Legislative Assembly of Ontario

The House met at 2 p.m.

Prayers.

ESTIMATES

Hon. Mr. Welch: Mr. Speaker, I have a message from the Honourable the Lieutenant Governor signed by her own hand.

Mr. Speaker: By her own hand, Pauline M. McGibbon, the Lieutenant Governor, transmits estimates of certain sums required for the services of the province for the year ending March 31, 1979, and recommends them to the Legislative Assembly, Toronto, March 13, 1978.

COMMONWEALTH DAY

Mr. Speaker: Hon. members, today, the second Monday in March has been set aside throughout the Commonwealth as a day to be known as Commonwealth Day, on which member nations draw attention to this unique world organization of which Canada is an active member.

As members are no doubt aware, the Commonwealth consists of one-quarter of the people of this earth, and one-half of the poor people of the world are members of the Commonwealth. I am sure all members will agree with me that at a time when we as Canadians tend to look inward it is useful to recall our international commitments, not only in the governmental organizations of the Commonwealth but in the important nongovernmental organizations such as the Commonwealth Parliamentary Association. This year, of course, the Commonwealth Games will be held in Edmonton which will no doubt strengthen Commonwealth ties and the appreciation of Commonwealth relationships in Canada.

On the occasion of Commonwealth Day we have in the Speaker’s gallery today the consular representatives in Toronto of nine members of the Commonwealth. These distinguished members are: from Australia, Mr. Llewellyn Martin; from Barbados, Mr. Stanton Carter; from Britain, Mr. F. S. Fielding; from Guyana, Mr. E. V. Persaud; from India, Mr. M. L. Suri; from Malaysia, Mr. N. Sivarajah; from Malta, Mr. John Pisani; from New Zealand, Mr. P. L. Harland; and from Trinidad and Tobago, Mr. Calvin Smith. I am sure all members will wish to welcome them on this occasion.

OPP ROLE IN STRIKE

Hon. Mr. Kerr: On a point of privilege in connection with the point of privilege raised last Friday by the hon. member for Wentworth (Mr. Deans): When I answered the hon. member’s question in the Legislature last Thursday I did not recall using the expression to a radio reporter, “only half the workers at the plant want the union.” I have since had the opportunity personally to listen to a tape of my interview with the reporter outside the cabinet office and there is no question that I did use that phrase.

Mr. Nixon: You misspoke.

Hon. Mr. Kerr: Mr. Speaker, I apologize if I inadvertently or incorrectly advised the Legislature last week on this point.

As far as the second point raised by the hon. member is concerned, I refer him again to my statement in the Legislature last Thursday afternoon when I said the decision to inform workers of their rights and responsibilities during a strike was made by the local OPP detachment commander, Sergeant Roy Glover. It may well be true that the local plant manager made this request to officers who visited his plant on the morning of March 3, but the important thing is that the decision was made independently later that same day by Sergeant Glover. There is nothing in my answers to the hon. member for Wentworth --

Mr. Cassidy: What?

Hon. Mr. Kerr: -- which he quoted last Friday which conflicts with my Thursday statement.

Mr. Davidson: Who are you trying to kid?

INCREASE IN OHIP PREMIUMS

Mr. Speaker: On Thursday last, March 9, the member for Scarborough-Ellesmere (Mr. Warner), on what he considered a point of privilege, asked me to rule that the OHIP premiums are, in fact, a tax, and that any increase therein would require legislation and the appropriate message from Her Honour, the Lieutenant Governor. He referred to section 54 of the British North America Act and standing order 86 of this House, and on Friday, March 10, he added a citation from the Magna Carta.

Mr. Makarchuk: Good document.

Mr. Speaker: I must first refer you to the Health Services Insurance Act, Revised Statutes of Ontario, 1970, chapter 200, section 32, clause (e), which provides that the Lieutenant Governor in Council may make regulations “prescribing the amounts of premium payable for a single insured person, an insured person and one dependant and an insured person and two or more dependants and governing the time and manner of payment.”

What the member is, in fact, doing is asking me to rule on the legality or constitutionality of legislation passed by this House. I must inform the House that this question is beyond my jurisdiction. I quote from a ruling delivered by Mr. Speaker Cass on January 27, 1969, as follows: “There have been numerous decisions by former Speakers, the most recent being that of Mr. Speaker Stewart on April 4, 1944, to the effect that it is not within the Speaker’s responsibilities or powers to give an opinion on the legality or constitutionality of any legislation introduced in the House.”

As mentioned, the matter raised by the member pertains to the legality or constitutionality of a statute. As such, it obviously is not a matter affecting the special privileges which the House and the members thereof enjoy, and I must, therefore, consider it desirable to point this out to the House. In other words, the hon. member for Scarborough-Ellesmere did not, in fact, have a valid point of privilege.

Mr. Warner: Mr. Speaker, on a matter of principle --

Mr. Breithaupt: I think he should resign.

Some hon. members: Resign.

Mr. Warner: If you’ve got a better offer.

Mr. Ruston: Resign.

Mr. Warner: Do I hear shouts of a better offer over there?

An hon. member: We’re going over our reports.

An hon. member: Back to school.

Mr. Warner: Mr. Speaker, I firmly maintain that some of my privileges and, consequently, those of --

Mr. Speaker: You can’t debate the ruling.

Mr. Warner: This is on a different matter, a different point of privilege.

Mr. Speaker: You can’t debate the ruling. You can challenge it, if you wish.

Mr. Warner: I’m not debating your ruling, Mr. Speaker, nor am I challenging the ruling.

Hon. Mr. Rhodes: Then sit down. You can’t make a speech.

Mr. Warner: I appreciate your effort. What I have is a point of privilege under section 42 of the standing orders. I maintain that the privileges both of myself as a member and of my constituents have been removed by the action of this government. No taxation --

Mr. Speaker: Order. There is ample opportunity for you to raise that during the estimates, or during the budget debate. You can do it by way of a question. If you’re not satisfied with a question, you may have recourse to the late show, but you cannot question the ruling of the Chair, which includes the standing orders.

Mr. Warner: May I raise the matter then by way of introducing a bill this afternoon following question period?

Mr. Speaker: That’s your choice.

Mr. Warner: That’s what I shall do.

Mr. Makarchuk: We’re one step ahead of you.

STATEMENTS BY THE MINISTRY

ALGONQUIN PARK

Hon. F. S. Miller: Mr. Speaker, I’m pleased to announce that a significant step --

Mr. Wildman: Is this a policy statement?

Hon. F. S. Miller: -- to protect the environment of the interior of Algonquin Park will be taken when the regulations under the Provincial Parks Act are amended to require that after April 1, 1978, only burnable food and drink containers may be taken into the interior of Algonquin Park by canoe trippers and hikers. These restrictions follow the successful experiment introduced last year in Quetico Provincial Park. The results were all positive. Litter was considerably reduced, the quality of the environment was improved and the subsequent cost of garbage removal was materially lowered.

This significant environmental decision is aimed primarily at reducing the volume of garbage in Algonquin Park. The majority of abandoned materials are in the form of disposable food and beverage cans and bottles which decompose either very slowly or not at all resulting in degradation of values and in a decline in the recreational quality of one of Canada’s best-known parks. Obviously, this accumulation spoils the scenic and recreational value of remote areas in Algonquin Park for everyone. We have taken this positive action to prevent it.

Since its inception, Algonquin Park has provided thousands of visitors with some of the best wilderness canoeing opportunities available in Ontario. The provision of this high-quality wilderness experience has been threatened by the serious litter problem, requiring expensive cleanup programs. The ban was proposed by a number of individuals and organizations, including the Algonquin advisory committee, and has had wide public support The results of a questionnaire survey showed that a majority of the interior visitors favoured such a ban. The Ontario Parks Council has also recommended its implementation.

[2:15]

I should point out that the forthcoming ban will not apply to the organized campgrounds where special arrangements are made for garbage collection and disposal. These are primarily along the Highway 60 corridor. This restriction is another step in the implementation of the master plan for Algonquin Park which is designed to ensure that interior camping areas remain unimpaired for future use and enjoyment.

HIRING OF 18-YEAR-OLDS

Hon. Mr. Grossman: Mr. Speaker, it has been brought to my attention -- by the Minister of Natural Resources, as a matter of fact -- that there is some concern among resort and tourist operations, for example, that people of 18 will not be allowed to work in licensed establishments if the amendments to the liquor regulations raise the legal drinking age.

The question is particularly topical now because hiring decisions for summer jobs are being made in many sectors of the hospitality industry. I want to quell any doubts, by giving my assurance that whatever the government ultimately decides the legal drinking age should be, 18-year-olds will, nonetheless, continue to be permitted to work in licensed premises.

Mr. S. Smith: The Legislature decides, not the government, may I remind you.

AUTO ACCIDENT BENEFITS

Hon. Mr. Grossman: Mr. Speaker, I have a second statement. I would like to announce today that we are amending the regulations under the Insurance Act to improve automobile insurance accident benefits.

Mr. Laughren: Haven’t we got insurance, Larry?

Hon. Mr. Grossman: No-fault accident benefits, being paid at the present time, were introduced more than six years ago by this government; in January 1972, to be specific.

An hon. member: How about lowering the rates?

An hon. member: When is the minister going to listen to the consumer?

Mr. Cassidy: The minister is more right-wing than Sterling Lyon.

Mr. Swart: The government’s 25 years behind the times.

An hon. member: Why doesn’t the minister do what the consultants told him?

Hon. Mr. Grossman: I don’t think I need to go into any great detail on what inflation has done to the level of 1972 benefits in terms of 1978 dollars. Quite simply, the current benefit level is pitifully inadequate. What we are doing today is to make it contemporary.

To provide just a little background, the provision of these benefits is mandatory and must be included in every contract of third party liability insurance sold in this province. The benefits allow every insured person, including dependants and pedestrians hit by an insured automobile, to have immediate recourse to fixed payments by reason of death or loss of earnings. This eliminates the need to go to court to establish fault, and any amounts recoverable on a fault basis, on either court judgement or settlement are reduced by the accident benefits paid or payable.

The select committee on company law has recommended a doubling of death benefit and loss-of-earning benefit. To this we have added certain other changes based on the experience gathered in working with the provisions. We are today, therefore, announcing the following major benefit increases:

Firstly, increase of medical and rehabilitation benefits in excess of OHIP and other expenses within the new Health Insurance Act from $5,000 to $25,000. Chiropractic expenses, which were formerly not covered, are included in the package.

Secondly, death benefit of the head of the household and his or her spouse is increased from $5,000 and $2,500 respectively, to $10,000.

Thirdly, death benefits for all children under 21 are increased to $2,000. Previously, it was $500 for children under five, and $1,000 for children between the ages of five and 21.

Fourthly, funeral expense benefits are increased to $1,000 from $500.

Fifthly, the maximum payable for loss of earnings has been doubled from $70 to $140 per week.

Mr. McClellan: Why won’t you raise the compensation rates the same way?

Hon. Mr. Grossman: The regulation is in keeping with the provisions of the Family Law Reform Act in that it incorporates a new definition of spouse. As a result, there are benefits for the partners in a common law relationship of five years’ duration or in a relationship of some permanence, regardless of the length of time, where there is a natural child.

A very important part of the regulation changes the concept of “whole and continuous disability” to add a provision which entitles an individual who has consented to return to work and who has suffered a relapse within 30 days, to a resumption of benefits. This will encourage members of the labour force to attempt to resume work without penalizing them if it is then discovered that the attempt was premature. This regulation will come into force July 1 of this year to give the insurance industry sufficient lead time to revise forms and reprogram computers. I might add that the much-needed revision of this regulation followed extensive dialogue in consultation with members of the industry.

The no-fault benefits were introduced in 1972 by this government to eliminate financial hardship for those involved in automobile accidents in the interim period while the insurance companies and the courts wrangled over whose insurers should pay. It was a concept which worked, but it can only continue to work if the benefits reflect 1978 costs.

The government feels this is a progressive amendment which will help alleviate the hardship suffered by those consumers unfortunate enough to be involved in an accident.

ORAL QUESTIONS

AUTO PACT

Mr. S. Smith: A question for the Premier, Mr. Speaker: In view of the somewhat over 12,000 unemployed in the city of Windsor, and in view of his interest and ours in ensuring a more equal balance in the auto trade agreements with the United States, can the Premier tell the House if he has been informed by Chrysler concerning any possible plans they may have with regard to the pickup truck assembly plant -- the one at Tecumseh and McDougall? Has the Premier been informed as to any plans they might have to move that plant out of Canada into the United States? Could he report to this House on that?

Hon. Mr. Davis: Mr. Speaker, I have had no information of that kind. I will check it out for the Leader of the Opposition, but there’s been no information of that nature brought to my attention.

Mr. S. Smith: I’m pleased to hear that. By way of supplementary may I ask the Premier to give some consideration to a letter addressed to him, which is probably in his office, from the president of Local 444 of UAW? And will the Premier speak to Chrysler and make a full report to this House? Thank you.

Hon. Mr. Davis: Yes.

Mr. Makarchuk: Supplementary: In view of the fact that the whole matter of auto parts and auto manufacturing is one of concern between both the provincial and the federal governments, is the Premier prepared to call either a press conference or some kind of a public gathering where he can state Ontario’s case? The members of the federal government who are responsible for this particular sector of our manufacturing economy could also state their case, and the Premier would be able to tell them to get off whatever they are doing and insist that we get our rights and our proper share of the manufacturing in Canada.

Hon. Mr. Davis: Mr. Speaker, this point has already been made to the government of Canada. I believe they’re aware of it. I don’t know what purpose would be served in having a press conference. They have all the figures and they have the views of the government of this province that have been stated both privately and publicly.

Mr. Makarchuk: I think the people of Ontario would want to know what you are all about.

Mr. B. Newman: A supplementary to the Premier: During his discussions with Chrysler concerning the potential phasing out or closing down of the pickup line assembly plant, will he use his powers of persuasion, if the Chrysler officials decide on closing that plant, to keep it open as long as possible and/or substitute some other operation in that plant so the work force in the city of Windsor can remain at Chrysler as it is today?

Hon. Mr. Davis: It has always been the approach of myself and the government -- the ministers -- to do their best to ensure employment opportunities whether they be in Windsor or even in Brampton.

Mr. Cooke: Mr. Speaker, a supplementary for the Premier: I would like to ask the Premier, in view of the fact it was mentioned in the Throne Speech that it was felt something had to be done with the auto pact, what specific new initiatives is this government prepared to take to see that the auto pact begins to work and a balance begins to exist, so that cities like Windsor do not have to put up with 11.4 per cent unemployment any longer?

Hon. Mr. Davis: Mr. Speaker, I will send to the hon. member for his reading, the presentations made to the government of Canada on this issue. I think they lay it out fairly clearly and I will send him a copy of that.

Mr. Cooke: I said “new initiatives.”

Mr. S. Smith: I’ll have copies of that. I think it would be a good idea.

Hon. Mr. Davis: Yes, I have got a lot of stuff I want to send you.

Mr. S. Smith: Send it along, send it along. It’s better than the usual secrecy anyway.

FRENCH-LANGUAGE SERVICES

Mr. S. Smith: A second question to the Premier on a different topic: Since the Premier believes, as we all do, that we must “reduce factional sentiments in our society” -- I am referring to his speech at Bucknell University on Friday -- does he not agree that an all-party committee of the Legislature to review and report on the state of French-language programs and services in Ontario would be the first step to finding, as the Premier put it, “reasonable accommodation to situations our forefathers were perhaps not as prepared to discuss”? Is the Premier now prepared to establish such a committee, as I have asked him to do?

Hon. Mr. Davis: I appreciate the suggestion from the Leader of the Opposition. I’m delighted to see he read that small excerpt in the Globe and Mail from my rather lengthy lecture to the students and faculty of Bucknell University which is in Lewisburg, Pennsylvania.

Mr. S. Smith: I wouldn’t have missed it.

Mr. Lewis: Maybe the Premier should circulate that as well.

Hon. Mr. Davis: If the member will read it, I’ll circulate it. It’s really one of the better lectures that have been given.

Mr. Martel: That doesn’t say much for the quality of the lectures.

Mr. Makarchuk: The Treasurer circulates his speeches. Why can’t the Premier?

Hon. Mr. Davis: As I say, it’s one of the better ones. I can only make a judgement because it’s the first one I’ve heard of that particular lecture series.

Mr. Lewis: You mean given by you.

Mr. Laughren: Modesty might become you.

Hon. Mr. Davis: No, at that particular university because I’ve not attended that university.

Mr. Cassidy: I am reconsidering the idea the Premier should leave politics for academic life.

Hon. Mr. Davis: There was no degree. I was there on a working mission.

Mr. Cunningham: There was not even a football team there?

Hon. Mr. Davis: No, Bucknell is not in that; they play basketball very well.

Mr. Speaker: Order.

Hon. Mr. Davis: I was interrupted, Mr. Speaker.

Interjections.

Hon. Mr. Davis: Actually, in my observations, I was talking about factual or regional differences in a Canadian perspective. Perhaps when the Leader of the Opposition reads that lecture very carefully, he will understand what it was I was attempting to say.

Mr. Samis: I doubt it.

Hon. Mr. Davis: While I appreciate the constructive suggestion as to the possible establishment of a select committee, I really think the best way for this to be discussed and debated is here in the Legislature. I haven’t a closed mind on any subject. I told the Leader of the Opposition when he mentioned this to me a few days ago that I didn’t have a closed mind on it. But I think for an analysis of our existing programs and some greater awareness and understanding of them, perhaps some discussion here in the House might be a better route to go. However, I haven’t said: “No. We will never have a select committee.” If he is asking me whether at 2:15 this particular afternoon we are ready to appoint a select committee, the answer to that would have to be no.

Mr. S. Smith: By way of a supplementary, while I appreciate that the Premier did tell me that the other day, could I ask him, first of all, if he will ask his House leader to find a day for a special debate on this very matter, as he suggests? Secondly, since he says his mind is not closed to the idea of a select committee, could he, in thinking about that, recall that the main purpose of such a committee would be to depoliticize and take out some of the partisan aspects of what is potentially a very divisive topic but which could be a very useful topic for the future of our country and our province?

Hon. Mr. Davis: I’m delighted to sense that the Leader of the Opposition is aware of it being potentially divisive, if that is the right way to pronounce it. I think some discussion in this House perhaps after the recess might be appropriate. I have always attempted to depoliticize this issue.

Mr. Martel: Yes, that was obvious last July.

Hon. Mr. Davis: It became somewhat politicized with the intervention of some of the Leader of the Opposition’s close associates in the government of Canada who were politicizing it here for the people of this province, which I thought was unfortunate and which prompted a reply from the Premier of this province to inform these gentlemen that they were not adding anything of a constructive nature in terms of the current discussion. If the Leader of the Opposition is saying let’s depoliticize it, I can only assure the Leader of the Opposition that it has never been my intent to politicize it.

Mr. Samis: Can I ask the Premier if he is concerned about an increase in backlash in this province against minority rights, and as Premier, in the interests of national unity, what is he doing to challenge and confront such a backlash?

Hon. Mr. Davis: The hon. member may be more aware of a backlash than I am. I can only give him my own personal observations and they are not totally representative. I haven’t talked to large numbers of people, although in just about every gathering in some casual conversation this matter is discussed. I still sense a very genuine feeling in this province on the part of the people with respect to the language rights of the Franco-Ontarians.

I recognize there are always exceptions to this. It’s fair to state that, contrary to the policy of the member’s party, there is fairly general support for the present position of the government in what we have been attempting to do, with, I think, some measure of success. I question whether there is this backlash. The hon. member may feel there is.

[2:30]

Mr. Samis: You mentioned it in Montreal.

Hon. Mr. Davis: Mr. Speaker, I did not mention it in Montreal. I was asked a specific question, “Was there ... ?” and I said there could be. I did not say there was, and I think any accurate reading --

Mr. Samis: You are splitting hairs again.

Hon. Mr. Davis: -- of what was said will show that, because I am very careful what I say on that particular topic.

Hon. Mr. Welch: There’s an important distinction.

INCREASE IN OHIP PREMIUMS

Mr. Cassidy: Mr. Speaker, ignoring the Leader of the Opposition’s efforts to depoliticize every issue in this province, I would like to ask the Premier this question: In view of the mounting crescendo of public opposition to the OHIP premiums increase as announced in the budget, is the government prepared to reconsider its position and to maintain OHIP premiums at or below the levels which existed before last week’s budget?

Hon. Mr. Davis: Mr. Speaker, I recognize the leader of the New Democratic Party wants to politicize everything in sight. That’s part of our process. I don’t quarrel with that, but I would say the answer to that question at this moment, of course, is no.

Mr. Cassidy: Supplementary: With the growing amount of public opposition to premium increases, will the Premier not take the initiative and bring this issue to the Legislature by means of resolution or by means of legislation in order to submit his government’s plans to debate in this House to be followed by a vote?

Hon. Mr. Davis: Mr. Speaker, these matters are always contentious. They are always difficult. It is not easy for government in its assessment of the situation in this province to make decisions with which everybody is going to agree, but to ask for a specific resolution, I think the leader of the New Democratic Party knows full well the process in this House. I fully expect from what I have read that in his contribution tomorrow afternoon he will introduce a motion of less than confidence --

Mr. Martel: What else do you expect?

Hon. Mr. Davis: -- and that is the process that I think should be followed. The avenue for members to make their views known and to offer constructive suggestions to us is open to us in the budget debate, but the leader of the New Democratic Party can, tomorrow at about 3:15, take whatever steps he may feel he wants to take, although I would just urge him in advance to take a look at the total economic situation, take a look at the total health costs, ask himself in terms of being responsible what other --

Ms. Gigantes: Soak the poor.

Hon. Mr. Davis: -- opportunities are there in terms of government administration and policy --

Mr. Swart: All your policies are reason for no-confidence.

Hon. Mr. Davis: -- and sort of put that into the mix. I know his answer is very simple, tax the corporations out of existence so we don’t have any tax base --

Mr. Martel: He didn’t say that.

Hon. Mr. Davis: -- on which to fund the economic and social policies of this province.

Mr. Makarchuk: Six other provinces do not charge for OHIP.

Mr. S. Smith: Since, as the Premier knows, our concern on this matter is one that we feel ought to be dealt with in the social development committee, where we hope that alternatives --

Mr. Cassidy: Going to depoliticize it, eh?

Mr. Lewis: What a copout that is.

Mr. S. Smith: -- can be put forward by all parties, since it’s easy enough to criticize but not as easy to present alternatives --

Mr. Martel: There is Xaviera Hollander again. Another position.

Mr. S. Smith: -- will we have the assurance of the Premier that we are going to have the co-operation of the government in our search for the various possible alternatives, that all studies done by the Ministry of Health and by the Treasurer (Mr. McKeough) will be made available to that committee for use and that the results of that committee will, in fact, be taken very seriously by the Premier?

Hon. Mr. Davis: Mr. Speaker, I take the results of every select committee of this House seriously. I took the results of the Hydro select committee very seriously in terms of a certain issue.

Mr. Lewis: Right. Got you off the hook.

Hon. Mr. Davis: I waited, and in that I didn’t get any, shall we say, constructive alternative, then the government obviously had to make that decision. I can assure the Leader of the Opposition that I think the Minister of Health (Mr. Timbrell) is prepared almost literally to inundate the committee in terms of material, statistical information et cetera, and I can assure him that in terms of the functioning of the committee it will not be short of any co-operation from the government.

Mr. Lewis: It’s like a godsend to you to have a Liberal Party to shore you up.

Mr. Martel: They help you, don’t they?

Mr. Cassidy: In view of the fact that the amendments to the budget and the budget itself will not be voted upon until December, and in view of the fact that the cabinet his already acted by order in council concerning this premium increase, does the Premier not agree that it is contrary to the principles of parliamentary democracy to impose a tax increase without legislation from this House and does he not agree that there should be no taxation without legislation which is passed before May 1?

Mr. Martel: Fought a couple of wars over that, didn’t they, Bill?

Hon. Mr. Davis: I would only remind the leader of the New Democratic Party of the ruling that you made earlier this afternoon, Mr. Speaker. I think that really is an answer in itself.

Interjections.

Mr. Warner: A supplementary question to the Premier: Noting that at least one of his cabinet colleagues has publicly disavowed any responsibility for the budget -- and there are probably others --

Mr. Lewis: At Hy’s steak house, no less.

Mr. Warner: -- could he please explain why he has rejected the democratic principle of no taxation without legislation?

Mr. Eaton: Have you ever heard of paying fees for service?

Hon. Mr. Davis: This government has never rejected any tradition or principle of the parliamentary process. The process is totally understood, I think some days, even by the hon. member who asked the question.

Mr. Speaker: A new question?

Mr. Cassidy: Final supplementary, Mr. Speaker: In view of the fact that the Premier has already rejected any action arising out of this legislative committee, does the Premier not understand that the opposition to these OHIP premium increases among the public of Ontario is real and that this is not sabre-rattling on the part of the New Democratic Party of Ontario?

Hon. Mr. Davis: Since the new leader assumed office, I can never distinguish between real problems and sabre-rattling, because he rattles his sabre -- if I may use that terminology -- at every opportunity he gets.

Mr. Martel: That’s a great answer. You just ignored the question --

Mr. Cassidy: The people of the province will judge that, not just this Legislature.

Mr. Eaton: You blew it again, Mike.

Mr. McClellan: What is your position today?

Mr. Martel: It’s a new position, isn’t it? Xaviera Hollander would be envious of you.

Mr. Hodgson: Show some respect, Elie; you’re a House leader now.

FLECK MANUFACTURING COMPANY

Mr. Cassidy: Mr. Speaker, I have a new question for the Solicitor General. Does the Solicitor General have any comment on the affidavit he received today concerning what has been happening at Fleck Manufacturing Company in Centralia, particularly in view of the apparent contradictions between it and his earlier statements, and especially the fact that the police were apparently involved at least two weeks before the minister had previously admitted?

Hon. Mr. Kerr: Mr. Speaker, I have had a chance to read the letter which accompanied the affidavit. I really haven’t had a chance to look at the affidavit; it was handed to me just a few minutes before two o’clock. However, the letter refers to the affidavit and makes certain allegations. I intend to look into them.

Mr. Mackenzie: Supplementary: If indeed the information is verified, that the police were in that plant at least two weeks prior to what we have been told to date and discussing the strike situation with management and employees, and in view of the comments that were in Saturday’s Toronto Globe and Mail made by Sergeant Glover of the Exeter detachment of the OPP, who said, “There is no doubt that barring the individual in question from the strike site has it effects; this does the job,” would the minister not take a look at some other form of investigation, rather than having the OPP investigate their own complicity in this situation?

Mr. Martel: That is like putting Dracula in charge of the blood bank.

Hon. Mr. Kerr: There was a visit by a police officer to the plant, I believe in late January or early February, in respect to another investigation. I understand it was in respect to a criminal investigation and not in respect to the present dispute at the company between labour and management. As far as the report in the newspaper is concerned, I will look into that. I didn’t see that particular quote.

Mr. Speaker: Final supplementary; the member for Hamilton East.

Mr. Mackenzie: Would the minister then comment or also check into the statement in the affidavit as to whether it was a criminal investigation some two weeks prior? As to the comment made in that affidavit, Mr. Turner approached me and said that Constable Maclntyre would be on the picket line the first morning of the strike. Further, in checking that, would the minister also find out if, just before a previous attempt to organize this plant, some eight or nine months prior to this successful organizing drive, the Ontario Provincial Police were also in the plant, discussing with management and the employees the effects of a union in that plant?

Mr. Warner: Shameful. Union-busting.

Hon. Mr. Kerr: I will look into those matters.

Mr. Martel: I think you should fire a few people.

Mr. Riddell: This is a new question to the Premier on a topic related to the Fleck Manufacturing Company strike. As a prelude to my question, I might say that I spent two hours this morning talking to the workers in the plant, to the workers outside the plant and to the management --

An hon. member: Too little too late.

Mr. Speaker: Question?

Mr. Riddell: -- and it appears that considerable headlines were made last week arising from questions put by the NDP, information which was in a large part erroneous --

Ms. Gigantes: Question?

Mr. Speaker: Question?

Mr. Riddell: -- accusations which were false and allegations which were unfounded.

An hon. member: Where were you last week?

Mr. Speaker: Order. That’s not a question; that’s a statement.

Mr. Riddell: In the interest of de-escalating --

Mr. Deans: In whose opinion?

Mr. Riddell: In my opinion, after talking to the workers --

Mr. Deans: After management put the words in your mouth.

Mr. Speaker: Order.

Mr. Riddell: After I talked to the workers.

Interjections.

Mr. Speaker: Order. If the hon. member doesn’t wish to pose a question, I can recognize someone else.

Mr. Riddell: I’ll pose my question, but I’m getting a lot of flak, Mr. Speaker.

Interjections.

Mr. Laughren: Fleck, it’s called -- not flak.

Mr. Davidson: You’re getting a lot of Fleck.

Mr. Riddell: In the interest of de-escalating an explosive situation --

Mr. Lewis: What do you mean, explosive?

Mr. Riddell: -- explosive from the standpoint that there are supposed to be 1,300 shift workers coming from Talbotville --

Mr. Lewis: Oh, I see.

Mr. Riddell: -- will the Premier review and report to the House on the situation at Centralia concerning the Fleck Manufacturing Company so that the facts may be known? I refer specifically to what the police said to the workers before the strike began and how the police, strikers and workers have conducted themselves --

Mr. Deans: Welcome aboard.

Mr. Martel: You know they always are in every strike -- the police.

Mr. Riddell: -- since the strike occurred. Will the Premier undertake to ascertain the facts and report to the House? In that connection, will the Premier also undertake to table the documentation concerning the application, consideration and terms of the lease which Fleck Manufacturing Company holds at Huron Industrial Park with the Ontario Development Corporation?

Mr. Lewis: We’re not as nasty as you are, my friend. Not as insidious.

Mr. S. Smith: Don’t put on that kind of attitude -- holier than thou. That’s why you are the third party.

Mr. Lewis: Well, come on. You open up by asking falderal and then you get to what you really want. You never change.

Interjections.

Mr. Speaker: Order, order.

Mr. Kerrio: Hang up your skates, Stephen, you’re done. Put your stick away.

Mr. Deans: We at least ask about things that are immediate and relevant.

Hon. Mr. Davis: Mr. Speaker, I’m tempted to ask the hon. member if he would repeat his question, but --

Mr. Riddell: He’d be glad to.

Hon. Mr. Davis: It was the preamble before that I’m sure he wanted to repeat. I must say he looks very healthy -- I welcome him back. Nice to have him here.

Interjections.

Mr. Speaker: Order, order.

Mr. Riddell: Point of privilege -- after a very heavy two months on legislative business I was just giving nature a chance to get ready for another year of dedicated service.

Mr. Deans: That’s as much hogwash as the first piece.

Mr. Speaker: Order, order.

An. hon. member: The Premier has a tan.

Mr. Speaker: I don’t think the Premier or any other member of the House is too concerned about the degree of tan that the hon. member is sporting.

An hon. member: He asked about it.

Hon. Mr. Davis: Nor are we interested in the health of his body, for that matter, but --

Mr. Reid: We know the health of his mind --

Hon. Mr. Davis: Yes, it’s his mind that we worry about.

Mr. Reid: Looks like a terminal case.

Hon. Mr. Davis: In answer to the first part of the question, I think really the Minister of Labour (B. Stephenson) has dealt with some of the matters raised, but I will alert her --

Mr. Laughren: That’s what bothers you.

Hon. Mr. Davis: -- as to the specifics of the question the hon. member asked and will ask her to make a report to the House.

With respect to the second part of the question, I will ask the Minister of Industry and Tourism (Mr. Rhodes) to table whatever documentation there is, which I think is pretty close to what has already been reported in the press. But if the hon. member hasn’t had a chance to read that, the lease, I’m sure, will be readily available.

Mr. Martel: They’re scandalmongers.

Hon. Mr. Davis: Listen, your own leader didn’t cover himself with glory, either.

Mr. Speaker: The hon. member for Welland-Thorold.

Mr. Martel: No, no. I read what he said.

Mr. Speaker: Will the member for Sudbury East allow his colleague to ask a question?

Mr. Martel: I am having a discussion with the Premier.

PAYMENTS TO MUNICIPALITIES

Mr. Swart: Will the Treasurer recall that according to his own figures the province one year ago had a net balance owing to municipalities of $18 million? Will he recall that through his unilateral change of the Edmonton commitment, making it retroactive for a period of four years, and that in September that $18 million owing was changed to $298 million owing by the municipalities to the province, and that he now claims in a new budget that he has overpaid municipalities by $444 million? Because he has now unilaterally, without any notice to municipalities, assessed new costs against municipalities in the amount of tens of millions of dollars for OHIP premiums and for licences and for taxes, will he give this House and the municipalities an assurance that he will not recover by way of reduced transfers the $444 million which the Treasurer says the municipalities owe the government, either next year or in the future?

[2:45]

Mr. Warner: Fiscal finagling.

Hon. Mr. McKeough: I thought the member would draw attention to the chart which shows that after five years we have delivered some $ 13.581 billion to the municipalities out of a commitment of $13.583 billion -- which indicates that we are only, after five years, $2 million short. I thought the member was standing up to commend us on that today, and I am a little surprised he didn’t.

Elsewhere in the budget the member will find some reference to the fact that we hope to get along with market value assessment, with property tax reform --

Mr. Martel: Another 10 years.

Hon. Mr. McKeough: -- that there will be discussions about grant reform and we will move on from there to a redefinition of the commitment. Therefore it would be premature of me to answer that question today.

Mr. Warner: You fiscally fiddle while the province burns.

Hon. Mr. Davis: Oh, Scarborough is in pretty good shape.

Mr. Swart: By way of supplementary: You didn’t answer that question, but may I ask the Treasurer if he will not, in the coming year, transfer to municipalities an offsetting amount equal to the new taxes that he unilaterally levied against them this year? Is he not aware, because he hasn’t increased the property tax credit, that the property tax increases, like OHIP premiums, hit the modest- and low-income taxpayers the hardest?

Hon. Mr. McKeough: I find it hard to believe that OHIP premiums hit the lowest-income people hardest, inasmuch as most of them are exempt.

Interjections.

Hon. Mr. McKeough: Some 1,820,000 in this province will not pay the premiums.

Mr. Makarchuk: There is a difference between the pensioner and the low-income person.

Hon. Mr. McKeough: I recognize the member will pay and that I will, but 1,820,000 people will not pay the premiums in this province.

Mr. Swart: How about those who make $7,000 a year?

Hon. Mr. McKeough: Beyond that I am not aware of where we have hit municipalities. And no, I don’t intend to go back and redistribute the amount of money which was determined back in September. I can’t think of anything more upsetting. We make our announcements in September, and within a few millions of dollars those are the amounts of money which are delivered to the municipalities, which they have been counting on since January 1. No, we will not be going back.

Mrs. Campbell: Are you sure it isn’t a question?

MINI-SKOOLS LIMITED

Hon. Mr. Norton: I would like to respond to the questions raised by the hon. member for Bellwoods (Mr. McClellan) in the House on Thursday last. I would have responded on Friday, but I delayed one day in order to clarify my position through my legal staff with respect to an injunction which I understood had been issued relating to the documents which had been passed to me by the hon. member. Having received an opinion from our legal staff, I will respond to the questions.

The first question raised by the hon. member was whether or not it was true that Metro awards agreements without proper financial submission or adequate accounting. Requirements for submission of budget and financial information prior to negotiating a purchase-of-service agreement with privately operated nurseries are established by the municipalities in question. Metro social services has set up its own criteria in such matters.

The Ministry of Community and Social Services does not review these procedures and does not participate in the negotiations concerning the agreements. The municipalities submit proposed per diem rates to the ministry and a proposed budget for purchase of service. We review the Metro social services budget and approve both the per diem rates and the total net municipal expenditures.

We are satisfied that the rate proposed by the Metro social services in 1977 for its purchase of service with Mini-Skools is competitive. This rate was compared with those for other nurseries. The proposed per diem for 1977 for Mini-Skools was $10.57 in each of the six nurseries. We understand that the per diem rate will now be reduced to $10.17 for all Mini-Skool nurseries as a result of the experience over the past year.

The $10.57 was not the highest per diem rate for a private nursery in the budget submitted to us by Metro social services. It also compared very favourably with the per diem of $15.92 in Metro-operated day nurseries.

We are pleased that the actual per diem is coming in at a lower level than was originally proposed. Once a month Metro social services inspects the accounts submitted to it under purchase-of-service agreements to establish the validity of the accounts. Each nursery is checked once a month to reconcile the attendance of each subsidized child with the amount being claimed on his behalf.

This is one of the most intensive municipal audits of purchase-of-service accounts in the province. In addition, the ministry employs claims examiners to review the same account on behalf of the province and because of the intensity of the scrutiny by Metro social services it is very rare that any adjustment is necessary in those accounts.

The second question raised by the hon. member related to the issue of whether or not subsidy payments without a signed contract are legal under the Day Nurseries Act. Metro social services have signed agreements for 1976 with Mini-Skools covering purchase of service. There is no requirement in the Day Nurseries Act that purchase-of-service agreements be in writing, although we do by policy require them to be in writing. Metro social services have negotiated a new agreement for 1977 and we are advised that it was almost finalized and would have been signed except that they now wish to wait until the questions which have been raised have been settled.

In the fall of 1976 Metro social services requested budget information from Mini-Skools in connection with the renewal of the purchase-of-service agreement. In 1976 Mini-Skools had not submitted such information and it was decided that no agreement would be signed for 1977 until this was received. It was finally received in December 1977 and the agreement negotiated for a per diem of $10.17, as opposed to the higher figure earlier in the year. This rate has not yet been paid by Metro social services to Mini-Skools. Provincial subsidies are still based on 1976 rates.

We have a legal opinion that the arrangements for 1977 can be construed as an extension of the previous agreement and on this basis subsidies have been paid by the ministry to Metro for 1977 based on the conditions which pertained in 1976.

The next inquiry was whether the profits of Mini-Skools are a ripoff. The Ministry of Community and Social Services has no direct knowledge of either the profits or losses of operators of day nurseries unless these are financed directly by the province. In the case of Mini-Skools we do not know how much profit, if any, was made by them.

We do know that a per diem rate of $10.17 compares favourably with those negotiated by other nurseries with Metro social services. Metro social services budget criteria do allow a profit of 10 per cent based on income and expenditures as defined in their budget guidelines.

The next inquiry was whether Mini-Skools’ rated capacity exceeds the licence capacity established by the ministry. The term “rated capacity” is not one which the ministry uses and we have not been able to determine precisely how it is defined by Mini-Skools. In the statement by Elody Scholz to the social services and housing committee it is indicated that rated capacities are internal goals for enrolment.

Based on ministry inspection reports since 1975, Mini-Skools did not have in any nursery an enrolment overall which exceeded its licensed capacity. We have no evidence from our inspections that Mini-Skools overenrolled generally. In specific rooms, there were from time to time more children than would be permitted under the space requirements set out in the day Nurseries Act.

Finally, Mr. Speaker, in response to the fifth question, it was indicated in that question that the child-staff ratios of Mini-Skools centres are violated as a matter of habit. There have at times in the past been problems with child-staff ratios. In view of this, inspections are made more frequently than once a year at some Mini-Skools centres. Notice is not given of inspections prior to their being carried out by our staff.

Mini-Skools have complied with the child-staff ratios after requirements have been discussed with them. The 1975 licence for Tuxedo Court was issued with a condition requiring the operator to comply with the regulations concerning staffing, and this was done.

It is not our practice to revoke licences immediately when difficulties are encountered, except in situations where the safety or wellbeing of the children appears to be in jeopardy. We meet normally with the operators and discuss the requirements of the legislation and give them a specified period during which they have an opportunity to comply. Closing a nursery creates difficulties for all concerned but particularly for parents and children. We therefore provide some consulting service to assist operators to meet the standards within a specified period.

Information is supplied to us by Mini-Skools, as required under regulation 232, section 3 of our legislation. There are no difficulties being encountered by the ministry under this section at the present time. At the present time, Mini-Skools are complying with the terms and conditions of the Day Nurseries Act. All nurseries are licensed and none has a conditional licence. I might add that I have reviewed the matter and the six Mini-Skools within Metropolitan Toronto in the past three years -- in some cases two years -- have been inspected a total of 25 times by the inspection branch of our ministry.

Mr. Speaker: Detail was sought in the multiple questions that were put by the hon. member for Bellwoods, and as I recall in the supplementaries that followed. I think in future a question as detailed and requiring as much detail in the answer should be put on the order paper. I’m going to add five minutes to the question period.

Mr. McClellan: May I have a supplementary?

Mr. Speaker: A brief supplementary.

Ms. Gigantes: He’s got a right to it.

Mr. McClellan: Rather than get into the details of his response, do I gather from what the minister has said that he had refused to undertake the kind of inquiry I requested, which would have involved his use of his authority under regulation 13 of the Day Nurseries Act to obtain full financial and enrolment records from Mini-Skools and determine whether the material which I presented to the minister, which I gather he didn’t even study, indicated violations of the Act and irregularities in the contract awarding?

Hon. Mr. Norton: I don’t think that degree of sarcasm is necessary in response to what was a sincere attempt to respond to the hon. member’s questions of the other day.

Ms. Gigantes: That’s a sincere question.

Mr. Martel: Boy, you’re touchy.

Hon. Mr. Norton: No, it does not mean I am closing off the matter.

Ms. Gigantes: Talk about sarcasm.

Hon. Mr. Norton: Obviously, we will continue to look into this but I do want to indicate to the hon. member very clearly that this is not a situation that has not been under regular supervision by our ministry staff and, as I understand it, by the Metro staff. Obviously we will look in detail at the rather copious material that was supplied to us.

Mr. McClellan: Couldn’t the minister have done that before he answered?

Hon. Mr. Norton: If there is any truth to the innuendo and outright accusations that the hon. member has made, certainly I will respond.

Mr. McClellan: It’s not innuendo.

Hon. Mr. Norton: I will continue to examine the matter.

Mr. McClellan: May I have another supplementary?

Mr. Speaker: The hon. member for Huron-Bruce.

HYDRO TRANSFORMER FIRE

Mr. Gaunt: I have a question of the Minister of the Environment. Since the Ministry of the Environment report on the PCB fire in downtown Toronto positively identified only one toxic compound, since the Ministry of the Environment believes that other toxic substances were present but couldn’t be identified because of the limitations of its own laboratory facilities, and since Dr. Harding of the Ministry of Labour’s occupational health branch has asked for the funds for a study on the liver functions of those people most likely to have been exposed to these extreme toxic substances at the scene of the fire, has the minister, in conjunction with the Ministry of Labour’s occupational health branch, sought and attained funds from OHIP for such a study; and when will it commence?

Hon. Mr. McCague: No, not as of this point.

Mr. Gaunt: Supplementary: Is the minister pursuing the matter with the Ministry of Labour; and if so, when does he think this problem will be resolved?

Hon. Mr. McCague: I am not personally pursuing it. The staff is.

Mr. Gaunt: Supplementary: At what stage are the negotiations?

Hon. Mr. McCague: At the staff level; I will find out for the member.

Mr. Riddell: The minister better take a holiday.

Mr. Gaunt: Will the minister report back?

Hon. Mr. McCague: Certainly.

[3:00]

CITIZENSHIP PROGRAMS

Mr. Grande: My question is for the Minister of Culture and Recreation, if he would take his seat. The question regards cutbacks and phasing out of citizenship classes, English-for-mother program classes and the nursery program component of those classes.

Given the fact that the federal government last year changed the waiting requirement for Canadian citizenship from a five-year to a three-year period and given the fact that the number of people who are applying for citizenship has almost tripled since last year, can the minister explain why the citizenship department of his ministry is cutting back and phasing out the citizenship classes, the English-as-a-second language classes for adults -- which prepared our immigrants to achieve Canadian citizenship status -- and also cutting back the nursery component? Why is he phasing out a program for which the need has almost tripled in one year?

Hon. Mr. Welch: I would simply ask the hon. member what information does he have that we are?

Mr. Grande: Supplementary: Is the minister not aware that the citizenship department was asked to cut back $150,000 in salaries? Is he not aware that at F. H. Miller School and St. Mathew’s Church the four people who run the adult English-as-a-second- language classes and nursery programs, respectively; and the person who does the citizenship classes at St. Thomas Aquinas -- all within the borough of York -- have been fired as of March 31 of this year?

Hon. Mr. Welch: My response to that is that this government will maintain its commitment to ensure that this program is not impaired in any way. The hon. member knows that a great deal of this program is run through the community colleges of the province; and indeed as far as the involvement of the ministry itself is concerned it is to look after some of the shortfalls there. I am quite prepared to stand here and say that no one will go without support in order to maintain this program; that’s our commitment. The hon. member is now talking about particulars, I am talking about the commitment. We will look after this program. As the hon. member knows, the estimates of this ministry will be before the standing committee on social development on March 28 and we can go into this in further detail at that time.

Mr. Martel: Will the minister look into the firing?

Mr. Dukszta: Does this apply just as much to a working English program in Shirley Street School which has been notified by this ministry that its nursery program is going to be finished in the next few months?

Hon. Mr. Welch: The comments I have made apply to the entire program. As far as our support of teaching English as a second language is concerned, and all its ramifications also, it is a complex program involving other agencies and other ministries besides ourselves; I am quite satisfied that nothing will stand in the way of maintaining our overall commitment to that program.

SMOKING AND DRINKING HAZARDS

Mr. Reid: I have a question for the Minister of Health. Has the Minister of Health any plans on publicizing the ill effects of smoking and drinking on pregnant women who are about to give birth, and the effects that those two vices will have on the birth of their child?

Hon. Mr. Timbrell: I think questions on the effect of these lifestyle problems on pregnant women are already well covered in material which is put out both by our ministry and by various private sector groups. If the member has any particular suggestions or problems in that regard, I would be pleased to consider them or refer him to the appropriate counselling authorities.

Mr. Reid: I was more concerned about the minister himself Mr. Speaker. But, unlike the Minister of Health, I don’t hang around doctors’ offices and prenatal clinics. Is there information available to women in doctors’ offices and in clinics on the effect that drinking and smoking will have on the health of their children?

Hon. Mr. Timbrell: I will be glad to send the member copies of the material that we send out or which we make available to physicians. He may have seen the small brown stands in pharmacies and doctors’ offices.

Mr. Nixon: There is one other pamphlet you should send.

Ms. Gigantes: This is not funny.

Hon. Mr. Timbrell: You don’t go to doctors?

Mr. Eakins: Send him the full kit.

Hon. Mr. Timbrell: Yes, I’ll send the member the material we have. It’s optional for the doctors to have these pamphlets in their office at all or which of them they use. I may say the pamphlet program is very successful in that last year we distributed over 800,000 pamphlets on a wide variety of subjects to schools, doctors’ offices, pharmacies and hospitals around the province.

OTTAWA PSYCHIATRIC FACILITIES

Ms. Gigantes: I have a question for the Minister of Health. It’s not a funny question; I didn’t think the last one was either. I wish he would take his responsibilities a little more seriously on this subject.

Mr. Warner: Shame.

Ms. Gigantes: I am assuming the minister is familiar with the tragic murder last week of two members of an Ottawa family, two young girls, and the charging of an alleged suspect who was a member of that family.

I would like to know if the minister is prepared to respond to the very well-placed criticisms that have been levelled at his ministry concerning the lack of adequate psychiatric facilities in the Ottawa area? These criticisms are now coming publicly from the director of psychiatric services at the Royal Ottawa Hospital.

Hon. Mr. Timbrell: Let me say, first of all, I take myself not nearly as seriously as perhaps the hon. member does. Once in a while I can look at myself and not be so stuffed up as the hon. member that I can’t see the lighter side of life.

Mr. McClellan: This is a riot.

Hon. Mr. Timbrell: As regards this, I understand there were some things in the Ottawa press late last week. We have over the last few years attempted to ensure the provision of more psychiatric services in the area. The member will know that this is one of the aspects of the review by the district health council of all facilities and programs in that area, which is of prime importance. Once we have that review in hand, within the next year or year-and-a half, we will be able to make some decisions about the provision of psychiatric services, not just in Ottawa but in all of eastern Ontario, that one wouldn’t want to make without having a complete study in hand.

Ms. Gigantes: Supplementary: I wonder if while we are holding our breath on this matter we could get some encouragement from the ministry in terms of citation of what new programs are being developed. The only result I know of currently from the review process that's been going on is a holding motion which has led to the dissolution of projects like the mental health project.

Hon. Mr. Timbrell: The hon. member will know that over the last number of years there have been developed in all parts of the province a number of community mental health programs as the process of de-emphasis on the traditional psychiatric incarceration has been accelerated.

I can only say she is quite mistaken if she sees the review of the district health council as some form, as she puts it, of “holding your breath” or trying to stall. Rather, for the first time in the development of the district health councils and in the further development of modern health care planning, we are in the region of Ottawa-Carleton coming together under the auspices of the health council and using the services of the university and a number of other agencies within government --

Ms. Gigantes: There are no facilities and no programs.

Hon. Mr. Timbrell: -- to develop a long-term plan for all aspects of health care in that region. I’m sorry the member is not supportive of that process.

Mr. Cassidy: Supplementary: Is the minister aware that it is now more than a year since recommendations have been made to the ministry about a forensic program for the Ottawa area which would include a secure psychiatric ward at the Royal Ottawa Hospital so that patients do not have to be taken to Penatanguishene, 300 miles away from Ottawa, and that this tragedy might have been averted had the action that was promised in that program during the election campaign last June been taken by the ministry rather than put forward as a kind of pre-election promise?

Hon. Mr. Timbrell: I am not aware of any pre-election or intra-election promises on the subject. Let me say on the question of secure units, as the member knows, if funds permitted we would perhaps do a lot of things we don’t do now. We have an excellent program at Penetang and one which is probably better known and better appreciated outside of Ontario than it is by members opposite.

Mr. Cassidy: You were very warm during the election period.

Mr. Martel: One of your promises was to have a hospital built in Sudbury.

Ms. Gigantes: How many people have to get killed?

Mr. Makarchuk: Is the minister aware that because of his cutbacks in mental or psychiatric hospitals, the net result has been deaths in his hospitals because of lack of staff? Is the minister prepared at this time --

Mr. Speaker: The question dealt specifically with an incident in Ottawa.

The hon. member for Brant-Oxford-Norfolk.

TOUR OF NORTH

Mr. Nixon: I have a question of the Premier. Does he recall that traditionally the government has arranged a tour of northern Ontario for the members of this House at a convenient time following each election? If so -- and I’m sure he does recall this -- will he undertake to set in train the mechanics for planning such a tour, which I personally think would be valuable for new members of the House, as well as for some old war- horses, so that we might perhaps visit the Indians in their own community, perhaps go and see the timber limits that have been under discussion -- and maybe even wet a line?

Hon. Mr. Davis: To reply to that question it’s quite obvious to me why the members of the Liberal caucus would like to visit northern Ontario because it would be, with the exception of one, their only relationship to it.

Mr. Breithaupt: Which one?

Mr. Reid: Quality, quality.

Hon. Mr. Davis: Listen, I’ve never argued the member’s quality. Never. His judgement, yes, but his quality, no.

Mr. S. Smith: North Bay gets a $10 licence.

Hon. Mr. Davis: I certainly would want the member’s leader to get to Sault Ste. Marie. It would be the first time since he said he’d never be back.

Interjections.

Mr. S. Smith: You got an excellent reception in Sault Ste. Marie.

Mr. Breithaupt: See Ontario first.

Hon. Mr. Davis: However, to get back to the question; the House leader from the Liberal Party is suggesting there be a tour of northern Ontario. I certainly think that’s worthy of exploration.

OWEN SOUND HOSPITAL TRANSFER

Mr. Charlton: I have a question of the Minister of Health. Can the minister tell us if the terms and conditions of the proposed transfer of the MacKinnon Phillips Hospital in Owen Sound have been completed and approved? If they have, would he table that package in the House? If they have not, does the government still intend to go ahead with the transfer, as April 1 is approaching rather quickly?

Hon. Mr. Timbrell: To answer the last part of the member’s question first, yes, the transfer will go ahead.

The answer to the first part is that it will be reviewed by Management Board in cabinet within the next few days.

Mr. Charlton: A supplementary: Can the minister tell us if there is a problem with the transfer of the land; and if there is how that will affect the transfer itself?

Hon. Mr. Timbrell: As I recall there is some difficulty with regards to a sewer easement or something of that order, but nothing so major as to delay the effective date of transfer. It is something which can be worked on by the respective parties after April 1.

Mr. Charlton: One final supplementary, Mr. Speaker: Is the minister aware at all of the possibility of any layoffs in this transfer, as somebody from the administration of the General and Marine Hospital in Owen Sound has indicated that there may be some layoffs?

Hon. Mr. Timbrell: All employees of the MacKinnon Phillips Hospital have been offered employment by the Owen Sound General and Marine.

NORTH PICKERING INQUIRY

Mrs. Campbell: My question is to the Attorney General. In view of the fact that he has now released the abortive commission report on Pickering, and in view of the fact that the Ombudsman has publicly challenged the position of that report, has the Attorney General given any consideration to a reply to the Ombudsman’s position with reference thereto?

Hon. Mr. McMurtry: No.

(Laughter.)

Mrs. Campbell: A supplementary, Mr. Speaker -- I am sorry that I don’t think it is a matter for levity.

I would ask if the Attorney General is prepared to give consideration to a reply to that matter, because it seems to me it’s of great importance in the field of justice in this province?

Hon. Mr. McMurtry: It may be that the Minister of Housing (Mr. Bennett) may wish to say something at the appropriate time. It’s my own personal view that with this unfortunate North Pickering problem any decisions may very well have to await the report of the Hoillett commission, which is expected sometime in May.

[3:15]

OLIVETTI LAYOFFS

Mr. Wildman: Mr. Speaker, I have a question for the Minister of Industry and Tourism. In view of the cuts in the work force at Olivetti Canada on Don Mills Road from 180 to 55 over the past year and a half, and the fears at the plant that further layoffs may be pending, will the minister investigate to determine if these cuts at Olivetti’s Canadian plant results from dumping in Canada by Olivetti’s plants in Brazil, in Britain and elsewhere? And if he would be willing to look into this, would he also approach his federal counterpart to ensure that dumping by foreign typewriter manufacturers will not take place at the expense of Canadian jobs?

Hon. Mr. Rhodes: Mr. Speaker, certainly I will look into that. There is no question that we are not in favour of allowing offshore companies to dump into our markets. I will certainly look into that.

Mr. Wildman: Supplementary: Would the minister also inquire to determine what Olivetti’s plans are for the future of its Ontario plant to ensure that it is not intending to phase out operations completely, and would he investigate to determine whether or not the provincial government has purchased foreign-produced typewriters and other business machines?

Hon. Mr. Rhodes: Yes.

STUDENT ASSISTANCE

Mr. Sweeney: A question to the Minister of Community and Social Services, Mr. Speaker: Given that the minister’s colleague the Minister of Colleges and Universities (Mr. Parrott) is making it more difficult for university students to get money these days --

Hon. Mr. Davis: Shame.

How can you distort things like that?

Mr. Sweeney: -- I wonder if the minister would please advise me why it is necessary for the Association for Single Student Parents to indicate in their most recent newsletter that those who are on welfare will have some of their money deducted from their grant by municipalities?

Hon. Mr. Norton: Is the hon. member suggesting -- excuse me, Mr. Speaker, this is a question -- that the municipalities would take into account the student grant or loan as income?

Mr. Sweeney: My understanding is that the municipalities, through the Ministry of Community and Social Services, will deduct --

Hon. Mr. Timbrell: Question.

Mr. Sweeney: -- and this is the question, why is it necessary for them to deduct some of the grant for single-parent students?

Hon. Mr. Norton: I have not looked into that matter -- I will -- but presumably the grant or loan would be awarded to the students on the basis of their total responsibility and living expenses; and if that were the case, then presumably that portion would be income which was designed for their support and the support of their child. If they were to continue as a student, it would seem to me that it might be appropriate that the municipality consider the total income when they are assessing the need, if they are contemplating giving some assistance to the student.

Mr. Sweeney: Supplementary: Given the fact that the welfare amount is even less than the family benefits payments that come from his ministry, does the minister think this is reasonable?

Hon. Mr. Norton: The hon. member’s assumption is correct that it’s less than family benefits. I would have to comment on a specific case before I would know whether it was a reasonable decision. If the hon. member is asking, do I think there ought to be discretion? I would say yes. But if he asks me, in a specific case, do I think it’s reasonable; I would have to know more before I could respond to that.

URANIUM DRILLING

Mr. Martel: A question to the Premier: In view of the fact that Hollinger has now indicated it won’t drill Lake Wanapitei, in view of the fact that the regional municipality has dropped the legal proceedings against the firm, is the Premier now prepared to give assurance to the regional municipality of Sudbury that his government will not give permits or licences to anyone else to drill in Lake Wanapitei for uranium?

Hon. Mr. Davis: Mr. Speaker, I think that question should be properly directed to the Minister of Natural Resources.

Mr. Martel: I am sometimes afraid of the answers I get from him, because there is never anything concrete in them. With your permission, Mr. Speaker, I would like to redirect that question to the Minister of Natural Resources.

Hon. F. S. Miller: Mr. Speaker, my answers are as concrete as the questions.

I am not going to commit this government, or my ministry at least, at this time to refusing any application in the future. I only would suggest to the hon. member that we will give it very serious consideration before any decision is made.

Mr. Martel: That is the reason I put the question to the Premier in the first place. In view of the fact that his government has given the regional municipality of Sudbury, under Bill 164, the responsibility for drinking water for the region, is he prepared to change Bill 164 so that the responsibility for drinking water doesn’t rest with the region but in fact, because his government is going to play around, that it rests with the province?

Hon. F. S. Miller: That does not relate to my ministry.

Mr. Martel: No, and that is precisely why I raised the question with the Premier in the first place. You can’t have it both ways.

MINING TAX

Mr. Reid: I have a question for the Minister of Natural Resources -- which I believe is within his ministry if perhaps not his competence -- dealing with mining taxes.

Hon. F. S. Miller: If you can think of it, I can answer it.

Mr. Reid: That’s a good point.

Can the minister indicate what line he will be taking in going to Ottawa to discuss with his federal counterparts taxes within the province relating to mining, and the impact of the federal tax? And can he indicate if his committee dealing with mining tax has come up with any solution for declining resource communities, and the tax base which will be affected by that decline?

Hon. F. S. Miller: I read with interest the report of the select committee of the Legislature that was set up to look into the Inco matter. The member may recall that he suggested we look at tax measures as they relate to these municipalities and to the industry itself.

Just this last week the prospectors and developers were in Toronto, and I had an opportunity to talk to Mr. Gillespie and to five other provincial ministers. The one thing we all agreed upon is that we are, as ministers, going to meet regularly on the matter of taxation. We are going to try our best to make -- not uniform rules across Canada, because I believe with 10 provinces they are neither appropriate nor possible -- but we are going to do our best to simplify the system and to put in stimuli to encourage investment.

As far as the single-industry community is concerned -- a place like Atikokan, which I am sure is one that is near to the member’s heart at this moment --

Mr. Reid: Right.

Hon. F. S. Miller: We are very concerned. I have been in touch with officials in Atikokan within the last few days and have assured them that I am going to be talking to them and that my committee is trying to find alternatives.

Mr. Reid: May I ask, by way of supplementary; I presume that the minister and his federal counterpart and the five provincial ministers agreed that perhaps the taxation load, on the mining industry in particular, was killing any incentive for new exploration and development of mines in Canada and that this is one of the objects of the meeting?

Hon. F. S. Miller: That wasn’t the object of the meeting on Monday, but it certainly got discussed in a long panel meeting with the mining people present. In the last fiscal year, no one could possibly say that the taxes collected in Ontario for mining were a burden to the industry. What has been the problem, because there were very few profits --

Mr. Reid: That’s true, there is no incentive to open a mine even.

Hon. F. S. Miller: We collected taxes to the best of my knowledge from fewer than 15 mines in Ontario last year --

Mr. Martel: Darcy said that’s great stuff; he gave me a junior economics lecture here one day.

Hon. F. S. Miller: -- and probably less than $20 million in total.

Mr. Cassidy: You are trying to get out of this as well.

Hon. F. S. Miller: However, the issue was not that but the impact year by year, when profits went up; the relative tax rate when they went up. The changes mentioned by the Treasurer in the budget were aimed at levelling the good and the bad years in Ontario. They are going to do that to a large degree.

Mr. Reid: That doesn’t deal with the problem.

Hon. F. S. Miller: The federal government has an aspect of that.

MERCURY CONTAMINATION

Ms. Bryden: I’m very glad to see the Minister of Natural Resources is here; I have been trying to ask this question for 10 days, but either he wasn’t here or --

Mr. Kerrio: Why weren’t you here?

Hon. F. S. Miller: You can’t ask it from Florida.

Interjections.

Ms. Bryden: He hasn’t been here whenever I was able to catch the Speaker’s eye in the last 10 days.

In view of the extreme importance of including Ontario native people in the federal epidemiological survey of persons exposed to mercury contamination, particularly in view of the very high levels of methyl mercury found in the blood and hair samples of some people in the Grassy Narrows Reserve, will the minister stop the silly Gaston and Alphonse routine between himself and the federal Minister of Fisheries and the Environment and facilitate the acceptance of this survey of the native people in the Grassy Narrows and Whitedog reserves by making a commitment to assist the federal minister in enforcement of at least a temporary ban on sport fishing in the English-Wabigoon River system, until such time as the survey is completed and we find out the extent of the health hazards in this river system and can then decide whether a permanent closing of the river system is necessary?

Hon. F. S. Miller: The government stated its position clearly last May on this matter. The federal government has the power to close the river system --

Mr. S. Smith: So do you.

Hon. F. S. Miller: Certainly we have. I’ve never denied that. We have decided not to close it. If the federal government wishes to close it within its power, it may do so with our blessing.

Ms. Bryden: Will the minister agree to provide them with every assistance in enforcing a closure if they decide to close the river?

Hon. F. S. Miller: I’d have to consider that, but I would assume that would become their responsibility.

MINI-SKOOLS LIMITED

Mr. McClellan: Pursuant to standing order 27(g) I wish to give notice that I am dissatisfied with the answer to my question of the Minister of Community and Social Services and wish to pursue it at the adjournment of debate at the next opportunity.

WRITTEN QUESTIONS

Mr. Speaker: On Friday last, the hon. member for London Centre (Mr. Peterson) raised with the Chair the question of the apparent delay in a response to his written question number 10. I note that on the same day the hon. member was provided with an interim answer in accordance with standing order 10(b). I can only advise the member that the ministry has complied with the requirement to respond within 14 days, even though the response is only an indication that more time will be required. That’s in keeping with provisional order 10(b).

OTTAWA PSYCHIATRIC FACILITIES

Ms. Gigantes: Pursuant to standing order 27(g) I’d like to give notice that I’m not satisfied with the response of the Minister of Health to my question concerning psychiatric services in the Ottawa-Carleton area, and I’d like to raise it after adjournment of the debate tomorrow evening.

MOTIONS

TEACHERS’ SUPERANNUATION COMMISSION

Hon. Mr. Welch moved that the annual report of the Teachers’ Superannuation Commission for the year ending December 31, 1976, be referred to the standing social development committee for consideration today following the routine proceedings.

Motion agreed to.

ESTIMATES

Hon. Mr. Welch moved that the following estimates be referred to the committees as follows: To the standing administration of justice committee -- Justice policy, Attorney General, Consumer and Commercial Relations, Correctional Services, Solicitor General; to the standing general government committee -- Office of the Assembly, Office of the Provincial Auditor, Office of the Ombudsman; to the standing resources development committee -- Resources Development policy, Agriculture and Food, Energy, Environment, Housing, Industry and Tourism, Labour, Natural Resources, Transportation and Communications; to the standing social development committee -- Social Development policy, Colleges and Universities, Community and Social Services, Culture and Recreation, Education, and Health.

Motion agreed to.

Hon. Mr. Welch: Just as a matter of information, we’ll be bringing in by way of a statement on the business of the House the agreement which has been arrived at with respect to the allocation of time for the consideration of these estimates. The estimates of the Ministry of Government Services will commence in the House in committee of supply on April 3. The estimates of the Ministry of the Environment will commence in the resources development committee on March 28 in the evening, and the estimates of the Ministry of Culture and Recreation will commence on the afternoon of March 28 in the appropriate committee.

[3:30]

INTRODUCTION OF BILLS

HEALTH INSURANCE AMENDMENT ACT

Hon. Mr. Warner moved first reading of Bill 32, An Act to amend the Health Insurance Act, 1972.

Motion agreed to.

Mr. Warner: Mr. Speaker, this bill repeals provisions of the Health Insurance Act, 1972, that authorized the Lieutenant Governor in Council to establish the cost of premiums by regulation.

ORDER OF THE DAY

BUDGET DEBATE (CONTINUED)

Resumption of the adjourned debate on the motion that this House approves in general the budgetary policy of the government.

Mr. Peterson: Mr. Speaker --

Hon. Mr. Welch: Double-breasted suit!

Mr. Peterson: I rented this suit from the Treasurer (Mr. McKeough) for the day.

Mr. Nixon: You look like an NDP critic.

Mr. Martel: That’s an insult.

Mr. Peterson: Mr. Speaker, I am very happy to rise for our party today and to make our contribution to this budget debate. As you recall, last year I was representing the third party, now Her Majesty’s official loyal opposition. I am expecting the logical progression, Mr. Speaker, is that next year we will be presenting the budget. We will look forward to see what kind of an opposition critic the Treasurer of this province is.

An hon. member: Don’t hold your breath.

Mr. Rotenberg: Are you going to pull the plug?

Mr. Peterson: We may just pull the plug. Just keep ready all the time.

Some hon. members: We are ready.

Mr. Peterson: It has been very difficult to prepare this budget response because of the considerable number of things that I would have liked to have said which we unfortunately had to cut out. About three-quarters of the good stuff has been eradicated, Mr. Speaker, but I want you to know I am prepared on short notice to come back to this House if there is a popular request for my so doing to include the stuff I am not going to have time to talk about today. I gather my time is till 6 o’clock. There is a great round of approval from my House leader on that particular matter. He is suffering, Mr. Speaker. He feels a bit persecuted today because his obligation is to sit here and listen to all of this stuff.

Mr. Nixon: It is what I am paid for.

Mr. Rotenberg: Can you take it, Bob?

Mr. Lewis: You could go on this evening.

Mr. Peterson: I appreciate that very much.

In analysing the budget of a province or of any jurisdiction I think one has to put it in the context of all the other major documents -- the social documents, the other planning documents of a province or of a jurisdiction. I think maybe when one analyses the discrepancy between the Throne Speech and the speeches and all of the attendant good things that were attached to the first ministers’ conference and then you see the budget, one is bound to be somewhat disappointed. In fact one wag has said if you really want to understand the soul of a government you have to look at their budget, because that clearly outlines their priorities and how they feel about the social problems -- how they feel that financial burden should be distributed among the people and the institutions of a particular jurisdiction.

I think that as we analyse this budget we are going to see our party differing very substantially in a great number of the priorities.

When I read the budget this time I was struck particularly by the total absence of any kind of long-term policies or vision by the Treasurer and by the government. For a government that has long held unto itself almost exclusively the myth of management competence -- and the Treasurer himself almost embodies that myth of management competence held by the government -- when we analyse some of the discrepancies, when we analyse how so many of the rules have changed to fit his contemporary political purposes and how he has unabashedly changed some of these rules and terms and conditions, I think we are going to find that perhaps they aren’t as competent as one would have assumed and that perhaps other people have just as constructive ideas, given the very difficult economic climate we are living in today.

I said after the budget it is not an easy thing to make up a budget today.

Mr. Laughren: Not with those Liberals in Ottawa

Mr. Peterson: We have so spent out our options, we have so little room to move without incurring massive deficits. I am going to point out in the course of this speech the tremendous constraints put on the budget of this province over the next 20 years because of our financial obligations, our obligations to pay back capital, having exhausted all of our sources of capital; it is very alarming.

I can tell you that whoever forms the government in this province in the next two or three years -- and I suspect it is going to be somebody different from those members sitting across there now -- and I really don’t, in all fairness, think it will ever be my friends on the left.

An hon. member: I don’t think so either.

Mr. Lewis: Why don’t you be unfair?

Mr. Martel: They are not biased.

An hon. member: Thirty-four seats again is hardly overwhelming.

Mr. Peterson: I can tell you that it is going to be extraordinarily difficult. If you think we have economic problems today, let me tell you they are going to be a lot more critical, because we have been exhausting our options, we’ve been using up all of our flexibility.

In the old days, perhaps it was more fun to be in government, perhaps there weren’t the great demands on government that there are today. Maybe they didn’t have to make the tough priority decisions that they have to make today. When things were running in a balanced sense, when governments could have surpluses or deficits, there was lots of flexibility, and I understand that. But I can tell you that flexibility is not there today. To that end, and to that extent only, I sympathize with the Treasurer. Given those constraints, though, I think that the decisions he made were not only wrong but they were abjectly unfair, and I think that the people of this province are going to show that to the Treasurer.

Mr. Haggerty: He’s been wrong six times.

Mr. Peterson: Personally, I have detected, just in the last couple of weeks -- pre-budget as well as post-budget -- that people are looking at the Treasurer with a new set of glasses. Because of his demeanour, and with the assistance of his tailor and barber and the stewards at the Albany Club, he was able to project an image of confidence, but now we are seeing far more bluster. We are seeing a far less specific response to some of the very difficult questions. We are finding that he is in a bind. If you look at question period for the last week, look at his responses to the straightforward questions asked, look at how he has changed the rules; it is my opinion that the decline of Darcy McKeough is starting to set in.

Mr. Haggerty: The duke is on his way out.

Mr. Peterson: I think that we are going to see a very different view of this gentleman held by the people of this province.

I planned, today, to talk briefly about some of our historical problems because I think they are important and relevant to the financial bind we are in today. I expect, in the process, to analyse our relative position, to talk briefly about how we compare to the other provinces in Canada, because I think it is important that we understand the trends and the kind of situations that we have developed for ourselves today.

Then I intend to discuss the present government’s solutions: how we differ, how our priorities would be different; then I would go to our constructive suggestions. And that is going to include our specific suggestions for job creation, our specific suggestions for developing an industrial strategy in this province -- which the Treasurer mouths the need for but does absolutely nothing about -- and I intend to talk briefly about an energy strategy for this province, because we are the most energy-consumptive people in the world per capita; and as we find that we are totally vulnerable -- because we are importing some 80 per cent of that energy and the energy bill is getting into the area of 10 per cent of the gross provincial product -- it becomes an area in which we need massive new invigorated strategies with new insights, a new toughness. We on this side of the House are prepared to provide that, and I intend to lay out some of our approaches and give our reasons why. So with any luck I will be finished by 6 o’clock; if we are not, well we will try to accelerate it.

Before I start I would like to thank many people who assisted in the preparation of all of this work. As I have said before, the research department of the Liberal Party of Ontario -- that you may or may not be familiar with, Mr. Speaker -- is just first class. They have just done a marvellous job. We have assistants with new insights, taking us into new areas; and I, for one, am very grateful to them. I am going to take the liberty of reading five of these names into the record just because they have been a great help to me. And it will be interesting when their children read Hansard -- and they will particularly want to refer back to this debate, I am sure -- and they can see their mommies’ and daddies’ names in Hansard. They are Daphne Rutherford, Jane Shapiro, Lou D’Onofrio, Sandie Giles and Jean Shilton, who have been terrific and worked many long hours and many weekends to assist me. In addition to that we have had many outside experts who have assisted. That's one thing that gratifies me.

Mr. Laughren: Walter Gordon tried that too.

Mr. Peterson: Many outsiders -- economists, people in the labour movement, people in the investment business -- are now coming to us with positive ideas. They are trying to provide meaningful input. Today the Liberal Party of Ontario, I say with great pride, has gained under the leadership of the member for Hamilton West (Mr. S. Smith) a great deal of respect in many communities and in many constituencies in this province. We will continue to grow as we continue to attempt to represent all of those constituencies as fairly and as equitably as we can.

Mr. Samis: Finally.

Mr. Martel: I’m glad the member for Brant-Oxford-Norfolk (Mr. Nixon) is here.

An hon. member: I’m glad he got the message.

Mr. Peterson: I want to start off with a little historical view of the situation. The Premier (Mr. Davis) took over the reins of government inheriting a provincial budget of some $5.2 billion. Today the budget stands at $14.OO5 billion, an increase of some 171 per cent.

Mr. Johnson: That’s an irresponsible statement.

Mr. Peterson: Prior to the Premier’s advent, this province had the benefit of sound financial and economic management. Our economy grew steadily and we led the nation. The first Davis-McKeough budget in 1971 promised controlled public spending and delivered a 15.6 per cent or almost $1 billion increase in government expenditures. That year saw, not coincidentally, an election and a record provincial deficit of $1.28 billion.

With the characteristic inaccuracy that we have grown to expect on a yearly and even monthly basis from this government, the Treasurer underestimated his budgetary expenditures in that year by more than $1 billion in 1971 and against in 1972.

Mr. Haggerty: He’s consistent.

Mr. Peterson: Expenditures went up by 7.5 per cent or almost $450 million, increasing 50 per cent more than the spiralling cost of living.

In 1973, with a different Treasurer at the helm, the provincial budget called for increased spending to the tune of $750 million, or 11.8 per cent compared with the preceding year. Ultimately, expenditures increased by some $811 million, an increase of 12.7 per cent at a time when Ontario’s inflation rate was running at 7.6 per cent.

Inflation was still rampant in 1974. Experts agreed that control of public spending was absolutely essential. The government of Ontario responded by calling for a 14.2 per cent increase in expenditures, notwithstanding a predicted inflation rate of 7.7 per cent. Again the budget was overspent, this time by about $385 million. Increased spending rose from an estimated 14.2 per cent to an actual 20.8 per cent. Did I hear “shame” from my benches?

Mr. Nixon: Shame.

Mr. Peterson: Thank you. The 1975 budget envisaged an increase in government expenditures of 16.8 per cent, about $1.5 billion. That was the year of the “mini-budget,” which boosted the increase in government spending to 21.2 per cent. Updated to December, 1975, budgetary and non-budgetary deficit figures were $1.976 billion, within nudging distance of the dreaded $2 billion mark -- almost half of the entire provincial budgetary expenditure when the Premier took over.

Deficit financing had clearly become a way of life for the government of this, the province of opportunity, for they knew no other way. Our budgetary and non-budgetary deficit had gone from $566 million in 1970-71 to nearly $2 billion in December, 1975. The year 1976 saw net cash requirements increase by $158 million to nearly $1.4 billion, an increase of 12 per cent in government spending, the budget overspent by $55 million and a budgetary deficity of $302 million more than the estimated amount.

By this time, the bizarre fiscal policies of the Premier and his colleagues had incurred a well-nigh intolerable burden of debt for the people of Ontario. Between 1970 and 1974, the accumulated provincial net debt had more than doubled, from $1.4 billion to $2.9 billion. Within the next two years, to March, 1976, it more than doubled again to $6.2 billion.

Mr. Haggerty: It sounds like a balanced budget.

Mr. Peterson: Last March it was estimated at $7.2 billion; in fact, at the end of the fiscal year it is $7.8 billion. The projection for 1978 is $9.1 billion. Soon we will be in debt by almost twice as much as the entire provincial budget when Mr. Davis became Premier and Mr. McKeough started to get his hooks into the Treasury.

I just want to recap this because it’s meaningful in terms of the environment we’re in today. Since John Robarts’ last full year as Premier, we have witnessed the following: Budgetary expenditures have more than tripled from $4.2 billion to $12.9 billion, an average annual rate of increase of 15 per cent. The projection for 1978 is over $14 billion. From a budgetary surplus of $150 million we now have budgetary deficits totalling $6.4 billion.

The projection for 1978 adds almost another billion and a half to that deficit. The provincial net debt has more than quintupled. It has increased 450 per cent, from $1.4 billion to $7.8 billion. The projection for 1978 has the net debt rising a further 17.5 per cent to $9.1 billion. The net debt as a percentage of gross provincial product has increased by 112 per cent. With the 1978 projection, that increase will be over 120 per cent.

The net debt as a percentage of budgetary revenue has more than doubled, increasing from 31.9 per cent to 68.5 per cent. For 1978, the percentage is expected to rise to 72.1 per cent. Interest payments on the public debt rose 472 per cent from $209 million to over $1 billion. Projections fur 1978 show a further increase of 15.4 per cent, the largest increase in the budget, to a total of $1.2 billion in interest payments. That is about $3.3 million a day in interest on the debt accumulated by this government.

The net debt per capita has increased 391 per cent from $189 to $928 and is projected to rise this year to over $1,000 -- $1,077 to be exact -- an annual increase rate of 22 per cent.

These are the sad facts but they are important to setting a context for today’s budget debate, for the situation that we are in today.

What we found is the Treasurer isn’t stupid. He understands the evils of his past and now we find him trying to run against his past. We see him making or trying to make a virtue of denying his own past excesses at the public expense. When we have seen this massive growth in debt and the raiding of the pension funds in order to finance it we have seen a situation entirely created by this government, no one else. That is something that he is going to have to own up to. It is something that he is going to have to pay for in the near future. I suspect he won’t be in government to have to deal with it when the crunch comes.

Mr. Nixon: He’ll be back pushing plumbing.

Mr. Peterson: It’s important that I also discuss Ontario’s economy not in terms only of its past but in terms of its relative position in this country and indeed in this world.

The decline in Ontario’s economy in the last eight to 10 years is serious enough when viewed in isolation. In comparison with developments in other selected provinces and the Canadian national average the implications are cause for very real anxiety.

Let’s consider the compound annual rate of growth in gross provincial direct and guaranteed debt in Ontario between 1968 and 1975 -- which was 14.5 per cent. This was the third highest growth rate in the country. Moreover, the actual debt was greater in size than Quebec’s by $4.5 million; than Alberta’s by $10.8 million; and British Columbia’s by $9.1 million.

The per capita compound annual growth rate in gross provincial direct and guaranteed debt for Ontario between 1968 and 1975 was 12.5 per cent. This was the third highest growth rate in the country. In 1968, Ontario ranked behind Alberta in having the lowest debt per capita. By 1975, Ontario had dropped to fifth place.

While Ontario has the highest personal income per capita in the country at present, the compound annual growth rate in personal income, per capita, between 1968 and 1975 in Ontario was the lowest in Canada; 9.8 per cent compared to 10.4 per cent in British Columbia, 11.3 per cent in Quebec, and 12 per cent in Alberta. In these circumstances, we cannot expect that Ontario will continue to rank first for very long.

Ontario’s compound annual growth rate in provincial government gross annual revenues between 1972 and 1976 was 14.7 per cent. This was the lowest growth rate experienced by any province in the country.

The compound annual growth rate in Ontario’s gross provincial product from 1970 to 1976 was 13 per cent -- lower than the national growth rate of 13.6 per cent.

Another area in which Ontario’s performance over recent years compares very unfavourably with other provinces in the national average is in terms of housing.

With the exception of 1972, the annual percentage increase in housing starts in Ontario has lagged the national average since 1970. If Ontario starts are removed from the national total the difference in percentage increase is dramatic.

In 1975, Ontario experienced a decrease of 5.7 per cent over 1974, while nationally, excluding Ontario, there was an increase of 16.6 per cent in urban housing starts. Again, in 1976, while Ontario had an annual increase of 5.4 per cent in urban starts, nationally there was a 15.3 per cent increase. If Ontario starts are excluded, the rest of the country experienced a percentage increase of 21.2 per cent.

These are a lot of numbers and in some ways I apologize for putting these in the record today, but I think it is very important that --

Mr. Nixon: Don’t apologize.

Mr. Peterson: -- we set the stage properly.

Mr. Nixon: It is a serious indictment of inadequate policy over many years.

Mr. Peterson: While urban starts in 1977 finally improved over the national average increase, the number of starts has declined. With the exception of 1975, the total is the lowest since 1970. Urban starts declined by one and one half per cent over 1976. While all starts came in close to, but under, the projected level of 80,000 starts for 1977, they were targeted by the government at a level almost six per cent lower than 1976; so reaching this goal cannot be considered a great achievement.

The data for January of this year is not promising, especially in multiple dwelling starts where an increase of 25 per cent for Ontario in January of this year over January 1977 was matched by a national increase of 57 per cent. Ontario’s increase is less than half the federal. If Ontario starts are excluded from the national increase, the latter increase would have been more than 73 per cent over the period last year. This is of particular concern, given apartment vacancy rates for selected Ontario cities in October 1977 as follows: London 1.6 per cent, Ottawa 1.2 per cent, Sudbury one per cent, Thunder Bay 0.2 per cent, Toronto 0.2 per cent and Windsor one per cent.

That’s just too low and has tremendous distorting effects on the local housing markets.

In almost every case these figures represent a decline in the apartment vacancy rate from October 1976. The national figure, which represents the average for 24 centres across Canada, rose from 1.3 per cent in October 1976 to 2.2 per cent in October 1977, coming slowly closer to the three to four per cent apartment vacancy rate which federal housing experts maintain is healthy -- conducive to fair rents and the construction of more buildings. Ontario is making no progress towards that healthy target.

The government is forecasting 80,000 housing starts for Ontario in 1978. This represents no increase over the 1977 level. This is also a far cry from the 100,000 starts which the government-commissioned Comny report four years ago said would be necessary annually for a decade to avert a housing crisis. Indeed in each of the intervening years we have fallen so far short of that level that it would take a monumental effort, far beyond anything we have come to be able to expect from this government, to rectify the situation and to provide the number of starts required.

The target for 1978 will certainly not help in this regard. We will not even fulfil the famous Brampton charter which forecast 90,000 housing starts per year for a decade. The low levels of housing starts are due to a high inventory level of newly-completed homes. Clearly what Ontario continues to need is not housing but affordable housing.

Ontario has lagged substantially behind the national percentage increase in retail sales in 1973, 1974 and 1976; and while this province finally slipped by the national increase in 1977, it was attained by a lower annual percentage increase than was achieved in 1976. In 1976 and 1977 Ontario failed to reach the percentage increases predicted by the government. An increase of 12.3 per cent was forecast for 1977, but only 8.4 per cent was achieved, a shortfall of $1.1 billion in retail sales. The 8.4 per cent achieved is certainly a far cry from the Treasurer’s prediction of 10 per cent for 1977.

From 1970 to 1977, capital expenditures for the nation as a whole increased by 161 per cent. Ontario experienced an increase of only 110 per cent, lagging behind the other growth provinces during this period. Alberta had an increase of 298 per cent, Quebec 215 per cent, British Columbia 132 per cent. If the Ontario figures are excluded from the national total the increase for Canada was 194 per cent from 1970 to 1977, compared with 110 per cent for Ontario. The gap in expectations for 1977 between Ontario and the national average widened over the course of the year.

From 1970 to 1977 capital expenditures for machinery and equipment showed the same trend, rising by 159 per cent for Canada and only 116 per cent for Ontario. Again, the other growth provinces fared better; Alberta 370 per cent, Quebec 190 per cent and British Columbia 125 per cent. When the Ontario figures are excluded from the national total the increase for Canada was 191 per cent compared to 116 per cent for Ontario. Again, the gap in expectations for capital expenditures between Ontario and the national figure grew over the course of the year.

The lagging trend for Ontario shows no signs of changing. Specifically, the annual average percentage increase in capital expenditures in 1976 was 7.6 per cent for Ontario and 12.1 per cent for the nation as a whole. In the entire country, only Newfoundland experienced a lower yearly percentage increase in 1976, at 5.2 per cent; while Alberta saw an increase of 27.6 per cent, uebec 10.7 per cent and British Columbia 10.2 per cent. For 1977 the increase for Ontario at six per cent was well below the national increase of 11 per cent.

Ontario’s share of the country’s planned capital spending in 1977 works out to 31 per cent, down from 39 per cent in 1970. This will mark the fifth year in a row that Ontario’s advance in capital spending has lagged behind the national average.

The situation may, however, improve slightly for Ontario in 1978. Predictions by the Conference Board in Canada rate Ontario as number three nationally in production growth and increased retail sales, number three in real provincial growth, and second in gains in employment and personal income.

As a Toronto Star economic columnist stated -- and I really don’t want to read a lot of editorial comment; I know that the Premier was very worried about that, because almost every editorialist in this country has castigated this government in the last week, but I just want to quote the Toronto Star economic columnist. He says this about Ontario:

“It’s not bad for a has-been,” and he commented: “One factor, obviously, is that the province has done so badly in the recent past that it has plenty of room to improve. Ontario may be over the worst of its painful adjustment to the fact that it is no longer number one in just about everything.”

Indeed, a survey conducted by the Toronto Star last month found that a growing number of politicians and economists believe that Ontario is in an economic decline from which it may never recover its once envied position. Not one of the experts interviewed held out hope for an upturn in Ontario’s fortunes this year.

Arthur Donner, a respected Toronto economist, expressed the view that rather than holding our own, “we’re slipping both ways; in Canada and in the rest of the world.” Whether 1978 proves to be a year in which this province improves slightly over its dismal performance of the last six to eight years, or whether we decline even further in major indicators of economic growth, the fact remains that our situation is critical.

This government has allowed our provincial economy to drift, providing no leadership, no direction for recovery or growth.

The survey conducted by TV Ontario is clear proof that the people of this province lack confidence in the economic future of Ontario. And this attitude, of course, affects investment intentions which are so important to any turnaround in the economic climate.

We do not have to take a defeatist stance, we do not have to take a hands-off stance -- the one taken by the government which believes the solutions lie with the federal government.

Ontario possesses the resources, both human and financial, to become a leader again. We must have economic leadership. We must chart a course to prosperity by building a manufacturing base and by putting our skilled and motivated labour force to work. It is tragic that the Ontario economy has been allowed to deteriorate to its current state when the decline, in large part, was avoidable.

Government, along with the private sector, should have planned and must plan together for the future. Unfortunately, the government’s economic performance in 1977 hardly represents a step in the right direction.

I just want to point out a discrepancy that bothers me. I think that the Treasurer understands these trends because he’s faced with them daily. Indeed, when he went to Ottawa and presented his paper reassessing the scope for fiscal policy in Canada, he presented this statement as one of his major conclusions. Of course, the Treasurer and the Premier came away from that conference very smugly. The people felt they were looking to the Premier and the Treasurer for leadership because he said this:

“The composition of unemployment in Ontario and the rest of Canada merits more attention. Skilled, permanent jobs for youth is highlighted as the pre-eminent challenge to governments in the immediate future. Required are fundamental structural changes in the economy to enhance competitiveness, to increase exports and generate well-paying jobs in the private sector.” When it came to his budget some months later, there isn’t one reference to this. He denies, in almost everything that he says there, having made that kind of a statement.

That statement summarizes what we believe has to be done for the economy of this province. We have, and I will be laying out this afternoon, constructive, positive ways to reach this goal -- a goal that the government has stated but from whom it has completely backed off. I for one am disappointed -- not only disappointed but struck, very frankly, by the hypocrisy between those two documents.

I think it’s important that we run down some of the past budgeting of this province to understand how deeply in error they have been on so many occasions and how any objective observer, looking at their past record, is going to not face the numbers with a great deal of credibility.

[4:00]

At the time of the 1977 budget, revenues were estimated at $12,621 million with expenditures at $13,698 million. Net cash requirements were quoted as $1,077 million. The publication Ontario Finances, issued by the Treasurer’s ministry on June 30, gave revenues as $12,529 million, expenditures as $13,606 million. It’s interesting to note the immediate post-election drop of $92 million in revenue. Possibly even more interesting is the fact that, as soon as it became necessary, the government was able to reduce expenditures by the required amount. In one stroke of his magic wand he cut out that amount of expenditure to arrive at this revised revenue figures.

What I am going through now is a litany of the number of budgets we have had in the last year. We have had six or seven budgets, each time the figures being revised in major proportions.

Let’s not forget either that much of the loss of revenue resulted from delay in implementing tax measures -- a delay caused by the government’s determination to have an election no matter what the cost to the people of Ontario. Nor should we overlook that fact that while the Treasurer maintained that performance of the economy was weaker than had been expected, the only so-called authority who was really surprised -- or pretended to be -- was the Treasurer, whose pre-election optimism or, for want of a better word, pseudo-optimism had led him astray.

By mid-September, the Treasurer was once again forced to undertake far-reaching “refinements” of his financial statements because of his irresponsibly optimistic predictions last spring. He admitted that his revenue projections had been inaccurate; revenues were now stated to be lower by some $309 million. The implications were particularly serious, given that we were at that time only five months into the fiscal year.

As of June 30, 1977, the Treasurer’s net cash requirements had been the same as his budget estimate. On September 16, he admitted that these would be another $217 million more than this figure. In other words, within two and a half months he had estimated an increase of some 20 per cent.

Two weeks later, on September 30, the Treasurer reported a further drop in revenues of $158 million, or $467 million less than the budget estimate. Once more, a sluggish economy was blamed, together with a downward re-estimate by the federal government of Ontario’s 1977 personal income tax by some $350 million. However, even given this federal re-estimation, Ontario’s revenues were off $117 million in five months -- not even halfway through the fiscal year. By this time, net cash requirements were up $375 million or 35 per cent since the budget estimate.

The December 31 issue of Ontario Finances offered us yet another revision of the budget plan and, as the publication noted, “one significant change -- the need for an additional $103-million contribution to the Teachers’ Superannuation Fund.” This figure is actually $107 million. Even more noteworthy is the fact that this was the second time in 1977 that the government was forced to admit that it owed the fund over $100 million more than it had thought. It was also the second time in 1977 that the government was able to accommodate an additional expenditure increase or loss by cuts in other spending areas. In June, $134 million was found through “a reordering, of priorities and implementation of spending cuts.” In December, another $103 million was found.

If reductions in expenditures are that simple to achieve, surely a tough and disciplined budgeting process could bring about far greater reductions in the initial budget allocations. For if the Treasurer can continue to make this kind of adjustment to compensate for loss of revenue, then obviously there is considerable fat in the provincial budget. This is not a time when we can afford to tolerate such loose budgetary procedures. If this government sincerely believes in restraint, let’s see a budget so tight that it cannot be pared down.

I want to get back to the figures for a minute. Revenue in December had dropped off yet another $162 million and fell another $5 million by the time the 1978 budget was introduced -- a total decrease of $634 million in revenue over the year. Net cash requirements have now risen by $539 million or 50 per cent since the last year’s budget estimates. The budgetary deficit rose to more than $1.6 billion from the predicted $992 million, rather than decreasing by some $287 million over the year as anticipated.

Again the Treasurer blames his new revenue loss on a downward adjustment by the federal government of its personal income tax payments to the province. I would like to take a few minutes to consider this matter and to relate to this House a very important exchange that took place between the Treasurer and myself and his executive director of fiscal policy during the consideration of the ministry’s estimates.

My colleague the member for Brant-Oxford-Norfolk, now the famous House leader, and I were asking about the reliability of the forecasts the federal government provides to us as to the amount Ontario receives in personal income tax payments. Mr. Allan, the executive director, stated: “We run an independent capacity, just for our own interest” and “We’ve had a pre-warning since 1970 that they’re” -- and I’m referring to the federal government -- “all screwed up basically.” The Treasurer later corroborated this view by saying: “They have continually underestimated the effects of indexing and it’s caught up with them.”

I then asked Mr. Allan if the fiscal policy division did its own independent forecast on these figures, and he replied: “We always do. We run computer programs on the income tax tapes.” To this the Treasurer added, “Obviously, in creating our own picture -- a snapshot of what we think the economy is -- we estimate a whole lot of things on our own and we take a look at the income tax.” Later he said: “We do our own forecasting of the economy, what the personal income tax or the retail sales tax, or any one of the other things may turn up.”

Two very important points flow from this exchange. First, on the day before this discussion, on October 18, 1977, I asked the Treasurer the following question in the House: “Does the ministry do independent forecasting, its own forecasting, about the provincial take on income tax as well as mining tax?” To this the Treasurer replied: “We do our own forecasting of mining tax. We do not do a forecast on the income tax.” Those were two entirely different answers in two days. I would suggest that the Treasurer was not being honest with this House in his answer to me, and that it was only after his official inadvertently gave me the facts that the Treasurer told the estimates committee the truth. How can we be expected to have faith and confidence in the Treasurer if we can not trust his statements in this House?

I believe, and I told the Treasurer this at the time, that he has an obligation to make an apology to this House and to myself for the deliberately incorrect answer that he gave me at that time.

Mr. S. Smith: Hear, hear; half a billion dollars.

Mr. Peterson: The second point arising from this exchange concerns Mr. Allan’s assertion that the federal government is “all screwed up” in its predictions, and has been told so since 1970. I later asked Mr. Allan if he told the Treasurer there was a risk in putting that particular budget number, the income tax revenue based on federal figures, in his budget. He replied: “I suggested that we couldn’t believe that the income growth could be nearly as high as that being projected by the federal government”; and the Treasurer added: “What he is saying is that he was pessimistic that the incomes would generate that amount of taxes.”

If the Treasurer and his senior advisers have so little faith in the federal government figures, how can they in good conscience base their annual budget revenue forecasts on them? Since they have doubts and since they do their own calculations, why does the Treasurer not act responsibly and at least give us the numbers he thinks are correct and the revenues he believes will be generated, based on these figures?

What is the point of doing an expensive provincial forecast, which he believes is correct and which has apparently proved reliable over the last several years, and then ignoring it and calculating budgetary revenues on the basis of figures he does not believe are correct and have not been very reliable in the recent past? As I said, the very least the Treasurer can do is to inform us of the discrepancy and say what, in his opinion, we can in fact expect the revenues to be.

It is amazing to me, given this record, this blatant discrepancy in just a two-day period, how any sophisticated observer of the budgeting process in this province can have very much faith in the figures. The record, frankly, doesn’t warrant very much faith. I think the Treasurer’s credibility is increasingly going to be an issue in this House and in this province.

I want to discuss an area of very great concern to me. I have spent a lot of time looking at this and a lot of time studying it. It is the distortion on the capital markets by the access this government has had to public service pension fund money. It’s a difficult area, it is complicated and most people won’t understand it. It may not be an area of broad public concern, but we have to make it an area of public concern, because it shows very clearly how we have sold out our future options and how we have really reduced our flexibility. Starting in the years 1982 to 1985, when we have to go back to massive return payments of capital for the amounts we have borrowed in the past six or seven years, we are going to have a much worse time than we have today.

The province currently owes our pension funds about $12 billion dollars, made up as follows: Canada Pension Plan, about $7 billion; teachers’ superannuation, $2.5 billion; OMERS, $1.2 billion; public service superannuation fund, $1.1 billion. These totals increase every year, as do the interest payments. Over the decade to March 1, 1977, interest was over $2 billion for CPP, over $600 million for teachers’ superannuation, and almost $300 million for OMERS. This year the interest on our public debt soared to $1.2 billion.

The province has appropriated this large pool of capital funds, which has earned a lower rate of return than it would have, had it been invested in the Canadian capital market. Each year the Treasurer has spent an amount equal to revenue plus the amount available for borrowing from internal pension funds. I would suggest that this is not good fiscal management.

Last year the Ontario Economic Council endorsed our view that the Treasurer has no incentive to balance the budget any closer than the level of provincial expenditures plus the amount available for borrowing from the pension funds. The council’s report singled out as the most important development affecting Ontario’s finances in the next decade the dramatic reduction in the future availability of non-public funds, strongly suggesting government financing will be complicated in the 1980s by a decline in net financing from these sources.

Deceleration of growth of CPP funds has raised many questions on alternative financing methods, the most obvious being a contribution rate increase. Even this would only postpone, not eliminate, the day when the province could no longer rely on the CPP as a net source of new finance.

The council warned that provincial governments might respond to an increase in available funds by increasing provincial expenditures. That has been the story in the past. It’s been an availability-fed demand -- anything that’s available, they spend. This distortion in recent budgeting is probably the most critical we’ve faced in the history of this province.

The council noted that the province pays an interest rate on CPP funds equal to the yield on long-term government of Canada bonds, below what the province would have to pay in the public market. The advisory committee of the Canada Pension Plan estimates this interest subsidy to be about 1.12 percentage points, and has recommended that provinces pay interest on these funds at a rate commensurate with the yield offered on securities sold on the open market.

This year, in a study on business investment in the province, the council stated that: “As the level of investment gradually accelerates, led by energy and resource developments, the need will arise to redirect a larger percentage of domestic saving from the government to the private sector and from short-term investment instruments to long-term investments more suitable for financing long-term capital investments.

“An increased flow of private savings from the public to the private sector could be encouraged in several ways. The largest flow to the government sector occurs through the medium of the Canada Pension Plan. Consideration should be given to depositing at least a portion of the net contributions in a special trusteed fund in each province to be available to the private sector on a competitive bid basis. To ensure the maximum availability of such funds to finance business capital investment it might be desirable to limit the use of such funds to equities or debt with a term of 100 years or longer.”

Business capital expendure dollars have always been high-powered. They create additional employment income and output demand in other sectors of the economy. Yet available funds for business investment may become more and more scarce in the future because of the growing burden of providing adequate pension benefits.

Not only will government savings in the period ahead be biased downward by a decelerating rate of net savings from government-operated pension funds, but there will also be a downward bias in corporate savings arising from the accelerating costs of funding corporate pension plans and the large outstanding liability represented by the unfunded portion of these plans. That is a great worry, Mr. Speaker.

Thus the picture emerges. Vast amounts of government-operated pension fund dollars must be redirected to the open market to stimulate the efficient growth of our business sector. Also, there is a danger that available pension funds will become scarce in the years ahead, due to the trend toward indexing benefits in line with inflation -- in itself reason enough to emphasize placing those funds on the open market.

The trend toward indexing increased pension funds benefits in line with inflation has forced Canadian pension funds to take measures to ensure that they are maximizing the rate of return on total fund investments. An increase of even one per cent in the fund’s rate of return can greatly increase the value of the fund and its ability to meet future payments, according to the estimates of investment measurement analysts.

With the exception of a portion of OMERS funds, government-operated pension funds have been invested in non-marketable province of Ontario debentures at preferential interest rates. The public service superannuation fund in Ontario doesn’t even go that far. It is deposited with the province’s consolidated revenue fund and the net increase in the value of the fund at year end is given interest at the current long-term, 25-year bond rate issued by or guaranteed by the province. On March 31, 1977, the overall blended interest rate on all funds in the PSS account stood at 7.94388 per cent. The balance of the fund at that time was about $1.1 billion.

A joint study group looking into the investment policies of OMERS concluded that the funds should be invested in a broader range of Canadian securities to obtain a higher rate of return. We have endorsed this position, and, in fact, urged the government to follow this course a year ago. We are pleased to see that the Treasurer has seen fit to follow this course, even if it is in an extraordinarily moderate way.

[4:15]

It’s just unfortunate that he delayed so long in deciding that these pension funds should be allowed to assist in the capital financial expansion projects of Canadian companies. If the funds had been available 10 years ago, we might have seen a more prosperous provincial economy. We would have seen less unemployment. We would have seen more real income. Studies have said that we are undercapitalized in this province -- that we haven’t put the money into capital that we need. This is one of the reasons we are not competitive on an international basis today.

In addition we would have seen a richer set of pension funds for our province, as evidenced by the rate of return on OMERS that is earned in the public market.

When we look back 10 years I can tell you the historians are going to be very critical of one Darcy McKeough. A historical look at Ontario’s financial methods reveals that the province has relied almost 100 per cent on in-house pension funds to cover its deficit virtually every year. If the contribution rate remains unchanged, the Canada Pension Plan will run out by about 1982, by which time payouts will have risen to equal contributions, and the surplus cash flow for provinces will become negative.

The Treasurer has suggested doubling the contribution rate. In other words, he would like Canadians to double their payments to CPP, to subsidize a preferential borrowing rate to his government to gratify his spending desires.

The Treasurer has argued that the province has incurred a string of deficits for capital spending purposes -- generally in long-lived assets. Here is his argument that all this money has gone into plant and capital.

Mr. O’Neil: The Conservatives have a great attendance over there.

Mr. Peterson: Total non-public borrowing over the last five years has been $5,271 million. Total capital investment for the same period has been $6,835 million.

The capital investment profile includes transportation vehicles -- predominantly GO vehicles and subways, taking in streetcars and buses, with an average life expectancy of 20 years. Land is also included in this figure that he tries to justify. We have spent $614 million on land in the past five years. Finally, there are financial assets. Mortgages, OMC, commercial loans for the development corporations, investments in Ontario Northland, UTDC, and equity investment in Syncrude.

I challenge the Treasurer’s argument. We question the validity of including some of these assets as long-lived, or whether a normal financial accounting would show them as revenue producing. We question the land banking expenditures. If we remove from the total figure transportation vehicles of $191 million, land purchases of $614 million and financial assets of $942 million, then capital investment over that five-year period would be a little over $5,088 million -- less than the amount of the non-public borrowing over that period.

The Treasurer has expressed the belief that non-public borrowing from internal funds has been used to finance the creation of a productive and necessary capital stock. In my view, there is nothing productive about the 3,000 acres of land lying idle in the Kitchener area that the government may not even want any more, some 10,000 acres at Edwardsburgh, 20,000 acres in North Pickering, 13,000 acres in South Cayuga, or another 13,000 acres in Townsend.

In addition, consider the schools, libraries, universities and hospitals over the past five years that have taken $1.2 billion out of the Treasury. We are now finding the government turning around and wanting to close these institutions. They are now using a different formula -- four beds per thousand -- than they were then.

We are finding that we have an overbuilt system with declining enrolment they didn’t anticipate. And the buildings that we do have are in the wrong place. It is simply an overbuilt capital system. The Treasurer tries to justify his spending habits on that story, but it is a very phoney argument. I think when we see the capital expenditure we made that are no longer necessary, that we are overbuilt, again history is going to judge this Treasurer very critically.

This year the Treasurer intends to spend about $1.4 billion on capital investments. That is equal to about 10 per cent of the budget. Yet we face a deficit of more than $1 billion.

In Mr. Robarts’ era, he made capital expenditures too, but he didn’t go to the market to raise the money for these kind of things, he balanced current revenues and current expenditures. My idea of a balanced budget is to match current revenues with current expenditures. That is not the Treasurer’s idea.

We find that in the Robarts era they had capital expenditures; they didn’t have massive deficits to do it. And it is not as if our obligations for capital expenditures are going to go away next year, or in the 1980s, when they have run out of these moneys. We are always going to have a demand for capital expenditure. We are going to have to go into new kinds of technology, into waste management and solar energy and that kind of thing, but that still doesn’t entitle the government to go out and borrow money.

It is my view that the only thing that should be amortized in government is a revenue-producing device like an Ontario Hydro reactor or whatever. But because there is a constant and full demand for capital expenditures, they’ve got to be done by up-front financing which I am frankly glad to see the Treasurer is talking about in this budget. He is going to write these off immediately rather than putting all these phoney transactions through the capital aid corporations and whatever else that he had under his control.

As I said earlier, a second problem is that reliance on these funds has contributed to expanded government spending. When these sources are no longer available, the expenditure pattern will have to be dramatically altered. Imagine the reduction of expenditure necessary in this past fiscal year ending March 31, 1978, if the government had not had access to $1.5 billion in pension funds.

Last year, the Treasurer gave us a five-year forecast aimed at a balanced budget in 1981. By coincidence that is the last year that money will be available from the Canada Pension Plan -- the borrowing source which has financed the lion’s share of the Treasurer’s deficits, and which this year will supply him with $910 million.

While budget paper A indicates that the Treasurer is moving in the right direction, he still has not addressed himself to the repayment of the pension fund debentures which will begin from 1982. That year $74 million will become due from teachers’ superannuation fund debentures. In 1986, $20 million in CPP fund debentures will become due. But, from 1987 on, repayment of pension fund debentures will be in the hundreds of millions of dollars for every year, surpassing $1 billion in at least two of the years before the turn of the century.

In other words, over and above normal expenditures and similar to no expenditure in our budget today, starting in 1987 the province will have to find a way to deal with the repayment of hundreds of millions of dollars in pension fund debentures. There’s just no walking away from it. Even if the province simply refinances these loans, they are eventually going to become due.

Already this year of the $900 million the province will borrow from CPP more than $500 million will go to paying interest on that debt. How does the province intend to meet those debenture repayments, and does the Treasurer have a plan for the financial commitments he has imposed on this province? Does he intend to refinance his debts for ever, amassing interest payments and putting off the debenture liabilities for future generations to take care of? I don’t know and, frankly, he doesn’t know because I have asked him this question in estimates, and he says, “Well, we will let them worry about that later.”

I have a chart listing the principal amounts of the pension fund debentures which will become due in the 1980s, and I would just like to read a few of these figures into the record because they are important to an understanding of the scope and nature of this problem.

In addition to the debentured amounts, we have these massive unfunded liabilities that appear in no account sheet, appear only by way of note on the financial statement.

We have given this a very serious look and have prepared a chart into the year 2002, which takes into account, as best we can determine -- and I will grant you there may be the odd little error in here, Mr. Speaker, but I think it is essentially accurate -- the principal amounts of funds repayable, starting in the year 1982, and, in addition, the amounts of unfunded liabilities that will have to be paid over this 25-year period. It’s all here in front of me.

In 1978 -- this year -- we are going to have to pay back $175 million; 1979, $198 million; 1980, $198 million; 1981, $198 million. Then in 1982 when some of the debentures become due we are going to have to add an additional $267 million to our budget; 1983, $193 million; 1984, $193 million; 1985, $193 million. Then when we get to 1986 the crunch comes. That year we will have to repay capital and unfunded amounts of $213 million; 1987, $701 million; 1988, $568 million; 1989, $605 million; 1990, $638 million; 1991, $530 million; 1992, $1.013 billion; 1993, $873 million; 1994, $800 million; 1995, $1,082 million; 1996, $953 million; 1997, $1,056 million. These figures are alarming, and I don’t mean to bore the members of this House with them, but it’s time they knew what the figures are doing to the future governments of this province and the kind of obligations they are going to have to deal with.

Let us not forget, in the process we have dried up every available source of money that we have now. They have two choices: Either they can refinance this by going to the public markets of this country, competing with private enterprise for capital, or they can raise the tax rate. If we raise the tax rate at those times -- and it is my suggestion that we’re at the economic tilt point right now; we don’t have any more room to move -- we’re going to be robbing more initiative out of the private sector in this province than we are already. We can’t afford to do that.

Mr. Reid: They’re bankrupting us.

Mr. Peterson: The total for capital repayments, debentured liabilities plus unfunded liabilities, is in the range of about $15 billion over the next 25 years. That’s the best estimate we are able to make, and I suspect it’s a pretty accurate one. I have yet to see any plan or even any suggestion of a plan by this government as to how they are going to deal with it. They are counting on an increased growth rate and a larger budget, and they’ll fudge it or hide it somewhere in that budget. But I can tell you, Mr. Speaker, thoughtful observers of this scene are seeing a long period of slow economic growth; they question some of the principles upon which our growth has been developed in the past. We’re seeing rapid deindustrialization. We’re seeing that our resource base is no longer as strong as maybe it once was. These premises about the economy growing automatically are not always accurate, and a thoughtful government is going to have to start thinking ahead a little more than we have seen to date.

I think I have dealt with the pension fund problem as best as I can, given the limited amount of information that is available on it, although a great deal of work was put into it. But I commend those numbers to the Treasurer and I urge him to develop some kind of a strategy to look at them. This information gives us, in my judgement at least, the context in which we are facing a budget in 1978. The Treasurer has put forward his proposal, and I would like, if I may, to deal with those proposals in a specific way and to look at our alternatives.

In this year’s budget, the Treasurer is predicting a growth rate of some 4.3 per cent, which is a questionable proposition at best. You will recall, Mr. Speaker, that last year he was off by about two percentage points. As I recall, he predicted 4.7 per cent; it ended up at 2.7 per cent. We all admonished him and told him he was a dreamer and he was crazy because everyone else in the country was predicting a lower growth rate but he, of course, thought everyone else was a little funny. In fact, most of the predictions came in about right.

This year, I’ll grant, he’s taken a middle course on this matter. There are certain estimates higher and certain estimates lower; it’s impossible to tell. I suspect it won’t hit the level that he has suggested. He is relying on an increase in consumer spending of 4.1 per cent, a decrease in business investment of one per cent -- and that is a real worry -- an increase in government expenditures of 1.6 per cent and an increase in exports of 8.9 per cent, to drag through this growth rate of 4.3 per cent.

What he is doing is relying on the devalued Canadian dollar as a short-term crutch -- for short-term assistance. If the dollar was at parity today, he would be projecting a much lower growth rate, because he wouldn’t have that export advantage -- and surely the experience in other countries of this world tells us that at best it is only of extraordinarily short-term advantage to have a devalued dollar. I do not criticize any government or any business in this jurisdiction for taking advantage of that, but please let us not be so naive as to think that it’s going to last forever. History tells us there are very quick structural adjustments to those kinds of things, and you lose your competitive advantage very quickly.

Mr. Laughren: He thanks God for the federal Liberals every night.

Mr. Peterson: The Treasurer himself has said that the Quebec crisis is worth five cents of that to him; he’s suggesting we profit from this five-cent advantage because of the unity crisis we’re facing in this country.

I can’t argue with that --

Mr. Laughren: That’s why he’s grateful to the federal Liberals.

[4:30]

Mr. Peterson: -- but I would say this, that these figures should prompt him to look at the structural problems and to look at some of the more basic problems that he at least alludes to.

In past years under other premiers and treasurers we were able to deal with Ontario’s basic needs and problems ourselves. We did not have to depend on the external forces to bail us out. Joint federal-provincial initiatives are valuable and necessary, but they should not be our only hope; they should not be our only refuge. We must take postive, forward-looking programs right now. Surely Ontario, as the largest, richest province, has a role.

At the first ministers’ conference in Ottawa, the Premier of Ontario presented a paper outlining the need to improve the business climate and increase private investment in this country. He stated that private enterprise needs more confidence and less uncertainty if it is to risk new capital investment to improve productivity and expand employment. He stressed that the first commitment must be to manufacturing -- action to bring about increasing employment in manufacturing and an increase in the share of GNP. Yet this budget offers no incentive to stimulate the private sector or arouse confidence. There is not a word of encouragement for the manufacturing sector, let alone concrete measures, and absolutely nothing for small business. Let me tell you, Mr. Speaker, that the Treasurer is part of the crisis of confidence in this province.

The small business sector particularly is capable of contributing a great deal to redressing our economic problems, being labour-intensive and able to deal easily and quickly with new and changing economic realities.

The contradiction between word and action is quite unacceptable to our party. We are very happy that the Liberal message -- and unabashedly we have been talking about restraint in government expenditures for a long time in this party and we will continue to talk about that and we are glad, to some extent at least, that the Treasurer has seen fit to limit increases in spending to seven per cent. We think it is a laudable objective, as is his intention to introduce sunset provisions to cover certain government boards and commissions. My leader introduced a resolution in the Legislature last fall which provided for the termination of government agencies, boards and commissions, as deemed appropriate by the standing procedural affairs committee according to specified conditions.

We again are pleased to see the government implement our idea. However, in this case, if the Treasurer intends to apply his provision only to certain boards and commissions, he should quickly indicate which ones and what criteria will be used in deciding which ones will or will not come under review. We are not persuaded that the implementation of this legislation should be selective.

As the members recall, when I was doing the budget address last year we suggested four specific points to bring government under control. We suggested management tools which could be used by this government. One was zero-based budgeting. I am glad the Treasurer has alluded to that. He had made mention of it; we have no idea what his plans are.

We talked about sunset laws that we would bring in immediately. We talked about deregulation that we would bring in immediately and a regularization of the various devices the government has under its disposal.

Very importantly we talked about -- and I am glad the Treasurer mentioned it in his budget this year, and I hope he does something about it -- bringing in an economic analysis of the impact of any law or regulation on this province. Because it is very important that we don’t consider any law in isolation without considering the net effect throughout the entire economy.

Those were our four suggestions in last year’s budget. I am glad that the Treasurer is looking at them seriously. He will certainly have our assistance in the implementation of those measures or in any similar legislation he brings in.

I want to talk about some of the specific suggestions that the Treasurer had -- suggestions that by and large are okay as far as they go but reveal, in my judgement, a tremendous absence of leadership on the issue.

If the Treasurer was serious about resource industries in this province, he would have developed a comprehensive resource plan for the present and the future, rather than tossing out a mere $5 million token gesture to the mining industry. It is a step in the right direction but a very small and isolated one, which the Ontario Mining Association feels will not adequately stimulate the new mining investment and exploration in Ontario.

Let me get to energy conservation. If the government was really serious about energy -- and I think very seriously that is one of the most profound deficiencies in government policy today -- the lack of a comprehensive energy strategy. Surely the Treasurer could come up with more than a rebate of sales tax on storm doors and storm windows. That is just absolutely minuscule.

I can’t sortie into this whole area of energy conservation. We gave the government a myriad of good suggestions. We have in our party, I’m proud to say, the most authoritative person in this House on energy, our critic from Halton-Burlington (Mr. Reed). He will continue to make suggestions. I look forward to the day when that man is Minister of Energy so that he can bring in the kind of positive, perceptive proposals he has. I will be talking more about energy later because I think it is so important. Obviously, we don’t disagree with removing sales tax on some of these little items, but it’s a long way short of any kind of meaningful policy. The tax break proposed for the travel and tourism industry is long overdue, but again there is no co-ordinated strategy. What the Treasurer gives with one hand by eliminating sales tax on hotel rooms, he takes away with the other by increasing alcohol taxes and continuing the 10 per cent tax on so-called luxury meals. As part of this package, this tax should have been reduced to seven per cent and the dollar value of exempted meals should have been raised.

We should have been looking into gas prices along Highway 401. It’s the first contact that many drivers of motorized vehicles have when they come into this province and they get ripped off immediately at the gas pumps along 401. No wonder we have created an inhospitable impression to people travelling into this province.

Mr. O’Neil: It’s called highway robbery.

Mr. Peterson: The government has direct control over that. Why isn’t it doing something about it? We’ve been pushing for years to have some kind of a look at the leases under which those gas stations are held. Why don’t we introduce a gift certificate program for domestic travel that is exchangeable anywhere, almost a form of currency that could be used for just domestic operations? We need an overall policy and we need something to address the $650-million tourist deficit we have in this province.

Mr. O’Neil: Hotel rates have already gone up.

Mr. Peterson: My colleague from Victoria-Haliburton (Mr. Eakins) has conducted a task force on this for the last six months. He has talked to many people in this industry and he has made himself the House authority on this particular issue. He has brought a considerable number of good suggestions as a comprehensive way of looking at these issues.

He has suggested, and I support it, putting the Tourism portfolio in with Culture and Recreation. That little squirt doesn’t do that much anyway, except administer a few funds ill-gotten that he gets. Why don’t we put that important portfolio in there so that a comprehensive strategy can be built in that area? And why don’t we turn Industry and Tourism into Industry and Small Business, an important and neglected area of the provincial economy where we would really have a chance to do something? These are some of his recommendations. I look forward to the day when he is the minister and can implement all these things.

Perhaps the most blatant evidence of an empty promise contained in the budget is the research and development proposal. The Treasurer wants a strong incentive for new jobs in industrial research, development and design and has gone so far as to tell the Minister of Finance in Ottawa about it because he feels it should be a national program. He and his colleagues must be spending a lot of time talking to their federal counterparts these days because they have passed the buck in that direction a lot. Let me reiterate: Let us start at home. Let’s introduce a program for research and development here in Ontario now. If and when the federal government decides to implement a plan, then they can join us or we can join them -- it doesn’t matter -- but we can’t delay when we have the most threatened industrial base of any province in this country.

Statesmen-like positions which concentrate on the national perspective, such as that taken by the Premier and the Treasurer in Ottawa last month, are fine but they cannot replace something positive and something concrete here in Ontario. We have several ideas. We think we should use the Ontario tax credit to bring about research and development for Canadian-owned companies in this province. We are not happy about the Treasurer’s sellout to branch plants and to foreign-owned companies.

Mr. Laughren: Is this a Liberal speaking?

Mr. Peterson: We think we should be encouraging indigenous Canadian-owned research and development capacity here in this province. To that end, the government can use two mechanisms. It can use the tax credits, and we should be using that. We shouldn’t be given generous tax write-offs for that kind of work here in the province. There’s no reason we can’t expand the Ontario Research Foundation. There’s no reason they couldn’t be using Wintario money, or some percentage of Wintario money, putting it out to private enterprise, allocating it on a fair and equitable basis to build an indigenous entrepreneurial talent here in this province.

Mr. Laughren: Is the Treasurer getting these alternatives?

Mr. Peterson: I will be talking more about this later because I think it’s critical to the financial and economic future of this province.

The Treasurer maintains that his objective of balancing the budget in 1981 remains a viable goal. In the 1977 budget, when he first introduced his five-year deficit reduction plan, he said -- and I want to read this in because it shows another major abdication, another major change from his previous philosophy. In the 1977 budget paper called Towards a Balanced Budget, he talked about the five-year deficit reduction plan. I want to quote to you from that, Mr. Speaker, because it’s very important. He said:

“Achievement of a balanced budget by 1980-81 assumes the continuation of this trend, but it assumes that eventual elimination of the budgetary deficit will be realized via expenditure restraint and not via tax increases.”

And what did he do? He turned around one year later and increased the OHIP premiums to $271 million; as I recall, that’s the figure.

During the first year of the plan, both precepts were violated. In the 1978 budget, the Treasurer asserts that “discretionary revenue increases in this budget, together with continued expenditure constraint, have put the fiscal plan back on target.” These revenue increases result from tax increases amounting to $429 million in 1978. What tax increases will be required in 1979 and 1980 to keep the plan on target? What will it cost the taxpayer in terms of jobs and disposable income? In other words, what will be the cost to the economy of balancing the budget? We agree with the objective, but there are other objectives in budgeting too. We need job creation, and the question we have to ask the Treasurer is at what price is he prepared to do this? He has used only the regressive OHIP rates of 37.5 per cent.

Mr. Laughren: You are getting these alternatives are you, Darcy?

Ms. Peterson: Also, in the first year, net cash requirements increased by $300 million, or 50 per cent, rather than decreasing by $200 million, so falling short of the target by $500 million. This year the target has been revised to show an anticipated shortfall of $200 million, or an increase in net cash requirements of 22 per cent over what was actually projected. In the light of the Treasurer’s recent track record, we can expect net cash requirements to grow over the year.

For several reasons, as I pointed out, it is very difficult to have faith in this Treasurer and that ministry.

Finally, Mr. Speaker, we’ve seen a major shift in policy. The Treasurer is willing to sell off the province’s assets in his desperate attempt to balance the budget. His decision to begin selling the $1 billion portfolio of mortgages held by the Ontario Mortgage Corporation to the private sector can best be likened to a firm that starts selling off the office furniture to avoid bankruptcy. This is of great concern to me because my conception, as I said earlier, is of a balanced budget to match current revenues and current expenditures.

When asked in the House last week if, in balancing the budget in 1981, he anticipated selling off provincial assets to do so, the Treasurer said, “No.” He has dramatically changed his budgeting in order to hit that god of the 1981 balanced budget, with a major change in position that, I’m sure, he thought would slide through. I can tell you right now, Mr. Speaker, if he is the Treasurer in 1981 he will balance the budget, because he will have sold off the $1 billion portfolio of mortgages or whatever. I liken it to selling off the Robarts library for $50 million -- assuming you can find a market for it -- and then putting that money into current revenues and reducing your deficits by that amount.

If one looks at this budget carefully, on the non-budgetary side, one sees a major change this year. We are seeing more receipts than disbursements by selling off this money. The Treasurer has decreased his net cash requirement by fudging below the line rather than above line. It’s a major change from generally accepted accounting principles, and accounting principles which the people of this province have become used to. That is one of the very major changes that I see in this budget, and it disturbs me.

I have never said I’m against divesting unproductive assets but I am against not bringing revenues and expenditures closer into line, and I will never accept those kinds of mechanisms as an excuse to balance the budget.

The Treasurer also intends to manipulate a deficit figure to suit his purpose and has led us into thinking the government’s deficit position was better than it is.

[4:45]

Ten years ago the Smith committee on taxation formulated a rule that the province should maintain debt at the ratio of approximately nine per cent of provincial domestic products. This year’s budget will lead us to believe that the net debt as a percentage of gross provincial product is surpassing the Smith standard for the first time, hitting 9.5 per cent. In fact, net debt passed the Smith standard in 1976, registering 9.7 per cent of the provincial domestic product. To camouflage this fact, the Treasurer altered one of the bases on which he reports annual net debt position. Provincial domestic product and gross provincial product are not the same standard. GPP is a broader indicator, taking into account indirect taxes and external investment income.

The advantage to the government of making this reporting change is made clear in the 1976 figures, the first year the switch was made. That year net debt as a percentage of GPP was eight per cent while the percentage of provincial domestic product was 9.7 per cent and therefore more than the acceptable level. According to the Smith standard of PDP, the figure this year is really 11.1 per cent.

The Treasurer is reported as saying that the Smith committee standard really is no longer relevant. If that is the case, why has the Treasurer gone to such lengths to deceive us? Sneaking in a change in the reporting base to make his miserable debt position appear better is irresponsible. And this is not the only change from generally accepted accounting principles or from historical principles -- to alter the figures and alter what we are getting today.

Finally, increases in expenditure in the area of debt servicing -- interest payments already accumulated as well as additional deficits this year -- are alarming. Net debt has now reached 9.5 per cent of the gross provincial product and 72.1 per cent of annual revenue. Interest payments of $1.2 billion are now taking 8.5 per cent of the budget, an increase over last year of 15.4 per cent, the largest dollar increase in the budget.

In addition to decrease the net cash requirements he took advantage of a one-time $70 million accelerated cash flow through the payment of corporate income tax. I am not against that. That’s a reasonable accounting device -- it’s a reasonable thing to do in the circumstances.

But let us not be deceived by his figures. Had he not flogged off the assets to the tune of $120-$125 million, had he not had this accelerated cash flow on corporation income taxes of $70 million, his real net cash requirements would be some $200 million higher than he projected. Rather than being only $200 million off his projection in 1977, as he says, in fact he is $400 million off that projection according to generally accepted accounting principles.

We are going to be watching this very closely and we are going to be pointing out as best we can, with as loud a voice as we can summon --

Mr. S. Smith: You have been caught, Darcy.

Mr. Peterson: -- that these aren’t reasonable in the circumstances.

The Treasurer’s performance in other areas has been no less disappointing. Personal income tax revenues declined by $525 million, or 21 per cent over the 1977 estimate. Corporation income tax dropped by $119 million, or 14 per cent; mining profit taxes fell by $70 million, or 175 per cent; retail sales tax by $66 million, or three per cent; and the motor vehicle fuel tax by $17 million, or 20 per cent -- some terribly shoddy budgeting throughout.

There are, however, two aspects of this budget that cause me even greater distress than what I was talking about. I want to talk about those in some length. First is the increase in OHIP premiums and second is the lack of measures to deal effectively or meaningfully with any kind of permanent job creation in this province.

Mr. Speaker, I think we are going to make it by 6 o’clock so don’t despair.

The OHIP rate increase of 37.5 per cent is, in our judgement, unconscionable. At a time when pay increases are being held to six per cent, how does the government expect taxpayers to cope with this increase in health insurance premiums which total 100 per cent in two years? Two years ago a single person paid $132 per year in OHIP premiums and families paid $264 per year. In May those figures will be exactly double -- $264 for single people and $528 for families.

Mr. Haggerty: What does the AIB say?

Mr. Peterson: It is a regressive form of taxation, hitting those who can afford it least and who cannot afford it equally. Even the premium assistance provisions are cruelly unfair. The taxpayer earning one dollar more than the allowable assistance amount is hit by the full weight of the increase. If premiums must be raised -- and the Liberal Party believes there are far better ways of dealing with the health care system that is financially out of control -- they have to be increased on a progressive, graduated basis.

Mr. S. Smith: And we mean business on this one, Darcy.

Mr. Peterson: The new premiums will be more than double those in effect anywhere else in Canada. Only three other provinces use premiums or special payroll taxes to help pay health care costs. The province with the next highest premium is British Columbia, where the annual single rate is $90 and the family rate is $225 per year. That is 34 per cent and 43 per cent respectively of Ontario’s rate. Alberta and Quebec also charge their taxpayers separately for health care coverage. The other six provinces finance their programs through general tax revenues, thus eliminating all premiums.

According to the Treasurer, premiums will now cover 34 per cent of health expenditures. In Quebec, the figure is 13 per cent; in Alberta, 10 per cent and in British Columbia, 15 per cent. However, the discrepancy between Ontario and the other provinces is far greater. The Treasurer, as usual, has manipulated the figures to serve his purposes. He has not taken into account the $415 million paid by the government in premium assistance. If this figure is included, the portion of health costs paid by premiums is more than 46 per cent. No study or committee I am aware of in this province has ever recommended that premiums pay anywhere nearly as large a percentage.

The burden of this increase to every sector of society is awesome. The Ministry of Labour analysed 258 municipal agreements in 1977 and, of these, 234, affecting 97.6 per cent of the municipal employees under these agreements, provide for 100 per cent OHIP coverage. The impact of the increases on municipal budgets across the province will be significant. In Metro, the cost will be about $2.5 million. Chairman Paul Godfrey noted that Metro’s 1978 budget, which had called for a 5.2 per cent increase in spending, would now have to be amended to 5.5 or 5.6 per cent. The regional municipality of Niagara estimated that the increase would cost it about $170,000; the city of St. Catharines said about $77,000 this year.

School boards will also feel the blow. The higher premiums will cost the Metro school board another $1.4 million annually. Board officials claim the tax increase would have been even higher, if they had not set aside $400,000 in anticipation of possible OHIP increases. Outside of Metro, the Lincoln County Board of Education calculated increased costs of $225,000 this year. Municipalities and school boards, already reeling under the effect of reduced transfer payments provided for under the again revised Edmonton commitment, will almost certainly now be forced to increase their property tax rates to cover this additional cost. They have been hit coming and going this year, and if they have been hit, so has the taxpayer. Hospitals, already under severe budget constraints this year, will be even harder pressed. We can anticipate staff and service cutbacks as they attempt to absorb this additional cost increase.

I had a small businessman -- not exactly a small businessman, but not in big business -- phone me: He said: “This OHIP increase is going to cost me about $5,000 this year. I am probably going to have to lay off at least one person to make that up because I just can’t afford it in my costs.” These are the real effects. We are talking about the effects on government and on the taxpayers, but it is going to have a real effect throughout the economy of this province because of the very high burden of payroll taxes we are putting upon the employers in this province.

The Treasurer, by way of reassuring us, says that almost three-quarters of the increase will be paid for by employers. However, employers cannot simply absorb such additional costs. There are bound to be adverse effects. A spokesman for the Canadian Manufacturers’ Association, whose members employ about 800,000 workers in Ontario, said the premium increase would cost employers an extra $122 million this year. He predicted that some companies would pass on the increase to consumers by raising the prices of their products. Others may decide it is cheaper to invest in automation than to spend the money on new workers because machines aren’t paid fringe benefits, such as OHIP premiums.

Mr. S. Smith: The government is going to have to rescind it, just like the energy tax of John White.

Mr. Peterson: The self-employed will be forced to pay the entire amount themselves, in addition to the increases that will be passed on to them by the other affected sectors of society. No one benefits from this increase but the provincial Treasury. Seventy-five per cent of this year’s announced tax increases will come from the OHIP boost. This will bring the revenue from OHIP premiums to a total of $1.12 billion in fiscal 1978-79, making it the third-largest single source of budgetary revenue in Ontario, trailing only the personal income tax and retail sales tax. Even the corporate income tax will bring in fewer dollars.

The Treasurer also contends that premiums retain a visible link with the cost of services. How can this be true when three-quarters of Ontario residents have their health insurance premiums paid for by employers? Premium increases do not address the problem of cost awareness, nor do they act as a deterrent to unnecessary doctor or hospital visits. How can he even talk about this visible link when anyone can go to any doctor or take advantage of any medical service in this province, without even having to show any proof or without any calculation of how many provincial services he’s consuming? It’s the most ill-conceived system I can possibly imagine. Very quickly, in order to provide that visible link that the Treasurer is talking about, we must use far more acceptable and responsible methods than he has ever suggested. Certainly one of them is letting every person know how much he consumes in provincial services, and not just how much he pays. I suggest that the Treasurer’s visible link provided by this mechanism will be questionable at very best.

Clearly the health care system is in need of a major examination and overhaul. Raising OHIP premiums in a non-election budget is not the answer. Last week my leader asked the Treasurer to delay implementation of the increase pending consideration of a report on alternative, cheaper and more equitable methods of financing that portion of OHIP costs currently paid by subscriber premiums.

Subsequently, my colleague the member for Renfrew North (Mr. Conway), the Liberal Health critic, petitioned that the annual report of the Ministry of Health for 1976-77 be referred to the standing committee on social development so that the current system of financing OHIP can be examined with a view to finding alternatives to the present scheme. This petition was granted.

We hope that this committee will present more equitable and just alternatives to the present health financing system. It is absolute folly for the government to persist in inflicting this iniquitous burden of sharply increased OHIP fees on the taxpayers. Another solution must be found -- and must be found quickly. We have got to look at more progressive ways of financing this system. We are expecting answers from this committee and we are expecting that the government is going to act on some of these answers.

I want to turn now, if I may, to another very major area of concern; that is, the absence of job stimulation measures and, to that end, we have many proposals. The absence of job stimulation measures is another aspect of the budget which is offensive by virtue of its total disregard for the plight of some 316,000 Ontarians who are currently out of work. In January the unemployment rate in Ontario was 7.9 per cent. Forty-three per cent or 137,000 of the unemployed were young people -- those under the age of 25. Equally appalling, the number of unemployed in their peak earning years (25-54) who are often the sole support of families, rose by 47,000 between November and January, to 158,000, an increase of 42 per cent over two months.

Yet for the second consecutive year the Treasurer, acknowledging that unemployment will continue at about present levels in 1978, has not brought forward even one permanent job creation proposal. Again he is abdicating responsibility to the federal government. He passes the buck up to the feds and down to the municipalities -- just as long as it doesn’t rest with him. In Ottawa he and the Premier unveiled a paper, entitled Immediate Action for Job Creation, which proposed 10 measures, either calling for federal initiative or making no recommendations for implementation at all. We need leadership here in this province, and surely that’s the government’s responsibility.

Last year the Treasurer forecast 89,000 jobs would be created in 1977. Actual job creation figures show about 73,000 -- a shortfall of 16,000 against his own 1977 budget forecast and 27,000 against the famous Brampton charter. This year, having failed to introduce either meaningful job creation programs or measures to stimulate the private sector, he blithely predicts 101,000 new jobs will be created in 1978. Like most of his predictions, I’ll have to see it to believe it.

To be fair, the Treasurer does address himself briefly in this budget to youth unemployment. He proposes to buy off our young people for one more summer. Of the 60,200 jobs projected for 1978, more than half are designed to last only 16 weeks. Only the Ontario Youth Employment Program has been expanded to run for 25 weeks. This means that most of the unemployed youth in Ontario, representing almost 15 per cent of the labour force in that age group, will be back on the job market in the fall and the rest will join them two months later.

While the Ontario Career Action Program functions year-round, the jobs are for only 16 weeks in most cases, though a very few are for 32 weeks, and carry no guarantee of future employment. The operation of this program came in for severe criticism in the report of Provincial Auditor for the year ended March 31, 1977. The report cited case upon case of poor administration and mismanagement which has resulted in financial waste and abuse of the program. Since the funding for this program will be increased by 33 per cent this year, we advise the government to clean up its act and heed the Auditor’s recommendations so as to be able to reap the greatest possible return from this program.

The government’s job programs for youth are not inexpensive. It will cost $2,090 to create each junior ranger job; $3,000 for each youth care for senior citizens job; and $3,685 for each job under the regular summer replacement program.

[5:00]

Given a spending increase of $13 million this year to generate an additional 12,700 jobs for youth, the government is already conceding that of the 700,000 students expected to be on the job market this summer, at least 100,000 won’t find jobs, probably more. Last year, at the peak of the summer, there was a shortfall of 159,000 jobs for young people. The Treasurer admits in his budget that more permanent measures are needed, and he urges the federal government to find ways of providing them.

This government has abandoned a whole generation of young people. It has also written off the adult unemployed. The Treasurer is so callous that he dares to justify his failure to fight unemployment on the basis of maybe the most offensive statement I have ever seen in a budget anywhere. And I want to read this into the record because I find it absolutely incredible. This is what he said on page 4 of the Ontario budget: “In reading this staff study, one reluctantly comes to the conclusion that the taxpayers of Ontario would see only marginal returns to the provincial Treasury when government stimulates the economy through general measures. Nearly all of the budget dividends, arising from the resulting job creation, flow to federal coffers in the form of savings on unemployment insurance.”

So he is saying that because the taxpayers here don’t get anything back he has no obligation to create jobs. It is a discrepancy, because I have heard the Treasurer on many occasions arguing that there is only one taxpayer in this world, be it federal, municipal or provincial. Now he is differentiating between the Ontario taxpayer and the federal taxpayer -- even though they are one -- saying that there is no obligation for the Ontario taxpayer to help out with the unemployment insurance. I find it incredible that he would take that view, I would urge him to dramatically change his position on that and take some responsibilities.

Mr. S. Smith: It’s a disgrace.

Mr. Peterson: Not only does he not create jobs; he is actively pursuing a policy that is costing Ontario jobs. A study, which we demanded the government undertake, to examine the impact of their program of retail sales tax exemption for machinery and equipment, estimates that last year and this year Ontario will lose over 10,000 jobs because of the exemption. I must point out that we supported that exemption. The rest of the country gains almost 18,000 jobs as a result. There is supposed to be a turnaround in 1981.

I can tell you, Mr. Speaker, the Liberal Party of Ontario will hope that is true, and we will continue to support it. But I want you to recall that it was us, the Liberal Party, that insisted on that review rather than blindly take the figures that the Treasurer would seem to give in the circumstances.

The Treasurer has always contended that tax exemptions to industry create jobs. What went wrong? The answer is that the tax exemption on machinery encourages manufacturers to replace people with machines, because it costs less.

This year the loss in jobs is expected to be even greater. It is estimated that some 6,078 additional jobs will be lost in Ontario as manufacturers replace people with machines. But because of the increased productivity of Ontario industry, about 12,635 jobs will be created in the rest of the country.

We will support that, Mr. Speaker. We will be looking for some action in the very near future.

We need short and long-term solutions to this very dismal job scene today. We direct all of our efforts to the long term. We may go under before we get there. The government has abdicated its obligations to the people of Ontario for the present, in the hope that problems will resolve themselves. We need to concentrate on short-term job creation programs, and we have to that end many suggestions that I want to get into now, as well as the structural problems that I want to discuss thereafter.

For our young people, our education system and guidance facilities must be brought into line with current labour market realities. Our schools have failed to teach the skills and technology necessary to succeed in our economically-lagging province. In a recent survey by the OECA, “meeting job market needs” was selected by Ontarians as the aim of education at the elementary level by 27 per cent, at the secondary level by 45 per cent, and at the post-secondary level by 51 per cent.

We must be honest with young Ontarians about the bleak job prospects in certain areas. They must not be misled into believing that higher education guarantees higher-paying work. The traditional jobs just aren’t there any more.

Why have we continued to train more and more nurses and teachers, when our obvious needs will be for geriatric care workers and environmental specialists?

To take only one example -- the medical field. About 3,500 nurses graduate in Ontario each year. Even though many hospitals hire nurses on a part-time basis, unemployment in the nursing profession stands between 10 per cent and 20 per cent. Year after year, we lose a high percentage of Canadian-trained nurses to the United States and to other parts of the world. The need for improved guidance counselling has been widely recognized by professionals for at least 10 years, as has the vital necessity of extensive and accurate manpower planning. Surely the government has the facilities and available information to project future employment needs. Students wishing to take specific courses should be made aware at the outset of their chances of obtaining a job in their chosen field. Graduation day is no time to learn that through a lack of knowledge of future job prospects one has made the wrong choice when one entered university or community college.

All students must be provided with this information before they embark upon a course. They must be made aware of the prospects of finding employment in the career of their choice. No punches can be pulled in this connection. Enrolment must be encouraged in areas where there is an identified shortage and limited in areas where there is a surplus of qualified people. Let us not forget the approximately 73 per cent of Ontario’s young people who don’t go to university or community college. They desperately need help to bridge the gap between school and work and to contend with the want ads that state “experience required.” They need a chance to acquire skills which will enable them to earn a living in today’s competitive world.

Since 1963, at about the time the Premier became Education minister, five government reports have strongly recommended expansion of alternatives to formal, institutionalized education and training. In this year’s Throne Speech, the government spoke of giving the highest priority during the year to evolving a training program geared to the manpower needs of industry. After some 15 years of study -- of talk -- there is still no definite plan and no program. The situation cries out for more action, and all we are offered is more talk.

The existing apprenticeship program in Ontario is little known, badly organized, inconsistently funded and not broadly applicable. During the last election campaign, we in the Liberal Party came forward with a proposal for an improved and expanded program. We proposed that employers wishing to train apprentices would register with the industrial training branch of the Ministry of Colleges and Universities, which would establish and monitor standards for training programs. Applicants for apprenticeship would also be registered and directed to potential employers, who would themselves decide which applicants are acceptable for training. This matching service would be a substantial improvement over a situation where each potential apprentice must, without assistance, seek out an employer to provide training.

During on-the-job training, the apprentice would be paid by the employer at a salary level which gradually increased towards the amount paid to fully-trained persons in the particular occupation. Each year the apprentice would return to a community college for a period of three to four weeks for classroom instruction and examinations. During this time, federal financial assistance would be available to many apprentices under the Adult Occupational Training Act.

The program would be promoted through guidance counsellors in the schools and though Canada Manpower centres. Employers would be urged to take advantage of the excellent opportunities to hire and train reliable, comparatively inexpensive and increasingly skilled apprentices. The industrial-training branch would ensure that no employer abuses the program as simply a source of cheap labour.

At the end of the training period, an apprentice would receive a certificate of apprenticeship, acknowledging that he possesses certain defined skills and knowledge. At that point, he may choose to remain with his present employer, he may seek employment elsewhere or he may even establish his own business.

As an integral part of this program, a labour market information service would be established to determine future manpower requirements as well as a vocational counselling service to ensure that young people are fully aware of their job prospects and opportunities in various occupations. How many high school students are aware that present forecasts to 1982 indicate a high demand for electricians, machinists, carpenters, plumbers and skilled workers in manufacturing?

While we believe this basic plan would meet the training needs of many occupations, we realize the special requirements of the various skilled and technological trades must be taken into account. The recent study commissioned by the Industrial Training Council concluded that “on-the-job training lacks consistency, uniformity, and standards.” On- the-job training costs were found to be quite high, due partly to loss of productivity because a journeyman’s time is taken up with coaching the trainee. The study also indicated a very high turnover rate. Only about 29 per cent of those who begin a training program ever become graduate journeymen.

Clearly, an intensive, longer initial period of community college classroom instruction and examinations would be a tremendous asset for many skilled occupations. Possibly, a front-end community college term of six or nine months would be appropriate, followed by on-the-job training, interspersed with annual three to four week sessions at college.

An extensive and effective apprenticeship program is not only important to meet the needs of young people in today’s competitive job market, it would also help to alleviate what is fast becoming a serious shortage of skilled tradesmen and artisans in this country. This shortage has developed because many of the highly skilled immigrants who came to Canada from other countries are approaching retirement age.

Last year, a confidential study of 15,207 skilled tradesmen in Toronto, Hamilton and Guelph showed that 87 per cent were more than 40 years of age, while only 2.6 per cent were 30 to 35. It’s interesting to note that 73 per cent were foreign-born and 72 per cent were foreign-trained.

If this country -- if this province -- is to survive and prosper, we desperately need to benefit from the talents and skills of all of our people. We cannot risk losing great numbers of Ontarians to other provinces and other countries because there are no career opportunities at home.

Our proposed apprenticeship program is one way of increasing our skilled labour force, and preventing a brain and talent drain out of the province. Increased research and development would improve our economic and manufacturing position, and at the same time provide challenging career opportunities for Canadians.

We would introduce without delay a 100 per cent tax credit for companies’ investment in research and development. The government’s proposal in the budget would appear to be hanging fire until the federal government makes a move. We would implement such a program immediately. However, only Canadian-controlled companies would qualify for the scheme, contrary to the Treasurer’s view.

We believe we must be concerned about a branch plant economy. We believe we must develop an indigenous research and development capacity here in this province. Only research and development carried out in this country, by Canadians, will result in real benefit to Canadians.

Mr. Laughren: How do you vote federally?

Mr. Warner: He doesn’t.

Mr. Peterson: We certainly don’t vote NDP, I’ll tell you that.

Mr. Laughren: That wasn’t an answer --

Mr. Peterson: Provision of R and D support to branch plant companies usually results in the export of the end product of the technological innovation to the parent firm.

If the Treasurer is not going to use Wintario funds for health care and other things, why don’t we put a percentage of them into research? That’s compatible with health research plans and everything else. We need to beef up, in terms of grants through the Ontario Research Foundation --

Mr. Cassidy: There you go gambling with our industrial future.

Mr. Peterson: -- and that’s a meaningful and important place. There is that mechanism in place whereby we could start operating immediately. We must have the courage and the imagination to identify these areas, and to encourage research and development. Ontario and Canada are far behind other jurisdictions in this field.

Mrs. Campbell: You’d better wait until he comes back. He’s gone out to find more answers.

Mr. Haggerty: He’s gone out to borrow more money.

Mr. Peterson: With the surplus of bright young minds in Ontario we have a tremendous opportunity to pioneer in new areas of manufacturing and economic activity, in the development of renewable energy, waste management techniques and environmental protection.

We are all well aware that the days of cheap energy are over. At this time of high unemployment, we have a unique opportunity to combine an effective job creation program with energy conservation measures, which are very important in view of the rapidly escalating energy prices and possible future energy shortages.

Some more of our job creation suggestions: We would institute compulsory insulation standards for all new buildings, residential and commercial, combined with a comprehensive program of thermal upgrade, retrofitting and insulation for all existing structures -- certainly retrofitting of all public buildings.

These energy conservation measures would create many job opportunities. This work is highly labour-intensive. The technology is available; the side-benefits in fuel saving are enormous and would, on their own merit, make implementation of these proposals well worthwhile.

Incidentally, to encourage public acceptance of such a plan, we would amend the Assessment Act to ensure that no property tax increases would result from energy conservation alterations to buildings, be they residential or commercial.

To further stimulate job creation in the construction industry we would invest pension funds in the private sector. We talked about that earlier. This would lead to increased residential construction, creating construction jobs and employment in industries which serve the construction industry.

In order to encourage further investment and development, we would reduce red tape and planning delays. We would curtail the power of the Ontario Municipal Board to review zoning bylaw decisions of municipalities with demonstrated planning capability.

This party has advanced for some time, and will continue to advance, the cause of Ontario’s small business. That provides a tremendous opportunity to strengthen our economy and to increase job opportunities.

In pursuit of a viable “buy Canadian” policy, we would, as stated earlier in our policy paper New Directions for Small Business, set a target of 40 per cent of government contracts and subcontracts to be awarded to small business within a three-year period. The most effective way to help small business is through our purchasing power -- to buy from them. That’s what they want. That’s far more effective than any other device we can employ. We have that mechanism in place, through my associate’s bill, and we look forward to that bill becoming law in this province.

Mr. S. Smith: Darcy’s committed only to big business.

Mr. Peterson: Needless to say, we would endeavour to follow a “buy Canadian” policy right across the board for all government purchases as much as possible.

[5:15]

Finally, in the last election and innumerable times since, our party has proposed the creation of much-needed jobs by paying 20 per cent of the salary for each additional worker hired by a small business. We would do this up to a net gain in previously unemployed people of 10 persons per firm for a three-year period for salaries up to $10,000 per year.

Mr. Eakins: Common sense.

Mr. Peterson: With some 316,000 Ontarians out of work, with our manufacturing industry in a state of critical decline, with our huge trade deficit and our dismal record in research and development, we believe it is time for government to start to pay attention to the backbone of our economy -- to the small businessman.

Small businesses are more labour-intensive than larger operations and can create more jobs more cheaply and more quickly. They are our best hope in our fight against rising unemployment. Small businesses, because they are less closely tied to international market forces, have a better chance of counteracting the effect of world-wide recession. They can, for instance, improve our balance of trade position by substituting Canadian-made products for imports.

Small businesses are generally more energy efficient than large capital-intensive firms. And this is crucial at a time when we must learn to conserve our energy supply, and increase our efficiency.

Inevitably, energy price -- and, in fact, energy supplies -- are going to have a major impact on the future of this economy, and country, domestically and in the international arena. Rising costs are making large, highly-automated capital and energy-intensive centralized enterprises less viable. This country’s future economic development, the standard of living of all Canadians, will depend to a large extent on our ability to become more self- reliant and conservationist.

New technology, such as solar heat, lends itself to small operations and small-scale equipment, with a considerable potential for export to other countries, particularly developing nations.

Small businesses provide much more fertile grounds for innovative research and development in the often shifting environments of government and large corporations where risk taking is often overcome by inertia. Yet government policies generally leave small businessmen at a serious competitive disadvantage. Fast write-offs in equipment and machinery, for instance, tip the economic scales in favour of capital-intensive big business, and the whole system of payroll taxes--contribution to workmen’s compensation, and unemployment insurance, Canada Pension Plan, and, yes, OHIP -- also hits hardest at the labour-intensive small business.

In order to enable small business to continue and to expand its role in the economy, government must provide assistance through incentives and programs specifically designed to ameliorate the problems facing this sector. Such action is long overdue. We have the answers to that question. We are desperately hoping that this Legislature will follow our lead. The time has come when we must make a definite and a firm political commitment to such a small business policy.

We are looking forward to the clause by clause debate of that bill early this session. In that bill, we attempt to redress some of the ills that we have in the society. We will be prepared to amend that bill to redress some criticisms shown against that bill. The bill, as I mentioned earlier, establishes a target of 40 per cent of government purchases, contracts or subcontracts to be placed with small businesses which are defined as independently-owned or operated and not dominant in the field.

At present, the government does not even know how much of its business goes to these firms because they group them together with branch plants operating in Canada.

Also, the bill establishes a small business subcontracting program to ensure that small businesses are considered fairly as suppliers and subcontractors to recipients of large government contracts. Any firm awarded a government contract of over $500,000 would designate a small-business liaison officer for this purpose. The bill provides that a small business liaison officer may already be a member of the firm and most firms would not likely employ an additional person for this purpose, although we did not want to interfere with any firm that may decide to do so.

The bill establishes a small business committee of the Legislature to review and report on all aspects of small business activity warranting legislative action. This committee would, of course, receive commissions from interested businessmen and others. The bill empowers the ministry to encourage small businesses to form co-operatives for the provision of central services or the purpose of jointly obtaining raw materials, equipment inventories, supplies or benefits of research and development or to undertake and use applied research.

Very importantly, the bill gives preference to Canadian-owned and managed business in the allocation of research grants and loans by the government, and requires the minister to assist small business to obtain government contracts for research and development.

There are two aspects of the bill that have been particularly controversial. I was going to discuss these today but the time is running a little tighter than I would like it to and I’ll probably have to leave them out. But when that bill does come to committee, I am sure that our member, the fine member for Victoria-Haliburton, will have many ideas on how to amend this bill to improve it and to answer some of the objections that have been expressed.

I just want to say one thing: The new minister has taken very strong objection to this bill, saying it will involve a very large bureaucracy and it’s going to take a great deal of time in handling this. We can tell from the American experience that this is not the case. It has been operational there for 25 years; it has been successful and it is running well. Surely there’s enough experience there that the minister shouldn’t be so hesitant; he should stretch a little bit and use his imagination and creativity to make this a workable proposition in this province.

Mr. Speaker, I appreciate the opportunity that I have had to point out some of our specific job creation mechanisms, both for the short term and for the long term -- some of them hitting the structural problems and some of them to create work tomorrow -- because it is our view that this has got to be a high-priority objective. Sadly, it has been neglected by this government.

Mr. Bradley: All of them benefical.

Mr. Peterson: I have two more areas that I want to deal with, and I’ll try to be considerate of the members; they’ve been sitting here a long time -- the ones that are here. I want to talk about structural problems. I want to talk about things that we think need to be done immediately.

It is interesting that in all the banter and exchanges we have had with the Premier over the last week since the budget, he has kept saying, “We’ll be interested in your solutions; we’ll be interested in your ideas about how to handle some of these problems.” Mr. Speaker, as specifically as we can do, we have presented some of those ideas here.

As I said earlier, energy is an area that concerns us a great deal. We think we can make major inroads into assisting job creation and building a better economy in this province if we attack this problem squarely on the nose. The critical factor in determining the future course of Ontario’s economy is the supply of energy.

Traditionally, energy consumption in Ontario has accounted for about 30 per cent of all the Canadian consumption. Canada, incidentally, now uses more energy per capita than any other country in the world: 350 million Btu, compared with 145 Btu in Europe and 335 Btu in the United States.

A full 80 per cent of the province’s energy is imported. Provincial oil production meets less than one per cent of our requirements. Almost all our oil and more than 90 per cent of our natural gas come from western Canada. Most of our coal comes from the eastern United States.

For 1977, out-of-province energy costs have been estimated at $3.9 billion -- that’s $3.9 billion directly transferred from the Ontario economy to the United States and western Canada to create jobs there. All of this increases our cost of living here. We must move to rectify that very large number.

Ontario’s total provincial expenditure on energy in 1976 was about $7.5 billion; divided by sector, that figure breaks down this way: transportation, $2.9 billion residential, $1.3 billion; commercial, $1.1 billion; industrial $1.9 billion; losses and own use, $0.3 billion.

The government has estimated that oil and gas price increases in 1975 had a substantial effect on Ontario’s economy: A $1.50 increase in oil prices raised the consumer price index for Canada by 2.3 per cent on a full-year basis, and a $1 increase in the price of a barrel of crude oil reduced gross provincial product by $100 million in 1961 constant dollars. Every $1 increase in the wellhead price of oil, along with respective increases for natural gas, means $450 million flows out of Ontario per year.

Energy price increases have had a significant effect on economic growth in Canada and other industrialized countries. For example, in 1974 it’s estimated oil price increases accelerated inflation by 3.5 per cent; a further 4.4 per cent inflation occurred as a result of 1974 price changes being delayed into 1975 and 1975 price changes. Indications are that in the long run, when energy costs double, there is a five per cent increase in the cost of manufacturing output in Canada and only a three per cent increase in the United States.

The days of low-cost energy are fast disappearing. By the mid- to late 1980s there probably will be a constraint, either physical or political, on the world’s crude oil supplies. Prices will be forced upward; our economy will once again be jeopardized. The major oil companies estimate that oil will come off the tar sands -- out of the Syncrude project -- at about $20 a barrel. At present, the price per barrel of oil in Canada is about $11.75. World price is about $15.10 Canadian. Let’s not forget that due to OPEC control of a large percentage of world oil production overnight shortages could occur and could be deliberately created.

There is no question that Ontario will face serious energy supply problems within the next decade. Last year the Ontario Economic Council stated that movement of domestic energy prices toward world prices would stimulate domestic supplies, encourage conservation and the development of new technologies. The council warned that if these technologies are not forthcoming, increased reliance on imported energy would lead to further depreciation of the Canadian dollar and higher energy prices in Canada. We were also warned that policies designed to prevent adjustments to the higher energy price would create distortions elsewhere in the economic system.

The Premier takes great delight in running around this province. I remember in the last campaign he was in the great riding of London Centre with the defeated Tory candidate saying that the Liberals are advocating putting the price up to the world price. “If the price of your heating oil and gasoline goes up, you can blame David Peterson, your provincial member,” he said. That is so much nonsense it’s incredible. The Premier would rather bury his head in the sand and deny these things are going to happen. We don’t favour an increase in the price any more than anyone else does, but we must understand the inevitable, and it’s going to come. It’s our very strong view that we must take a defensive strategy, being as we are high consumers and being that we have very little indigenous resource here.

Mr. Cassidy: It’s like the Liberals opposing wage and price controls in 1974.

Mr. Peterson: We need a very strong defensive strategy based on conservation and based on renewal. Does the leader of the NDP have something to say?

Mr. Cassidy: That’s like the Liberals opposing wage and price controls in 1974.

Mr. Peterson: That wasn’t a very high-calibre interjection.

We could reduce our problems to a great extent by cutting back on our energy consumption. It has been estimated that one megawatt of electricity can be insulated for half the capital cost of generating one megawatt. Each year the energy bill for government buildings in Ontario is estimated at over $200 million. This could be substantially reduced. A 20 per cent saving in the residential sector would save some $260 million. A recent study of the Department of Energy, Mines and Resources indicates that a primary energy demand growth rate of two per cent a year is clearly attainable, if extensive conservation measures are implemented. Historically, Ontario’s annual growth rate in energy consumption has been five per cent. Reducing this to two per cent would mean a saving of approximately $900 million a year by 1980.

In 1975, four industries -- pulp and paper, industrial chemicals, smelting and refining, and iron and steel mills -- consumed 43.6 per cent by value of energy used in Ontario manufacturing. That year the manufacturing sector, which employs 923,000 people, used in excess of $791 million in energy, an average of about $860 per employee. That year, by comparison, the cost of energy consumed in pulp and paper mills averaged out to approximately $3,958 per employee. To demonstrate the effectiveness of energy conservation, according to the office of energy conservation, some Scandinavian pulp and paper producers operate on zero net energy through efficient production techniques and by making their own energy -- by burning bark and chips, for example.

We in the Liberal Party have recommended a comprehensive compulsory set of standards to ensure these kinds of things. We want compulsory insulation standards for all new buildings, residential or commercial, thermal upgrading, retrofitting and insulation of all existing structures. If we brought our existing housing stock up to 1975 federal standards, we could save 36 per cent of our residential heating bill or the equivalent of 824 million gallons of oil, which would mean well over $400 million annually. That would cover OHIP premiums right there and the Treasurer wouldn’t have to worry.

Another major factor in the solution of our energy problems is development of renewable energy sources, such as energy production from industrial and renewable waste, biomass production, solar energy and methanol. Conservation and the development of renewable energy sources are opposite paths from the development of conventional energy sources with an expanded nuclear component. Unfortunately, neither the federal nor provincial government has seen fit to acknowledge the urgent necessity of choosing these alternatives as opposed to the conventional and less realistic approach.

[5:30]

Ontario’s commitment to renewables and conservation is totally inadequate. For 1977-78 it is roughly $5.15 million. The provincial office for energy conservation has a base budget of $4.3 million. It’s not a very substantial sum, given the size of the province.

Last year the government of Ontario scrapped its low-interest loan program for home insulation and its policy paper, Ontario’s Energy Future, does not accord high priority to conservation or renewable energy sources. The paper anticipates that only two per cent of energy requirements will be met by renewables by the year 2000. The United States, by comparison, has set a goal of 25 per cent of input from renewable resources by that date.

Even a conservative figure of, say, six per cent of Ontario’s energy needs being supplied from renewables by the year 2000 would save us some 60 million barrels of oil. Based upon the predicted price for next year of $14 per barrel, this would mean a saving of $840 million. I have to use these numbers to show that there are profound economic advantages to our province’s taxpayers by instituting this kind of program immediately.

Last December, the former Minister of Energy told this House that the budget for renewables in 1978-79 would be $4.4 million. In fact, it is only $2.4 million, approximately the same amount spent by the Ministry of Government Services last year on long-distance phone calls. Long lead times are required for development of new sources. The government’s present allocation of funds would not even permit development of alternative energy sources sufficient to supply two per cent by the year 2000.

No doubt this totally inadequate budget reflects the extent of the government’s commitment to renewable energy source development. Compare this pathetic commitment with the estimate of $180 billion of new energy investment required in Canada by 1990, equivalent to 5.2 per cent of the gross national product, as opposed to 4.5 per cent at the present.

We are all aware that the high unemployment threatens the stability of our province. Greatly increased efforts in conservation and renewables would minimize Canada’s and Ontario’s reliance on oil imports and slow down the demand for capital for high technology energy development, whether for new oil and gas supplies or nuclear power. This would free resources for other capital projects, for creating more jobs and for providing more economic opportunities.

US figures indicate that solar technology will provide about 2.5 times more jobs per unit of energy than nuclear. The Science Council of Canada estimates that sales of $50,000 in renewable energy technology equipment results in one person-year of employment. By comparison, the investment in the petroleum industry per employee is about $108,000. Moreover, conventional energy sources involve placing our energy production in the hands of fewer and fewer people.

One of the most important economic benefits to be derived from immediate implementation of a conserver-renewable source energy strategy is that the investment required can be channelled into jobs that will be created here and into products that can be manufactured here in Ontario. As the Science Council has stated, “A conserver approach will lead to the introduction of new technologies, new opportunities for Canadian business, and unprecedented challenges to the entrepreneurial spirit.”

The greatly increased employment opportunities created by a conserver-renewable source energy program will help to offset the negative effects of rising oil prices in this connection. The government has not developed a program which produced any significant results. The Ministry of Treasury, Economics and Intergovernmental Affairs has estimated that as a result of the price changes that year, Ontario lost 22,000 jobs in 1974, 16,000 jobs were lost in 1975 as a carryover, and 19,000 jobs were lost as a result of 1975 price increases.

We have a number of specific recommendations to make on this question of energy conservation. My colleague, the great member for Halton-Burlington, has talked about some of these things. I think it’s important that we give these suggestions to the government at this time for their consideration, because I can assure you, Mr. Speaker, we would enact all of them very quickly if we were the government:

1. The institution of compulsory insulation standards for all buildings.

2. All energy consuming devices, including houses in this province, would be energy efficiency rated.

3. The production of low-grade heat by the use of electricity to be targeted to off-peak hours through incentive pricing. If there is sufficient demand, we know we can reduce demand on this system by at least 20 per cent.

4. The hydraulic division of Ontario Hydro to be moved into the conservation program and Ontario Hydro to be directed to appropriate sufficient funds to develop the remaining hydraulic pump and power storage facilities in Ontario in keeping with proper environmental concerns and the government encourage the private sector to develop those sites which are of no interest to Ontario Hydro.

5. The energy pricing structure to be changed to promote conservation and to more truthfully reflect the cost and the “lifeline concept” for electrical pricing to be adopted in Ontario. The lifeline concept is a reasonable fixed price for basic family electricity needs. Hydro rates are increasing so rapidly that senior citizens and people on fixed incomes will soon be unable to afford electricity for even essential purposes. A basic minimum allotment would be established for all residential customers. For those who use little electricity, hydro bills would be low. For people who use more than a minimum, they would pay progressively more as consumption rises.

Mr. Wildman: That’s a good idea.

Mr. Peterson: 6. The government should subsidize co-generation units by industry to the extent of cost savings realized through the reduced need for transmission lines.

Mr. Speaker, I just got a very rude note from my colleagues here. “We’ll stick it out to 6 o’clock, if you buy us dinner”; signed by an unattractive number of my colleagues. Mr. Speaker, would you be so kind as to lock all the doors of this House right now? I don’t want anybody weaseling out at the last minute.

Hon. Mr. Parrott: We’ll take up a collection if you’ll stop now.

Mr. Nixon: Listen, you’ll learn something, Harry.

Mr. Peterson: Suggestion 7. The government should make a major commitment to renewable energy source development.

8. All Ontario Hydro’s future thermal expansion should be tied to the utilization of cooling water.

9. The Ministry of Energy and the Ministry of the Environment to combine to facilitate the construction of energy-producing units from combustible garbage -- that might even include some of the cabinet members over there who are making a fuss.

10. Cutting rights agreements for wood fuel should be developed by the Ministry of Natural Resources in order to convert those species and qualities of trees considered undesirable for other forms of processing into usable products. These rights may apply to those areas where timber cutting rights are currently held and where timber has previously been cut, and be allocated to individuals on as highly dispersed a scale as possible, recognizing that good management in the forests is better served by the cleanup of undesirable species.

11. The government to study immediately the use of wood distillation for the operation of remote generating facilities currently operated by diesel power, and the application of such direct installation for other internal combustion use.

12. Tax exemptions for energy conservation to extend to all forms of heat reclaimers, chimneys and any renewable methods of producing energy.

13. Insulation of renewable energy equipment such as solar panels or insulating materials should not increase the tax assessment of a property.

14. That various incentives for energy conservation of renewable energy generation for homes, farms and businesses be found, such as tax credits and low-interest loans.

15. Careful study having been given to the use of methanol for fuels for auto transportation, the government should construct a pilot methanol production plant, using biodegradable waste -- such as government reports and some of the budgets that it has produced in the past.

Those are just some suggestions; there are so many more. We have talked about them at great length and we will continue to talk about them. I just want to make this point: Apart from the ethics involved, apart from the fact that this is the way the world is going to have to go, and particularly Ontario, there is a more important point that may appeal to the Treasurer’s crass nature; we will actually save money.

In the long run it will be to Ontario’s benefit. We will actually create more jobs. It is in our financial self-interest, apart from anything else, to do these things. I would urge him, in his great strength in the cabinet, with his great sense of charity, with his great leadership, to use his good offices to provide that kind of thing; because when he has the numbers, he will understand that it is in his interest. I am hopeful today that through the sheer power of my oratory I have been able to convince him to embark on some of these kinds of programs.

I have a little more here I would like to mention, although we are running out of time. Do I hear from my colleagues that they want to hear a lot more?

Mr. Nixon: Hear, hear; give them the full load.

Mr. Peterson: As you can see, Mr. Speaker, we have been trying to be positive and constructive today, and to lay out some of our specific suggestions to some of the structural problems facing this provincial economy. I want to talk about industrial policy or industrial strategy or some kind of vision, some kind of place that we have got to start moving the Ontario economy, in our judgement, immediately. I want to just take the last few minutes to give this House the outline of that particular strategy.

The Science Council of Canada has suggested we are now witnessing sluggish industrial development, perhaps even a deindustrialization of Canadian society. How did this happen, where did we go wrong?

Mr. Wildman: Did you say sluggish industrial development?

Mr. Peterson: The answer lies in the history of Canadian industry, its development in this century, its desire for and dependence upon foreign investment. Canadians encouraged foreign investment, and it served to facilitate and quicken the growth of the Canadian economy in the early decades of Confederation.

Until the First World War, British portfolio investment predominated. However, since the 192Os American investment -- initially portfolio and then direct -- increased and replaced British investment in Canada. This development is significant, because while portfolio investment implies ownership, usually through the buying of shares or bonds, but not control, direct investment invariably leads to both ownership and control.

Today 57 per cent of Canadian manufacturing is under foreign control. The latest data available for Ontario from Statistics Canada shows that 61 per cent of the province’s manufacturing sector was foreign-controlled in 1972. All indications are that the current figures would be worse not better.

Much of this control is in the hands of American multi-national corporations through branch plants established in Canada in order to overcome the tariff barrier to goods entering this country. Designed to serve the domestic market, they frequently discourage the emergence of Canadian-owned firms in the same industry.

The essential problem of a branch plant economy such as ours is that we cannot control it, and the economic objectives of the multi-national corporation seldom coincide with those of Ontario or the rest of Canada. As the report of the task force on the structure of Canadian industry in 1968 found: “A parent firm may expect its subsidiary to behave in such a way as to maximize the global profits of the multi-national enterprise rather than the profits of the subsidiary itself. The interest of the host country, however, is in maximizing the efficient growth of the subsidiary.”

This concern of the parent firm may, for example, require a normally financially successful subsidiary to show a loss for a number of years, permitting the parent to be the locus of profit accumulation. Since transactions between parent and subsidiary occur within the firm, rather than within the marketplace, intercompany prices and profits are open to considerable manipulation by the parent firm. Profits may be expatriated, and their tax benefit lost to this country. The effect of a branch plant economy on the structure of domestic industry is by now well established -- too many firms producing too many product lines at high unit cost.

Mr. Wildman: Are you against the branch plant economy?

Mr. Peterson: However, foreign multinational corporations are not interested in development of Canadian world markets or in making the Canadian economy more efficient and globally competitive. This would be a direct contradiction of the purpose for which a branch plant was established in the first place.

Mr. Wildman: At the behest of the federal Liberal government.

Mr. Peterson: Above all, a branch plant economy inherently entails low levels of research and development undertaken by subsidiaries in Ontario. Canada spends far less on R and D and is far more dependent on foreign sources than most countries in the western world.

Mr. Wildman: It’s a federal Liberal policy.

Mr. Peterson: As a result, our economy grows slowly these days and does not develop. In 1973, Canadian spending on R and D equalled only one per cent of gross national product, ranking 14th on a list compiled by the OECD. The United States, the United Kingdom and West Germany ranked at the top with 2.4 per cent, 2.1 per cent and two per cent respectively, while only Ireland and New Zealand ranked below Canada.

Largely as a consequence of this low level of spending, entrepreneurial skill and expertise are inhibited. For the multi-national, it is more economical to develop technology at home, exporting know-how and professional managers to its Ontario subsidiary. This may initially appear to have some advantages for us in terms of receiving a ready-made package and, therefore, not needing to invest in such development ourselves.

Mr. Wildman: Would that you would speak to your federal counterparts.

Mr. Peterson: However, in the long run this process serves to increase our dependence. Why are you yapping so much back there?

Mr. Martel: It is your party that brought it in.

Mr. Peterson: It hinders our ability to initiate future independent research and development, for we have neither the base nor the expertise to build on. Because technology is supplied directly to the subsidiary, we may ultimately receive no usable benefit at all. Further, the subsidiary often receives only a part of the total production package, thus increasing its dependency. Frequently, the package is old or mature technology because technology sales to subsidiaries tend to occur in the late growth or mature phases of the production life cycle. Technology received when it is mature is often deprived of the skill-intensive stages of product and process development.

Industrial R and D in Canada has been largely marginal and applied, rather than innovative or basic work. This has wide repercussions for our international position. As the report of the task force on the structure of Canadian industry observed: “Power accrues to nations capable of technological leadership, and technological change is an important source of economic growth.” The lack of indigenous, innovative industrial research and technological development in this country, and especially this province, has placed us at a distinct disadvantage in terms of global competition.

Another consequence of the small amount of R and D done here has been the emigration to the United States of Canadian-born, Canadian-trained scientists and engineers. This is a circular problem -- a vicious circle. Lack of ongoing research work eventually compels Canadians to seek better opportunities elsewhere, yet we need these experts to rectify the problem.

Ontario’s industrial structure must be strengthened and time is of the essence. We do not believe that nationalization or buying out foreign-controlled manufacturing enterprises are viable solutions. Independent, Canadian-owned and controlled companies must be encouraged, developed and supported with the full extent and power available to government. Our policy paper on small business suggests many mechanisms. Government leadership and assistance are crucial in the context of cohesive industrial strategy. We do not have the resources to waste. John Shepherd, executive director of the Science Council of Canada, has pointed out the difficulties which will result from unco-ordinated or inadequate planning.

[5:45]

In the boom years of the 1960s, government-sponsored R and D programs were developed with little regard for existing industrial capacities or potential markets. Even in that golden decade, we steadily lost market positions at home and abroad. “In this context there seems to have been little appreciation of the relationship between technology and the entrepreneurial function, or between innovation and the industrial structure, or between the entrepreneur and the business environment.”

By the end of the 1960s government, sceptical about the payoff for R and D, reduced its expenditures. Industry reacted to market uncertainties and to the curtailment of government support by cutting back its own R and D spending. The resultant loss in potential development is tragic. A co-ordinated, comprehensive strategy must be developed in consultation with the private sector and put in place immediately. The components must be clear; the sector and their potential must be identified. Ideally, we need several years’ lead-time before initiating any moves to free trade as a result of the GATT negotiations. This is unlikely. We must, therefore, do as much as we can as quickly as we can.

The Liberal Party has long called for a clear and comprehensive industrial strategy for the province of Ontario. Regrettably, this government’s performance at the first ministers’ conference in Ottawa, and its Throne Speech, amount to an abdication of responsibility for such long-term planning to the national level. The federal government, in its turn, seems content to rely on internally produced selected sector profiles which are more descriptive than prescriptive, and do not provide a comprehensive context or strategy. We believe a national industrial policy is long overdue. Time is running out, and we cannot risk further delays. We are prepared to address ourselves to these issues.

The emphasis of an industrial strategy for Ontario must be on the manufacturing sector. However, we realize the important interrelationship between this sector and the resource and service sectors. These very connections stress the crucial role of manufacturing. In recent years the secondary manufacturing sector in Ontario has declined rapidly; and as it goes, so goes the capacity to add value in our resource industries and viability to our service sector where one and a half jobs are lost for each manufacturing job that disappears.

According to John Shepherd, 450,000 manufacturing jobs were lost to the Canadian economy between 1970 and 1977. Without a well-developed manufacturing sector, the service sector will not mature and will thus be deficient in the quantity and quality of its work it is able to offer.

Many of the services provided by the service sector are directly or indirectly provided to the manufacturing and resource sectors. If Canadian manufacturing is allowed to become insignificant, the prospects for a healthy service sector are slight.

In the past we have relied heavily on our resources as the basic strength of the provincial economy. We can no longer afford to do so. Canada and Ontario are becoming resource-deficient, particularly in the area of energy. The layoffs at Inco and Falconbridge have shown clearly the danger of reliance on our resource sector to the exclusion of the manufacturing and service sectors. We must have a more diversified economy.

It is noteworthy that $1 worth of resource products typically embodies 6.5 cents worth of wages, while $1 worth of manufacturing goods generates 20 to 35 cents in wages. Therefore, by following a policy of overemphasizing resource exports, for every job created by resource exports, the Canadian economy may lose the potential for anywhere from two to five jobs in the manufacturing sector.

Mr. S. Smith: Very sobering thoughts.

Mr. Wildman: Talk to Jack Horner.

Mr. Peterson: The interconnections are evident as is the importance of secondary manufacturing as the focal point. A study by the federal Department of Industry, Trade and Commerce points out: “The importance of the manufacturing sector is highlighted in that it purchases over one-third of the primary products as inputs, over one-half of manufactured products, three-quarters of repair construction, 15 per cent of utilities and more than 16 per cent of services.” Another study demonstrated that 60 per cent of service industry output went to consumer demand. Incomes generated in the goods-producing sector play a major role in stimulating consumer demands for these services.

Mr. S. Smith: if there is one word we need in our industrial strategy, it is “manufacturing.”

Mr. Wildman: Talk to Jack Horner.

Mr. Peterson: Some 923,000 people, or 25 per cent of the Ontario work force, are directly employed in manufacturing which contributes 29 per cent to the provincial domestic product. Fifty-one per cent of the national sales take place in Ontario. The importance of the sector to the health of the Ontario economy is obvious, as are the reasons for its precipitous decline. There was a loss of 27,000 jobs in manufacturing in Ontario between 1974 and 1976, and officials of the provincial Ministry of Treasury, Economics and Intergovernmental Affairs forecast a continuing decline in the share of employment derived from this sector.

What is needed now, what has been lacking in this area, as in so many others, is government leadership. And I am sure you would agree with me on that, Mr. Speaker. It is not enough for the government to say that it is up to the private sector. The government must create a climate of confidence. More important, in consultation with business and labour groups, it must clearly chart out the course it wishes the economy to follow and actively support that course with all the resources at its disposal. The time for drifting is long past.

Mr. S. Smith: Yes, indeed.

Mr. Peterson: The primary objective of industrial strategy must be job creation; decent jobs providing a reasonable standard of living and leaving some kind of environment for our young people today and for the generation that follows.

In January of this year there were 316,000 unemployed persons in the province of Ontario, a rate of 7.9 per cent. In 1977, 282,000 more people were in the labour force than there were jobs available. This situation can only be expected to worsen when about 200,000 young people are entering the labour force every year until a peak of about 214,000 is reached in 1981.

A strong, innovative manufacturing sector provides for a whole range of jobs, from highly-skilled technicians, engineers, scientists and craftsmen, through white-collar professionals to semi-skilled and unskilled workers.

Second, an industrial strategy must promote an indigenous research and development capability. Its seminal role was recognized in the 1976 International Economic Report of the President of the United States in which he said: “Technological innovation is the primary determinant of economic growth and competitiveness.” To remain internationally competitive in a world that has undergone dramatic structural shifts and changes in the post World War II period -- with competition between the industrialized nations of the west intensifying at unprecedented rates and with rapidly industrializing Third World countries entering the fray -- technological innovation is the only answer.

Mr. S. Smith: That’s right. Manufacturing and technological innovation.

Mr. Peterson: It is the only payoff.

Mr. S. Smith: That’s the answer.

Mr. Peterson: Technological change today is concentrated in the secondary manufacturing sector.

Mr. S. Smith: I hope the Minister of Industry and Tourism (Mr. Rhodes) is listening to that.

An hon. member: He’s reading the comics.

Hon. Mr. Rhodes: You’re right. It’s coverage of your convention.

Mr. Peterson: It is fast becoming our only advantage vis-à-vis the very inexpensive labour supply of the Third World countries. However, as I said earlier, it is an advantage not readily available to Canada. It will be difficult for Ontarians to become technological innovators on an international scale. It is to a great extent a new game for us. It is, however, imperative for us to achieve this objective.

Mr. S. Smith: The Treasurer is beyond redemption but the Minister of Industry and Tourism should listen.

Mr. Peterson: I’m glad the Minister of Industry and Tourism is here today because he is quite new in his portfolio and I have actually had a couple of months more experience --

Mr. S. Smith: He still has a chance to learn; the Treasurer is beyond redemption.

Hon. Mr. Rhodes: Don’t get mean fellows. I am trying to be sweet and lovable, but I can change.

Mr. Peterson: The impact of technology on industrial performance is clearly demonstrated in a comparative analysis of US technology-intensive manufacturing industry versus all other manufacturing, undertaken by Michael Boretsky of the US Chamber of Commerce. He found that technology-intensive industries experienced -- and it is very important to understand this -- 45 per cent faster growth in output, 88 per cent higher growth in employment, 38 per cent greater growth in productivity and 49 per cent higher growth in exports.

Mr. S. Smith: John Rhodes is the velvet hand in the iron glove.

Mr. Peterson: Similarly, American economist E. F. Denison has estimated that technology accounted for 45 per cent of US economic growth from 1929 to 1969.

More recently, at a Financial Post conference on research and development, Dr. Thomas Vanderslice, senior economist US General Electric Co., released the findings of a study commissioned by his company to gauge the impact of R and D on the economy. The key findings were --

Hon. Mr. Rhodes: I don’t know whether this is a speech or a chant.

Mr. Peterson: 1. High-technology industries grew nearly three times as quickly as low-technology industries; 2. Productivity in high technology was twice that of the low; 3. High-technology industries were more inflation resistant; and 4. Employment in high-technology industries in the US has been growing almost nine times as fast as the low-technology industries.

Mr. S. Smith: Manufacturing, technological innovations research and small business; that is the answer. But you don’t even know the question.

Mr. Peterson: According to Vanderslice: “The same kind of favourable ratios prevail in terms of international trade. The positive contribution of high technology products is up to a plus of over $25 billion a year.”

Mr. Wildman: We all agree.

Mr. Peterson: “By contrast, the US trade balance in products of low technical content is down from a breakeven in 1960 to a $16 billion deficit.”

Mr. Nixon: Shame.

Mr. Peterson: The Ontario government must lead the way to technological growth by putting personnel as well as financial resources and incentives at the disposal of the private sector. Government must also assist in making choices. We cannot compete in everything. Together with the private sector, we must pick areas in which to concentrate our efforts.

Third -- and I am drawing close to the end -- an industrial strategy must generate and support indigenous entrepreneurial and managerial talent. This objective is linked to the research and development goal. Technological change takes two forms: The design of new or improved products; or the development of processes to increase productive efficiency. In both cases, the impetus to change usually comes from the entrepreneur -- the person who has the ideas, is willing to take risks, both financial and personal, and has the managerial ability to see the project through.

Entrepreneurs are crucial to the survival and growth of small business, and an intrinsic part of the makeup of small and medium-size enterprises. Two separate studies commissioned by the United States Department of Commerce found that: 1. Out of 61 important innovations and inventions selected randomly from all possible choices during this century, more than half were the work of independent inventors and/or small firms; 2. of major inventions from the decade 1946-55, more than two-thirds were the results of work by independent inventors and small companies.

Ontario does not have a thriving entrepreneurial class, and we must develop one. The Liberal Party outlined the steps necessary to foster the growth of entrepreneurial skills in our policy paper New Directions for Small Business and our bill; we think that is one of the answers to this very difficult question. Small businesses are very crucial in that that they are labour-intensive. The small business sector employs between 50 and 60 per cent of all working Canadians

The final objective of our industrial strategy is to support rationalization in selected areas. In some instances mergers are the most appropriate mechanism. We believe that a healthy economy should consist of a mix of small, medium and large firms, since each enterprise has a different optimal size in terms of efficiency and effectiveness depending on its product and the market it serves.

These, then, are the goals of an industrial strategy for Ontario. They provide a framework within which a strong manufacturing sector, with a capacity to compete internationally can be developed in Ontario. It is not a question of choice, it is a question of economic necessity. I would say to the Treasurer, don’t be staggered by the size of the task, he must start immediately.

Members will all be happy to know that brings me very close to the end. I thank you for the opportunity of participating in the debate. We have tried to be constructive. Since I have been elected to this House, the party under the leadership of the member for Hamilton South and the member for Brant-Oxford-Norfolk has always tried to be constructive and provide a plausible and possible alternative. We are not in the habit of introducing spurious motions of no-confidence; we aren’t in the habit of blocking first reading of various pieces of legislation just to get a little free press; that isn’t our style.

Mr. O’Neil: Tell him how it is.

Mr. Peterson: We consider ourselves the alternative government. Frankly, we have no competition for that particular role, I hasten to add. That is why we are not, at this time, going to introduce a motion of no-confidence.

Mr. Martel: Aw, bring the government down.

Mr. Peterson: We reserve our right to do that.

Mr. Martel: Bring them down.

Mr. Peterson: The very troubling issues of the economy and the lack of permanent job-creating measures --

Mr. Martel: More huffing and puffing.

Mr. Peterson: -- and particularly this OHIP matter, are of very serious concern to us.

An hon. member: You’re on automatic pilot.

Hon. Mr. Rhodes: Here is your chance to pump some money into the economy, have an election.

Mr. Peterson: We have taken the leadership in putting this matter, which has not been reviewed by a legislative --

Mr. S. Smith: Move a vote of no-confidence. Bring the government down.

Mr. Deputy Speaker: Order.

Mr. Peterson: Would you bring my leader to order please, Mr. Speaker?

We have taken the leadership in putting this matter, which has not been discussed by a legislative committee of this House for 10 years, we have assumed leadership in sending it to that committee. We are going to make constructive, positive suggestions in that committee. If the government does not see fit to mold their views somewhat, to change somewhat, to the suggestions of this committee, then believe me, no fooling around, we are prepared to introduce a motion of no-confidence and we will live with the results of that. At this time, we are going to give the government, as we have tried to do today, the benefit of our advice, the benefit of our assistance, towards building a positive kind of a program for this province.

Mr. Warner: The Treasurer is chuckling.

Mr. Peterson: In our opinion, it is not to the benefit of the people of this province to go to the polls tomorrow or have an election immediately. The government learned that lesson last time, and we don’t think it’s the answer to these problems.

Mr. Wildman: You more than bend over backwards.

Mr. Peterson: It is only by working creatively and effectively together that we can progress, and in order to do that the government’s going to have to be a lot more receptive than they have been in the past.

Mr. Nixon: Oh, a lot more.

Mr. Martel: You’re in danger now, Darcy.

Mr. Peterson: Mr. Speaker, I thank you for the opportunity of participating.

On motion by Mr. Martel, the debate was adjourned.

On motion by Hon. Mr. McKeough, the House adjourned at 5:58 p.m.