Legislative Assembly of Ontario

The House resumed at 8 p.m.

ESTIMATES, MINISTRY OF REVENUE (CONTINUED)

Mr. Chairman: When we rose at 6 o’clock, the member for Beaches-Woodbine had the floor.

On vote 901:

Ms. Bryden: Thank you, Mr. Chairman. When we rose, I was discussing the fact that almost two-thirds of the budget, or 60 per cent of the budget of this ministry, covers the assessment function which we started out in 1970 as a provincial responsibility. Up to the end of the last fiscal year we have spent approximately $211 million on this function and we don’t seem to have very much to show for it, because it has not yet been implemented. The inequities that it was supposed to remove are still frozen and causing all sorts of further losses to the people who are over-assessed and gains to the people who are under-assessed and also very great inequities and problems in connection with the dissemination of provincial grants.

For instance, the city of Windsor complained that as a result of the failure to get the market value assessment in and the use of equalization factors, that in 1975, compared to 1974, their unconditional grants only went up 5.06 per cent when a lot of other municipalities, some of similar size, were going up as much as 18 to 43 per cent.

They feel a great deal of this situation, which was due to the failure to get an equalization factor that took account of the changes in the assessment and the freeze on the assessment over the past six years, has cost the city of Windsor millions of dollars and they will document that. They already have in a letter they sent to the provincial Treasurer (Mr. McKeough) and he referred the letter to the hon. Minister of Revenue (Mr. Meen), who replied that with regard to their request that the equalization factors should be reconsidered:

“It follows that to calculate further equalization factors within Essex county or any other county at this time [This letter was dated August, 1975] would be totally inappropriate and could only lead to a redistribution of the inequities which initiated the reassessment programme.”

So that, in effect, he told the city of Windsor that they would just have to put up with losing what they thought was their fair share of provincial grants until such time as the assessment department could get itself organized enough to produce our proper reassessment.

Now we are going to examine a proposal that has come out of the budget speech and to reform the property tax base in order to prevent the shift that I was mentioning earlier from industrial and commercial to residential, and we have only a few months given to the municipalities and the people generally to examine this fairly sweeping proposal to meet these shifts, which we have been warning about for six years. It seems to me that they are not going to have very adequate time to examine a very serious change.

On the other hand, the longer we delay, the longer the inequities that the assessment programme is intended to remove are with us. It just seems that the government has bumbled along for six years, leaving this province to get into a more and more inequitable tax base for our local property taxes.

Mr. Good: Your party supported that back in 1970. We voted against it.

Ms. Bryden: I’m not saying that the assessment function shouldn’t be at the provincial level. What I am saying is that the way it has been administered in the past six years is --

Hon. Mr. Meen: Oh come on, Marion!

Ms. Bryden: -- little short of disgraceful, in that it has taken so long and the proposal to offset the shifts has been so late.

There are just one or two other points I wanted to raise. The ministry has been administering the home buyers grant programme and we did have some discussion of this when the supplementary estimates went through, but I don’t think we found out entirely what was the situation with regard to the number of fraudulent payments and how many of them had been recovered. Secondly, what was the situation with regard to the number of grants which were being disqualified on the basis of the assessor’s statement that they were not arm’s length transactions?

There seemed to be some feeling in the committee that some of these disqualifications were unreasonable, or there seemed to be more of them happening after the election than before. At any rate, we would like some figures on how many have been rejected and how many of the fraudulent ones that were paid have been collected back. Also, I would ask if there are any later figures on the total number given out and the number over $100,000, which I think was about 342 at that time.

Just one question with regard to Teela: Now that the minister says that Teela’s services to the province are becoming less and less -- we were never convinced that they were all that great when you were collecting your own data -- but now that they are very minimal, is there any justification for giving Teela the information that our assessors and computers collect so that they can sell it in the private market? Would it not be considered proper now to charge them a fee for that service, or else to make the service available as a direct government service, possibly for a fee too? It seems to me that it is a rather cosy arrangement whereby they are obtaining free information from us and then reselling it.

I think those are the only points I wanted to raise at this stage, Mr. Chairman.

Hon. Mr. Meen: Mr. Chairman, there are a number of points the hon. member raised before we rose for dinner. She talked about the complement in the ministry. I just want to refer her, if I can find my notes here, to the decline in complement -- which has been steady, it didn’t just happen.

Well, it has in a way; in 1973 it was 4,082, in 1974 it was 4,084, in 1975 it was 4,115 as I mentioned, and now we are down at the level of 3,962, give or take. So it has been steady to drifting downward over the last little while. The point I want to make really is that this isn’t just an abrupt reduction. We have been striving toward this kind of efficiency, which bears out the observation I made on April 1 that we already tend to be a rather lean ministry.

Ms. Bryden: Mr. Chairman, with respect, may I say that I did not raise the question of complement really; that was my colleague. I raised the question of the items labelled “services and supplies” which seem to have gone down drastically, particularly the management systems ones I cited.

Hon. Mr. Meen: When we get into that part of the votes, Mr. Chairman, I think perhaps I can give the hon. member some other details. I don’t have those figures at my fingertips at the moment.

The hon. member was asking about our policy and planning branch. The name itself, policy and planning, Mr. Chairman, is probably misleading, as was indicated by the member for Beaches-Woodbine. The Minister of Revenue really is not in the overall fiscal policy and planning end of things, but this section, which we have put together from sections in other disparate parts of the ministry, is more related to keeping things organized within the ministry, the planning of things such as the estimates, the review of operations in the ministry to see that we are meeting our objectives, the establishment of the overall accomplishments and determining whether our management by results is meeting our criteria.

These are the objectives and the activities of the policy and planning group, rather than a sort of fiscal policy and planning which the name may connote. I have reflected from time to time on whether there shouldn’t be a better name for it, but up to now I haven’t come up with one. It may better be described as a kind of organizational committee, seconded as it is. It is new, as hon. members will see. It is new this year but it is lifted in part from other parts of the ministry.

The hon. member was talking about some reductions in some of the other ends of the ministry; in some measure, although not in large measure, some of those reductions are a result of that complement being lifted from there and being put into this new group. The need for this kind of thing was identified by a study team which I had in operation about a year ago. They reported about June or July and they noted that we lacked adequate co-ordinative machinery and that there was a need for more initiative in the area of policy development of this operational sort.

We set this up in July last year as a sort of ad hoc group within and under the deputy minister’s office. I might tell the hon. member for Beaches-Woodbine that the staff is eight, seconded from the revenue division. There is one from the revenue division; from the assessment division, two; from support services, three; and from ministry administration two. The group was organized not to develop new functions but to perform existing functions in a co-ordinated way and to do so, therefore, more efficiently by centralizing them under one head. One of the roles which they have assumed recently of course has been the co-ordination of the ministry estimates -- this is a sort of on-going programme -- the forecasts for the future and, as I have already mentioned, the establishment of managing by results or MBR projects. They perform in that sense a monitoring function, so I can say that it’s not an overlap with Treasury. In fact I was careful from the beginning to make sure the Treasury understood what we were doing and they wouldn’t think that we were attempting in any way to usurp any of their fiscal policy prerogatives.

Ms. Bryden: It is still a non-policy.

Hon. Mr. Meen: It depends on what you then define as policy. That’s why I say that this may be a bit of a misnomer. It’s in the category of management policy perhaps -- management of all responsibilities which happen to fall primarily in the area of administration of 12 taxing statutes, the tax credit programme, the GAINS programme and the assessment programme -- along with POSO, of course, and we mustn’t forget that very valuable end of the ministry.

[8:15]

Since the member asked me before dinner I have asked the staff, about the North Pickering assessment and valuations on properties that were under expropriation. I asked them to determine for me whether there was, in fact, any overlap, or whether it was a case of my ministry being unable, at the time when the North Pickering group required these figures, to provide figures for market value valuations on properties that were under expropriation or negotiation for purchase at the time. I haven’t got that yet.

A lot of this discussion we’ve been involved insofar under vote 901 has been free-wheeling right across the entire ministry. There was another vote directly related to assessment, and I trust that the hon. member will permit me to maybe answer that question when we get to that vote. I would hope that I would have the answer by that time. I don’t know what the answer is, to tell you the truth. I’m speculating, though. I just can’t imagine that we would, consciously at any rate -- indeed we wouldn’t permit it to happen -- have two bodies with this information available, or one body with it available and another body needing it and going out and buying it in the private sector by way of hiring assessors or others to give them these figures.

The hon. member referred to Windsor and the correspondence that I had with them. You must recognize that last August, and indeed until last month, my ministry has been looking toward November of 1976 as the time we would bring in the assessments for 1977. So looking just another year down the road, to my mind, doesn’t look all that tough for Windsor. Now Windsor is going to be expected to look two more years down the road, this year and next.

I would emphasize to the hon. member, and remind her, that the inequities of which Windsor complains are not inequities existing between classes or inequities brought about by the assessments my ministry has made, but rather they are inequities created in the Sixties by their own assessors at a time when they had such variations in their approaches to assessment that they wound up with these gross injustices, and they are simply frozen. Those are the assessments that were frozen in Windsor in 1970. We, at that time, didn’t expect that it would take six or seven years before we would get them into a more equitable position, but the fact of the matter is that those inequities are of their own making.

That doesn’t mean I’m not sympathetic to their problem. I know a lot of the problems by putting this all on a common base, with assessments being made by a ministry that has nothing to gain or lose by the way in which it’s done, except to do it as well as we possibly can. That’s what we’re going to do, although it’s taking us a little bit longer than we had originally thought.

It puts me in mind of the sign I used to see down in the county court office of the county of York. The sheriff or the county clerk, I’ve forgotten which, had a sign up there saying, “The difficult we do at once. The impossible takes us a little longer.” This is turning out to be, not an impossible task but certainly it’s turned out to be a more difficult one than we thought it was going to be. We encountered more problems, and on top of that those problems were compounded by the sudden escalation in market values in the late 1973 into 1974. So I think everybody has to bear with us. I guess most people in this area of activity know the problems, but we’re struggling to get them resolved.

The hon. member was asking about home buyer grants. Here again, I can answer the question later, but I might just as well answer her now, if I can find it in my material on home buyer grants. On fraudulent claims -- she said “fraudulent payments,” but I think she meant fraudulent claims, giving rise to payments -- I think I can give her the figures she was asking for.

She was asking about prosecutions. It may take a little longer, Mr. Chairman, but I think there will be some merit in it.

Here is a relatively short statement, rather than getting involved in a long one: As of March 19, 1976, 55 claims had been referred by the benefits control section to the special investigations branch. The status of these referrals was, at that date, as follows:

“Referred, 55; rejected for prosecution, 25 -- in other words, 25 of the 55 were not considered to be strong enough to merit prosecution. Those were cases where they shouldn’t have claimed but it was difficult to show culpability of a sufficient degree to merit prosecution.”

Then “Rejected for prosecution under Ontario Home Buyers Grant Act but possible prosecution under the Land Speculation Tax Act,” and you can see that there would be a few there, where they may have filed a false affidavit. There were four under that category.

“Under consideration by the legal branch” -- in other words, we don’t have a ruling from them yet -- there were another four.

Eight currently are being investigated and the number of charges laid is 14, making in all a total of 55.

Ms. Bryden: Mr. Chairman, may I ask the minister one question on that?

Hon. Mr. Meen: Yes, go ahead.

Ms. Bryden: In how many cases was the payment actually made and then you discovered that the claim was fraudulent and you tried to recover the money? How many payments have been recovered?

Hon. Mr. Meen: I am advised that in all of those cases the payments would have been made. I am advised that there may be one or two in which about halfway through the mechanism the payment was stopped or something of the sort. Presumably they got at least to the stage where cheque issue was authorized and, indeed, the cheque may have gone out; then something showed up and we put a stop-payment on the cheque. But basically the moneys were issued.

As of today -- I have a current update now -- the number of cases referred is 83, rather than 55. In court, instead of 14 there are 28. The number of cases closed due to lack of evidence is 30, compared with 25 before. There are now 25 cases under investigation, and so far there have been two convictions and one acquittal.

The last point the hon. member raised was about Teela Market Surveys and whether we shouldn’t be charging them a fee. As I mentioned -- the hon. member is aware of this -- we’re winding this down. I can’t honestly tell her how long it will be before it is phased out, though I would guess that it would be phased out about the time when we come into full market value assessment, which will be the end of next year. But it is being wound down.

I outlined to the committee the things that we provide to them, and I outlined to the committee the items they provide to us. I would be speculating, but my speculation is that if we were to charge them a fee, or if a fee were to enter the picture, they would wind up in a position where they could charge us, because what we get from that at the present time is at least as much as we’re giving them in return. So, if we got on to a fee basis, I suspect that it would run the other way; therefore, I don’t see any point in pursuing that, and I haven’t pursued it in the past. It’s simply a matter of letting this wind itself down.

Mr. Chairman: Shall item 1 carry?

Ms. Bryden: Mr. Chairman, just one further question on Teela. I understood the minister to say that what services they were providing to us would disappear very shortly when we were on full market value. Therefore, I’m suggesting that when we get to that stage, if they want material from us for their service, we should charge them.

Hon. Mr. Meen: That is exactly what I am suggesting. I think that by that stage they will be getting whatever they want. They are entitled to come in and ask for it, as any other taxpayer is, and then they can get it. Otherwise, there would be some fee charged to them. On this basis, where we’ve got this reciprocal arrangement going, I don’t see any point in working a charge to them because that would automatically attract the argument from them that we should be paying for the service and for the information that we get from them.

Counting such matters as their title searches, their sketches of the properties and the other matters that they provide to us, that would probably exceed the value of the material we give to them. When we get down to a point where we are on market value assessment, we won’t need any of that further information. It will be coming through automatically by the information posted to us from the registry offices on valuations, and we will have all the information anyway.

Mr. Maeck: Just to follow up with a short question, before dinner, the member for Stormont-Dundas-Glengarry (Mr. Villeneuve) posed a question regarding bilingualism in the ministry. I am interested to know if there are any facilities within the ministry at the present to deal with people of other languages.

Hon. Mr. Meen: Yes, as I mentioned, our information service in GAINS is most extensive. We have facility in -- I have heard the figure of 35 languages used.

Mr. Lawlor: There are 36 languages. You have forgotten gobbledygook.

Hon. Mr. Meen: Is that the 36th? The telephone answering service, for example, for OTC and GAINS is fluent in 18 or 19 languages and generally oar people are competent to deal with all the linguistic problems that come up. Given another minute or so, I can probably find a page where I can give you greater particulars.

Mr. McClellan: The member’s timing must have been off.

Mr. Maeck: Surely you people don’t resent the fact that we ask questions on this side of the House once in a while, do you?

Hon. Mr. Meen: I mentioned before dinner some of the publications that are bilingual. The OTC bulletin, the tax credit guide, is bilingual. The booklet was bilingual. The tax credit form itself has explanations on the back in separate English and French. The GAINS material, the brochures, are bilingual. The tables are bilingual.

Mr. Chairman: That is not the question that was asked. The minister answered that before dinner. He asked you about other languages.

Hon. Mr. Meen: In part I did.

Mr. Maeck: I am only asking about languages other than English and French.

Hon. Mr. Meen: Then I have answered the question. We have facilities in some 18 or 19 languages on the telephone answering service and we also have some fluency in about 35 languages.

Mr. Edighoffer: I have two very brief and unrelated questions. The first one has to do with the Management Board orders, which I mentioned in my opening remarks. During the supplementary estimates we learned that the ministry had received $900,000 through Management Board orders. Were there any other items daring the last session?

Hon. Mr. Meen: No. To the best of my knowledge the only MBO was at a time when the House was not sitting. It was for the purpose of paying the February instalment of GAINS for which we would not have otherwise had authority. The increase having occurred in January and the funds being exhausted, it was necessary that we go to Management Board for an order for the February instalment. We could, I think, have gone to Management Board for a board order to cover March as well. That board order then would have been for $9.1 million as well as the $900,000 or so for which we had a board order issued to cover the balance of moneys required for the February instalment. We decided not to do that for the simple reason that we expected the House to be convening and that I could then come back with a supplementary estimate for the $9.1 million.

[8:30]

Mr. Edighoffer: I understand there were no other Management Board orders in any part of your ministry?

Hon. Mr. Meen: I believe that’s correct.

Mr. Edighoffer: Okay, thank you.

I recall passing the amendments to the Income Tax Act last fall, I believe it was November, setting the rate at, again, 30.5 per cent. Why was this legislation introduced prior to the budget? What lead time does it take to notify the federal government?

Hon. Mr. Meen: Remember that employers are very busy deducting tax from their employees for the calendar year, beginning with the first pay period in January of this year. It was necessary for them to have authority to make those deductions. Without the passage of the bill, to be effective Jan. 1, they would have no such authority so it was essential that that be approved for 1976.

Mr. Young: Along the same line as the hon. member asked a moment ago, we have had the budget here. Is the minister certain that this budget is going to provide all the services he needs this year or will we be getting supplementary estimates later on? There’s going to be some problem in finishing the valuation file recovering information from the computer -- a very expensive proposition -- and the staff needed to put this whole thing into effect. Or will some of that be postponed until next year -- that is until 1977-1978?

Hon. Mr. Meen: Mr. Chairman, I guess it’s fair to say that’s what estimates are all about. One sits down with a sharp pencil to try to determine what you’re going to need to do a job. I can say that my staff and I are confident that we can do the job within the figures set out in these estimates.

Mr. Young: You’ll still be lean and hungry.

Hon. Mr. Meen: Yes, we’ll still be lean and hungry on March 31, 1977, Mr. Chairman. Hopefully, we’ll have discharged our responsibilities adequately.

Mr. Johnson: Mr. Chairman, I have a question for the minister. In 1973, the Ontario government had established the women Crown employees’ office as part of its support for equal opportunities for women in the public service. Its policies were given further emphasis during the recent International Women’s Year. I’d be grateful to know what the Ministry of Revenue has done in this regard and what are its plans for the immediate future.

Hon. Mr. Meen: Under the equal opportunity programme, of course, there have been lots of matters which have been proceeding.

The programme has been designed to involve decentralized staff among our 68 offices. We focused on assisting large steno groups and clerical groups, for that matter, as priority as opposed to trying to organize the professionals who seem to have a bit of an edge in that respect. We’ve set up a special educational fund to assist people in self-improvement and personal development and this is an ongoing thing which the hon. member may have had in mind.

There was a conference of the 75 or so members of grassroots organizations of the women within the ministry. They had a conference last fall and they are planning one for next year.

They are planning development of career information profiles for all the staff; a programme in which they can take a look at career information profiles. I’m advised they have a special research project in which they’re investigating potential for a new Ontario government programme in tax credit areas related to child care expenses. I don’t know much about this. They’re going to be looking into it in the coming months. It’s possible that something of this sort might be operated within the Ministry of Revenue.

For ongoing purposes, they have their monthly information kits. They have these workshops I was talking about and their conferences. They have liaison with the affirmative action committee and just generally they are a very active group within my ministry.

Mr. Foulds: The minister was speaking about language facility in his ministry, and I would like to know if he has the availability of those 35 languages.

Hon. Mr. Meen: Mr. Chairman, I’ve heard that figure, but frankly the figure I feel more comfortable with is 18 or 19.

Mr. Foulds: Eighteen. Does it include Ojibway and Cree?

Hon. Mr. Meen: I have no idea, but if you care to ask me that when we get into that particular vote, I can probably give you the answer.

Mr. Foulds: Fine. Thanks very much.

Mr. Lawlor: I just want to deliver a dithyramb, a eulogy, whatever it is I want to deliver. Have you ever thought -- I’ll be very brief -- in terms of your ministry of just what an immaculate record of efficiency you really have? Taking a $4 billion budget, do you know how much it costs to collect that money? We hear in this House, with respect to charitable institutions, of various kinds of rake-offs at the top, with less than one-tenth of one per cent do you do this magnificent job.

Don’t you think government’s a wonderful institution? Don’t you think that the efficiency of government beats anything that can be done in the private sector? I think you should be given the highest accolades. I think, as a result of being Minister of Revenue --

Mr. Eaton: Just because the private sector collects a lot of it for nothing.

Mr. Lawlor: -- you also might become a socialist in the process and say “I’ve performed this task with great aplomb, streamlining it.” What I really want to ask is how many lawyers have you got in this department?

Mr. Chairman: That’s in the next vote.

Mr. Lawlor: That’s next? It’s the first vote.

Mr. Chairman: No, that’s in -- shall item 1, the main office, carry? Carried.

Item 2, legal services.

Mr. Lawlor: I see. I’m still here.

Mr. Chairman: You have the floor.

Mr. Lawlor: Thank you.

Hon. Mr. Meen: What are we on?

Mr. Chairman: Legal services.

Mr. Lawlor: I want to know all about the lawyers. How many have you got in the department? There must be a fancy amount of legal talent for $356,000. That’s all I wanted to know.

Mr. Ruston: Four or five at the most.

Mr. Lawlor: Four or five?

Mr. Eaton: Two or three.

Mr. Lawlor: Let’s make it half a dozen, for heaven’s sake.

Hon. Mr. Meen: I have none in the Ministry of Revenue.

Mr. Lawlor: What’s all this about then?

Mr. Chairman: It may be why it works so well.

Hon. Mr. Meen: First of all, I want to thank the hon. member for his compliments on our efficiency in the administration of the tax system in Ontario.

I was about to turn up the tables to show you the cost of collecting the moneys in the ministry but maybe we could get to that later. My short answer to the member is that we have no lawyers in this ministry because they’re all members of the Ministry of the Attorney General. That is why there are no figures for salaries shown under item 2 of vote 901.

You’ll notice, Mr. Chairman, that there are items for transportation and communication, services, and supplies and equipment but nothing for salaries. The reason is they’re paid out of the moneys of the Attorney-General.

However, the item for services, $348,300, is made up -- I guess 99 per cent; at least a substantial measure -- of services charged by and paid to the Ministry of the Attorney General for the salaries of the lawyers. To be more practical about the answer and to tell the hon. member for Lakeshore (Mr. Lawlor) just how many lawyers I have really working on behalf of the Ministry of Revenue, I would answer that we have 11 plus their staff support.

Mr. Chairman: Shall items 2 to 4 carry? Carried.

On item 5:

Mr. Lawlor: Mr. Chairman, this bemuses me too. You know, here’s a ministry that does no planning, which has no policy, and yet has $176,000 dedicated to this specific purpose. It does absolutely nothing with respect to policy touching taxation measures. Any time any question of any substance is asked during these estimates, he refers us to the Treasurer, and we are left hanging with the most flimsy, inarticulate cobwebby ministry of the whole lot and yet he has the infernal presumption, the gall, to shove in $176,000. Justify your existence.

Mr. Chairman: I believe that was answered earlier.

Mr. Lawlor: Was that answered earlier?

Hon. Mr. Meen: You know, I am bound to say it is just too bad that the hon. member for Lakeshore wasn’t here earlier and he wouldn’t have had to ask the question.

Mr. Lawlor: I will read the Hansard.

Mr. Chairman: Yes, you can read it in Hansard.

Mr. Spence: Item 5, in regard to the speculation tax --

Hon. Mr. Meen: You are on the wrong vote.

Mr. Spence: Am I on the wrong vote?

Hon. Mr. Meen: I think the hon. member will find the land speculation tax under succession duty, which is item 4 of vote 902.

Mr. Chairman: Items 5 to 7 agreed to? Carried.

Vote 901 agreed to.

On vote 902:

Mr. Chairman: Do you want to go through this item by item? If so, 902(1), administration. Item 1 agreed to. Item 2, corporation tax and other taxes.

Ms. Bryden: Mr. Chairman, I have a question in connection with this item and the same question in connection with item 5, and that is that last year there was an amount shown as a recovery from other ministries which was offset against the estimate, a total of $155,000 in the two votes. It doesn’t seem to show this year. I would just like to ask where those recoveries have gone. It really means an additional increase of $155,000 in costs this year if we are not getting those recoveries.

Hon. Mr. Meen: I am advised that Consumer and Commercial Relations was doing some of our EDP work for us at that time and we were doing work for them too, so there was that degree of balance between the two shown for a figure, and I take it that this year there isn’t anything contemplated, of a similar nature that is, you see.

Mr. Good: Could I inquire under what vote the land transfer taxes fall?

Hon. Mr. Meen: Under vote 902, item 4, succession duty.

Mr. Young: I have a short question for the minister in respect to item 2, corporation taxes. The federal government has a policy of deferring corporation taxes under certain circumstances, and there’s a very large amount of money piled up there. Does the Province of Ontario have the same sort of policy, where corporation taxes can be deferred?

Hon. Mr. Meen: I am advised that yes, we have that kind of policy in effect as well.

Mr. Young: Has the minister any idea of what assets we might be carrying in this respect? Would all these taxes be paid at some future date?

Hon. Mr. Meen: Oh, in other words, what kind of security do we have for the payment of the moneys?

Mr. Good: How much are you carrying?

Mr. Young: How much are we carrying, yes.

Hon. Mr. Meen: Of course, they are not yet due. They are deferred, so presumably we have no particular --

Mr. Young: What I want to know is, will those taxes ever he paid? Corporation A has a tax of $100.00. They are deferred for future payment. Will it ever be paid, or is that an asset in our books, or is it something that we will write off eventually?

Hon. Mr. Meen: It certainly isn’t intended or expected that it would be written off. My advisers tell me they have every expectation that these accounts will be paid.

Mr. Young: Have we any estimate of the total amount that is deferred in this way, standing on the books to our credit?

Hon. Mr. Meen: I take it from what my staff are saying that we don’t have an estimate, because we don’t have it set up. It is not yet a liability. Therefore, it is not set up as a receivable. Therefore, it follows we don’t, at least immediately, have available a figure for the total amount that would be a receivable.

[8:45]

Mr. Young: Then I take it, Mr. Chairman, that the situation is something like this; certain corporations in Ontario are not paying taxes but at the same time the government of Ontario has no method by which to collect those eventually. The whole thing is in limbo.

Hon. Mr. Meen: In short I don’t think that is the case, because we would have some way to determine the deferral. You see, I think it becomes a question of whether it is a tax liability or is it a tax deferral. If it has been deferred it is not a liability.

This may be a matter of semantics, but let me outline for you some material my staff have handed me with respect to the years 1971 and 1972, which is the latest year for which this information is available. Corporations in all of Canada deducted capital cost allowances for tax purpose and depreciation, for book purposes, as follows:

In 1971, the number of corporations was 228,458; in 1972, 234,967. Of those, capital cost allowances deducted for tax purposes in 1971, $5,388,800,000; 1972, $6,162,800,000. Now depreciation deducted for book purposes: 1971, $4,676,800,000; and in 1972, $5,054,600,000; leaving taxable incomes deferred of $712 million in 1971 and $1,108,200,000 in 1972.

Assuming 40 per cent of this was in Ontario -- and this is an assumption -- that would be $284,800,000 in 1971, $443,280,000 in 1972. The Ontario tax on that deferred, then, is $34,176,000 in 1971 and $53,193,600 in 1972.

The source of this is corporation taxation statistics, 1972, of Stats Canada. I don’t know if there is anything more I can add to that, but there are the figures for deferred tax as they would appear to the latest year available. This was as of March 18, the latest year we have available through Stats Canada.

Mr. Young: Mr. Chairman, my problem is how can we relate that into deferred tax, the tax charged to corporations. It’s deferred and yet there is no method by which we get it, eventually, into the Treasury. This seems to be the situation. In other words it will be, in effect, a forgivable tax in the long run.

Hon. Mr. Meen: No, it is not forgivable.

Mr. Young: It just disappears then, does it? When is it collected? When will it be collected?

Hon. Mr. Meen: I am advised that the money becomes a receivable at the time they stop increasing their assets; or when they have depreciated their existing assets to certain levels then these moneys come in. But the moneys are deferred in the interest of creating further capital investment.

Mr. Young: In other words, as long as they reinvest, then this money does not become due? That is essentially correct, isn’t it?

Hon. Mr. Meen: That is essentially correct.

Mr. Young: And that means simply that these companies are building up their assets out of the provincial Treasury?

Mr. Samis: Paid for by the taxpayer.

Mr. Young: Paid for by the taxpayer.

Hon. Ms. Meen: Well that is the purpose of the provisions in the Act, to allow certain tax deferrals.

Mr. Young: Yet we point the finger at the people who are receiving welfare from the public Treasury and say that they are terrible people, eh?

Mr. Chairman: Shall item 2 carry?

Ms. Wildman: No, Mr. Chairman. Are those Statistics Canada figures that you were quoting to us?

Hon. Mr. Meen: Yes, I am advised that the figures I have in that letter, which is an inter-office memorandum, are extracted from statistics Canada, Mr. Chairman.

Mr. Wildman: If that’s the case then, does the provincial government not keep any records of their own regarding provincial corporation taxes which are deferred; is that correct?

Hon. Mr. Meen: Not on an overall basis, I am advised Mr. Chairman, but rather just on a sampling basis, which would therefore not be a total statistical basis.

Mr. Chairman: Shall item 2 carry?

Mr. Renwick: No.

Mr. Chairman: The hon. member for Riverdale.

Mr. Renwick: I will defer to anybody else who wants to speak on that.

Mr. Chairman: The hon. member for Timiskaming.

Mr. Bain: I have a quick question of the minister. Before I get to the question, I must admit that I am rather amazed at how the revenue system operates in this province. I think if the average taxpayer had all the tax breaks corporations have, they too would be in a lot better financial position -- just to get by these days, not to reinvest; the average person just wants to meet expenses. Would the minister be willing to table in the House all these companies in Ontario that have tax deferrals, and the amount of deferrals for each company? And when he expects to collect from each of those companies?

Hon. Mr. Meen: Mr. Chairman, in a way I think I might like to, because that would be an easy way in which to point out just what happens. But I regret to say that I can’t; that’s confidential information under the taxing statute, and there is no way in which I can divulge that information.

Mr. Bain: Then as a supplementary question to your answer, would you be willing to extend these kinds of incentives to others? If a person has a capital expenditure and invests in his family for their future well-being, are you going to extend to the average person the same gift, give-away, tax break -- whatever you want to call it -- that you have extended to companies like Inco? When are you going to have the same taxes for Inco as you have for the average person?

Hon. Mr. Meen: Mr. Chairman, if Ontario administered its own personal income tax, or we had our own personal income tax administered by my ministry, then I suppose the question would be a valid one. But in as much as we currently rent out the personal income tax field to the feds, and they in effect administer our tax by simply aiding a 30.5 per cent to the tax collected by them, I think that kind of question is more appropriately directed to the federal authorities; because we have no say whatever over the personal allowances that are provided for under the federal government.

Mr. Bain: Assuming then, that you agree with the principle, that you are hamstrung by the federal government, are you going to present this case to the federal government and attempt to get them to change their taxation system, which you apparently admit is inequitable?

Hon. Mr. Meen: Mr. Chairman, I should remind the hon. member that if the individual is in business, he has the same kind of provision available to him as is available to corporations. Perhaps I should have made that clear; it doesn’t just apply to corporations.

Mr. Bain: Just the average person.

Hon. Mr. Meen: Okay, but I am talking about provisions under the Act that are available to individuals in business in the same way as to corporation. It’s not just available to “big corporations”.

Mr. Bain: They are the ones who reap the benefit.

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

Mr. Good: Mr. Chairman, I gather by the tone of the dialogue that the minister is referring to capital cost allowance as deferment of tax?

Hon. Mr. Meen: That’s correct.

Mr. Good: I think it’s incumbent upon him to point out to the members of the NDP that a capital cost allowance is recaptured on the disposal of the asset. I would suggest that the member for Riverdale, who is probably the best-versed person on this subject in the House, hold a seminar for you people who have never been in business, who don’t know anything about running a business and the needs of business to meet payrolls and raise capital.

Mr. Wildman: We wouldn’t know.

Mr. Good: Consult the member for Riverdale. If you are that dense about this whole subject, ask him.

Interjections.

Mr. Chairman: Order please, the hon. member for Riverdale.

Mr. Good: My, I have never heard such tripe in all my life. Holy smoke.

Mr. Chairman: Order, please. The member for Riverdale has the floor.

Mr. Renwick: I appreciate the compliment from the member for Waterloo North. I really do appreciate it; in fact I think perhaps he and I might bold a seminar right now.

Mr. Good: You know about twice as much about it as I do.

Mr. Renwick: There is one of those eternal principles that the closest thing to eternal life is a deferred tax for a corporation. It’s never collected and the history of the taxation statutes shows that it is never collected. It’s not a deferral; it is the immediate conferring of a benefit on the corporations which is unjustified on any basis of social and economic policy.

The minister’s answer is very clear, that he has nothing to do with tax policy, but then the Treasurer is never around to discuss tax policy under any situation except to say, “We’ll talk about it in the budget.” If you talk about it in the budget, nobody’s here, nobody reads it, it’s never heard.

I think what we’ve got to understand, and understand very clearly, is that embedded in the technicalities of the Corporations Tax Act are social and economic policies of the government, the successive governments of the Province of Ontario, with respect to the way in which they treat corporations. They’re not accounting statutes; they’re accounting statutes only on one basis, but the second and the fundamental principle is that they embed in them social and economic policies with which this party disagrees.

What my colleague, the member for Timiskaming, has said, and the comment by the member for Waterloo North is to say that there is no justifiable distinction, and never has been, as to why inert property owned by corporations is subject to depreciation but the individual person over his lifetime is not subject to depreciation allowance for tax purposes, and that’s a capital cost of living. Let’s not kid ourselves that somehow or other the Income Tax Act on its personal level is an equitable tax.

Mr. Ruston: Tell that to your own members. They are the ones who need the information.

Mr. Renwick: It’s very simple. You know some day --

Mr. Good: I know how it works.

Mr. Renwick: I would think you would, considering the Act which was passed under the Ministry of Agriculture and Food yesterday.

I’m very interested. It opens up an immense field about equity and taxing structures and benefits which are conferred by Tory governments on corporations, and benefits which are not conferred on individuals in taxation systems which have grown up under the capitalist system. I don’t want to get distracted by that, because I know we’re engaged in a very technical ministry.

Mr. Lawlor: It’s known as rugged free enterprise.

Mr. Chairman: Order, please.

Mr. Samis: It’s worse than that.

Mr. Renwick: I just want to --

Mr. Lawlor: We make the distinction on our own. We don’t need the government to --

Mr. Chairman: Order. The hon. member for Riverdale has the floor.

Mr. Renwick: I want to ask, under item 2 of vote 902, when you’re talking about corporation tax and other taxes in this vote, and then later on in item 4, succession duty and other taxes, and in item 5, retail sales tax and other taxes, there are 12 taxing statutes that you administer, I want to know why it is that you don’t administer the taxes imposed on the mining companies of the Province of Ontario. I think it’s important for us to know why you do not administer that tax. We have said this I guess on -- and perhaps when I was not here my colleague from Yorkview --

Mr. Young: I haven’t raised it yet, but --

Mr. Renwick: I just want to say that if one reads about the attitude of successive Liberal and Tory governments in the Province of Ontario toward the taxation of the natural resource industries of the province, and the history of it is recorded -- as a matter of fact there’s a professor around who has written a book about the matter which I would commend to the ministry. We all think of it, of course, as history. It’s not history, because it’s exactly what continues to go on with respect to the taxation policies on natural resources in the Province of Ontario and those who exploit them, to whom the grants of the right to exploit have been made by this province.

[9:00]

I want to know why it is that the ministry whose avowed aim is to promote the entrepreneur in the exploitation of the natural resource industries is the same ministry which is charged with the responsibility of determining the taxes which will be paid in all of the underlying substrata of calculations that have to be made in order to determine what the ultimate tax will be. It defies rational explanation to understand the basis on which any of those factors are calculated.

My question to the minister is, under corporations tax, where you refer to other taxes, why are you not taxing those corporations engaged in the exploitation of natural resources?

Hon. Mr. Meen: Mr. Chairman, the other taxes referred to when we talk about corporation taxes and other taxes we have capital taxes, the provincial land tax, Railway Fire Charge Act, premiums tax and so on.

Mr. Renwick: I am sorry, Mr. Minister, you are mumbling.

Hon. Mr. Meen: I am mumbling? I apologize for that. Let me try again. I am talking about the other taxes administered by -- and I thought the member had asked this question -- the provincial land tax, the Railway Fire Charge Act, the premiums tax --

Mr. Renwick: Just a moment, the provincial land tax -- what is the other one?

Hon. Mr. Meen: Railway Fire Charge Act. The premiums tax, capital tax --

Mr. Renwick: What is the capital tax levied on?

Hon. Mr. Meen: Well, it is on the paid-up capital.

Mr. Renwick: Part of the corporation tax.

Hon. Mr. Meen: That is part of the corporation tax, yes.

Mr. Renwick: Apart from the corporations tax?

Hon. Mr. Meen: Yes, the other ones I gave the hon. member.

I think the main point in his question was the question he has asked on other occasions: Why doesn’t the Ministry of Revenue administer the Mining Tax Act?

Mr. Lawlor: We have asked it for about 30 years.

Hon. Mr. Meen: I have heard it before. The reason which I think is the most cogent is that it is a completely different kind of tax, more akin to a royalty than akin to a corporations profit tax on corporations in other ends of economic activity.

I am advised it is calculated on the basis of the form of imputed profits, imputed pithead value on the ore and imputed costs and notional market value therefor, for the ore, and a cost against that from which then is calculated an imputed profit. Generally it would require, as I am advised, a degree of expertise that just doesn’t come in my ministry as a taxing ministry. It would require the kind of mining expertise that is found in the Ministry of Natural Resources.

It would appear to me, at any rate, to be appropriate that that Act should be administered by the Ministry of Natural Resources, a ministry with the expertise to understand what these people are talking about when they are talking in terms of these imputed values. There used to be, if memory serves me, other factors involved such as proven reserve of ore, and certainly my people don’t have the expertise to assess those values, the validity of claims of that sort and so I think it is appropriate that that Act should be administered within the Ministry of Natural Resources.

Mr. Renwick: Mr. Chairman, I would like you to understand that if occasion should require that we would form the government of the Province of Ontario, you can be certain that we would do what you should have done years ago, which is to transfer the mines assessment branch of the Ministry of Natural Resources into the Ministry of Revenue to separate those who assess the imputed value, because that is where the kick is in the mining tax, the imputed value.

I grant the expertise required. I doubt the integrity -- not of the persons who do the assessment, but the integrity of a ministry which in its history has developed a most lenient view about imputing values at the surface to mine output for the purpose of calculating the tax. To use these figures as a percentage of profit or the percentage of any other criterion that one wants to use to determine what the people of the Province of Ontario get by way of returns through the tax system for the exploitation of their resources is one of the fundamental mistakes that this government has made.

The second point is, it is not a royalty. There is a royalty method of collecting taxes but each --

Hon. Mr. Meen: I said it was like a royalty.

Mr. Renwick: No, it is not like a royalty. You are using language totally opposite from what the Treasurer uses, because each time this question comes up they try to make the distinction, “We are not taxing on a royalty basis because we don’t think that is fair. Look at British Columbia.” That is what the argument is. “We eschew the royalty basis. We have a mining tax that will produce the revenue which is required.”

I simply say to you that even under the taxation system which this government has decided upon for the resource mining industry, until such time as you get it out of the Ministry of Natural Resources and under the control of a person whose sole job it is to see that the taxing statutes produce the maximum revenue consistent with an equitable interpretation of the terms of those statutes, there is not going to be, even under your method of taxation, the kind of return we should be getting.

I can’t say it any more distinctly in my way. Others of my caucus may be able to say that kind of thing but I can’t say it any more clearly that you are making a fundamental mistake in not bringing it under the control of your ministry. When I am talking about you I am talking about your government because you don t have the authority to make transfers but you are a member of a government which can reallocate the responsibilities. Until that is done, even on your limited basis of what the social and economic return to the people of the Province of Ontario will be, it will be false.

It will be false because the history of the Ministry of Natural Resources and its predecessors, with respect to the exploitation of the resources of the province by entrepreneur companies in all cases, is a disaster for the people and has been for a long time Repetition doesn’t make it monotonous. Repetition is what is required for the purpose of making the government understand that even within the limited framework of its philosophy the least it could do is take the mines assessment branch out of the Ministry of Natural Resources, bring it under the Ministry of Revenue and have a tax collection system applicable to those corporations consistent even with the Tory philosophy about the limited return the people should get for the exploitation of those resources.

Hon. Mr. Meen: Mr. Chairman, I think the only further observation I might have on the point is that I really had not intended to suggest that the mining tax was equivalent to a royalty because, of course, the mineral resources are not owned by the Crown so it is not a question of its being a royalty per se.

I was suggesting it was rather akin to a royalty, though I can certainly see the clear distinction the hon. member for Riverdale draws in this instance. I don’t disagree with that. It’s rather akin to it in the sense there are the notional elements of profit only. There are not the true elements of profit in it. There are the notional elements of market value; again, not necessarily reflecting the true market value.

Consequently, there are a lot of elements in this thing which aren’t related to a profit and loss picture upon which normal corporation tax would be based and, therefore, perhaps it is more related to the philosophy of the charge made on the basis of a royalty when property of the Crown is extracted or cut and timbered, in the case of lumber, for the gain of the company. There is a difference. It may be halfway between or somewhere in between those two extremes.

Mr. Lawlor: No reason why you can’t handle it. It is impudent.

Hon. Mr. Meen: I hadn’t intended to mean that it was actually a royalty or equivalent to it.

Mr. Lawlor: It is not concrete.

Mr. Renwick: You don’t lightly provoke a minor comment on my part. First of all, I just want to clear the record. It’s only been in very recent history that the Crown has reserved the mineral rights and grants which have been made and leased them; only in very recent history. The great bulk of the reserves of mineral resources in the Province of Ontario have been alienated by outright grants. I’m not suggesting that in the Crown lands of the Province of Ontario there may not be in the future substantial mineral deposits, but of the known mineral resources of the Province of Ontario only a very small part is owned by the Crown. The bulk of it was alienated years ago and is being exploited under the capitalist title of ownership when it should never have been alienated in the first place.

In the second place, this party, if it ever has the opportunity of becoming the government of Ontario, will take back the reserves in the ground from the mining companies and will negotiate the terms and conditions under which they will be brought to commercial production and the terms and conditions under which they will be sold in the marketplaces of the world. I trust you have understood that I have said it relatively carefully and clearly and unmistakably. It’s almost like years ago when anybody on the other side wouldn’t dream of even using the word socialism because it might have been anathema.

I want you to understand what we in this party are about. Do you know how far we are advanced in our social philosophy? We’re so advanced in our social and economic philosophy in this party that the Globe and Mail agrees with us, which is giving us significant concern. We almost think we should reverse our position and become the private enterprise party.

Mr. Laughren: We are okay as long as the Sun doesn’t agree with us.

Mr. Renwick: The Globe and Mail has very clearly said to the government of Canada, go to Venezuela and understand the way in which Venezuela deals with the oil reserves in Venezuela. The Arab countries and Venezuela, being members of the OPEC group, have already learned the lesson which we haven’t learned -- that you say to the companies that have the technology to develop and bring into commercial production those reserves, be they oil or minerals of any kind:

“Certainly we as a government don’t have that technological expertise. You have it by virtue of the world in which we live. Your scientists have developed the expertise and you have the engineers who produce it. But we say we own the reserves and the terms and conditions under which you bring them to commercial production and the way in which we share the profit of the sale or the payments which are made to you for the process of bringing them to commercial production, whatever those arrangements may be are matters which are negotiable and are not yours of right.”

I think we had better start to understand what you’re going to have to come to if you continue to be the government but which we will institute if we are the government or had that opportunity, which may or may not come our way. That’s not the problem. I want you to understand that, when it becomes known clearly across the Province of Ontario the extent of the ownership of the mineral resources of Ontario, which are equated with the petroleum reserves in Alberta or the oil reserves in the OPEC countries or any other of the major embedded resources that we all seek to exploit, when that time comes, we will reassert one way or another the ownership of those resources. We will negotiate the terms and conditions under which they will be exploited and the terms and conditions under which there will come back into the consolidated revenue fund of the Province of Ontario a proper proportion of the profit which is to be earned from that exploitation. There is an infinite number of ways of doing it. But I can assure you, whether you as Tories like it or not -- and we know you don’t like it -- we as New Democrats like that system and adhere to it as part of our philosophy. You’ll be forced into it and we will willingly accept it on behalf of the people of Ontario.

[9:15]

Mr. Samis: Mr. Chairman, could I just ask one question of the minister arising from comments made by my colleague from Riverdale? Can you give us any factual evidence from the fiscal year past or present to refute his statement that a corporate tax deferral is the closest thing to eternity? Can you give us any tangible evidence to disprove that?

Hon. Mr. Meen: How long is eternity and how does one measure eternity on the basis of this fiscal year or the next fiscal year or the last fiscal year or whatever?

Mr. Renwick: It is certainly not an expectation.

Hon. Mr. Meen: It is not a thing one can put down in dollars and cents in any one fiscal year.

Mr. Samis: All I’m asking is if the minister can give us one concrete example of collection on a deferral.

Hon. Mr. Meen: I’ve already pointed out that I cannot, not because it’s not available but because I cannot disclose it. That kind of information is confidential to the taxpayer, and I cannot talk about it.

Mr. Renwick: Give us the amount.

Mr. Laughren: If I might ask the minister, is he saying he can’t reveal it; that it is confidential even in global terms? We’re not selecting a company and saying this. We’re asking, in global terms what kind of figures are we talking about?

Hon. Mr. Mean: I have no figures in global terms either.

Mr. Laughren: Are the global terms confidential? Do you regard them as secret as well?

Hon. Mr. Meen: No, they would not be confidential if I had them. I do not have them in global terms or any way.

Mr. Laughren: What is the expectation of this minister when he grants deferrals? What are the expectations? Does the minister want me to repeat it?

Hon. Mr. Meen: I don’t know how one describes this except to say that you’ve got to recognize that these figures for deferral are wrapped up in all the other figures any particular corporation tax return has. They are not segregated out; they work as deferrals of tax; they work against that particular fiscal year. Another fiscal year will show up and there will be certain deferrals.

There is no aggregation of those particular deferrals. Some mature and some don’t. The assets are sold, all of them are realized and the money is repayable. But it would not show up statistically because then that applies against the corporation income tax. There’s no breakout of that figure with respect to deferrals.

Mr. Laughren: If I might apologize for my lack of knowledge in this whole area of taxation, I really do wonder what the purpose of the deferral is in terms of what the company is expected to do with that deferral.

Is there a reason for the deferral? Secondly, do you have any expectations of what would be done with that deferral?

Hon. Mr. Meen: I don’t know what the hon. member means by what will be done with the deferral. If the time comes when the deferral matures for tax, then we would pursue it and collect it.

Mr. Laughren: You will pursue it and collect it.

Hon. Mr. Meen: Of course, when that deferral matures.

Mr. Laughren: Can you be more specific about the maturity?

Hon. Mr. Meen: I can’t because I don’t know the mechanics of the way in which each of these deferrals accrue. But if a deferral is accomplished, then over a period of years the deferral is written down and then perhaps the operation is wound up, whatever tax deferred is outstanding then becomes payable. If it is not paid along with any other corporation tax, then of course the liability would be pursued.

Mr. Laughren: You are saying that if the deferral winds down at the same time as the company winds up that it’s co-terminus.

Mr. Mackenzie: I’d like to ask a question, if I can, of the minister. I listened with interest to the very clear position put by my colleague, the member for Riverdale, to the fact that this party would willingly reassert the ownership of the mineral resources in this province and his prediction that while we were doing it willingly, you would be forced into doing it. I think in the interests of the people of this province and plain good management, that’s going to happen, and I just would be interested in your response to that comment of my colleague. Do you agree that you will be forced into it?

Hon. Mr. Meen: No. I could hardly agree to that, Mr. Chairman.

Ms. Bryden: Getting back to the deferred tax situation, I’m sure that the minister recognizes that the deferred tax increases the cash flow of a corporation. I think what we would like to know is, has he ever monitored what has happened to that extra cash flow? Has it just gone into the pockets, has it gone across the border in payments to parent companies, or has it been invested in Ontario to create more jobs?

Secondly, if Statistics Canada can break out figures on tax deferrals for Canada as a whole, I don’t quite see why the Ontario corporation tax administration cannot break out such figures in total, say, for each year over the last five years.

Hon. Mr. Meen: If I understand the member for Beaches-Woodbine, she’s asking what happens to this money that is allowed on capital cost allowance, and so far as we’re aware it goes off into bricks and mortar, into machinery and into expansion of the operation of the business.

Ms. Bryden: Do you have any monitoring of that? Do you have any surveys of the companies that have benefitted from it?

Hon. Mr. Meen: I understand the answer is no, Mr. Chairman, we don’t.

Mr. Renwick: Well, the answer is no, you don’t have any information.

Hon. Mr. Meen: The answer is, so far as I am aware, we do not have any direct monitoring of the extent to which the moneys claimed for CCA actually go into bricks, mortar, machinery and equipment.

Mr. Renwick: I think it would be wise for the minister to look at the elements that go to make up the balance of payments between Canada and other countries. I think it really would be worth your while to do so. We don’t have trouble really on merchandise account, despite what the Treasurer (Mr. McKeough) and your government say about the productivity of our manufacturing industries. We don’t really have any basic problems about the balance of trade on merchandise account or on other tangible products. We don’t have very much trouble in our tourist account insofar as that is an element of the balance of trade. We certainly don’t have any trouble on making up the deficit through the inflow of capital into this country to make up the so-called imbalance.

I’d like you to know that my information is correct and my reading of the information is correct. The outflow of funds which takes place in this country, which always has to be made up by the reassertion by Liberal and Tory governments of the need for capital to be invested, is to make up for the moneys which go out in cash, not by way of dividends, not by way of interest on capital, but by way of payments made under so-called know-how agreements and other such agreements.

That’s the area, if anybody wants to focus on the question of where we are having trouble in our balance of payments and where we have to listen to all this nonsense about productivity and about why it is we must have wage controls and we don’t have any price controls and all of that kind of philosophy. Just analyse, as the Minister of Revenue, the component parts of the balance of trade deficit of the Province of Ontario abstracted from that of the federal government and our responsibility in it, and look at the dollars that flow out of this country under various disguises which I use in a colloquial term to be know-how agreements.

That’s where it goes and until somebody looks at those agreements and asks “What do we get for what we pay out? When were those agreements entered into? What is the duration of them? How many times must we pay for the technology which comes into the country under those agreements? How long? Forever?” that’s where the problem is.

I can’t understand, under the Corporations Tax Act, and I never have understood in the administration of the corporations tax, why there isn’t the most rigid scrutiny of the agreement made by companies who are paying corporation tax to the Province of Ontario under which payments are made that flow out of the country. It has nothing to do with capital. It has nothing to do with merchandising accounts. It has nothing to do with the insurance or tourist accounts. It doesn’t have anything to do with those things.

It simply has to say, the subservience of the economy of the Province of Ontario to corporations outside the Province of Ontario is reflected in the one-sided, know-how agreements under which those cash flows take place. Taxation agreements between Canada and the United States, Canada and the UK, Canada and the Netherlands, Canada and this and that country, will show you we pay time and time again on a permanent basis for know-how which should be capitalized, and bought in a package if we want it, on a once-and-for-all basis or on an installment basis that at least has some ending to it.

Let me reiterate. Until we solve that key problem, we are never going to solve the subservience of the economy of the Province of Ontario. You don’t have to talk, and we in this party don’t talk, about buying back the control of those companies at all. No way. I don’t care who owns Imperial Oil. It can be owned by anybody, because we can tax the outflow of money from this country by way of dividends. We can tax the outflow from this country by way of taxes on interest paid on debt. We can calculate what it costs to deal with capital. We can provide everything. The one thing we cannot control are the agreements this ministry never looks at that are entered into between one company in Canada that happens to be owned abroad.

One of the greatest frauds perpetrated on the so-called economy of the Province of Ontario are these so-called joint venture agreements, know-how agreements, or whatever you want to call them. When we solve that problem we will have solved the question of the control of our own economy.

Don’t ever let me hear somebody say, “Oh, we can’t afford to buy back the control.” We can buy it back, and we can buy it back very quickly, by preventing that kind of outflow of capital. The moment you do that, the moment you stop that cash flow -- the drain that my colleague, the member for Beaches-Woodbine, is talking about -- the moment you stop that which is almost like a haemorrhage on the economy of the Province of Ontario, the capital will be available in Canada for all kinds of purposes.

We, within the university framework, within the colleges framework, within the research framework of the government of the Province of Ontario, have all the brains and all the knowledge to do all those things. I say to you that we are allowing a haemorrhage on the economy of the Province of Ontario. You disguise it constantly on the basis of lack of productivity, or because we want higher wages for the people who operate the industries. If you stop that flow of money out of this country, we can pay the best wages in the world, we can have high productivity, we can compete in every market of the world with respect to the product we produce, whether they’re natural resources products, metallic products, secondary industry products or any other product.

I would suggest to the minister that it is about time that this division between tax policy on the one hand and the collection of money through certain taxing statutes on the other hand be brought together to understand what it’s all about. One of these days I am going to ask the minister to table in this House the number of dollars that flow out of this country and of the Province of Ontario specifically, not by way of dividends, not by way of interest, not by way of legitimate payments for purchase of goods imported into the country for the purpose of enhancing the productive capacity -- none of those tangible things that you can put your finger on -- but how much money has been paid out and for how long under the so-called know-how agreement. That is the key to our solution -- one of our solutions -- with respect to corporations in the Province of Ontario.

Ms. Bryden: Mr. Chairman, the minister didn’t respond to my question of why Ontario could not isolate these deferred tax payments the same way as --

Hon. Mr. Meen: Mr. Chairman, I had intended to respond to the member just to say to her that we don’t really try to trace the actual dollars and where they go. We simply don’t trace them through the company. We don’t get into that degree of detail in the company records. So I can’t tell the hon. member. I can respond in part by answering the member for Riverdale that the federal government imposes a 15 per cent tax on a non-arm’s length know-how agreement -- to use his expression; that’s a good term -- process licence agreements and that kind of thing between a parent company and its subsidiary. We maintain the same ratio as we do with respect to the federal corporation tax -- their level of tax and our 12 per cent tax. With their 15 per cent tax on these agreements, we charge five per cent; a third again. So we have some revenue derived from these agreements.

But now coming back to the hon. member for Beaches-Woodbine. Through the corporate finance structure, we don’t have a trace on the capital cost allowance and how it is applied.

Mr. Renwick: I don’t want to prolong it; I really don’t. But I want to say to the minister I fully understand that we impose the 15 per cent tax as if it wore a dividend payment. All I am saying is that the number of dollars that constantly flow out of the country under these agreements is like paying time and time again for the same piece of furniture. It is as if you bought a chesterfield, an automobile or an airplane and you paid and you paid and you paid and you paid. It’s as if you were in the hands of a loan shark. You just could never satisfy the obligation under which you bought in the first place, and the way in which you had financed it. I think you have to understand -- and I trust the minister does. I think the relatively subdued tones in which he responded to the question were not only because of his particular temperament, but because he knows that there was a significant element of reality in the remarks which I made about those know-how agreements.

Mr. Chairman: Shall item 2 carry?

Agreed.

Item 3, gasoline and tobacco tax. Any comments on this item?

Shall item 3 carry?

Agreed.

Item 4, succession duty and other taxes.

Mr. Good: Wait a minute -- item 4, Mr. Chairman. I understand the land transfer tax is in that, and that would include the 20 per cent tax on foreign acquisitions.

Hon. Mr. Meen: Yes.

Mr. Good: Could the minister inform the House just what the division of that tax is as far as the budget is concerned? The land transfer tax is estimated at $60,000. How much of that would be applied to transactions with foreign purchases? Could he give a résumé of the exemptions that have been granted this past year, how many there are, and in what amounts, and a brief résumé of how the exemptions are dealt with?

Hon. Mr. Meen: Yes, in the year just ended, 1975-1976, the non-resident tax amounted to $2 million, the resident tax, $53 million, for a total of $55 million for 1975-1976.

The breakdown here for 1976-1977 is $2 million for foreign non-resident, and $56 million, for a total of $58 million. That’s our estimate for the year. I guess that’s in the books.

Mr. Good: So it’s obvious, Mr. Chairman, that the revenue from non-resident transactions is very small. What I am trying to get at is, is this because of the continual exemption of this type of transaction from the tax, or is this because you have effectively stopped the transfer of property to foreigners?

Hon. Mr. Meen: Mr. Chairman, it’s a combination of the two. The hon. member will recall that we built into the Act in December, 1974, quite a number of exemptions, which now make the exemptions from the Act automatic in a number of cases, where a present business is expanding and so on.

Then there are a lot of deferrals, of course, if they undertake to become resident within a particular period of time; two years or whatever. Where they are going to build for resale within five years they would have a deferral, so these would not be cases of tax collected again. All of these are essentially automatic now. On the other hand, though, we would expect that there will be some companies coming in and prepared to pay the tax, and that’s why we are estimating about the same level as last year, therefore $2 million. The Act appears to be discouraging non-resident acquisition of real estate where they do not fall within these criteria I have just outlined. If they are going to buy, develop and resell then they have a deferral of the liability for tax, so that revenue would not show up here in the year 1975 or 1976.

If there is an expansion by a company that was here on April 9, 1974, it likewise would gain an exemption where it’s an expansion of its existing business.

So there have been two things that have happened: (a) we have expanded the area of exemptions, the virtually automatic areas I have just outlined; and (b) we have tended to discourage the acquisition by non-residents of land which does not fall within any of these categories. The information I have is that it appears to be going into some of the other jurisdictions in Canada on a speculative basis, and I say, well, God bless them, if they want to do that, that’s fine by me. In effect then, we have the two fronts on which this Act seems to be working.

Mr. Good: Mr. Chairman, one further point on this. The reason I ask is that this particular tax has effectively stopped the purchase of multiple-unit high-rise apartment buildings used for residential purposes in my own particular area of Kitchener-Waterloo. There was quite an expansion previously in the building of high-rise units, and then foreign capital, mostly German capital, would come in, buy the unit, and they would retain it as an investment.

I feel that certainly the tax is justified to prevent the speculation on Ontario or Canadian property by foreigners. I personally, and this is a personal opinion, feel that we should maybe take another look at the foreign investment in residential buildings, mainly high-rise, by foreign capital where it is a legitimate investment. Many of these people are prepared to take a zero return for a good number of years and they were providing a service. We had a good vacancy rate in our area up until they stopped building apartments about two or three years ago, when this tax came in.

Just speaking for my own area, we now, of course, are in a much tighter apartment squeeze. I personally agree with stopping the speculation but when it comes to investment in residential property, you know they can’t move the buildings out of the country as they can pack up a business and take the production out of the country, and that I would be opposed to, but when it comes to investing in residential property, especially high-rise apartments, I just wonder if we are not cutting off our nose to spite our face on that particular one issue. I wonder if the minister would like to comment on that.

Hon. Mr. Meen: I am pleased to comment on that. That’s an area that my colleagues and I have been looking at very carefully over the last six months or so. Although we have not established any policy that would give automatic exemption in a case like that, a matter of two or three weeks ago I took to Cabinet a case of that sort. It was a company that was going to build some 530 apartment units on an ownership and rental basis and it was in an area in which we considered it highly desirable that apartment accommodation be got on with. We did indeed grant an exemption to that company -- yes, on a specific case -- and we will treat any cases like that on a case-by-case basis.

We do not undertake to approve all of them. We want to look at where they are proposing to build and look at the need for that kind of accommodation. We recognize the point the member makes, that you can’t pick up the property and leave, but you are not there to speculate. You are going to develop it and build it and for that particular purpose.

So when one grants an exemption of that nature, we would do it and we did do it in this instance on the basis of its being for a particular case, a particular piece of property in a particular area and in a particular time when accommodation of that nature is needed there. We granted that exemption on that particular apartment. The apartment complex of 530 units is moving ahead as I understand it.

Mr. Good: Mr. Chairman, the way the case has been presented to me by people in my area who have done this and have built and sold to a German investment particularly, they tell me that the investors are looking at a very long-term proposition. The rent control on those apartments doesn’t bother them one bit as it has bothered our Ontario builders, who have virtually stopped building apartments because of the rent control situation and the uncertainty of it. That foreign capital on residential high-rise is willing to come in even under rental control conditions, but the 20 per cent has effectively stopped the building and sale to foreign investors in our particular area.

Mr. Gaunt: I have a very localized problem which I passed along to the minister this afternoon with respect to the land transfer tax. I understand that there are exemptions under certain circumstances being given. I think the minister has indicated that. The circumstances which applied in the case of my constituent, as I understand it, were these:

The person owned a part ownership in the residential property, the home, which was owned by his parents. It is now being altered in its ownership because the mother has passed on and the father is moving into a senior citizen apartment. So the house is going to alter in its ownership to that extent. The son maintained a part ownership, a joint ownership as I understand it, in the home and now he wants to purchase the other half ownership of the father, who is moving into a senior citizen apartment building. Is there any problem there?

Hon. Mr. Meen: I would think there would be if the son is, as I am told according to the letter the hon. member sent, a US citizen. It doesn’t say he is a US resident. I take it, though, that the concern comes up because he is a US resident.

Mr. Gaunt: That’s right. He is a US resident.

[9:45]

Hon. Mr. Meen: Yes, the Act would apply. As I would see it, he would be subject to an attraction of tax on some basis anyway. However, it’s a little short notice for me to look into a particular case like that. They sent me the letter this afternoon. I have it in my file and will take a look at it and see if indeed the lawyer who wrote him is correct in his understanding of it. My bet is that he is correct, however.

Mr. Gaunt: Your instant reaction is that there would be no exemption under those circumstances?

Hon. Mr. Meen: That is one of the principles we were trying to address ourselves ta when we were talking about the growing non-resident ownership of our land and that seems to me to fall into that category.

Mind you, there is no indication in this letter, as I saw it, that he intends to become a Canadian resident here, perhaps moving into that property of which he is already a joint owner and of which he would be buying the other half interest. If he were, then one could give him a deferral. We would give him a deferral for a period of years so that he would then become a resident of Ontario and, if he did meet those residency requirements, then the tax now deferred would be wiped out.

Mr. Gaunt: So if he indicates that to you, which he may very well do, since, after all, he was born and raised in this country and I think seven or eight years ago moved to the United States because he sought employment and got employment in the United States and has resided there ever since; in the event that he moves back here or is prepared to undertake to move back in the next few years, it could be deferred.

Hon. Mr. Meen: There are different provisions as to time, if it’s a Canadian citizen who is undertaking to return. I think the maximum period of time we would give him to become a citizen would be two years. If he were a Canadian citizen we could give him five years under the Act and regulations as they stand, but it would be two years for an American citizen.

Mr. Gaunt: I think he is still a Canadian citizen and that he hasn’t relinquished his Canadian citizenship.

Hon. Mr. Meen: That is why I am saying that. I have just pointed out that. I thought the hon. member talked about something like five years and I said, if he is a Canadian citizen, then a period of five years would be appropriate and could be provided as a deferral for that period of time. But, if he is not, and the letter from his lawyer would indicate that he is not, that he is an American citizen, then under the regulations he would have two years within which to cease to be a non-resident, which is the expression in the Act.

Mr. Chairman: Shall item 4 carry? Carried. Any discussion on item 5? The hon. member for Riverdale.

Mr. Renwick: I really have only one comment on item 5 if I am on the right item, that is, retail sales tax. Do you keep any information of any kind which indicates the effectiveness of the statutes to collect retail sales tax on tangible personal property brought into Ontario from outside the province? I know very well that if I go abroad I have obviously to make out a customs declaration when I come back about what I have purchased. There would seem to me to be two or three levels of it.

The first level is the returning Canadian tourist who has gone abroad and has bought a few things and brought them back. Despite the natural inclination of all of us in the atmosphere in which we have been brought up to try to beat the customs, nevertheless, you do have to complete a form. You do have to pass through an inspection and you do have to make a declaration which is subject to checking and subject to severe penalty.

I have never felt either compulsion to pay or compunction about not paying or reporting to the Minister of Revenue to decide whether or not I should pay retail sales tax on what I bring into the country. Of course, I bring in very little that is taxable in any event. But there must be a wide vacuum, and I think one of the poorest things that a minister can have is the taxing statute which is wide open to abuse.

I also want to know what the monitoring system is with respect to all of the goods that come in on consignment, or in bond, into the Province of Ontario, to be released through customs, I want to know whether or not you collect sales tax with respect to those items, as well as how effective that is. There may be other areas also under which there’s a vast loophole in the statute. I would like to have some comment about whether or not you’re effective in making the Retail Sales Tax Act meaningful.

Hon. Mr. Meen: Mr. Chairman, there are two areas: We have an interprovincial agreement whereby the other provinces that collect retail sales tax will advise us. I would suppose Alberta, since they don’t have a retail sales tax, would not have any undertaking to us to advise us of sales made there. In the other provinces in which there is a retail sales tax, we have an interprovincial agreement whereby they advise us where they have made a sale and on which provincial tax should be payable.

Mr. Renwick: I have never known a person to be advised in the Province of Ontario of taxes owing on something he bought in Alberta, British Columbia or New York state.

Hon. Mr. Meen: I understand that we get the information in from, say, Quebec, not infrequently, of purchases made in Quebec where no Quebec tax has been paid because it’s been purchased in Montreal for delivery in Toronto for example.

Mr. Renwick: I mean if you put it in your car and bring it across the provincial border.

Hon. Mr. Meen: If you’ve taken delivery there, you will have paid the provincial tax in that jurisdiction. We wouldn’t hear about that because they’ll have paid it.

Mr. Renwick: It’s still taxable.

Hon. Mr. Meen: In theory, yes, it’s taxable here.

Interjection.

Hon. Mr. Meen: If it’s a matter of registration, for example, we would catch them at that time -- if it were a vehicle or anything else that had to be registered.

Mr. Renwick: I can understand that. I understand the Minister of Education (Mr. Wells) tried it once and got caught.

Hon. Mr. Wells: Which?

Mr. Renwick: He made a sotto voce remark there.

Hon. Mr. Wells: No. I did not try it. I would pay sales tax in any province.

Mr. Renwick: Did you try? You must have tried it and got caught.

Hon. Mr. Meen: I am advised that we have no agreement with the federal government for collection of retail sales tax at the border when articles are brought in from a foreign jurisdiction. There has been no real co-operation between them. We want to look into that.

As a matter of fact, I have a rather vague recollection that quite some years ago, back in the Sixties, I imported an article from Florida, and I paid Florida retail sales tax, customs, federal sales tax, and I am sure I was also charged the then three per cent provincial retail sales tax. Whether my recollection is faulty, or the arrangement has changed, the fact is I’m told we now have no arrangement. No tax is collected by the federal government for us, either at customs or otherwise.

We do have an arrangement with the federal government with respect to vessel registration and if there is a transfer of a boat from the member for Riverdale to the member for York East (Mr. Meen) --

Mr. Renwick: I understand that.

Hon. Mr. Meen: -- if I decline to tell anybody about it, they’d ultimately find out about it anyway. I’d receive a polite little letter.

Mr. Renwick: I understand all of that where there is a registration system.

Hon. Mr. Meen: But that is --

Hon. Mr. Wells: Especially for golf clubs.

Hon. Mr. Meen: What about tennis shoes? In any event, that is as much as I am in a position to tell the members right now. Certainly, I think we should be pursuing this further with the federal government.

Mr. Renwick: Let me just pursue it briefly. It would seem to me that with cooperation between the federal and provincial government with respect to income tax forms and so on, there should be some method by which you could collect tax. When you take an airport such as the Malton international airport and the traffic in and out of that airport, much of which is returning traffic, surely it should be possible to devise a customs declaration form which includes a portion related to the payment of retail sales tax. There must be immense numbers of dollars lost over the years to the revenue of the Province of Ontario for that purpose.

What you can do about interprovincial traffic I am not so certain, because Canada has always been, in my judgment, at least, if nothing else a customs union, and it is somewhat difficult to impose a form filling out procedure for crossing the border between the provinces. We wouldn’t want to be involved in that kind of an operation in any event.

I am certain that there must be some method, by either a programme of public education or not, or some other way of communicating with people whereby you can let people know that “Yes, if you buy something outside the Province of Ontario you are liable for retail sales tax in Ontario and liable to penalties if you do not pay that tax,” whatever the penalties may be. I think it must be within the wit and wisdom of your ministry, responsible when you’ve got elaborate technical provisions providing for it, it must be your responsibility to devise a system which is not foolproof but at least is going to make the taxing net to some degree effective.

Hon. Mr. Meen: Mr. Chairman, I don’t disagree with the member whatever. There are problems with respect to interprovincial freedom of movement, which I think we would all be loath to tamper with too much, but on the other hand it would be nice to have a little closer handle on purchases made in other provinces for ultimate use here in Ontario.

As for the federal government, I think it is worthwhile our pursuing it and I can tell you that I do intend to take that up with the Minister of Revenue and the people involved with customs and excise, to see whether there wouldn’t be something that we can work out to assist in the collection. We do have areas of co-operation and I would like to think that this is another one in which we could operate.

Mr. Spence: I would like to ask the minister a question in regard to item 5 vote 902, which amounts to over $9 million. It says the retail sales tax and other taxes. Does this include land speculation taxes that have been collected across the province? And could the minister inform us how much money has been collected from the land speculation tax -- maybe he could refresh my mind -- with increased prices of land that are paid for going back into agriculture, if I remember it correctly? Am I off base, Mr. Minister?

Mr. Chairman: This should have been in item 4. The minister may answer briefly if he wishes.

Hon. Mr. Meen: I guess the hon. member wasn’t here when his colleague from Waterloo North asked where these taxes fell. They were under succession duty, the previous vote.

If memory serves me, it was a couple of million dollars or so. Land speculation tax: $0.3 million in the year 1974-1975; $3.2 million in the current year for land speculation; and the figure we estimate for 1976-1977 is $5 million.

Mr. Spence: So land is going up.

Mr. Wildman: I have a couple of questions on retail sales tax with regard to northern Ontario. As the minister is probably aware, recently the Minister of Transportation and Communications (Mr. Snow) tabled a report on the effects of freight rates in the north, and one of the conclusions in that report was that people living in northern Ontario have to pay twice, in that they have to pay sales tax on the inflated price of commodities or goods which are transported to the north because they have already had to pay the great amount of the cost to transport that freight, and then they pay sales tax calculated on the basis of the total cost including that freight rate.

[10:00]

The conclusion in that report was that this was -- I am not sure of the exact words used, but inequitable was what they meant. Basically, however, they didn’t think there was anything they could do about it. I am wondering why the government couldn’t devise some method where people in northern Ontario -- areas north of the French River -- shouldn’t be able to have some sort of exemption, or a lower rate of sales tax, to compensate for the higher freight rates they have to pay on commodities imported from southern Ontario and other parts of the country. That’s the first question; I have one other if the minister would permit another question later on.

Hon. Mr. Meen: Mr. Chairman, this question comes up all the time and there isn’t any simple answer. There certainly isn’t an answer, I suppose, that would satisfy the member for Algoma.

But in short the constitutional authority of the province is to levy a direct tax on the final price. If the final price reflects a freight charge, then obviously the tax on that final price reflects the freight charge plus markup, plus all the other things that enter into the cost of the article laid down at the site.

We would have to set up a completely different taxing structure -- some for a particular geographic area -- reflecting in this case something or other on account of freight costs. I have a notion that a better way is to adjust the freight rates to be somewhat more favourable to the north, rather than to try to deal with some commodities that travel as freight -- whereas others are flown in, and others arrive by pipeline and so on. I just don’t know of any simple answer to a very complicated question -- indeed a question that is further complicated by the constitutional limitations imposed on a taxing authority at the provincial level.

Mr. Wildman: Surely since you recognize the constitutional problem, the provincial government has the responsibility to do something to alleviate the difficulties faced by northerners obtaining products that are cheaper in southern Ontario simply because distances are shorter? Even if you account for the distances, in some cases freight rates -- according to that study and others -- discriminate against the north even more than just the distance.

The other question I had for the minister is in regard to retail sales tax. Is it correct that native people throughout the province who have treaty status are exempt from the sales tax?

Hon. Mr. Meen: If they have treaty status and the goods are delivered on the reserve. The treaty status Indian can make a purchase off the reserve provided the merchant makes the delivery to the home of the treaty status Indian or on to the reserve. Then they are free of tax.

Mr. Wildman: In order to be able to prove status to be exempt, is it correct that your ministry has a form that the individual fills out on which he puts his band number and his treaty number?

Hon. Mr. Meen: Yes, he completes that form and leaves it with the merchant. The merchant then has that for audit purposes, so he can show why he did not collect seven per cent retail sales tax on the article that was sold to the treaty status Indian and delivered to him on the reserve.

Mr. Wildman: That would also apply to other taxes, such as gasoline taxes on the reserve?

Hon. Mr. Meen: Yes, except generally speaking the sale of gasoline would have to take place on the reserve.

Mr. Wildman: Why is it they have this form instead of just having the treaty native show his treaty card? Isn’t it possible that a non-status person could obtain one of these forms and just fill it out and give it to the merchant and then be exempt?

Hon. Mr. Meen: I think you could imagine, Mr. Chairman, the problems we would have with auditing the accounts of merchants if they had nothing to substantiate the fact why they had not collected seven per cent tax. They’d be in a terrible mess trying to confirm to us -- 99 per cent of them are honest but what about the one who isn’t? -- so we have to give them some kind of protection. So they have the form which they get completed and they have that there to send up along with the invoice to confirm the reason for the reduction in the amount of money collected.

Mr. Wildman: If you would permit one more question. Is it required that the status Indian provide his treaty card at the time he is filling out that form for the merchant?

Hon. Mr. Meen: I’m advised that that is not a requirement for sales tax. I would suppose if he is known to the merchant that the simple completion of the form by the status Indian would be adequate.

Mr. Wildman: That does make it possible for a non-status Indian person, if he so wished, to obtain the form, fill it out, put a fictitious number on the form, and thus be exempt.

Hon. Mr. Meen: Yes, I suppose anything like that is possible.

Mr. Good: A short question, Mr. Chairman. Does the $9.3 million reflect the amount paid to merchants for collecting sales tax? Is that amount deducted before they remit and do you have an amount which would show the total paid for collection?

Hon. Mr. Meen: The figure the hon. member is referring to is the estimate of cost for operating the branch. I think it is $9,326,300. Is that the figure you are asking?

Mr. Good: Yes.

Hon. Mr. Meen: That’s the cost of operation of the branch.

Mr. Good: Not payment made for collection by the merchant?

Hon. Mr. Meen: Oh, no, as a matter of fact, agents’ commissions for a total year is somewhere in the order of $11 million or $12 million.

Mr. Chairman: Shall item 5 carry? Carried.

Vote 902 agreed to.

On vote 903:

Mr. Young: The item on salaries and wages, $1.3 million, is fairly sizeable. I suppose it takes a large number of people to administer this sort of a programme. I wonder if the minister would tell us how many employees are involved in this salary and wage item?

Hon. Mr. Meen: I am advised that there are 94, Mr. Chairman.

Mr. Young: Ninety-four. Could the minister tell us how many of those are public relations people?

Hon. Mr. Meen: I will have it for you in a minute, Mr. Chairman. I don’t have it immediately at hand.

That may take me a minute or so; has the hon. member other questions?

Mr. Young: Well, all right, one further matter.

Hon. Mr. Meen: The note says four.

Mr. Young: Four; just four. What function do they serve? This is a public relations group, apart from the regular public relations staff of the department itself, is it?

Hon. Mr. Meen: Mr. Chairman, one of them, in fact maybe three of the four, are fluently bilingual. They visit radio stations around the country, they do hot-line shows; they are into all kinds of activities of this sort -- out to old folks’ homes, to senior citizens’ homes, getting around to tell them about the tax credit programme and the GAINS programme.

This is what I was referring to earlier, when I was talking about the reduction in the cost of some of our promotional work. This is the area of activity we have been concentrating on instead.

Mr. Young: One further question in this field. Last fall there was a magazine --

Hon. Mr. Meen: I am sorry, would you repeat it?

Mr. Young: There was a magazine geared to senior citizens. I don’t know whether that’s still being put out. Could the minister tell us whether this is put out by his department, or is there another department which handles this magazine?

Hon. Mr. Meen: I am told that it is not published by us. They did give the ministry, and the GAINS programme, quite a big spread recently, but it’s another department. Senior advisory council, I am told.

Mr. Young: I see.

Mr. Good: One question. The tax credit programme, such as property tax credit, sales tax credit and the pensioners’ tax credit, even though one does not have a taxable income, he or she can apply for the tax credit and get it. Do you foresee that privilege being granted under the election expenses tax credit where one can apply for the credit even though he or she does not have a taxable income?

Hon. Mr. Meen: I think the short answer, Mr. Chairman, is no, I don’t.

Mr. Young: Have you ever discussed it, or thought of it?

Hon. Mr. Meen: Oh yes, this was discussed at some length when we brought in the programme last year. It was determined that it should not work on that basis. It was decided it should be deductible from income tax payable, not from the credit.

Mr. Germa: Mr. Chairman, I am interested in the first time home buyers grant. Could I ask how much money is in this item for the first time home buyers grant?

Hon. Mr. Meen: There is nothing in this item, Mr. Chairman, for the current year. My advisers tell me that there is nothing in my estimates. The amount for that would be under the Housing estimates. That’s why my first reaction was that there was nothing. There is nothing in my estimates. We have it covered only for the administration costs of the plan for this year.

Perhaps the hon. member would like to know what the administration costs are -- no, I am sorry, I don’t have that information. I will get it.

Mr. Germa: I don’t understand it. You people do the administration but the funding is coming from the Ministry of Housing?

Hon. Mr. Meen: That is correct. That’s where the original funds came from last year too.

Mr. Germa: As the administrator of the plan, don’t you have the figures? How can you administer if you don’t know what kind of dollars you are dealing with?

An hon. member: Easy come, easy go.

Hon. Mr. Meen: Mr. Chairman, we know the costs of administration. My people advise me that there will be a $567,000 chargeback expected to be recovered from Housing on this in the next year, but the fact of the matter is we are administering this on behalf of the Ministry of Housing and they have their estimates there for the amount of the payout. We have around 90,000 applications, and all of those won’t be approved I suppose, but something of that sort, and that would mean $90 million on the basis of the grants for the first year. A quarter of that --

Mr. Good: That’s $23 million.

Hon. Mr. Meen: About $22.5 million.

Mr. Good: Say $23 million.

Hon. Mr. Meen: All right, $23 million in the Ministry of Housing then, one quarter of that is their estimate for the cost. Perhaps the hon. member for Waterloo North, who has that estimate in front of him for the Ministry of Housing, can tell me, does that include the $567,000 charged back for administration, or is that shown separately?

Mr. Good: Administration is $567,000 and the grant fund is $23 million.

Hon. Mr. Meen: Exactly, so it’s $23,567,000 total estimated cost for payout and for administration costs -- our part of it, the administration, being the $567,000.

Mr. B. Newman: Mr. Chairman, I wanted to ask of the minister if the tables are available to members and also to their constituency offices, so that when requests come into the offices considering eligibility for GAINS the individual could figure out the amount of GAINS he would be entitled to?

Hon. Mr. Meen: I can tell the hon. member, Mr. Chairman. I would be delighted to see that he gets all the copies he needs. I have them in my constituency office, and I am sure that whatever number he would like we would be pleased to get to him.

Mr. B. Newman: Will the minister make a note of it, or his officials, and send copies to my office?

Hon. Mr. Meen: I expect the note has already been made.

Mr. B. Newman: Right. Thank you, sir.

Mr. Edighoffer: I am just not sure if I understood the minister correctly on that chargeback of $567,000. I think I understood him to say that was from the Ministry of Housing for administration?

Hon. Mr. Meen: To the Ministry of Housing.

Mr. Good: From Housing to Revenue.

Mr. Edighoffer: I thought you said that was recovered from another ministry?

Hon. Mr. Meen: We will recover that from Housing, but we will be charging that to Housing for our costs of administrating the home buyer grants over the next 12 months.

Mr. Edighoffer: Yes, okay. I understand that, okay. Last year I noticed it was $500,000, and I presume that was for the same administration, but this year there will just be cheques for $250 going out to the home buyers. How come that large amount?

[10:15]

Hon. Mr. Meen: Mr. Chairman, it’s still necessary to verify that they are resident in the dwelling unit. You still have to process these through the machinery. There’s an ongoing audit -- and that’s probably the more expensive part of it -- a post-audit of a number of the applications and prosecutions and all the costs involved with the post-audits and so on over the next year.

It doesn’t surprise me that it would be that sum. Remember, we’re talking about 90,000 cases; a caseload of 90,000 which has to be monitored. Every one of those files has to be opened and dealt with over this next year to determine whether the person is still in residence or not. If he is, he receives his further cheque for $250. If he’s not, the file is closed. The odds are that there will be some activity on every one of those files. It doesn’t surprise me, therefore, that it’s a few dollars per file. That’s about $5 or $6 for each file and I don’t think that’s too much.

Mr. Grande: Mr. Chairman, I would like to ask the minister if he has allowed Bill 47, An Act to amend the Ontario Guaranteed Annual Income Act, 1974, to die on the order paper after second reading, or not?

Hon. Mr. Meen: In short, no.

Mr. Grande: A further question. Has this government or its ministry attempted to make any changes in regard to clause 2, specifically sections 3 (a) and (b)? Are you thinking of making any changes in that clause?

Hon. Mr. Meen: Is that the federal residency section the hon. member’s referring to?

Mr. Grande: That is correct.

Hon. Mr. Meen: I think any discussion of that sort would be far more appropriate when we get around to discussing this bill in committee.

Mr. Chairman: That’s right. You can’t discuss anything that’s before the House at the present time. It will be dealt with in committee of the whole House.

Mr. Ruston: Mr. Chairman, as far as the home buyers grant is concerned, I’m sorry if I missed anything, but how many do you have that are still outstanding, as far as the applications on file are concerned? This would be back in December, of course. What I’m wondering is when you were processing them last year -- just as an aside, I’m sure it has nothing to do with anything, I understand that the applications were processed in two to three weeks last summer. I don’t know why it would be that they went so fast and I found that they kind of slowed up after Oct. 1. I don’t know whether we can assume anything from that or not.

Mr. Edighoffer: Election?

Mr. Ruston: Anyway, it’s beside the point now; it’s passed. I’m wondering how many you have still outstanding and when do you expect that most of them will be finalized? How often are you running them through the paying process now compared to last summer and fall? Do you process them through the pay machine once every week or once every two weeks?

Hon. Mr. Meen: I really don’t know what the hon. member means.

Mr. Ruston: You must run them through the computer to make the payout. Are you running them through once a month or as they’re approved? Last year you’d be running them through maybe twice a week.

Hon. Mr. Meen: I would say as quickly as we confirm their qualifications. At the present time, as of March 26, there were 4,864 applications on file which had not been approved and had not been finally rejected.

Mr. Good: Why is that?

Hon. Mr. Meen: There are 4,728 out of 4,864 which are awaiting documents, clarification of original information and so on. Quite a number of people have filed their papers but haven’t sent in their duplicate deed with particulars of registration or haven’t sent in other material necessary for us to be able to confirm their qualifications for the grant. Remember, they have until the end of June to file their documents, their application, when they bought and took up residency before Dec. 31. In fact, even if they didn’t take up residency, if they purchased and were entitled to occupation, I guess we gave them six months on that too. They have until the end of June to take up occupation. They can’t file until they have taken up their residence.

Some of these are still just filtering in now relating to a somewhat later time when they can actually file their application. That therefore leaves only 136 in some form of limbo. I can tell you, Mr. Chairman, that there are some difficulties surrounding some of these and we are still looking at them to determine whether we can approve any of those.

Mr. Ruston: Are you saying that as they are approved, the paying process is not necessarily done only on a monthly basis now? Or is it done whenever there are so many in?

Hon. Mr. Meen: I am advised that the cheques are issued weekly. They may be batched but they are batched in no larger amounts than weekly.

Ms. Bryden: I just wanted to know if the minister could give us the figures on the amount in total of each of the tax credits that were given out last year -- the property tax credit, the pensioner tax credit and the retail sales tax credit.

Hon. Mr. Meen: They are not broken down. So far as I am assure, we would have no breakdown. Remember, this is administered by the federal government for us. But I don’t imagine that I can give it to you. The material I have at hand does not give any breakdown, as I had rather expected it wouldn’t. I can only tell you that we budgeted $415 million for 1975. As of March 26 we hail paid out $67 million with the number of tax filers at 4,800,000. We paid out $382,600,000, a year ago and we certainly would expect to exceed that this year.

But I don’t believe I can give you any breakdown of the amount because you take these various credits -- the $110 pensioner tax credit, the property tax credit or the rental credit, however that works out -- and the amount of your personal deductions times one per cent or the amount of your retail sales tax; add it all up, deduct two per cent of your net taxable income, and that is the amount of your OTC. That is the figure that gets paid out or credited, as the case may be, and I wouldn’t have the information that would be taken off in any meaningful way.

Ms. Bryden: Is the minister saying that from Ottawa or from any source we do not get any breakdown of how much we are paying out for these various credits except the total? Therefore, we don’t really know how much we are benefiting people.

Hon. Mr. Meen: There are certain -- I was going to say guesstimates but I don’t like to put it in that facetious way -- Treasury and Economics does certain analyses along this line. They can determine the number of tax filers in certain categories that would therefore have a certain personal deduction and from that they can calculate the amount that would be retail sales tax oriented. They know the number of pensioners, so they would be able to determine the number of pensioner claims of $110 that would be added in to their tax credits. But I regret to say that I simply don’t have that information through my ministry and I have no direct way in which to get it.

Ms. Bryden: Do you get any figures from Ottawa relating, say, property tax credits to income classes so that we have some idea what income groups are benefiting from, let’s say, each of these credits or even from the total?

Hon. Mr. Meen: I am told that we can get that. We don’t have it. We have never asked for it. At least, I don’t believe we have ever asked for it. It would be available and we could get it.

Ms. Bryden: But you do not have it at the moment?

Hon. Mr. Meen: No, I do not have it.

Ms. Bryden: I wonder how the provincial Treasurer (Mr. McKeough) in his slide show on his restraint programme is able to produce figures showing the Ontario property tax credits in 1975 given to different income groups, especially since the 1975 tax returns are not yet completed. But even if he was using a forecast from 1974, he must have had some figures.

Hon. Mr. Meen: I have just finished saying I don’t have it here. It may well be that my colleague, the Treasurer, has the information. I don’t have it here. I have said that we could get it. The hon. member for Beaches-Woodbine obviously doesn’t need it; she has already got it.

Ms. Bryden: I don’t really believe it, that’s why I wondered whether your ministry had supplied the figures because they really are rather unbelievable, these figures of the incidence of the property tax on individuals by income.

Mr. Chairman: The hon. member for Windsor-Walkerville.

Mr. B. Newman: Mr. Chairman, I wanted to ask the minister if the first-time home buyer grant affected many mobile home buyers?

Hon. Mr. Meen: I am told that there were 1,200 mobile home claims approved under the programme, Mr. Chairman.

Mr. B. Newman: How many was it, Mr. Minister?

Hon. Mr. Meen: It was 1,200.

Mr. B. Newman: How many were refused as a result of lack of CSA ratings? Because you’re aware, Mr. Minister, that many of your advertisements simply mentioned CSA rating but did not mention Z240, and a lot of people bought mobile homes in good faith, noticing it was a CSA-rated unit, but when they applied for the grant were denied the grant?

Hon. Mr. Meen: Mr. Chairman, that’s a hard question to answer. I don’t have the answer. Perhaps the staff can advise me. Yes, I have it now. There were 400 apparently, in round figures anyway, 400 rejected on the basis that they did not qualify. And, of course, that would not take into account people who, recognizing that they didn’t qualify, would not have made an application. That’s 400 who thought for one reason or another, whether they made the mistake the hon. member for Windsor-Walkerville --

Mr. B. Newman: Right. Dead on.

Hon. Mr. Meen: He refers to their having made an error in noting CSA but not the Z240 designation. There may be many others.

I simply don’t know who purchased but recognized that they didn’t qualify and so didn’t apply. But in any event, there were 400 in the category to which he refers.

Mr. B. Newman: Well, was not the error an error on the part of your department or the advertising on the part of your department? Because I know the two constituents who complained to me were very bitter from the fact that it was CSA-rated but the CSA rating referred solely to the electrical work on the mobile unit. There wasn’t a Z240 rating.

Hon. Mr. Meen: Certainly, there were some who didn’t go far enough as to read the booklets that were published that made it very clear that it was a Z240 designation. I suspect there may have been some who were misled by other areas than the advertising, and I think it behooved everyone to make sure that he had the bulletin and to see whether he did in fact qualify. It’s regrettable, and certainly I have sympathy for those who may have been misled, perhaps deliberately in some instances, into thinking that their purchase would qualify, but really the Act was very clear and it’s just too bad that those people did not establish accurately that their purchase met the Z240 requirement.

Mr. B. Newman: Did the advertising make mention of Z240 as being one of the requirements before the mobile unit would qualify for the grant? Because I understand it did not.

Mr. Chairman: Will there be any further comment on vote 903?

Mr. B. Newman: Take your hand off the mike.

Hon. Mr. Meen: I was going to try to answer the hon. member, Mr. Chairman, then I thought I would move that the committee rise and report.

Hon. Mr. Meen moved the committee rise and report.

Motion agreed to.

The House resumed, Mr. Speaker in the chair.

Mr. Chairman: Mr. Speaker, the committee of supply begs to report progress and asks for leave to sit again.

Report agreed to.

Hon. Mr. Meen: Mr. Speaker, before moving the adjournment of the House, I would advise that tomorrow after the orders of the day we will take order 2, resuming the adjourned debate on the budget amendment.

Mr. Young: Could I ask the minister, Mr. Speaker, will these estimates come up again on Monday?

Hon. Mr. Meen: That is my understanding, Mr. Speaker, that on Monday we will return to these estimates.

Hon. Mr. Meen moved the adjournment of the House.

Motion agreed to.

The House adjourned at 10:30 p.m.