Legislative Assembly of Ontario

The House resumed at 8 o’clock p.m.

Mr. R. F. Ruston (Essex-Kent): Mr. Speaker, might I just take a moment to introduce to the House 60 pupils and nine adults from the Belle River Public School? They are all grade 8 students whom we wish to welcome here. They came down by bus today and are staying in Toronto tonight and tomorrow. We wish to welcome them as well as the two bus drivers who are in the Speaker’s gallery.

PROPERTY TAX STABILIZATION ACT

Hon. Mr. White moves second reading of Bill 50, An Act to amend the Property Tax Stabilization Act, 1973.

Mr. Speaker: The member for Waterloo North.

Mr. E. R. Good (Waterloo North): Thank you, Mr. Speaker. Actually the Property Tax Stabilization Act is really three bills in one, as I see it. It has combined three new grants that were introduced last year for the first time, the purpose of which is to put funds in the hands of the municipality. The amendments are necessary because the formula used to figure out these three grants has changed in this particular year. I think the things must be dealt with separately.

First, the general support grant, Mr. Speaker, ranges this year from three per cent to nine per cent whereas last year it was from two per cent to six per cent. The grant is inversely proportionate to the increase of expenditure by the municipality. In other words, the more you increase the less you get, and the less you increase the more you get.

The theory behind this is perhaps good on the surface in that it is designed to constrain municipalities to keep their spending within certain limits and, therefore, to work for the biggest grant possible. However, I believe there are cases where, in spite of all the normal methods of good business practice and good municipal practices, nothing can be done except to have a considerable increase in spending from one year to the next. This, I’m sure, is due in areas of rapidly expanding municipal services, areas where population is increasing, where services are required and where the general growth in the area is demanding of an alert and live council that more moneys be spent to provide the facilities that are required.

If the increase from last year to this year is kept under eight per cent, the support grant is nine per cent. This diminishes down now. Where the increase in spending is 14 per cent or more, the grant is reduced to three per cent. I shudder to think what is going to happen, Mr. Speaker, when we see the reports coming out in some of the new regional governments which undoubtedly have special cases, they have special startup costs which are partly met in other areas, granted, but in the regional governments such as my own in Waterloo where the increase in spending has been considerable from last year to this year. In other regional government areas things have become so difficult that the minister has even seen fit to call the heads of the regional governments in to say that something has to be done to keep the spending within limits. This business, Mr. Speaker, of the province throwing enough money into the municipality to keep the taxes within reason appears to be very excellent on the surface, but when one analyses it down to its smallest components the money can come from only one source and that is the same taxpayer who has to pay the municipal tax burden.

However, I think the theory behind this is good in that municipalities are encouraged to keep their increases within limits to qualify for the maximum grant. I am sure there are instances where certain necessary works must be delayed and it must be a hard decision to reach, whether a municipality should try to work for the maximum provincial grant or work toward the necessary and maximum amount of services that the people require. As in many things, I suppose one has to balance the advantages and disadvantages of this particular scheme.

In one sense, this general support grant works like many other things instituted by the province, as it relates to the province and the municipality. In other words, if you do what we say and organize your things on the basis that we recommend we will provide you with a maximum amount of money. This, of course, is what happens here. It is a combination, I suppose, of a carrot and stick approach and we find that too often the priorities of the municipality must give way to the wishes and priorities of the province in order to get the maximum monetary return from the province.

The second grant within this bill, Mr. Speaker, is that special northern Ontario support grant, which is increased from 10 to 12 per cent in this particular amendment. If I may just go back, the amount of money involved in the first grant, the general support grant, is $33 million. That is the increase this year. The amount of increase going into northern Ontario under the second portion of this bill is just $4 million.

Certainly many northern Ontario municipalities are away behind in services. We remember very well the municipalities on the north shore of Georgian Bay, one of which -- and I hate to mention names because it’s embarrassing -- showed us the sewage collection system and said, “That’s where the pipe comes out into the river until such times as we can afford to build a sewage disposal plant.”

One can scarcely believe that situations like that exist in the Province of Ontario but, Mr. Speaker, they do. So certainly the municipalities of northern Ontario can use every dollar forthcoming from this government. We find that the $4 million increase raises the whole grant from $9.9 million last year to $13.9 million this year -- not a large sum of money when one considers the vast expanses of northern Ontario and the many municipalities whose services are much more costly. It costs a lot more to service people in the north than it does in the southern part of Ontario because of certain factors that enter into it.

The third part of the grant, Mr. Speaker, is that which deals with the average assessment in the municipality. The way this grant works is that when all assessments in the municipalities are rationalized out at equalized assessment, one half of the deficiency between the average assessment in that municipality and the tax that would have been generated had all those assessments been $10,000 is supplied by the province. This year that assessment figure is raised to $10,000.

Now this, I believe, is going to pour about another $15 million into the municipalities. This is very fine except that the equalized assessment as you know, Mr. Speaker, and as I am sure the Treasurer (Mr. White) realizes, is a very uncertain figure. Even the experts will say that figured out to the best of their ability it is not a fixed amount. It is not certain when we figure the equalized assessment even within a municipality that is neighbouring another municipality. But when we talk about equalizing the assessment all across the province we know that at best it is just a guess. To give the municipalities with a lower average assessment additional grants does have some merit, I am sure, although I question somewhat the accuracy these grants will really have when they are figured out in relation to the equalized assessment of all municipalities across the province.

We will support the bill, Mr. Speaker, because we feel the municipalities have to have this additional money. It has been said by the heads of many municipalities that inflation alone has eaten up the additional grants that came from the province last year. Certainly the municipalities are no better off than they were. They are barely meeting their budgets with these additional grants, allowing for somewhat lesser increases in taxes than would have occurred had these funds not been made available.

We support the bill, Mr. Speaker, and would hope that in the general support grant another year the minister could make allowance for some municipalities, which, through no fault of their own, are forced into increased expenditures, and by being so forced, would not be penalized by a lesser grant from the province, because the grant is given in inverse proportion to the increases required by that municipality.

Mr. Speaker: The member for Ottawa Centre.

Mr. M. Cassidy (Ottawa Centre): I wish I could say with the speaker for the opposition that we were going to support the grants unequivocally. I am afraid I am going to be a bit more equivocal than that, Mr. Speaker. My strong temptation would be to say to the Treasurer, “The heck with you, and your fiddling around with property tax stabilization plans and this kind of thing. We have been waiting for years to get a really fundamental reform in the system of municipal finance. What you have been doing instead is -- because you talk to the municipalities and previous Treasurers didn’t, and previous Ministers of Municipal Affairs didn’t -- conning them into believing that something substantive is happening. At the same time you are putting the blame for inaction by the provincial government on to federal treasury.”

Wiser heads in my caucus may tell me that when money is being given to municipalities, however strongly we feel about it, they will probably support it. On that basis, Mr. Speaker, we probably will support it, but I can say that it is a very reluctant kind of approbation I want to give the Treasurer for this particular piece of legislation.

When the Property Tax Stabilization Act first came in last year, one of the points we made was that the policy of ceilings being imposed on the municipality put them and their priorities in very much the same situation as the school boards have been over the past few years. Now it is being repeated this year. The screws aren’t being tightened the way the Minister of Education (Mr. Wells) has tightened them on the school boards. Now it is a matter of sticks and carrots, but it could become a matter of absolute coercive powers telling municipalities that they must spend no more than seven or eight per cent more than the previous year and nothing beyond that. That’s the kind of thing the Treasurer is leading to with this plan.

Some of the comments I want to make, Mr. Speaker really relate not just to this bill but also to the other two bills in passage which we are debating tonight. I’m concerned about the fact that the government has now, apparently, drawn a halt to its transfers to local government. The Treasurer has said in his so-called Edmonton plan that transfers to local government will grow at the same rate as and no more than the growth in provincial revenues. He estimates that the revenue growth will be 11.7 per cent for the province this year, a figure which surely must be an underestimate in view of the kinds of --

Hon. J. White (Treasurer and Minister of Intergovernmental Affairs): It is 13.7 per cent.

Mr. Cassidy: It’s 13.7? Is that right?

Hon. E. A. Winkler (Chairman, Management Board of Cabinet): That is what he said.

Mr. Cassidy: My notes are wrong and I prepared them myself. I can’t blame Hugh Mackenzie for this. All right, even taking that 13.7 per cent, Mr. Speaker, the figure is surely going to be pretty small. An underestimate this year, in view of the inflationary dividend that the Treasurer stands to collect because of the elasticity of the more progressive provincial taxes. But that, unless the Treasurer is going to change and recant during the course of this debate, is not to be passed on to the municipalities. They are left with transfers which are estimated at no more than the increase in provincial taxes, calculated at a time before either the increases in costs they would have to bear, or the increase in revenues that would be coming in to the province become clear.

This is particularly true if you look at the pattern of provincial revenue growth over the past three years. During the 1960s Ontario government revenues were growing by 20 to 25 per cent a year. They grew by 15 per cent in 1970-1971. In 1971-1972 provincial revenues grew by only 6.4 per cent. I recall that was a tax cut year whose timing was possibly related to the timing of the provincial election. Revenues grew again by 12.7 per cent in 1973-1974 and by 13 per cent in 1972-1973. Now the Treasurer is suggesting that, despite the conditions that prevail this year, the revenue growth will be no greater than in the past couple of years.

A realistic estimate of revenues would have led to much higher transfers to municipalities to help them cope with inflationary problems they will face this year. If the Treasurer wants any indication of what those problems are going to be, he need only look at the kind of wage settlements with their employees being reached between Metro Toronto, its boroughs and other municipalities.

The second thing is that the Treasurer said in the budget that he would offer to increase government transfers to municipalities by $239 million in 1974-1975, including an estimated $124 million for new provincial transfers, which are mainly comprised in these three bills.

In the course of the budget papers a number of claims are made. One is that the net property tax has barely changed in the last three years.

It is not noted that this is true for business as well. And since business, commercial and industrial properties pay about half the local property tax, the Tories have given to their friends in business a very substantial bonus over the last three years in a programme ostensibly directed not to business but to the individual property taxpayer.

Second, you would be hard-pressed to find out that the property tax burden hasn’t substantially increased if you go and talk to people who are paying tax on new and heavily-assessed homes, or people who are inequitably treated because of the delay in assessment reforms -- a delay may I add, Mr. Speaker, which is clearly politically motivated. The government has decided not to bring in assessment reform until after the forthcoming election.

The third thing is that the programmes suggested in this particular bill represent a retrograde step from the trends reflected in the original Property Tax Stabilization Act and in the original announcement of the 1973 budget. The Treasurer would only expect me to say that last year the government wasn’t going nearly far enough. This year, not only is that the case, but he is also heading back in the wrong direction, and I want to show how he is doing this, if I can, over the next couple of minutes.

The figures produced in the province’s own booklet, the Treasurer’s own budget paper on the property tax stabilization programme, indicate that Ontario has got a tremendous distance to go to equalize the revenue-raising powers of the poorer municipalities and those that are well off. If I can summarize, the small, poor municipalities must tax twice as heavily for the same per capita revenue. Now, that’s real discrimination, Mr. Speaker, and there’s no significant step to alleviating it in this current year’s budget.

If the needs of the small municipalities were significantly less, the Treasurer might have a thin leg to stand on, but in fact experience indicates that the per capita expenditure of the smaller and poorer municipalities is almost identical with the per capita expenditure of the large and prosperous municipalities. The reason is that they don’t achieve economies of scale. They have such things as mile after mile of concession roads to maintain. The cost of a new bridge for one of those municipalities is a major expenditure, whereas it is just part of the routine budget in the case of a large municipality. Welfare expenditures of municipalities in eastern Ontario are significantly higher per capita than they are for the large cities of the province, and so it goes.

Experience indicates that in 1972 municipalities with an assessment of less than $6,000 per capita spent $124 per capita. Municipalities whose assessment was between $6,000 and $8,000 spent $126 per capita. Municipalities with a per capita assessment of between $8,000 and $10,000 spent $128 per capita -- almost no difference between those three. The really prosperous municipalities whose assessments were $10,000 and up, spent less, in fact than the poorest. They spent $120 per capita.

In rough terms, just under a third of the municipalities had an assessment per capita of under $8,000, and just under a third had an assessment of over $10,000. So you see, the spending of the poorest third, the richest third and the middle third was just about the same.

But when you look at what it took to raise the money needed -- I think the figure is based on what it took to raise $100 in taxes -- the average equalized mill rate in 1973 for the poorest municipalities was 11.7 mills; for the next 25 per cent of municipalities it was 8.4 mills; for the next group, those with assessments of between $8,000 and $10,000, it was seven mills; and for the richest municipalities it was five mills.

In other words, the small poor municipalities with a per capita assessment of under $6,000 had a mill rate of 11.7 mills, whereas the large and rich municipalities had a mill rate of only five mills. That is grossly inequitable. If I can repeat it, it means that the poorest municipalities had to tax twice as heavily as the richest, despite the improvements that were introduced last year by the provincial scheme.

This year, Mr. Speaker, the province is only devoting a small amount of its increased allocation to municipalities in order to help cut the disparities between the richest and the poorest. Back in 1973 -- last year -- the resource equalization grants which were new then were worth $56 million. That is not a heck of a lot when you put it against the $2 billion or so that was being transferred one way or another to the municipal level, and to local education authorities. Nevertheless grants provided covered under this particular bill $56 million in resource equalization grants. They successfully reduced the disparity of mill rates required to raise $100 per capita from about 2.4 times to about 2.15 times. That means that the mill rate of the poorest municipalities was about 2 1/2 times that of the richest before last year’s grant and it was reduced to about 2 1/7 times.

That kind of progress should have been continued, if not accelerated. But this year the resource equalization grant is being increased by only $15 million out of a total estimate of provincial assistance to local government of $2,152 million. This is very small potatoes indeed. The $15-million increase in the resource equalization grant should also be compared with the overall increase transfer of $124 million that is mentioned in the budget. Most of the increase this time, is going to go in the general support grant, in main per capita grant and in the per capita grant towards policing costs, etc.

In this particular bill, the value of the increased general support grant is an extra $32 million. The value of the increase from 10 per cent to 12 per cent in the northern Ontario grant is an estimated $4 million and the resource equalization grant is only $15 million extra. One has to ask the Treasurer and the government where on earth are their priorities when poor municipalities have to charge double the tax rate of rich ones in order to achieve the same amount of funds. Where is the equality of opportunity in that? Where is the commitment to equalization?

When the government eventually got around to producing budget paper B, “Financing Development of Local Government,” the minister sought to compare the tax burden and the grants and so on of various kinds of municipalities. They very cleverly took a completely different kind of split in order to make that assessment. They talked about areas of rapid urban growth; stable urban areas which include, surprisingly enough, the cities of Ottawa, Kingston and Brockville; urbanizing areas -- these would be townships and semi-rural areas, such as Orangeville, Smith Township and Innisfil Township and rural areas with a population growth of about six per cent, like Darlington, Burford and Mersea Township.

Those who thought this was an urban province would be very surprised when they looked at the taxation figures. I would like very much to see these taxation figures compared with population figures, because I think they would show some very surprising results. I want to remind you, Mr. Speaker, that the government which the Treasurer represents has built its political strength on the rural townships and rural counties of this province. There’s that vast blue belt that goes from the Liberal fringe on Lake Huron right over to the Quebec border and Hawkesbury and L’Orignal.

Mr. D. M. Deacon (York Centre): Put a bit of red in there.

Mr. Cassidy: Okay, there are a few Grits around Waterloo as well.

One would have thought that the government would have some regard for the problems that rural people have for the disparities between rural and urban people and for the disadvantages of rural areas. But, as I was reminding the House just before the break, when we were discussing the Treasurer’s estimates, that just isn’t true. There are vast areas of this province represented by Tories for which the government does nothing, except drain the young people away to Toronto.

The Treasurer’s own statistics are very significant, Mr. Speaker, when you look at the effect of the property tax. We all know that the property tax is a regressive tax; that it bears most heavily on poorer people and least heavily on those who are well off. When you look at the tax burden in terms of its percentage of household income, however, you find that in these areas of rapid urban growth, such as Metro Toronto, Mississauga, and places like that, with high incomes may I say, the property tax amounts to 3.7 per cent of the total household income. In stable urban areas, such as Ottawa, Kingston and Brockville, it is really quite a modest 2.7 per cent. It’s at the level, in other words, where possibly it ought to be for the province as a whole, because of the inequities of the property tax system.

In the urbanizing areas it’s 3.4 per cent but then one comes to the rural areas of this province and finds that despite everything that has been done, all of the pretensions made by the Treasurer, all the claims, all the bills we have passed here for relief of taxation on farm property and that kind of thing, the governments in Ontario through the property tax take 5.3 per cent of the household income in rural Ontario. That is a lot of money as well, Mr. Speaker; $377 million goes into local government through the property tax in rural Ontario under the Conservative regime of the Treasurer and the Premier (Mr. Davis). That is only $14 million less than the amount of money collected in property taxes in the so-called stable urban areas such as Ottawa, Kingston, Brockville, and I am sure there are a few others, one needn’t pick on eastern Ontario.

The rate of tax as a proportion of income in these rural areas is double what it is in stable urban areas. I don’t need to tell the Treasurer that our people in Ottawa are a lot better off, on average, despite the problems we may have, than people are in rural and small-town Ontario. The rate of property tax in rural Ontario is double what it is in stable urban communities, and it is about 50 per cent higher than it is in the urbanizing townships around Toronto, for example, or than it is in rapid areas of urban growth like Toronto itself.

Mr. J. A. Taylor (Prince Edward-Lennox): The member is crazy.

Mr. Cassidy: I am not crazy. That’s true. I am glad the member for Prince Edward-Lennox is listening to this and I hope he goes back --

Mr. Taylor: I am listening but the member hasn’t learned very much because his figures don’t mean a damn thing if one starts to think about what he is saying.

Hon. Mr. White: That’s right.

Mr. Cassidy: I am quoting from the government’s figures; they are not my figures.

Mr. Taylor: Figures don’t lie but liars figure.

Mr. Speaker: Order, please. Please address the Chair.

Mr. Cassidy: I am quoting, Mr. Speaker, from a booklet called “Finance Development of Local Government in Ontario.” The figures I am quoting, Mr. Speaker, come from this volume, “Budget paper B; Financing Development of Local Government in Ontario,” I am looking to see whether Ian Macdonald’s name is still on it. I guess they took it off because the department was in the course of transition. All the same, it comes from impeccable authority that rural people paid twice as much property tax as urban people under the government of the Treasurer, and all he will do for them is to find about $14 million.

We are going to talk about that in rural Ontario in the course of the next year and a half, and I hope --

Hon. Mr. White: I’ll bet.

Mr. Cassidy: -- the member for Prince Edward-Lennox and a few others realize the fact that there is a rip-off going on in this province and the Treasurer is responsible. It’s those Tory voters in rural Ontario who are having to pay for it.

Mr. Taylor: I’d be happy to discuss that on the platform with the member, any time, in any rural community.

Mr. Cassidy: In any rural community? That’s fine. Okay I take that up. I look forward to the invitation. I drive through the member’s constituency almost every other week and if he sets up the meeting, I’ll be glad to go.

Mr. J. E. Stokes (Thunder Bay): Start at Picton.

Mr. Cassidy: That’s right, we’ll start at Picton.

Hon. Mr. White: I hope the member will speak in London, too, before the next election. That will really clinch it for us.

An hon. member: That’ll clinch it.

Mr. Cassidy: Yes. Well, no, this is serious.

Mr. W. Ferrier (Cochrane South): The Treasurer spoke in Timmins last night and that is going to clinch it for us.

Mr. Cassidy: Mr. Speaker, this is more serious than the Treasurer makes out. I have to admit I was surprised because I had always thought the level of taxation tended to be lower in rural Ontario because the level of services was lower, and because they didn’t have sewers and sidewalks and all sorts of other urban services. People in rural and small-town Ontario benefit from their environment; they have a lower standard of services but, in simpler communities, their need is less as well.

The Treasurer’s figures have put quite a different light on it and they indicate that we are really being unfair. Not only do we tax their incomes twice as much but we have to remember that incomes in those areas are a lot lower than they are in urban Ontario. Therefore, people in those areas can afford to pay these taxes much less. This is a classical example of regressive taxation.

Mr. Speaker, not only that but we keep asking ourselves on this side of the House, why is it that so much comes into Toronto? Why is there this obsession with growth along here? Now we find another reason and that is that if one goes to many parts of Ontario, which are rural or semi-urban, the communities there cannot afford the expenditures which might help them develop more jobs for their people. They simply can’t afford them because they’re so heavily taxed now, and the local politicians realize the situation and don’t dare go any further. If they appeal to the Treasurer for help they get a bland smile, and some bonhomie, and little shrimps --

Mr. Taylor: That’s not true.

Mr. Cassidy: -- and other things like that are handed out at the meetings with the Provincial-Municipal Liaison Committee --

Mr. Taylor: You’re the little shrimp!

Mr. Cassidy: -- and most recently, they get the opportunity once a month to come down to Toronto, if they can spare the time, and sit in on the PMLC and ask questions of the minister, or of other people, over the course of half an hour or so.

Mr. Stokes: Are you suggesting that he’d whitewash something?

Mr. Cassidy: I’m suggesting he is whitewashing things. There’s a very --

Mr. Taylor: He knows his shrimps, anyway.

Mr. Cassidy: -- instructive comment here from the Association of Municipalities of Ontario on the provincial budget. And this is from Mayor Meston, who’s president of the association. He comments favourably. I’m quite willing to grant the minister that the communications between the province and the municipalities were so bad in the past, that anybody who revived the PMLC as he’s done, and made it an organ of communication as he has done, deserves a certain amount of credit, and I give that credit to the Treasurer.

However, it seems to me that the municipal leaders have been conned on this. When you look at the facts, they indicate that while there is communication right now -- while the province is listening -- it’s not necessarily acting. That’s particularly true in rural Ontario.

Mr. Stokes: They listen, but they don’t hear.

Mr. Cassidy: That’s right. It’s interesting looking at the way the grants are going to go this coming year. There is absolutely no rhyme nor reason in the way they are going to be granted. I have to confess that I can’t even work them out, and I have to confess, as well, that when I find that major municipalities such as East York, Metropolitan Toronto, Chinguacousy and Brampton aren’t mentioned, then I really have some doubts about the Treasurer’s figures. These are the changes in grants for municipalities which were ostensibly outlined in the budget paper A on the property tax stabilization programme.

And may I say, for the benefit of the hon. member for Prince Edward-Lennox, that that is the other major source of the figures which I am using during the course of this speech on this particular bill.

Mr. Taylor: The member’s sources are all right, but the way he twists them and tortures them --

Mr. Cassidy: If the member understood municipal finance -- if he’d been living with it as long as I have, why, he might understand what it’s all about.

The way the thing works just doesn’t seem to make any sense at all. It leads me to suspect, without being able to prove, that the whole impact of the Treasurer’s programme is quixotic, that possibly, even, it is deliberately quixotic because of the use of the various powers for special grants in cases where the political heat is getting a bit too difficult for the Treasurer to stand.

I don’t understand why, for example, Gloucester, if I can find the figures, for this municipality, where expenditures went up by 28 per cent last year, is going to get a substantial increase in funding. Other municipalities who were good boys and kept their expenditures to the eight or 10 per cent that was desired by the Treasurer get virtually no change in their grants at all.

Here we are. Yes, in Gloucester expenditures went up by 28.3 per cent in 1973, making it a bad boy according to what the Treasurer wanted it to do. There’s some reference to annexations which puzzles me, because I was aware of none. Gloucester’s grants have more than doubled between 1973 and 1974. And to take an example from very close by, Nepean is also in a similar situation. Its expenditures were up by 26 per cent and its grants are also going to double. Yet, Ottawa, on the other hand, which was a good municipality, and where expenditures went up by only 6.9 per cent, is only getting about a 14 or 15 per cent increase in grants over last year.

One has to ask why London, where the Treasurer comes from, will get an increase of from $6.9 million to $9.5 million in provincial grants -- with a population of 232,000 -- while Ottawa, where the population is approximately 25 per cent greater, is going to have its grants increased from $6.1 million to $7.6 million. That seems to be a bizarre kind of result; it may have political motivations. The Treasurer may feel an obligation to London. It may even be that it’s simply because London has such an effective mayor right now in Jane Bigelow -- have to give credit where credit is due.

Mr. Taylor: She’s a very fine lady.

Mr. Cassidy: She’s a very fair lady, that’s right, and she’s a fine New Democratic, too. Let’s put that on the record.

Mr. Taylor: I appreciate her political colour.

Mr. Cassidy: At any rate, those results appear to be perverse. There’s been no action by the government --

Mr. G. W. Walker (London North): I know where the action is.

Mr. Cassidy: No, the rump is always like that; they’re rather tempestuous this evening as well. There has been no action by the government in terms of any general reform to give municipalities a really valid share in provincial revenues.

Mr. Stokes: Those were good shrimps.

Mr. Cassidy: What I find particularly objectionable is that the province has not been willing to take its political courage, to put into action what it has said from time to time about the property tax and so on and to shift decisively the burden of taxation from property tax to the personal income tax and the corporation tax and to other provincial revenues. It seems to me we can talk now not just about holding the property tax at the current level but about shifting the tax burden to the personal income tax.

What the Treasurer does is he talks about it as long as the federal government will carry the can. In one of his documents he’s recommended that five per cent of federal tax revenues from the personal income tax be shifted to the municipalities. That’s very bold; it’s very courageous to spend somebody else’s money, but it’s about time this province began spending its own money and ensuring a more equitable tax system than we have right now and ensuring a more equitable tax system than we get when so much of the burden of local expenditures still falls on the property tax and on the tax levied on individuals.

Within the property tax it is about time we began talking not about a property tax generally but about a tax which puts more and more of the burden on land and less and less on the improvements which go on that land. That is a measure which I’m sure the Treasurer is aware, would have the effect again of being relatively progressive in terms of who would have to bear the increased incidence of the tax on land. Among other things, it would put a really severe crimp into the kind of speculation which we have seen around our communities, unlike the proposals of the Land Speculation Tax Act which we have been debating over the last month or so.

Finally, Mr. Speaker, I believe it’s now seven or eight years since the member for York South (Mr. MacDonald) enunciated in this Legislature the New Democratic Party’s municipal foundation plan.

If you recall, sir, the basic elements of that plan were to ensure that every municipality would get the same revenue per capita for the same relative rate of taxation and this would be so right across the province. It’s been done to a fair degree in the field of education but it hasn’t been attempted in the field of municipal finance. That’s why we get the perverse result that to raise $100 a rural municipality must tax twice as heavily as a municipality like Ottawa, Kingston, Brockville or any other stable municipality.

It’s time for the Province of Ontario, which is rich enough to take the step, to say to every municipality within its boundaries -- or if the Treasurer wants, every restructured municipality; he can deal with the others on a traditional basis -- that for every mill of tax they levy they will get the same relative amounts of revenue as the people in the rich municipalities like Toronto, Mississauga, Burlington, London and Ottawa because until he does that he is going to continue the inexorable process where the rich will continue to get richer, where the large municipalities will continue to get services and attention and industry and jobs and other things from the government, and where the smaller municipalities will continue to languish. You will continue to have a depopulation of rural areas in the smaller communities, Mr. Speaker; you will continue to have this inequality of opportunity; you will continue to have a bleeding away of these areas where one thought the traditional values of Tory Ontario really resided, the beautiful small villages and towns that you pass through on so many of our provincial highways and which are now being sucked dry because of the inadequate fiscal policies of this Treasurer and of this government.

Mr. Speaker: Do any other members wish to address themselves to this bill? The member for Windsor-Walkerville.

Mr. B. Newman (Windsor-Walkerville): Mr. Speaker, I want to make a few comments on Bill 50 and bring to the attention of the minister the plight and the situation in which the city of Windsor finds itself as a result of ceilings imposed upon it.

The minister is aware that back during the depression days Windsor found itself in the position where it was bankrupt and it couldn’t finance many of the needed programmes. Following the depression days we got into the war years in which the situation didn’t improve as far as the ability to spend funds goes because of the shortages that developed. Windsor then could not engage in a lot of the needed programmes.

After the war years, we got into annexation or amalgamation in which the takeover of newer areas imposed added financial strain on the municipalities. Now with the additional curbs on ceilings and hingeing the grant to the curtailing of the spending, we find in the community that much-needed pollution control programmes, which must be carried on because of the mandate from the Minister of the Environment (Mr. W. Newman), put the city in a real financial disadvantage. They have to carry on these programmes. As a result, other needed programmes have to be curtailed or, in some instances, completely dropped.

I know the minister is aware of the situation because more than likely the mayor of the community has alerted him to it. Seeing that he claims the local members don’t, I wanted to bring to his attention an article written by Dick Spicer of the Windsor Star concerning the situation. He writes:

“A decision to protest the Ontario government ceiling on municipal spending and a rebuttal to a local charge of empire building characterized the city council’s two-hour budget session on Monday. [This is approximately a month ago.]

“Rushing to meet a deadline that expires Wednesday, council endorsed a resolution protesting the province’s system of grants aimed at holding municipal spending to an eight per cent increase annually.

“‘I don’t know how other cities are doing,’ said Mayor Frank Wansbrough [of the limit] ‘but it is hurting us. It is just strangling us.’”

The resolution passed by city council, Mr. Speaker, made mention that the $3.5-milion increase in expenditures so affects the municipality that even though they have a request for $3.4 million of public works expenditures, they can’t put all of their moneys into public works because other programmes need to be taken care of.

Some of the programmes that have to be cancelled are essential street and safety works and other required installations and services. As a result of the spending ceilings, the city on May 13 passed the following resolution, which was sent to the hon. minister:

“Whereas municipalities are required to limit to eight per cent increases in the general purpose expenditures in order to qualify for the maximum grants under the property tax stabilization grant regulations; and

“whereas a preliminary review of departmental estimates during the current council budget sessions indicates the need to cut over $7 million from estimates for general purposes, totalling over $57 million, thereby eliminating essential street and safety works and other urgently required installations and services; and

“whereas the limit of eight per cent permits an increase over 1973 allowable expenditures of approximately $3.5 million for general purposes, which is only slightly more than the $3.4 million requested by the public works department for 1974 in excess of expenditures by this department for 1973; and

“whereas city council during budget sessions has found it necessary to cut over $2 million from public works department estimates, which include reduction in work and sidewalk maintenance; and

“whereas a large portion of the increase in expenditures permitted under the tax stabilization grants formula must be allocated to environmental works demanded by the provincial Ministry of the Environment; and

“whereas local taxpayers are in effect penalized by having to pay twice for essential expenditures that may result in exceeding the eight per cent limit; and

“whereas this produces a contradictory situation where one provincial ministry requires the city to expedite completion of certain public works, and the other ministry effectively encourages a reduction in expenditures by making such reductions a prerequisite to earning maximum subsidies or grants; and

“whereas the high rate of inflation during the past year, which is expected to continue into 1974, places an additional burden on the municipal budget and the efforts of municipalities to stay within the provincial grants regulation;

“therefore be it resolved that the provincial government be urged to review the severe constraints placed on municipal budgeting by the stabilization grants.”

Now, Mr. Speaker, I bring this to the attention of the minister, primarily from the fact that Windsor would like to carry on, and must carry on, its environmental control projects. But, as indicated in this legislation, the municipality is being penalized, because they can’t share in the limiting of expenditures to eight per cent. There is no way that they can do it, and carry on all of the needed environmental programmes.

Mr. Speaker, I think the minister should consider programmes that are being forced upon a municipality to complete and they then should not be included in the limit. In other words, the $7 million or $8 million that the community may be spending in environmental programmes should not be included in the total expenditures for the various departments in a municipal government.

By doing that, Mr. Speaker, the minister would enable the municipality to complete in short time the much-needed programmes that the Ministry of the Environment insists that they complete. Thank you, Mr. Speaker.

Mr. Speaker: The hon. member for York Centre.

Mr. Deacon: Yes, Mr. Speaker, I just want to add to the comments made by my colleague from Waterloo North about the need for this control to be done on a per capita expenditure basis, rather than on a gross expenditure basis. It is a point that I brought up last year. I hope when this bill goes before committee, the minister will accept amendments to make it on a per capita basis, so that it will eliminate the inequities of this decrease in grants to municipalities which are experiencing growth.

I also endorse the points made by the member for Ottawa Centre about the need to decrease the gap of grants between municipalities in rural areas and those in urban areas. We must remember that we should be doing everything possible to encourage dispersion of people around the province, rather than encourage their concentration in the cities.

It is interesting that large cities in other parts of the world are recognizing that it costs many times as much -- in the order of four times as much -- to service people in large centres. It is much more economical for us, as well as leading to a much more attractive way of life, if we can encourage improved services in smaller centres, and I urge the minister to take that into account as he develops the property tax stabilization grants so that we are doing everything possible to make it less expensive for smaller municipalities to provide good services, and not try to provide all these services by larger and larger grants in major municipalities where, by one means or another, we are continuing to encourage people to move.

I hope that the province, and the Treasurer particularly, with his key role in the planning of this province, will recognize every means possible of dispersing opportunity and making other areas of the province more attractive to live in than they are now.

Mr. Speaker: The member for Thunder Bay.

Mr. Stokes: Thank you, Mr. Speaker. I want to direct my remarks to a particular situation that I brought to the attention of the minister last year regarding a mining municipality.

I am hoping that the figures contained in the book that accompanied the budget, regarding the 1974 property tax stabilization programme, were in fact in error. If they weren’t in error, I want to get some kind of assurance from the minister that he will, in consultation with his colleague, effect some kind of change in the Assessment Act that will assist mining municipalities, particularly newer mining municipalities that have a heavy expenditure as the result of having to provide a lot of services almost immediately rather than over an extended period of time.

I want to deal specifically with the improvement district of Manitouwadge, which is the largest centre of population in the riding of Thunder Bay, with a population of 3,305. They had an increase in spending in 1973 of only six per cent, and their total grant for 1973, including the per capita grant, was $385,000. The total for 1974 is just an increase of $2,000, for a total of $387,000.

They had a very favourable spending record in 1973, an increase of only six per cent, which I suggest wouldn’t even take care of the increment due to the rising costs of operating a municipality, and yet in relative terms I feel that they are being penalized. If the minister were to look at the debt structure of the improvement district of Manitouwadge he would find that it is less than favourable and they are, indeed, in a financial squeeze. I think they have been very restrained in their spending. There are several projects that they would like to undertake at the present time but feel they don’t have the right to do so until their debt position has improved, and on the basis of the grants for 1974 it doesn’t look as though they are going to be able to improve on that situation to any great extent.

In reading the information contained in the budget statement by the Treasurer, I am not going to quote at length but I just want to quote one sentence which says: “All former mining municipalities will again receive the guarantee of 105 per cent of their 1973 formula mining revenue payments.”

The mining revenue payments never did come close to compensating the municipalities that found themselves to be the dormitory communities for the employees who worked in the mine, simply because they never had the right or the authority to tax mining operations within their boundaries at the same rate as other municipalities had to tax other industrial activities, such as pulp and paper mills, manufacturing, or other industrial enterprises.

I’m sure the minister is aware of the situation because of the knowledge that he gained as chairman of the select committee on taxation a few years ago, when a comprehensive tax report was prepared for the province. All headframes associated with mining operations are exempt from municipal taxation. All hoisting equipment is exempt from municipal taxation; anything to do with the production of ore underground is exempt. Mechanical shops are exempt. Electrical shops are exempt. Railway sidings are exempt.

I think that it’s fair to say that the Treasurer is placing those mining municipalities in an unfair position relative to other communities which have the ability to tax industries on the basis of the assessment of the plant that is within the boundaries of the community.

I think away back to an agreement -- I think with the former Department of Municipal Affairs -- whereby the mine agreed to pay so much an acre in property tax to compensate the improvement district board of Manitouwadge for their inability to tax the mine on the same basis as other municipalities tax other industrial plants. When the assessment was changed to reflect the actual cost, the mine appealed and won that appeal. The assessment rate was reduced by the amount that the appeal court, I guess, felt that the mine had been assessed for the property in the initial instance.

We do have this unrealistic figure of $885,000 -- supposedly 105 per cent of the mining revenue payment for 1973 -- which resulted in only a $2,000 increase in 1974.

I am not really quarrelling with the provisions of Bill 50, An Act to amend the Property Tax Stabilization Act. I am really complaining of the method of assessment for mining municipalities, and it’s the only community that I have in my riding now that has an active mine within its boundaries.

I want to impress on the minister again this year the unfair position in which it puts a mining municipality -- a one-industry town. And particularly when that one industry happens to be a part of a major mining complex that is among the most lucrative in Canada at the present time.

Geco Mine, that particular wing of Noranda Mines, which operates within the confines of the improvement district of Manitouwadge, I am told, is the most lucrative anywhere in Canada. The people in Manitouwadge who work for a living and pay high taxes, contributed an enormous amount of wealth for that company every year -- it’s been estimated to run between $35 million to $45 million -- as a result of the exploitation of the base metal ores. Yet we find that their debt position as an improvement district board leaves a lot to be desired. I think it’s reflected in the tax rates and in the inability of that community to expand, to improve, to provide a lot of the services that they have on the drawing board and would like to undertake but can’t, just because of their inability to raise the necessary funds to retire their debt without exorbitant increase in the residential tax in that community.

While I’m not complaining about the level of tax to most of those communities, I think this is a special instance because it is based on a formula that is antiquated and out of date -- on old mining revenue payments that were always under question. That is the basis the Treasurer is using at present for payment to this municipality. They can’t exceed 105 per cent of the old mining revenue payment.

I hope that the minister will look at it because it is a unique situation. I think it’s one that needs review. I hope that in the process he’ll be able to provide some kind of relief for that municipality because they do create a tremendous amount of new wealth each year for that mine and for the Province of Ontario, through profits made from the exploitation of the mineral wealth in that area. I think it is a special situation, it needs special treatment, and I hope the minister will look at it.

Mr. Speaker: Does any other member wish to participate in the debate? If not, the hon. minister.

Hon. Mr. White: Mr. Speaker, it’s gratifying to learn that the NDP are voting for this bill tonight. I hope the Liberals, when they do make up their minds, presumably within the next half hour --

Mr. Good: The Treasurer doesn’t listen well.

Mr. Deacon: He should unplug his ears, he’s got his hearing aid on.

Hon. Mr. White: Oh, I see. Are they supporting me, too?

Mr. Deacon: He told the Treasurer right at the start.

Mr. Stokes: He did precisely what he set out to do; carry on.

Mr. Good: I told him twice.

Hon. Mr. White: Well, I have been told in recent days by those who were at the municipal convention in Winnipeg that Ontario was held up to be the model province insofar as co-operating with municipalities and assisting the financing of municipal services of every kind was concerned.

That great Liberal, his worship Mayor Leo Del Villano told me that in Timmins this morning.

Mr. Ferrier: He’s a Conservative provincially,

Mr. S. Lewis (Scarborough West): This year.

Hon. Mr. White: And some number of other municipal leaders in this part of the province have told me that in the last little while.

Mr. Ferrier: He doesn’t know where he’s at.

Hon. Mr. White: I do believe that one of the important elements in this success has been the property tax stabilization plan with its several components. When this was introduced and debated a year ago, I confess that, it being completely new, there were imperfections, no doubt, that only experience would reveal. We have made certain improvements in the Act this year, in addition to strengthening it by increasing the amounts of money involved.

I would like to go through the points raised by hon. members in the hope that this will add to their comprehension of the provisions contained in this bill.

Mr. Cassidy: We hope we added to the Treasurer’s comprehension, too.

Hon. Mr. White: The hon. member for Waterloo North spelled out the details. I won’t repeat that. He pointed out there were, on occasion, exceptional circumstances where a municipality was growing quickly, where they had to have additional resources to wheel in to support that increased population. In fact the Legislature a year ago gave the Treasurer the right, in these special circumstances, to make extraordinary grants. One would expect to depend less on that provision as time went by, and as the formulation itself was improved upon.

Mr. Good: They do that only in an election year.

Hon. Mr. White: In addition, the hon. member touched upon the need for extra support to regional government expenditures, and apparently has overlooked the fact that we are making substantial transitional grants and the regions themselves qualify for enlarged per capita grants more or less in perpetuity.

The hon. member used the phrase “if you do as we say” but I think in fairness that this is misleading because we don’t say to this community or that community “You must do thus and so.” What we have tried to do is to encourage economy. We learned over a 15-year period that educational grants -- and the same will be the case with municipal grants -- which are in no way curtailed, encouraged municipal councillors to spend a very large proportion of each additional dollar; whether that be 50 or 60 or 80 or 90 per cent, I do not know.

This was the reason, of course, we were driven to put ceilings on education spending which in themselves introduced inequities and difficult stresses and strains.

This was an invention to avoid the necessity for imposing ceilings on municipal expenditures. While some councillors will not like it, I think it has worked reasonably satisfactorily and I do observe that the overall level of spending on behalf of our municipalities was extremely responsible.

The hon. member said that northern Ontario grant is “just $4 million.” This is the C. D. Howe syndrome times an inflationary factor of four, I suppose.

Mr. Good: It’s a $4 million increase.

Hon. Mr. White: Because “just $4 million” is a great deal of money by any measurement and is certainly a great deal of money when one considers that one tenth of our population lives in those northern areas.

Of course, the hon. member didn’t point out that they get their --

Mr. Stokes: Everything is more expensive up there.

Hon. Mr. White: -- share of general support grants and they get an extraordinary share of all other grants, whether we are talking about roads or anything else.

Mr. Stokes: We create a lot of new wealth up there, too.

Hon. Mr. White: The north quite rightly gets more than its share and so it should. I would be the last to object to that.

The member for Toronto and the islands raised a number of points after his uninformed harangue. The arithmetic he used is ridiculous and I am not going to attempt tonight to teach him that subject nor am I going to try to teach him economics. I am going to make several points in response to his most obvious errors but before I do so let me compliment him for pointing out the elasticity of the progressive taxes of the Province of Ontario. This is one of the themes the hon. member was using and it is this elasticity that turns up a 13.7 per cent increase in a period of time when inflation itself turns up 10.2 per cent.

It is this reason which enables us to turn over to the municipalities what they received in the preceding year plus an additional 13.7 per cent, plus their share of the land spec. tax. That’s the agreement we made and that’s the agreement we kept.

The consequence is that our grants to municipalities are up $239 million, which includes $124 million in brand new grants.

Mr. Cassidy: The government’s own revenues will be up faster than that; that is the point.

Hon. Mr. White: The property tax is down in this province as proportion of gross provincial product and has come down progressively since the great budget of March, 1969. We are fully aware that this has lightened the burden of taxation on our businesses, too, and that is the reason, members may remember, why we doubled the capital tax a year ago, having doubled it for the first time a few years before that. We have quadrupled the capital tax here in the last three or four years and that has been an offset to the decrease in the --

Mr. Cassidy: To one-fifth of one per cent, isn’t it?

Hon. Mr. White: -- property taxes levied on our private sector.

Mr. Cassidy: That is a ridiculous claim.

Hon. Mr. White: It is not a ridiculous claim at all. The member is ridiculous.

Mr. Cassidy: Sure it is. It’s one-fifth of one per cent, something like that.

Hon. Mr. White: The smaller municipalities, as was quite rightly pointed out by the member for Prince Edward-Lennox, are very much better off than the raw figures used by the member for Toronto and the islands would have indicated because they overlook --

Mr. Cassidy: On a point of privilege, Mr. Speaker, would the minister kindly get my riding straight? I would just ask the speaker to refer to my riding correctly. My riding is Ottawa Centre. I have deliberately refrained from trying to get back, with one lamentable exception when I referred to the Premier and the place where he happens to stay in Toronto.

If the Treasurer wishes to talk with me privately about my family and so on, that’s fine, but it has no place in this House. I would ask you, Mr. Speaker, to enforce that rule in future.

Hon. Mr. White: I know nothing about the hon. member’s personal matters and certainly have no intentions of referring to them. That’s the farthest thing from my mind -- and I’m glad to call him the member for Ottawa Centre and Toronto and the islands.

These raw figures have been subjected to --

Mr. M. Shulman (High Park): The minister is a son of a bitch.

Mr. Cassidy: He really is.

Mr. Speaker: Order please.

Hon. Mr. White: -- gross misinterpretation because among other things they complete --

Mr. Shulman: That is for the record, Hansard. Did you get that? Son of a bitch.

Mr. Speaker: I think the hon. minister should not refer to the member as being from “Toronto and the islands.” Kingston and the Islands are one riding, but not Toronto and the islands.

Mr. R. D. Kennedy (Peel South): Just “the islands.”

Mr. Deacon: The Treasurer should withdraw.

Hon. Mr. White: The member for Ottawa Centre made a number of glaring mistakes; one by overlooking the fact that the raw figures he used did not take into account the 50 per cent farm tax rebate.

Mr. Cassidy: Those were the Treasurer’s figures.

Hon. Mr. White: I think the way in which he insulted the municipal leaders who give of their time freely and without any extra remuneration in serving through the municipal liaison committee; in the three large municipal associations which form that committee; the various subcommittees which work hour after hour attempting to help us as we grapple with a wide variety of matters fiscal and others -- I think these demeaning remarks are not very helpful, and I think on sober second thought the hon. member himself will concede that point.

The member for Windsor-Walkerville has repeated a lament that’s been made several times by him and others about Windsor’s position in the scheme of things. I see that the grant to Windsor has gone from $4.9 million to $5.8 million, which is an increase of 17 per cent in contrast to their own expenditure increases last year of five per cent.

Mr. B. Newman: They have intentionally held it down.

Hon. Mr. White: I don’t object to Windsor council holding their expenditures down and holding their mill rates down, but I think it is grossly unfair for them to say their level of service is low because we are not giving them enough money. They have to trade off whether they want lower mill rates or higher levels of service.

Mr. Good: Well, it works.

Hon. Mr. White: To try and hold the tax rate down and then blame us for the level of service is dirty pool, to my way of thinking.

I find out that Windsor’s expenditures went up five per cent last year; London’s went up 8.5 per cent; Ottawa’s went up 6.9 per cent -- so here are communities willing to increase their level of service and increase their mill rate and go to the people and explain the reasons for it.

Interjection by an hon. member.

Hon. Mr. White: But the hon. member has also overlooked the fact that there are extraordinary grants being made to Windsor. The winter capital projects have provided major financial assistance to municipalities for pollution control; a fact that hasn’t been mentioned here by him.

Mr. Good: Ottawa provides half of that.

Hon. Mr. White: Now, I would like to turn to the brief remarks of the member for York Centre and the islands -- no --

Mr. Deacon: I only have an island --

Hon. Mr. White: The hon. member would like to see this go to a per capita grant system; I will now move to the member for York Centre.

Mr. Deacon: It is a cost per capita.

Hon. Mr. White: He would like to go to cost per capita. This is a delicate balance. Mayor Frank Wansbrough would like to have seen a great deal more money going on to the per capita side. However, those with lower per capita assessments would like to see a great deal more money going into the resource equalization grant item in the formula.

Mr. Cassidy: Which the minister won’t touch.

Hon. Mr. White: We got a great deal of help from the subcommittee of the municipal liaison committee and we did indeed give them almost carte blanche, saying: “Here are the amounts of money which you will be receiving. Distribute them in some fair way and unless they are obviously out of whack, we will accept those figures.” And that’s what gave rise to the spreading of these additional resources between the several components and the property tax stabilization fund.

Just for fun I worked out what the result would be in Manitouwadge if the member for York Centre’s recommendation were accepted. They now get $118 per capita --

Mr. Deacon: The Treasurer is just dealing with the increase per capita and gross expenditures --

Hon. Mr. White: They now get $118 per capita. London gets $40. Of course, I suppose London has nearly 50 times the population --

Mr. Deacon: On a point of order, Mr. Speaker, the minister seems to have misinterpreted my remarks. I was talking about the percentage grant being based upon the increase in gross expenditures on a per capita basis in order that fast-growing municipalities would not be penalized.

Hon. Mr. White: I will use these figures because they highlight the conundrum. If we went to --

An hon. member: Completely off course --

Hon. Mr. White: All right, I’ll give Mayor Frank Wansbrough the credit for this suggestion. If we went to a per capita grant system, then London, Ont., would be getting that $40 per capita -- probably something like $43 per capita -- and Manitouwadge would come from $118 per capita to something like $43 per capita. That is the reason we have tried to balance these various elements within the property tax stabilization formula, taking leadership in the matter from the Provincial-Municipal Liaison Committee.

The hon. member for York Centre has drawn my attention once again to an interesting byproduct of the resource equalization grant. It is now equal to 60 per cent of the revenues which would have flowed from increased assessment of whatever kind for those communities whose per capita assessment is less than the provincial average. In draft there are quite obviously direct and indirect costs attached to extra assessment, whether that be from a residence or a blast furnace. My hunch is --

Mr. Deacon: Much less from a blast furnace.

Hon. Mr. White: -- although it is not provable at the moment, that the servicing costs -- street lighting, sewers, water, policing and so on -- amount to probably 40 per cent of the total tax revenues from an industrial or commercial development. Therefore I think that we have succeeded in greatly diminishing the ambition of certain municipalities, and I think this would be even truer as the consequences become better known and better understood.

We have taken the edge off the ambition which councils have had to seek out assessment which is not appropriate to the area from a planning and development point of view. This also has a bearing on dispersion, I do believe, although we are using much more direct tools than these grants to encourage settlement in places other than Toronto. This will be discussed, I think, Mr. Speaker, at greater length during my estimates, so I think I will not get into that particular matter at the present time.

As I said as I stood up, I don’t know how the Liberals are going to vote -- I missed that apparently --

Mr. Deacon: Yes, the Treasurer did.

Mr. M. Gaunt (Huron-Bruce): Oh, yes, he did.

Hon. Mr. White: But to close on a happy note, which I know the member for Ottawa Centre will appreciate --

Mr. Ruston: He doesn’t listen very often anyway.

Hon. Mr. White: -- here is a certification from the city clerk of London, Ont.: “I hereby certify that the municipal council in its last session held on May 31, 1974, resolved that on the recommendation of the finance commissioner, the Hon. John White, Treasurer of Ontario, be congratulated for the additional assistance provided by the Province of Ontario -- ”

Mr. V. M. Singer (Downsview): How many copies of that did the Treasurer have made?

Hon. Mr. White: “ -- to assist municipalities to combat inflation, and that the Hon. Mr. White be thanked for considering the suggestions made by the city of London, Ont.”

Mr. Singer: One of those goes out with each cheque.

Hon. Mr. White: So I am very glad, Mr. Speaker, to recommend the passage of this bill to all of my friends and colleagues here in the Legislature.

Motion agreed to; second reading of the bill.

Mr. Speaker: Shall the bill be ordered for third reading?

Agreed.

Mr. Singer: Does the Treasurer want to order an extra 1,000 copies of that letter?

THIRD READING

The following bill was given third reading upon motion:

Bill 50, An Act to amend the Property Tax Stabilization Act, 1973.

REGIONAL MUNICIPAL GRANTS ACT

Hon. Mr. White moves second reading of Bill 51, An Act to amend the Regional Municipal Grants Act.

Mr. Speaker: The hon. member for Waterloo North.

Mr. Good: Thank you, Mr. Speaker. This relates to the statement made in the budget that the per capita grants to regional municipalities would be increased from $8 to $9, which is a 12 1/2 per cent increase and which includes a 20 cents per capita amount to assume some planning responsibilities.

The increase in grants, of course, welcome as it is, does not keep up to the increase in overall expenditures that municipalities should undertake to keep abreast of things, especially as municipalities come into regional governments. I’m sure the minister knows better than anyone else in this House how much the increases are in the spending of regional governments. He knows the problems that develop in regions and he knows how small his startup grants are in relation to the actual costs of converting from the former system of government to a regional government.

He knows that in my own case in Waterloo region only 24 per cent of the startup costs were met by startup grants from this government. The original estimate of increased spending in Waterloo region was 21 per cent, an increase of about $6 million. It’s significant, Mr. Speaker, that the two major expenditures in the regional government -- and I speak in this case of Waterloo region -- are police protection and welfare. Twenty-seven cents out of every dollar spent this year in the region go for police purposes and 25.9 cents go to welfare. Those are the two biggest regional costs.

Embodied in this bill, as well as the increase from $8 to $9 per capita, is an increase from $5 per capita to $7 per capita where the region has a regional police force -- that is, there is one police force for the whole region. Let me remind you, Mr. Speaker, that the costs of creating a regional police force are almost unbelievable. The budget this year for the regional police force in the region of Waterloo is $7.9 million, which is an increase of $1.8 million over last year, and the whole grant from the province does not even cover the increase from last year to this year.

The police costs in the region are something in excess of $30 per capita. The grant from the province will be $7 and the increase per person is approximately $7 per person, so we find that policing costs are extraordinarily large, I would say, when a region moves to a regional police force.

I’ve spoken in the Legislature previously about this, that the regional police force required an additional 43 persons to police the whole region, which included areas that were previously policed by the provincial police. The provincial police detachment that was doing the work decreased its personnel by five.

So we find that for some reason or other, regional police forces are very, very costly to run. Since the per capita grant for a regional police force is $7 and the per capita grant for a police force where the force is on an area-governed base is only $5, it might appear on the surface that it would be advantageous to establish a regional police force.

Well, Mr. Speaker, I’m not in any way convinced that there are either monetary benefits, which I know there are not, or social benefits to the people in the region by having a regional police force. Unfortunately, we have had a considerable problem in our region, in the rural areas, when the regional police force took over. I won’t get into the details of that but they are well known. The original budget by the region, which required a considerable increase in spending, had to be cut back.

As in the last bill, Mr. Speaker, we find that the grants do not go far enough in the regions to cover the increased costs, so we find that the region reluctantly had to delay the hiring of 17 additional officers in the police force. They had to achieve other reductions by deciding to borrow money to finance several large items, such as land purchases and what not, instead of raising the funds through current revenues, which they had originally decided to do. So in many instances, to maintain tax rates at reasonable levels with the grants which are available, the municipality has no alternative but to delay important projects and to try to control spendings in that manner.

I wonder, Mr. Speaker, if the minister and his ministry has ever done any detailed study or analysis on the effects that a per capita grant has on various area governments within a region? I understand that most of the money comes through per capita grants for policing. What are the effects of this particular per capita grant when it is distributed out to the area governments, when the area government is required to pay its levy to the region on a weighted equalized assessment basis? It’s always been a bit of a paradox and a conundrum to me why the grants come in one form on a per capita basis and the levies go back from the area government to the region on a weighted equalized assessment basis.

Now, I’m sure some municipalities must benefit by this procedure; while other municipalities must find their position somewhat jeopardized by this procedure. I wonder if there are any studies available or any comparisons that have been made as to what actual effect this has.

We still find in the new regions this whole problem of whether it is advantageous to attract industrial assessment, or whether it is not advantageous. And if it is advantageous, up until what point is it advantageous? Is it to the point where our weighted assessment becomes so great that we are going to be required to make increased grants to the region in relation to our small population?

I’m sure by now our regional governments have been in progress long enough that someone must have done some comprehensive studies and research on those that are in existence, although with the original regional governments their levies from area to region were not based on a weighted assessment -- I think they were just based on an equalized assessment.

So I would be interested to know what effect this has when we find all these grants going out on a per capita basis -- which represents something in excess of 25 per cent of the expenditures of the area government -- and yet the levies back to the region are on an equalized weighted assessment.

We will support the bill, Mr. Speaker, to the minister through you. We find that even though it looks good on paper, the regional police grant doesn’t even take care of the increase in police costs from the first to the second year of operation of the region.

Mr. Speaker: The hon. member for Ottawa Centre.

Mr. Cassidy: Thank you, Mr. Speaker. I just want to make several points about this particular bill. You know, I was thinking here as I listened to the member for Waterloo North, that we really should seriously consider taking the Regional Municipal Grants Act and the Municipal Unconditional Grants Act and simply tossing them out completely, because they become less and less relevant to the whole programme. Either that, or else give them some meaning. Or, as I was stating earlier, come up with a programme of municipal finance that allows us to get away from having 80 per cent of the money going in conditional forms and gives us true equalization that allows municipalities to have a genuine share of the provincial income tax.

I was just trying to recall exactly the value of these regional municipal grants. The increase in the bill is worth, as I recall, about $11 million. And I guess the value of the grants all together is about $70 or $80 million. One wonders, though, when one compares the value of these grants with the overall costs of municipal government, just really what the Treasurer is doing about the move to deconditionalization. And I hope that during the debate on this particular bill he gives us some fairly clear answers.

In this particular case, a bill which has raised, similar to that we’ve had in previous years, the per capita grant increase is all of 10 per cent on a very small base, or 80 cents per capita, since we’re told the remaining 20 cents represents the cost of planning responsibilities which the province intends to delegate to the local level. That increase of 80 cents per capita in the general unconditional grant simply fails to reflect anything close to the real cost of regional government or to the real increases in cost of regional government.

The Treasurer will quite properly say, “But there is also the general support grant and the equalization grant.” That’s fine. But one has to ask, though, what is the real difference, say, between the equalization grants and why couldn’t all the money go into those particular forms of grants, rather than this particular somewhat anachronistic version? I’m suggesting it’s anachronistic particularly because it’s so small.

In 1971 the cost of all municipal services in Metro Toronto, according to the Treasurer’s figures, was about $250 per head; it was about $240 in Ottawa-Carleton, $200 in Niagara and $190 in all other cities in the province. Against that -- and that’s been going up at substantial rates over the last couple of years -- the figure of $9 per capita, plus $7 or $5, depending on whether policing is regional or at the lower-tier municipality, looks pretty small when you compare it against that very large overall cost.

The increase in the policing grant, as the member for Waterloo North was pointing out, doesn’t even keep up with the increase in policing cost, which in 1971 was about $29 per capita in Metro Toronto, $29 in Ottawa-Carleton; $24 in Niagara and about $24 on average in all other cities in the province. To add an extra $2 for regional police services at a time when police salaries, which are the major cost in policing, are going up by nine per cent or 10 per cent or more, and therefore where the cost per capita is rising by a minimum of more than $2, is simply not adequate -- if the minister is saying that the province ought to be paying a certain proportion of the cost of policing.

I don’t know, Mr. Speaker, what the policy of the government is about supporting police costs. I’m not sure if the government knows itself. This is an ad hoc programme. The grants go up by $1 or $2 every year. Municipalities are schooled to expect a certain amount of money in this way, in that way and in another way, and their treasurers become adept at trying to understand the various ways through which provincial money flows. But one searches with difficulty to find a general rationale behind it. In the case of the police, more of the burden of police work is going to be falling on municipalities in 1974 since their costs will be rising higher than the $2 increase for regional and area police services.

Then the Treasurer said that 20 cents of the increase in the per capita grant will be for the cost of planning responsibilities that the province intends to delegate. One has to ask whether that isn’t going to have somewhat quixotic kinds of effects. The value of this particular increase is equal to $5,800 in the Muskoka district; $33,000 in regional York and $89,000 in Ottawa-Carleton.

The responsibilities that are being passed over include subdivision approvals, I believe, and several other things which the Treasurer has mentioned are being delegated from the province to the local level.

Given that the particular, peculiar and somewhat difficult environmental problems of cottage development in regional Muskoka, one really does wonder whether an extra $5,800, the equivalent of half of a very junior planner, is sufficient to carry the extra responsibilities they are going to have. In the case of Ottawa-Carleton that may be adequate; I’m not sure. It doesn’t seem to fit. In the case of regional York, given the kinds of developments that are taking place in areas like Markham, Unionville and so forth, I suspect that this extra sum there is a token, a symbol, but is not in any way related to the increasing costs that those municipalities are going to experience.

I’d like to take issue as well with the Treasurer’s claims about the improvement in unconditional funds going to municipalities. In the previous debate, Mr. Speaker, we were talking about the general support grant. That is not a true unconditional grant, because it is used in order to influence in a very strong fashion the rate of growth of municipal expenditure.

The budget itself indicates that the grants that were being deconditionalized on April 1 this year amounted to a grand total, on an annual basis, of all of $3.2 million. The largest one was the LCBO payments for enforcing the Liquor Control Act, worth $2.25 million; municipal parks assistance, $439,000; $285,000 in grants for local planning activities; $71,000 for weed control; and by the time you get down to the bottom the province is deconditionalizing $3,000 in grants for municipal drainage. It’s small potatoes, Mr. Speaker.

What worries me, in addition to the fact that it’s small potatoes, is the way in which it is being deconditionalized, because the government is getting or is seeking to have double credit. The Treasurer proudly states we are going to give so much extra money in a resource equalization grant, an extra $15 million, and $30 million or $40 million in the general support grant; then surreptitiously he withdraws $3 million in these conditional grants.

Hon. Mr. White: They’re added into the extra grants.

Mr. Cassidy: They are added into the extra grants, says the Treasurer. I’d like him to explain to the Legislature just how they are added in; and if they are added in then possibly what he should say is --

Hon. Mr. White: We took all of the municipal grants, increased them by 13.7 per cent; then added in the $3 million and then added half the land spec. tax.

Mr. Cassidy: In that case, that’s fine. That answers my question. Maybe the Treasurer can say how he intends to deal with the grants proposed for deconditionalization over the forthcoming year, and these are ones that are quite serious in certain cases. The library grants come to mind in particular; public health grants too, because of the concerns that have been expressed by the boards of health; and in particular by the library boards which fear they are going to get very short shrift from some municipal councils.

I think that the Treasurer ought to possibly explain how that will be done and give some assurances, possibly during the course of this debate; bearing in mind, Mr. Speaker, that we really seem to be debating bills and dealing with estimates all in a continuum and therefore a certain strain might be considered to be in order since it’s all so closely related.

I know the Treasurer will breathe a sigh of relief that, consistent with our stand on the previous bill, we are not going to oppose this particular increase in the Regional Municipal Grants Act, but I do want to reiterate that $8 or $9 per capita for a government whose spending is approaching the $300 per capita mark just isn’t very much money. The government may as well do away with these grants, which have become anachronisms given the other forms of provincial funding for municipalities which have developed in the more recent past.

Mr. Speaker: Does any other member wish to participate? The hon. member for Windsor-Walkerville.

Mr. B. Newman: Mr. Speaker, I won’t be too lengthy but I do want to present to the minister the fact that regional studies are underway in Essex county, Pelee Island and the city of Windsor. The communities did ask for studies to begin well over a year ago; and I was just wondering at this time, Mr. Speaker, if the minister is considering the provision of grants to them now that studies are under way? He’s aware that the municipality certainly could use additional funds to take care of much-needed public works projects in the community and certainly would appreciate any consideration by way of financial assistance.

Mr. Speaker: Does any other member wish to enter the debate? If not, the hon. minister.

Hon. Mr. White: Mr. Speaker, I’ve explained why it is necessary, in a complicated structure, to allocate grants of one kind and another as determinants of several functions. I dealt with that during the last bill.

If we were to put all of the money into per capita grants serious inequities would be created. If we were to put it all into some other simple ratio serious inequities would likewise be created. Quite frankly, the municipalities involved simply couldn’t stand that kind of financial pressure; and we simply couldn’t attempt it, because of course, municipal expenditures are a function of population, just as they are a function of assessment and place; a function of growth, a function of geographic location -- which is what gave rise to our new northern Ontario grant -- and a function of many other qualities.

That’s the reason we have continued these particular per capita grants, and indeed increased them substantially.

The member for Waterloo North mentioned his own region, and I think he might be enlightened by the following figures. In 1972 the region’s total expenditures were $64,878,000 and in 1973 they were $73,500,000. This is an increase in expenditure of 13 per cent. When schools are excluded, the increase in expenditure was from $43,658,000 to $50 million, which is an increase of 15 per cent.

On the other hand, net property taxation went from $52,768,000 to $54,470,000, for an increase of three per cent, or excluding schools, from $31,548,000 to $30,970,000, which is a decrease of two per cent. So over this particular period of time -- and I am going to come to other more up-to-date figures in a minute -- while expenditures in the region increased 15 per cent taxes went down by two per cent.

The member might like to tell that to his leader who is propagating the most false, misleading, and really quite disgraceful numbers that somebody has pulled out of a hat. I don’t know where he got them.

Mr. Lewis: It is a shameful business, shameful.

Mr. Good: We are talking about overall increases in costs.

Hon. Mr. White: I have just given the member the expenditures. Now I am going to bring him up to date on a couple of other figures.

Waterloo region last year received $705,000 by way of grants and this year will receive $862,000, which is an increase in grants to the region of more than 22 per cent.

Waterloo area municipality has gone from $441,000 to $802,000, which is an increase of 82 per cent. So I don’t think they have a lot of complaints. If any other member wants me to give comparable figures for other regions or area municipalities, I have them here and I will be glad to do so.

Mr. Good: The region was given only 24 per cent of the startup costs.

Hon. Mr. White: Insofar as deconditionalization is concerned, there are two factors. The first is getting rid of some of the conditional grants, which started rather modestly a year ago by listing, I think it was nine candidates for deconditionalization, of which we were able to deconditionalize all but three if I remember correctly.

This year we have likewise provided a further list of grants as candidates for deconditionalization, including the three dropped from last year. No, last year there were 12 initially, and when we knocked out three to be put on this year’s list again that left us with a net number of nine conditional grants which were eliminated. Now, having done this, funnily enough, I am getting complaints from some number of municipalities saying: “Gee, we wish you would put that back as a conditional grant,” because here again, as one deconditionalizes and spreads the benefit generally, there are going to be cases where the grants are up a little bit and there are going to be cases where the grants are down a little bit; and when that grant goes down a little bit, then somebody squeals about it.

Drawing your attention now to 15 candidates for deconditionalization next year, Mr. Speaker, and more particularly to the library grant, which is a matter of concern to the Socialist who just spoke, I wouldn’t deconditionalize that for anything in the world unless we had very substantial support from the librarians themselves. I have given them four or five options, and I want to hear them say: “Yes, it is a good idea.” I have told them if they want to stay on the dole forever, that’s perfectly all right with me.

It’s my conviction, and I feel quite passionately about it, that if they get out and compete for public funds on the streets and on the corners right across their communities, they are going to receive more money rather than less money. However, I have given them a number of options, and I am going to be guided by their wishes.

Mr. Cassidy: Librarians lack self-confidence as a group. That is the problem.

Hon. Mr. White: Mr. Speaker, the balance of these items is going to be put through a number of vetting processes, including the municipal liaison committee; and I will certainly be turning to my own colleagues, these experienced, wise and virtuous men who surround me here, and calling on them for a little help in making these decisions some time later.

Mr. J. R. Breithaupt (Kitchener): All five of them.

Mr. Good: All five of them who are in the Legislature.

Hon. Mr. White: The other aspect of deconditionalization is the relative weight between conditional grants and unconditional grants; and I refer once again to the appendices of this budget. You will see, Mr. Speaker, that we have increased our conditional grants in recent years from $1,448 million to $1,836 million, an increase of $348 million or 43 per cent. During the same interval we have increased our unconditional grants from $60 million to $279 million, for an increase of nearly 400 per cent. So we are progressively putting more of the incremental grants into the unconditional grant column. We will continue to do that and we will accelerate that process.

The member for Windsor-Walkerville drew attention to the restructuring study. We are aware of this beginning and we commend the municipalities involved for initiating this, because as you know, we are not initiating any such studies or movements here.

Mr. Breithaupt: Not any more.

Hon. Mr. White: From now on, they will certainly qualify for 50 per cent of the total costs of this study, up to a maximum provincial contribution of $50,000 if they meet the criteria set forth. My expectation is they will do so; I think we have an application from them. My hope and expectation is that these provincial grants will be forthcoming, together with whatever non-financial assistance they would like to have from my ministry.

Motion agreed to; second reading of the bill.

Mr. Speaker: Shall the bill be ordered for third reading?

Agreed.

THIRD READING

The following bill was given third reading upon motion:

Bill 51, An Act to amend the Regional Municipal Grants Act.

MUNICIPAL UNCONDITIONAL GRANTS ACT

Hon. Mr. White moves second reading of Bill 52, the Municipal Unconditional Grants Act, 1974.

Mr. Speaker: The hon. member for Waterloo North.

Mr. Good: I just want to say a few words, Mr. Speaker. Much of what has been said previously about municipal financing could be said again with respect to this bill. This deals with the per capita grants going out to municipalities which do not form part of regional governments. The complex schedule of payments, which was somewhat simplified in amendments a year or two ago, is further simplified. Now, instead of a broad range of grants ranging from $5.05 to $7.10, depending on the population of the municipality, the grants range from $6 to $8, and all municipalities below 5,000 population fall into the same category for the minimum amount of grant, which is $6.

We’ll support the bill, and I won’t go over things said previously, except to note that the municipality providing its own police force will be treated in the same manner as an area government in a regional municipality that provides its own police force, and they will receive a $5 per capita grant towards policing costs.

The thing that has been under discussion for many years is that accurate figures of population be used when these grants are being figured out. There have been amendments from time to time to update them, and now there is ministerial discretion to make allowances where there are extenuating circumstances and population is increasing very rapidly.

ln my own area, the city of Waterloo had a 28 per cent increase in population in a matter of five years, which is a large increase. I’m sure there are other municipalities around the province, whether or not they are part of regional governments, where population figures are very critical when it comes to a per capita grant. I think the government has always lagged a year or two behind when it used the Statistics Canada population figures. Some amendments previously did update those to some extent, but now we find that the previous bills are all repealed and this bill sets out a more simplified formula for the granting of the unconditional grant to municipalities.

Mr. Speaker: The hon. member for Ottawa Centre.

Mr. Cassidy: Thank you very much, Mr. Speaker. My comments about this particular bill will be fairly brief as well. I do want to come back to a point which was raised by the Treasurer earlier when we were discussing the kind of tax burden that was borne by the smaller municipality.

During the course of my comments, I said I was surprised at the Treasurer’s own figures, although I assumed them to be accurate since they had been prepared under the leadership of Ian Macdonald and the others in the department. But the figures indicated that, as a proportion of household income, the taxes in the rural municipalities were twice as heavy as the taxes in, say, the stable urban areas.

The Treasurer notes that there are some remissions as to people who live on farms in those particular areas; that is correct. I would hope the Treasurer might look at those figures in more detail to look at the net incidence for people living in rural areas. But even if we take that into account, I think we will find that not only is the tax regressive, but that the proportion of income taken for property taxes at the local level in rural areas and small towns is very significantly higher than it is in the rapidly urbanizing or in highly urban areas. That just doesn’t make a lot of sense.

No matter how you cut it, Mr. Speaker, whether it is Tory politics, whether it is equality of opportunity, whether it is decentralization and the need to give opportunities in the whole province, it just doesn’t make sense to have a regressive tax that hurts the weaker and more stagnant slow-growth areas of the province more deeply than it affects the rapid growth areas of the province.

As far as this particular bill is concerned and in that same vein, I think it’s worth asking the minister why it is he doesn’t take the opportunity now to do away with the staged grant and simply have one level of grant for all municipalities that have not regionalized. It has now been acknowledged that whether your population is 100 or 4,999 you get the same grant. I would like to ask the Treasurer why he couldn’t have taken this particular opportunity maybe to equalize them all, if he wanted to have the programme at all, at the $7.50 or $8 mark rather than have this tax. Is he saying that the costs of running a municipality of 10,000 people appear to be that much heavier that it requires an extra $1 or so per capita? I recognize there is a staggering, there is a notch system, so that there is no inequity between the municipality of 5,001 and a municipality of 4,999; but that question ought to be answered.

Secondly, since he didn’t answer it last time, perhaps I can ask the Treasurer to consider very seriously whether there are not means of integrating this grant with the other grants, because once again the $7 or so that people get is only a very small proportion of total expenditures.

Thirdly, the Treasurer could indicate under what circumstances he wishes to use the discretionary powers that are put in here to make grants or loans to a municipality whose property tax is unduly increased by reason of circumstances of an unusual or exceptional nature. In the past, Mr. Speaker, what that has meant is that a municipality which got into trouble through regional government and which was able to put up enough political pressure on Queen’s Park, came down here and talked to the minister and get some money out of the slush fund. That applied to regional municipalities and to area municipalities within the regions.

I suppose the minister will argue this is simply bringing other municipalities into line, but I would like to know under what circumstances he wants to use it. Is it political? Has he got some idea? Is it a contingency? How will he report to the Legislature when he uses these particular powers? Will he report at the time the decisions are made and not simply at some time years after the decision is made in the form of the public accounts or in the following year’s estimates?

Mr. Speaker: Any further participation? The hon. member for Essex-Kent.

Mr. Huston: Mr. Speaker, I would like to speak very briefly on this, though it has probably been touched on already.

The problem as far as police cost goes in municipalities seems to be that they are losing some of the funds they did receive for enforcing certain regulations and laws, liquor control and so forth. They have been losing some of these funds, such as part of the fine.

The cost of policing is getting to a point now that it is one of the major items in the budget of many towns and cities.

I am concerned about it. There is an increase of $2 per capita, but with the escalation of just the regular cost increase in salaries and so forth of the police force, without adding any extra expenditures, this really doesn’t cover those expenses.

It’s a matter of great concern for many people in areas where they have their own police forces. Some of them may only be seven or eight-men police forces but it is quite a burden on the municipality. In fact in some of the areas I have figured out it seems to run to about $30 per capita. If you figure the average family as 3.5 persons, you are running to a little over $100 a year on your taxes for police protection. It is getting to a point of being a high expense on the municipality.

It is something that the minister is going to have to keep in mind as to grants for this purpose. I suppose if everybody behaved themselves we wouldn’t need these forces. However it seems that isn’t the case, although I do sometimes wonder whether we need them all the time, day in and day out and double shifts; and whether we need them as much as we have them on hand.

I sometimes wonder -- this is a matter for the Solicitor General (Mr. Kerr). I recall one time when they were taking a count on a highway as to what speed they would have in this certain area, they clocked all the cars using the road and when they came back they found out 80 per cent of the cars were going 43 miles an hour. They came to the conclusion they would put the speed limit at 40 miles an hour, rather than 30 which was what a lot of people wanted. The view was that there was no use trying to enforce it if 80 per cent of the people were going to drive at a certain speed.

I suppose this is part of our system of trying to enforce things that the public won’t accept. We are just fighting against ourselves and it will demand more police. Maybe we are going to have to look at what the majority of the people will accept and try to be guided by that in some of our laws in order to try to keep the police costs down.

Mr. Speaker: Would any other member like to speak before the minister replies?

Hon. Mr. White: This has been discussed under the preceding two bills, as the opposition spokesmen have pointed out, and I don’t think there is any point in my repeating the need to have a variety of grants, some of which are related to population, some of which are related to growth, some of which are related to expenditure assessment and such like. That is the reason, of course, we haven’t washed out these per capita grants, to answer the question of the member for Ottawa Centre.

Mr. Cassidy: Thank you. In the same spirit, the minister had mentioned that in the previous debate. How is that?

Hon. Mr. White: We have done the next best thing, quite frankly, by greatly reducing the number of categories -- from 40-odd to a fraction of that number. This greatly simplifies the administration and greatly increases the comprehension of recipient municipalities. I think this is quite a good step forward.

Insofar as the discretion is concerned, these statistics are all available on a regular basis. We prepare voluminous municipal statistics, showing among other things the amount of provincial grants under different headings. It enables the Treasurer of the day to take into account extraordinary population development, which one of the members has drawn to my attention, and perhaps other inequities from exceptional circumstances. It may be the member for Thunder Bay has a good point in drawing our attention to what is obviously quite a small increase in the grants to Manitouwadge.

Beyond that, as legislation and regulations are changed we have encountered a couple of instances where grave injustices would be done without this kind of emergency provision. I am thinking of the loss of tax revenues from cottage properties on lands owned by Indian bands. One of several municipalities had come to us for relief in those circumstances. This is the reason for that.

All the grants made under these extraordinary circumstances, of which there are just a handful, are published and I certainly accept the responsibility for making those grants available on the advice of my own officials.

Motion agreed to; second reading of the bill.

Mr. Speaker: Shall the bill be ordered for third reading?

Agreed.

THIRD READING

The following bill was given third reading upon motion:

Bill 52, the Municipal Unconditional Grants Act, 1974.

REGIONAL MUNICIPALITY OF NIAGARA ACT

Hon. Mr. Irvine, on behalf of Hon. Mr. White, moves second reading of Bill 60, An Act to amend the Regional Municipality of Niagara Act.

Mr. Speaker: The hon. member for Welland South.

Mr. R. Haggerty (Welland South): Yes, I would like to speak on Bill 60, An Act to amend the Regional Municipality of Niagara Falls Act.

As I understand it, Mr. Speaker, the city of Niagara Falls had requested the minister to make amendments to the Regional Municipality of Niagara Act back in January of this year. They asked that consideration be given to allow them to go back to election of municipal officials at large within the municipality. They received a reply from the minister on Jan. 28, 1974. He said the ministry would not go along with their proposal, that there would be no amendments to the bill and refused the request from the city of Niagara Falls. I guess it was on this basis that they thought the present ward system was the final word of the officials of the ministry; they thought this would be a continuing policy of the ministry, to have ward systems throughout every regional municipality within the province.

Apparently, they were a little shocked and amazed at the present bill that has come before the Legislature. I believe they wrote a letter to the ministry deploring its failure to at least notify the city of Niagara Falls that the Treasurer had changed his mind and brought in an amendment to the bill.

I suppose the question is: When the Treasurer makes an amendment like this, why doesn’t he go back to the municipalities? Why not go back and consult with them and find out why they made the request in the first place for the amendment to the bill? As I understand it, before approval can be given to the amendment, it must go to the Ontario Municipal Board. I think I can accept this amendment to the Act. It at least gives the ratepayers an opportunity to voice any objections they may have to the bill. But I am a strong supporter and I believe in the ward system of municipal government. I hope this isn’t a trend back to having officials elected at large throughout a municipality.

I’ve seen in the past, in a number of municipalities where there have been elections at large, that you can almost have stacked voting within a municipality. You can have a certain clique elected from the core of a municipality. I am afraid this could happen as a result of this bill. Maybe if no persons object to it and approval is given by the Ontario Municipal Board, they can go back to that old system of electing municipal officials; which I don’t quite agree with. I think that representation is better when people are represented through a ward system of local government administration. I think it is one of the better systems and I hope that the Treasurer will continue to support the ward system.

Mr. Speaker: Any other discussion on this bill?

Mr. Cassidy: Very briefly, Mr. Speaker, I want to echo the remarks of the member for Welland South; and to say with him that the minister really ought to be bringing in a bill which doesn’t only affect regional Niagara but also affects other municipalities across the province which currently have an at-large system.

The problems with representation and the entrenchment of unresponsive, political elite -- I don’t know what you want to call them -- in various municipalities across the province, which continues because of a lack of a ward system, is really indefensible. I know the government finds means of defending it, and it is very curious that those who are its most ardent defenders are often those who are the beneficiaries of at-large systems.

It seems to me, though, that in the system we have in this province -- and one which people find acceptable -- where municipal structure is determined by the province, since the municipalities are the creatures of the province, we haven’t gotten into the kind of hangups the Americans suffer from with local home rule and an incredible kind of resistance to any change at the municipal level and any meddling by their state government, the equivalent of our provinces.

It seems to me there were certain interests of the electorate which are better represented through the provincial channel than through the local channel. That’s why, in deciding the structure that should exist at the local level, it’s up to the province to ensure that local representatives reflect the kind of responsiveness you find through a ward system.

The only problem with this particular bill is that the Ontario Municipal Board has become so difficult, so unpredictable, so unresponsive and so remote from any sensible or sane public opinion, that one hesitates to leave in its charge the continuation of the wards in regional Niagara.

Mr. Speaker: Does any other member wish to participate?

Mr. Good: Yes, the member for Niagara Falls (Mr. Clement)?

Mr. Cassidy: That’s a good question. Who is the member for Niagara Falls?

Mr. Speaker: The hon. member for Grenville-Dundas.

Hon. D. R. Irvine (Minister without Portfolio): Well, Mr. Speaker, I appreciate the views expressed by the member for Welland South and the member for Ottawa Centre, except to say to the member for Ottawa Centre that the OMB is most responsive to the needs of the people. I feel that the remarks that were made tonight were uncalled for --

Mr. Good: The member doesn’t have to defend the OMB; they can defend themselves.

Hon. Mr. Irvine: -- and I wonder why he made them, because the Ontario Municipal Board, as far as I am concerned, has been the body that has protected the people in Ontario, and will continue to do so.

Mr. Cassidy: Sure, under J. A. Kennedy; but not since Kennedy left.

Hon. Mr. Irvine: I think that as far as this bill is concerned, certainly the view of our government is that the ward system should continue in this particular area in order that the people may have proper representation. If they wish to change to a different type of ward representation, that is fine; they can do so by applying to the Ontario Municipal Board, that is provided for in the Act.

The Act merely is to say to the people of Niagara Falls that their request from the city council was reviewed; and I might say to the hon. member for Welland South we did go back to the people in the area and found that the request possibly did not represent the views of the people. Therefore I wish to say to you, Mr. Speaker, and to the members of the House, that we feel this bill represents the views of the people. Thank you.

Motion agreed to; second reading of the bill.

Mr. Speaker: Shall the bill be ordered for third reading? Agreed.

THIRD READING

The following bill was given third reading upon motion:

Bill 60, An Act to amend the Regional Municipality of Niagara Act.

ONTARIO LOAN ACT

Hon. Mr. White moves second reading of Bill 69, An Act to authorize the Raising of Money on the Credit of the Consolidated Revenue Fund.

Mr. Speaker: The hon. member for Kitchener.

Mr. Breithaupt: Mr. Speaker, this bill is of course the traditional one by which the government is able to acquire sufficient revenues to maintain itself until the various estimates of the departments and ministries are completed. I suppose in one way it is regrettable to have to pass this kind of bill, because in effect it makes rather superfluous the comments we will make on various estimates to come.

I daresay there may be some in the ministry who would think our comments are superfluous anyway, but it is certainly our responsibility to attempt to deal with the various estimates as they are brought forward. It is apparent, as we probably have another two weeks before we adjourn for the summer, that many of the moneys to be spent in nearly all the ministries that have not as yet come either before the House or before the various committees, will have been committed, and the government of course has to have some opportunity to deal with the obligations before the funds are voted.

I suppose that by late October, November or December, we will still be dealing with certain estimates and then, finally, will pass formally the budget with the usual traditional motions. By that time, really, the moneys will have been spent, and a bill like this allows the government to deal with the spending of those funds, whether we make any further comments on the estimates or not.

It is natural and usual that this kind of a bill is brought before the Legislature approximately at this time in the session, because there are many estimates which will not have been dealt with. We will support the bill, because, of course we have no effective alternative to allowing the government to proceed in this manner, albeit it is a regrettable one.

Mr. Speaker: Any further debate? The hon. member for Ottawa Centre.

Mr. Cassidy: Well it’s a traditional bill, Mr. Speaker, and I really haven’t got too much to say about it. I think that during the course of the budget debate later we might come to issue with the Treasurer, who is borrowing another million dollars here to keep things going with the government, and who in net terms over the course of this year will be borrowing money. I find rather objectionable his constantly reiterated claims about the way in which the government is supposedly paying off debt in the province, when in fact the budget indicates very clearly that the publicly-floated debt of the province is being reduced but that the total indebtedness of the province is, of course, increasing because of the use of internal funds and funds from the Canada Pension Plan.

As I recall there are a number of pension funds from which the province borrows and it is because of this that it has been able to reduce slightly its outside indebtedness despite the increase in the overall indebtedness of the province, I think to the tune of about $1 billion or so over the last two or three years.

With those comments, Mr. Speaker, we will let this bill go through. We will have some comments on the wisdom of various estimates of the government, which will be made in the interim during the course of those estimates.

Mr. Speaker: Are there any other comments? The hon. member for Waterloo North.

Mr. Good: I have a few comments and questions. I presume the maximum allowed here, $800 million, includes non-budgetary borrowing as well as budgetary borrowing so that the complete net cash requirement of the province must be taken care of. Perhaps the minister could nod his head as to whether or not this includes the borrowing of Ontario Hydro which is backed by the province as well? The minister shakes his head “no”, that Ontario Hydro borrowing does not require a piece of legislation such as this, even though --

Hon. Mr. White: Well I will have to do more than nod, I will have to explain. There are two categories.

Mr. Good: Two categories. All right, thank you. Then I will confine myself to the comments dealing with non-public borrowing, which is the only borrowing the province has done for about four or five years.

We find the minister’s budget requires $625 million for his budgetary deficit and about $83 million for non-budgetary deficit, which is money given by the province which will be returned over future years, for a total in his budget of $708 million as being his net cash requirement. To play it safe, of course, the Treasurer said: “Well, you had better give me authority for $800 million because I don’t know how accurate my budgeting will be by the end of the year and we don’t want to go short. So we had better get authority for $800 million even though we figure only $708 million will be our net cash requirement.”

It is very interesting to note, Mr. Speaker, that the province has access to $1,044,000,000 of non-public funds that it can borrow with the authority of this bill. In fact, I am surprised that the Treasurer has to have the authority of this bill to borrow the money that is sent down here from Ottawa under the Canada Pension Plan -- $700 million of Canada Pension Plan money alone which is given to the province, on which it pays interest, granted, and it goes back into the pension -- the teachers’ superannuation fund -- there’s $166 million the province can borrow from that source -- and the Municipal Employees’ Retirement Fund -- $124 million. Those are the major components of the non-public source of funds to which the province has access. I, too, was amused the other week, I think it was just a week ago, when the Treasurer got up in his place and said: “Today we are paying off $300 million.” Was it 300? I forget what the figure was.

Mr. Ruston: Around 300.

Hon. Mr. White: No, $335 million since April 1, 1974.

Mr. Good: The Treasurer got up and said: “Today we are paying off $335 million of provincial debt”; and what a great day for the province, what a great financier he was. Well, anyone who has a source of $1,044,000,000 they can borrow on one hand can very easily afford to pay off $335 million on the other hand. In other words, you are just robbing Peter to pay Paul and setting yourself up as a great manipulator of finance.

Mr. Ruston: That’s like Stanfield’s budget, eh?

Mr. Good: The Treasurer has Wacky Bennett and his funny money system overdone a hundred times.

Hon. Mr. White: Well, John Turner can’t do it.

Mr. Ruston: Stanfield and White and their funny money.

Mr. Good: By $100,000. He has got it overdone by nothing. Well, the system is going to catch up to him, because these people --

Hon. Mr. White: John Turner can’t do it.

Mr. Good: -- from whom he is borrowing money are beginning to demand --

Mr. Cassidy: But Bob Stanfield says he can.

Mr. Good: -- a bigger share of return on their money. He is now tied to some pretty hefty interest rates on the future borrowings that he does through OMERS, which is only just and right. I believe he has committed himself that the municipalities are going to get a piece of the action on OMERS money in the future, and that is only right too. So I think it’s only fair that we draw to public attention the fact that although the province is paying off its debts, it’s borrowing larger sums from sources available to it. Because of that it hasn’t had to go to the public money market; it’s not because of any extraordinary good management.

Mr. Speaker: Do any other members wish to enter this debate? If not the hon. minister.

Hon. Mr. White: I think it’s great fun to end this evening’s session on the most hilarious note I can remember in many weeks, namely, the fact that the Liberal financial critic, and to some extent the NDP financial critic, have both supported the resolution passed by this Legislature on Friday, March 29, which was: “On motion by Mr. White, seconded by Mr. Winkler, order that the Treasurer of Ontario be authorized to pay the salaries of the civil service,” and so forth. Notwithstanding the kindness of the gentlemen opposite, this bill has nothing to do with that.

We have $1,044,000,000 pouring in from a variety of pension plans established by statute in this Legislature, including OMERS, the teachers’ superannuation, the public service superannuation fund, and of course the very large Canada Pension Plan.

Mr. Good: And federal-provincial winter capital costs.

Hon. Mr. White: As these funds are received by way of cheque from these several sources we give them a debenture in return. This bill, which the Legislature is being asked to approve now, is the authority to issue those debentures. We do borrow for Hydro in foreign markets, and in so doing reduce the interest rate paid very substantially. Hydro borrow on their own account in this jurisdiction and therefore this bill would not touch those domestic borrowings by Ontario Hydro.

Mr. Speaker: The order is for second reading of Bill 69. Shall the motion carry?

Motion agreed to; second reading of the bill.

Mr. Speaker: Shall the bill be ordered for third reading?

Mr. Cassidy: Committee.

Mr. Speaker: Committee of the whole House or shall the bill be ordered for third reading? Third reading!

Agreed.

Hon. Mr. White: On third reading, am I permitted to give a short speech?

Some hon. members: No.

Mr. Speaker: If it were not 10:30 I might permit it.

Clerk of the House: The motion is for third reading of Bill 69.

Mr. Cassidy: We appreciate that, Mr. Speaker. Now you see there are new things to be said about the bill in view of the comments that have been made. The comments that have been made here indicate that the government, and the Treasurer in particular, is performing a sleight-of-hand feat.

I wish he would come clean about it, as he admitted here in the House, come clean in public as well. He borrows money like any other Treasurer; and to claim that he reduced the public debt is a sham, it isn’t true. He increased the public debt in this particular case by something like $600 million or $700 million, taking budgetary and non-budgetary borrowings together. That is what this bill is all about.

The fact that he borrows from Canada Pension Plan and OMERS doesn’t change the fact that he is still borrowing just as much as if he was borrowing on the public market.

Mr. Speaker: The motion is for third reading.

Hon. Mr. White: Surely I can take one minute.

Mr. Speaker: All right.

Hon. Mr. White: The fact is we are in receipt of $336 million more in cash inflow than we are spending, whereas the federal government is spending $2 billion more than it is taking in.

Mr. Good: The federal treasury doesn’t have a billion dollars worth of Canada Pension Plan.

Interjections by hon. members.

Hon. Mr. White: And we have reduced our outstanding public debt from about $1.5 billion to $1 billion in the last 15 months.

Interjections by hon. members.

Mr. Cassidy: The Treasurer is increasing his total indebtedness though.

Hon. Mr. White: And that’s what I call good budgeting.

Mr. Ruston: Using the federal pension funds.

THIRD READING

The following bill was given third reading upon motion:

Bill 69, An Act to Authorize the Raising of Money on the Credit of the Consolidated Revenue Fund.

Hon. Mr. Winkler: Mr. Speaker, ending on that amiable note, tomorrow I will ask the members of the House to prepare themselves for almost all of the remaining legislation. We will begin by calling item 2, Bill 65; and then items 5, 6 and 7 on today’s order paper; and I shall inform the members opposite of the order thereafter.

Mr. Cassidy: Mr. Speaker, does the House leader intend to call Treasury estimates after the bills?

Hon. Mr. Winkler: Yes, if we have that degree of co-operation I will be pleased to call the Treasurer’s estimates.

Hon. Mr. Winkler moves the adjournment of the House.

Motion agreed to.

The House adjourned at 10:30 o’clock p.m.