street in my riding has to fill out extra forms, it means he has to spend an extra hour or two on a Friday evening rather than spend some time with his wife and kids.
Mr. Breithaupt: It has nothing to do with this bill.
Mr. Cassidy: These are forms which come week after week after week. Let’s look at what is being proposed in this particular amendment. The amendment in the first place doesn’t touch the guy who has a small business on Elgin Street in my riding, because if he is to be required to file, his sales have to exceed a quarter of a million dollars a year or the assets have to exceed $100,000. It has to be substantial.
Second, it requires an audited statement. Those audited statements will be automatically available for any company of that size because they will be audited annually. Their creditors will require them to be audited. All that is required in terms of effort by a business affected by this particular bill is a 10 cent stamp, an envelope and a trip to the post office with the 5 o’clock mail in order to mail it down to Queen’s Park, and nothing more, Mr. Chairman.
Mr. Breithaupt: Why do we need it here?
Mr. Cassidy: That is all. Nothing more than that is required. Yet this is what the Liberal Party and the government are prepared to wrap themselves around -- essential information which is central to --
Mr. Roy: Why is it essential?
Mr. Cassidy: -- the privilege of having a corporation they would deny for the price of a 10 cent stamp.
Mr. Breithaupt: It is not worth the 10 cents.
Mr. Cassidy: I think it is, as a matter of fact. That remark may go down in history when the public of the member for Waterloo --
Mr. Breithaupt: Kitchener is the riding.
Mr. Cassidy: -- is told that the information that they seek to protect them in the marketplace wasn’t worth the price of a 10 cent stamp.
I would be very interested to see what attitude the Liberal Party of Ontario takes when we get to the question of a freedom of information Act, Mr. Chairman. We happen to believe that there should be some daylight on the operations of the government of this province and there should be some daylight on the operations of the corporate sector in this province --
Mr. Roy: Sure, you would abolish it.
Mr. Cassidy: -- and that is what we are trying to introduce in legislation. But it is being systematically opposed by the government and systematically opposed by the Liberal Party and I think the public of Ontario can judge whether daylight or night is what they want for the province.
Mr. Shore: Which one do you fit into?
Mr. Reid: You are asking him where he fits, Marvin? You’ve got to be kidding.
Mr. Makarchuk: Mr. Chairman, I wasn’t intending to get involved in this debate. However, after I sat here and listened to the Liberals on the one hand claim to be the friends of the small businessman and on the other hand be prepared to shaft him immediately and thoroughly, I can understand some of the things that have been happening in this House. They are neither fish nor fowl. I can understand the problem the member for London North had. He had an identity crisis.
Mr. Cunningham: Is he speaking to this amendment?
Mr. Breithaupt: The member for Ottawa Centre was wanting it both ways.
Mr. Deputy Chairman: Order, please. Perhaps the hon. member might speak to the amendment and the section of the bill.
Mr. Makarchuk: The reason I’m up to speak on this particular amendment is that yesterday I had a very corporate-looking gentleman drop into my constituency office.
Mr. Reid: Did he want to buy your boat, Mac?
Mr. Breithaupt: How big a corporation did he have?
Mr. Makarchuk: Ordinarily, my office is not the gathering place for the corporate elite.
Mr. Reid: Wanted to buy your boat, eh?
Mr. Cunningham: He is out of order.
Mr. Deputy Chairman: Order, please.
Mr. Makarchuk: But they did arrive in this case. This gentleman was in rather great distress and the reason he was in distress, and I hope my friends to the left will listen to this, is the fact that he was employed by a firm -- a reasonably large-sized firm with assets over $100,000 at least.
Mr. Roy: We don’t listen to foolishness.
Mr. Breithaupt: And sales were more than $250,000.
Mr. Makarchuk: He was persuaded by the management of the company to invest a sum of $20,000 in the firm. He was told the firm was healthy. He did not have an opportunity to see the details. Of course, this is what we’re trying to do here -- ensure that the financial statements are available. Of course, they weren’t available.
Mr. Reid: He must be NDP. Nobody else would invest without making sure what was going on.
Mr. Makarchuk: I may say this gentleman used to be a Liberal, anyway.
Mr. Makarchuk: The gentleman in this particular case put up his house as collateral and borrowed $20,000, which he gave to the company to receive 10,000 preferred shares in the company.
Mr. Ferris: Send him down for the next campaign.
Mr. Makarchuk: Shortly thereafter the company went into bankruptcy and the Clarkson company was appointed as the liquidator of the assets. The result, of course, was that the Royal Bank of Canada managed to get its money, RoyNat certainly also got its money, and the development corporation got most of its money. However, this gentleman did not get his money. In fact, he’s totally out of the picture. He has written to Clarkson Gordon asking them what happened to this company. How were the shares distributed? Who collected the shares?
This is the kind of information that should be made available to the public. This is the kind of information that we’re arguing about right now. This is the kind of information that, if it was public, would have let the gentleman know what was going on inside that corporation. Obviously you are not prepared to give them that kind of information. That’s the crux right here, that’s what the argument is all about.
An hon. member: Shame on the Liberals.
Mr. Makarchuk: The net result of this, of course, is he did write to Clarkson Gordon. I’ll just read part of the letter. I’ll leave out the name of the company.
“With reference to business loan to [it names the company] to the amount of $20,000 issued by me on April 1, 1975, deposited to the Royal Bank of Canada, main branch, Brantford:
“With your knowledge of the financial situation company, please send me a copy of the financial statement of [name of company], at the time of deposit of the above-mentioned money and the statement at the time of foreclosure. Since I did not hear from you, I was not notified as to my status and the whereabouts of the money. As you know, I have not received company shares. Therefore the invested money is legally treated as a loan to the company. Please let me have your formal statement by return mail.”
Of course, he did receive a letter from Clarkson Gordon:
“Re [the company again] the Clarkson Company Limited was appointed receiver and manager and agent by the Royal Bank, RoyNat and the Ontario Development Corporation. All the assets of [name of company] have been pledged to these parties and on their behalf we are realizing on the assets.
“The amount recovered is not sufficient to pay off secured creditors and each will therefore suffer a significant shortfall. Unfortunately, this also means there are no funds available for the unsecured creditor like yourself. We have now completed our assignment with [company again] and therefore we suggest you look to the company for copies of financial statements.”
Of course, he’s looked all over for copies of financial statements. He’s looked all over to find out where the shares went and he’s in a very desperate situation. Now the bank has called the loan on his house. He is out of a job and has no way to pay for his home. He has a family to support. Here is a reliable citizen who believes in the private enterprise system, I presume. I never asked him that question or how strongly he believes in it or whatever it is.
Mr. Angus: He may not believe it any more.
Mr. Makarchuk: He was prepared to work. He took the chances. He was prepared to contribute and he invested his money. Because the information was lacking, he is out and also, because there is nothing to persuade either Clarkson or the company or anybody else to tell him, he just doesn’t know where to go. They said he could go and get a lawyer. He discussed it with a few lawyers and they said if he put up $1,000 immediately. They look after things very well for themselves, I must admit.
Mr. Shore: Tell him to call me, I’ll help him out.
Mr. Makarchuk: Yes, I am sure you will. I am sure you will.
Mr. Cassidy: Then vote for the amendment.
Mr. Makarchuk: But, anyway, he can’t afford that so he’s out. This is a good example of the kind of service that can be done by legislation to people like this man. And you sit there and laugh and chortle about the whole thing. I think it’s disgusting.
Mr. Roy: Don’t be crazy.
Mr. Makarchuk: You are totally irrelevant to the functioning of this house.
Mr. Chairman: Order, please.
Mr. Makarchuk: You have people who are prepared to do something and all they ask is a fair chance, end you are not even prepared to give that to them.
Mr. Roy: God, you are foolish.
Mr. Deputy Speaker: Order, please.
Mr. Breithaupt: The member for Brantford (Mr. Makarchuk) has given us a situation which is indeed an unfortunate one and I don’t quarrel with that in the slightest.
Mr. Bain: But you are not going to do anything to see it doesn’t happen in the future.
Mr. Breithaupt: But I say that the form of this amendment would have done nothing and would do nothing to resolve that problem any time in the future. The member for Brantford has said that this person to whom he referred apparently was working and involved in a certain company and apparently this person was not aware of loans to the Ontario Development Corporation, to heavy indebtedness to the bank and to the whole difficult situation in which this company happened to find itself.
I suggest to the member for Brantford that if this company had filed financial information that might now be almost a year old, shall we say, or perhaps even a year and a half old, it would give the investor, the person that had come to him, no more information than he should have found out on his own if he was going to invest money in the company. While I regret that this person has lost funds, I see no advantage to be given by having every corporation file information that will not be used either in the ordinary case or even rarely in exceptions.
The problem and the serious problem that you have presented to the House is one which will not be resolved in my view by this particular amendment. I simply do not see how a lot of out-of-date information filed annually will prevent a difficult situation from happening to a certain individual. I just don’t see the benefit that would flow from this amendment to a person who is choosing, as you say, to take a chance and involve himself in a certain financial situation. Of course, he should have received that information. He should have had it in great depth and indeed in greater depth than even this amendment would call for, but I don’t see how this amendment would have resolved that very unfortunate problem.
Mr. Renwick: Just a brief note, I think the member for Kitchener would clearly understand that the public and timely disclosure of financial information for public consumption is a great inducement to honesty, and that’s what happens when you make public disclosure. People are careful. People are honest if people are required to disclose. The information may be old but at least it’s honest and at least it is available.
Mr. Reid: How do you know? Who is going to check it?
Mr. Renwick: Who is going to check it? Most of the statements would be audited by financial auditing firms of chartered accountants who have professional reputations involved in it. It is just that simple.
Mr. Reid: It is a year old. It is like cold potatoes.
Mr. Renwick: That’s why we have gone the route of public timely disclosure under The Securities Act. It is a tremendous inducement to honesty. I say that as an endeavour to answer the comment made by the member for Kitchener about the pitiful situation which my colleague, the member for Brantford, detailed to the House.
Mr. Makarchuk: On that same point, I think that if the member for Kitchener is so convinced that this information wouldn’t help, I’d like to see him talk to the gentleman about this. I’m sure he would tell you that you really don’t know what you’re talking about.
The information may have been, at the most, a year old. But even with information that’s a year old, if you’re involved in a company, as my colleague from Riverdale pointed out, there’s a desire, shall we say a legislative force, to stick to honesty. But even with information a year old, if you’re going to invest money in something it’s helpful information, it’s useful information. Although it may not help to resolve all problems or prevent similar incidents from happening in all cases, I’ll guarantee you that it will help in very many cases, And if we’re going to err, whether we introduce legislation of this nature or not we have to err on the side where we can help this kind of an individual.
Mr. Chairman: If there’s no other member who wishes to participate in the debate, perhaps the member for Scarborough Centre?
Mr. Drea: Mr. Chairman, the arguments have been made for more than an hour on this. I don’t think I could add anything to it. We won’t accept that proposed amendment,
Mr. Chairman: All those in favour of Mr. Cassidy’s amendment will please say “aye.”
All those opposed will please say “nay.”
In my opinion, the motion is lost.
It is stacked.
Any other comments or amendments to any other section of the bill? If so, which one?
Mr. Breithaupt: I was wondering if we could at least put the other two bills before the committee, so that if there happened to be amendments they could be dealt with and, hopefully, we would be able to resolve everything with one voting practice this evening.
Mr. Drea: Mr. Chairman, I don’t think there’ll be any amendments to Bill 137 or Bill 138.
Mr. Lewis: Just on principle we will invent one.
Mr. Drea: If you have one they’re both ancillary to this. One deals with share capital and one without.
BUSINESS CORPORATIONS AMENDMENT ACT
House in committee on Bill 137, An Act to amend The Business Corporations Act.
Sections 1 to 3, inclusive, agreed to.
Bill 137 reported.
CORPORATIONS AMENDMENT ACT
House in committee on Bill 138, An Act to amend The Corporations Act.
Sections 1 to 3, inclusive, agreed to.
Bill 138 reported.
CORPORATIONS INFORMATION ACT (CONTINUED)
The committee divided on Mr. Angus’s amendment to add a clause (g) to section 3(1), which was negatived on the following vote:
Ayes 24; nays 47.
The committee divided on Mr. Cassidy’s amendment to section 3(4), which was negatived on the same vote.
Section 3, as amended, agreed to.
Bill 136, as amended, reported.
On motion by Hon. Mr. Auld, the committee of the whole House reported two bills with amendments and two bills without amendment.
MUNICIPAL AMENDMENT ACT
Mr. Norton, on behalf of Hon. Mr. McKeough, moved second reading of Bill 149, An Act to amend The Municipal Act.
Mr. Swart: Mr. Speaker, I want to make some comments on this bill and to say immediately that we intend to support the bill for the purpose of getting it to a committee of the House, where we hope to make some amendments. I think it’s fair to say that there are some desirable trends in this bill: first of all, to giving more authority to local councils --
Mr. Kennedy: Are you opposed to this bill?
Mr. Swart: -- -and, second, to making local government a bit mere democratic by removing the two-thirds and, in some cases, the three-fourths vote that it takes to pass or change municipal legislation.
This bill also has some merit in that it corrects some things that were wrong in legislation. In fact, it corrects one mistake that was made by the government last year. I want to make the point very clearly, with regard to this bill and the other municipal bills that we’ll be dealing with and with regard to the planning bill we dealt with today, Bill 130, that there has not been adequate consultation with the municipalities and with their organizations.
Mr. Bain: That’s their usual method.
Mr. Swart: They have asked for this year after year. At the PMLC meeting which was held two weeks ago tomorrow, I believe it was, there was criticism made there by the chairman of the regional municipality of Ottawa-Carleton about inadequate consultation and inadequate notification. There was some sort of assurance given him that there would be more time given for consideration by the municipal organizations. Then I found out today that at least one of the major organizations received a copy of Bill 130 just yesterday at the same time as they received copies of the municipal bills with which we are dealing tonight.
I suggest this is not good enough if we want to deal fairly with local government. I ask the parliamentary assistant, because he seems to be handling these bills, if he will assure there is adequate time between the second reading and the clause-by-clause discussion of these bills, so the municipalities and their organizations have an adequate opportunity to make input to these bills.
Mr. Lewis: Withdraw your juggernaut tactics.
Mr. Swart: I also want to say that I have come to the conclusion during the 13½ months I’ve been in this House that the Treasurer (Mr. McKeough) gives very low priority to municipal matters. He, of course, is the minister of almost everything, but to the best of my knowledge, and I think I am right, he has not been in this House on one occasion in those 13½ months when a municipal bill has been discussed.
Mr. Lewis: It is beneath his dignity.
Mr. Swart: This is no reflection on the member for Kingston and the Islands (Mr. Norton), but I suggest that --
Mr. Bain: Not meaning to criticize the member for Kingston and the Islands.
Mr. Speaker: Order, please. The member for Welland-Thorold only. Thank you.
Mr. Swart: I suggest the Premier (Mr. Davis) perhaps should give some consideration to making him Minister of Municipal Affairs --
Mr. Bain: He is already. That’s the next announcement.
Mr. Speaker: Order, please.
Mr. Swart: -- rather than just having the man who’s supposed to be the minister constantly opting out.
Mr. Lewis: What does it feel like to be the lackey to the Duke of Chatham-Kent?
Mr. Norton: It’s a great experience.
Mr. Speaker: The hon. member for Welland-Thorold.
Mr. Swart: I have to say that I strongly support the section of this bill which provides for a municipal code rather than having individual bylaws on every issue in a municipality. This is done in a number of states in the United States very successfully. It was instituted in this country, I believe, in Kitimat -- I think I’m correct in saying that -- and now it has been asked for by the regional municipality of Peel. I think it’s a move in the right direction. It eliminates a lot of repetition of definitions in 40 or 50 or 100 different bills and it consolidates those bills into one code. I suggest it is very valuable.
I think, perhaps too, I support and our party supports the proposal to extend the terms of debentures on disposal systems and on road equipment, doubling the time in which they can pay for these. I would like to point out, though, I am very suspicious of the motives for it. The government more and more is going deeper and deeper in debt, and seems to be encouraging the municipalities to do the same sort of thing. There is at least one other section of this bill which does the same thing -- makes it possible, in fact almost compels municipalities to go deeper in debt.
There is a section of Bill 149 which permits municipalities with a population of over 20,000 to change the interest rate and certain other things on unsold debentures -- at least to vary it from the approval that was given by the Ontario Municipal Board to one-half of one per cent, without having to go back to the Ontario Municipal Board for the second time to make that change.
I want to say that we in our party can’t support the apparent philosophy behind this. Somehow or other the council of a municipality of under 20,000 is not capable of making a decision on its own as to whether it wants to vary interest rates by one-half of one per cent. Surely if you have that protection in the bill where they cannot vary it more than one-half of one per cent without getting approval of the Ontario Municipal Board, you should not require all municipalities under a population of 20,000 -- I would point out that that is about 740 of the 800 municipalities in this province -- that they must go back to the Ontario Municipal Board, have the lengthy delay which sometimes runs -- and I am sure the member for Kingston and the Islands knows -- into six or eight months, to make a variation perhaps of only one-quarter of one per cent in the interest rate for debentures.
Surely you can reconsider that and perhaps bring in an amendment on your own to give all municipalities permission to make that slight variation without having to go to the Ontario Municipal Board. I suggest that somehow or other that seems to be an indication on the part of the government that bigness is good. If you are big and powerful we will let you do these things on your own, but if you are a small municipality, those members of the council don’t have the wisdom and the good common sense that councils have in municipalities with populations over 20,000. It’s the same sort of belief that I think has caused the government of this province to get into regional government on a massive scale and of a massive size.
I notice too that they are going to rescind the requirement for municipalities to give security of loans from the development corporations. I believe that was just passed last spring. Now that is going to be rescinded and I commend the government for doing that.
Mr. Speaker: Does the hon. member have much more to contribute to this debate?
Mr. Swart: Yes, I have about 10 more minutes, Mr. Speaker.
On motion by Mr. Swart, the debate was adjourned.
Hon. Mr. Auld: Mr. Speaker, before moving the adjournment of the House I would just inform the House that tomorrow morning we will have budget debate.
On motion by Hon. Mr. Auld, the House adjourned at 10:30 p.m.