The House resumed at 8:02 p.m.
House in committee of supply.
ESTIMATES, MINISTRY OF TREASURY AND ECONOMICS
Mr. Chairman: Does the Treasurer have an opening statement?
Mr. Hall: Your friends are all over here.
Mr. Peterson: You have a lot of support over here tonight.
Mr. T. P. Reid: Is this the kickoff for your election campaign, Frank?
Hon. F. S. Miller: I have all the support I need, and perhaps all I deserve.
I am going to be brief.
Mr. Laughren: Not too brief.
Mr. T. P. Reid: You are obviously going to stick to what you know.
Hon. F. S. Miller: I would like to say a few words about the Ministry of Treasury and Economics before we begin the proceedings tonight.
As you know, the ministry formerly included in its responsibilities the coverage of municipal and intergovernmental affairs. The separation of those two areas of responsibility from the ministry should really be looked upon as one of many steps taken over the past few years to adjust the structure of government to the needs of public policy. Before that particular move was made, the ministry gradually had been shedding certain functions which were tending to become less policy oriented and more of a line nature.
A good example of that was the period during which the Ministry of Housing was established. At that time, the administration and approval of local official plans was transferred to the Ministry of Housing. As that ministry developed further, there emerged a need to put greater emphasis on community planning in the Ministry of Housing and much less on that aspect of Treasury’s work.
Treasury’s role in regional planning is now of the large area order. We look at the broad development needs and regional economic opportunities of the province rather than the fine detail of community planning. All this has evolved gradually and hand in hand with two other developments.
Firstly, there has been a continuous growth in the sophistication and self-sufficiency of local governments in a wide range of activity, including urban planning and development.
Secondly, there has been a noticeable increase in the past few years in the complexity and demands of maintaining clear linkages and consultation with local governments, other provinces and the federal government.
There are certain functions which belong uniquely to the Ministry of Treasury and Economics. They are those which deal with establishing the broad strategy of the government’s budgetary policy each year; cash management; financing and financial reporting for the province; the design of tax policies; and the design of economic development policies for Ontario.
In this process, Treasury and Economics is a policy ministry. It acts as a co-ordinator and a facilitator on many occasions rather than a deliverer of public services.
I am pleased that today we have a ministry that is leaner and significantly smaller than it was four years ago. The changes have been for the better.
Mr. Laughren: We have got two ministries.
Mr. Peterson: Definitely shorter.
Hon. F. S. Miller: I believe that as a result we have a more responsive and efficient system of public administration.
In presenting the spending estimates of the Ministry of Treasury and Economics, I am asking the Legislature to approve the expenditure of $1,646 million for the fiscal year 1978-79, of which $16 million, or one per cent of the total, is provided for administrative expenditures; $1,443 million, or 88 per cent, is provided for interest on the public debt; $114 million, or seven per cent, is provided for development loans to three provincial corporations; and $67 million, or four per cent, is provided for payments from pension funds, deposit, trust and reserve accounts. Transfer payments, the Ontario Economic Council and the acquisition and construction of physical assets account for the balance of approximately $6 million.
I look forward to discussing these and other matters with members during consideration of the budget estimates -- five minutes.
Mr. Peterson: That was a marvellous little speech and I want to congratulate the Treasurer. We have yet to figure out what he really thinks about the state of the economy of this province.
Mr. McClellan: Give us two and a half minutes, will you?
Mr. Peterson: I must say that I, for one, was somewhat disappointed with it. I think very frankly -- I am going to be very sincere about this -- I share a general disappointment with the business community and the economic community in knowing really where the Treasurer stands on a plethora of issues that are important and that we are going to have to face very shortly. There was no question ever where the previous Treasurer stood on any issue, be that right or be it wrong.
I think one of the reasons we have economic insecurity in this province today, when we look at some of the figures we will be exploring in the course of these estimates, is going to have to come down to the general business community’s assessment of the Treasurer. Like it or not, personalities are almost as important as policies in a democracy such as we have here today. People are looking at you very carefully, and not necessarily through rose-coloured glasses, saying, “What does that man stand for? How tough is he? How much clout does he have? Does he have control over his bureaucracy? Who really runs that place and what does he really stand for?” I say that very respectfully.
I say to the Treasurer, who I consider a very fine man, and I know that none of the remarks that I make here tonight are going to be taken personally --
Mr. Laughren: It depends how you deliver them.
Mr. Peterson: -- that people are looking for more than you have given since you have taken over that portfolio, the second most important portfolio in the government of the province of Ontario. I think it would behoove you to have clearer statements and more information than you have given today. The statement that we have just read is frankly a bit of a disappointment. That speech could have been made on the reorganization of your ministry.
Mr. Laughren: I think it was.
Mr. Peterson: It’s a rehash, I am sure of some aspects of it. When I look at these things I get a little bit disappointed. You say you have adjusted the structure of government to the needs of public policy. The government hacked up a portfolio that one man used to handle and now two men are handling it. Whether that is coming closer to the needs of public policy very much, as I see it, is a value judgement. I am not sure creating two portfolios is necessarily a better way than one. I am not sure how you can argue conscientiously that it comes closer to the needs of public policy in this particular province.
What we had -- and we have discussed this before, so I won’t go into a great deal of detail -- was a portfolio handled by a very superior minister who, because of long experience and long history in this House, had a magnificent handle on a plethora of different economic matters. Today we don’t have that minister. The whole thrust of the reorganization of government for the past four or five years has been to back off from the committee for the reorganization of government. There have been changes. If what you have done is correct today, then the committee on government productivity some five years ago was a complete and utter mistake, which I happen to believe it was. It is not as if you are becoming any purer; you are trying to rectify some of the mistakes in the system already.
The minister has taken the same view as the previous Treasurer. He feels his mandate is to look at broad economic needs and regional economic opportunities as opposed to the fine detail of community planning. I don’t have any major problem with that. He has taken the macro as opposed to the micro view of the job. I am not sure that he is wrong in that particular view, but I say to him very sincerely, we have learned some lessons in the past few years at all levels of government -- and you are not alone -- that it is pretty tough to fine tune. If we are going to make this economy competitive, we are going to do some of the things that are going to have to be done to meet the very serious industrial competition and the commercial competition from other sophisticated jurisdictions in the world. He is going to have to roll up his sleeves. He is going to have to become far more involved than he is today.
I say that in conjunction to the Minister of Industry and Tourism (Mr. Grossman), who, in my judgement, when you look at the numbers, has an equally serious responsibility of restoring some kind of economic health in this province.
Mr. Foulds: Give us your solutions.
Mr. Peterson: You will hear them in due course. I must say I originally was not going to make a major statement tonight. That is my preference; I don’t believe in great long statements at estimates. I would rather question the minister and have discussions on specific issues. However, I had an opportunity to chat with my little friend from Nickel Belt earlier in the day, and he told me that he would probably have an opening statement of at least half an hour in length. Not to be outdone by him, I felt I would speak for 35 minutes.
Mr. Foulds: You would be outdone by him if he only spoke for five minutes.
Mr. Laughren: I think I’ll take an hour.
Mr. Peterson: If he speaks for 40 minutes, I am going to speak for 45 minutes. I think that’s one of the prerogatives of Her Majesty’s official opposition.
I want to make just a few general comments about our philosophy and the way we see the present government’s action or lack of action. If I had to summarize in two or three words, I would say that the minister is blessed by a singular lack of vision, collectively in his government. With many of the problems we are facing today, I think wiser people, or more gutsy people, or people who were prepared to that with fundamental issues rather than superficial issues, would have started the ball in motion some years ago.
Mr. Ashe: He is talking about the Just Society in Ottawa.
Mr. Bradley: Are you still blaming Ottawa?
Mr. Ashe: That is the kind of change he is talking about.
Mr. Peterson: I say to you very respectfully that we are in a position now to foresee some of the problems of the ’80s. We have an obligation -- indeed, we have a mandate, and we are probably the only public body to do so. Business doesn’t, and labour doesn’t necessarily. They are all fighting for maximum profit in the short run, or maximum advantage for their particular membership. That is the whole trend of capitalism.
But governments, surely, have a longer mandate. They certainly have a responsibility to see further into the future, because if governments don’t, no one else will. I say to the minister respectfully, that many of the problems we are going to be facing in the ’80s are a creation of his particular government. Only if he starts now with a constructive series of actions are we collectively going to be able to do anything about it.
Maybe I’m a pessimist. Of course, the Premier (Mr. Davis) always stands up and wrings his little chubby hands and says, “I look into the future and I’m a great optimist.” Every person who takes over the Treasury portfolio always says that he is a great optimist about the prospects of this economy.
Mr. Ashe: It’s a good thing you are not running the government. Once we get rid of the government in Ottawa, we will have fewer problems.
Mr. Peterson: What are you fellows blithering about from the back benches? If you have something to say, stand up and say it.
Mr. Foulds: You wouldn’t even want Sinclair Stevens in your government.
Mr. Peterson: How much are you paying that man to make those rude noises back there?
Mr. Foulds: George, are you bucking for a promotion? Make George Ashe Treasurer.
Mr. Laughren: He already thinks he is.
Mr. Chairman: Order, order.
Mr. Peterson: I would respectfully submit the basic qualification to be Treasurer is to at least be able to count. That necessarily excludes George Ashe from that portfolio.
Mr. Foulds: You should at least say the member for Durham West.
Mr. Peterson: I am trying to be constructive and I am very sincere about what I am saying. The mouthed restraint of your government over a period of years is something you have never over the years seen the Liberal Party of Ontario disagree with. I understand at all counts the socialists to my left have disagreed with me. Frankly, I don’t think there’s any respectable commentator in this province or in this country who takes one thing they say terribly seriously from an economic point of view.
Hon. F. S. Miller: Two of your members are sleeping.
Mr. Peterson: Are they still here?
Hon. F. S. Miller: Yes, one is on your immediate left.
Mr. Peterson: We shall have to have them removed immediately.
Hon. F. S. Miller: He has refused to be aroused.
Mr. Peterson: I think it is not a luxury. I don’t regard as a cheap political trick, even though you have milked it for maximum political mileage over the years, talking about a balanced budget. I think it was important in some of your prospects, talking about a balanced budget in 1981. I don’t see that as a luxury, and I don’t see it frankly as a pie-in-the-sky kind of a proposition.
Mr. Foulds: No, you see it as a pie-in-the-face kind of proposition.
Mr. Peterson: I see it as a necessity. I see that we are going to have no other choices. Indeed, as one looks at the financing of this province and the tremendous pressure that’s going to be put on the public purse -- and it’s straining the capacity of this province to borrow in the 1980s -- then let me tell you very sincerely that we are putting a great number of problems on to the next generation of taxpayers, the next generation coming five or seven or eight years from now.
I have talked at great length about the follies of borrowing from the pension plans; I don’t mind restating my thoughts very briefly. We have found that we are billions and billions of dollars in debt to the pension plans. We know they’re going to come due starting in the mid-1980s. You know you will have no other source of internal funds. You know you’re going to have to pay back not only the interest. Probably early in the 1980s the accumulated interest bill on the Canada Pension Plan alone is going to be close to $1 billion.
Starting in about 1985 you’re going to have to repay capital over a 10-year period and the accumulated borrowings at that point will be around $10 billion. That means if you average that out -- and one cannot necessarily average that out on this virtual call money from the Canada Pension Plan -- it means we are not only going to have to generate the cash requirements for this province, whatever they are at that time, but we are going to have to generate an additional average of $1 billion a year just to repay our capital borrowing.
If you don’t think that is serious, let me tell you, Mr. Chairman, I think it is serious, and our party thinks it’s serious The tragedy of this is that this was not accumulated over 50 years. This is virtually a phenomenon of the Davis-McKeough regime. This is a phenomenon of the 1970s. It was in the 1960s that government at all levels went a little crazy. They thought they could solve all the world’s problems by throwing money at them. We saw this explosion in government spending at all levels.
Mr. Ashe: In l968-78 -- your government.
Mr. Peterson: We’re seeing the decade after that we’re going to have to pay the price for some of these very serious excesses.
I am sure that Charlie McNaughton and John Robarts, if they were here today, would weep. If they were being honest and had to stand up in this Legislature and say what they really think, they would be appalled by the fiscal mismanagement of this province.
Mr. Nixon: They had the last balanced budget.
Mr. Peterson: I know the retort. The retort is, of course, “Our capital expenditures have always exceeded our borrowings.”
Mr. McClellan: Tell us what Herbert Hoover would do.
Mr. Peterson: That isn’t true. I want to point out some figures to show that the classic argument used by the successive Treasurers of this province is not necessarily true.
In 1976 and 1977 the capital investment by this province was $1.480 billion. Net borrowing was $1.092 billion. Indeed capital investment exceeded the borrowing. In 1977-78 a different picture: capital investment was $1.477 billion; your net borrowing was $1.5 billion. In fact, your net borrowing -- which is not necessarily the same figure, as you know, because you are an authority at juggling numbers below the line as evidenced in our last provincial finances -- we found that our net borrowings have exceeded our capital investment, and the same in 1978. We have borrowed $1.417 billion and our capital investment was $1.404 billion.
I know the argument you have always presented to whomever would listen to you about justifying the deficits. In fact, your financing is exceeding your capital investment. That is your argument. I don’t accept the argument. I would only accept those kinds of arguments on revenue-producing assets. A hydro plant, which is not included in these figures, is a different kind of a proposition. It is amortized over a period of years. It generates real wealth.
You would have to stretch the economic argument very far to say that a lot of the spending you have done, for example, land accumulation of $600 million over the past six or seven years, is in any sense generating real economic wealth or will generate real economic wealth for the people of this province.
Those items from a bookkeeping point of view are treated as current expenditures and they are also from a borrowing point of view. Ten years from now you’re still going to have a need for capital expenditures, hopefully of a different type. We have some view about what the kind of capital boom of the future is going to be. But there will always be a need for that. You have a responsibility to make sure we aren’t going into hock in perpetuity, even though you argued that we can’t have one set of taxpayers paying for a future generation’s capital needs. The point is we will always have capital needs in any expanding economy. Unfortunately, it’s not expanding nearly as quickly as it should or it could with proper assistance. We will always have capital needs.
We’re going to see capital needs in the future that we haven’t even thought of today -- in energy, in transportation, in the handling of toxic wastes and in environmental apparatus. As the demands of a changing society are for a different standard or quality of environmental apparatus, we’re always going to have those demands. You can’t dismiss those and say we can’t have one year’s taxpayers paying in perpetuity because we are going to have to pay as we go. That’s what balancing a budget means. It means matching current revenues with current expenditures. If you’ll follow my argument, I include all those items with current expenditures.
I have talked briefly about the pension funds. Anyone who is thoughtful is worried about what we are going to have to face in the future with the Canada Pension Plan, with the teachers’ superannuation fund, with OMERS and with the various other funds. The evidence is before you. I congratulate the previous Treasurer for putting out something like $200 million of OMERS into the private capital market. I think it’s a progressive move. The evidence is there that it generates a higher rate of return. That is a fact.
In fact, had all the accumulated billions gone into private enterprise 10 years ago or eight years ago when this phenomenon started, the state of the Ontario economy would be dramatically different from what it is today. Lots of studies on the issue tell you that there would have been more real disposable income; there would have been higher investment and there would have been less unemployment. Almost all the phenomena we’re facing today would have been diminished had we invested for the future.
The political leadership and the political challenge of the future is to convince people to invest more now so that we can maintain some kind of standard in the future. It is not through offering more every single day in order to solve tomorrow’s problem at the expense of next year’s problem. That has been the whole history of your government. You haven’t had the guts to face up to the long term. You have judged these things in four-year cycles. You can see the major distortions in your entire budgeting pattern always just before an election. You make an assessment of the political mood and you spend accordingly or try to save accordingly. There has been no other long-term thought in the whole process than that in my opinion.
I pride myself on one thing. Since I was elected in 1975 and since I have had some role in the Liberal Party, we have never kidded people about the prospects. We have said there are going to be tough decisions. We have said it’s not necessarily going to get better in the short run, but we are going to have to put more away now in order to guarantee some kind of future for our children and indeed fur ourselves 10 and 20 years from now.
I say to the Treasurer only because I want you to get your sights up, that anytime you come out with a constructive policy that involves those kinds of parameters you will have the support of the Liberal Party.
Mr. Nixon: You can count on that.
Mr. Peterson: I can’t guarantee anything for my friends to the left. They would buy their way out of any given problem. It’s an economic philosophy which, frankly, is so totally remote from my own that it frequently doesn’t even merit discussion between the two of us because we are so far apart.
Mr. Lawlor: How about your long-term planning?
Mr. Peterson: I want to talk about economic planning. I want to talk about industrial strategy because we are very strong proponents of economic strategy.
Mr. Lawlor: Another bird by another name.
Mr. Peterson: They don’t necessarily involve a higher degree of spending. They see all these little words all wrapped up together -- necessarily higher deficit, necessarily industrial strategy.
Mr. Lawlor: You know you have to plan.
Mr. Peterson: There is a myriad of things we should be doing and I will get into it later. We think the government of Ontario has shown precious little imagination in using the resources it has to develop a manufacturing base here.
One of the things we are seeing is a very significant deterioration in the general economy of this province compared to the other provinces. This is not a unique phenomenon. Let me quote from the Financial Post: “In the 1970s Ontario has been the slowest-growing province. Its gross provincial product per capita has now slipped behind British Columbia and Alberta.”
Let me cite one other quotation, because I think it puts the argument in perspective: “As Bess Crawford, a regional economist with the Canadian Imperial Bank of Commerce pointed out, Ontario was growing better than Canada as a whole on eight economic indicators and worse on two at the end of 1977. By October, it had slipped to doing better on only four and worse on six including manufacture shipments, retail sales, car sales, non-residential construction and housing starts.”
It’s not the absolute numbers that are so distressing, it’s the trend. If you trace the trend back for a successive number of quarters for two or three years, these are not surprises to any thoughtful people. One can rationalize it and say that a disproportionate amount of wealth is now being generated in Alberta -- to a large measure, at our expense. I don’t disagree with that. But that doesn’t speak to the issue, necessarily, of manufacturing exports and the great industrial base that we once had in this province.
The only response that’s ever seen from the government on this issue is your involvement in the Ford plant in Windsor. It’s something we supported. It’s something that our friends on the left, who support industrial strategy, do not support. I do not understand that particular phenomenon either. We think the judicious use of government money in a case like this, and we support you, was not poorly spent. It will generate taxes; it will generate employment and, with any luck, it is going to be there for a considerable period of time. We think that’s constructive and we think there are other ways that can be done too.
Mr. Foulds: With any luck that is. What kind of wishy-washy nonsense is this?
Mr. Peterson: Let’s look at the whole issue of the machinery business in this province. There virtually isn’t a machinery business any more. In pulp and paper, in mining, we are importing all of that. Far-seeing people several years ago should have seen the position we’re at today. There’s an example where government could have assisted. It’s not going to come just by across-the-board cuts, faster writeoffs, decelerating manufacturer’s sales taxes or anything else.
Mr. Foulds: Maybe even intervene --
Mr. Peterson: I was personally disappointed with the federal budget last week. I think the billions of dollars -- $1.4 billion or whatever -- they’re spending in terms of lost revenue could have been far more intelligently directed towards specific problems in specific areas of this country. So we lowered the manufacturer’s sales tax and what do we do? All we do is lower the price of imported goods as you did with your retail sales tax drop.
When we look at a tax expenditure of that type, of hundreds of millions of dollars, I say to you respectfully, it could be more intelligently and more purposefully directed. You have a myriad of agencies under the Ministry of Industry and Tourism that could have directed that money. Why not use the Ontario Research Foundation? Why not work with tax policies in research and development? Why not direct that money to work with a specific need in a specific area? Because in a general sense they are going to be lost or dissipated.
I’m going to be interested; I’m going to be asking you the effect of the retail sales tax cut. Most analysts I read today think the effect was minimal. It may possibly have accelerated retail sales in the short-term but it did nothing of a structural nature to help the economy of this province.
I want to go back to the September 30 statement which was a great disappointment to me. I have no idea whether the Treasurer put his personal stamp on this. I have no idea how strongly he feels personally about defending this document.
Mr. Laughren: Passionately.
Mr. Peterson: I will tell you that it’s a virtually indefensible document. You have made some major changes from previous fiscal policy, ones that you have yet to admit to. Either you don’t understand what was written for you by the good staff you have or you have dramatically altered the policy.
The previous Treasurer originally said in his budget he would not be going to the public market. You said you were not going into the public debenture market but, in fact, you are into the public markets for another $195 million this year by way of Treasury bills to finance your bad projections and increased deficit. That is a fact.
I would like you in your explanation -- and I am glad you’re making a note on this -- to stand up and explain that to the House. You can say we may not need it so that we can cut our Treasury bill offering down to $10 million. That means you will have to pay back the $195 million and generate that much more money from some other source. Just because it is not long-term debt and just because it is not debenture debt does not mean you are not in the public market.
Mr. Foulds: Perhaps you will have to tax your corporate friends or even your corporate enemies.
Mr. Laughren: Where is Marvin Shore?
Mr. Peterson: I want the Treasurer to realize that. I want other observers to realize this particular phenomenon. The Treasurer has cut into the liquid cash reserves of this province by a significant amount. In 1976, the cash reserves were cut into by $227 million. In 1977, the cash reserves were cut into by $116 million and this year by $74 million after an original projection of an increase in cash reserves of $364 million. In fact, over the past three years the Treasurer has cut into the cash reserves of this province by $417 million.
This is a fact missed by most observers unfortunately. Those are issues you have to address. Every time I read one of your statements I think I am reading the Apostles’ Creed. There the Treasurer is saying: “I believe in God the Father, maker of heaven and earth.” It almost reads: “I believe in free enterprise and profit is not a dirty word.” It’s so pious and frankly it’s beneath you.
Mr. Foulds: This is blasphemous.
Mr. Peterson: I am not saying you can’t use those kinds of speeches to the little old Conservative ladies association in the riding of London Centre. They find you very cute as a matter of fact.
Mr. Lawlor: Which is yours? The Athanasian Creed?
Mr. Peterson: I defy you to take that down to Bay Street and explain that kind of financing to people who have some kind of a conception of what you are actually doing.
Mr. Foulds: You just go back to London Centre and say that to the Progressive Conservative Association.
Mr. Peterson: I respect the fact that there are lots of different ways to fool people. If a person is in trouble, he is going to take advantage of any particular device he can. I think the Treasurer has an obligation, and I am still waiting for an explanation of those particular phenomena in Ontario Finances of September 30. As a function of your ministry’s projections, which have been so dismally bad successively for the past 10 quarters, you should be frankly ashamed of these projections.
I know your response and I know Duncan Allan’s response. It will be that it is all the federal government’s fault. I had one of the most discouraging exchanges with the previous Treasurer and with Duncan Allan on that particular issue who admitted he does his own forecasts and admitted they are lower than the federal forecasts for personal income tax, but the higher one is always taken. The implication I have to draw is that the most favourable one is taken in order to present the kind of budget deficit that will be the most politically attractive at election time.
The tragedy is that so few people understand any number on that sheet except the net cash requirements. That is the one that has all the sex appeal and magic to it. We are going to have a deficit of a billion or we are going to balance our budget or the deficit is going to be diminished. They don’t understand how you get there. Sometimes I get the feeling frankly that you don’t understand how you get there either.
I wanted to talk about these things for the reason that I think it’s important to put budgeting into perspective. Within those parameters, we have a number of suggestions which are going to be coming out with the assistance of my colleagues during the estimates debate. We think we have been sadly lax from the point of view of developing a strong industrial base here in this province. That saddens us. We are seeing it deteriorate and slip away on an annual basis.
There is no easy answer to that. It is going to take co-ordinated policies by many ministries from Labour, from Industry and Tourism, from Consumer and Commercial Relations, from Environment and from everybody, but it has to be made necessarily your single most important priority.
Therein lies our future. When we look at our natural resources base today, when we look at the troubles internationally of the mining companies, when we look at the deterioration of commodity prices, when we look at the troubles companies like Inco and various other mining companies are in today, then we know there is going to be no easy way out of this.
I can tell you our trading partners, and I happen to have some experience personally with some of the people against whom we have to compete, are tough as nails. They look at Canada and they look at Ontario and they think we are babies in terms of using all the devices at the disposal of government to assist the private sector, to build a manufacturing base and to build real wealth. The value added in this province is diminishing and the only way we are going to produce real wealth is by concentrating on the value-added aspects on the manufacturing base. Therein lies the future of the economy of this province as we see it.
In the last budget response last spring, we spent a considerable amount of time laying out the framework of what we called industrial strategy. It is there for you all to read. I know the critic for the NDP has spent a considerable number of nights reading that fine document, and he has learned a lot from it. You will probably hear some of it back from him tonight. I am happy to share it with him.
I have used my 35 minutes, and I will let the critic from the NDP fumble his way through, I am sure, far more eloquently than I have fumbled my way through. I just wanted to make sure there was no misunderstanding about the way we view things. We are going to be fighting for a responsible government that delivers some kind of promise to the young people of this province, and we think you have failed.
Mr. Laughren: Mr. Chairman, I commend my colleague from London. It takes a lot of courage for a Liberal to speak on economic matters these days in Canada; in any province.
I wanted to welcome the Treasurer to his first set of estimates in Treasury and Economics. We supported the whole idea of splitting off the ministry from Intergovernmental Affairs, primarily because, as my colleague from London said, it allows you to look at problems in a macro rather than a micro way. I think that is what is required as we go through some rather difficult times.
We feel the times are difficult and from what we can glean from the literature, and from economists, and so forth, they are not going to get better in the shortrun. It is going to be a tough row to hoe, despite some of the comments of the minister. We think it is a time in Ontario that is going to require a great deal of leadership on the part of the Treasurer; a great deal of confidence, and also a great deal of courage.
I don’t mind saying I am completely opposed to bringing personalities into a debate like this, but we are concerned about the minister having those requirements of competence, courage and leadership, because that is going to be desperately needed if we are going to chart the course for the economy in Ontario. It is not just in Ontario because as Ontario goes so goes a great part of this country.
We think the economy is in trouble despite what the Treasurer has told us. It is not a question of the government simply standing up and saying everything is fine. We have looked at the Treasurer’s figures themselves, and looked at what has happened this year alone. I look at the predictions of the budget in April and I see that virtually all the key economic indicators are not even matching the predictions made by the Treasurer’s predecessor.
He predicted an unemployment rate of 6.8 per cent, seasonally adjusted. We are cruising around 7.5 per cent. I think it is at 7.3 per cent through the first ten months. That is a substantial increase over the Treasurer’s predictions. He talked about an inflation rate of 7.9 per cent. The last time I looked, it was about 8.6 per cent rate of inflation increase over a year ago. The growth rate the Treasurer predicted was 4.3 per cent. The Conference Board in Canada predicted 3.2 per cent.
In reality, through the second quarter, which is the latest data I could get, we were up 2.9 per cent over the second quarter of 1977. That’s substantially down as well. The budget deficit, which the member for London Centre talked about, is considerably up. Revenues are down.
There is one item that bothers me a great deal in particular -- it’s not really an economic indicator -- and that is the housing starts. The Treasurer predicted 80,000 housing starts for this fiscal year and we predict, based on the starts to date and taking a sort of guesstimate -- educated guess -- of predicting through the winter, that we’re probably only going to reach 70,000. I don’t think we’re going to go above 70,000 housing starts. That’s a lot of jobs. If you take a drop of 10,000 housing starts, I’m sure you’re talking on the level of 20,000 jobs or more. That’s a substantial decline in employment in itself.
We on this side of the House don’t think that to get things on the rails again it’s simply a case of government moving in and introducing massive projects to get us through a difficult winter. Despite what the Liberal critic said, we are not that simplistic. It’s not a question of simply riding out a slump while wheat sales improve or until interest rates flatten out or until the US economy improves. We don’t think it’s as simple as that. It’s a question of how we are going to restructure the economy, not just of Ontario but of the country. In view of the fact that Ontario is the industrial heartland, that simply is where it has to begin. A simple government restraint program is so oversimplified that it really doesn’t warrant debating here.
We’re not going to solve our problems by relying -- as the Treasurer seems to think is the solution -- on the devalued dollar. He expresses great hopes for export and import substitution because of the devalued dollar. That’s not going to restructure the economy. For one thing, we don’t know if it’s a permanent devaluation. As a matter of fact, saner heads hope it’s not. If that’s the ease, surely we can’t lie back and simply hope the dollar will stay down and therefore we’ll be all right. Besides, it’s not proving to be working out as well as a lot of people thought it would be either.
The negotiations are going on now in Geneva -- the so-called Tokyo round of trade negotiations. That’s certainly not going to solve our problems. If anything it may very well make them worse. I’d like to talk about that a little more at a later point.
The federal government has at least launched sectoral studies -- they have 23 sectoral studies completed now. I just received them in the mail today as a matter of fact. They’ve even gone to the second tier where they have summarized the 23 sectoral studies. The federal government did appoint the Reisman commission to look at the problems of the auto pact. The federal government is engaged in the GATT negotiations and so forth.
Mr. Van Horne: You mean we did something right?
Mr. Laughren: Well, at least those are areas where they have said there are problems. In GATT they really had no choice; they had to get into the game. In the other areas at least they have recognized the problems and have shown some initiative. Ontario has been dragged along with them, so to speak.
What have we got in Ontario? What are we doing in Ontario? If we accept the fact that there is a problem, and even the minister does so reluctantly -- surely he is prepared to admit there are serious problems.
Mr. Van Horne: Blame the federal government. That’s his stock reply.
Mr. Laughren: Well, that should not be excluded from his arsenal; let’s put it that way.
Mr. Van Horne: Stock reply, but he’s got no other arguments. Propaganda at its best.
Mr. Laughren: They are only 90 per cent to blame.
Mr. Foulds: Why are you defending those feds? After all.
Mr. Van Horne: I’m not defending them; I'm attacking him. It’s about time you guys got your sights lined up properly.
Mr. Foulds: You are attacking us for not attacking him.
Mr. Van Horne: Attack him. Keep going at him. Stick it to him.
Mr. Chairman: Order.
Mr. Van Horne: Stick it to him.
Mr. Foulds: Call the member for London whatever-it-is to order.
Hon. F. S. Miller: With a little bit of luck you’ll shoot each other and I’ll be left.
Mr. Laughren: I’m trying to remember the admonition the Premier (Mr. Davis) gave us over the weekend when he said the NDP is spending its time fighting with the Liberals in Ontario, and I’d prefer not to do that this time. There are bigger targets across the floor of this chamber.
Mr. Chairman, in Ontario I look and I am seeking to find out what it is this government is doing. This government won’t tell us what they are saying to the Reisman commission. Why they won’t show us that document I don’t know. It’s as though it was a great secret document.
We have a government that won’t table its Industry and Tourism working papers to the conference of Industry and Tourism ministers across Canada. We have a government that won’t tell us what they are saying to the federal government in preparation for the GATT negotiations. At least as seriously, we have a government that won’t even admit to having serious problems. That really is too bad.
Mr. Van Horne: They don’t know it.
Mr. Laughren: I hope you don’t wonder why we say we are worried, quite frankly, about the Treasurer’s leadership, about the Treasurer’s competence in economic matters and about his courage to deal with government. We need, in Ontario now, and Canada needs, an Ontario Treasurer who will face up to problems and one who will share with us the fact he is aware there are problems and he needs us to help him solve those problems. He should not expect to do that alone.
We should be prepared to play a leading role in the rebuilding of the Ontario economy. I think -- I know -- we have simply got to look beyond the old solutions as though we were living in a period of temporary slump and all will be resolved if we get through this winter or through the next winter.
We are worried that the Treasurer doesn’t understand the difference between cyclical and structural problems because we feel very fundamentally that our problems are structural. To approach them as though they were cyclical is a very serious error. The Treasurer simply has to stand up to the people in his own cabinet who don’t want to see a change in style in economic management and say to his colleagues those ways don’t work any more. There have to be new ways.
We, in this party, are thinking very seriously. We too have had to do some serious thinking about some of the beliefs we have held. It is not simply a case of relying on some of the old thoughts, whether we had them or whether you had them. We haven’t been through these problems before. I want to tell you we are thinking seriously about our position on grants to the private sector, you might be interested in knowing. We are thinking seriously about our position on protectionism versus the lowering of tariffs around the world, particularly as they apply to Canada and some of our threatened industries.
As well, we are thinking seriously about our traditional position on balancing budgets. We are thinking seriously about our whole approach to the public sector, our approach to collective bargaining in the public sector, and the whole approach to strikes from the public sector. We are not allowing ourselves the luxury of simply engaging in rhetoric because the problems are too serious. We are demanding of ourselves that we think them through.
As a political party, we have assigned ourselves the task of a task force to look at the problems of the Ontario economy as well. Our federal party did it. Our provincial party has done it. I am a member of that task force and we are working very hard on it. I am not suggesting we have more expertise than the federal people who did the sectoral reports. On the other hand, we have perhaps a different perspective --
Mr. Sargent: Couldn’t get any worse, eh?
Mr. Laughren: -- and one that should not be ignored because we do speak for a substantial number of people. Our economic views are not to be held in contempt the way the member from London was attempting to do. That is why I said I thought it takes some kind of chutzpah for a Liberal to heap scorn on anybody’s economic policies.
Mr. Sargent: Come on, now, we are talking about the Tories here.
Mr. Laughren: Well, I am thinking of both of you. The Treasurer has had problems with his colleagues, we know that, just as his predecessor had trouble with the Ministry of Industry and Tourism, and I am sure others in the cabinet as well. We maintain he is not going to help things if he maintains his present position of being so silent on all the problems. We simply need to hear from the Ontario Treasurer more than we have heard from him since he was appointed. We didn’t expect very much the first month or so --
Mr. Sargent: He hasn’t got much to talk about.
Mr. Laughren: There is lots to talk about. The Treasurer simply has to assert leadership because it is not coming from anyone else over there. The Treasurer is expected to play a leadership role in the economy and this Treasurer isn’t doing it. We hope that some day he will. We have followed closely the pronouncements of your predecessor, the pronouncements of the Ministry of Industry and Tourism and more recently the pronouncement of not only the Premier but also the Minister of Labour (Mr. Elgie) who had some things to say about the economy. I will be quoting him as well.
What we see is an absolutely astounding package of contradictions. It is truly astounding, and I am going to go through a few of them. I am telling you when I think of you now, I think of the Roman god Janus -- do you remember Janus who had a head with two faces? One looked forward and the other looked back. That’s why we have January. I think of you that way now and I used not to think of you that way.
Hon. F. S. Miller: It’s a great way to be built if you’re a Treasurer.
Mr. Laughren: I want to tell you there has to be more consistency over there. You cannot be so contradictory and provide leadership at the same time because no one knows the direction in which you are going. How can you lead when you are going in so many different directions? You are like -- wasn’t it Don Quixote? -- I am getting into literature tonight -- but wasn’t it Don Quixote who jumped on his horse and rode off in all directions? That’s what you are trying to do and you can’t do that.
Mr. Peterson: Did Pat Lawlor write this? He is the classics scholar.
An hon. member: I don’t think it was Don Quixote.
Mr. Laughren: Somebody did that. I thought it was Don Quixote.
Mr. Lawlor: If it wasn’t it should have been.
Mr. Laughren: I think it was Don Quixote.
The contradictions in this Treasurer are really monumental. There’s a conflict in him between the old conservative ideology and the economic reality of the problems we are facing. There’s a conflict there and the Treasurer has not come to grips with it. Quite frankly I think that’s one of the reasons your predecessor left. He saw the contradictions in the positions he was taking and how, if he persevered in those positions, we are going to go further down the slope.
Mr. Sargent: That wasn’t the real reason, was it, Frank?
Mr. Laughren: I am convinced that’s one of the reasons.
Mr. Sargent: It wasn’t the real reason.
Mr. Laughren: I hear the minister say things like -- and I quote from his October 24 statement: “I am an economic conservative which means I believe this government must work to reduce its role as a regulator and provider of so many facilities and services.”
I don’t mind that as a definition. That truly is a definition of an economic conservative I guess. But then we have somebody like the Minister of Industry and Tourism. On November 7, he said: “The pressure is now on governments to respond quickly to recommendations stemming from recent national, industrial sectoral task force reports. What we want to see now is action to solve the problems identified in the studies.”
Then we have him saying again: “It will not be good enough for government to stand passively by. It will not be good enough for government and government spokesmen to say ‘We are controlling our spending -- now let the private sector do it.’” That was Mr. Grossman. It’s no longer good enough to be an economic conservative, is what he’s saying.
Mr. McKeough realized that the government had an important and up-front kind of role to play in the stimulation of the economy. He talked about developing an economic strategy not only for Ontario but for Canada as well and he included it in his budget statement. He said it was “to help prepare Ontario to face the challenges of the 1980s.” That was McKeough. Then the present Treasurer steps in and says, “Well, no, we are going to step back. We are going to let things happen. We are going to let the private sector flex its muscles and” -- I am not quoting verbatim now --
Mr. Martel: Give them another tax break.
Mr. Laughren: -- “let them do their thing out there.” He says things like, “Governments merely transfer things around. We have confidence that the least regulation necessary is necessarily the best regulation.” Well, isn’t that something?
Mr. Martel: Conscription but not necessarily conscription.
Mr. Laughren: The whole question of government restraint versus stimulation and it’s confusing. Nobody knows what you are saying over there. There was a fellow from Industry and Tourism by the name of James Wessinger. He was quoted in the Globe and Mail recently as saying: “It was obvious that the industrial strategy of the pact was no longer viable and the country must adopt new measures. From the Ontario perspective this means a statement of commitment from government support for growth and development and making economic growth a first priority. Accompanying this should be government restraint in spending.”
I don’t know how you are going to do all these things. You are going to have restraint in government spending; let the private sector do it, but you are going to get involved and stimulate the economy at the same time. You are going to have to explain that to me.
You get Mr. McKeough talking about balancing his budget. Then the present Treasurer says, “The reductions in revenues have made 1981 an unrealistic date” for the basic objective of balancing cash requirements. That’s from your October 24 statement. It’s very hard to know whether you are serious about your restraint, whether you are serious about your stimulation of the economy, or whether or not you are trying to have the best of both worlds.
The document that was prepared by your government to go to the federal government for the GATT negotiations states, and I quote: “Short-run monetary fiscal stabilization policies, even in combination with regional development incentives, will in themselves do little to redress the basic structural imbalance in Canadian manufacturing.”
The people in your government, your bureaucrats, understand the problem. They know your whole dream of a balanced budget is not possible. I am sure you would like to have it, being an economic conservative, but you are not going to get there. The senior people in your ministry, and in the Ministry of Industry and Tourism, understand that. But no, you are trying to play both sides of the equation -- the balanced budget, the restraint, and the stimulation. I don’t know how you are going to do it.
The whole question of the state of the economy is another area where you can’t seem to make up your mind whether the economy is in great shape, or whether it is going downhill, or whether it is going uphill. I don’t know what you think about the economy. I know what you told us on October 24. You told us things were pretty good. As a matter of fact, Mr. McKeough said in his budget, “The economic prospects for 1978-79 are favourable. Our expectations for 1978 are for a stronger provincial economic performance with a real growth rate of 4.3 per cent.”
You said on October 24, “The Ontario economy is growing at a rate of close to four per cent in real terms.” But the document that went to the federal government said, “Ontario believes that the economic climate will continue to be sluggish into the 1980s.” What do you believe? We don’t know.
Mr. Martel: Masters of economy.
Mr. Laughren: Again, you said, “There are a number of encouraging developments on the economic front which suggest both that our economy is showing significant strength and that positive foundations are in place for the future.”
The document you sent to the federal government again says, and I quote: “Basic indices of industrial performance reflect a manufacturing sector that is not only weak but in a state of fundamental disequilibrium.”
Mr. Sargent: He keeps a set of books there.
Mr. Laughren: That’s a serious assessment of a troubled economy. You say on October 24: “New job opportunities are opening up at record rates ... Nearly one third of these new jobs are in manufacturing.” Your document that went to the federal government said, “ ... a decline in manufacturers’ share of employment from about 24 per cent in 1966 to about 20 per cent in 1976, and projections into the future are even worse than that.”
Here we have you bragging about the number of jobs that are going into manufacturing, while your own document shows that jobs in manufacturing are declining, in due proportion to the work force.
Mr. Martel: What do you mean, Frank?
Mr. Laughren: Mr. McKeough says the economy is on a recovery path. But I met your colleague, the Minister of Labour, while he was speaking at the Ontario Federation of Labour. I can understand how he would want to say something nice down there, given the record of his government in labour matters. This is what he said, on November 15: “ ... the nature of the problems facing the Ontario and Canadian economy in these difficult times: the progressive loss of jobs in the manufacturing sector” -- did you get that, Mr. Treasurer? -- “the progressive loss of jobs in the manufacturing sector; the persistent and unacceptable high levels of unemployment in all sectors, particularly among young workers and women; the growing competition from our major trading partners as well as from developing countries.” The Minister of Labour said that after you had given us a glowing report on the health of the manufacturing sector.
Mr. Martel: Peter Honey is going to have to write better papers.
Mr. Laughren: I want to tell you, you had better make up your minds over there about what you think about the state of the economy.
Then there is the whole question of trade, the whole question of Ontario’s position and the federal government’s position on the trade negotiations going on in Geneva. The contradictions there are something else. Mr. McKeough said in November 1977, a year ago: “I think we should extend into other areas the principle of our arrangement with the Americans on autos. We should be prepared to negotiate with the US and others for better access and international rationalization of production facilities in more industries. Our own market isn’t big enough to sustain us and we can take advantage of the lower value of the dollar.”
He says in April of this year, around budget time: “Are we really prepared to gear up for freer trade, and if so, will we accept the adjustment which will be required? We want honest answers, but are we prepared to accept that in order for competitive sectors to grow, many people will have to change their careers, their skills and perhaps where they work and live?”
Then the Minister of Industry and Tourism said on November 7 of this year; “The impact of reduced tariff barriers on Ontario industry will likely be severe. There can be no benefit to any part of the country from a decline in Ontario’s manufacturing strength.”
Mr. Martel: You’re like a yo-yo over there.
Mr. Laughren: Let me go back to Mr. McKeough to show you the contradictions. He said: “The plain fact of the matter is that Canada is not the most significant country at Geneva and we simply do not have the option of opting out of the negotiations. The United States, in particular, has stated that non-participants will not benefit from reduced United States tariffs and this would mean a substantial reduction in our exports to the United States.” Then he said: “We have no choice but to accept the reality of free trade and prepare ourselves as best we can.”
Then your government sent a document to the federal government. This is what it said: “The federal adjustment proposals have not tackled the root cause of the problem facing Canadian manufacturers today, problems which will only be worsened under conditions of freer trade.” The Minister of Industry and Tourism then said on November 7: “Federal proposals for industrial adjustment are still incomplete.” I think that those negotiations had to be completed by December 15. That is the deadline on the negotiations.
Then the Treasurer himself said: “There is considerable room for optimism for Canadian exports and import replacement.” I would like to know the data on which you base that statement. The document which you sent to the federal government said: “Canada is taking a considerable risk in even participating in the multinational trade negotiation.”
There’s a bundle of contradictions. I’m sure there are more if we were to seek them out. The one that put the icing on the cake for me, the one that topped it all off, was the latest one on the oil price increase for January 1. That one to me has to be the worst example of a major policy reversal I’ve ever seen. That really is a remarkable piece of policy reversal.
I was looking through some of the statements that have been made and I found a very interesting one. It goes back a couple of years and was dated June 19, 1975. When was the provincial election in 1975?
Mr. Swart: September 18.
Mr. Laughren: This was in June prior to that provincial election. The Premier of this province sent a Telex to Prime Minister Trudeau. It’s very brief and I’d like to read it to the Treasurer. “At this point I must restate Ontario’s strong opposition to any increase in the domestic price of crude oil or natural gas until such time as inflation is brought under control and unemployment is substantially reduced. The most recent information from Statistics Canada reveals that Canada’s current economic performance is the worst in over two decades. The possibility that the federal government might approve price increases for oil and gas at such a time is incredible.”
That was a pretty clear document, but you might say that’s going back too far. By the way, I don’t think things have improved since then either.
On June 20 of this year their Minister of Energy (Mr. Baetz) was talking in this chamber. He said: “The federal and provincial governments plan to continue to gradually move domestic oil prices towards world price. Contrary to that report, the Ontario government strongly opposed any such agreement last year and continues to do so. In essence, we stated a price increase was not justified at that time for a number of reasons. Today those reasons are even more valid than ever.”
Then he went on to say -- and this is the part that really got to me: “Even though Mr. Gillespie has already taken unilateral action on this increase, there is another increase proposed for next January 1” -- that’s the one we’re talking about now -- “and it would help considerably, Mr. Speaker, if the members on the other side of this House would support the government in its efforts to prevent still a further increase.”
When did we find out what the minister’s position is? We found it out in a report in the Globe and Mail. He asked us to support him in opposing a price increase and he went to Ottawa and supported the price increase without even having the courtesy of telling us he had reversed his position.
Mr. Nixon: I don’t think he even knew he did it.
Mr. Laughren: That’s some kind of policy-making over there.
You wonder why we tell you there are contradictions? You wonder why we tell you nobody knows which direction you’re going? You don’t know yourself.
The Minister of Energy (Mr. Auld) today had the nerve to stand up and try to tell us he hasn’t really opposed -- what he really meant was that he thought there was an agreement there that we had to support. He didn’t think the price increase was right, but on the other hand the agreement had to be honoured.
I looked through that statement of June 20 and I can’t find a comment about honouring an agreement. If he’s so concerned about the agreement today, what was he concerned about on June 20? I don’t see anything here about honouring an agreement between the federal government and the provinces.
What kind of nonsense are you handing us from over there? How do you expect to have any credibility at all in these matters? If I were representing the federal government and the Ontario government came and made a proposal to us, I’d say: “Just wait awhile; if we don't like it they’ll have another one in a month or two.”
Mr. Martel: You’re as bad as the Liberals over there.
Mr. Laughren: Whether you’re talking about trade, whether you’re talking about restraint or stimulation or oil prices, there is no end to the contradictions. That’s what’s bothering us. It bothers us a great deal. The trouble is you’re being played off by the federal government. They don’t know in which direction you’re going. You don’t have a firm position on anything. Far be it from me to hark back to the days of the former Treasurer, but I must say we tended to know which direction he was heading.
Mr. Sargent: It was all downhill.
Mr. Laughren: We simply don’t know any more. We see too many contradictions. What bothers us is the specifics like that one, but there’s also the whole question of whether or not you really understand the economy is in trouble.
You can go across this province as “the jolly Miller from Muskoka” if you like, but you’re not fooling anyone. My colleague from London was right when he said, “You can give those speeches if you want to a Conservative gathering, but it doesn’t wash when you’re talking to people who know anything at all about the economy.” You’re not being direct; you’re not being honest with people who want to engage in a debate with you.
I think you have that obligation here in this chamber. I hope very much you will be more frank with us, you will be more direct. Take your lumps if need be because that’s your job. The job of the Treasurer is unlike any other one because so much depends on it. I think you have an obligation to engage in a serious debate with us. We don’t need any more of that glossing over the problems. It doesn’t fool anybody anyway.
Mr. Martel: The court jester. Be frank for a change.
Mr. Sargent: And earnest.
Mr. Martel: And earnest.
Hon. F. S. Miller: Look who’s calling the kettle black.
Mr. Martel: And earnest.
Mr. Laughren: About what?
Hon. F. S. Miller: I am talking to your neighbour.
Mr. Laughren: Don’t talk to him. He doesn’t have the floor.
Hon. F. S. Miller: He doesn’t have much to offer.
Mr. Laughren: He has a great deal to offer.
Mr. Nixon: He’s earnest. You’re Frank.
Mr. Martel: I’ve forgotten more economics than you’ll ever know.
Mr. Laughren: I know he’s forgotten a lot.
Mr. Sargent: When does your book come out, Elie?
Mr. Laughren: I think I understand part of the Treasurer’s problem. I know there’s a problem there. The analysis is there. The analysis from within his ministry and from within Industry and Tourism is there. We’ve seen that. That document that went to the federal government for the GATT negotiation was a very honest, a very straightforward document.
But I think what’s bothering the Treasurer is that the conclusions that document leads him to are contrary to the pronouncements he’s been making about the private sector solving all our problems. That’s the problem, isn’t it? The conclusions of his analysis scare him. That’s why I talk about courage. That’s why I talk about the ability to get up there, having an understanding of the problem and the courage to get up and talk about it, and not in the way that he’s been taught, going back to Alfred Marshall’s economics.
He’s actually embarrassed about the system, of what the system has done to our economy, because it’s the system that’s done it; it’s his system. It’s his system that’s taken our economy to the position it’s in now. But he’s going to end up choking on some of his words. In the end he’s going to have to eat them.
The solutions he’s talking about now in his simplistic statements such as the one of October 24, he can’t live with those statements. They will come back to haunt him.
Mr. Foulds: They are already haunting him.
Mr. Laughren: We think there are a number of ways of going about the problem. I’m not trying to give you the impression they’re simple or that we have all the answers to them either. But I’m telling you that you have to come to a decision as to whether or not you think the problems are deep-seated and long-run, or whether they’re simply cyclical and will resolve themselves with just a little tinkering with the system.
Mr. Sargent: Boy, if you know the answer you could make a million dollars tonight.
Mr. Laughren: When I see you making statements like the ones you’re making now do you know what I picture in my mind? I picture you in the backyard rebuilding your sandbox while a demolition crew is in the front yard taking down your house.
That is simply not good enough. You can’t tinker with the system the way you are when it has structural deformities. Your own papers are telling you there is a disequilibrium in our economy and you simply have got to come to grips with that. The old days are gone.
If you disagree with me, if you think that our problems are not deep-rooted and structural, I’d like to know where your evidence is. I’d like to know what makes you so optimistic. Show me your figures. If you agree with me, then I’d like to have you justify some of the pronouncements you’ve made already. You owe us that much, to tell us why you think the way you are speaking.
The Science Council of Canada has been hitting us over the head with the evidence for a number of years now and no one at the federal or provincial levels -- at least at the political level; perhaps in the civil service there are people who understand -- is prepared to deal with it. They did a very nice book which I just finished reading called The Weakest Link. Perhaps you’ve read it. It’s a technological perspective on Canadian industrial underdevelopment.
Hon. F. S. Miller: Is that an autobiography by you?
Mr. Laughren: Now, now, don’t get personal.
Mr. Martel: It is about you.
Mr. Laughren: I’ve been very kind to you.
Mr. Foulds: So far.
Mr. Laughren: This is done by the Science Council of Canada.
Mr. Nixon: You haven’t been kind to the rest of us.
Mr. Laughren: It’s a serious problem. I’m not here to entertain you. I would like to give you a couple of short quotes:
“Canada’s trade patterns are those of a primary good hinterland. On balance, in contrast with industrial nations Canada is an importer rather than an exporter of finished goods.” We know that. I don’t think that is anything new, or that you should find that unusual.
To go on: “The customary positive balance in resources trade is more and more obviously insufficient to offset deficits in fully manufactured goods and in invisibles” -- which is mainly trade and services.
“Canada’s hope for the future, therefore, is in the trade of manufactured goods, presently a disaster area. From 1964 to 1975 imports increased two and a half times while the domestic market increased by one third.” They go on: “Canada’s share in world trade of manufactured goods has been dropping. Canada leads the industrialized world as a practitioner of free trade.” There’s something for you to think about, Mr. Treasurer.
“Canada admitted about 53 per cent of its imports of finished manufactured goods duty-free in 1970, compared with about six per cent in the United States” -- do you wonder now why we’re called the boy scouts in international trade? -- “and just over three per cent in the European Common Market.
“Foreign ownership is a much more significant contributor to our overall industrial problems than the level of tariff protection enjoyed by Canadian industry.” That’s another area where we’ve simply got to move and that’s on the whole question of foreign ownership of our economy.
Mr. Martel: They scrapped that.
Mr. Laughren: That’s pretty heavy stuff for the science council to be laying on us. It’s not very optimistic. It’s a little discouraging to be told that that’s where we’re at by a body like the science council. They’re no hack organization.
I think you’ve simply got to accept the fact, although you won’t like it, that it’s your friends who have done that to us. It’s not the public sector that’s done that to you. It’s the private sector. The public sector has not been engaged, by and large, in manufacturing; that’s the private sector. And look what they’ve done to us. They’ve pulled it out from under us.
I’d like to look at a few of our problems.
Mr. Riddell: You’re doing a fine job.
Mr. Laughren: I’m just getting warmed up, Jack. I made no promises about time. I’m just getting warmed up here.
Hon. F. S. Miller: I have 15 hours.
Mr. Laughren: Whether you talk to the Economic Council of Canada, the Ontario Economic Council, the Conference Board in Canada, the C. D. Howe Institute -- well, not so much them -- Statistics Canada, no matter who you talk to, what it really boils down to is the whole problem of deindustrialization and, by and large, you are talking about the manufacturing. Ontario’s role in manufacturing puts us front and centre in that problem. We simply can’t shrug our shoulders and say that’s a federal government problem.
I was disappointed when you said you weren’t going to make a major economic statement until after the federal budget because that implies the federal government is going to solve Ontario’s problem. They never have and they never will. We have got to take the lead in turning the thing around in Ontario. We can’t abdicate that to the federal government. I’m surprised you would want to. I am surprised you have that kind of confidence in the federal government to solve the problems of over which you are the guardian.
Mr. Sargent: Who is going to do it then?
Mr. Laughren: I think we have an obligation to try to push him to do it anyway.
Mr. Sargent: Leave it to them over there.
Mr. Laughren: Are you going to leave it to the federal ones, Eddie? I don’t think even you would do that. We provide over half of Canada’s manufactured goods which is so much more than any other province. We are the key to a healthy Canadian economy. The key to a healthy Ontario economy is the manufacturing industries in it. There are one million jobs in manufacturing in Ontario and huge trade deficits to go along with it, which are two major problems.
Mr. Sargent: They are all controlled in the States too.
Mr. Laughren: Yes, a large proportion of them are. These are problems that are serious. We are going to require those things I keep repeating. We are going to require leadership, competence and courage to deal with them. That is what we are looking to you for.
I would like to take a brief look at four key sectors in manufacturing, I think this belongs more in one of the votes later on, so I won’t deal with it in great length here. That is where a quarter of the employment is and where $6.7 billion worth of trade deficit is. That’s about two-thirds of Canada’s total manufactured goods deficit. That is pretty serious.
The keys sectors I wanted to just very quickly look at are auto, machinery, electrical and textile and clothing. Those are the four key sectors in which we have real problems. In auto, we have a $1 billion deficit. In machinery, we have a $3.1 billion deficit. In electrical, we have a $1 billion deficit and in textile and clothing, we have a $1.6 billion deficit.
Mr. Foulds: Scandalous.
Mr. Laughren: That’s the $6.7 billion deficit I’m talking about. This is the industrial heartland of Canada.
Mr. Foulds: What is that total figure again?
Mr. Laughren: Six point seven billion. You can relate the degree of foreign ownership to it as well; auto is 89 per cent foreign-owned, machinery is 70 per cent, electrical is 65 per cent foreign-owned, and in textiles 60 to 90 per cent of shipments are foreign-owned although only about 10 per cent of the companies are foreign-owned.
A figure we have not tended to look at so much in the past, but I think increasingly we should be looking at, is the imports as a percentage of the total market in this country. Autos are 74 per cent, machinery is 65 per cent, electrical is 29 per cent, textiles is 27 per cent and clothing is 22 per cent. Those are the percentages of imports in the market.
One of the measures of industrialization is the finished manufactures as a per cent of total exports. In other words, if you look at our total export picture, what proportion of them is actually finished products. It’s a pretty sad thing. I took a look at a number of major trading countries. In Canada, we have 16.2 per cent, excluding autos. Sixteen and two-tenths per cent of our exports are finished products. Compare this with a few other countries: Denmark has 46 per cent; France has 48 per cent; Italy has 60 per cent; Spain has 46 per cent; Sweden has 49 per cent; Finland has 33 per cent; Greece has 21 per cent; Japan has 63 per cent; Norway has 43 per cent; the United Kingdom has 55 per cent; West Germany has 60 per cent; and the United States has 47 per cent. Our percentage is 16.2 per cent.
Mr. Foulds: You mean Spain is ahead of us?
Mr. Laughren: Those are the latest figures that I could get. As a matter of fact, I think those figures are from 1974. There is no question we are in trouble. There is no question it is your friends who have got us there because they are the ones who do the manufacturing.
There was an article in the Globe and Mail on October 26 by John L. Orr. He’s a professional engineer, which should endear you to him somewhat, Mr. Treasurer. He is a consultant in industrial strategy and technology policy. He had a couple of statements to make, and he certainly doesn’t have any axe to grind in providing me with ammunition. He said:
“The trade deficit in end products has grown from $3 billion in 1970 to $11 billion for 1977. As a result, imports have captured 35 per cent of the domestic market, a level of import penetration not even remotely approached in any other industrialized country.” And get this figure: “The $8 billion increase from $3 billion to $11 billion in the trade deficit in end products since 1970 eliminated and some 325,000 additional jobs to the economy.” Then he went on: “This adverse trend is reflected in the progressive shrinkage of the manufacturing sector which has declined in terms of employment from 24.4 per cent of the work force in 1970 to 19.6 per cent in 1977.”
The Treasurer might recall that is the same sector he was expressing such optimism about in his October 24 statement. Then he went on to say: “Thus if only 25 per cent of imports of manufactured goods could be converted to domestic production, the trade balance would be improved by $6.5 billion, the balance of payments deficit would be eliminated and some 325,000 additional jobs would be created in the manufacturing and service sector.”
Mr. Martel: Your friends are tough on you.
Mr. Laughren: They haven’t done you any favours. We are not too sure about your response. As I say, we’re confused.
I picked up a little document which I think was sent to every member of the Legislature by Burns Fry, the investment people. It is called The Canadian Economy: Its Problems and Its Potential. Once again they are taking a rather hard, cold, realistic look at the economy. But there are just a few figures I’d like to present to you. The project ahead to 1981.
They say: “In 1977 we had a deficit on services” -- the services are part of the current account -- “of $6.9 billion.” By 1981, they predict it is going to be $17 billion. They talk about our travel deficit, which is another part of the current account, which in 1977 was $1.6 billion. For 1981, they predict it will be over $5 billion. With regard to merchandise trade, which is supposed to pay for our deficits on service and so forth, in 1977 we had a $2.9 billion surplus. By 1981, they predict it will drop to $1.2 billion. That is going to drop while the other goes up enormously. In the final summary, when they talk about the current account in total -- those were components of the current account -- in 1977, we had a total deficit of $4 billion. By 1981, they predict it will be $15.9 billion.
You think the Canadian dollar is in trouble now. If these figures are correct -- and they are simply a projection, but I don’t think they are playing any kind of game -- to the best of their ability they see that as being what is in store for us. If you continue to regard the problem as being cyclical then I really fear.
We don’t know what your response is. We don’t know what you are saying to the federal government on the matter of trade. We don’t know what you are saying to the federal government on the matter of the auto pact through the Reisman commission. We don’t even know what your Minister of Industry and Tourism (Mr. Grossman) is saying when he gets together with his counterparts all across this country. I suspect we won’t know what the Premier (Mr. Davis) will be saying to the first ministers’ conference on matters dealing with economic problems.
I think we have a right to that kind of information because it is fundamentally wrong for you to be going to Ottawa, talking about these important problems and reversing your policies in some cases, without even talking to us about them. That is not what you are supposed to be doing as Treasurer.
We don’t know what you are saying a lot of the time, but we do know that the problem is more serious than you think it is. And we are not gloom and doom economists either. There is nobody more optimistic than socialists.
Mr. Swart: We know our day will come.
Mr. Cunningham: Not in your lifetime, though.
Mr. Laughren: We have great optimism for the future. If only we could get our hands on the levers, then we know that it will be cause for great optimism.
Hon. Mr. Snow: You never will.
Hon. F. S. Miller: Don’t worry about it.
Hon. Mr. Snow: Don’t get anxious.
Mr. Laughren: No, I’m not anxious. That is the other thing about being a socialist, you develop a long-run view of things.
Hon. F. S. Miller: You have to.
Hon. Mr. Snow: You’ve got to be pretty negative.
Mr. Laughren: We haven’t been running the country for 100 years like you have. We can’t take credit for the mess we are in. We have to give you that.
Mr. Foulds: We have to give to you your due.
Mr. McNeil: You have created a bit of it, though.
Mr. Martel: You’ve given away all the resources, now you want to give away cash.
Mr. Laughren: We have never had power. How can we create the problem? You are the ones who have had power; you’ve created the mess, you and your friends.
Mr. McClellan: You are directly responsible, Ron McNeil, and don’t deny it.
Mr. McNeil: You helped create it.
Mr. Peterson: Don’t blame him; he was in England when it all happened.
Mr. Ashe: Is that Santa Claus over there in the red suit?
Mr. Chairman: Order.
Mr. Laughren: Thank you.
Mr. Martel: That was a real comment. We expect it from a hick like you.
Mr. Ashe: It takes one to know one.
Mr. Martel: Yes, a real professional hayseed.
Mr. Laughren: How did we get so unparliamentary so fast?
Mr. Riddell: Don’t talk so degradingly.
Mr. Martel: Kick him out of the fraternity.
Mr. Laughren: I’d like to talk about the minister’s optimistic comment about manufacturing. That really got to me. When he talked about the optimism --
Mr. Peterson: You promised to take only half an hour.
Mr. Laughren: No, no, I didn’t. I changed my mind. I told you I was going to talk longer.
The minister’s optimism on employment in manufacturing -- that really bothered me. I don’t know whether your people are not telling you, or whether you’re not reading, or whether you’re trying to con us, but it has to be one of those three.
Mr. Foulds: Check one -- or two.
Mr. Laughren: I’ll tell you why. These are Treasury and Economics figures.
In 1961, manufacturing as a percentage of the work force was 30 per cent. In 1970, it was 28 per cent. In 1975, it was 24.6 per cent. Don’t forget these are TEIGA documents, not mine. Predicted for 1980 is 22.7 per cent; for 1985, 20.1 per cent; for 1995, 16 per cent.
Do you know what? The Ontario Economic Council -- which John Smith called subversive, and which I don’t think is --
Mr. Cunningham: Where is he now? He’s Michael Starr’s driver now.
Mr. Laughren: -- says that by 1987 manufacturing will be down to 12 per cent of the total work force of Ontario. The figures from TEIGA are even more optimistic than those of the Ontario Economic Council.
Another way to look at it is which sectors are going to grow in the years to come? TEIGA said that manufacturing growth between 1975 and 1980 is going to be 1.4 per cent and between 1980 and 1985, 0.1 per cent. That is what you’re expressing your optimism about. You really should be ashamed of yourself.
Using the same sources, they talk about the Ontario employment structure as a percentage of the labour force. The productive sector is 33 per cent and the nonproductive sector is 67 per cent. That is an interesting figure. If you look at the difference, at what’s going to happen, the thing that comes through loud and clear is that the nonproductive sectors are going to grow and the wealth-productive sectors are going to decline.
That should bother you a great deal. We are accused sometimes of creating too much in the public sector, but I want to tell you something. We would not create a bloated public sector without the wealth-producing sector to pay for it, and that’s what you have done.
Mr. Martel: You have given it away.
Mr. Laughren: You have created it and the figures are there to show it’s going to happen more in the future. There is going to be an increasing wealth-absorbing part of this economy and a decreasing wealth-producing sector and we’re going to have trouble because you have allowed the economy to run down. It is becoming deindustrialized and it’s your friends who have done it.
Mr. Peterson: Shameful. It’s Gord Walker’s fault.
Mr. Laughren: It’s your friends who have done it and you dare to accuse us of building a public sector. We would build a responsible public sector but we would also build one that created some wealth and didn’t just absorb it. There is a big difference, my friend. There is a big difference.
Mr. Peterson: The same as they did in England.
Mr. Martel: They’re coming out now.
Mr. Peterson: They’re going to pay their debts with North Sea oil.
Mr. Martel: That’s right, but what have we got? We’ve given all ours away.
Mr. Foulds: We gave away our uranium.
Mr. Martel: What a bunch of dummies.
Mr. McClellan: We’ve given the forests all away. We’ve given everything away.
Mr. Swart: And now you’re trying to buy it back.
Mr. Chairman: Order. Order. The member for Nickel Belt has the floor.
Mr. Laughren: You can’t ignore the problem any more.
Hon. Mr. Snow: Stand up.
Mr. Foulds: Why doesn’t the minister sit down?
Mr. Laughren: I’ll get Mickey Hennessy on my side and then you’ll be in trouble, James Snow.
I wanted to talk in the few minutes that are left about free trade because I think we have a lot at stake there. In fact I know we have a great deal at stake. I wish you would tell us what you are doing, because you worry us there. You worry us on free trade like you worry us on the oil price increase. We know what the former Treasurer was. He was an avowed free trader. Perhaps I should say “freer” trader.
We know that the Ontario Economic Council and the C. D. Howe Institute are great free-trade people as well. The economic council told us there should be a $4 billion redeployment fund because we think there are going to be 250,000 workers affected when these tariffs are reduced.
We say to you and to them that before you start playing that kind of game you had better have some of those things in place. I am worried, I don’t mind confessing to you -- that is the difference between you and me. I tell you what I am concerned about. I tell you what I think the problems are and you won’t reciprocate.
When we see an industrial strategy, when we see there is not 15 per cent unused capacity in our industrial sector in this country, when we see you have a manpower policy in place to look after people who need to be retrained and redeployed, when we see you have reasonable and rational government procurement policies in place, when we see you have a sane resource policy, when we see you have a policy on research and development and when we see you have a commitment to repatriating our economy, then you come and talk to us about the reduction of tariffs in the Tokyo round. Then come and talk to us.
But don’t you and the federal government and the economic council and so forth talk to us in some wishy-washy kind of way about the reduction of tariffs giving us a higher standard of living when you have a million people unemployed, unused capacity in the private sector and nothing in place at all at this point to look after the people who will be displaced if there are reductions in tariffs. That simply is not good enough. It is irresponsible, as a matter of fact. We are not willing to write off our clothing and textile industries -- because that is what you are in danger of doing if you are supporting that.
How are we to know what position you are taking with the people in Ottawa? You have not yet tabled the document. We found the copy. I saw an edited version of it in the Toronto Star, but you haven’t tabled that document. If that is what is in there, if that is what you are saying, tell us; table it. Let us know what your plans are for the textile and clothing industry. There is a lot at stake in this province and you have a lot to say about that.
The unions that represent the workers in the textile and clothing industries are being a lot more responsible than you people are. They ask some very pertinent questions. They say when they are talking about this redeployment fund and what happens if there are 250,000 people put out of work and so forth, where is the new industry to come from? Have the markets been analysed, the technologies developed, the capital secured, has any planning at all been done on possible successor industries? What has been the success of existing regional development policies? How is the transition to be made? What level of government will pay the cost of retraining, welfare, et cetera? Who will decide where potential investments will be made, the government or private capital? Will firms be ordered to invest in Quebec in the present political climate? Can middle-aged workers be retrained? It goes on. They ask some very pertinent questions.
Until we know what position you are taking on our behalf -- we are a legitimate part of this process and you are going down there and negotiating for us without telling us what you are saying, just as you did with the oil price increase.
That is not good enough. We have a right to demand that you share with us some of your concerns and the statements you are making to the federal government. We are not asking you to tell us ahead of time if you don’t want to, but you won’t even table the documents once you have said it. There is nothing secret.
As a matter of fact the Reisman commission papers are a good example. The Reisman people have put no restrictions on it at all. You have. Why? We have seen submissions that other people have made but not our government. What are you hiding, for heaven’s sake? We have a right to those papers. It is not a privilege --
Mr. Foulds: The people of Ontario have a right to --
Mr. Martel: Why don’t you screw up a little courage, Frank?
Mr. Laughren: You have an obligation to table those things. We don’t know what you are saying at all. But I will tell you we are worried and we want those papers that will be presented to the first ministers’ conference too. We find the confessions in that GATT document that went to the federal government are confessions, and they are depressing, but I think they are right and you have to live with that.
I ask myself why they will not table the documents. Do you know a conclusion I come to? There is a number of possibilities. One, they lead to embarrassing conclusions. Two, you have nothing to say in them. Is it that, or do they reveal further contradictions in your policy, or policy reversals? Which is it? I can’t think of any other reason why you would be so paralysed. Why don’t you table those documents?
Mr. Foulds: Paralysed and paranoid.
Mr. Laughren: We are looking for the kind of leadership, competence and courage that it takes to talk to us frankly about our problems. If you think there are other legitimate reasons why you won’t share with us that data, then by all means tell us. We would love to hear. My own view is that you are embarrassed.
In the few minutes remaining I would like to say a few words -- not much -- about some of the problems within Ontario that you haven’t dealt with. For example, I come from an area that’s got a few problems and I am talking about regional development.
You know I read a -- no, I shouldn’t say that; nobody would read this -- it’s Input-Output Analysis of Fiscal Policy in Ontario, by somebody on the Ontario Economic Council. I say no one would read it; you wouldn’t read it unless you were an econometrician or a pure mathematician. None the less, there are some interesting excerpts in it that one can take out.
What they really conclude -- and I am at great risk here because I am not good at reading technical documents -- but what I gather from it is that your regional development policies, in terms of government expenditures and so forth, benefit -- guess what part of the province they benefit the most?
Mr. Cunningham: Oakville.
Mr. Laughren: That’s right. The Toronto-centred region. Remember the Toronto-centred region?
Mr. Martel: Remember Doctor Talman?
Mr. Laughren: A great, great concept, wasn’t it?
Mr. Martel: Remember old Doc Talman?
Mr. Laughren: Well, there are people under the gallery who should have to answer to some of these things about regional development as well, I might add.
Mr. Peterson: String them up.
Mr. Laughren: Now, there you go -- a case when, when you do try to do something, it doesn’t benefit the people for whom it’s intended. I look at Sudbury as an example; I look at the whole question of the resources in Ontario. I look at the resources.
What’s our revenue going to be from our mineral resources this year, Mr. Treasurer? It won’t be $20 million, will it? Nineteen million dollars, $18 million, $15 million? Well, I can remember days when we were predicting $200 million plus from mineral revenues and now we are down flirting with $20 million. We have more than $2 billion worth of production in minerals, of course, and we are going to get the magnificent sum -- if we are lucky -- of $20 million. That’s some mineral taxation policy, isn’t it?
If you look at the employment in the mineral industry, it has gone down in absolute terms because it’s a highly efficient, highly capitalized industry. I am not quarrelling with that. But you know and I know, when they bring in a scoop-tram underground at Inco or at Falconbridge or any other mine, guess what happens? Fifteen or 20 men per shift are no longer employed there, but are they employed making the scoop-tram? No, no, the scoop-tram is bought in Germany, Sweden, Japan, the United States, but not here.
You can say it’s a coincidence that the interlocking directorships of Inco and the major mineral machinery companies is just one of those things we really can’t deal with. You can say that if you like but it’s a fact and you should know it. Your policies on regional development cannot be separated from your policies on taxation and ownership of our resources. You can’t separate them that way.
Do you know why this party has always talked so passionately about the ownership of our resources? Do you know why we have always said that the nonrenewable resources of this province should be in the public sector? We haven’t said that about the automobile industry. We haven’t said that about the food industry. We haven’t even said it about the machinery industry. We have always said it, though, about the resources. If you need any further evidence than what’s happening in northern Ontario today, I don’t know where your head is.
I will tell you, what’s happening with the resources industry is something over which you have no control whatsoever. You don’t have your hand on the levers at all. If the supply of nickel is developed elsewhere, such as in Indonesia, Guatemala and so forth, guess what happens to the mining companies in northern Ontario. They do one of two things. They start exporting their capital and developing there as well and shoving the minerals here aside. Even more importantly, the grade of nickel or copper or gold or whatever that they take out is dependent upon the price. The higher the price, the lower the grade they can take out. If the price drops low, they only take out the richest part of the vein. I call that highgrading.
You have no control over that at all. If the mining companies in the north decide they are just going to take out the richest part of the ores, you can’t say a word about it because you have no control. If you raise your taxes on the mining companies, that’s the same as lowering the price in their terms and they will highgrade some more. And you have no control over it.
You are not building a heritage fund of any kind either. When those minerals are gone, they are gone. You are not doing a thing about it. You are not even planning ahead. Do you know what your grand gesture was in Sudbury? When it became evident with the layoffs and so forth that we were in serious problems, the answer of the Premier was to come into Sudbury and drop $600,000 on the Sudbury 2001 committee -- the only day in history that Sudbury showed a profit. He left $600,000 there and said, “Now do your thing. Develop an alternative development strategy for Sudbury.”
Mr. Martel: And you wiped out the fourth biggest employer.
Mr. Laughren: I wish them well. At the same time he was doing that, as my colleague from Sudbury East said, he closed the fourth largest employer in the Sudbury basin, the Burwash Correctional Centre.
Mr. Martel: And he opened one up in the riding of the Minister of Transportation and Communications.
Hon. Mr. Snow: That was five years ago.
Mr. Martel: In 1974.
Mr. Swart: Are there more criminals there?
Mr. Laughren: Last year you changed the processing allowances in minerals. You said: “It is not enough they are not processing here now. We’re going to let them ignore section 113 of the Mining Act and ship elsewhere and write off those costs against their Ontario operations.” That’s some kind of job creation and wealth creation in the province of Ontario. You should be ashamed of it. I’m sure you are, but you don’t know how to extract yourself.
Then you wonder why people in Sudbury now, when there is a questionable development on the horizon called Eldorado Nuclear, are apoplectic about obtaining it because of the level of unemployment in the Sudbury area. The level of unemployment in the Sudbury area, now that you mention it, according to the latest figures I have is 13.6 per cent. Isn’t that great? A resource community that is known around the world for its wealth has an unemployment rate in your jurisdiction of 13.6 per cent. You must be very proud of your mineral policies and the policies you have for regional development in this province. Processing our minerals is your responsibility.
Over the years we have tried to be positive. You tell us we’re negative. We hear sometimes that my colleagues from the Sudbury basin are negative. What is negative about saying to you again and again, year after year, “We want further processing of our minerals in northern Ontario”? There is nothing negative about that. That’s as positive as you can get, and you have ignored it year after year. Now you make it worse by extending to them processing allowances to ship it out. That is some kind of development policy on your part.
Then when Inco does have good years, like 1974 I believe, when they had $308 million, even they were surprised and almost embarrassed at their profit. Did they say at that time, “Well, now we can put some more money into the Sudbury basin. Maybe we can create some of the things that have been suggested, like copper rolling mills and that kind of thing”? No, no, they went south and put a quarter of a billion dollars into a battery plant. They didn’t create a single job in the United States and they didn’t create a single job in Ontario. Out went a quarter of a billion dollars of money that was earned here and only here. That’s some kind of development policy on your part. That is a sad commentary indeed.
We’ve got problems in the Sudbury area now and we’re not alone in northern Ontario. I don’t see any policy coming from your ministry or other ministries that are doing anything about it. The Ministry of Northern Affairs is a joke. You’ve simply got to make up your mind that you’re going to decentralize growth and development in this province.
We’ve never talked about public ownership of nickel for punitive reasons, but I want to tell you there are lots of punitive reasons that could be used for bringing International Nickel into the public sector. There are lots of them, but we’ve never used them. We’ve always used the economic argument. If it doesn’t make good economic and social sense, we don’t want it in the public sector; but if it makes good economic and social sense, we would indeed bring the nonrenewable resources into the public sector.
Perhaps you listened to the Ontario Federation of Labour last week. They said the same thing. No group of radicals those.
Mr. Peterson: Which side?
Mr. Laughren: Very common sense; a very logical approach. We don’t believe that you can control the private sector in resource development. They hold all the cards, both here and abroad. You’re simply not dealing with the problem.
Sault Ste. Marie is a good example. I think there was a report out in Sault Ste. Marie today -- perhaps somebody’s read it or heard about it already -- which says there’s a problem in Sault Ste. Marie in that there’s no economic development. They’ve finally started to listen, I guess.
We compared Sault Ste. Marie and Hamilton, two steel towns. We found that in primary steel, in Sault Ste. Marie there are 9,500 jobs and in Hamilton there are 25,000 jobs. As a percentage of the total, the primary steel employment in the Sault represented 84 per cent and in Hamilton it represented only 35 per cent. Know why? Because in Hamilton you had steel-related jobs, 19,000 -- almost 20,000 -- and others 26,000. So for 25,000 primary steel jobs in Hamilton you had 26,000 others, plus 19,000 steel-related.
In Sault Ste. Marie you had 9,500 primary steel jobs and only 230 steel-related and 1,500 others.
Mr. Martel: Aren’t we doing well?
Mr. Laughren: That is a sad commentary on how you develop a province. I don’t want to go over again what happened at Nanticoke, but there, I think, was the watershed in the development of the Ontario economy. You had an opportunity to say to the people who wanted to build Nanticoke, “No, that is not the place to do it.” For economic reasons, agricultural reasons, social reasons, development -- all sorts of reasons; that should have gone on the north shore. But where did you put it? Nanticoke. I think that was the watershed. When economists look back in years to come they’re going to look at the Nanticoke decision as being your greatest failure to develop this province in a balanced kind of way.
I really don’t want to go on any longer. I would say, though, that we have two major problems with the Treasurer. I’ve tried not to use any kind of personal attacks on the Treasurer, but we’re concerned about your ability to provide the leadership, about your confidence in economic and fiscal matters, and about your courage to deal with the problems in view of their seriousness. I’m very direct with you.
The second major area of concern does not apply so much to you directly as to your government, and that’s the whole area of contradiction.
I think you want restraint and you want stimulation by government intervention; you want protection, but maybe you want free trade too; you want an increase in the price of oil, but you don’t want an increase in the price of oil.
Mr. Peterson: He makes you sound like a Liberal, Frank.
Mr. Laughren: You’re optimistic about the future, but then there are figures from your own people that show you’re not optimistic about the future. You think free enterprise can solve the problem; but on the other hand no, free enterprise can’t, the government has to step in and get involved. You think you can balance the budget; no you don’t, you can’t balance the budget now, no.
Mr. Martel: You have got more positions than Masters and Johnson.
Mr. Laughren: You think that our problems are structural and deep-rooted; no you don’t, they’re cyclical and they’ll go away with a very superficial kind of intervention on your part. You think the federal budget isn’t worth supporting; but on the other hand it’s not so bad, it’s not a bad budget. We need an industrial strategy; no we don’t, no it’s okay, the federal government didn’t come up with one but that’s okay.
I want to tell you this simply cannot continue. If the present Treasurer wants to have any credibility -- not in my eyes, if he wants to have any credibility among the people who count, among the people to whom you yourself look for direction and the people to whom you have to talk, including the federal government, including Bay Street -- as my colleague from London said, the Treasurer’s got to change his ways.
The jolly Miller of Muskoka can live no longer on the treasury bench. He has simply got to start talking to people more directly. He’s got to start showing a bit of courage in dealing with the problems. His present demeanour simply cannot continue.
Mr. Chairman: Does the honourable minister have any comments in reply?
Mr. Peterson: We are very fond of you personally, Frank. We want you to know that.
Hon. F. S. Miller: I understand that.
Obviously, the Treasurer of the province gets a little different kind of attention than other ministers do. I’ve sat through 25 hours of estimates this year as Minister of Natural Resources, and for at least four other years have had the opportunity to defend a ministry, either Health or Natural Resources, in those estimates. We very often had disagreements in them. I don’t recall, however, both lead speakers starting out, in effect, with the words of Marc Antony in his speech, “and Brutus was an honourable man.” I suppose I really should be flattered that both of you found it necessary to take that approach, yet I don’t intend to reply in kind.
When I present my own budget and when I am defending policies I’ve had the opportunity to originate and therefore policies for which I must be held personally accountable, I think that time will be the time to decide whether I have the competence, the courage or the leadership to do the job. Look back at my other ministries; don’t take my word for it. I’m rather proud of the times I had in both
Mr. Laughren: In Health too?
Hon. F. S. Miller: In Health too, yes. Yes, I would say that in the Ministry of Health --
Mr. Foulds: Natural Resources? What is happening with that two-for-one plan?
Hon. F. S. Miller: -- although it cost me a heart attack, I was quite pleased to have the opportunity at that point to take some of the measures absolutely essential in this province to cut the spiralling costs in that field.
One of the things I also feel quite happy about is that I’ve been a school teacher -- and I noticed that the three critics in the front row of the one party over there this evening were all teachers. It’s an honourable profession, one that I found perhaps the most rewarding of any I’ve done in my life. I’ve had the opportunity to be a businessman, and I believe the member for London Centre (Mr. Peterson) is in that category.
An hon. member: In his Tory days.
Hon. F. S. Miller: I’ve had perhaps some of the toughest times in my life as a businessman. In fact, I would say to you that surviving in the field as an automobile agency franchise dealer is perhaps much harder than being Treasurer of this province.
Mr. Peterson: It’s not easy to sell Edsels these days, is it, Frank?
Hon. F. S. Miller: No, it isn’t; but if they were there, I could sell them.
Hon. Mr. Walker: David, you’d be the first one to buy one.
Hon. F. S. Miller: Yes. There’s one thing I have total confidence about, my friend; it is that I can sell product. If I have to sell a philosophy --
Mr. Martel: You and Stan Randall.
Hon. F. S. Miller: -- I’ll be glad to. I’ll be glad to tackle my two critics on the most important of all bases, ideology. I really don’t think the critic for the Liberal Party and I have too much basic ideological difference.
Mr. Laughren: He is further to the right than you are.
Hon. F. S. Miller: Yes, he is, in terms of his ability to sit as a critic. I’m not sure he would be if he were sitting in the Treasurer’s chair.
There’s one great beauty to being a critic. When one is a critic one can state the way it is or should be. When one has the responsibility of office one has to temper one’s own, sometimes radical, points of view with the realities of life --
Mr. Foulds: How would you know? You’ve never been a critic.
Hon. F. S. Miller: -- and with the feelings of average people.
Mr. Martel: He’s never been a radical either.
Hon. Mr. Snow: Except the NDP. They’ll never have to do that.
Mr. Foulds: Even when you were on the back benches on this side you were fawning in your support of the Treasurer.
Hon. Mr. Snow: The NDP never has to think about being responsible.
Hon. F. S. Miller: I talked about being a teacher and therefore perhaps sharing some of your background, and of being a businessman and sharing some of yours. I have the one great difference from either of you, though, I luckily enough was able to work my way up through the working class to where I am.
Mr. Swart: Are you above them now?
Hon. F. S. Miller: That’s something I often wonder, what you people who are socialists think about.
Mr. Foulds: What does that mean, Frank?
Hon. Mr. Walker: You socialists never got your hands dirty.
Mr. Foulds: We never had a chance to work. How would you know, you never have been a socialist and you never got your hands dirty.
Hon. F. S. Miller: What it means is this: I think I’ve been able to taste -- I don’t believe you’ve had that luck in life -- to taste what it is like to live on the mother’s allowance. When you talk to me about the problems of low-income --
Mr. Laughren: So have I.
Hon. F. S. Miller: -- families, I don’t need anyone to draw me diagrams. I have had the opportunity, as some of you may have too, to be there, but I got through that experience still with an intact and firm confidence in the free enterprise system. When you say to me you don’t know where I stand --
Mr. Foulds: It shows you something about the closed quality of your mind.
Hon. F. S. Miller: -- let me tell you, I know where I stand. I know the system that works.
Mr. Laughren: That’s hollow rhetoric, Frank.
Hon. F. S. Miller: It is not hollow rhetoric. I’m not trying to convince you and I don’t want you to try and convince me, because it ain’t going to work, as they say. I have some chance of talking in reasonable terms to my critic over there, but frankly the big difference between you and me --
Mr. Laughren: I didn’t try to convince you in my speech. I talked to you about problems.
Hon. F. S. Miller: -- is that you dream and I deal with reality. That’s the fundamental difference between a socialist and a capitalist.
Mr. Peterson: Criticize me, please.
Mr. Foulds: You are destroying his credibility; he already destroyed his own.
Hon. F. S. Miller: If I have any problem with Canada’s society today it is that far too few people will stand up and say unashamedly they do believe in the free enterprise, capitalistic system, and I do. I have absolutely no worry or shame about it, and it’s time more people said just that.
Mr. Laughren: In spite of the track record.
Mr. McClellan: Deal with the problems for a change.
Hon. F. S. Miller: And I’ll deal with the problems quite happily.
Mr. Foulds: It’s too bad the capitalistic system won’t.
Hon. F. S. Miller: The capitalistic system obviously is not perfect.
Mr. Foulds: Obviously; that is the understatement of the year.
Hon. Mr. Snow: It’s 10 times better than anything else.
Hon. F. S. Miller: That, perhaps, is the big difference between you and I. You keep thinking that human beings who lose their personal motivations, the motivations of profit, will somehow solve the problems of this world.
Mr. Laughren: Did I say that in my speech?
Mr. Foulds: What kind of crap is that? What kind of nonsense is that?
Hon. F. S. Miller: They will not. Any attempt at state control has always failed and always will fail.
Hon. Mr. Walker: It is not nonsense, it is common sense.
Hon. F. S. Miller: At the very best, the state can die-cast and mould, but it cannot plan.
Mr. Foulds: What kind of nonsense is that? He not only does not understand economics he doesn’t understand politics. You little twerp.
Mr. Chairman: Order.
Hon. Mr. Snow: Hear, hear, Mr. Chairman.
Mr. Chairman: Would the honourable member withdraw? I don’t believe that is parliamentary language.
Mr. Foulds: Certainly, I will withdraw that.
Hon. F. S. Miller: As a matter of fact, the honourable member, for all that he may be calling me a twerp and having to withdraw it, I will say was always a responsible critic in the Ministry of Natural Resources. I don’t think we ever traded any ugly words at any time in that job. I think you would even say at times that I did take some of the steps that required some thinking.
Mr. Foulds: But what has happened since you became Treasurer?
Hon. F. S. Miller: Just give me time, please. I have been Treasurer three months and four days.
Mr. Foulds: And what has happened to the two-for-one plan? What did you tell the new Minister of Natural Resources?
Hon. Mr. Walker: They’re very unruly today.
Mr. Chairman: Order.
Hon. F. S. Miller: I always take is as a mark of honour, Mr. Chairman, when the opposition gets so exercised they must interject.
Mr. McClellan: Why don’t you say something?
Mr. Foulds: I am just trying to add some substance to your speech.
Hon. F. S. Miller: The kind of substance you’re adding to my speech is the one the Minister of the Environment deals with on a daily basis.
Hon. Mr. Snow: Underground.
Hon. Mr. Walker: And that is not effluent.
Mr. Foulds: Liquid or solid?
Hon. Mr. Snow: Sort of a mixture.
Hon. Mr. Walker: The same kind of sludge.
Mr. McClellan: You just smile and smile and be a villain.
Mr. Chairman: Perhaps the members could get back to the estimates which are before the committee.
Hon. F. S. Miller: I tried to look over the notes I made while the minister -- sorry, while the member for the Liberal Party was talking to me.
Hon. Mr. Snow: Don’t say minister.
Hon. F. S. Miller: That’s a Freudian slip.
Mr. McClellan: Do a few somersaults for us.
Hon. F. S. Miller: I trust the time will go on and you will have the opportunity to see whatever clarity of policy you’re looking for. I intend to see it produced. I hope perhaps later this week to have the opportunity to make a statement, as promised, to set certain guidelines before you, in terms of spending and so on, for the coming year. My thoughts, again, in that --
Mr. Peterson: In your estimates?
Hon. F. S. Miller: No, this won’t be during my estimates; although you will have the time to talk to me about it during my estimates because I hope to do it, all being well, while my estimates are before the House. I think that will be useful, because I think it will give members opposite the time to tackle me on some of the statements I’m making. I can’t guarantee that will happen because there are a number of other events, such as the first ministers’ conference on the economy, on the horizon very shortly. That is taking a good deal of time this week. If there is time to do both and be here in estimates, then you will get the statement as promised this week.
I was listening to your comments on balancing the budget. Of course we talked about the degree of imbalance a number of times. I am not about to try to put all the blame on Ottawa. I have used those examples only to try to point out that on a relative basis we have been doing a reasonably good job.
One of the things I’m sure we will have an opportunity to discuss when we get into detail is the Canada Pension Plan which you talked about in your comments. I share your concerns completely. I’m not trying to say you are not right; far from it, I think you are correct when you talk about the fact that the Canada Pension Plan at this moment appears to be unfinanced.
Mr. McClellan: To say nothing of being inadequate in its benefits.
Hon. F. S. Miller: I think the total contributions coming from the employee and employer amount to 3.6 per cent. You are right when you say that in the early 1980s the charges for interest against the debt will start roughly equalling the inflow of cash from the premiums.
Mr. McClellan: Save the assault on the Canada Pension Plan for some other day.
Hon. F. S. Miller: I happen to respect Mr. McKeough tremendously and -- by the way, let me say that to enter the Treasury in the shadow of a person who is as fine as that man is difficult for any of us. I think you would recognize that. I am not a Darcy McKeough, but like my old buddy John Rhodes, I’m optimistic enough to think maybe I have some attributes. They may not be equal to his. Some may be better and some may not be better. But you will find that I will have no trouble knowing where I’m going or determining to go there.
Mr. Laughren: We are not prejudging you, we are waiting.
Hon. F. S. Miller: Again, like the member for London Centre, thank God I have the great privilege to be able to leave this House any day of the week if I choose to and not worry about where my next pay cheque comes from. It makes the job at hand much more important. It allows us to focus on what we are doing and say we are doing it because it matters.
Mr. Foulds: Most of us can leave any time.
Mr. Laughren: Most of us can do that.
Hon. F. S. Miller: Whether I am doing it well by your standards or not time alone can tell, but it does allow us to realize those are the reasons we are here, doesn’t it? It does allow us to argue on the basis of points of view, not simply on the basis that we’re here to keep our job as long as we can in sheer desperation that we may be on the street penniless the next week.
Mr. Peterson: I could always sell cars for you.
Hon. F. S. Miller: As a matter of fact, if you would finance me I’ll start the dealership and hire you back as a salesman.
Hon. Mr. Walker: I bet you couldn’t sell as many.
Hon. F. S. Miller: I have become very interested in pension plans. I wrote a little article in my Queen’s Park report a week or two ago in which I said that not only ostriches stick their heads in the sand. I think the citizens of this country, whether they are civil servants in Ottawa or whether they are workers expecting that someone has funded their pension plans so that the money is being set aside under Canada Pension, should be entitled to that protection. I think the money should be set aside in amounts so that they are funded; they should not become, as they are at the present time, a charge on future taxpayers. I don’t know what the exact figure required for a total funding of the Canada Pension Plan is, but it is about eight to 10 per cent.
Mr. Peterson: It is 6.5 or 7.5 per cent.
Hon. F. S. Miller: That was the figure I saw. One of the things we asked for when we went to Ottawa two weeks ago for the federal-provincial economic ministers’ conference was a review -- I think there is a committee looking at it -- and an update on the Canada Pension Plan, because we believe it deserves to be spotlighted. We believe most Canadian workers would be willing to see their share increased in order to know that the moneys were being put aside to fund their future benefits. Anything less than that is sheer deception. I think we have the duty, you and I, if we agree, to say that until our friends in Ottawa -- and this is not a criticism on a political basis -- will say in fact we have to make sure it is funded.
Mr. Peterson: Just to follow that along, how do you feel about the teachers’ superannuation fund?
Hon. F. S. Miller: On the teachers’ superannuation fund -- and later on I will be glad to elaborate when the staff are here who can document it -- I think we are on reasonably safe ground.
Mr. Peterson: Relatively to what?
Hon. F. S. Miller: Let the figures be perused at that time. I have stated what I believe and I am not going to change my point of view because it is my pension plan and not Ottawa’s. I would like to think we were as fiscally sound in that plan -- or actuarially sound I think is the better term -- actuarially sound in that plan as we are in any other plan.
Mr. Peterson: Frank, you really have to be a dreamer.
Hon. F. S. Miller: Let us get to that, there will be a point when we can discuss it in the regular part of the process.
Another thing that shocked me is -- again, at least you will admit under the teachers’ superannuation fund in the past couple of years, fairly large chunks of money have been taken out of our budget and put into the fund to bring it up to whatever figure is deemed to be required to make it actuarially sound. Whether you think it is enough or not, you will admit we are doing it; and you will admit we are paying pretty well going rates of interest. Is it the Canada rate plus three-eighths at one point? Whatever Ontario bonds I are.
Mr. Peterson: Historically that has not been the case. It is one of the problems of the fund.
Hon. F. S. Miller: Again, I am not going to argue that. I think we have started doing that. We can, again, provide a table showing all the bonds, the rate of interest, et cetera.
Mr. Peterson: I have it.
Hon. F. S. Miller: I think the last figure I saw was that we were paying 10.14 per cent interest on those particular issues -- on the moneys we were borrowing from the teachers’ superannuation fund.
I am talking about it a bit at length because I was shocked the other day to have the opportunity to review the federal civil service pension plan. A group of people who have been studying it wished to explain to me some of the problems they had found there so I would be looking at our own plans and looking at them carefully.
At the present time the pension benefit of a federal civil servant is worth 34 cents for every dollar they are being paid in salary. I suspect not one employee in a hundred appreciates the magnitude of that sum. I suspect even fewer realize that only about 14 or 15 cents of that is being set aside at the present time. So when the federal government has been saying that it has a $12 billion surplus, they haven’t tried to take the money, as we did with the teachers’ superannuation fund, and put it into any kind of debenture upon which they compute interest for the sake of the civil servants who start retiring in the future.
Mr. Peterson: If I can help you with this.
Mr. Chairman: Order. There will be ample time.
Mr. Peterson: Mr. Chairman, one important point.
Mr. Chairman: No, order. There will be ample time during the rest of the estimates.
Hon. F. S. Miller: I was shown, for example, that the present actuarial liability of that plan, if I recall the figures, was $5.8 billion underfunded.
Mr. Peterson: What is the teachers’ superannuation?
Hon. F. S. Miller: That I’ll get. I can’t tell you off the top of my head. But we will try and get it.
Mr. Peterson: Contribution rates are now about 21 or 22 per cent.
Hon. Mr. Walker: Order.
Mr. Peterson: I sneaked it in.
Hon. F. S. Miller: You got into a discussion about our deficit -- the $1.11 on the dollar -- and you implied that we could cut costs more. This is where I think a responsible opposition -- you are both responsible, and I am saying this straight to you -- will disagree with me, and I accept that you are disagreeing with me on principle. I think you, on the other hand, may agree with me on principle. I do believe in a balanced budget; I don’t believe you do.
Mr. Laughren: At the right time, yes.
Hon. F. S. Miller: A balanced budget is possible. It is possible at any time we decide it should happen; and you know that.
Mr. Laughren: Not in a recession, Frank.
Hon. F. S. Miller: If the word “can” is put in -- in other words am I able? -- then I am able, but that doesn’t mean I am wise to do something at a particular point.
Mr. Laughren: We don’t think you should have one in a recession, that’s the difference.
Hon. F. S. Miller: All right, we are touching upon the impact of a decision, not the ability to make the decision. They are quite different things, So if you ask me if I can balance a budget. obviously I can balance a budget. I would suggest to you though that it should be a phased process.
Mr. Peterson: If you can, so can the feds.
Hon. F. S. Miller: Yes, they can. Although their job currently is at least three times as difficult as mine. You agree with that?
Mr. Laughren: It takes a lot of courage.
Hon. F. S. Miller: I would say that a number of factors have to be taken into account. We do have to keep working on government spending. I looked at approaches that Mr. Friedman, the famous economist, suggested for economy. He said that when an economy has the kind of an inflation rate we have, a gradual process is better than an abrupt one. If you have an economy such as, I think it was Chile, had --
Mr. Laughren: Brazil.
Hon. F. S. Miller: -- with the inflation in the hundreds of per cent per year, you might as well be abrupt because there is no such thing as a gradual solution to that magnitude of problem.
We have, under Mr. McKeough, and currently under myself, been whittling away at the size of the civil service each year. We have been constraining the general spending of government, trying to keep it below the growth in our income and trying to keep it below the growth of inflation --
Mr. Laughren: Deal with the symptoms.
Hon. F. S. Miller: -- so that real dollar savings were being effected each year. I say to you there are still tough decisions to make on the spending side. There are still objections to run into from people who are affected by those decisions. I would hope as we make those decisions public we could expect your support in seeing they are carried out, because you have preached that gospel. You may argue in detail, but in principle I trust you would accept that approach.
At the same time I am faced with -- let’s say the Ontario Health Insurance Plan recommendations that came from the committee, and I would say they were in three categories. The only unanimous one I caught was the belief that we should have a tax credit to cover those people who are presently entitled to either partial or total premium assistance; we would get rid of the notches we all talked about on the committee and in effect make the return of the premium automatic. It was said that would cost $150 million. I hope you would realize that $150 million can’t simply disappear from the Treasury without being replaced in some way or another. That replacement has to be either further cuts, increases in OHIP or increases in taxes -- doesn’t it? -- or a combination of all three; if I am not going to make my budgetary deficit worse by granting assistance to people who are entitled to assistance.
I lean towards it. I’m not going to say it will happen, but I think the committee, in making that recommendation, had done a reasonably good job of looking at the problem and assessing it. I found both parties’ belief that we should either dramatically do away with premiums -- I think that was your party’s point of view -- or cut them in steps and get rid of them -- which was, I believe, your party’s point of view -- unrealistic if one wasn’t willing to take the other step, and that was to increase taxes too.
You talked a lot about the economy in Ontario, both of you.
Mr. Laughren: What kind of statement is that?
Mr. Riddell: What are premiums if they are not a tax?
Mr. Laughren: Premiums are a tax. What are you talking about?
Hon. F. S. Miller: All right; we recognize that change to an income tax base catches people in an entirely different way --
Mr. Swart: A fairer way.
Hon. F. S. Miller: -- and that it was difficult to measure and the present premiums were reasonably well accepted by the great number of people paying them. One can argue whether that is right or wrong, but it seems to be so on the basis of our information and polls.
Mr. Riddell: Premium assistance is a dismal failure.
An hon. member: Was that a poll?
Hon. F. S. Miller: I just finished saying that.
Mr. Riddell: If it was all being used you would have to cough up another $250 million.
Mr. Chairman: Order.
Hon. F. S. Miller: That’s what I just said. Please go back and see what I just said two minutes ago.
Mr. Riddell: But I don’t say it in quite as convoluted a fashion.
Hon. F. S. Miller: That’s right.
Mr. Riddell: Carry on.
Hon. F. S. Miller: I can’t read my notes.
Mr. Laughren: You were agitated when you wrote those.
Mr. Peterson: Did you write them?
Hon. F. S. Miller: Oh yes, I wrote them as he talked, so at least these are responses to what was said. I’m always intrigued at the, I suppose Pavlovian, reaction of the opposition to tell me how bad things are. I suppose I’d do the same thing if I was there.
Mr. Riddell: You will be next election.
Mr. Laughren: You are saying it yourself, your people are saying it. What are you talking about, the next election?
Hon. F. S. Miller: No, I don’t. I am a realist and say things can be better, but things are not bad; there’s a big difference.
Mr. Swart: It all depends on where you sit.
Mr. Laughren: I am quoting from your figures, not mine.
Hon. F. S. Miller: Compared to what? Somebody was quoting me 2.9 per cent growth in the budget. The latest figure I have shows that it is almost hovering right on four in Ontario. My figures do show anywhere from 120,000 to 140,000 new jobs created. They do show that a third of those are in manufacturing. Admittedly, manufacturing is a smaller percentage of the total work force as time goes on because it is becoming more and more automated. As a result we rely more and more on the other parts of society that have not been as automated and remain more labour-intensive.
Mr. Riddell: OHIP found the Treasury figures unreliable.
Hon. F. S. Miller: I think the boys in Treasury, and I have had a chance to look at three ministries, are pretty sharp when it comes to figures.
Mr. Sargent: They have got to be with the mess we are in now.
Hon. F. S. Miller: Both of you talked a lot about the government’s ability to solve problems. I guess those of us who are politicians are all guilty of one fault, that is trying to convince people we talk to about what we can do and seldom admitting what we can’t do. One of the things we have done far too much of, in my opinion, is convincing the world that government can do a lot of things that are in fact, so far as I can tell, beyond any government’s ability, whether it be socialist, capitalist or communist.
I have watched those who believe in the centralized socialist system, and frankly, if it worked I would be a socialist. I look at Ontario’s tax rate and I see that we take 33 per cent of the gross provincial product for all levels of taxation.
Mr. Laughren: You are talking about everything except our problems. There are about four ways to look at that figure.
Hon. F. S. Miller: Is it 33 per cent in Ontario? Nods are coming from my staff. I think the Canadian average is 42 per cent, if I am right. The British average is 60 per cent. If Ontario is such a badly run place, how come it has, if not the lowest then perhaps almost the lowest, tax rate as a percentage of gross provincial product in Canada?
If socialism is so good, how come Britain has a 60, 61 or 62 per cent rate of taxation?
Mr. Laughren: You are being dishonest. You are not even looking at the OHIP rate and other services included in that level of taxation. You can’t be serious.
Hon. Mr. Walker: He certainly can; and he is.
Hon. F. S. Miller: When you compare Ontario to the United States --
Mr. Riddell: Furthermore, who said socialism is good?
Mr. Laughren: He did.
Hon. F. S. Miller: Not you or I.
Hon. Mr. Walker: It is the scourge of the 20th century.
Hon. F. S. Miller: When we look at the involvement government has -- and I have to say we do have involvement from time to time, and you and I agree that the Ford deal was good; but it doesn’t mean we should be involved in every deal. We got involved in Syncrude, and I would say Syncrude is good. I guess a government has to stop and say what in fact is its role.
Mr. Laughren: What about Petrocan? Do you like that?
Hon. F. S. Miller: I am not really sure about Petrocan yet. There is a million dollars invested for every man’s job in Petrocan. I am sure you are aware of that.
Mr. Laughren: There is almost a million in Inco.
Hon. F. S. Miller: You get to the tourist industry where I am and you can produce a job for $20,000 investment.
Mr. Laughren: Which one creates wealth?
Mr. Peterson: You build nuclear plants for a job creation program.
Hon. F. S. Miller: Which one creates wealth? I would say to you any industry that helps bring Americans into Ontario and brings dollars in from another country has solved one of our most pressing problems, that is the imbalance in our total Canadian cash flow in and out of the country. There are those economists to whom I have talked who say --
Mr. Sargent: That’s why we are in the mess we are today with 85 per cent control from across the border here.
Hon. F. S. Miller: My friend, if we look at one of the reasons that percentage is that high, we would have to look to the ways the federal government taxes us.
Mr. Sargent: It’s a dead-end street.
Hon. F. S. Miller: One of the things it has been doing in recent years is giving fairly generous tax credits to people who put their money into retirement and savings plans; isn’t that true? That approach has withdrawn, in my opinion, a great deal of investment risk equity money from the market.
Mr. Laughren: And it cost us tax dollars too.
Hon. F. S. Miller: While they were doing that they were simultaneously taxing capital gains.
Mr. Laughren: Now you have gone too far.
Hon. F. S. Miller: While they were taxing capital gains, they didn’t index the taxation for capital as they did for personal income; so they didn’t tax capital gains, they truly taxed capital. Do you agree with that?
Mr. Peterson: On a point of order, Mr. Chairman: This is a very important point of view. I wanted to --
Mr. Deputy Chairman: Is this a point of view or a point of order?
Mr. Peterson: A point of order. The Treasurer asked me a question. We are running along informally, Mr. Chairman, and I am sure the Treasurer would be happy to hear my response, because he is fundamentally wrong.
Mr. Swart: That’s no point of order.
Mr. Deputy Chairman: Order.
Mr. Peterson: I am trying to assist the Treasurer. If he’s digressing, if he’s making a mistake, then surely we collectively have an obligation to him as our friend to assist him --
Mr. Deputy Chairman: Order.
Mr. Peterson: -- because we don’t want to see him embarrass himself --
Mr. Sargent: With friends like you, who needs enemies?
Mr. Peterson: -- on his first time defending his estimates.
Mr. Deputy Chairman: I would indicate to the member for London Centre that I will hear a point of order, but I will not hear a speech in reply to the Treasurer at this time. There will be ample opportunity for this. Will the Treasurer please continue.
Hon. F. S. Miller: One of the great advantages I have as Treasurer is being fundamentally wrong in your opinion.
Mr. Laughren: It’s a growing opinion.
Hon. F. S. Miller: Yes.
Mr. Sargent: You are not going to get it settled tonight.
Mr. Peterson: Give me three minutes to respond.
Hon. F. S. Miller: The role in Syncrude, for example, was a catalytic role. It was a role where we stepped in and the Ontario government helped something go forward that was, I think, essential. You were saying earlier tonight that Ontario has been reappraising its position. If that’s now a profitable venture, one that private enterprise is willing to invest its money in, I guess we have to sit back and ask are we still a necessary partner? Is it government’s duty to leave money invested “to earn dividends”; or is it in fact its duty to use it over again to start some other enterprise down the road that will create more jobs or secure our energy supplies -- or whatever it may be -- until we are not needed there and then go back and do it somewhere else? I would, as you may guess, tend towards that latter course myself; and so we are currently doing some thinking, as I am sure you have seen in the paper.
You talked about the Treasury bills and implied that somehow I was not being honest in the statements. I tried to qualify the words in my statement. I did not try to deceive you. I was aware that Treasury bills had been increased from $10 million a week to $25 million a week. I was also aware that unless there was a great deterioration in our cash position we would hope to go back to $10 million a week before the end of this year and end up with a balance at the end of the fiscal year roughly equal to the balance with which we started the year so that there was no net change on the books from Treasury bills. I can’t guarantee that. I say that is my intent.
Mr. Peterson: You can’t do it, Frank.
Hon. F. S. Miller: I don’t know that I can or cannot. It depends entirely upon the cash flows for the balance of the year.
But I want to point out that in drawing down the cash reserves -- obviously I would like them a slight bit higher -- one of the reasons we have been able to draw them down in the last while has been much better control by Treasury of the cash requirements of government, making them fit more closely to the cash inflow to government, and much better electronic data processing that allows us to operate with significantly smaller total cash reserves at the year end.
Mr. Peterson: You are still trading off an asset, Frank; that’s what you are doing.
Hon. F. S. Miller: No argument.
Mr. Peterson: Like selling off mortgages, no difference.
Hon. F. S. Miller: I am still very anxious to achieve the same goal you are. Whether I will be able to make that forecast as to when it will happen or not remains to be seen. You say it will take courageous decisions, you say it will take tough decisions; I agree, and I just hope and trust there will be support in principle for those moves when the time comes. If it becomes a political issue; and it easily could because it’s the kind of thing one can easily win elections on -- remember, telling the man on the street that you should reduce taxes will always win a vote faster than being --
Mr. Peterson: Frank, we may have been wrong in this party, but we have never been cheap, have we? We have always tried to face up to the tough things.
Hon. F. S. Miller: I don’t think you have.
Mr. Peterson: We have always tried to face up to the tough things.
Hon. F. S. Miller: May I suggest I think that’s been my track record. I think you will find it will continue to be my track record as I go down the line.
Listen, I take this job very seriously. I have, as the member for Nickel Belt (Mr. Laughren) will say at times, a flippant way. I don’t apologize for that. I rather enjoy the repartee in this House. I think that if I couldn’t have some fun while being serious, life wouldn’t be really worthwhile.
Mr. Laughren: That is the part we are missing. We like you to have fun, but we like you to be serious, too.
Hon. F. S. Miller: No, no; anybody who works close to me --
Mr. Laughren: That’s not us.
Hon. F. S. Miller: No, thank God.
Mr. Laughren: You don’t share anything with us. Don’t blame us for not knowing, Frank.
Mr. Deputy Chairman: Order.
Hon. F. S. Miller: On that topic, the one paper you referred to I think was a January paper. That was one you quoted from at great length on the GATT negotiations. That, I think, went way back to last January or February. It was well before my time.
Mr. Laughren: No; June or July.
Hon. F. S. Miller: That’s when it got to Ottawa, but I think the paper was ready before then.
You know, I went to Geneva this year. I did talk to the GATT negotiators. I am aware of the impact on Canada, if in fact these barriers were eliminated. I am also realistic enough to tell you that Darcy was right when he said Canada is a relatively small country in the action.
Look, you are in power negotiations. There is no use you and I pretending Canada can come in there with a big stick and say it is our way or no way. You’ve got Japan, the European Common Market and the United States as the potent negotiators, and you have a whole host of other countries which can only hope to influence what goes on through patient negotiation --
Mr. Laughren: We are the US’s biggest customer, Frank.
Hon. F. S. Miller: -- negotiation with a partner, often; like the United States in our case, with whom we share a whole series of common problems.
Now that is our role and we are going to make the best possible deal. What you and I need to worry about in Ontario is that the Canadian negotiators don’t see this as the round where Ontario “gets it.” That, I think, is something we can all share.
You have to understand there are provinces that have felt that Ontario has done well and that Ontario’s industries have done well at their expense. You have to understand there are a good many Canadians who would dearly love free trade, because it means lower-cost products to them immediately, no matter what it does to the economy of this country in the long run.
Mr. Laughren: The same argument can be made on the oil price increase, and you sure have a funny position on that one.
Hon. F. S. Miller: Now you would agree with those things, I hope, on both sides. Those are very serious problems, ones where we --
Mr. Laughren: You are not telling anybody about that. You go over to Geneva and come back and don’t tell us. We don’t know what your policies are, we don’t see your papers --
Mr. Deputy Chairman: Order.
Mr. Riddell: He doesn’t like us.
Mr. Laughren: He doesn’t like anybody at this point. He wants to keep everything to himself.
Mr. F. S. Miller: I don’t recall having much cause to tell you I was there before. I don’t recall having much cause to stand up and tell you I was there before. I happened to go there when I went to see four bankers in Geneva. I went to see it because it is exactly the kind of thing the member for London Centre said -- in fact the personality of an individual is a critical thing.
Mr. Martel: What is your responsibility to the province?
Hon. F. S. Miller: The personality of the Treasurer is important.
Mr. Peterson: You went to see the little gnomes of Zurich, Frank.
An hon. member: They’re just his size.
Hon. F. S. Miller: Yes, I did. Intellectually my size.
Mr. Martel: That’s why they have all the money.
Hon. F. S. Miller: I learned one thing; I came home with my head perhaps a little fatter, if that was possible than when I went.
I came home realizing that over there, under the cold, analytical eye of what you like to call the gnomes of Zurich, we are a pretty competent, well-run province. The top credit risk around; the one they are most willing to lend money to; the one to whom they would give money for zero per cent interest for 90 days, seven-eighths for one year.
Even at that, my friend, I am not suckered into borrowing money that has an exchange risk of the order they currently have.
Mr. Laughren: How about Ontario Hydro?
Hon. F. S. Miller: When we get down to the figures you will find, I think, that one half of one per cent, or thereabouts, of all of our moneys are borrowed in foreign currencies, some figure like that.
Mr. Laughren: What is the devalued dollar going to cost you?
Hon. Mr. Walker: What is the Swiss interest rate, Frank?
Hon. F. S. Miller: I think the latest rate that was negotiated was 2.625.
You are telling me it is time to quit, Mr. Chairman? I think anything else I can say on this need not be said. I have managed to cover the time until 10:30. I will be glad to start on my votes in the next round.
On motion by Hon. F. S. Miller, the committee of supply reported progress.
On motion by Hon. F. S. Miller, the House adjourned at 10:30 p.m.