The House resumed at 8 p.m.
LAND SPECULATION TAX REPEAL ACT
Hon. Mr. Maeck moved second reading of Bill 151, An Act to repeal the Land Speculation Tax Act, 1974.
Hon. Mr. Maeck: The purpose of Bill 151 is obviously to repeal the Land Speculation Tax Act, 1974. As indicated by my colleague, the Treasurer of Ontario (Mr. F. S. Miller), in his remarks on October 24, it is this government’s view that this tax in no longer needed. In keeping therefore with the government’s commitment to deregulation and tax simplification, we are proposing to repeal this Act.
I would like to provide members with a few points about the history and operations of the land speculation tax over the last four and one-half years. The land speculation tax was introduced in 1974 in response to clear indications that speculation in lands and buildings, particularly houses, was contributing to excessive increases in the cost of housing. It was not the objective of the act to impede development and construction of residential and commercial properties which were exempt from the application of this tax.
Mr. Nixon: Friends of the developers.
Mr. MacBeth: That’s better than being friends with nobody.
Hon. Mr. Maeck: At the time of its introduction, the act was described as an interim measure and regulatory in nature rather than a revenue-raising statute. This was made very clear by the Treasurer of the day, Mr. White, in his 1974 budget statement. A review of housing price changes up to the end of 1977, the last year for which we have complete information, indicates the general stabilization in housing prices. Figures for Ontario show that in 1974 housing prices increased 26.8 per cent on an average, but only 3.9 per cent in 1977.
I agree with members that the land speculation tax was not the only factor in this change and that, with the exception of Alberta, prices are stabilizing. Other factors are mortgage rates and the economy generally, but the tax was definitely a factor in Ontario. Repeal of the act has other simplification benefits in the areas of reducing paperwork for sellers and purchasers alike by eliminating lien clearance certificates. These will be abolished on January 1, except for a lien that has been registered on title for unpaid taxes.
Mr. Nixon: If it passes in the House, it will.
Hon. Mr. Maeck: I understand that the member is going to support it.
Mr. Nixon: The minister will recall the argument I gave the government when it came in.
Hon. Mr. Maeck: He has no alternative but to support it under these circumstances.
Mr. Nixon: The minister is not in a position to make statements like that.
Mr. Laughren: Don’t push it -- a Christmas election.
Hon. Mr. Maeck: My ministry will pursue all unpaid assessments under this act until they are paid.
Mr. Speaker: The member for Brant-Oxford-Norfolk doesn’t have the floor to make statements like that.
Hon. Mr. Maeck: In conclusion, when it was introduced, the Land Speculation Tax Act was designed to be temporary only. By proposing its repeal, the government is living up to that promise. I call on all members, including the member for Brant-Oxford-Norfolk, to support the bill.
Mr. Nixon: I promised the people I would eliminate it.
Mr. Haggerty: I would like to add a few comments relating to the act which introduced a land speculation tax in 1974. As the minister indicated, the Honourable John White introduced the bill at that time. It was one of his several anti-inflationary measures. One was the new tax on land speculation --
Mr. Nixon: The stupidest decision a government has made in 10 years.
Mr. Haggerty: -- and another one was an increase in the land transfer tax paid by foreign buyers of land in Ontario. Both are directed against speculators whose actions, quoting the then minister, “were helping to inflate the price of land and housing without contributing anything to the economy of the province.” That was rather a broad statement to be made by the Treasurer of the province at that time.
At that time, the minister was one of the largest land speculators of all time in the province of Ontario. I recall how often my former leader, Mr. Nixon, and I discussed the problem of Nanticoke and Jarvis where some 20,000 acres of land were purchased, I believe, in the former Treasurer’s dream of building new cities across the province of Ontario.
Mr. Nixon: Those were great days.
Mr. Haggerty: In his dreams, you might say, he added to the inflationary cost of land in the province of Ontario. He was one of those who helped foster it.
Mr. Breithaupt: He became the Wizard of Oz.
Mr. Haggerty: That’s right. We in the Liberal Party supported the principle of the bill during the debate --
Mr. Nixon: Which bill?
Mr. Haggerty: Bill 125 I believe it was called at that time, the Land Speculation Tax Act. We were collectively concerned over the continuous escalation in the price of land which confronted the home buyer. We were well aware of the Comay report, a study completed in this particular area, that recommended some measures of control. During the debate of Bill 125, the official opposition members expressed our concerns relating to the exemptions which the bill allowed the minister to make in the transition period. I don’t have to elaborate on that particular area. We saw the minister allow certain exemptions under the act and under the regulations that were not, perhaps, in good taste for the government of the day. Even members of the Legislature were not too happy about it.
We were also concerned about the monopoly over ownership which could be developed. We were deeply concerned about that particular bill. We did support it in principle. In fact, we supported the government all the way along, although we had certain reservations. While supporting the bill, we were concerned about land cost escalation; that was the major concern.
When you look at it, Mr. Speaker, the bill did bring about some adjustment in land costs in the province of Ontario. There is no doubt about it, it did. The speculators were not too happy about it and even some of the real estate persons, but I think over the last three or four years they agreed it did bring about a reasonable adjustment and stability in the price of land.
I was looking at some of the debate that took place and I was stunned when I read the article by Peter Mosher of the Globe and Mail when he said, “The New Democratic Party leader, Michael Cassidy, however opposed removing the tax. He said it was a necessary weapon in the government’s arsenal to prevent land speculation in areas where rapid development is taking place, such as Nanticoke and Elliot Lake” That’s quite a switch or flip-flop from the arguments they put forward back in 1974. I don’t think the record should go by without refreshing members of some of those quotes at that time.
For example, the member for York South (Mr. MacDonald) in the debate stated: “However, we in this party find ourselves unable to support this particular bill because it simply doesn’t fulfil the objective -- ”
Mr. Laughren: It doesn’t go far enough. You are absolutely right.
Mr. Haggerty: “ -- and it is something of a fraud. It is deceiving the public with regard to what it is going to achieve.”
The leader of the New Democratic Party stated, “All my colleagues have indicated to you, all of us have demonstrated to the minister that it is a piece of legislation which shouldn’t even be dignified by debate in the House.”
Those are pretty interesting comments. I find they switched today and they’re not going to support the bill. This is what the leader says, that it’s a good piece of legislation. I was just trying to pick out the present leader’s comments on this particular thing, but he covered it anyway. One of the ways to solve the problem, he said, was that in the New Democratic Party “we have been saying for several years now that land in and around our major cities should be developed publicly; it should be developed by leasehold.” That pretty well explains their position on home ownership in Ontario. I think they are opposed to it; they want it done by leasehold. I just can’t understand the reason for their flip-flop or their change in mind to support a bill that in the past has been full of loopholes and fraud. It indicates their views on it anyway. But I say to the minister that we support the bill, perhaps with some reservations.
The AIB guidelines now are in the process of winding down, but the federal government will continue monitoring income and prices. I suggest to the minister that, although we are repealing the act, there should be some type of monitoring done here so that we don’t have escalation of land prices again in Ontario. I think you have to look at the ownership of land -- the purchasers who want to buy a home -- and you have to look at the tenants who are renting property.
I suggest to the minister that we should have some type of a monitoring process to ensure that there isn’t a continuing windfall to certain speculators in Ontario. I raise that particular question because our researchers have been trying to get some information from the minister relating to the number of liens currently outstanding and the dollar value that they would represent. I’m sure there is a good possibility that windfalls may still be there, and I hope the minister will not permit this to continue.
I say to the minister that we in this party will support the bill before us, the Land Speculation Tax Repeal Act, 1978. We’ll wait to see what position the party to our left is going to take on this particular thing --
Mr. Laughren: Are you a federal Liberal or an Ontario Liberal? Have you got it straight?
Mr. Roy: Are you trying to be cynical?
Mr. Haggerty: I don’t know whether they’re going to continue supporting a bill that’s full of loopholes and may indicate a certain amount of fraud. I don’t know what they’re going to do, but we will support the bill.
Mr. Speaker: The member for Hamilton Mountain.
Mr. Charlton: Thank you, Mr. Speaker --
Mr. Nixon: Oh, my God, it’s going to be one of those nights.
Mr. Charlton: The member for Erie is quite right --
An hon. member: He’s right on.
Mr. Charlton: He’s very right, yes; he’s also quite correct that we’re going to oppose this bill.
Mr. Breithaupt: You didn’t like it when it came on.
Mr. Kennedy: You are still left.
Mr. Charlton: But I’d like to start out by pointing out to the member for Erie and to the minister that --
Mr. Nixon: You opposed it when it was brought in, too.
Mr. Charlton: -- we haven’t changed our opinion of this particular piece of legislation since 1974.
Mr. Breithaupt: You are consistent at least.
Mr. Kennedy: He is right and you are still left.
Mr. Charlton: Part of the position that this party took in 1974 was that this measure didn’t go far enough, and I’ll talk a little bit about that during my speech.
Mr. Nixon: Now you are reversing it.
Mr. Charlton: We don’t really feel that the land speculation tax has dealt with the problem of land prices in Ontario effectively --
Mr. Breithaupt: Because it doesn’t go far enough.
Mr. Charlton: -- but it has had some effect.
Mr. Kennedy: Mostly adverse.
Mr. Charlton: Land speculation in the province has levelled off over the past three years for the most part as a result of the usual cycle in land speculation. But this act has had some effect in helping to level off and even in some areas reduce slightly the price of land.
Hon. Miss Stephenson: There is a point of diminishing returns, you know.
Mr. Charlton: Everything over on that side is diminishing. The land speculation tax is the only measure we have in this province to deal with the question of land speculation and with the question of land pricing and, therefore, with the price of housing. We have had no controls on the price of housing whatsoever while a lot of other things, like wages, have been controlled.
Just a little quote from the Minister of Agriculture and Food (Mr. W. Newman) from a press release he gave on the land speculation tax in July 1977: “Agriculture and Food Minister Bill Newman explained that the 10-year period” -- he was talking about exemptions on farms, and he said the land speculation tax had in fact controlled land speculation in the province. So it has worked to some degree.
The issue has been raised a number of times that the spec tax has had some effect in dampening the province in terms of being a good place to invest. The former Treasurer, Mr. McKeough, said that’s not true. He said, “I believe that the province of Ontario continues to be one of the most attractive places in the world for productive investment by nonresidents. Our favourable geographic location, highly skilled labour force and strong resource base have together produced an impressive record of economic growth.” This is when he was talking last year specifically about the land spec tax and its effects -- when he added some additional exemptions to the act -- “so it’s not our belief that the act has had any serious detrimental effect in terms of development in the province.”
Looking over statistics on housing and land prices in Ontario and across the nation, over the past number of years, I’ve noticed that Ontario has been going in the opposite direction to the rest of this country in terms of land prices and people’s ability to buy housing.
In 1961 in Canada the average wage was $3,800 and the average price of a residential lot was $2,600. That, in effect, meant that the price of a residential lot was only 68 per cent of the average annual salary in this country.
In 1965 the average wage in Canada was $4,400 and the price of an average residential lot was about 70 per cent of that annual salary.
In 1977, in Canada as a whole, the average wage was up to $13,000 and the average price of a lot was up to $10,200. That works out to about 79 per cent of the average annual income in this country.
The story in Ontario is quite considerably different from that. I’d just like to run through a number of examples.
In the city of Hamilton, where I come from, the average income in 1961 was $4,300 and the average price of a residential lot was $4,000. So the price of a residential lot in Hamilton was about 93 per cent of the average annual income in Hamilton. It was slightly higher than the national average, but not a lot.
In 1977 in Hamilton, the average annual income was $13,364 and the average price of a residential lot was $26,078. The average residential lot in the city of Hamilton today is 195 per cent of the average income in the city of Hamilton. That’s exactly opposite to the national trend. The national trend is up slightly from what it was 15 years ago, but in Hamilton it’s up so much that it’s having an effect on the rest of the economy in the area. The same is true in most urban centres in Ontario.
I’d like to run through some figures from across Ontario in the present day. I’ve given you Hamilton’s figures. In Kitchener, for example, a residential lot today is about 152 per cent of the average annual salary in Kitchener. In Oshawa, a residential lot is about 151 per cent of the average annual salary in Oshawa. In Ottawa, it’s 146 per cent; in Niagara Falls, 141 per cent, in Thunder Bay, 130 per cent; in Toronto, 202 per cent; in Brantford, 144 per cent and in Kingston, 120 per cent.
All of them are considerably above the national average. All of them are considerably higher than Ontario home owners can easily afford. What in effect has happened in Ontario in the past 15 to 20 years is that the price of land has gone up considerably more than in the rest of Canada with a few exceptions. I’ll run over some of the national figures just so that members can see what is happening where because I want to use them to make a couple of points.
In 1977, in St. John’s the average residential lot is valued at about 82 per cent of the average annual income. In Halifax it’s about 71 per cent; in Saint John, 56 per cent; in Montreal, 28 per cent; in Quebec City, 40 per cent; in Hull, 80 per cent; in Regina, 80 per cent; in Saskatoon, 88 per cent; in Calgary, 157 per cent; in Edmonton, 201 per cent; in Vancouver, 159 per cent and in Victoria, 141 per cent.
I read out these figures because I want to point out something about them. The significance of these figures is that Ontario on average is the highest in Canada of all the major urban centres in this country.
Mr. Sterling: We’ve been expanding. People are coming here.
Mr. Charlton: Even more significantly, in those areas of this country where the provincial governments have been involved in an ongoing and continuing way in attempting to curb land speculation, that’s where the lowest figures come. In the province of Quebec we have figures that range from 28 per cent to 80 per cent as compared to Ontario’s figures of 136 per cent.
Mr. Sterling: They don’t pay for their services in the cost of the lot
Mr. M. N. Davison: You guys just can’t run the store.
Mr. Charlton: In the province of Saskatchewan the figures range from 80 to 88 per cent. It’s also significant to note that in the province of Alberta, where there is a similar government to that in the province of Ontario, the percentage is running from 157 per cent to 201 per cent, which is similar to what’s happening here in southwestern Ontario.
Mr. Foulds: Those guys never met a payroll in their life.
Mr. Eaton: Things are booming. It’s prosperity.
Mr. Charlton: Prosperity isn’t prosperity if the people can’t afford the prosperity, my friends, because all of those percentages are percentages in comparing land costs to people’s average income. If they can’t afford to buy the properties, then the prosperity means nothing and the prosperity is not prosperity at all but a serious economic hindrance to the lives of the average people in that province.
Mr. Makarchuk: It’s prosperity for a few and poverty for many.
Mr. Laughren: The Minister of Revenue has pushed us too far this time.
Mr. Charlton: One of the things these figures very clearly point out is that although land speculation in the province of Ontario has been curbed over the last two or three years, in Ontario, we still haven’t been able to catch up with the cost of land in terms of our wages and our ability to buy that land.
Hon. Mr. Maeck: I will quote the true figures for the member later.
Mr. Charlton: The minister can go ahead and quote whatever true figures he wants. These are all from his figures.
Hon. Mr. Maeck: Those figures come from that side of the House.
Mr. Charlton: At any rate, we have situations in Ontario where between 1970 and the present day residential land prices have gone up by as much as 300 per cent in five years while the national average is only 400 per cent in 20 years.
Mr. Eaton: That’s no help for anybody who works here.
Mr. Sterling: Twenty years?
Mr. Charlton: Yes, Ontario is 300 per cent in five years; Canada is 400 per cent in 20 years.
Mr. Sterling: Yes, what 20 years?
Hon. Miss Stephenson: Which 20?
Mr. Makarchuk: The last 20 years.
Mr. Charlton: So what we are saying about this bill is that we would very seriously like to see this government take some more definite, more serious and more productive action in terms of land than this present land speculation tax act. But since it is the only measure we have in this province that is in any way helping to affect the amount of land speculation that goes on, we don’t want to see it go until we see in black and white what the government is prepared to propose to replace it.
Hon. W. Newman: That’s your first and last speech.
Mr. Makarchuk: I would like to participate in this debate for a very brief moment. All I want to deal with is my favourite land speculation tax case known as the Ronto situation. In a sense, this probably demonstrates what the NDP said about the bill originally, the fact that the government really wasn’t serious about the proposition of curbing speculation. Secondly, having something is sometimes better than nothing, so one is caught in a difficult choice.
However, I think we should put on record the fact that the public accounts committee did look at this matter and there was a motion passed in the committee. The motion was moved by Mr. Peterson and it said, and I am reading from the minutes of the meeting that was held on February 3, 1977, “The provincial auditor is directed to determine how much land speculation tax would have been payable at the time of sale.”
The directions to the auditor were quite clear. The case was discussed in the public accounts committee for a considerable length of time. There were arguments as to what was the effective date of sale and so on and whether the land was disposed of on January 31, 1976, or May 11, 1976, et cetera. However, for purposes of the auditor’s figuring out the computation of the tax, we agreed with what was the official position taken by the government. The report from the auditor was provided on March 16, 1977. The subject of the report was “computation of the amount of land speculation tax that would have been payable by Ronto Development Company on the disposition of designated land at Brantford to George Wimpey Canada Limited.” On the date recognized for land speculation purposes, and it is important to get this in the record, it says the date of acquisition by Ronto from Pate used by the auditor was September 18, 1973. The date of disposition by Ronto to Wimpey was January 31, 1976. Closing date of disposition from Ronto to Wimpey was May 11, 1976. The period for which costs may be claimed -- and this isn’t my decision, this is the decision of the auditor, whose ability I have no reason to question -- was April 9, 1974, to May 11, 1976. This is the period of time over which Ronto was liable to the land speculation tax payable to this government.
There are a whole series of figures which I will not read into the record. They are available. The documents relating to Ronto are available and the public accounts are available from the Clerk, I’m sure. The total disposition was $12 million. The cost of the land was something like $1,493,000 odd, so you can see there is quite a spread with the speculation tax. There’s a little profit involved, as my friend from Guelph would say.
However, the auditor was aware of, shall we say, the leanings of the government, its disposition and how the government felt at that time about this thing. Anyway, he computed that the tax, which is 20 per cent of net taxable value, payable to the government of the province of Ontario, is $493,158.
Mr. Speaker, before this bill departs from this House, I will attempt -- and I am giving the minister a warning -- to move an amendment to the bill to the effect this tax as was computed by the provincial auditor is collected. I hope I get the support of the Liberal Party on that particular amendment. In addition, Mr. Speaker, I think interest on that money, which has not been paid, should be collected. We may dicker as to the figure, whether it will be eight and one third per cent or nine and a quarter per cent, but somewhere in that vicinity, is the interest figure that should be included.
Hon. Mr. Maeck: When did you get the authority to move that?
Mr. Makarchuk: The principal amount or the tax, plus the interest should be included. I am giving a warning to the minister now. The basis of my motion, which will be tacked on to the bill, will be to ensure tax is collected and playing favourites by members is stopped.
Mr. Speaker: I want to remind the honourable member that nothing you have said in the last five minutes is contained in the bill.
Mr. Makarchuk: Mr. Speaker, in my estimation this is very much on the principle of what we are discussing.
Mr. Foulds: It raises the deficiencies that are involved in this bill.
Mr. Makarchuk: I am discussing some of the deficiencies of the bill although not so much the deficiencies in the bill, as the favouritism displayed on that side of the House towards certain people in this province of Ontario. With the aid of the bill, I hope to correct that. In other words, we want to ask those people to pay the same amount of tax we have asked other people to pay and who have paid speculation tax.
Mr. Nixon: Mr. Speaker, I am very interested in the remarks made by the member for Brantford. I certainly felt at the time, and feel now, that the government was wrong in excusing Ronto Development Company from paying this tax. This is not specifically the principle of this bill, and I don’t intend to pursue it. But if the honourable member puts forward his amendment we will give it every consideration, and I am sure you will too.
The matter I wanted to bring to your attention is a little footnote to history, and is something that has been sort of a burr under my saddle for a little while, and which is left over from the election in 1975.
I recall when we were thinking about the possibilities of what might be coming up in the budget the year this statute became law in 1974 -- it was just when the old inflation machine was really starting to move. Mind you, we didn’t know what it was all about then, and maybe we don’t know either, but we hope and pray the pressures of inflation are somewhat easing off under the great leadership of the government of Canada, and the tremendous initiatives that have been taken there. I would agree that everybody in this House, Mr. Speaker, would feel inflation is being wrestled to the ground.
Mr. Makarchuk: They are the ones with the social disease.
Mr. Nixon: But I’ll tell you in 1974 this was not quite so apparent, particularly in the prices of land.
Mr. Foulds: The ground is quicksand on which you stand.
Mr. Nixon: No, not at all. A lot of the ground I stand on sinks a bit.
Mr. Roy: This is the Ontario Liberal Party right here.
Mr. Makarchuk: The others have the social disease.
Mr. Nixon: But Mr. Speaker, there was a general concern at that time. We felt in the Liberal Party there had to be some action, pretty strong action -- draconian, one of my colleagues called it at the time -- to bring under control the inordinate profits that were made by developers, most of them supporters of the Conservative Party.
I have often been very critical of one of the former Treasurers, John White. I really thought he displayed some terrible judgements, but at least you can’t accuse him of being afraid to take stands and actions which didn’t go precisely in the direction of the best interests of many of his close friends and supporters, let’s say in the London area, if nowhere else. Putting on this tax certainly elicited many cries and screams. We, in the Liberal Party, felt it should be supported, even though at the time the NDP voted against it. I didn’t understand their reasons then, and I don’t understand their reasons now.
Hon. Miss Stephenson: You didn’t understand their reasons then. You don’t understand them now.
Mr. Kennedy: Wrong both times.
Mr. Nixon: Their consistency is very difficult to determine. But the people who were really the big winners in this, in my view -- and this will get a rise out of a few of the members -- were not the government but the legal profession. When I think of all the legal ramifications of every one of the sales of a parcel of land in all these years, and all of the marvellous paperwork that drifted back and forth between the Minister of Revenue and his staff and his predecessors and the various law offices in this province, it just appals me.
This was even drawn to the attention of the House at the time by a person who has had his political virginity restored by order in council -- and that was quite an operation, I’m telling you, Mr. Speaker -- my former colleague from Downsview, now a member of the Ontario Municipal Board. I certainly recall very clearly him pointing out as a lawyer himself --
Hon. Miss Stephenson: Dear heart, it was a transplant.
Mr. Nixon: It had nothing to do with his heart. Mr. Speaker, I can tell you that he drew to our attention then that this would be a very difficult matter for the lawyers, it would be very time-consuming and elaborate and, since many of them are paid by the hour, they would have to study it rather carefully and extensively in order to see that their services were properly available.
There was bound to be some small lack of confidence in the judgements of the Ministers of Revenue or their masters in those people who had been exempted from the payment of these taxes; that has already been referred to, and I have a feeling it may be referred to again.
When the bill came in, although we were supporting it in principle, I and my colleagues were very critical of the convolutions of the bill itself and the regulations that emanated from it. It was just a rat’s nest of red tape, and it really had little or no effect in controlling the costs -- a rat’s nest of red tape; is that a mixed metaphor? Anyway, it really has not had much effect over these years.
I can remember sitting down with my colleagues in the Liberal Party before 1975, and we came to the conclusion that it had little or no efficacy in the community and that the only reason the government had stuck with it was because they had to carry all those ashcans that the former Treasurer, John White, had left with them; it was too embarrassing to throw them all over their shoulder at once and they were prepared to brazen it through.
The part that really did offend me, however, was that when it became apparent that the Liberal policy was the repeal of this ridiculous item, the Premier and all of those yapping around him at the time were calling me, of all people, and my colleagues, the friends of the developers. It was obvious even then, and now is even more apparent, that the developers were funnelling the dough into the Tory coffers, trying to get it back in under the guillotine of the election expenses act, packing it in there in great wads of dough that are still stuffed in a sack somewhere and may never be revealed. They had the brazen hypocrisy to call me -- and, of course, I’m a friend of everybody -- specifically a friend of the developers. Gosh, I tell you, I could hardly show my face around South Dumfries, there are so many developers and speculators there. Actually, some of the farmers are sometimes called that, and we’re all friends of the fanners.
I have no hesitation in being critical of the administration of this bill over the years. I’ve thought it’s been singularly ineffectual and, frankly, it’s good riddance to it.
Mr. Laughren: I don’t understand the comments of my colleagues in the Liberal Party, talking about us changing our vote. I really don’t understand that at all. If memory serves me correctly, and I was here back in 1974, it seems to me that the Liberal Party voted in support of the bill and now they’re voting to repeal it. I don’t see anything more contradictory in the position we’ve taken and the position the Liberals are taking.
Mr. Laughren: It is obvious that the members of this party saw some of the inadequacies back then that other members of the chamber didn’t see.
Mr. Breithaupt: You want to keep them.
Mr. Roy: You want to keep some of the inadequacies.
Mr. Laughren: What we are saying now is that there are ways that this bill could have been improved. It is simply not right that there should be outlandish speculation profits made on land in this jurisdiction. Housing is just too important an ingredient in the life of most people, virtually all people, to allow these kind of speculative profits that have gone on.
There were problems in the land speculation tax. I brought one to the attention of the minister not long ago where if you were in a depressed area -- I’m saying this before he gets up and clobbers me with my presentation to him --
Hon. Mr. Maeck: I wasn’t going to say it, Floyd, I wasn’t going to mention it.
Mr. Laughren: -- in an economically recessed area like Sudbury, where if a person was unable to sell their house within six mouths --
Hon. Miss Stephenson: Did he say “economically recessed”?
Mr. Laughren: -- to purchase another one within six months of selling their home there was a land speculation tax assessed against that person, even though the cause of that was not that they were deliberately holding on to their land in order to make a profit but simply because the market was soft -- because of, for example, layoffs, or as is happening now in the Sudbury area, the strike.
If the government really wanted to deal with the price of land in Ontario, it would get into land banking in a serious way. The only people who are doing land banking to my knowledge --
An hon. member: You mean the NDP in Saskatchewan?
Mr. Laughren: Would the member wait for it? I mean besides Doug Kennedy. The only people who are doing serious land banking are Inco.
Mr. Roy: You sound like John White.
Mr. Laughren: I’m speaking of surface acreage; I’m not talking about mining rights --
Mr. Nixon: You don’t mean that Gobi Desert property Morty Shulman was talking about?
Mr. Laughren: -- that Inco owns in the Sudbury basin alone. Inco owns outright, over 200,000 acres in the Sudbury basin. If members think that sounds a little high, I would suggest they go to the Financial Post survey of mines where the figures are repeated virtually every year.
Mr. Eaton: That’s a pretty big subdivision.
Mr. Laughren: There, one has a company which, when it obtained the mining rights also obtained the surface rights and holds 200,000 acres of land in the Sudbury basin.
Mr. Eaton: How many of them are lots?
Mr. Laughren: Two hundred thousand acres, that’s what they own.
Hon. Miss Stephenson: How many are suitable for housing?
Mr. Laughren: If you wanted to split 200,000 acres into lots, you’d have millions. What do you mean, “how many lots”?
Mr. Eaton: In Sudbury?
Mr. Laughren: Of course it would be a lot of lots. A lot of lots, that’s how many.
Mr. Eaton: In Sudbury?
Mr. Laughren: Yes, they are in the Sudbury basin -- 200,000 acres. When I sit here and I look at the present Treasurer (Mr. F. S. Miller), there’s someone who previously had responsibility for natural resources. He wouldn’t touch them. There have been suggestions made to him that those 200,000 acres be repatriated in the name of the crown, so that they would be then crown land and used for banking purposes by the municipality when appropriate. Not all 200,000 acres would be useful --
Hon. Miss Stephenson: Who would want to build a house on them?
Mr. Laughren: -- for sewer and water development projects; I understand that.
The minister might not want to build a house in Sudbury but I want to tell her something, lots of people have built houses in Sudbury.
Hon. Miss Stephenson: You wouldn’t.
Mr. Laughren: I certainly have.
Hon. Miss Stephenson: Not on Inco land.
Mr. Laughren: The Minister of Labour doesn’t understand the issue at all.
If the members of the government are wondering about our opposition to the land speculation tax, we are quite frankly telling them that they did not administer this bill well. They did not administer the collection of the land speculation tax well. That does not mean that the principle of land speculation tax is invalid. Of course there should be a land speculation tax in this jurisdiction. The government knows it and I know it, and if the members over there weren’t protecting some people they wouldn’t be repealing this.
Mr. Roy: Mr. Speaker, I just thought that I should make a few comments having participated in debate back in 1974 when the act was brought into being. I heard a sarcastic comment from the Minister of Agriculture and Food (Mr. W. Newman). Looking at the source of the comment I’ll consider it to be as usual, coming from there, irrelevant. So I won’t bother with that and I will address the chair.
Mr. Deputy Speaker: If it was an interjection, just disregard it.
Mr. Roy: It seems to me, Mr. Speaker, looking back at the history of the Land Speculation Tax Act since 1974, we’re the only party that has had a consistent approach to this problem.
Hon. Miss Stephenson: That will be a switch.
Mr. Roy: My colleagues, you’ll recall, and some of the members across the way who seriously look at this as a matter of conscience, will recall as well that prior to 1974 we were calling for some form of tax to prevent speculation in the area of land.
Mr. Foulds: Why are you against it now?
Mr. Roy: After having pressured the government prior to 1974, finally it was brought into being in 1974. In keeping with the usual principles of this party, we responded to an existing problem.
Mr. McClellan: Name one. Name one.
Mr. Roy: The NDP I will deal with next.
Mr. Deputy Speaker: Order, order.
Mr. Roy: If I may say, in 1974 there was a real problem in land. There was speculation not only by large developers, but it got to a point where, in fact, individuals --
Mr. Nixon: A lot of politicians were developing their farms.
Mr. Roy: -- were buying homes in subdivisions.
Mr. Deputy Speaker: Order.
Mr. Roy: In fact, it got to be that it was not only the large speculators involved. There were all sorts of people in our middle class buying homes from developers, hanging on to them for two or three months, and making huge profits. So there was a terrible escalation, a vicious circle evolved. We felt the Speculation Tax Act in 1974 was necessary.
But having said that, it was only a matter of a year, or a year and a half, and for all intents and purposes the problem was solved. In fact, in 1975, our then leader the member for Brant-Oxford-Norfolk (Mr. Nixon), had the intestinal fortitude to suggest during an election campaign that it be removed because it was no longer necessary.
Mr. Foulds: Is that why he was called a friend of the developers?
Mr. Roy: Sure he was called that. Here’s a man who was facing an issue head on during an election campaign. The people on that side are cynical. The Premier (Mr. Davis) called this man the friend of the speculators, when in fact he’d been the one on whose leadership we had initiated the tax. The problem had been solved in 1975.
So, having suffered the slings and arrows of that campaign in 1975, here we are. The Tories are given the credit for removing it in 1977. If there’s no other satisfaction we can get, we can say, yes, we’re on this side. We’re not in power but, my Cod, we’ve got principles. We’ve got principles. I want to say to my colleague, the Treasurer, we’ve had long conversations with Bob Stanfield about this. We’ve got principles.
Of course, another reason for removing the tax, and it’s a very practical one, is we’re taking away one of the instruments whereby the government could favour their friends. Some of my colleagues talk about Ronto. The tax was, in effect, for everybody except certain friends of the government. I don’t want to be overly offensive, but that’s a fact.
Mr. Foulds: Who are these friends? Name them.
An hon. member: Some people from your party asking for remissions.
Mr. Roy: In fact, if for no other reason, we should remove the tax to take away one of the goodies the government was spreading among its friends over the past few years that this tax has been in force. In fact Ronto --
Mr. Peterson: It’s just like a $15 licence plate.
Mr. Deputy Speaker: Order. Order.
Mr. Nixon: Boy, do we ever need a House leader.
Mr. Roy: So for these reasons we are supporting the removal of the tax.
I think I would be remiss if I sat down without making some comments about my friends to the left.
Some hon. members: Sit down.
An hon. member: Go ahead and be remiss.
Mr. Roy: I don’t mind admitting in public, I’m a simple-minded individual. I am.
An hon. member: That’s the only thing you are right on.
Mr. Foulds: Just plain simple, Albert.
An hon. member: Don’t brag about it.
Mr. Roy: I don’t mind admitting that. As long as logic works in somewhat of a straight line, I can follow it. But I’m trying to follow the reasoning of the party to my left and I’ve got some problems.
Mr. Foulds: That’s true, you’ve got problems.
Mr. Roy: In 1974 they voted against the tax. They said: “This tax is inadequate. We don’t want it.” They voted against it.
Mr. Makarchuk: We voted for it.
Mr. Roy: No, you voted against it.
Mr. Makarchuk: You voted for it.
Mr. Roy: Yes, we did.
Mr. Makarchuk: Now you’re voting against it.
Mr. Deputy Speaker: Order. Order.
An hon. member: You reversed it.
Mr. Makarchuk: Lots of people are logical.
Mr. Deputy Speaker: Order.
Mr. Makarchuk: There’s consistency on this side.
Mr. Roy: They voted against it. They said, “This tax is not adequate. We don’t want it. We vote against it.” Now we’re giving them an opportunity to remove it and they’re voting against that. Try to follow that logic.
Mr. Nixon: No way.
Mr. Roy: I really can’t.
Mr. Makarchuk: You said it was adequate and you voted for it. Now you’re voting against it. Same logic.
Mr. Roy: It’s just like this afternoon on Bill 136. The leader of the NDP says, “I pressured the government into this legislation and now that they’ve brought it on I want it removed.” I’ve got some difficulty understanding that.
An hon. member: No logic.
Mr. M. Davidson: Now I know why you’re not successful in law, Albert.
Mr. Roy: I would have thought, in view of the comments made by the member for Brantford, that he would agree with us that we should take away this instrument of the government granting favours to their friends such as Ronto. Their critic said, “Well, look, the speculation and inflation has been reduced,” and what he was saying in fact is that the tax is no longer necessary.
Mr. McClellan: No, no, you’re wrong.
Mr. Foulds: No, he didn’t say that.
Mr. M. Davidson: Let our critic speak for himself.
Mr. Breithaupt: The member for Riverdale (Mr. Renwick) said that.
Mr. Roy: I just want to make it very clear that the people of this province, when they look at a responsible opposition, as the people on this side are, they will know that when there is a problem we’re not afraid to bring in legislation to correct it. When the problem no longer exists, we’re not afraid to take it away. It’s not forever. That’s the attitude of this party.
Mr. Williams: Mr. Speaker, I’d like to introduce some sober observations to the debate this evening --
Mr. Eaton: Is anyone sober over there?
Mr. Williams: -- before the minister summarizes the provisions with regard to this bill and introduces it for third reading.
I think it is important for us to reflect on what exactly happened in 1974 bearing in mind that at that time the government felt, because of the economic circumstances of the day and because of the inordinate amount of activity in the real estate market, it was necessary to introduce legislative clout to cool out this tremendous amount of activity that was putting a great deal of pressure on the real estate market and causing the cost of land to skyrocket.
Mr. Foulds: You call that a one-two clout.
Mr. Williams: Of course the one-two clout was the enactment of the Land Transfer Tax Act as well as the Land Speculation Tax Act.
Mr. Foulds: If you call that a one-two clout, it is, to paraphrase Muhammad Ali, “dance like a bee and sting like a butterfly.”
Mr. Williams: There is no doubt that, without the introduction and enactment of that legislation, the chaotic situation that existed at that time would not have been brought under control and wrestled to the ground.
The fact that the increase in housing costs in 1974 exceeded 25 per cent and that today they have not increased beyond a four per cent factor, I think, is testimony in itself of the beneficial effect this legislation has had.
Mr. M. Davidson: They haven’t stabilized themselves at a reasonable level either, have they?
Mr. Williams: At the same time, it makes it abundantly clear that the temporary measures that were taken with regard to the Land Speculation Tax Act have had their desired effects and the suggestion for permanency, I think, evaporates under the evidence that lies clearly before us.
At the time the cost of land was accelerating so dramatically, one of the factors that gave cause to that difficulty, of course, was the understanding that less than arm’s-length transactions were occurring between corporations that were --
Mr. Deputy Speaker: Order, please. There are a number of private conversations. I wish they would stop.
Mr. McClellan: Why aren’t his colleagues listening to this drivel?
Mr. M. Davidson: They are trying to decipher what he is saying.
Mr. Williams: Private corporations involved in land speculation were conducting business on less than an arm’s-length transaction basis, and this surely was one of the significant contributing factors to the high cost of real estate. It was readily apparent to all that interlocking corporate directorships were controlling the development of land and bringing it through four or five stages, each one of which would increase the cost of land from the time it was purchased as raw land to the time it came out as the finished product, namely, serviced residential or commercial lots.
The government, in clearly recognizing that problem, felt that the land speculation tax was the appropriate legislative means to bring that situation under control. The results, as we have them before us today, demonstrate again quite clearly the fact that the bill has had its beneficial effect and now the justification for continuation of the bill has evaporated.
At the same time, of course, there was the Land Transfer Tax Act, which was also incorporated to try to bring some reasoned control to the tremendous pressures on the escalating costs of real estate.
Mr. M. Davidson: The real problem is that your friends got stuck with a pile of land they wanted to get rid of.
Mr. Williams: A large portion of that pressure was attributable to the high degree of interest that was shown in Ontario real estate by nonresident individuals and corporations. That fact, of course, further contributed to and aggravated the already inflationary situation that existed at that time.
While both of those bills have proven to have had beneficial effect, unfortunately -- from the offshore and out-of-country point of view -- they created some concerns for and imposed prohibitions on otherwise legitimate foreign investors. That has proven to be one of the detrimental effects of those two pieces of legislation.
I have had opportunities on more than one occasion to meet with bankers and businessmen in the United States to discuss some of these problems.
Mr. McClellan: Let’s hear it for the foreign bankers.
Mr. M. Davidson: You are in favour of American investment. Is that what you are telling us?
Mr. Williams: Without exception, they have all expressed grave reservations in concerns about investing in the province of Ontario.
Mr. M. Davidson: You want American money to take over Ontario.
Mr. Makarchuk: Some of us are not too anxious to sell off our province.
Mr. Wildman: Let’s hear it for the foreign bankers.
Mr. Williams: While we all have our nationalistic pride and desire to ensure that our own domestic investors have first opportunity to express their confidence in our province by investing here, we should not be imposing legislation that would have the effect of completely turning away foreign investment, whether it be from south of the border or from European countries or countries in the Far East.
Mr. M. Davidson: Or absentee landlords.
Mr. McClellan: Sell it all out, John.
Mr. Williams: The negative effects of those bills have had a measured adverse effect. Rescinding this legislation will restore a degree of confidence in the foreign investment market. While it may be that some people would like to see no foreign investment whatsoever made in this country, reserving all real estate activity solely to the domestic market --
Mr. Makarchuk: That’s nonsense. That is economic nonsense. That’s baloney, John, absolute baloney. You generate more worth in this country than you utilize.
Mr. Williams: -- the economic facts of life are that we do not have the total financial capability to develop the resources of this province to the extent to which they can be developed.
Mr. Makarchuk: Tell him he is away the hell off.
Mr. Williams: It is important that we encourage foreign investment in Ontario while exercising appropriate legislative control over the foreign investors. This can be accomplished by other types of legislation.
Mr. Makarchuk: The resident auctioneer over there, the highest bidder.
Mr. Williams: The concerns of foreign investors have been heightened further by the legislative actions taken by our federal counterparts in the establishment of the Foreign Investment Review Agency which has an appropriate controlling feature brought to the federal level but which, at the same time, has had some detrimental effects, raising concerns in the minds of foreign investors as to whether or not it would be worth their effort and time to seek out appropriate real estate investments --
Mr. McClellan: Let’s make it easy for the foreign investors. Let’s invite the foreign investors in.
Mr. Makarchuk: Sell the country, John. Auction it off.
Mr. Williams: -- not only in Ontario but also in other provinces within Canada.
Mr. Deputy Speaker: Order.
Mr. Williams: The fact of the matter is that this province, as well as the federal government, should be doing everything necessary to encourage continuing foreign investment in this country while continuing to exercise appropriate controls to ensure that --
Mr. McClellan: For sale, cheap.
Mr. Williams: -- those investments are not made to the prejudice of the domestic development companies and domestic investors.
Mr. McClellan: Don’t sell it. Give it away.
Mr. Eaton: That’s the only way you would get any of it.
Mr. Williams: The rescission of the Land Speculation Tax Act comes at an appropriate time. This proposed legislation in conjunction with the amendments enacted by this Legislature last year, will help modify the harsh effects of those two bills on foreign investments.
Mr. Gregory: If you say “I give up”, I will turn him off.
Mr. Williams: Those bills did have some beneficial effect and did rekindle an interest in investment by foreign business concerns.
Mr. McClellan: We give up.
Mr. Makarchuk: We give up.
Mr. Worton: Turn him off.
Mr. Williams: The enactment of this bill today, will further rekindle and restore the confidence of foreign investors in this province while removing any doubts domestic land developers may have as to the ability of this government to control inordinate land speculation. Based on the evidence we have before us, the enactment of this legislation this evening is appropriate.
Mr. Peterson: Mr. Speaker, I don’t intend to speak very long on this bill.
Mr. Peterson: I just want to add a couple of new reflections. It seems to me that the best thing that was ever conceived about this tax was the name. In 1975, it allowed the Premier in his three-piece suit to run around during that campaign and criticize the then leader of the Liberal Party (Mr. Nixon) who has never owned a decent suit in his life. They’ve always been hand-me-downs. God knows, you only have to know the man to realize how poorly dressed he is. It allowed the Premier to call that poor, downtrodden man a friend of the speculator and a friend of the developer.
The name of the bill was the only advantage of the bill. This was the most ill-conceived, superficial bill that ever hit this floor.
Mr. Roy: That’s right.
Mr. Eaton: Your colleagues supported the bill.
Mr. Peterson: John White was the great Treasurer of that time. Granted that everybody understood there was heavy speculative pressure on land at that particular time, they had no idea then or now of the effect of this bill. John White in the first year originally forecast $25 million of revenue from this bill. Over the life of this bill since 1974, it hasn’t generated $25 million of revenue.
Mr. Kennedy: That wasn’t the point and he said so.
Mr. Roy: They granted so many exemptions.
Mr. Peterson: They were working so far in the dark. Then they brought in a bill, as I recall, where, when the rates came in, they were 50 per cent rates. Do members recall that? Being an ill-conceived bill, conceived in haste, they hadn’t negotiated with the federal government in order to organize for a deduction which resulted in an effective taxable rate, depending on one’s income tax bracket, of over 100 per cent in some circumstances.
Mr. Roy: That’s right.
Mr. Peterson: It came so quickly, they didn’t even have time --
Mr. Makarchuk: They wrote it in the back seat of a car.
Hon. Mr. Parrott: Why don’t you talk about his clothes now?
Mr. Peterson: I just want to clear up my little diatribe for a moment and apologize.
Mr. Nixon: Did he say something about my suit again?
Mr. Deputy Speaker: Order.
Mr. Peterson: I hope nobody will tell the honourable member what I said about him when he was out of the House.
Mr. Nixon: He’s lucky the member for St. George (Mrs. Campbell) is here to protect him in view of the suits he wears.
Mr. Foulds: I hope your tailor sues him.
Mr. Peterson: If you will be so kind as to give me just two or three minutes of your undivided attention, Mr. Speaker --
Mr. Deputy Speaker: I would be most glad to on Bill 151.
Mr. Peterson: -- I know that you can benefit from my counsel on this particular subject. They started off with an effective rate of 50 per cent. Then they realized it was not deductible and they negotiated it down to a 20 per cent rate. Then they effectively changed that rate on a sliding scale down in the 1977 budget. It has been the most flexible tax one can possibly imagine, coupled with the exemptions to their friends as previously mentioned. It shows that this government was forced into it because it perceived a political problem. It was not a philosophical commitment. This government had hinges on its heels then and it has still got them. They move with the pressures as they see them at the time.
There was no philosophy of taxation; there was no philosophy of equity. It was only to get a few people off their backs because they were going to be running into an election within a year.
Mr. Roy: Political opportunists.
Hon. Mr. Bennett: A good lesson learned from the Liberals in Ottawa.
Mr. Peterson: That’s the kind of government and that’s the kind of taxation system they have developed. Why are they out of it now? It still is only generating $9 million of revenue. It is peanuts as a revenue-raising device.
Hon. Mr. Bennett: At least we admitted it.
Mr. Peterson: It’s because this, coupled with other ill-conceived superficial measures --
Mr. Sterling: It stopped speculation in its tracks.
Mr. Peterson: You may ask why we have a bad tax climate in this country and in this province, Mr. Speaker. I’ll tell you why. It’s because investors all over, not only American investors but Canadian investors, are losing faith in this government’s and other governments’ ability to manage. Because of this government’s inconsistency, they don’t know from one day to the next what it is going to do. They know that the government doesn’t know the effective rate when it changes rates three or four times in a three- or four-year period. It is natural that any investor is going to say, “How much does this government know?” They are going to say, “What kind of philosophy of taxation do they have?”
Unfortunately, this is not the time for a full debate. We are finding that the competitive tax climate in this province is suffering with respect to some of the other jurisdictions in this country. When one looks at the moving of head offices, Ontario is starting now to suffer the same problem that we all think only Quebec has, with the moving of head offices westward and out of here. As the axis of political power and financial power shifts, as a government we are going to have to try to compete by removing these punitive taxes --
Hon. Mr. Bennett: Ottawa should have moved too; they’re not all provincial.
Mr. Peterson: -- taxes that in a real sense accomplish nothing.
I compliment the government for taking it off and we will obviously support it. But the time has passed when governments at any level can tinker in a superficial, meddling way for peanuts’ worth of revenue with no effect. No one on the government side has ever come to this House and proved in any measurable way the benefits of this particular bill, because they aren’t there. But the hidden detriment is fantastic, and we are glad to see it go.
Mr. Gregory: You started off badly and got continually worse.
Mr. Foulds: I would like to make two brief observations, Mr. Speaker. There are two purposes usually attributable to a tax: A tax can be used (a) as a deterrent and (b) as a source of revenue. It seems to me strange that, although this tax has not been applied as thoroughly and as judiciously as it might have, the revenue has risen consistently. In 1974-75, the revenue from the tax was something like $283,658, if the figures from the public accounts reports are to be accepted. That rose steadily over the years to $6,915,987 in 1977-78. What that indicates to me is that, if there was an increasing revenue in the taxation, there was an increasing incidence of land speculation transfers that were subject to the tax. The argument that has been used throughout by the Tory government and the “Tory” Liberal Party of Ontario, that the tax has been effective in stopping land speculation, simply does not apply.
Mr. Nixon: You want to nationalize it all.
Mr. Foulds: That is, if you have a higher incidence to which the tax is applicable and a higher revenue, surely there are increasingly apparent numbers of land speculation transfers.
Secondly, leaving aside the argument of a deterrent, this government more than any other government that I have seen, aside from the “Tory” Liberal government in Ottawa --
Mr. Rotenberg: How about the Tory socialists in Saskatchewan?
Mr. Foulds: -- is talking about government restraints and the necessity to balance the budget. They are crying -- and I just heard the Treasurer crying in his usual optimistic way -- that their revenues are dropping, and this is a serious problem. Yet we have before us tonight a bill that will deprive the province of approximately $10 million in revenue this year. That’s not a heck of a lot. But it’s better than nothing. It is revenue that we are throwing down the drain.
Mr. M. Davidson: Are you going to get that $10 million out of the workers? Are you going to up the income tax?
Mr. Foulds: By throwing that revenue down the drain -- the Minister of Revenue indicates that it’s $7 million -- by throwing $7 million down the drain, we are forcing the Treasurer and his colleagues to cut back on other programs that we in this province will not be able to offer.
Mr. Speaker, I ask you, in the name of common sense, how does a government such as this, which cries about the necessity to increase its revenues, repeal this tax and throw away the revenue, without replacing it with some other mechanism to get additional revenue?
Mr. Swart: Mr. Speaker, I want to join in on this debate briefly, because the statistics show that in this province there is no sector of price escalation generally in our economy that has exceeded the escalation in land prices in recent years. It’s true to say that generally in this province, and to a very substantial extent throughout the rest of Canada, the whole issue of land prices, particularly for residential development, is a shambles; that it has escalated to the degree where it has got out of the reach of the average individual. The only reason today that it has reached sort of a plateau and is levelling off is because there are so few people who can afford to purchase a lot for a single-family dwelling unit that it has kept the price reasonably level during the last year.
The document which was published called, Down to Earth, the report of the federal-provincial task force on the supply and price of serviced residential land, showed that from 1966 to 1975 in Ontario the price for foot frontage has gone from about $75 a foot in those 10 years to almost $300 a foot -- almost a four-fold increase in 10 years -- and the speculation tax has done little to deter that increase. The same book states that the profits of the speculators and the developers were excessive, particularly during those recent years within --
Hon. Mr. Bennett: Read from the report; not just the portions you want to read.
Mr. Swart: -- within almost two years, from 1973 to 1975, they went up from $150 a foot to almost $300 a foot frontage.
The speculation tax, as my colleague from Port Arthur said, should have -- as any tax should have -- two components. One is as a deterrent; it hasn’t worked as that. Number two is as a revenue source and it has worked --
Mr. Sterling: That’s false.
Mr. Swart: -- very poorly as that.
Mr. Gregory: You’d better get rid of it.
Mr. Swart: Because it has not been applied properly, because the government really had no heart in imposing it, because they gave all kinds of exemptions, there’s no reason now that we should abolish it totally.
Therefore, I, along with the other members of my party, will oppose this bill which has been largely ineffective, but which could have been a measure for keeping down the price of lots and getting additional revenue.
The fact that the government has administered it poorly is no reason at this time to abolish it.
Hon. Mr. Maeck: I will try to be as brief as possible; but there were some remarks made that I think require some answering. I’ll go through the list of speakers, those who require a reply.
Mr. Roy: Those who talked about a matter of substance.
Hon. Mr. Maeck: That’s very difficult to do in a debate of this kind. I can tell you. From what I’ve heard so far, there’s been very little substance.
Mr. Roy: You don’t have a very good memory.
Mr. Foulds: He has a good memory but it is short.
Hon. Mr. Maeck: To reply to the member for Erie first of all. He did suggest that some monitoring should be done if the act is repealed. I certainly agree with that. That can obviously be done very easily because those figures are available at any time from Statistics Canada and others. Any change in the market would be available to us immediately. That really wouldn’t be a problem.
The other question he asked was how many liens there are outstanding. I would advise the member there are no liens outstanding. There is $1.75 million in tax that is to be paid according to the normal payment schedules that have been set up and this tax will be collected in the normal manner. That pretty well answers the queries he made.
The member for Hamilton Mountain talked of the high prices of homes -- not particularly homes but property -- relative to people’s income. I would remind the member for Hamilton Mountain that people don’t live on property; they live in homes.
Mr. Wildman: What do they do, build the homes in the air?
Hon. Mr. Maeck: I have some comparison charts here of what’s been happening in Canada in general.
Mr. Makarchuk: Do they build their houses in the sky?
Mr. Foulds: What do they do then, live in a treehouse?
Hon. Mr. Maeck: Just a minute. I have some comparison charts here to relate just what has happened in Canada compared to Ontario in the last few years. In 1972-73, for example, the average increase in housing in Canada was 21.6 per cent, in Ontario it was 26 per cent. In the following year, 1973-74, in Canada it was 27.1 per cent and in Ontario it was 26.8 per cent.
Mr. Young: It is already too high.
Hon. Mr. Maeck: In 1974-75 when the spec tax came in, listen to these figures.
Mr. Laughren: That is disgraceful.
Mr. Swart: Compound that more --
Hon. Mr. Maeck: It was 11.8 across Canada, 5.3 in Ontario. In 1975-76, it was 11.7 across Canada and 7.6 in Ontario. In 1976-77, it was 5.1 across Canada and 3.9 across Ontario. So there is no question that it has been effective. I think you have to relate the figures to housing rather than to raw land or to lots, because you can’t live on a lot, you live in a house.
Mr. Laughren: Then why are you getting rid of i?
An hon. member: In most cases, but some of them over there are groundhogs.
Mr. Laughren: The minister is inconsistent.
Hon. Mr. Maeck: The member for Brantford, of course, brought up his favourite topic, the Ronto affair. It’s a matter that’s been debated in this House and in public accounts and, as usual, he is incorrect in all of his assumptions, all of his statements.
Mr. Worton: Is that a horse?
Mr. Foulds: He is listening outside.
Mr. Eaton: As usual.
Hon. Mr. Maeck: The provincial auditor’s report to the public accounts committee confirmed all of the ministry’s figures, contrary to what the member for Brantford is saying. At no time did the auditor say any amount was payable or outstanding. And no tax was payable and, therefore, none is owing.
Mr. Foulds: Here he is.
Hon. Mr. Maeck: And there was, I’ll remind the members of the Legislature, a judicial inquiry and they found no wrongdoing in the Ronto case at all.
Mr. Makarchuk: That didn’t have anything to do with the tax.
Mr. Foulds: They never said that.
Hon. Mr. Maeck: I just don’t understand why the member for Brantford insists on flogging a dead horse. That’s exactly what he’s doing.
Mr. Makarchuk: On a point of order, Mr. Speaker.
Mr. Breithaupt: There is nothing out of order.
Hon. Mr Maeck: There’s no point of order. I listened to you.
Mr. Acting Speaker: Order.
Mr. Makarchuk: The auditor’s report said tax payable, 20 per cent of net taxable value is $493,158. I don’t know what the minister is talking about over there.
Hon. Mr. Maeck: I think Mr. Makarchuk had better read the whole report. He should read the whole report. He only read chapters of it.
Mr. Makarchuk: The whole thing? We didn’t eat it, we read it.
Hon. Mr. Maeck: Read the whole thing and you’ll find out.
The member for Nickel Belt --
Mr. McClellan: We’ll be going to the next point, having established the first point and we’ll move right along.
Hon. Mr. Maeck: I only wanted to mention to the member for Nickel Belt that the Ministry of Consumer and Commercial Relations has a law about selling swamp land. I suspect it might also extend to rock because that’s about all the property Inco owns up there. I don’t think you could build on it if you wanted to.
Mr. McClellan: What have you got against rocks?
Mr. Laughren: Oh, Lorne, you know better than that.
Mr. Wildman: And you like to pretend you’re from northern Ontario.
Mr. Acting Speaker: Order.
Hon. Mr. Bennett: You made a fair assessment of that one.
Hon. Mr. Maeck: The member for London Centre talked about the 50 per cent initial tax rate, and that was so.
Mr. Laughren: You’re not the country boy from South River I used to know.
Hon. Mr. Maeck: However, when it was determined that it was not a deductible item as far as federal income tax was concerned, it was reduced to 20 per cent, retroactive to the date that the bill came into effect. So in effect there never was a 50 per cent rate on this particular bill. It was 20 per cent because the amendment made it retroactive to when it was introduced.
I want to conclude my remarks by saying that I for one am very happy to see, hopefully, the end of the speculation tax. I think Ontario has progressed very well without this type of regressive tax and I’m only too happy to see it go, provided I get enough support in this Legislature to do exactly that.
The House divided on Hon. Mr. Maeck’s motion for second reading of Bill 51, which was agreed to on the following vote:
Ashe, Auld, Belanger, Bennett, Bernier, Bradley, Breithaupt, Campbell, Cureatz, Eakins, Eaton, Elgie, Epp, Gaunt, Gregory, Grossman, Haggerty, Hall.
Havrot, Hennessy, Johnson, Kennedy, Lane, MacBeth, Maeck, Mancini, McCaffrey, McGuigan, McKessock, McNeil, F. S. Miller, G. Miller, B. Newman, W. Newman, Nixon, Parrott, Peterson, Pope, J. Reed, Riddell, Rowe, Roy, Ruston.
Scrivener, Stephenson, Sterling, Sweeney, G. Taylor, J. A. Taylor, Timbrell, Turner, Van Horne, Villeneuve, Walker, Watson, Welch, Williams, Wiseman, Worton, Yakabuski -- 60.
Breaugh, Bryden, Cassidy, Charlton, M. Davidson, M. N. Davison, Deans, Foulds, Germa, Gigantes, Grande, Laughren, Lupusella, Mackenzie, Makarchuk, McClellan, Philip, Renwick, Samis, Swan, Warner, Wildman, Young -- 23.
Ayes 60; nays 23.
Ordered for committee of the whole House.
MINISTRY OF TREASURY AND ECONOMICS ACT
Hon. F. S. Miller moved second reading of Bill 142, An Act to establish the Ministry of Treasury and Economics.
Hon. F. S. Miller: This bill to establish the Ministry of Treasury and Economics is required because of the separation of the Ministry of Treasury, Economics and Intergovernmental Affairs into two ministries.
Mr. Foulds: The minister wasn’t big enough for the job?
Hon. F. S. Miller: The bill to create the Ministry of Intergovernmental Affairs has not yet been given its first reading. However, the bill before the House deals with parts of the original TEIGA bill relating to the Treasury function. I do not believe any major change in principle is enunciated in the bill. Where changes in a part have been made, they are shown in the text of the bill and should guide the opposition in its comments.
Mr. Peterson: I am very happy to speak briefly on this bill. It is our belief that the government probably should have the prerogative to order its business any way it sees fit. In accordance with that principle, we will support the government on this particular bill. That is not to say we think it’s right. That’s not to say we think it’s good. That’s not to say that is the way we would do it if we were in government. I hesitate to point out that the day we assume power -- and I suspect that will be far sooner than members think -- we will change this ministry and we will streamline this government.
Mr. Pope: That’s not what the people in Chatham-Kent thought.
Mr. Nixon: There will just be a handful of you over here. There will be the member for Fort William (Mr. Hennessy).
Mr. Peterson: This bill we have had presented today is one of a long series of bills over a series of years trying to exculpate the government from the so-called Committee of Government Productivity. Since that has been created, there have been bills, there have been amendments, there have been changes, there have been aberrations and there will continue to be until someone gives that whole cabinet structure a complete and thorough dusting and cleaning, a D and C, if you will.
Mr. Makarchuk: It’s called the Conservative eunuch party over there.
An hon. member: Have a little more.
Hon. Miss Stephenson: Listen, it isn’t what he’s drinking, it’s what he’s smoking tonight that I’m worried about.
Mr. Worton: Just give him a dose of salts.
Mr. Peterson: Here we have this lady trying to apply medical opinions in this House, Mr. Speaker. I think she is taking advantage of her position.
Hon. Miss Stephenson: It was you who started it, not anybody else. D and C, my God!
Mr. Acting Speaker: Order.
Hon. F. S. Miller: Please explain that that’s not electricity.
Mr. Peterson: What we have today is the diminutive new Treasurer, taking on about half of his job. Unfortunately, the bill he has presented to the House tonight is only half a bill in a sense. It is very difficult for the opposition to study it or indeed for himself to know what his real responsibilities are.
Even after this bill is passed and even if it’s passed tonight, the Treasurer will not know what his responsibilities are because he has yet to work out with the Minister of Intergovernmental Affairs (Mr. Wells) the appropriation or the delegation of the various powers or the splitting up of the various functions of those two ministries.
It would have been far fairer to this House to have presented the two bills together so that we could have some rational understanding of how they’re going to split up the various responsibilities and who will be responsible for what. I assume that’s going to be sorted out in the near future and that we will have that bill for Intergovernmental Affairs before this House fairly soon.
At the origination, as I recall, as a result of the Cronyn committee, the Committee on Government Productivity, there were four superministers. The House leader was one of those superministers. Isn’t that an interesting case, from a superminister to a non-minister. There is a gentleman today who is hanging on to a portfolio.
Mr. Roy: He is enjoying himself.
Mr. Peterson: The only reason he has that is to allow him cabinet status and the extra $18,000 a year. He is a paid flack to run this House and, to his credit, be does a very charming job. But it doesn’t necessarily guarantee him cabinet status in order to organize this unruly House.
Remember when we look back to that great leadership convention -- what was that great Canadian’s name?
Hon. W. Newman: That was your leadership convention. I remember that very well.
Mr. Peterson: It was Allan Lawrence. I remember Allan Lawrence well. He lost by 45 votes. I have some sympathy for that man, let me say, but he has gone to his reward in Ottawa, to oblivion in the back benches there. As members recall, he was a superminister.
And then there was Bert Lawrence. Whatever happened to Bert Lawrence?
Hon. Miss Stephenson: Better you should have stood by the member for Brant-Oxford-Norfolk (Mr. Nixon).
Mr. Roy: Bert who?
Mr. Nixon: Remember the night he challenged the Speaker’s ruling?
Mr. Peterson: And who was the other one?
Mr. Nixon: Darcy was one.
Mr. Peterson: Darcy McKeough, God bless him. We have now split up his jobs. What happened was that whole process was ill-conceived because Cronyn and his committee in their wisdom --
Hon. Mr. Grossman: How much did you lose by? Was it 44?
Mr. Peterson: -- felt that the superminister’s job should be to think. That was a fundamental error because I have yet to see a cabinet minister think in any respect over there. They would prefer to act, and we haven’t seen very much of either since.
Mr. Roy: The House leader didn’t like the thing. It was too low a profile.
Mr. Peterson: They have confused all of this post, that great committee on government organization with Jim Fleck, God bless him, at Harvard, with all of his flow charts, and John Cronyn who brought all these marvellous management principles in from Labatt’s.
Mr. Nixon: Mr. Canadian Tire.
Mr. Peterson: Fortunately, and I say to his credit, he is a heck of a lot better at running Labatt’s than he was at running this government. We have seen the gradual dismantling of that committee step by step. We have only the hangers-oner -- the oners, the hangers-on, the hang-oners -- whatever it is. That is all we have left.
Mr. Roy: The hanging?
Hon. Mr. Welch: That is tomorrow.
Mr. Peterson: We have delegated these so-called important jobs. There is the honourable minister who speaks so rarely I don’t even know her title. I am sure it is an important title. The honourable Scarborough minister -- what is her title?
Mr. Nixon: Policy secretary.
Mr. Peterson: The policy secretary for social something or other. What does she possibly contribute, I say with great respect to this House, what kind of organization abilities?
Hon. W. Newman: If you stayed in the House you would find out.
Mr. Peterson: We have found that they have combined for convenience which has nothing to do with productivity. It only has to do with individuals, with politics, with power, with the availability of certain warm bodies at an appropriate time when they are reorganizing the cabinet.
We are seeing the Minister of Agriculture and Food come to life, and that is a refreshing treat.
Mr. Breithaupt: Like the job of the Minister of Northern Affairs (Mr. Bernier).
Hon. W. Newman: I’ll tell you something. The day you know anything about agriculture, I will sit down. You know nothing, absolutely nothing.
Mr. Peterson: I want the Minister of Agriculture and Food to know I was raised on a farm and I spend all my summers there.
Hon. Miss Stephenson: You are suffering from -- why don’t you sit down?
Mr. Peterson: It is our profound belief that if we are going to reorganize government, if we are going to bring leanness and efficiency, the first place we would start is at the top.
Mr. Pope: Start with your own caucus.
Mr. Peterson: We would start at the cabinet level. It is our judgement, and we have said this repeatedly, that the government has shown a remarkable lack of management discipline and of fiscal discipline in the creation of this proliferation of absolutely unnecessary cabinet jobs.
Mr. Pope: Start with your leader; organize your leader.
Mr. Nixon: What has leanness got to do with anything?
Mr. Van Horne: What about all the frame-ups over there?
Mr. Peterson: I must say that I am not in disagreement with the changing of the Ministry of Intergovernmental Affairs and splitting it off in Treasury and Economics in a sense, but I would like to contribute this one little bit of advice from our side.
Mr. Pope: Oh, don’t bother.
Mr. Peterson: It is my belief, and I say this to the Treasurer with sincerity, that he should maintain the federal-provincial intergovernmental function that is critical to the functioning of the Treasury of this province.
I would not have called the member for Scarborough North (Mr. Wells) the Minister of Intergovernmental Affairs; we would have made him the Minister of Municipal Affairs. That is the only case that we can see for the creation of a new cabinet portfolio. In the process, we would have cut out at least five or six. We can see far more rationalization, for example, in combining Correctional Services and the Solicitor General. We don’t see any possible rationale for combining Solicitor General and Attorney General, which is a violation of functions.
What is this being delivered from the Minister of Education (Miss Stephenson)?
Mr. Roy: She’s spreading drugs or something.
Mr. Nixon: It’s one of Beth’s marbles, she’s lost them again.
Mr. Peterson: Here, page; you better take it back. She’s going to pop a blood vessel.
What I am saying, Mr. Speaker, is there is no rhyme or reason for the distribution of the cabinet portfolios. Here we have a minister carrying Colleges and Universities. God knows what she’s going to have next week. I assume her job will be to report back to the Premier (Mr. Davis) whether she can handle both or whether she can’t. We have the Attorney General (Mr. McMurtry) carrying two portfolios. We have other people carrying extraordinarily light portfolios.
Hon. Mr. Grossman: What would you do with mine?
Mr. Peterson: A lot of them are lightweights, in fairness, so I am not saying there’s a mismatch. But I am saying if you analyse the organization of this government it has nothing whatsoever to do with efficiency.
At the risk of being a tiny bit repetitive, I want to say this to the Treasurer: I hope in his negotiations with the cabinet that he will keep that federal-provincial intergovernmental function very much his own. When we consider the total budget of this province, that some $4 billion comes in by way of federal transfers, when we consider that takes some very tough negotiation, we need a strong voice --
Mr. Nixon: Is it $2 billion or $4 billion? It is shared cost.
Mr. Peterson: I could be very wrong on that, Mr. Speaker. If I am wrong, I apologize.
Hon. Miss Stephenson: You are, as usual.
Mr. Peterson: Anyway, it’s a substantial amount of money.
Mr. Roy: We can’t be more wrong than the budget forecast.
Mr. Nixon: They collect all your income tax for you.
Mr. Peterson: That function has to be kept in his area. How else, given the considerable amount of money, can he conceivably do proper budgeting, when he has an obligation to correct or to change or to stand by the federal figures as they are given to him? That, necessarily, has to be his responsibility, as I see it. The responsibility of the Minister of Intergovernmental Affairs, who should have been called the Minister of Municipal Affairs, could be very easily combined with Housing if the government wanted to get rid of a portfolio. That’s a declining portfolio, with a declining minister at the helm. There’s a job that could be combined efficiently --
Mr. Breithaupt: The minister doesn’t like his ministry anyway.
Mr. Peterson: -- and well; there is a job that could be done far better. We said before that we could probably run affairs as efficiently and as well with a 20-member cabinet, without all of the attendant limousines and bureaucracies and perks and executive assistants. And we could do so without the Minister of Industry and Tourism (Mr. Grossman). We wouldn’t have to put up with people like him yapping in our cabinet, we could do it so much more efficiently.
An hon. member: No yapping in the Liberal cabinet.
Mr. Peterson: It is a sad commentary on the calibre available to build the cabinet when the member for St. Andrew-St. Patrick (Mr. Grossman), the diminutive member -- look at the physical stature of those three men sitting across on that front bench.
Hon. Mr. Grossman: Come on over here and say that. Come on over here. I resent that.
An hon. member: It is appalling.
Mr. Peterson: If I was them I would put the Minister of Government Services (Mr. Henderson) right in the middle.
Hon. W. Newman: As the member from Thunder Bay said, “Do you want to step outsider?”
Mr. Peterson: Does the minister resemble that remark? Is that what he said? Mr. Speaker, there’s no question they need some heft and they need some weight on that front bench.
Hon. Mr. Grossman: Where is Lorne?
Mr. Peterson: It’s a very difficult night to make intelligent points. I think that everyone gets a little spooky on Hallowe’en and with any luck we won’t have any important debates on Hallowe’en night in future years.
But I do make my remarks to the Treasurer about this particular division of responsibility very seriously. I hope he keeps that function. He is entrusted with a very grave responsibility. He is the second most important man in that cabinet. He must maintain the power to deal effectively with the federal government, a principal source of revenue.
With that, I will leave the debate.
Hon. Mr. Welch: You’re one of us -- one of the short people.
Mr. Swart: It’s from the shoulders up that counts, Bob.
Mr. Laughren: I’m glad the minister is allowing me to cope with a smaller ministry -- not only me, but also the rest of us in this chamber. I know why the Ministry of Treasury, Economics and Intergovernmental Affairs has been split into two; it’s because the minister couldn’t cope with my colleague the member for Welland-Thorold (Mr. Swart). He certainly could not cope with a fact.
Mr. Eaton: Who could cope with that?
Mr. Laughren: His expertise in the area of municipal activities is greater than the accumulated expertise on that side of the chamber. That’s true; that’s a fact.
Hon. Mr. Grossman: He has more election experience.
Mr. Laughren: I don’t care whether we are talking about the assessment of property or about grants to municipalities, my colleague from Welland-Thorold has more expertise than all the ministers combined. That’s fact.
We are supporting the splitting up of the TEIGA ministry for a couple of reasons.
Hon. Mr. Grossman: Send it to committee.
Mr. Laughren: As a matter of fact, we intend to send this bill to committee, but it’s nice to know the minister supports that move.
We feel that the whole area of intergovernmental affairs is important and even sensitive. Quite frankly, we are worried that, when the Treasurer had control of the municipal affairs as well, there was no one there standing up and fighting for the municipalities. That is evident in what has happened with the grants to the municipalities in the last couple of years. That’s another reason we feel that splitting this ministry is a good move. It was a ponderous ministry before.
I won’t say that spinning off Treasury and Economics puts a very significant burden on the present Treasurer to deal with the problem of Treasury and Economics in a very fundamental way. If I might, I would remind the Treasurer that the only difference between the responsibilities of the Minister of the Treasury, Economics and Intergovernmental Affairs back in 1972, in the bill that was passed then, and those in the bill that we are debating tonight, in terms of the key operational section, is the omission of the words “and Intergovernmental Affairs.”
Section 5 of the bill states: “The Treasurer shall direct and control the Ministry of Treasury and Economics; recommend to the executive council of finance, economic, accounting and taxation policy; supervise, direct and control all finance, economic, statistical and accounting functions; and manage the consolidated revenue fund and all public money.” That’s the operative part of this bill, as we see it.
The only difference between that and the bill back in 1972 is that the words “and Intergovernmental Affairs” are not included in this bill. In no way do we see this bill, even though it splits up TEIGA, as giving the Treasurer any less onerous responsibilities in managing the economy of Ontario. As a matter of fact, it is our hope that he will concentrate in such a way that he can understand the problems of the province better than his predecessors seemed to.
I will add a proviso there, that we are not particularly happy with what has happened just in the short week that the Legislature has been back. Partly it goes back, I must say -- and I have no intentions of being personal -- to the Treasurer’s roles as Minister of Health and Minister of Natural Resources, where no new initiatives were taken, either in the Natural Resources field or in the Health field. There was ample opportunity to strike out in areas like preventive health care, community health clinics and so forth, but that didn’t happen with the present Treasurer when he was there.
We think that in Ontario now there needs to be a Treasurer who will move out in bold new directions, who will take a different approach to managing the economy of Ontario. Let’s face it: The Treasurer is the guardian of the economy in the province. That’s an onerous responsibility, and the Treasurer has an obligation to respond when conditions change in the economy. We are very worried that he is not going to do that.
We are nervous because of his statement on the day after the Legislature came back, his statement on October 24 -- and we’ve been through that, why that made us so nervous. We’re nervous about his response to the question we raised about the content of the document submitted by the Ontario government to the federal government dealing with multilateral trade negotiations. We’re worried about the Treasurer’s response to that and his seeming inability to cope even with the content of that document. That makes us very nervous.
When the Liberal Party critic the member for London Centre (Mr. Peterson) and myself and others talked in the interim supply debate, raising what I thought were some pretty serious questions about the state of the economy in Ontario, the Treasurer merely shrugged, smiled and sat down. That’s virtually all he did when he responded.
Mr. Wildman: Quit this partisan response.
Mr. Laughren: The Treasurer is making a serious, fundamental error. He thinks that because economic problems do not seem to be catchy or politically sexy, he can ignore what the opposition is saying. That’s wrong. The state of the economy is such that he simply cannot do that, he must not do that. He must respond in a serious way to the questions raised by the opposition.
It’s not just the opposition in this chamber to whom he should listen. When I look at section 5 of the bill and see what his responsibilities are, see the mandate this bill gives him, it seems to me he has a responsibility to respond not just to questions raised in this chamber, but to people at the Conference Board in Canada who are making some very thoughtful statements on the economy today; the Economic Council of Canada, the banks with their research services; Statistics Canada, and his own people who are making statements such as that document that went to the federal government dealing with the Tokyo round of the GATT negotiations.
The Treasurer has an obligation to respond not just to us but to those people as well. He cannot ignore forever the data coming to the surface on the state of the economy. It very serious. That submission to be made to the federal government shook me up a bit when I read it. It’s the first time, to my knowledge, that the people around him have stated that they understand the seriousness of the problem. They realize we’re dealing with a structural problem in the economy and that the old ways of solving the problem simply won’t work.
These are people who are serious about what they’re doing; they’re serious in that they understand not only the problems, but also some of the solutions, and the Treasurer has an obligation to listen to them.
When I read section 5 of the bill I know he has the mandate to undertake a lot of research himself with his people and to intervene when the time is appropriate. I look at the three key branches of his ministry, the economic policy branch, the economic analysis branch, the economic development branch, and at the objectives of those three branches. They certainly give the Treasurer a mandate to take a look at the problems in the economy and attempt to do something about them. He cannot continue to shrug off the problems that we and other groups are raising. He simply cannot do that if he’s to have any credibility as the Treasurer of the province of Ontario. That’s something he has yet to learn, I’m afraid.
We don’t know at this point whether the Treasurer understands it. We don’t know whether he has the courage to tackle a problem as enormous as the one we’re facing in Ontario. We’re waiting, because the statements he’s made today don’t reveal that he has either the initiative or the courage to tackle those kinds of problems, given their enormity.
We’re very concerned about that. I don’t know how many times we’ll have to say it. Thankfully, his ministry’s estimates are coming up within the next couple of weeks and we intend to lock horns with him again at that time. The debates we’ve had in the last couple of days will serve notice to the Treasurer that we’re serious about it. We expect a thoughtful response to the kind of analysis that other groups are doing and that we ourselves are doing.
I have never seen such a plethora of information as that which is coming from the different groups interested in the problems of the economy. If we’re coping with them, if we’re trying to digest them and make positive suggestions to the Treasurer, I think we deserve a more serious response than we’ve had to date.
I was very serious last week when I responded to the Treasurer’s statement by saying that it was superficial and frivolous. I was very disappointed in that. I’m not expecting some kind of ponderous response, but rather an indication that the Treasurer is serious about engaging with us in a debate on the state of the economy and the solutions to the problems.
I don’t think that’s asking too much, because that’s one reason we are here too. If the Treasurer wants to take his political stances, with his charade of optimism, we’re not going to get anywhere and we’re not going to be able to resolve some of the problems.
Once again, I’d like to address myself to the minister, harking back to section 5 of the bill and some of the problems we see. Perhaps if we say it often enough the Treasurer will start to listen to us.
The Conference Board in Canada is a body that certainly no one can accuse as being of a socialist nature. They’re an independent forecasting body. I don’t think their statistics are suspect; I think they do good research. They rely a lot on Statistics Canada and so forth. I don’t think there’s any question about the validity of the conference board figures.
The conference board has done some excellent work on the state of the economy. Particularly the conference board and the Science Council of Canada have done a lot of tremendous work, as have the people around the minister. As a matter of fact, that document that was prepared for submission to the federal government contained a lot of material that looked like it had been lifted right out of the science council documents.
Not only the conference board and the Economic Council of Canada and Statistics Canada, but of all people, the Canadian Senate has a standing committee on Canada-US relations in trade. They have done an excellent study on what’s wrong with the economy and with our balance of trade and so forth.
There’s a lot of material there to indicate to the Treasurer what the problems are and how serious they are. At the same time, when that information is available to him -- and presumably his people are bringing this information to his attention -- he comes up with the kind of superficial statements that he has in the last week.
One area the conference board looked at was some of the weak industries in this country. I’m sure the Treasurer would admit that Ontario is the heartland of the Canadian economy and that as Ontario goes so goes the country. While the conference board deals primarily with federal analysis, they do sometimes comment on the Ontario economy. Certainly whatever they say federally applies in spades to us provincially.
When they talk about the weak industries in the country, basically they’re saying there are six key industries. They are clothing, knitting mills, leather products, textiles, household furniture and electrical products. If you look at those six industries and you see what happened to the trade balance between 1971 and 1976, it gives one pause for thought.
I quote from the conference board document. “The combined trade balance of these six labour-intensive industries deteriorated by $2.2 billion between 1971 and 1976, which accounts for approximately 62 per cent of the deterioration of the manufacturing trade balance over that period. Six key industries accounted for 62 per cent of the deterioration in our manufacturing trade deficit.”
That’s pretty serious, but what it allows the Treasurer to do is zero in on an area where he doesn’t look at the whole problem and think it’s too big to tackle. There are six specific industries he could be looking at.
Further, there have been sectoral studies done by the federal Department of Industry, Trade and Commerce. There are all sorts of suggestions sitting on the Treasurer’s doorstep and it’s up to him to respond to what role he sees Ontario playing. He cannot, he simply must not, shrug his shoulders and say it’s up to the federal government, he is waiting for the federal government to take action.
If the Treasurer has that much faith in the federal Liberals, stand up and say so; if he doesn’t, then he should take some action himself. Those are his options.
Mr. Makarchuk: They wouldn’t stand up.
Mr. Laughren: I’m telling the Treasurer he can’t have it both ways. Either he thinks the federal government is going to resolve our problems and has the capacity and the will to do so -- and given the track record I don’t know how he can think that; or he doesn’t think they have the capacity to do it, in which case it’s up to him to play the role. That’s what we’ll be waiting to see.
Mr. Wildman: In their document they said they would.
Mr. Laughren: The Treasurer has an obligation to play more than a self-serving political role in his position. I know those are tough words and I see the Treasurer frowning, but I’m telling him his response in the last week makes us extremely nervous. We really don’t think he’s serious about the job he’s supposed to be doing. If he is, give us some indication, tell us about it.
Hon. Miss Stephenson: Shame on you, really.
Mr. Laughren: Let the minister tell us why he is serious and in what way. Let him tell us how he intends to respond? All he’s told us so far is that in the great wonderful world out there things are getting better. He says things are better now than they were a year ago. There is no evidence of that; as a matter of fact the signs are the opposite.
Hon. Miss Stephenson: Doom and Gloom Laughren.
Mr. Laughren: Doom and gloom, she says. Perhaps the minister would accuse the conference board of doom and gloom; perhaps she would accuse the ministry’s own people, the Ontario government people, of doom and gloom. She’s going to accuse everybody of doom and gloom. This government is the kind that blames the victims whenever there’s a problem.
Mr. Swart: You are the ones who created it.
Mr. Laughren: This government always blames the victims. It never takes the responsibility itself.
Hon. Miss Stephenson: Oh, balderdash. As usual you don’t know what you are talking about.
Mr. Warner: There is no one out of work.
Mr. Swart: Our economy is in good shape. We only have a deficit of $1.5 billion this year.
Mr. Warner: Hide your head. Stick your head in the sand and open your mouth.
Hon. Miss Stephenson: All right, David, yours looks better there.
Mr. Laughren: We keep asking the Treasurer to respond in one way or another. I don’t know how many openings we have to give him, but I’m going to give him another one now. I’d like the Treasurer to tell us what he thinks about the problem of the lack of research and development going on in the province of Ontario. There is an area to which he can address himself. It’s nicely focused. Tell us about research and development.
Let me tell him once again what the conference board said: “It is now generally accepted that technology and technological innovations play an important role in the long-term rate of growth of an economy.” That is accepted.
“R and D expenditures in the manufacturing industries as a proportion of the gross national product peaked in 1967 when over half of one per cent of the GNP was devoted to research and development in manufacturing. However, this ratio has been declining steadily since then and by 1977, 0.33 per cent of the GNP was devoted to research and development in manufacturing.”
Tell me that the conference board are purveyors of gloom and doom; tell me that, tell me the statistics are not valid.
Mr. Makarchuk: That’s their friend, Rene de Cotret.
Mr. Laughren: The alternative to that kind of rhetoric is to address oneself seriously to the lack of research and development being done in this country.
Then the conference board goes on:
“Whilst Canada currently devotes less than one per cent of its GNP on total research and development, most industrialized countries allocate a substantially higher proportion of the GNP to research and development.
“Furthermore, in Canada only one third of one per cent of the GNP is devoted to research and development in the manufacturing sector. This is in sharp contrast to most of the other countries where the manufacturing sector specifically accounts for one per cent of the GNP. For example, the United States devotes over 1.5 per cent of its GNP to research and development in the manufacturing sector.”
One third of one per cent in Canada as compared to 1.5 per cent in the United States. If the minister thinks seriously about it, he will have to come to the conclusion that the whole structure of the branch plant economy in this province, in this country, is responsible for it. It’s no coincidence that it’s 1.5 per cent in the United States and it’s 0.33 in this jurisdiction.
What is the Treasurer’s position on compulsory research and development by multinationals in Ontario? Does he have a position on it? Is he serious about it? Does he think that the conference board is wrong in stating there is a very direct relationship between economic growth and development and the research and development that’s done in the manufacturing sector? If he disagrees with that we would certainly be interested in hearing it. We’d also like to hear the basis on which he reaches his conclusion.
There are statistics available that show that the industries that do research and development are the ones that have the highest growth pattern. They’re also the ones that are most productive. I hear people in this chamber talking about the lack of productivity of the Canadian worker.
Hon. Miss Stephenson: No you haven’t.
Mr. Laughren: Yes I have. I heard it this afternoon.
The lack of productivity is not due to the workers in this jurisdiction. It’s due to the kind of economy we’ve got, with short runs and a small domestic market, and the lack of research and development by the branch plants.
Mr. Wildman: Poor productivity by capital.
Mr. Laughren: Yes, as a matter of fact there have been studies done showing that the productivity of capital in Canada is significantly less than the productivity of capital in the United States. Yet we still hear some people -- some member of the Liberal caucus this afternoon was talking about the lack of productivity of the Canadian worker; it’s simply a lot of nonsense.
Mr. Grande: Uninformed Vince Kerrio.
Mr. Nixon: We are just working slobs.
Mr. Laughren: The Treasurer’s optimism is based on something. I don’t know what it is, but some day, hopefully, we will get the kind of data, to which I think we’re entitled, to substantiate his optimism.
I would love to know what it is; and I don’t. Is it based on the kind of research and development that is being done? Not by any statistics I’ve ever seen. Is it based on the government revenues that were pouring into the consolidated revenue fund this year? Not according to the Ontario Finances which the Treasurer just tabled yesterday. Is it based on the unemployment figures? No; because they are going up, it can’t be. Is it based on the rate of inflation? It can’t be based on that either. Is it based on import substitutions? No, because the statistics are bad there too.
I know that this is gloom and doom to government members. I suppose to cry out gloom and doom is one way of avoiding responsibilities; that simply is where it begins and ends.
As a matter of fact I wanted to talk about import penetrations. That’s another area to which the Treasurer should address himself. He makes nice noises about buy Canadian and so forth, or the Ministry of Industry and Tourism does.
Let me tell members some of the things that have happened to the proportion of imports that make up our domestic market, some of the key industries. In the primary industries, which include of course agriculture, hunting, fishing, trapping and mining, the proportion of imports that made up our domestic market in 1971 were 16.6 per cent, in 1976 they were 23.6 per cent. That’s a tremendous increase in the amount and proportion of imports that are making up our domestic market in primary industries. In the manufacturing industries, it’s gone up from 27.4 per cent to 29.7 per cent. That certainly applies to Ontario more than others.
Specifically -- and listen to these figures -- in the machinery industry it’s gone up from 66.2 per cent to 70.9 per cent -- that’s the penetration of our domestic market by imports; transportation equipment, from 66 per cent to 69 per cent. It goes on and on. The material available is almost overwhelming. The further you look at it and the closer you look at it, the more you realize how structural the problems are.
Mr. Rotenberg: What’s this got to do with the principle of the bill?
Mr. Laughren: Well perhaps the member would like to read the bill.
Mr. Warner: That highlights the problem over there.
Mr. Wildman: Section 5, just look at section 5.
Mr. Laughren: It’s that kind of attitude that tells me that the Treasurer doesn’t have his own caucus behind him in dealing with the problems of the economy in Ontario; that’s the problem.
Mr. Warner: It highlights the whole problem.
Mr. Grande: Back-benchers.
Mr. Laughren: If we could just zero in for a moment on manufacturing in high technology areas. If there is a hope for us in trade, and that relates to the value of the Canadian dollar of course, it should be in high technology manufacturing. When I look at high technology manufacturing, and the balance of payments picture in high technology, it is devastating between the years 1970 and 1975.
Mr. Rotenberg: Better be careful, I won’t vote for you next time.
Mr. Grande: True; but I must admit I don’t need your vote.
Mr. Rotenberg: You will next time.
Mr. Laughren: The increase in the deficit in high technology areas alone is over $5.5 billion just between 1970 and 1975. It’s a very serious problem.
I don’t know how much harder we can push the Treasurer to try and convince him that the problems are serious. I hope that if we continue to push that we’ll convince him that we’re not going to give up, we’re going to keep pushing until we get some answers. When we get to the estimates of the Minister of Treasury and Economics we intend to be even more specific than we have been to date.
We support this bill in principle, but I tell the Treasurer our patience is wearing very thin. Because we would like some specific answers we do intend, when we finish speaking on second reading, to send the bill to committee.
Mr. Speaker: Does any other member wish to speak to second reading?
Mr. Williams: Mr. Speaker, I did want to speak for five or 10 minutes on this bill, but in light of the hour it might be more appropriate to adjourn the debate at this time and continue at the next opportunity.
Mr. Wildman: Most sensible thing he has ever said.
On motion by Mr. Williams, the debate was adjourned.
Mr. Speaker: In accordance with our announcement this afternoon, I deem a motion to adjourn to have been made and we will call the order of business as announced earlier. In accordance with standing order 28, I will hear the member for Brantford for up to five minutes.
Mr. Makarchuk: Thank you, Mr. Speaker. These questions were addressed to the Minister of the Environment (Mr. Parrott). He did not answer adequately this afternoon and I would like to receive the answers to the following points regarding the matter of the lagoons that have been developed in the urban environment near the city of Brantford.
In the first place, the minister did not explain why no consultations were carried out with the city of Brantford, which will be affected by the lagoons; nor with the Grand River Conservation Authority which is responsible for the Grand River into which the lagoons will drain.
The minister does not take into account the fact that the effluent going into the lagoons is the type over which he has no control. It will contain not only human waste but industrial waste which includes solvents, paints, plating fluids and various other chemicals of which we are not at this time aware.
The minister says, and his staff say, that the effluent will be treated in the lagoon by sunlight and bacteria, this is the report in the paper. Further, the minister said earlier today that the effluent from the lagoons will be of such a nature that it could be drained into the watercourse without any problem at all, as is being done from an ordinary sewage treatment plant.
I should point out to the minister that if the effluent was suitable for drainage at any time, then the statement by one of his officials to the effect that the effluent will only be discharged when the water levels are high, in other words mean that it’s not treated it but concealed the effluent, not to control it. This is the statement by his official.
In a letter from the previous minister to myself he says: “In any case, careful consideration will be given to the submission when it is received, owing to the limited assimilation capacity of Fairchild Creek.”
If the effluent was pure or of reasonable quality, then there would not be the problem of assimilation; the effluent could be dumped at a steady rate into a watercourse.
The minister does not answer questions on the fact that this action will be introducing more hydrocarbons into the Grand River and the fact that it will require greater chlorination; added to the fact that the Grand River at this time already has hydrocarbons or chemicals which are treated by chlorine, and which produce cancer-inducing agents.
This is a hazard in the Grand River now. Dumping more stuff into the Grand River will be increasing this hazard. The minister didn’t answer that question.
The minister also didn’t answer on the fact that the various chemicals from the industrial source will be dumped, pretty well in their natural form, into the Grand River again. This means rare metals going into the Grand River, and eventually into Lake Erie in an area where one of the few remaining commercial fishing industries exists on the lake. Of course, the result will be to possibly poison that.
The minister in his reply did not touch on the fact that there is a sewage treatment plant in process, a treatment plant that is being built right now, which would be able to handle this sewage or the waste from this area; that all that is needed is a pumping station, and the pumping station would not only provide service for the area but would also provide service for a proposed residential area. In effect, what the minister is doing is wasting $90,000 for the lagoons -- wasting $90,000 of the taxpayers’ money to create another hazard.
In effect, I would like to know why the minister embarks on policies that, in the first place, are injurious to the environment and, in the second place, are in the long run costly to the taxpayers?
Mr. Speaker: The honourable minister for up to five minutes.
Hon. Mr. Parrott: I can assure you, Mr. Speaker, I won’t take that long. I think what the member for Brantford really does need is a short course in the sewage treatment methods here in Ontario and indeed in many other places in the world. He just plain doesn’t understand the seasonal discharge systems that lagoon systems have.
Mr. Makarchuk: Your own letter says it can’t handle it.
Hon. Mr. Parrott: It does not.
We will be very pleased to give him that course if he should so like. There is absolutely no need to chlorinate the effluent, contrary to what the member says. He won’t accept that, but I guess that will have to be his problem. There is no need to chlorinate the effluent.
Mr. Makarchuk: I didn’t say you did have to.
Hon. Mr. Parrott: We won’t do all those terrible things he predicted. I ask the member, is it worth spending $90,000 to protect the environment, to protect the rivers and streams of this province? I think it is. I suspect that on many other occasions he would suggest we should spend many more dollars than $90,000 to protect the environment but when it’s convenient for his own purpose, whatever that might be, to criticize it, he does so.
Mr. Germa: You should have built a pumping station.
Hon. Mr. Parrott: I think, in conclusion, that his last statement was perhaps the most damaging. He would like to imply that there is great injury to the environment. It’s not factually correct. I said that this afternoon, and I can’t add much more. If the member does want to avail himself of some of the information the ministry has, we’ll be glad to provide it.
Mr. Swart: A poor answer.
Mr. Warner: You’re not going to be long in that job.
Mr. Speaker: This disposes of the matter.
The House adjourned at 10.37 p.m.