Legislative Assembly of Ontario

The House resumed at 8:04 p.m.

BUDGET DEBATE (CONTINUED)

Mr. Speaker: The hon. member for Oriole.

Mr. Williams: Mr. Speaker, I find it a privilege --

Mr. Evans: There’s no one here from the official opposition.

Mr. Williams: -- to have an opportunity to speak to the 1976 budget this evening. It is well recognized that the provincial budget has to be considered as the base document that will govern the activities, and in fact dictate the well-being of the citizens of the province and the total economy of the province in the 12 months to come and beyond that period. This document surely is the blueprint for the immediate and long-range future; and as such one cannot minimize its importance, particularly bearing in mind, Mr. Speaker, --

Mr. Evans: On a point of order, Mr. Speaker, there is nobody from the official opposition here at all. There’s nobody in their seats from the official opposition.

Mr. Speaker: The hon. member really doesn’t have a point of order. Will the hon. member for Oriole continue?

Mr. Reid: But it’s a good point, Mr. Speaker.

Mr. Williams: The provincial budget, Mr. Speaker, is of particular significance because it is the Ontario budget, and as Ontario goes, so in fact goes the nation. I say this without in any way minimizing the importance and the effect of the federal budget, but next to that particular document this has to be the singular most important annual presentation that is made in the country, which has profound ramifications extending beyond the borders of this particular province.

Because of its significance and importance, Mr. Speaker, I think it is imperative, it is appropriate, that not only the members of the opposition parties but the members of this party are given the opportunity to fully air and publicly criticize in a positive way the content of this document; to tear it apart if you will, and determine whether in fact it can sustain the onslaught of criticism from whatever side of the House. If that document can stand the test of this scrutiny and criticism, then I think it augurs well for the future and well-being of the citizens of this province.

Because of the importance of the document, I think it is deserving of some considerable comment, not in a superficial way but in an in-depth manner. It bears the closest scrutiny and is deserving of overall comment and consideration because, Mr. Speaker, all too often the opposition parties are too quick to take particular sections of a budget out of context and criticize in a way that really doesn’t truly reflect what the overall budget presentation reflects.

Mr. Wildman: If you take it all together it might work.

Mr. Williams: I think that accordingly, Mr. Speaker, one has to look at it in total perspective to give it a truly honest and thorough airing.

The whole essence of the 1976 budget, of course, is contained in the very opening paragraph, and because of its significance I think it bears repeating at this point in time. It’s going to set the tone of the remarks and highlight the emphasis that I’ll be giving to my observations on the budget over the next short while.

It was stated by the Treasurer (Mr. McKeough) three weeks ago tonight that the budget that was being presented reflected the determination of this government to keep the province’s finances in good order. This may be a statement that is so obvious it barely warranted comment, yet it’s so fundamental to the whole state of the union as far as this province is concerned that it had to be stated first and foremost, in this regard, the Treasurer pointed out that the basic plans for ensuring that the province’s finances were in good order would be to ensure there would be a slashing of the growth in provincial spending. I stress the word “growth” in provincial spending.

The term “cutback” has been used all too frequently, and again out of context throughout the budget debate.

It’s not a question of cutting back. It’s a question of containing our spending within responsible fiscal guidelines that can stand up under scrutiny, that have integrity behind them.

Mr. Mancini: That’s ridiculous.

Mr. Williams: So that it is a question of slashing the growth in provincial spending; and also it’s a question of reordering the priorities, of trimming government costs and reducing the number of civil servants. At the same time it points out there is a need to raise taxes in selective areas. It’s within these areas that this budget, of course, brings forward a plan of purposeful fiscal restraint.

Perhaps not enough emphasis has been given during the debate to the support documents that reinforce the statement that was made by the Treasurer at the time of presentation of his budget. To ensure there has not been an oversight in this regard, I intend this evening to spend some time in commenting on the background papers to this budget; in particular the six budget papers which discuss the economy, which discuss health financing, which discuss expenditure restraint, which discuss the labour market and which discuss property tax reform, as well as an all-important consideration of the auto tax.

These are very significant support documents that I don’t think have been given the proper consideration, the proper emphasis, nor have they been put in the proper perspective to date. I hope to try to correct that situation this evening.

In that regard, I would turn to the initial, budget paper A. It deals with the economic recovery of this province, which is coming out of a very significant recessional period.

I found, as I am sure all of the candidates did who ran for this government party in the last election, that in the presentation of the fiscal actions that had been taken in 1975 by this government there was a certain degree of concern expressed by the electorate. In fact, in some quarters a degree of cynicism prevails. The government made its actions clear in its budget of 1975 and its supplementary budget in June of that year, the mini-budget as it has come to be known. But it was thought that the efforts by the government to prime the pump, to use the well-worn term, were being used for reasons of political expediency. However, it happened to be that we were going through the most difficult economic period since the end of the Second World War, and it happened to coincide with an election year.

Mr. Wildman: Bad planning.

Mr. Williams: And because of that, it was felt the move by the government to reduce taxes in some areas, and to remove taxes in some areas for a specific time was being done to coincide with the election period.

Mr. Wildman: Oh, who said that?

Mr. Williams: This type of concern and criticism and cynicism greeted us wherever we went. It is unfortunate that the recessional period in which we were heavily involved at that time was not the sole responsibility of any particular government --

Mr. McEwen: It was the election recession.

[8:15]

Mr. Williams: -- regardless of their political party affiliations. It was not solely the responsibility of this government. It was not solely the responsibility of the nine other provincial governments, nor indeed of the federal government of this country. It was international in scope and no one will refute that obvious consideration.

Interjections.

Mr. Williams: The budget does dwell at some length on the difficult economic period that we went through in 1975. I think the government has not blown its horn sufficiently to set the record straight in confirming that its actions at that time proved to be most beneficial and in the sound interests of the people of the Province of Ontario, because predictions that were made at that time by the Treasurer have borne themselves out to have been true in no small measure.

I will refresh the memories of the members of the House in pointing out that at the time of the 1975 budget mere than $600 million in immediate tax cuts and incentive programmes were undertaken for the specific purpose of stimulating the economy at that time. It was based, as I my, not on the basis of a provincial recessional period but on the fact that we were in the midst of an international recession which was having profound effects and which no one government alone could cure.

However, it was the intention of this government to endeavour to take the worst of the sting out of the recession as it was affecting the province at that time. The economists of the day were pointing out that the 12-month period through 1975 would be the most difficult to endure and that there was a woeful lack of action being taken at the federal or/and provincial levels by any government, it wasn’t the governments that were saying this, it was the economists. Not only within this province, but beyond; the international economists, people who have a better understanding than perhaps all of us here as lay people have with regard to the complexities of the international money markets and the economies of the world in the international context.

It was this government, I would point out, that took the initiative in bringing forward some significant proposals to try to minimize the sting that was being felt during the height of the recession at the beginning of 1975. It was this government that brought forward a bold budget by introducing tax reductions, by priming the pump and by endeavouring to stimulate a sagging economy in the private sector, that did bring about a turnabout in the economy that carried us through the most difficult months of the recession.

Mr. Godfrey: By spending $200 million on North Pickering?

Mr. Williams: It was made clear that in the first half of 1975, before the province did bring down its budget in 1975, Ontario’s economic performance had dipped below that of Canada as a whole. This, of course, parallels what was happening in other industrial economies, which were also experiencing sharp drops in economic activity during that period. But because of the specific actions taken by this government at that time, the last half of 1975 finished off with a stronger performance, which left the Province of Ontario experiencing a year without any real decline in real productivity or output, which is an achievement that was attained in few other jurisdictions in the free world.

The success can be further emphasized by reason of the fact that Ontario has the most heavy industrial base in orientation in all of the provinces in Canada, and as such is the one that would be the first to experience the effects of unemployment, the lack of productivity, the lack of confidence from the private sector that stimulates the economy, the lack of confidence from the international investors in this country. So it was Ontario that had to bear the brunt, and necessarily be the one to initiate remedial action if this country, in fact, was to pull itself out of a deep recessional period.

The provincial economy was, for these reasons, more vulnerable than that of the other provinces in Canada because of our heavy manufacturing orientation and because of the heavy export programme that we have in this province. The productivity of this country rises and falls on the productivity of the Province of Ontario.

Mr. Godfrey: The workers of Ontario.

Mr. Williams: Without the private companies of this province being productive, the workers of Ontario were not productive. Without job opportunities being made available, the workers of this province were denied the dignity of being able to provide their services for fair return, but rather had to turn, in many instances, to government support, without providing real productive services in return.

In fact, it’s significant that this province, the most heavily industrialized province of the country, found that its unemployment statistics were below the national average, that this province’s unemployment figures were 6.3 per cent --

Mr. Wildman: It is 22 per cent on the north shore.

Mr. Hodgson: Don’t you like this country?

Mr. Williams: -- while those of Canada as a whole were 7.1 per cent; this indeed is most significant evidence of the success of the actions of this province.

Mr. Hodgson: Why did you come to the Province of Ontario?

Mr. Speaker: Order, please.

Mr. Williams: For the benefit of our socialist friends, I would point out that the thrust of Ontario’s fiscal policy in 1975 was to give direct and immediate impetus to private sector spending by temporary tax cuts. In order to let that message sink in, I’ll repeat that statement, without interruption I would hope, because from this point forward I’ll be dwelling on this point again at some length. I would reiterate, therefore, that the thrust of the 1975 Ontario budget was to give direct and immediate impetus to the private sector by temporary tax cuts, and I emphasize the word “temporary.”

Mr. Godfrey: Like $200 million for North Pickering? How many jobs did that create?

Mr. Williams: This province realized it could not continually continue to spend at a rate faster that it was bringing in tax revenues. It was admitted and acknowledged and conceded that deficit financing had to be a temporary measure to deal with a very special economic condition that existed and prevailed at that time.

Accordingly at that time, Mr. Speaker, I perhaps needn’t remind you as one of the members of the House at that time, but for the benefit of my other colleagues in the House who are for the first time participating in the activities of this Legislature, the principles enunciated at that time were to prime the pump by reducing sales tax from seven per cent to five per cent, by rebating to consumers the entire sales tax on new car purchases and by providing a $1,500 grant to first time home buyers so that the consumer markets, the automotive industry and the construction of homes were the basic areas in which the government endeavoured to provide encouragement to the private sector to stimulate the areas sagging and reeling under the impact of the recession at that time.

On a longer-term basis the government, coincidentally with those measures, was endeavouring to encourage investment and increased productivity by totally removing retail sales tax from machinery and equipment purchases delivered before Dec. 31, 1977.

Mr. Godfrey: How many jobs did that create?

Mr. Hodgson: How many jobs did the member opposite create? None.

Mr. Godfrey: Come on. I gave you a political chore to do and did it very nicely.

Mr. Speaker: Order, please.

Mr. Williams: The significance of those actions is that while it was a cost to this government of approximately $600 million in lost tax revenues, those revenues were not totally lost. They were simply redirected into the private sector and, as such, significantly stimulated the economy when it needed stimulating the most.

Mr. Godfrey: And raised profits.

Mr. Williams: Lest any member of the opposition suggest that these observations are made from a partisan, biased point of view, I can simply reinforce the success of those measures by referring to the impartial assessment of that undertaking enunciated in the Canadian Tax Journal by people who are qualified to speak on the economy and on the matter of balancing books.

Mr. Wildman: You believe that that is an unbiased source.

Mr. Williams: It was pointed out in that respected journal that the 1975 Ontario budget provided a significant stimulus to the economy. Moreover, the stimulus provided in the Ontario budget was such that it ensured a maximum impact around the turn of the year with the effects tapering off as the recovery of the economy gathered strength. The economists had predicted that by the end of 1976 the economy would gather strength and it was for this reason that the government felt that on a short-term basis it could endure a period of deficit financing to help stimulate the private sector.

The success of that programme was overwhelming and I think it’s important that it be read into the record how successful that programme was. The critics who suggested that the Treasurer at that time was being optimistic about the extent to which the private sector would be stimulated need only turn to table 4 in paper B, on page 6 thereof. It pointed out very clearly that the provincial Treasurer underestimated the success of the first home buyer grant programme which had been anticipated to stimulate that sector of the economy by $55 million and, in fact, stimulated it to the extent of $90 million.

It’s interesting to note that the Treasurer had predicted cautiously at that time that the automotive industry and all the jobs it entails -- that’s one out of every six workers in this province, directly or indirectly -- would be stimulated to the extent of an input of $24 million as a result of the exemption of sales tax on automobiles, when in fact the end result showed that the rebate on sales taxes on automobiles stimulated the economy to the extent of $45 million rather than $24 million. These are very significant achievements that I don’t think have yet been read into the record and it is long overdue that they should be so recorded.

[8:30]

The most substantial benefit of that programme of course was the stimulation of the consumer market. The reduction of sales tax from seven to five per cent brought about benefits that had not been anticipated, far greater again than what the Treasurer had optimistically, yet cautiously, predicted at that time. In fact, the collective result of these measures indicates that the $347 million in tax savings was distributed among broad sectors of the economy, from which clearly the consumers enjoyed the bulk of the benefits and, as expected, the retail trades in Ontario immediately picked up momentum.

Prior to the introduction of that budget and the supplementary mini-budget, the retail trades in Ontario were more sluggish than they were in the rest of Canada, but the turnabout came with those innovative and significant measures being introduced. So by the end of that 12-month calendar period which represented three-quarters of the fiscal budgetary period, the recovery period in retail sales in Ontario had risen from a 9.6 per cent increase in the first half of 1975, to a gain of 17.8 per cent in the second half, a very significant improvement indeed.

As I have made reference to already, and which I think deserves further elaboration, the government recognized the high degree of involvement of the work force in the auto industry in this province -- in fact, 90 per cent of the auto industry in this country is within the Province of Ontario. When the federal government introduced its budget last June it had an adverse effect, as far as stimulating the auto industry that employs so many of the workers of this province, because it brought about an increase in oil prices not only at the wellhead but also at the pumps. The most interesting aspect of that regressive type of taxation was that three-quarters of that went directly to the federal government rather than back into the private sector to stimulate the much-needed development resources of the private sector to find greater reserves of energy within this country.

In order to counter that regressive form of taxation, the Treasurer saw a need to introduce the mini-budget to further stimulate our economy and bring us through the height of the recessional period, to smooth out the valleys and the peaks in a way that would least injuriously affect the citizens and workers of this province.

Lest it is not clearly understood as to the significance of that involvement and the effect that tax reduction had on the auto industry and the negative actions taken by the federal government, I would simply remind the members of the House, Mr. Speaker, that the higher energy prices which were announced in that federal budget in June came at a time when the North American automobile industry was in a depressed state; the sales were sluggish and the production was falling. The workers were becoming unemployed.

In the first half of 1975, the sales of North American-built cars in Ontario were off 6.1 per cent. Production in Canada was down by 20 per cent over the same period and industry layoffs reached as high as 50,000 workers.

The $44 million tax rebate programme initiated at that time by this government helped turn the car market around and propel it to a record year of sales in Ontario; a point that our loyal opposition and members of the third party are too often remiss in mentioning.

For indeed, the sales of North American-produced cars in the province rose by 38.1 per cent in the second half of 1975, compared with the drop of 6.1 per cent that I referred to a moment ago in the first huff of that year; and that strong response boosted sales in Ontario to nearly 14 per cent above the 1974 level. I stress that happened during the height of the recession that we were experiencing.

As a consequence -- and I am sure my learned friend, the member for Durham West (Mr. Godfrey) will be interested in and, I think, heartened to be reminded of the fact -- as a result of that action, employment in the automotive industry recovered strongly. By the year’s end the layoff level had been reduced from 50,000 workers in the automotive industry to 5,000 workers.

In the first three months of 1976, automobile production in Canada increased by 22 per cent over the levels of a year prior. It has proven to have been an appropriate form of action for the government to have taken at that time.

I don’t hear in the House today criticism being directed at the government for the actions it took at that time in priming the economic pump, because the members opposite do know the success of that necessary temporary measure.

Of course, the other key area was in the housing market, which also was in a highly-depressed state. The shocking facts at that time, in the early months of 1975, were that the housing starts were running 58 per cent below 1974 levels.

Mr. Godfrey: How can you admit that?

Mr. Warner: It is your own fault.

Mr. Godfrey: How can you admit that?

Mr. Speaker: Order, please.

Mr. Williams: This was before the Treasurer introduced the positive budgetary measures of that time. The great success of that programme is evidenced in the fact some 90,000 purchasers took advantage of the incentives to acquire their first homes under the first home buyers programme that was introduced as a measure to counteract the sagging housing industry.

Mr. Mancini: It was a temporary measure.

Mr. Williams: I have no hesitation nor does this government, in acknowledging the extent of the depressed housing market at that time.

Mr. Warner: Houses by lucky draws; big deal.

Mr. Williams: And, of course, the simplicity of one suggesting that it was the fault of this government that there was a depressed housing market, when it was international in scope, I think warrants comment.

Mr. Warner: Blame it on the feds.

Mr. Williams: This government alone could not be blamed for the depressed housing market at that time. But certainly this government, I think, if it is to be blamed for that, can be more clearly applauded for the action it took to again counteract that situation, As a remit of those measures, Mr. Speaker, while I have clearly and openly pointed out the severity of the depressed housing market at that time, I would point out that there was a happy conclusion at the end of 1975 to that perilous situation; because, Mr. Speaker, in 1975, first three home buyers accounted for fully 54 per cent of total housing sales, as compared to about 30 per cent in a normal year.

Mr. Godfrey: What price were they? In what price range?

Mr. Warner: Have you solved the housing problem?

Mr. Wildman: To buy a $200,000 home --

Mr. Godfrey: It’s amazing what $1,300 can do.

Mr. Williams: Mr. Speaker, in answer to the questions that have been raised by the opposition members who have implied in their criticisms and comments that the home buyers who benefited the most were those in the higher price range, the statistics show, Mr. Speaker, that while the home buyers grant programme had no price or income criteria, nevertheless the results of the programme attested to the merit of this programme in that of the estimated 85,000 units purchased with the help of the incentive, nearly 80 per cent, I would point out, were under $50,000 in price

Mr. Godfrey: Try $500,000 --

Mr. Williams: And only one per cent were in the price range of $80,000 and over.

Mr. Godfrey: You mean to say you expect people to buy houses for $60,000?

Mr. Williams: The price differential between new and resale units was very narrow, and the average price for all homes bought under this incentive was $39,118. Therefore, Mr. Speaker, its retrospect, Ontario’s three major fiscal initiatives in 1975 were, without question, an overwhelming success as far as the desirable economic impact was concerned.

Not only did sales, production and employment revive, but confidence also improved. As a result, Mr. Speaker, the Ontario economy ended 1975 on a firm recovery path which has continued on into 1976.

Mr. Warner: You’re not even serious!

Mr. Williams: So I think it was necessary, Mr. Speaker, to spend some time on recapping the actions of this government during the height of a recession in 1975 and to again set the record straight as to the success of the economic activities of this government as represented in its budget at that time.

But this government, Mr. Speaker, is the first to recognize that you cannot indefinitely assist the private sector to bring them through a recessional period, or a period of decline in the economy, by participating, without some termination point, in deficit financing. It’s a costly way to undertake government activity and it is one that no responsible government would recommend for a lengthy or sustained period of time.

But I suggest to you, Mr. Speaker, and it’s been borne out by the results, that in fact the temporary measures that were taken at that time were precisely in accord with what the economists were asking for and demanding, and which the federal authorities fell woefully short in responding to.

It was this province that took the initiative, and I suggest, Mr. Speaker, in large measure blunted the worst effects of recession in this country. For in fact, Mr. Speaker, I think it has been clearly demonstrated that the recessional adverse effects in the country to the south, in the United States, were far more harsh than those experienced in this jurisdiction.

[8:45]

Mr. Wildman: They’re better off than we are.

Mr. Williams: And while the US economy has now taken a turnaround --

Mr. Godfrey: Because of your tax cuts?

Mr. Williams: -- it appears again that the predictions, as set out in this budget, are also going to be borne out as being accurate assessments of the economy, with the appropriate fiscal measures being taken now to assist the private sector to take advantage of the recovery, to restore the confidence of the private sector and to leave the initiative now with the private sector, which has substantially recovered from the onslaught of recession in 1975.

In this area, it is anticipated that export performance this year is expected to be the leading source of strength in 1976 in reinforcing our private sector because of strong consumer demand. We anticipate there will be greater investment activity in machinery and equipment purchases. And this will, of course, result from a strengthening of corporate activity and corporate profits. And when private industries are healthy and operating in an air of optimism, then this has to benefit the employees of those companies, whether large or small.

Mr. Wildman: What is good for Henry Ford is good for the world.

Mr. Williams: It is anticipated, and so stated, that in the export area there will be an estimated 20 per cent increase in exports this year, which is indeed a significant turnaround; and while the imports in this province will continue to remain at approximately 13.5 per cent, as they were in 1975, there is a significant 6.5 per cent variance between exports and imports that will leave us in a positive, healthy fiscal position.

Mr. Roy: Are you giving us your budget? Is that it?

Mr. Warner: He is not even serious; that’s it. You condone housing by lucky draw.

Interjections.

Mr. Warner: Lucky draw; that’s the way to do it!

Mr. Williams: Again, because of the particular concern of our friends across the way --

Mr. Warner: That’s the only way you’ll keep your seat, by lucky draw.

Mr. Williams: -- it is directed toward job opportunities. The significance of a healthy economy is of course reflected in the reduction of the unemployment situation, and it is predicted that employment in Ontario in 1976 is expected to increase by 3.2 per cent or 116,000 new jobs.

Mr. Warner: How?

Mr. Williams: Our socialist friends may scoff at these statistics; and it’s unfortunate if they do when they’re such a positive set of statistics.

Mr. Warner: Deal with the facts.

Mr. Good: It’s Darcy juggling figures; that’s all it is.

Mr. Williams: Of course, when the facts are positive and are complimentary to the work force and the initiative of the private sector, it is unfortunate that our socialist friends take those facts to task as being unrealistic, leaving them without ammunition to pursue their particular economic and social philosophies.

Mr. Godfrey: You don’t think this increase is going to come in the hospital industry, do you?

Mr. Williams: I’ll be dealing with the hospital industry in a short moment or two.

Mr. Roy: You’re not going on much longer, are you?

Mr. Williams: It is on a healthy note that the employment situation in this province is moving out of a depressed situation into a period of high employment. And while those in the labour movement have been critical of wage and price controls and restraint --

Mr. Warner: Wage and wage controls.

Mr. Williams: -- nevertheless it has had some significant beneficial effects.

Mr. Wildman: Ask them in Elliot Lake.

Mr. Wildman: It is pointed out in budget paper A that basic wage settlements, which peaked in Ontario in the fourth quarter of 1974 at 15.5 per cent, moderated through 1975 to 12.9 per cent by the end of the third quarter.

More moderate wage settlements in the private sector in Ontario over this period are particularly encouraging.

Mr. Warner: Taking money away from the workers.

Mr. Godfrey: We have 8,000 out of work in Oshawa.

Mr. Williams: It would appear that the resumed growth in the United States, and the stabilizing of other major economies, should ensure the resumption of normal levels of economic performance in Canada in 1976. And with restraint in the government sector and more moderate wage and price increases, Ontario’s economic performance in 1976 --

Mr. Warner: Name a price control; go on!

Mr. Williams: -- will be better balanced and more consistent with long-term international competitiveness.

Unfortunately, Mr. Speaker, I think that this is an area that is too often overlooked by our friends in the loyal opposition --

Mr. Warner: Name one price control.

Mr. Speaker: Order, please.

Mr. Williams: -- in that we have to remain internationally competitive. Unless we are productive and can match the productivity of other nations, our exports which are a major part of our economy, will suffer. Our industries and our workers will suffer in turn, because there is undoubtedly a rippling effect that has to occur. It perhaps can be simplistically overlooked, but it is an integral part of the whole economic fabric.

One of the areas that is of particular interest and concern to all of us, and has perhaps been of even greater concern to the financial critic of the official opposition, is in the financing of health insurance in Ontario.

So I turn at this time to budget paper B, which deals with the financing of health insurance in Ontario. If there is one area of the budget which requires to be put into proper perspective, it is certainly in this area. It seems that this is the particular area that the opposition feels is the Achilles’ heel of the whole budget, and there could be nothing further from the truth.

Mr. Godfrey: We have another anatomical miracle.

Mr. Williams: There could be nothing further from the truth, Mr. Speaker.

Mr. Wildman: I don’t think that’s an Achilles’ heel; that is a bionic budget.

Mr. Williams: It has to be pointed out that in 1959 this government embarked upon one of the most ambitious universal health programmes of any province in the country, and indeed of any jurisdiction on the continent.

Mr. Warner: Who forced it? Right here.

Mr. Godfrey: Except Saskatchewan.

Mr. Williams: That programme started out, as you may recall, Mr. Speaker, with the government of Ontario entering into partnership with the government of Canada in introducing a universal prepaid hospital insurance plan. It wasn’t long after that it was recognized that the province had to establish, in conjunction therewith, a voluntary medical insurance plan, at that time designed to cover the 25 per cent of the population who were not insured through private plans. This was a modest beginning, Mr. Speaker, but from that period of time and through the past 17 years we have come to achieve within this province one of the most sophisticated universal health programmes anywhere in the world.

This initial start has grown from those initial experimental programmes, as they were at that time, to a sound social, fiscal, health finance programme within the Province of Ontario, But this success has not been achieved without cost. And in fact the freely accessible health cure has led to increased utilization of health services and a greatly increased flow of resources into the hospital and medical delivery systems.

Mr. Wildman: A terrible situation. Sick people are actually using health facilities.

Mr. Warner: That’s not what the minister said.

Mr. Williams: The resultant cost pressure, in conjunction with the decline in the relative importance of premium revenue, has generated a huge financing gap.

Mr. Warner: Sock it to the poor. They will love that.

Mr. Williams: And here, Mr. Speaker. I will have the opportunity of pricking the balloon of the simplistic criticisms of the opposition. They keep saying that you are “socking it to the poor,” to use the common jargon, or applying it against those who can least afford it; the blind, the disabled, the widows. This type of rhetoric from the opposition continues without --

Mr. Warner: How true it is.

Mr. Williams: -- any factual backups to substantiate those generalization’s that have become nothing more than rhetoric and well-worn clichés that can be attributed only to our socialist friends across the way.

To put into perspective the health insurance programme -- the problems that we are confronted with, and the positive responsible measures that this government intends to take --

Mr. Warner: Total mismanagement.

Mr. Williams: -- to continue to provide the quality of health care in this province that the people of this province deserve, yet within more manageable financial parameters and with a programme that is to be more efficient rather than more inefficient -- I would simply point out where we are at and where we are going as clearly identified by budget paper B.

It has been pointed out that expenditures on insured health services have more than doubled in the past five years. During the same period Ontario’s gross provincial product grew by 82 per cent and total provincial revenues expanded by 79 per cent. In simple terms, this means that the health insurance plan has consumed a rapidly growing share of the government’s tax revenues and created an ever-increasing drain on the province’s economic resources.

Mr. Wildman: Why don’t you look at doctors’ incomes?

Mr. Warner: Tell us about private labs.

Mr. Williams: I think this can be clearly demonstrated; one simply has to look at the provincial financial pie and one clearly sees that in excess of 27 per cent of that pie is directed to health care.

Mr. Warner: Less than last year.

Mr. Williams: That is approximating almost a third of the provincial budget.

Mr. Norton: How much is going to Browndale?

[9:00]

Mr. Williams: Well, Mr. Speaker, there have to be measures taken to counteract the extent to which the government budget has to be directed to health care without impairing the quality of health care and the universality of that programme.

It has been demonstrated, Mr. Speaker, that the root cause of cost escalation has been a steady rise in the per diem cost of hospital care, combined with the greatly expanded volume of medical claims.

In the area of hospital services, Mr. Speaker, expenditures on insured hospital services has increased from $794 million in 1970-1971, to $1.634 billion in 1975-1976.

Mr. Warner: Tell us about the private labs.

Mr. Williams: A rise, Mr. Speaker, of 106 per cent over five years.

Mr. Godfrey: They are doing the closings.

Mr. Warner: Why don’t you stop avoiding it? Tell us about private labs.

Mr. Williams: This rate of cost escalation is more than twice the rate of inflation over the same period.

Mr. Wildman: Look at doctors’ incomes!

Mr. Williams: With regard to medical services, Mr. Speaker, expenditures on insured medical services have risen less rapidly than hospital expenditures. However, over the past five years medical care expenditures increased by 70 per cent.

Unlike the hospital sector, where unit costs are pushing up total expenditures, in the medical sector it is the volume of services which is driving up spending. The total number of OHIP claims has risen from $32 million in the first full year of medicare to $51 million in 1975-1976, representing a volume increase of 60 per cent.

Mr. Warner: Are you not going to do away with OHIP? Is that what you are telling us?

Mr. Williams: The obvious need is to control costs, Mr. Speaker, and Ontario’s health care delivery system has been studied extensively to identify where and how economies can be achieved without impeding the quality of health care and delivery of services.

Mr. Reid: You’ve got to be kidding. Haven’t you heard the figures that have been contradicted by the Ministry of Health itself?

Mr. Warner: This is absolutely silly.

Mr. Reid: Sounds like an old speech somebody is running through for the third time.

Mr. Williams: Mr. Speaker, I think one of the encouraging factors in the health care area has been that on the Medicare side the Ontario Medical Association has agreed to a fee increase of not more than 8.1 per cent in 1976.

Mr. Warner: That is an income increase of 15 per cent.

Mr. Williams: And with this strong cost-cutting programme, total expenditure of insured health services are expected to grow by only 12 per cent for the fiscal 1976-1977 period, vs. the 15 per cent average annual growth rate over the previous five years and 20 per cent average annual growth rate from 1973-1974, to 1975-1976.

However, Mr. Speaker, it is obvious there has to be complementary action taken on the financing side. Even with a strict control over costs the deficit in health care financing in 1976-1977 would rise in the absence of a premium increase.

I think it’s understood, Mr. Speaker, but I won’t take it for granted so I will point it out again for the record, that Ontario’s comprehensive health I insurance plan is financed from three sources. About 45 per cent of the funding is in the form of shared cost reimbursements from the federal government, which as we all know is in a precarious state at this point in time.

Mr. Wildman: One source is the people’s pocketbook.

Mr. Williams: The remaining 55 per cent is financed by the province in the form of health premiums and contributions from the consolidated revenue fund. The financing problem arises because premium revenues grow only by about two per cent per year, or roughly the rate at which the population grows. Without periodic increases in, premium rates, revenues from this source cover a steadily diminishing share of the total cost.

In addition, contributions from the federal government are precarious at best, based on complex formulas involving national average costs, eligible expenditures and the like, which have escalating factors for which it is difficult to have clear picture at all times. It has been made clear that the federal government intends to compound this problem by limiting its financial participation in the future by the imposition of ceilings, which in turn will place a heavier burden on provincial sources of finance.

Over the past five years the shortfall between health insurance costs and the revenue from federal government, plus premiums, has steadily widened. This financing gap was a relatively modest $72 million in 1970-1971, when premiums covered 44 per cent of costs. By 1975-1976 premiums covered only 23 per cent of costs, leaving a shortfall of $788 million to be made up from the general revenues of the province.

Premiums historically have been a major source of funding, averaging one-third of total financing.

Mr. Warner: Not in Saskatchewan; zero there.

Mr. Williams: Despite the declining relative importance of this revenue source in recent years, health premiums remain the only direct link between the user of health services and the costs of providing those services. For this reason alone it is essential to increase this direct revenue flow from the consumers of health services.

Mr. Warner: Pay as you go.

Mr. Norton: Best way.

Mr. Williams: Health insurance premiums have taken up a steadily-declining portion of personal income over the last five years, and this is contrary to what is being espoused by the official opposition members. Per capita income has gone up by 68 per cent, prices have increased by 39 per cent, but per capita premiums have gone down by 15 per cent. And that, I think, is one of the most significant bits of statistics I have introduced so far this evening.

I hope that all members of the House have had an opportunity and taken the time to address themselves to the budget papers that really are the substance of the provincial budget --

Mr. Warner: And the McKeough-Henderson report too.

Mr. Williams: -- because so many of the erroneous statements that have been made, and the statements that have been made out of context with regard to criticism of the budget, have arisen by reason of the fact that people perhaps haven’t taken the time to inform themselves on the statistics that are readily available to them.

Mr. Warner: You should get a job now as public defender.

Mr. Williams: Criticism is fine, but I think it has to be borne out by statistics and background information, not by generalizations for which there is no substance in fact.

Mr. Warner: There is.

Mr. Williams: Conventionally, premiums are regarded as a regressive form of taxation. However, Ontario’s health premium system contains three basic elements of progressivity.

Mr. di Santo: Progressivity? You must be kidding.

Mr. Williams: First, some 20 per cent of the covered population, including pensioners, welfare recipients and low-income families, are entitled to free premiums.

Mr. Renwick: That is not progressive, they couldn’t pay them.

Mr. Williams: I don’t think the opposition has made reference to this fact at all during the budget debate.

Interjections.

Mr. Speaker: Order, please.

Mr. Williams: A further substantial number are entitled to half premiums.

Secondly, OHIP premiums have been institutionalized as a regular fringe benefit in most collective agreements, with employers paying all or a substantial part of the monthly charge. I think this is reflected in the statistics that were presented in the House by the Treasurer when he pointed out that in 1975 only 29 per cent of premiums collected were actually paid by individuals, the balance having been paid by employers as taxable fringe benefits. That is over 70 per cent of the premiums were paid by the employers, not the employees. That brings me back to the other point, that 20 per cent of the population were not required to pay anything at all in the way of premiums for OHIP --

Mr. Renwick: They couldn’t possibly have paid.

Mr. Williams: -- because of age or income. So again the private sector was paying the charges for those who could not themselves afford to pay the premiums.

Mr. Norton: That is why it is so structured.

Mr. Renwick: It is the same today as it was in 1968. How could they possibly have paid?

Mr. Williams: The third progressive aspect of the premium system is, as I pointed out, the premium contributions are paid by the employers as a taxable benefit.

In endeavouring to restore some balance to the financing of hospital care in this province, the 1976 budget has taken three complementary actions to preserve the equity and restore better balance in health insurance financing.

While it is increasing premiums, at the same time it is broadening premium assistance and is increasing the user charge on semiprivate and private hospital accommodation. A great much ado has been made by the financial critic for the official opposition over the fact that premium rates will increase by $5 per month for single persons and by $10 per month for families. That critic has suggested that those who can least afford it are the ones who are bearing the brunt of this premium increase.

In fact, if you really analyse the $10-a-month increase for families, Mr. Speaker, putting it in simple terms that can be easily understood that would represent the cost of less than two cups of coffee a day.

Mr. Warner: A point of order, Mr. Speaker.

Mr. Williams: Thirty-three cents a day would be the increased cost --

Mr. Speaker: On a point of order, the hon. member for Scarborough-Ellesmere.

Mr. Warner: May I ask the Speaker’s discretion? Is it incumbent upon any member of this legislative assembly to be serious in his remarks with regard to any debate which is taking place in the House?

[9:15]

Mr. Speaker: That’s not a point of order. The hon. member for Oriole may continue.

Mr. Williams: I appreciate the opportunity for a brief respite, Mr. Speaker. I thank the member for Scarborough-Ellesmere; I’ll continue.

Mr. Conway: So did we.

Mr. Williams: Again the fact that the bulk of the increases will be borne by industry bears reiteration. In excess of 70 per cent of the increases will come from that source.

Effective April 1, 1976, the OHIP premium assistance will be substantially extended, a point which the opposition have again chosen to ignore in their criticism of the increase in premiums so as to keep it out of perspective.

All persons currently entitled to free coverage will continue to enjoy this benefit. Under the broadened premium assistance being made available through this budget, an additional 296,000 persons will qualify for free coverage. This will be achieved by raising the taxable income criteria from zero to $1,534 for a single person and to $2,000 for families.

Mr. Wildman: That’s if he makes just over $8,000.

Mr. Williams: The changes in premium assistance mean that in 1976 an estimated 1.8 million people, or almost one person in four in Ontario, will receive free or subsidized OHIP coverage.

Mr. Renwick: Perhaps I could repeat what I said, that they can’t afford to pay it.

Mr. Norton: That is precisely why the programme was designed that way, to assist them.

Mr. Williams: The value of this premium assistance is no less than $279 million.

Mr. Renwick: The lowest 20 per cent of the population in Ontario had five per cent of the income. How can they possibly pay it?

Mr. Williams: This is precisely, as stated by my learned colleague, why the programme is being extended to those who are least able to pay.

Mr. Renwick: It doesn’t make it progressive, because if you’re going to have a universal plan you can’t collect money from a stone.

Mr. Wildman: Why don’t you eliminate the premiums?

Mr. Conway: Let the filibuster continue.

Mr. Williams: Of course, that is the simplistic rationale that is applied by our friends across the way who say why not make it a free programme? The money obviously is going to come from a stone from which the member for Riverdale suggested it couldn’t be drawn or extracted.

Mr. Renwick: You can get it from where you got it before, from the corporations. You got 70 per cent from the corporations. Nobody then has to pay because the corporation didn’t need medical attention.

Mr. Williams: And so it should come from that area, and it is; a very substantial portion of it is, under the progressive collective agreements that have been negotiated in this province, agreements that benefit the working force in this province as you will find in no other jurisdiction.

Mr. Renwick: Let the corporations pay it all.

Mr. Williams: It’s because of these provisions that we do have as extensive a health care programme in Ontario. To ensure the integrity and extent of that programme we have to narrow --

Mr. Conway: Did you check that in Tasmania?

Mr. Williams: -- the financial gap, which is what the budget is all about. It’s being attained in a way that will preserve the quality of the programme and, at the same time, extend the benefits to those who are at least able to afford the programme out of their own limited personal wealth; people for whom the member for Riverdale is most concerned, as are the members on this side of the House.

The other area from which the moneys will be extracted to assist those who are most needy and deserving of subsidization from the government will be the OHIP benefits covering standard ward accommodation in hospitals, in that the semi-private or private accommodation charges or premiums will be increased. And so by the action proposed in the budget in the area of health care, it is determined that there will be a contribution directly to the reduction of the province’s overall deficit in 1976-77 to ensure a sounder financial base --

Ms. Gigantes: The Conservative deficit.

Mr. Williams: -- for one of the most comprehensive health care plans in the world.

Mr. Godfrey: What about Sweden?

Mr. Wildman: Does the deficit have anything to do with those great programmes in 1975 you described earlier?

Mr. Williams: Premiums will now generate approximately 28 per cent of the total finance in of OHIP.

Ms. Gigantes: Shame.

Mr. Conway: Says who?

Mr. Williams: This is more appropriate --

Mr. Norton: Where do you propose it comes from?

Mr. Williams: This is a more appropriate level than the current 23 per cent.

Mr. Renwick: That is regressivity.

Mr. Norton: Oh come on, you can’t tell whether you’re going forwards or backwards.

Mr. Conway: Who wrote this, Stanley Randall?

Mr. Williams: Now, Mr. Speaker, if I might I’d like to return to budget paper C.

Mr. Godfrey: What about employment? You were going to talk about that.

Mr. Williams: Patience, my friend, patience.

Mr. Renwick: You ask a lot of us.

Mr. Williams: One of the main thrusts of the budget paper is the need to restrain expenditures in the public sector. While I spent some time commenting on the benefits that accrued as a result of the strong fiscal stimulus that the Ontario government gave to the province in 1975 --

Mr. Conway: It is called an election-year prophecy.

Mr. Williams: -- the government now has to take measures to prevent an excessive expansion of government expenditures during this fiscal period.

Mr. Conway: Lorne Henderson doesn’t agree.

Mr. Williams: If it is in any way to maintain integrity with the private sector by matching the restraints that are being asked of the private sector, individually and collectively, this government has to show the initiative, and take the initiative, in showing equal restraint in the public sector. This government, more than any other government in Hi is country, has taken that initiative in no uncertain terms.

Mr. Wildman: How many casuals have you got on staff?

Mr. Conway: The end!

Mr. Williams: In 1975 Ontario’s fiscal initiatives amounted to some $600 million and accounted for a large part of the increase in the 1975-1976 deficit. This we make no apologies for --

Mr. Haggerty: You can add another 300.

Mr. Williams: -- nor do we hesitate to recognize, but it was done for specific purposes under unique conditions.

Mr. Conway: Yes; election ones I believe.

Mr. Godfrey: In 1974, the same amount.

Mr. Conway: Fiscal initiatives, remember?

Mr. Williams: As I pointed out earlier, before some of the members came into the House, the success of that economic support policy has become readily apparent --

Mr. Wildman: The election results show how successful.

Mr. Williams: -- and the temporary fiscal initiatives have expired as scheduled.

Mr. Renwick: That support policy coincided with the calling of the election; it is known as cyclical financing.

Mr. Williams: The province has added some $330 million to its revenue capacity through tax measures announced in this budget.

Mr. Conway: You make John Maynard Keynes sound like a person.

Mr. Williams: To achieve restraint in its demands on the output of the economy, however, the government has taken strong action to control the growth of its spending by limiting expenditures to a 10 per cent increase in the current fiscal period.

Mr. Renwick: Actually you didn’t quite do that, did you?

Mr. Williams: And in fact no, we did not quite achieve that objective --

Mr. Renwick: That’s right.

Mr. Williams: -- as acknowledged and conceded by the Treasurer and this government.

Mr. Conway: And Gordon Walker didn’t like that.

Mr. Williams: A 10.4 per cent increase is a significant difference from the average rate of 15.1 per cent that was being achieved in previous years, a significant shift.

Mr. Renwick: A significant shift from last year.

Mr. Conway: Is that what happened to the seats?

Mr. Williams: Pardon?

Mr. Conway: Were some of those seats lost in the last election?

Mr. Williams: Ontario has maintained that excessive government spending is a major inflationary force in Canada. I think it’s acknowledged by all people within and without the House.

Mr. Conway: Put in a worse position.

Mr. Haggerty: For five consecutive years.

Mr. Wildman: You drove the member for Erie (Mr. Haggerty) back to this side of the House.

Mr. Williams: I think this is one common area of agreement that we have as legislators in this province. Government expansion and expenditure is reaching a point where it is beyond the gross provincial productivity level and as such cannot be sustained for a significant period of time without creating financial chaos and collapse.

Mr. Conway: What did you say was “gross”?

Mr. Williams: As I indicated, over the past decade public sector expenditures have grown at an average rate of 15.1 per cent, compared to a 10.5 per cent average growth in consumer expenditures.

Now initially this public expenditure growth was fueled by inflation.

Mr. Reid: What do you mean, “fueled by inflation?” Isn’t it the other way around?

Mr. Williams: Inflation generated increases in government revenues.

Hon. Mr. Rhodes: Inflated by fuel.

Mr. Williams: However, this public sector growth continued even when the economy stopped growing; hence our dilemma.

Mr. Conway: That’s what Lorne tells us.

Mr. Williams: The government was thereby diverting resources from investment and private incomes.

Mr. Conway: Called Wintario.

Mr. Williams: And such excessive public sector expansion must be at the expense of private initiative and a stable economy.

Mr. Conway: Lorne has a new suit.

Mr. Williams: I made reference earlier to the negative impact of some of the federal fiscal actions that have been taken in recent times.

However, the government of Ontario thought there were benefits to be derived from the action taken by the federal government in introduction of its anti-inflation programme, while disagreeing with some of the specifics of the programme and the duration of the programme and the manner of implementation of the programme.

But in principle this government has declared its support for a concerted national effort to break the grip of inflation on not just Ontario’s economy but on Canada’s economy.

Mr. Conway: Are you sure Lorne agrees?

Mr. Williams: Since restraint by government alone will not overcome inflation, Ontario has fully committed itself in support of the notional price and wage guidelines.

Mr. Conway: What about the energy part of that?

Mr. Williams: But, acting in a domestic manner, the Ontario government has brought its own public sector under the national system of controls.

Mr. Davidson: Explain that. Explain that.

Mr. Williams: Which is more than what the federal government apparently has been prepared to do based on news releases issued today.

Mr. Davidson: You have opted out of your responsibility, my friend.

Mr. Williams: The public sector includes direct employees in the provincial government, as well as municipal government employees, plus those in Crown corporations, provincial commissions, school boards, universities and hospital boards. In fact, if these support groups had not been included in the restraint programme they would have eliminated a major employment sector from the controls.

Mr. Wildman: The provincial government is putting its employees under a federal government that isn’t even restraining its own expenditures or following its own edict.

Mr. Davidson: Is your government certain the people of this province want that?

[9:30]

Mr. Williams: The backbone of the provincial restraint programme and its success is related to the change in priorities and in internal cost reductions. As pointed out in the position paper, the government’s expenditure restraint programme has four complementary thrusts. One is reordering priorities for 1976-1977; the second is the reduction in the civil service complement, which is politically not an easy thing to do.

Mr. Conway: Is there an end to this circle?

Mr. Williams: The internal cost-cutting measures have been embarked upon.

Mr. Davidson: What do you do with people you put out of work?

Mr. Williams: And of course of some significance is Ontario Hydro’s capital spending cut backs.

Mr. Davidson: What do you do with people you put out of work?

Mr. Haggerty: The Treasurer read that same report in 45 minutes.

Mr. Williams: To inform better those members who prove impatient or are not catching the initial comments, I will elaborate on some of the points I’ve touched upon.

Mr. Conway: No! Spare us! Act 5, scene 4.

Mr. Williams: I’ve got all week, Mr. Speaker.

Mr. Reid: It feels like all week listening to you.

Mr. Williams: I find it discouraging that the base document which will determine the wellbeing or otherwise of this province this year, and into the immediate future, is taken so lightly.

Mr. Davidson: It’s most unfortunate to have to rely on your speech; I’ll tell you that.

Mr. Williams: I gather perhaps it has been left on shelves to gather dust in too many areas. I was about to address myself to the backbone of the provincial restraint programme --

Mr. Conway: Which is abdication, is it not?

Mr. Davidson: Direct abdication of responsibility is what you’re saying.

Mr. Williams: -- which deals specifically with four areas, but of course, the initial thrust is in the area of expenditure priorities.

Hon. Mr. Rhodes: Make us a speech about direct abdication of Barrett’s responsibility.

Mr. Williams: In an effort to expand and carry forward the thrust of the 1975-1976 restraint initiatives, which the government announced in October, it was determined we would endeavour to restrain our growth in spending to a maximum of 10 per cent. I have to re-emphasize this because I think the point has been lost due to some of the side remarks which have been made, usually by those who are most in need of being refreshed as to the factual situation.

The government has endeavoured to restrain its growth in spending to 10 per cent, which is a dramatic divergence from the 20 per cent average annual growth rate of the past two years and the federal government’s projected 1976 spending rate of 16 per cent.

Mr. Wildman: Well, you’re unusually lucid tonight.

Mr. Williams: The choice of a 10 per cent ceiling was dictated by the need for this government to restore a greater measure of control over its finances and to show leadership in adhering to the national restraint guidelines.

Mr. Davidson: Come on, it was a copout.

Mr. Conway: Have you compared your figures with Uganda and Tasmania?

Mr. Williams: In programme expenditures, priority has been given to support of essential services, thus necessitating an absolute reduction in expenditures in other areas.

Mr. Davidson: Abdicating the responsibility for a quarter of a million people.

Mr. Williams: In other words, the 10.4 per cent limitation factor has not been applied on a universal or global basis but rather on a selective basis based on priorities, and so it should be.

Mr. Haggerty: What about municipalities?

Mr. Williams: For those who talk about cutbacks, again let’s put it into perspective by pointing out the extent of the increases being provided under the budget papers.

Mr. Davidson: Everyone knows what they are. Don’t describe them.

Mr. Williams: I think perhaps that is a bit of false bravado coming from the other side of the House.

Mr. Davidson: That’s not false bravado.

Mr. Williams: I would think, Mr. Speaker, that it should be clearly pointed out that the payments toward post-secondary education this year will increase 15.4 per cent to accommodate the rapid increase in enrolments. Spending in the justice field will grow by 19.1 per cent in recognition of the demands for improved services in the area of law and order.

Mr. Conway: Speaking of enrolments, have you thought about Dale Carnegie?

Mr. Williams: To provide the funds for the higher growth areas other lower priority programmes have had to be cut back severely.

For instance, Mr. Speaker, the level of activity in provincial road construction will be reduced absolutely. For those who suggest that the provincial government has withdrawn from its support of the local governments, I would remind the critics that transfers to local governments in 1976 will increase by 7.8 per cent --

Mr. Davidson: Ask the municipalities what they think.

Mr. Williams: -- or some $225 million over the previous year’s support level.

Mr. Davidson: Ask the municipalities what they think about it. Go talk to your own municipalities.

Mr. Speaker: Order, please.

Mr. Williams: In the past few years, Mr. Speaker, the province has financed many provincial-municipal programmes on the basis of open-ended formulas. However, this government has determined that continuation of this practice would not encourage government restraint in spending at the meal level, which is needed to complement Ontario’s own actions.

Mr. Conway: Oh really, what does Lorne say about that?

Mr. Williams: Mr. Speaker, one of the other most difficult political actions to take with the introduction of the budget was the one dealing with the human equation, that is members of the work force in the public sector. It is not without difficulty that the government has seen the need to apply restraint in that area; to limit, and in fact freeze, hiring of additional staff.

Mr. Davidson: Are you the apologist for those actions?

Mr. Williams: The provincial record of manpower restraint, of course, compares very favourably with that of the federal government. Federal manpower statistics show that a 13.6 per cent increase over four years existed at the federal level, as compared to a reduction of four per cent in Ontario.

Mr. Davidson: So what’s the relationship?

Mr. Conway: What are you talking about? Sorry that’s an unfair question.

Mr. Williams: Mr. Speaker, sometimes I can understand why some people are in the back benches and some people are in the front benches.

Mr. Davidson: That’s why you are there.

Mr. Conway: John, that wasn’t very well thought out.

Mr. Speaker: Order, please. The hon. member will continue without being provocative.

Mr. Davidson: They send us back-benchers to look after you back-benchers.

Mr. Williams: A series of internal cost control measures have been undertaken, Mr. Speaker, which are significant and which are having a desirable impact on the government restraint programme as far as its own direct involvement is concerned. As I mentioned a moment ago, one is the immediate freeze on replacement staffing on all internal administrative functions. Another was an immediate moratorium on new or renewed contracts for management consulting and organizational planning.

A further significant reduction, Mr. Speaker, that I don’t think really has been touched upon or made light of, is the fact there would be a 10 per cent reduction in data processing budgets, which are a very significant factor in the overall governmental operation.

Mr. Davidson: Explain it to us. We back-benchers don’t understand.

Mr. Williams: These are some of the key areas that have already had desirable results and are contributing in no small way to the success of the programme.

Mr. Conway: I knew it would happen; Mackenzie King has left. It’s just Darcy at the till.

Mr. Williams: In summary, the government’s internal economy drive has generated substantial savings of some $265 million.

Mr. Davidson: John, the lights are still on.

Mr. Williams: One of the other significant areas of cost saving is related to the savings that will be brought about --

Mr. Conway: Keep going, the lights may go out.

Mr. Speaker: Perhaps the hon. member should refrain until the sound effects cease?

Mr. Conway: Intervention of the gods.

Mr. Davidson: Even the building can’t stand it any longer.

Mr. Williams: I’ll endeavour to do so. It’s unfortunate that the verbal interruptions have to be reinforced by artificial means.

The other area of significant cost saving, of course, has been in relation to the Ontario Hydro capital requirements. It was not without a great deal of consideration that the government, working with Ontario Hydro, brought about a modification of expanded programmes which have resulted in additional savings from the cancellation of the Bruce heavy water plant C, as well as the slowing of the construction of the Wesleyville, Darlington and other power facilities, as well as the reduced capital spending on lines and transformers.

Mr. Davidson: Put it in the proper perspective.

Mr. Williams: The concern I have, however, is that, in fact, we are not being penny wise and pound foolish, because I know the select committee is involved in a most crucial consideration of the whole Hydro overview as it relates to the well-being of this province as far as being self-sufficient in the use of conventional power sources now and into the immediate and foreseeable future. It is in this area that I think other directions have to be taken.

While restraining the expansion of the Hydro programme we must not lose sight of the absolute need to expand that programme to ensure self-sufficiency by 1980 for the people and the economy of the Province of Ontario. I think in this area, while the budget doesn’t dwell on other considerations, other than the conventional sources of hydroelectric power, which fortunately we are blessed with in this province because of our geophysical conditions and the relatively large quantities of water available to us, so too I think the government should be directing itself to the most conventional, yet to date economically unextractable, sources of energy that exist; namely, energy related to solar and wind energy.

[9:45]

Mr. Conway: What was that about wind energy?

Mr. Williams: These are new areas that governments in all countries are looking to as a potential replacement source of energy. Indeed, we are starting to find there are very few non-renewable energy resources left that will carry us through the end of this century, and we must, therefore -- I think it is imperative -- embark upon a crash programme to find replacement sources of energy for the non-renewable sources that are fast being consumed.

Mr. Davidson: You are talking about domestic sources?

Mr. Williams: In this area, again I come back to a field of energy that has barely been touched upon and yet which has been with us all the time. It’s a question of making it economically feasible to extract and use in our society today. The Minister of Energy (Mr. Timbrell) highlighted the need --

Mr. Speaker: Order, please. An hon. member has asked for a quorum count.

Mr. Reid: That wasn’t very nice.

Mr. Speaker ordered that the bells be rung for four minutes.

[On resumption:]

Mr. Williams: Mr. Speaker, I was commencing to direct the attention of the House to the alternative forms of resource energy that we, as a government, have to look to for the immediate and long-term future because no assurance has been given to us to date by Ontario Hydro officials that we can become totally self-sufficient in relying upon the most traditional source of energy we have available to us in the province. So initiative has to be taken at all levels, provincially and federally, to expand the area of alternatives available to us. There appear to be only three outside of the combustible fuels and hydro-electric energy. Those are in the areas of --

Mr. Conway: Will you amplify your remarks?

Mr. Cassidy: Candle power, wind power and Williams power.

Mr. Williams: -- solar energy and, of course, atomic power.

Mr. Wildman: What about wind power?

Mr. Williams: These appear to be the only resources that will carry us through the end of this century in assured quantities. It is a question of how to economically harness those alternatives so that they can be usable, not only in massive quantities but on an individualized basis.

Mr. Conway: Are you saying you could be replaced by a fan?

Mr. Williams: I think the concern of this government in this area has been emphasized by our own Minister of Energy when he was addressing the select committee enquiring into Ontario Hydro’s proposed bulk power rates back in March of this year. The minister spent a goodly portion of his time in analysing these alternative sources of energy.

Mr. Conway: Lent is over. We have all done our penance.

Mr. Williams: At that time, the significance of those remarks, while they may have been contained in committee reports, were not to my knowledge put on the record in the House. I think they are of such significant importance that that oversight should be corrected at this time.

Mr. Conway: What a man to do it.

Mr. Williams: So I will make reference to the comments made by the minister and the three areas of concern he felt this government should be taking some initiative in, and was taking some initiative in.

Mr. Wildman: I thought Darcy made this --

Mr. Williams: One, of course, was the area of solar energy. This really breaks down into two components: one is reliance on the energy from the sun and the other is reliance on energy from wind which is created in turn by the actions of solar power. The minister pointed out at that time that a report on wind energy was about to be introduced. It had been commissioned by the Minister of Energy and Ontario Hydro as a joint effort, and it indicated there was a concern about the viability of the solar application for wind-generated energy, and concern whether it would be economically feasible to introduce.

The experimentation has been continuing and will continue, although the comments made by the minister at that time were not overly optimistic that it could be brought into service on a massive economic scale. Nevertheless, Mr. Speaker, the minister did point out that --

Mr. Cassidy: You know he is a resource for Ontario Hydro that they never thought of.

Mr. Williams: -- there is a use for wind energy --

Mr. Roy: You are right.

Mr. Williams: -- and there is some commercial viability to the use of wind energy --

Mr. Reid: If you could bottle that, John, you would be a rich man.

Mr. Williams: -- and in fact within the next few months in the Mud River area in the northern part of Ontario there will be somewhere in the neighbourhood of 200 residential units which will be turning for the first time to the use of energy through wind propulsion. I think this is a significant breakthrough in that heretofore those areas have enjoyed no energy source at all.

The experimentation that is going on is international in scope. What concerns me is that while this province has shown some initiative in this area, in wind experimentation and in solar energy --

Mr. Davidson: You’ll fill this Hansard all on your own.

Mr. Williams: -- we recognize we do not have the benefits of 250 or 300 days of sunlight in this area of the world, as are enjoyed in the more southern climes and as such our reliability on solar energy is not likely to be as great as in other areas of the continent.

However, I think it is ironical that the federal government in its national energy policy had the audacity to impose the significant surcharges at the wellhead and at the pumps on oil, and at the same time introduce into its research and development programmes as to alternatives for energy, a mere half-million dollars for 1976-1977, to be applied solely toward solar research and component development.

Mr. Reed: Tell us what you did.

Mr. Williams: Talk about an imbalance of priorities; that surely has to be a classic example thereof. By contrast, I think it’s significant, and so it should be --

Mr. Reed: You’re no better.

Mr. Williams: -- that while the federal authorities in the United States, and in the private sector as well, are investing substantially more sums of money into these areas of research, it only highlights the limited interest and concern that the federal government appears to have in developing these resources which are so essential --

Mr. Reed: What has your government done?

Mr. Williams: -- for ensuring a continuity of our well-being and enjoying the standards of living which we have come to enjoy and take for granted --

Mr. Reed: Fifty thousand dollars last year.

Mr. Williams: -- based largely on the availability of energy for our recreational and industrial and commercial needs.

Mr. Conway: I heard Lorne Henderson got a Canada Council grant to look into that.

Mr. Speaker: Order, please.

Mr. Williams: For instance, in the United States, the energy research and development administration is working on a number of alternative sources of power, not only from solar energy, but from ocean currents, as well as heat beneath the earth, as well, of course, as from the wind.

Mr. Wildman: You have been ebbing and flowing all night.

Mr. Williams: The National Aeronautics and Space Administration in that country --

Mr. Conway: The speed limits don’t apply to your speech.

Mr. Williams: -- has suggested or concluded that the wind power programme, if pursued in the United States, will likely, by the year 2000, generate energy that will represent somewhere between five to 10 per cent of the nation’s electrical resource.

Mr. Reed: And your government won’t have contributed one nickel.

Mr. Good: You didn’t have to inaugurate the wind power programme tonight.

Mr. Speaker: Order, please.

Mr. Davidson: Now that we have the statistics for the United States, what about Ontario?

Mr. Conway: Filibuster, filibuster.

Mr. Davidson: What is your government doing in that same field?

Mr. Conway: Speech.

Mr. Williams: In the area of direct solar energy and an economic viable use of that commodity, again research is being conducted at an ever-increasing rate, at least in the United States.

Mr. Davidson: What is your government doing?

Mr. Speaker: Order, please, order.

Mr. Williams: Compared to the half-million dollars being put forward by the federal government of this country, the private sector in the United States alone is putting $590 million into solar research.

[10:00]

Mr. Davidson: Tell us what the Conservative government in Ontario is doing.

Mr. Williams: It is a shocking indictment of the lack of seriousness being given by the public sector in this country.

Mr. Davidson: On the part of your government.

Mr. Reed: On the part of this government.

Interjections.

Mr. Speaker: Order, please. The hon. member will have an opportunity later if he wishes to participate, thank you.

Mr. Wildman: I’m not so sure.

Mr. Conway: Have you offered your services as a windmill?

Mr. Davidson: If he keeps talking we may never have an opportunity.

Mr. Speaker: I think, with fewer interruptions, things would go along faster, thank you.

Mr. Williams: I point out, for the benefit of the laymen in the House, the significance of the resource available from solar energy. It has been pointed out by one of the learned experts in the States that the solar energy falling upon the Arabian peninsula in one year is greater than twice the oil reserves of the entire globe.

Mr. Reed: What are you doing about it?

Mr. Speaker: Order, please.

Mr. Williams: To some people that may sound trite but I think it’s of some significance.

Mr. Conway: Who wrote this speech?

Mr. Wildman: The Shah of Iran.

Mr. Speaker: Order, please.

Interjections.

Mr. Williams: It is anticipated that by the end of the century, solar technology could fill about 10 per cent of the United States energy needs as I had indicated earlier. That is, perhaps, a more optimistic prediction than that made by our own Minister of Energy who, while being prepared to pursue research in these areas, had suggested that in the area of the use of solar energy, total electrical consumption would be increased by less than one per cent in this country. However, I think it can be appreciated that the availability of daylight hours and solar energy is far less favourable at this latitude than it would be in the southern climes of the United States.

Interjection.

Mr. Speaker: Order, please. Would the hon. member for Cambridge please restrain himself?

Mr. Williams: It is significant, notwithstanding that we are embarking on our own initiative in areas of research in trying to harness economically these alternative sources of energy and it must, I stress, it must be done.

Mr. Conway: Have you offered your services?

Mr. Speaker: Order.

Mr. Williams: We have, of course, the project being undertaken in King township, just north of Toronto, where we have Provident House. This is, to my knowledge, the first total solar home being brought onstream on the basis of experimentation at the cost of the research resources of this province.

Mr. Conway: Mr. Speaker, this is cruel and unusual punishment.

Mr. Williams: In addition thereto, we have started, in conjunction with the Ministry of Housing, a solar-heated senior-citizens apartment building in Aylmer, Ont., which also, I would hope, will produce a great deal of important statistics which will tend to determine the viability or otherwise of expansion of the programme.

Mr. Reid: Ten years late.

Mr. Williams: It is heartening that this government at least is prepared to take some initiative in this area of research which is much needed and, I suggest, from a time point of view, it is imperative. The federal government, I would hope, would start to take greater initiative in this direction if we are not to find our own resources exhausted by the end of the century with no alternatives available to us.

I would like now to move further into the budget paper.

Mr. Davidson: I have a member here who will contradict what you have just said if you give him the chance.

Mr. Williams: I turn now to budget paper D which deals with the Ontario labour market, an area of great concern to all of us because the well-being of the work force in this province, of course, will determine the wellbeing of our economy and populace as a whole, and will ensure, or otherwise, on a continuing basis the high standard of living that we have come to enjoy in this province.

I would point out, as I referred to earlier in speaking about the actions taken by this government in 1975, that as a result of those actions and stimulation of the private sector through the traditional economic pump-priming, employment opportunities in Ontario did, in fact, grow during 1975 notwithstanding the recessional period, and that less than one-half of the increase was required to fully absorb the growth of 139,000 in the number of workers at that time.

The unemployment rate in Ontario in 1975 was initially -- well, throughout the term as I indicated earlier -- 6.3 per cent, or as adjusted, 6.9 per cent, and was below the national average of 7.1 per cent, which I think was very significant, bearing in mind that Ontario is the province that absorbs the greatest part of the work force in the country.

Yesterday, during the private members’ hour, there was a resolution before the House calling for the establishment of a committee comparable to the former Smith committee that dealt with tax reform, and that particular issue was debated at some length and dealt primarily with tax reform as it related to taxes imposed on real property at the municipal level. It was suggested that no action had been taken by the government during a long seven-year period, that purportedly the Smith report had lain dormant during that period of time when, in fact, as I pointed out in the House at that time and again this evening, the province as a result of that report took appropriate initiative to correct some of the inequities that were disclosed by that report.

In particular, the need was pointed out for the responsibility for equalization of assessment to occur, and that the only way in which this could be attained was to give that responsibility to the provincial government as one which could apply equalization of assessment on a uniform universal basis, whereas heretofore, or prior to the time of the Smith report, as is well known, the responsibilities were left to the local municipalities to determine their assessments based on local needs that were considered in isolation of broader needs throughout the region and, in fact, throughout the province.

So, quite properly, the province was swift to move in that area to assume the responsibility for assessment and to establish the provincial regional assessment offices so that a more comprehensive balanced programme could be introduced.

Mr. Wildman: I am determined to stay here as long as you.

Mr. Mackenzie: We are willing to suffer.

Mr. Williams: In conjunction therewith, there was a need, as pointed out in the Smith report, to provide greater equities in the field of taxation as far as real property was concerned. One of the areas in which they felt a substantial inequity existed was in the area of properties that were exempt from taxation. They pointed out the many properties that fall into that category which were therefore depriving the municipalities of substantial sums of tax revenue that would ordinarily be available to them through the realty tax process.

So it was with this concern that the resolution had been introduced into the House, and, I point out, prior to the introduction of this budget. It was a motion that has now proved to have been introduced prematurely preceding the budget and which has now therefore proved to have become redundant because of the measures that are being proposed within budget paper E, which in itself contain some 15 tax proposals that will revolutionize the realty tax basis in Ontario and build a foundation for a new property tax system based on reassessed values and equalization of assessment.

It was suggested that a new select committee of the House be set up for this express purpose and the budget paper points out that a commission will be appointed to receive submissions and to make recommendations on the new property tax system. While I didn’t have the chance to mention this yesterday, I think it needs to be stressed that the establishment of a commission, rather than a select committee of the House, will permit the review to be undertaken much more expeditiously, I would suggest, and to meet the tight time parameters that have been prescribed in the budget paper by the Treasurer to ensure that the legislation can be prepared in the spring of 1977 so as to permit the new tax assessment notices for 1978 to be introduced.

The concerns that have been expressed in that resolution have been largely dissipated as a result of the 15 significant and substantial tax proposals that have been introduced in budget paper E.

Mr. Mackenzie: Name one.

Mr. Williams: Primarily the main thrust of the proposal is to provide a reduced share of property taxes on residences in Ontario. Originally it was proposed that there would be a 100 per cent levy based on market value. A reassessment of that proposal in the light of escalating property costs and shifting in market values has made it clear to our staff people and to the Treasurer that it is necessary to reorder the priorities of levy, whereby the proposal is now that every residence should be taxed at 50 per cent of market value with all other property being taxed at 100 per cent of market value.

[10:15]

This is a substantial shift from what had been originally proposed and, as I suggest, completely dilutes the implied criticism in the resolution that was before the House yesterday that there was an inequitable burden of local end regional taxes that would be falling on the homeowner. Certainly that proposal will completely diffuse that criticism and the substantial tax base will, nevertheless, be reinforced by reason of the fact that in addition to the market value on all properties, other than residential, being taxed at 100 per cent, business taxes on top of that would be applied on the basis of a 50 per cent levy.

In essence, therefore, commercial and industrial properties would be bearing a 150 per cent tax levy as related to the 50 per cent of market value levy being imposed against the hard-pressed residential homeowner. This, indeed, is a most equitable shift and recognition of the problem by this government, In conjunction with that, the present practice of levying different mill rates on residential and commercial properties will be discontinued, and a more global formula will be introduced that again will simplify the process, administratively speaking, and provide greater tax policy flexibility. This, indeed, is a welcome relief.

In the resolution that was before us in the House yesterday, one of the implied criticism’s was that there were no new sources of revenue for local and regional governments to fall back on to support their revenue base. It’s pointed out in the budget paper, of course, that the government will now be permitting municipalities to move into two new key areas of tax revenue; that is, the area of farms and managed forests, where there will be a significant resource for tax revenues, and the area of what were heretofore tax-exempt areas. These are two very significant areas in which revenues will be becoming available to local municipalities that had been denied to them in the past. Complementing and reinforcing that will be the fact that all public properties, except residences, will be subject to payments in lieu of taxes equal to full taxes at 100 per cent of market value. This will include, of course, properties such as universities, residences, chronic hospitals and homes for the aged, so they will be paying their fair share of taxes. The inclusion of all local public property in the property tax base will mean, of course, that local governments will be taxing their own facilities such as schools and parks.

It is hoped that this principle of full taxation at market value will be able to be applied as well to federal government properties so as to enrich again the source of revenues to which the local municipalities should be entitled and which, to this point in time, has been denied them.

Mr. Wildman: But you reneged on what was in your Edmonton commitment.

Mr. Williams: The taxes that will be paid by the government property school support initiative will now provide that the levy in lieu of taxes, which heretofore had excluded a levy applying to school taxes, will now be included. This again is a significant enrichment of the taxes that will be paid by government-owned institutional facilities.

Another very significant area of improvement is in the area of business assessment. As we are all aware, the complexities of applying business assessment in the past have been compounded by the different percentage factors applied against different businesses. Under the proposals before us that the commission will have to consider is the fact that all real property used for the purpose of a business, including government administrative facilities, will be subject to an additional assessment of 50 per cent of market value for business taxes; but it will be under a uniform percentage figure.

The single rate of 50 per cent for business assessment will replace the current rate of 25 per cent for car parks, 30 per cent for retail stores, 50 per cent for professional offices and retail chains, 60 per cent for industry, 75 per cent for financial and wholesale businesses and 140 per cent for distilleries. The tax on business assessment, however, will continue to be a tax on the occupant rather than on the owner of the property.

So these are significant ways in which more equitable sources of revenue will be made available to the local municipalities to minimize the pressures to which they’re continually being subjected. This is their sole source of support outside of the provincial and/or federal grants or subsidies they receive. It will strengthen their revenue base and provide greater equity on the pass-through.

I would like to come to budget paper F which dwells on an issue that is of profound importance. It is the one paper in the budget that contains a degree of pessimism and so it should.

From an Ontario perspective, it appears that the auto industry is entering into a critical area of chronic imbalance in providing job opportunities and productive capacity in this country as related to our counterparts in the United States. I find it shocking that it took the initiative of this government to bring forward the first real assessment and critique on the state of the auto industry since 1970. It seems that it should have been the federal government that was taking this initiative, because of the international implications of the Canadian auto pact.

I’m sure that the members of the House from the areas of the province where the auto industry is the mainstay of their economy will in turn be speaking at some length and sharing these concerns with the government members as to the direction in which the auto industry is going in this country.

More specifically, while it is anticipated that the automobile is and will continue to be a basic and important part of family and business life in Ontario, it is questionable whether the industry will remain as healthy as it has in the past. It’s not because of some of the negative attitudes that have been shown at all levels of government toward the provision of the appropriate roadways and throughways to provide the motoring public with the facilities to use their automobiles and to permit the commerce of the province and the nation to move. More directly it is the attitudes within the auto industry itself and the employees involved therm.

The importance of this paper is highlighted by the introductory observation that 90 per cent of the Canadian automotive industry is located in Ontario, which I referred to earlier in my remarks this evening.

Mr. Wildman: I think that was about 8:30 p.m.

Mr. Williams: You are absolutely correct. What is of greater significance is that the paper is quick to point out that the auto industry in Ontario accounts directly for over 12 per cent of wages and indirectly for one out of every six jobs in this province.

Accordingly, it is obvious that the future health of this industry is of vital concern to the Ontario government.

Mr. Reid: That’s almost what the Treasurer said.

Mr. Williams: With the short-term recovery of the industry now under way, a number of serious longer term problems in the Canadian industry need, however, to be identified and dealt with. As I pointed out a few moments ago, the Ontario government believes that the time is now right for a full review of the facts concerning the performance under the auto pact and the gains and losses to Canada. Budget paper F is the first such presentation, as I indicated a moment ago, of a comprehensive Canadian review of the auto industry. The analysis that has been made in this paper is that while growth has been substantial in the initial period under the auto pact, major problems have in fact developed since 1969.

As we are all aware, based on a mutual desire to reach a lasting accommodation on the automobile trade situation, Canada and the United States launched a rather innovative free trade undertaking with the signing of the auto pact back in early 1965. The record discloses that assembly and parts manufacturers moved quickly to modernize Canadian production facilities to take advantage of those opportunities under the pact. Certainly during the first five years of that pact the industry adjusted to its new environment with significant gains being made in the auto industry, to the benefit of our economy and to the work force in this province.

However, since the advent of the 1970s, serious problems have emerged and a number of these significant gains have been eroded. In line with their commitment to strengthen the Canadian production facilities and integrate them into the North American market, members will recall that auto assemblers undertook a major investment programme at that time.

Mr. Speaker: Would the hon. member find it convenient to break his remarks at this point and move the adjournment of the debate?

Mr. Reid: It was convenient at 8:01 p.m.

Mr. Williams: Okay, Mr. Speaker.

Mr. Williams moved the adjournment of the debate.

Motion agreed to.

Hon. Mr. Wells: Mr. Speaker, before moving the adjournment of the House, I think the members are aware that on Thursday after question period we will continue with the estimates of the Ministry of Revenue and, if they are completed, follow with the estimates of Management Board.

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

Motion agreed to.

The House adjourned at 10:30 p.m.