Legislative Assembly of Ontario

The House resumed at 8 p.m.

House in committee of supply.

ESTIMATES, OFFICE OF THE PREMIER (CONCLUDED)

On vote 201, Office of the Premier program:

Mr. Chairman: Are there any further comments on vote 201?

Mr. Conway: Yes, Mr. Chairman.

Mr. Chairman: The member for Scarborough-Ellesmere.

Mr. Warner: The member for Renfrew North waited here for an hour and a half, but I think it is our turn.

Mr. Chairman: Generally, we recognize members in rotation.

Hon. Mr. Davis: I hear he spent the whole supper hour here. Don’t go away mad.

Mr. Warner: Stay around. I’ll be about 10 minutes. I would like to speak briefly to the Premier about the statement he made in the House today.

Hon. Mr. Davis: I thought you were going to talk about Magna Carta.

Mr. Warner: I’ll get to that but I can’t do that in 10 minutes.

I would like to say, first, that I appreciated the fact that the Premier made the statement and took what I thought was a very strong stand. My criticism would be that the statement didn’t come early enough in terms of a message from Ontario with respect to the Confederation issue.

Some time ago when the opportunity was afforded I spoke on my view of the problems confronting Confederation from the perspective that while we are in the midst of trying to save Confederation with respect to the possibility of Quebec’s separating, the issues which are very deep in the minds of the people of Quebec are problems which also exist in other parts of the country. When the referendum is finished, regardless of the results, many of the issues which have been debated with regard to Quebec will remain to be debated with respect to other parts of Canada.

I think that is why it is extremely important that as an assembly we are able to follow up on the address made earlier today by the Premier, that we have a very open and meaningful debate in this assembly and that we come out of it with a statement from the Legislative Assembly of Ontario that I would hope unanimously reflects the views of its 125 members.

I would think that kind of statement would be very powerful in terms of the results in Quebec. But we should not make any mistake about how serious many of the people of Quebec are about separating.

Along with some of my colleagues I visited Quebec City and Montreal and met with some members of the National Assembly, the business community, the labour movement, community groups and others and discussed the issue of separation. The feelings are very strong indeed. Many people in Quebec feel they have been cheated through Confederation. People in this province may disagree with that, but that is their perspective. They feel as though they’ve been cheated in Confederation. They see their way out by forming what they call sovereignty-association.

It’s a very strong feeling and if we are to combat it, we have to do so in a very strong but intelligent way. That’s why I think the Premier’s statement today is to be welcomed by this House. It should be taken as a starting point for this assembly to go forward and come up with some very constructive suggestions as to how we keep Quebec in Confederation and, at the same time, improve the agreement under which our provinces are presently united.

I might also say that we should recognize that while the Premier says the people of Quebec are the greatest losers if Quebec separates, we in Ontario stand to lose a great deal as well. Should Quebec end up seceding from Confederation, we in Ontario will lose. We will lose very directly, it seems to me, in terms of jobs and the economic ties which presently exist. While we can and should put forward the argument that Quebec has a great deal to lose, we should also make it clear that Ontario has a great deal to lose. We don’t intend to see either Ontarians or Quebeckers lose in this struggle, so we try and address the problems.

By the way, I don’t believe the referendum results will complete the matter by any stretch of the imagination. When we think we’re on the right track with respect to Quebec then we can turn our attention to the resource question.

The resource question for the provinces of Canada is absolutely crucial. Whether or not it’s an argument with the Premier of Alberta about Alberta’s oil or an argument with Newfoundland about resources they hope to find under the sea, or arguments with any other province about its resources, the question of the resources and the sharing of the wealth from those resources throughout Canada is a question which must be answered.

We don’t have the answers in our present Confederation, but we have to find those answers. If we don’t, we will be faced with continual wrangling between provinces and that surely won’t benefit any one of us.

I believe there are answers. They won’t be found easily, but they can be found if we put our minds to it. Therefore, I want to impress on the Premier that many of the items he raised this afternoon with respect to Quebec are items which affect the entire country, not just a single province.

The province of Saskatchewan has successfully moved from being a have-not province in the 1930s and early 1940s, with a very desperate economic situation, to today where its economy, on balance, is stronger than ours. Much of it was done by obtaining some control over its resources and the direction it would take. The people in Saskatchewan should have control over their resources. I wish we could do that here in Ontario. But we’ve chosen not to do that.

We’ve chosen instead to allow people outside of our country to control our resources and the wealth from them. That’s unfortunate. In my opinion it has to be reversed. It seems to me it is a separate question from the one of sharing within Canada. In other words, we have two problems.

We have to first decide how we are going to control our resources, or if we are; if we’re going to reverse the policies of this government and actually gain control of our resources so that all the people of Ontario will benefit. If we decide to do that, then we have to answer the second question about the sharing of those resources with the rest of the country, as Alberta must decide.

Will Alberta simply hoard the wealth from the petroleum industry, or will it share it with the rest of the country? I guess if I were living in Alberta I would say, “We’re finally getting our day. We didn’t get the message through on freight rates many years ago but now, today, we’ve got oil and we’re going to get what we figure is coming to us.”

Mr. Martel: Ontario should have said that years ago.

Mr. Warner: That’s a historic problem. I don’t know how we handle that because historically, if you go back 40 or 50 years, Ontario could very well be accused of not having treated the rest of the country well.

What do we do now? What kind of an answer do we give to the Premier of Alberta, when there seems to be a certain edge of revenge about the oil?

Time may not allow this evening but certainly I would like to know from the Premier if he has an answer on the sharing of resources within Confederation; for example, the question of Alberta oil or Newfoundland natural gas, as they expect, or any other natural resource of each province.

Second, can he offer us any rationale for having abandoned the control by Ontarians of our natural resources?

Those are the two particular questions I have. Mr. Chairman, if time doesn’t permit a full answer, I’d appreciate it if the Premier could send me something in writing later on.

Finally, in conclusion, I would say again to the Premier I welcome his statement of today. I do see it as a beginning of a very meaningful debate in here, whether or not we have a committee or some way of opening the place up for all members. I would like to see an opportunity in this House when I could ask questions of Mr. Robarts and Mr. Pepin, who spent a great deal of time and very honest effort in trying to come to grips with Confederation. I’d like to have an opportunity, either in this chamber or in one of the committee rooms, to pursue questions that would reveal to me their findings and their beliefs as to what kind of a resolution could come out of this House.

When we’re finished with that, I would hope we would have a resolution from this House, a resolution which strongly supports a united Canada, strongly supports a reworking of our Confederation and something that would have 125 signatures on it.

Mr. Chairman: For the information of the committee, there are 12 minutes remaining on the clock. Mr. Premier.

Hon. Mr. Davis: Mr. Chairman, I’m sure the House leader for the Liberal Party of Ontario will convey to the member for Renfrew North my regrets for those many minutes spent during the supper hour preparing observations he was not able to deliver. If he would convey to him my suggestion that he might send me his observations and if there are any suggestions to which I can reply, I’d be delighted to do so.

Mr. Nixon: I’m sure there will be other occasions.

Hon. Mr. Davis: I’m sure there will be.

I wish to reply to the member for Scarborough-Ellesmere, the proponent of Magna Carta, the defender of Magna Carta, the member who probably has never read Magna Carta.

Mr. Warner: Oh yes, I have, and in the mediaeval Latin, thank you.

Hon. Mr. Davis: I don’t want to trespass on the time of this committee, but I really do have to tell you something.

Mr. Cassidy: No fee or scutage without the consent of the member.

[8:15]

Hon. Mr. Davis: I had dinner tonight, as I always do when I am here for dinner, downstairs, and we went to the main dining room.

Mr. Nixon: Run that past us again.

Hon. Mr. Davis: I said I always have dinner here. When I am here for dinner, I eat downstairs. We went to the corner table at the far end because there were a number of us, just to prepare ourselves for the very difficult task of the evening. Members of the New Democratic Party caucus were in the far room. In the spirit of openness, freedom of information and desire to share their thoughts and advice, the first thing they did was to put one of those big screens across the end of their table so that we couldn’t share in their deliberations and we couldn’t benefit from their advice. I said to myself, “Here is the young man who is in favour of Magna Carta but also in favour of putting up barriers as between members in a public restaurant in this building, not wanting to share his thoughts with us.”

Mr. Cassidy: Will you open the door to your cabinet office?

Hon. Mr. Davis: I just couldn’t understand it. I was wondering if there was a palace revolution under way, but I did overhear some of the conversation. There was no palace revolution. In fact, I don’t know what there was.

An hon. member: They didn’t know either.

Hon. Mr. Davis: I am reminded it is Guy Fawkes day today. What has that got to do with anything?

However, in replying to the very thoughtful suggestions by the honourable member, I should point out to him that what I said in the formal statement in the House today was really in many respects what I had been saying for the past couple of years--I guess more definitively in the last year. The reason the statement was made today, of course, was obviously in reply to the white paper which all of us have been awaiting now for some months.

I won’t get into the debate on the question of control because, with respect, that doesn’t really solve the problem, or at least the issue I see internally within Canada. We can have our philosophical differences as to who can better develop the resources in this province or any province. You will notice Alberta is having some modest measure of success in the development of its resources. It is being done primarily by the private sector. That is my recollection. They are having modest success without having to move in and nationalize it all.

Mr. McClellan: It is hard to lose money on oil.

Mr. Cassidy: They have been honest with tax expenditures too.

Hon. Mr. Davis: They go on the basis of royalties which aren’t really available to us to the same extent. However, I will tell you how I have attempted to explain Ontario’s point of view to the Premiers of the producing provinces. I think you put it very well when you said that some people feel it is now their turn; that Ontario has had its turn and it is now their turn to benefit as much as they can from resource revenues.

It is not easy to explain to the people in our sister provinces that historically while we have had the benefit of significant economic growth, we have shared those benefits. I am the first to recognize that when you take a barrel of oil out of the ground in Alberta, that barrel is never replaced. The agricultural members, including the member from Brant, would understand that if you grow a bushel of wheat on your farm this year, you can grow a bushel next year.

Mr. Nixon: In forests up north where there is one tree now, next year there will be two.

Hon. Mr. Davis: That is right, two for every one. In some places, there are three for every one. Those are renewable.

Mr. Nixon: With plenty of hard work.

Hon. Mr. Davis: Yes, with hard work. I acknowledge that. The producing provinces with a depleting resource feel they should have something additional to what might be the traditional approach to it. I understand that and I think it would be foolish for us not to understand it and not to accept at least a part of that argument. The part I had difficulty getting across out west and in some other places is that they argue that tariffs and central government policy work solely to the benefit of the province of Ontario. Historically and traditionally, I always use the illustration of the automobile because that is their favourite subject. Over the years an automobile purchased in Brampton has cost the same in Edmonton, plus transportation. An automobile purchased in Kenora, the member for that great community tells me, costs a few more dollars than in Brampton. In Brant I’m not sure, but the basic difference in cost was transportation. For many years prior to the auto pact Ontarians paid more for their durables, whether it was automobiles, refrigerators, stoves or what-have-you, than those who were in, shall we say, the same geographic or competing areas south of the border.

If we hadn’t felt, as a country and as a people, that there was something worthwhile about being a Canadian, if we didn’t think there was something unique in being part of a country where we are prepared to pay a premium, whether you put that premium in terms of the cost per unit, or whatever way you wished to describe it--this is where I disagree with the Premier of Alberta--then the Ontario consumer in straight dollars and cents would have been better off with some economic association with our neighbours to the south.

You can trace that economically, historically, any way you wish to describe it, but the natural trade flows, the natural geographic areas on this continent are primarily north-south instead of east-west. So during those years when we were, as Canadians, paying something for our desire to be a separate nation, we shared the economic benefits from that with the rest of Canada.

I try to articulate this when I am out west, in the Maritimes and in Quebec, and I think it fair to say, Mr. Chairman, Ontarians have never objected to the principle of equalization. We have never said what we have done here in terms of our economic growth should not be shared with our sister provinces for basic government services. We might argue on occasion about the DREE program, the application of DREE, whether or not the ground rules are fair in all parts of Canada, but on the concept of equalization we have always been supportive.

In part of my rationale, you are asking me how I explain why we wish to see something less than world price, why we wish to see a different distribution. These are some of the arguments I have advanced and will continue to advance.

You see, there is another differential that is not understood by a lot of people, because when they compare Canada or they compare Alberta, they talk about world price. I think it fair to state, Mr. Chairman, while those nations that are producers of oil may be at world price, and a number are not, the benefits of that economic plus flow to the total population. I think it is fair to state Canada is unique in the world in terms of the distribution of the oil moneys that are flowing to the producing provinces.

In the United Kingdom, for example, while they may be at world price--I am not sure if they are at world price or close to it--and where they have now a large domestic supply and, as pointed out to me by the western Premiers, the consumers are paying world price, all of the consumers in the United Kingdom are the beneficiaries of those extra dollars flowing into the economy. It isn’t just the people in Scotland. It is not just the people in Wales. Everybody is the beneficiary.

Mr. Martel: As much as you hate to admit it, it is also largely owned by the government.

Hon. Mr. Davis: No, no.

Mr. Martel: Fifty per cent.

Hon. Mr. Davis: As a matter of fact, the late Lord Thomson of Fleet owned a great deal of it. It was the private sector that took the initiative to do the development. I will trace that for you historically, if you would like to know.

Mr. Martel: BP is government-owned. I met with Chataway, the Tory minister in England.

Interjections.

Hon. Mr. Davis: Oh, no, no. I have to tell you, if it hadn’t been for the private sector, North Sea oil would still be in the North Sea. It would still be there.

In this discussion with our sister provinces, these points are the ones that should be made. I think we would be making a mistake to say to the people of Alberta or Saskatchewan they are not entitled to a portion of those increased revenues. I think this would be unfair and short-sighted.

Our position is very simple. We want to see a better, more equitable distribution. We want to see the distribution has impact on the national economy. We are not looking for a handout. We are not looking for preferential treatment. We are looking at a policy that treats energy in a national sense, recognizing the control of that resource remains within the provincial jurisdiction.

It is not an easy position to maintain. As I pointed out in the discussions here in the House, this view is not shared by a number of other provinces because of either anticipated or actual potential resource revenues. But it is a credible position and I think very fundamental to the future of Canada, and I expect we will be saying more of these things as the discussions on energy continue.

I would also point out to the member for Scarborough-Ellesmere that he is quite right. Whatever we say between now and the referendum, when the referendum is over and hopefully settled in a way that will leave the people of Quebec to maintain their part in Confederation, the issues themselves won’t disappear. This is true in many other parts of the country and it is why this government has been and is prepared to give some leadership to and be part of a renewed or altered constitution, however one may wish to describe it.

I always point out, and I feel this very strongly--and I have trespassed a little bit here, Mr. Chairman--that whatever rationale is developed, whatever constitutional reform takes place, the Premier of this province is going to be on the side of making it very clear that the central government--and I don’t like that term, because it sounds as though one is arguing centralization versus decentralization--the national government should always have the power and the responsibility to deal with the economic, monetary and fiscal issues in a national sense.

Mr. Chairman: The allotted time now has expired.

Hon. Mr. Davis: I will just finish by saying that I don’t want to be part of a new constitution or a constitutional change that will put the national government in a position where it cannot function in a national sense. I feel that very strongly.

Vote 201 agreed to.

ESTIMATES, CABINET OFFICE

Vote 301 agreed to.

ESTIMATES, MINISTRY OF REVENUE

Hon. Mr. Maeck: I presume, Mr. Chairman, that the overtime the Premier ran in his estimates will be credited to the Minister of Revenue. Is that the way the system works?

Mr. Chairman, it is a pleasure for me to present the 1979-80 estimates for the Ministry of Revenue. I welcome the opportunity to discuss the operation of my ministry with the committee again.

As was the case last year, I have already provided additional explanatory material to all parties to supplement the financial information contained in the printed estimates. I hope the members have found this material useful in their preparations for these discussions.

Also, before we turn to the detailed examination of the estimates, I would like to draw the committee’s attention to a number of important developments taking place in the Ministry of Revenue. I believe this will be of further benefit to members in their item-by-item review of our operation.

In particular, I shall deal with three main elements: the overall financing and productivity gains in the ministry; tax simplification and improved customer services; and progress in municipal property assessment.

As all members are aware, since 1975 the government has pursued a rigorous policy of reducing the growth of expenditures and the size of the public service in order to lessen inflationary pressures in the economy and to achieve a better balance between the private and public sectors in Ontario. This policy is widely endorsed as correct by informed observers in other governments both in Canada and abroad.

Similarly, our success in controlling expenditures is amply demonstrated by our record.

These results could not have been accomplished without the full co-operation of all ministries. I am pleased with the particular role played by the Ministry of Revenue. In this connection I would refer the committee members to the expenditure summary table in the briefing material they have before them.

This table shows that, in comparison with 1978-79 actual expenditures, the ministry’s 1979-80 estimates are up by only $828,800, which is less than half of one per cent. In part, this very modest increase is due to the reduction in Gains payments. Spending on services and supplies, which are subject to significant inflationary cost increases, is up by only $590,800, or 3.4 per cent.

[8:30]

Wages and salaries are shown to be rising by $2,147,700 or only 3.3 per cent. While some salary increases occurred after the estimates were printed, it is not anticipated that they will increase in total by more than $4.5 million or 6.8 per cent, which is in line with the government guidelines. This demonstrates that the Ministry of Revenue is exercising restraint in expenditures and that its 1979-80 estimates are essentially level-lined.

In emphasizing the way the ministry’s expenditures are being constrained in line with overall government policy, it is important also to stress that we have been able to do so in the face of continuing increases in the volume and complexity of program work loads in all parts of the ministry. This has been accomplished by a concerted effort over the past few years to improve productivity.

Since 1975 the ministry has been successful in increasing efficiency by recognizing and exploiting opportunities on two main fronts. In 1976, management board of cabinet approved the introduction of the management by results system, or MBR, as a basic tool to be used by all ministries in measuring and reporting on how their programs performed during the fiscal year against stated objectives. Along with other ministries, the Ministry of Revenue was successful in implementing this new management technique to reinforce existing cost-benefit procedures already in place.

In 1978, the ministry successfully introduced zero-based budgeting techniques as a complement to the MBR system. Essentially, ZBB is a process of ranking and comparing the benefits to be derived from funding alternative levels of activity among a range of programs within a fixed budgetary allocation. The effect of ZBB, therefore, is to force the conscious rationing of scarce resources among competing uses, so that the most effective package of results is planned for the year’s operation.

The combination of ZBB and MBR works like this: The ZBB exercise rations the resources and sets the targets. The MBR system monitors program performance during the fiscal year in terms of the achievement of the targets and what adjustments need to be made in the light of changing circumstances. Most importantly, these systems have intensified the involvement and commitment of the ministry’s management staff in ensuring the most efficient use of our limited resources. In other words, the internal operation of the ministry is under constant scrutiny to get the best results.

Closely connected with improved program planning and management systems is the need to improve constantly the use of our manpower resources in line with the government’s overall objective of containing the civil service. In the Ministry of Revenue this dictates the investment of funds in the development and introduction of new labour-saving methods. To date, this has resulted in the redesign and overhauling of the computer systems and administrative procedures supporting all of our major tax-collecting operations and has also produced significant productivity increases and improvements in services in the area of municipal property assessment.

However, it must be stressed that the maintenance and improvement of such systems is on an ongoing basis. Typically, it takes two years before a new investment project bears fruit. As a result, this year’s estimates include funds dedicated to ensuring further increases in productivity in the future so that we will continue to contain total expenditures while at the same time dealing with increased work loads and inflationary pressures on our operating costs.

To conclude my remarks on the question of improved productivity, I would like to draw the members’ attention to the summary table on ministry staffing which is contained in the material I have distributed to them. This shows that we plan to reduce our manpower this year by at least 118, compared to last year.

This means that over recent years we have reduced our staff by some 210 from the level of 4,182 in 1974 to 3,972 in this current year. In contrast to these reductions, we have had to manage significant workload increases. For example, the number of taxpayers with whom we deal under our various statutes has increased by 24 per cent since 1974, along with a more than proportionate growth in the number of transactions to be administered.

However, productivity gains are not measured by staff reductions only. Wages and salaries are, after all, only part of our total cost and on this broader scale I am pleased to inform the members that unit costs are also being significantly reduced. For example, the cost of collecting $100 in corporation tax has fallen from 60 cents in 1977-78 to 57 cents in 1979-80.

Mr. Nixon: Run up the flag. Sound the trumpets.

Hon. Mr. Maeck: Quite a thing. In this inflationary world, it is quite a thing.

Hon. Mr. Walker: Try to get that up to a decent amount next time.

Hon. Mr. Maeck: We will try.

Thus, to sum up in the area of financing and productivity, the ministry will in 1979-80 be once more operating with a level-line budget, with planned employment down by 118 man-years and expenditures up by less than one per cent.

I would like now to turn to the second part of my introductory explanation of my ministry’s estimates for 1979-80. Primarily, this concerns our progress in simplifying provincial taxation and improving customer services in our revenue division.

Mr. Nixon: Your equalization factors certainly simplify things.

Hon. Mr. Maeck: We will come to that a little later, Bob.

I should also emphasize similar improvements are taking place in the area of municipal property assessment services at a later point.

As the committee is aware, the revenue division is responsible for the efficient and equitable management of the provincial tax system. This also includes administration of Ontario’s guaranteed annual income payments to the elderly citizens, the Ontario tax credit system and the government’s new small business development corporation program. Altogether, this involves some 12 statutes on an ongoing basis, as well as business still occurring under the now-repealed Succession Duty, Gift Tax and Land Speculation Tax Acts.

As members can see, Ontario’s tax structure is highly developed and sophisticated. However, at the same time, it must be recognized that no two taxpayers are exactly alike. More particularly, their ability to deal with the intricacies of the tax system varies extensively, from the highly sophisticated corporate tax manager to the operator of a small business in a local neighbourhood. The needs of these groups are as different as they are numerous.

Recognizing this, my ministry is absolutely committed to a program of tax simplification under which the prime objectives are the minimization of undue interference in daily business activities and the minimization of paper burden and its attendant cost. To the extent we are successful, I believe such a program works to the mutual benefit of both the taxpayer and the government. If the taxpayer is not asked for a lot of forms and information, then we as a ministry don’t have to process them, either. The potential savings involved in this approach to both the government and taxpayers is obvious.

I believe my ministry’s record provides eloquent testimony to our commitment to tax simplification and our determination to improve our services as far as possible in a rapidly changing environment. Consequently, I shall review briefly some of the more significant steps we have taken. In doing so, it is helpful to describe our actions in two main groups. These are legislative and procedural improvements and increased services to taxpayers.

Under the first of these headings, procedural simplification must begin at the very first stage of contact between the ministry and taxpayer. Obviously, taxpayers must file returns with the ministry. However, there are ways to ensure they are filed only as needed. To this end, various steps have been taken.

In the case of retail sales tax, we have been able to steadily eliminate the need for filing monthly returns for 10,000 of our smallest vendors. These business operators collect and remit only small amounts of tax and it is, therefore, sensible to allow them to file returns only once every six or 12 months, whichever the case may be.

Also, a couple of years ago, we raised the level at which corporations must file monthly instalment payments. The current level is $2,000, below which a corporation is required to file only once a year. To date, this change has allowed more than 30,000 small companies to file yearly instead of monthly.

While on the subject of corporation tax, I would like to remind members of the recent changes to the capital tax. These changes allow small companies to pay only a flat rate of tax, thus avoiding the need to enter into unnecessary calculations in order to comply with the tax.

I think members will agree that steps such as these represent a significant effort and commitment on the part of the ministry to reduce undue demands on the part of the taxpayer as much as possible. We have been able to achieve these results without compromising the revenue position of the government.

There are other steps besides tax filing changes which can be taken and have been taken to reduce the level of government presence in day-to-day business transactions. As a prime example, I would like to touch briefly on statutory liens.

Statutory liens are one method of protecting the revenue position of the province, and these were used extensively in almost all the statutes. A lien constitutes a charge on property for taxes which might be owing. However, a statutory lien is not registered against the title to real property and, therefore, prospective buyers and sellers cannot always be sure whether or not a lien exists.

At one time the use of a statutory lien was necessary to protect the revenue interests of the province, but we have found ways to protect the province’s position without resorting to statutory liens and thereby the need to give prior approval to all property transfers. Since 1974 we have eliminated six statutory lien provisions, along with many thousands of clearance requirements.

The elimination of these statutory lien provisions has several benefits. First, it allows businesses to operate with more certainty; if a lien is not registered, then it does not exist. Second, it eliminates the need for buyers and sellers to obtain lien clearances from my ministry for every sale. Third, by eliminating clearance requirements, my ministry is able to redeploy its resources to more urgent problems instead of using them to interfere in every transaction, the vast majority of which we have no interest in in the beginning.

With a diversified economy and tax structure, disputes are bound to arise between taxpayers and tax collectors. Recognizing this, however, it is our responsibility to provide simple methods for the resolution of these disputes at the lowest cost possible.

In this connection I remind honourable members of the latest measure taken to assist taxpayers in their dealings with my ministry in the area of tax disputes. Our new tax appeal service has been created to deal with all appeals and hearings related to our tax statutes plus the Small Business Development Corporations Act. Together with day-to-day administrative duties required by the tax collection process, appeal activities were previously the responsibility of the individual tax branches.

During the fiscal year 1977-78 my ministry received less than 1,300 appeals, by no means a large number when compared to the considerable number of taxpayers, corporations and businesses on our tax rolls as well as’ the number of tax transactions involved. I am proud of our record, and I believe that the consolidation of the appeals function in one separate office can only serve to increase the level of efficiency of my ministry’s service to the taxpaying public.

I would emphasize that my ministry deliberately located tax appeals out of head office and away from administration of taxation specifically to provide an added measure of impartiality and independence. In addition, our ability to ensure consistency in handling appeals across all of the taxes we administer will be greatly enhanced.

Finally, it is important to emphasize that the benefits of the new appeal service will not be confined to Metropolitan Toronto only. Our appeals officers will continue to travel regularly to other parts of the province to deal with appeals where it is not convenient for taxpayers and their representatives to come to Toronto.

In the area of streamlining legislation, members will recall that two years ago this House approved extensive revisions to the Corporations Tax Act. The purpose of the revision’s was to bring Ontario’s act more closely into line with that of the federal government so that where the law was supposed to be the same taxpayers would be certain that it was.

This approach allowed us to further simplify procedures. Where the federal government issues revised assessments, either up or down, and Ontario’s law on the matter is the same, my ministry will automatically follow that assessment. In addition, if the taxpayer objects to the federal assessment, his objection automatically becomes valid for Ontario purposes. He does not have to file two pieces of paper to two levels of government. I am pleased to report that this is working well to the mutual benefit of taxpayers and the ministry.

[8:45]

I come now to the issue of repealing tax statutes. Members will undoubtedly recall that the Land Speculation Tax Act was repealed in the autumn of 1978. I am happy to report that by January 1979 the transition process was 99 per cent complete. There are still a very few disputed cases open, but I hope to have these resolved in the very near future.

As members know, in April of this year the Succession Duty Act and the complementary Gift Tax Act were also repealed. I would like to report to members that the winding down of this operation is also on schedule. I anticipate that the bulk of activity should have been resolved by mid-1982.

For the information of the members, the last returns under the Succession Duty Act were due on October 24. Of course, the smallest estates are processed within days; however, larger and more complicated estates can easily take 15 to 18 months before assessment. In addition, the structure of wills may cause some estates to be open for years into the future, particularly where life tenancies are involved.

However, as I said earlier, the wind-down process is proceeding in an orderly manner according to plan and is on schedule.

I have been describing some of the more tangible steps taken by my ministry in the area of tax simplification and reduction in paper burden. I would now like to discuss the less tangible but equally important question of improved customer services.

My ministry has accepted as a basic principle that we cannot expect taxpayers to comply with statutory requirements if they do not know what they are supposed to comply with. it follows then that the ministry is obligated to meet this need through improved information services. For the information of members, I will briefly outline some of the main measures my ministry has undertaken to meet our obligations in this field.

Almost every small business operator needs a retail sales tax permit. When these people go into business and request a permit, which is free of charge, my ministry also supplies an easy-to-read kit giving the business operator some basic information about dealing with the tax. Then, about two weeks afterwards, one of my staff calls the new business to see if there are any questions. At that time, my staff also offers to visit the operator personally to discuss any problems.

On a broader scope, my ministry is in the process of introducing a new telephone referral service, using our district retail sales tax offices and head office. It will ensure that the taxpayer with a question of any kind I will be put directly in touch with the right person. in co-operation with the Ontario Chamber of Commerce, my ministry will shortly begin a series of seminars on taxation across the province. This program is specifically geared to the needs of the local businessmen. Thanks to the close assistance of the chamber, I am very confident of the success of this new program.

In the last two years my ministry has totally restructured its information bulletin program. The objective has been to make bulletins more timely and easier to understand; and all bulletins are available in both official languages. A recent survey of my ministry indicates that in addition to French and English, we have capacity to deal in more than 60 languages through our central telephone inquiry service.

Finally, in order that taxpayers may have greater certainty in their affairs, my ministry recently introduced a new advance ruling service, which has proved to be highly valued by taxpayers. This means taxpayers can obtain a statement of the tax consequences of their actions before taking them.

We are continually striving to provide more and better services to our taxpayers. We are open to any reasonable suggestion as to how service levels can be improved and I invite and welcome suggestions from members of this House and the public.

Mr. Chairman, I shall now turn to the last part of my introductory remarks, which concerns developments in the area of property assessment. This is what you were waiting for, Bob.

Mr. Nixon: You’re a little ahead of schedule.

Hon. Mr. Maeck: Last year, in response to a request from the city of Cambridge and 13 other municipalities, my ministry embarked on a program of property tax reassessment under section 86 of the Assessment Act. This initiative was a response by the ministry and those councils to demands by ratepayers that the inequities in the assessment base be rectified.

The program, which is purely voluntary on the part of municipalities, is designed to equalize assessments within such major property classes as residential, multiresidential, farms, commercial and industrial.

In addition to Cambridge, five other municipalities in the region of Waterloo--namely, Kitchener, the townships of North Dumfries, Wellesley, Wilmot and Woolwich--requested a section 86 reassessment. The other eight municipalities were scattered across the province. They ranged in size from the city of Hamilton to the village of Sterling and included the cities of Kanata and Timmins, the towns of Newcastle and Rainy River, and the townships of Burford and Uxbridge.

A section 86 reassessment is based on the premise that the total tax base for a municipality does not increase or decrease as a result of the reassessment, nor does the total change for each of the property classes. Let me repeat that point.

In a section 86 reassessment, the total taxes paid by each property class after the reassessment are exactly the same as the taxes before the reassessment, although, of course, taxes will go up in municipalities if councils increase their spending over the previous year.

In order to achieve a constant tax base, the assessments are analysed and the major property classes identified. The average level of value is calculated for each class by comparing the actual assessments with 1975 market value assessments. New assessments are then calculated by applying the ratio that represent the average level of value to each individual assessment. Some assessments--those previously overassessed--go down. The others remain the same, others go up. But the net change in total assessment for each property class is zero and the total taxes for each property class do not change.

I emphasized earlier that section 86 reassessments are voluntary programs initiated by municipal councils concerned about inequities in their assessments. I believe it would be helpful to the honourable members if I reviewed with them the process whereby a section 86 reassessment is implemented.

The first step is a request from the municipality, generally in a letter to me from the head of council, for a review by the ministry of its assessments. This preliminary study indicates the major property classes and by means of statistical analysis shows the average level of assessment for each class and the range of assessments above and below the average.

If, on the basis of this analysis, council believes there are serious discrepancies in the assessments and a reassessment is warranted, it proceeds to the third stage. Council, by means of a formal resolution, requests the ministry to undertake a section 86 reassessment. When the ministry receives this resolution our assessors undertake a thorough review of all assessments to ensure that the 1975 market value estimates are correct and that the assessments are properly allocated to their respective categories--residential, multi-residential, farm, commercial and industrial.

The class averages are recomputed and new assessments are calculated. When the new assessments have been verified, the ministry presents council with a detailed study of the impact of the new assessment. This report provides council with a comprehensive overview of its tax base which allows it to see what inequities and inconsistencies exist in the assessments.

By reviewing this impact study, council can ascertain exactly the magnitude and distribution of tax changes that would result from reassessment. Council can then determine for each class how many assessments will increase and how many will decrease. They are able to calculate the average change in taxes and to ascertain the number of assessments which are greater and which are less than the average.

In a municipality that is organised into wards, the analysis is done on a ward basis as well as on a municipal basis. Council then decides whether the reassessments should proceed. No municipality has as yet decided not to proceed, but if that was the decision of council, the old assessments would continue to be used for taxation purposes.

When council decides to proceed with the reassessment the ministry mounts a public information program to explain to rate-payers what is happening. Through the use of newspaper advertising, explanatory inserts with assessment notices, and information pamphlets, citizens are told that a reassessment has been implemented. Also, they are urged to examine their own assessments compared with last year’s; they are referred to the indicated market value estimate which appears on the notice. They are told what property classes have been identified and what ratios have been used to calculate the new assessment. They are told where and when they can attend open houses to meet with their neighbourhood assessor and have their assessments explained in more detail. Finally, they’re also told, if they are dissatisfied with their assessment, how they can lodge an appeal.

In regard to our experience with the section 86 program in 1979 is the distinct success and the significant contribution to the local government process. The vast majority of ratepayers accepted the new assessments as a reasonable reallocation of tax burdens so that within each property class every ratepayer bears his fair share.

There are some 203,000 properties in the 14 municipalities that were reassessed, and of those, just under 18,000 were appealed. While the appeal rate grows substantially from 1978 when there were approximately 6,500 appeals, the total was within our projection and compares favourably with the 10 per cent appeal rate generally used as a standard in other jurisdictions that have witnessed the assessments.

An issue often raised with section 86 as the assessments are discussed is whether tax change can be phased up. The province does not have the authority to phase in tax changes. And I make it clear to all municipal councils, if they want to phase in changes, they have the authority to do so themselves under the Municipal Act. It is interesting that of the municipalities that have implemented section 86, only the city of Hamilton is phasing in the tax changes.

One measure of the success of the program is the number of municipalities which have applied for impact studies this year with a view to implementing section 86 in 1980. In fact, 106 municipal councils and one board of education right now are analysing the impact studies we have provided with a view to requesting the ministry to apply section 86. I expect to know very soon which municipalities wish to proceed so that the preparation of assessment rolls can begin without delay.

I’m sure members will recall that when amendments to the Assessment Act were debated last year, there was agreement among all parties that equalization factors should not continue to he frozen.

Mr. Nixon: Try to share the blame a little bit there.

Hon. Mr. Maeck: We have to.

This decision was made in recognition that general legislative grants to school boards and regional equalization grants to municipalities, which are distributed on the basis of equalization factors, were in need of readjustment.

Further, the apportionment of regional or county levies and school requisitions, also based on equalization factors, was similarly in need of change. Therefore, new equalization factors were prepared by the ministry and Gazetted on July 14 of this year. Following publication of the factors, I sent a copy of the Ontario Gazette to the head of every municipal council and chairman of every school board. Each municipal treasurer received a copy of the calculation sheet for his municipality. The calculations were explained to municipal and school board officials at a series of meetings held throughout the province.

By means of these initiatives, the ministry did everything possible to ensure that municipal representatives were made fully aware of the new factors and were given ample opportunity to consider whether to appeal their factors.

The new factors would substantially alter the distribution of grants if their implementation were not cushioned in some manner. Consequently, the cushioning procedure adopted by the government has two major components.

First, no municipality will receive less grant in 1980 than it received in 1979 because of the use of the new factors and the grant distribution formula.

Second, the overall impact of the new factors will be limited by restricting any changes in equalized assessments.

Finally, my colleague, the Minister of Intergovernmental Affairs (Mr. Wells), explained the limiting formula to the members during debate on his estimates on October 12 last. In the case of provincial education and municipal grants, the limits are set at maximum changes of plus or minus 10 per cent from the amount received in 1979. Comparable limits for apportionments are plus or minus five per cent.

This concludes my introductory remarks, Mr. Chairman, and I look forward to hearing from the member for Brant--Oxford--Norfolk.

Mr. Nixon: Mr. Chairman, since there are just a few of us deeply interested in the matters of the Ministry of Revenue I perhaps can be more frank than I sometimes am. I want to begin by congratulating the minister. I really feel the record be has presented to us indicates one of two or three things, maybe two of two or three things:

Most of the responsibility for policy-making in this ministry is still assumed by the cabinet as a whole, and perhaps to some extent as much by the Treasurer as by the minister, and that perhaps the ministry was either overstaffed or underemployed for the years that have led up to the record the minister has given us.

[9:00]

Frankly, I appreciate the fact he talks in terms of man-years or person-years. If Mrs. Campbell were here, she would probably amend that, although the term man-years is the one used in the minister’s report. I think it is much more easily understood than trying to balance the number of official complement with contract staff. We have been confused, frankly, on this side for a good long time on that very matter of just how many people were employed, either by the government at large or by the ministries individually in particular. When we look at the man-year requirements and see it has been reduced substantially, certainly this is something we favour.

Perhaps we are not kind enough to agree entirely with the minister that it simply means there has been a serious work-load increase. Those of us who have not held the seals of office and had the opportunity to deal directly with the competent staffs of the various ministries are not that impressed with the work load that is carried. We feel the work is done efficiently. I have had an opportunity on more than one occasion in the last year to contact officials in the minister’s office and I have always been dealt with efficiently and courteously. Perhaps it was the fact I was a member of the Legislature, but there didn’t seem to be any heavy work load interfering with the response. I shouldn’t be complaining about that, but it is a fact.

My own feeling, of course, is complimentary to the minister as an individual, but I still am not convinced even that the ministry should have, or warrants, a separate and individual existence. This province operated a good long time without a separate department or Ministry of Revenue. I personally feel that while I would think the minister’s advice on more general things as well as revenue matters would be valuable, still there must be a big crowd around that cabinet table when you are all there. It seems to me in the interests of efficiency at least, the leader of the government might think of cutting the numbers of cabinet ministers. There would be a saving.

Maybe it would be a little difficult to increase the size of the back bench. There are these problems which I for one have not experienced, as far as either being in a cabinet or trying to organize one.

I would say to the minister, and there is nothing derogatory in this in a personal way, I do not believe the Ministry of Revenue, per se, is necessary. The organization of the collection of these taxes is fairly standard. The minister speaks with some pride of the year-to-year, or perhaps month-by-month, improvement of efficiency, but after all, this has been going on now under the leadership of one political party for 36 years. If you can’t collect taxes pretty efficiently now, then I don’t know the explanation.

I don’t know of any great complaint about the tax collecting procedure. Just as a footnote, it has been brought to my attention by some of those tax collectors who remit the sales tax to the minister that if through certain circumstances they are late in the remittance of the sales tax, they not only lose the four per cent fee they are given from the generosity of the Treasury for their work, both for the collection and the forms associated, but they pay a penalty of an additional five per cent.

In other words, it is sort of a double whammy that is visited on them when, perhaps being reasonably small retailers themselves, they are not equipped nor even interested in the heavy responsibilities they have as being among the thousands of working minions of the ministry.

It seems to me a great deal of the low costs the minister reports when he collects his taxes is because the people who actually do the work and take the pennies and the dollars from the retail purchasers are paid at such a low level and are subject to at least the indication of that kind of an unfair penalty.

I know the minister has to be sure the law is obeyed, and nothing would be worse than allowing some of these remittances to get seriously out of date. I suppose this is one way that he has of keeping the retailers in line, but it seems to me to be a rather draconian double penalty which I believe would not be necessary.

The minister may recall--perhaps it was during the early months of his predecessor’s ministry that gasoline tax, I believe, got so seriously behind in payments from some of the major collection agencies. I don’t believe we have really collected all that was owing in that yet, and there have been a number of committee hearings associated with it.

Mr. Ruston: In the St. Catharines area.

Mr. Nixon: In the St. Catharines area, yes; a very well-known case. So it is a problem.

Certainly there has been no evidence from those of us who try to keep a sharp eye on what the government is doing, that the collection of taxes in this province has been seriously remiss in any particular degree, with the exception of one or two cases.

It is not my intention at this time to thrash over some of the problems the minister and his predecessor had in the levying, if not the collection, of the land speculation tax. The famous cases in Brant county were even reviewed by a royal commissioner. Perhaps, when we get into that vote, there will be some details we would like to pursue, once again associated with properties in the Brantford area, where I know there were applications for exemption from land speculation tax but it was never made public to me whether those exemptions were granted or not.

The assessment matter is one that concerns me directly. Although the minister really ended up with that in his own remarks, I think I would begin with it. He has given us a further explanation, following the remarks made by his colleague the Minister of Intergovernmental Affairs (Mr. Wells) two weeks ago, as to the cushioning program that has been entered into by the government in the application of the new factors.

I am a little embarrassed myself, let alone embarrassed for the government of Ontario, with regard to the fiasco that assessment in this province has been for almost a decade. I had a letter today from the president of Union Gas, the former Treasurer, who had written to me on a matter pertaining to gas service in the area. He made a few personal remarks in closing. It is always good to hear from him.

I will always recall the strong stand he took in the province when, although there was a Minister of Revenue then, he took the responsibility of both ministries in a very real way, even more than the Treasurer today. Nobody’s feelings seemed to be hurt by it particularly. It wouldn’t have mattered much if they had been.

I very well recall when the decision was made, obviously authored largely by Mr. McKeough, that in order to get any rationalization in assessment in this province it had to be taken over by the central government. The expectation of Mr. McKeough, and those who believed in him, I am sure was that the takeover would be followed by market value reassessment, or reassessment on some uniform base, probably within the following two years, and that, while there would be certain problems, there would be nothing the well-known Conservative majority could not withstand. Unfortunately, and in some respects fortunately, that was not the case.

I personally believe Mr. McKeough’s approach, and therefore the government’s acceptance of the McKeough approach, was entirely in error. No one has been well served by the centralization of the assessment process. I know the NDP critic has had direct and personal experience of this and might feel it was better to work for the government of Ontario than for one of the local muncipalities. But from my point of view and from my experience I reject the view that it is better that assessment be centralized.

I believe the supervisory powers of the province, through the Ministry of Revenue, could very well have been brought to bear to bring about the degree of uniformity which would have permitted the province to make its grants for education and municipal purposes on a fair and equitable basis without disrupting the situation to the extent that the last decade has meant that our local tax procedure and taxes payable have been anything but fair and equitable, and anything but understandable.

On the other hand, they have been completely disruptive. They have had more to do with the breach developing between the municipal elected governments and the government of Ontario on the one hand, and the loss of confidence between the people and the local government on the other, than anything that could possibly have been imagined.

To begin with, the cost of assessment skyrocketed. This is always what happens when the unitive government, taking over a direct function, becomes large, either in the case of a regional government or in this case, centralizing assessment at the provincial level. Immediately, more staff had to be hired. Immediately, all salaries were raised to the highest common denominator. Immediately, the offices that had been serving the municipalities became completely inadequate and new premises were purchased or built on new properties. I won’t even add the footnotes about the lands acquired from good loyal Tories from one end of the province to the other to serve the assessment requirements having to do with offices and property and the rental of those facilities.

This may just be an observation that my jaundiced eye perceives unfairly. Certainly the perception is one that it was a bonanza for good and loyal Conservative supporters waiting their turn to line up at the trough over these many years. Once again, they were not disappointed. Mr. Chairman, it’s not necessary for you to nod your head at this time. All right, shake it.

Immediately following, it was believed that rather than allow what the Treasurer, who was also acting as Minister of Revenue--although I believe there was a Minister of Revenue, maybe John White in those days--perceived to be this growing inequity in assessment and the factors that controlled it, the grants that controlled the grants, they were frozen in 1970. During all those years, until the freeze was removed, the minister indicates by approval of all parties, the pressures for inequity increased. The minister knows, and so does anyone who has studied this even in an amateur way, that the pressures on the values of rural properties were probably the most dislocating of all.

My constituency is probably one of the most rural of any represented in this House. I could argue with my colleague, the member for Essex North and others, but the largest municipality I have is the town of Paris at 6,000. Some of the areas that have been regionalized have artificially large municipalities, but in fact, when one goes into them, one knows that reality is considerably different from the unreality imposed by the Conservative government in the regional government reorganization.

Mr. Ruston: The only place to stop in Paris is at old highway 2 at the Whitehorse restaurant.

Mr. Nixon:: That’s right, and now it’s a pizza parlour. A very, very fine pizza parlour.

Mr. Mancini: Yes, I love pizza.

Mr. Nixon: Ah yes. The rural areas, of course, have been increasing in productivity. There have been changes brought about by judicial review of assessment procedures that have dislocated the assessment to some extent.

Some of the tobacco lands, 50 years ago, were the poorest agricultural lands one could get. I think most of it was designated as fox sand and it tended to blow over the side-roads in the old days when the wind blew. Things have changed dramatically. Those are now the most productive lands in Canada and valued for the farm crops.

In some of the townships in those areas, including Burford, which the minister referred too, the assessment was adjusted to compensate for the values of the crops producible from these special lands. The courts eventually found on appeal that that was not an acceptable method of assessment. That meant the township assessment was thrown into a cocked hat. In order to change it, they appealed to the ministry and a section 86 reassessment was granted.

[9:15]

I must give the assessment officials a good deal of credit. They certainly went out of their way to see that anybody who could possibly be interested in learning about the reassessment procedure under section 86 were informed.

The minister personally, as he will recall, took the members involved under his wing and with his officials explained it and really tried to give us a response to any kind of complaint or even expression of fear that we might get. Personally, I think that was well worth while for many reasons. I cannot say to the minister and his officials who are listening that there have been no complaints from Burford. I really haven’t had very many valid complaints or ones that really were worthy of taking further. In each instance, as far as I know, the ministry officials have followed them up either with a personal call or in a way which was satisfactory from my point of view.

I cannot say that all of the property owners are satisfied because we know that whether they got reassessment or not, in order to pay for local services the taxes to be collected have gone up. For a number of reasons, the minister might say they had to go up. They’ve gone up, and people will say, “That’s because of this reassessment.” It’s a difficult thing for the minister and perhaps even for the member, an opposition member, to cope with. I can always blame the minister, as he knows, and say that the damned Tories and their policies have done this.

To a great extent, the Tories, whatever adjective you want to use, have been the author of any problem they are experiencing. In their greater wisdom, or so they thought, they took over assessment from the municipalities. They froze the factors. They delayed any approach to change to the extent that the author of the whole system, I think in some embarrassment, simply walked out on the government and went back into private industry, more or less washing his hands of the whole bunch of them.

After all, one person can’t be dictator, however effective a dictator he might have been. It’s not the sort of government even the Premier is able to run or wants to run. It seems to me the problems you have experienced both in section 86 reassessment and the general reassessment problems are your own responsibilities.

When the new factors were announced in July, there was a calm quietness for a few days or weeks, almost like an upcoming thunderstorm, and then it came. It really came, and it must have been tougher on the minister and his officials and the back-bench Tories who would speak to the ministry even than it was on me.

In my own rural township, which is a complete farm township, South Dumfries, we would have had to find an extra $250,000 for education alone. I suppose all these numbers are relative, but I can assure you in a farm township with about 8,000 residents that was shocking. Our other levies for county purposes went up somewhat in proportion.

Although this township has very good farms, and I feel personally that I happen to have the great fortune to own one, about a third of the township is not good farm land. It’s rocky and full of bush that is not commercial. It’s not even pasturable. There are streams in it and very steep hills. While it is the last thing that I would be looking for if I had a dairy herd or any kind of farm operation, it is exactly what people who are highly paid civil servants or professional people in Toronto are looking for as a place away from the city in which they can have a home with a real wood fire. They can have their own stream. They have a nice road, where it’s possible to get snowed in on occasion. They can keep a few horses. They can have a patch of garden and some other interesting plants that are grown back in these areas.

The value of those properties skyrocketed. It really threw out the value of the local farm land completely because the land that was valuable under the traditional concepts of land didn’t go up that much. It went up some, but the scrub land that was always sitting there with tenant farmers and people selling the farms every four or five years when they got into trouble was purchased by people who made their money--and lots of it--elsewhere. The white-painted fences went up. The ponds were dammed up and cleaned. The prize cattle were brought in and shown at all the fairs.

The local people were, I wouldn’t say moved aside, because most of these people when they came in fitted into the community very well indeed, but when it came to apply these reassessment factors, it was really disastrous. They had been frozen too long, and the centralization of assessment had its dislocating effects. We had the visits of the assessment experts with their tape measures prying into the clothes closets to see what was going on. We, I suppose, had to bear that. I had some complaints about that, but I don’t think it was anything too serious.

I even had the member for Hamilton Mountain (Mr. Charlton) coming up to my farm to look over what I choose to call the Beverly field. There is not a building on it; there is no development or improvement on it of any type, and he reassessed that to the benefit of the local municipality. I have no objections; I don’t mind paying the taxes. It is a pretty productive field. As a matter of fact, it was being ploughed today--33 acres; pretty hilly but very productive. It is valuable land and certainly well worth paying taxes on.

It became apparent the assessment factors were simply inadmissible, and the government couldn’t stand the strain. Even if they had a big majority, the injustice of the thing was so apparent somebody had to find an answer. The answer, I suppose, is sufficient for the day, and that is probably what the cabinet decided, “Let’s get ourselves through another year somehow.” Really, this has been the basic tenet of assessment policy ever since it was taken over by the province. There was every expectation that somebody was going to come up with a working solution or a workable solution; but you haven’t and you haven’t got it yet.

I find the fact it is just there for a year is an admission it is nothing but a Band-Aid, and not even a very good Band-Aid. There is no indication of what the program announced by the Minister of Intergovernmental Affairs (Mr. Wells) will cost. I don’t believe it has ever been announced, and the minister is not indicating to me one way or the other. There has been no indication of what the cost will be.

Hon. Mr. Maeck: I have heard the figure $50 million. That’s both municipal and education.

Mr. Nixon: Right. The fact that it is for a year means there is not a clear understanding of it. I don’t really believe that. We can see the assertions made by the minister tonight, and his colleague a few days ago about the five per cent leeway, and that no municipality will get less money than they would have got under the old System and so on, and that’s fine. In other words, the slack in the program and the uncertainties of it are mostly with the government.

They have not announced their grant packages for the coming year, as far as I know, so there is still a considerable amount of uncertainty in the minds of the municipalities. They do not feel there is any kind of a partnership with the government here at Queen’s Park, and I really regret this.

I will tell you there was a time when I thought I might have something to do with government, and the idea of a new partnership with the municipalities appealed to me. I got the idea, frankly, from John Robarts. He used to talk about a new partnership with the municipalities and that, “We are going to deal with this together. Sure we have the senior responsibility, but we are working at this together”; and despite the best of intentions it has never worked out that way.

It may be the government had bad advice. I don’t mean from the civil servants, because they are supposed to give you a range and you select what you think is possible and come up with alternatives of your own if you can, you select your own advice. The whole approach, through regionalization and through assessment, has meant the municipalities really do not look to the province with anything but fear. It is not fear of some great powerful senior government that is going to come down and catch them at something, it is the fear that the senior government, which is supposed to know what it is doing, does not.

A lot of people at the municipal level are capable and well experienced, and they would much sooner be there than here in the Legislature or in the Parliament of Canada. They feel they are close to their taxpayers. They love municipal matters. Many of them are very expert and would make very good ministers, certainly very good opposition members. As a matter of fact both of us are always looking for people with municipal experience to run for us, because we deal with these, or should deal with these matters here. But what they say to me is, “We dont think they know what they’re doing down there--“ that is the minister. “We don’t think they know what they’re doing. Sure they’ll get through the next year, but it’s a matter that is ad hoc. We don’t feel there is any direction to municipal affairs. We feel that the government of Queen’s Park is off balance and their reactions to that situation put the municipalities off balance.” They find it embarrassing to approach their ratepayers because of that; it has been a seriously dislocating matter and it continues and continues.

We really don’t know what the future is going to hold. The fact is that this has been done for a year and we say, “What are you going to do? Are you going to wait for an election hoping you’re going to get your majority?” Then you’ll say, “These are the new factors; then during the next year it’s going to be market value, we’re going to section 86 everybody or something like that.” We just do not know.

Maybe the minister, who has probably as much common sense as anybody who has been dealing with this for a long time, as to what will sell and also what’s fair--I say this most sincerely, I really believe it--maybe the minister will say, “We’re going to do a certain number of municipalities under section 86, and then we’re going to do more and more of them.” The municipal people go to these conferences and they realize that the approach through section 86 is as fair as a piecemeal program can be, and maybe the minister is going to find them coming to what is eventually a reassessment across the province through the section 86 doorway. That may be; maybe the minister is just waiting to see what will happen there.

I personally don’t feel confident that that program has received any leadership and I’m not guaranteeing him my support for whatever he does. I’ll tell him that and he knows that. It’s our job to criticize. We’ll support him when we feel we can, but we are not looking for reasons to support. We’ll support him when we feel there is not a viable alternative procedure.

We felt it was wrong to take over assessment in the first place. We felt that the power of the province could be used in some way to direct and moderate the local assessment program, which could be left at the county or regional level, in such a way that the minister’s grant program could be applied fairly and equitably. There would be a certain degree of ad hockness to it, but an upgrading of the municipal-provincial liaison concept could have, in my view, kept that under control. I felt that would have been the best approach. I said so strenuously at the time, and I believe frankly we were right in our criticism.

The next thing I want to talk about is the Province of Ontario Savings Office. I notice it’s one of the few offices where the amount expended has gone up and the amount the minister is requiring has gone up. We’ll get some detailed information about that.

I know that in all parties, Mr. Chairman, there is a division of opinion on the Province of Ontario Savings Office. I felt the Treasurer (Mr. F. S. Miller) always wanted to close it down. He felt that if we weren’t going to do anything with the savings office we should not keep it around. I noticed in his list of prospective cutbacks in government toward a balanced budget that would be a thing that should he simply shut down.

I can tell the minister that I’ve talked to colleagues of mine who agree with him. I don’t agree with him. I feel very strongly the other way. So obviously when I’m talking about this I am not declaiming Liberal policy, I’m expressing my view as a member of the Legislature who has been interested in the savings office for a long time. There was a time when the government of Ontario was going to upgrade the savings office to a near bank. The bond houses in New York and downtown Toronto were not prepared to express confidence in the credit of the province in 1934 and 1935 and were expressing a certain degree of unwillingness to buy the bonds that were needed to run the government of the day.

The Premier of the day, being a very progressive populist type, said to them, probably over a light lunch somewhere, that if they weren’t going to do it he would simply sell them across the counter at his own banks. They knew he was prepared to do it. I tell the members he was, and I frankly would not have regretted it if he had. Under that threat they soon came around and handled the bond issue, and certainly we’ve always been able to pay off our bonds here. The whole basis of our AAA rating was established in those days, as I am sure all members would agree.

[9:30]

Mr. Rotenberg: Who was the Premier then?

Mr. Nixon: Mitchell Frederick Hepburn.

Mr. Rotenberg: Who?

Mr. Nixon: You’re the only person here who doesn’t know, David.

Mr. Rotenberg: Those were the bad days here.

Mr. Nixon: It may be because I have heard the stories about the usefulness of the Province of Ontario Savings Office that I feel we should do something with it. It seems to me the push and pull in the cabinet over the savings office has been about equal. The sawoff was: “We will do nothing with it at all. We won’t open new branches; we won’t close any branches. There will be very few adjustments.”

I was glad to see a few years ago that some of the offices were renovated; they are quite pleasant places. During the last few months the savings office has been doing a land office business in deposits, and I congratulate the minister. I think that is a marvellous thing. I would hope the savings office would go into the business of guaranteed deposit certificates. I see the ads now in the Globe and Mail are talking about 13.5 per cent. If private enterprise can take $1,000 of a citizen’s money and give him 13.5 per cent for a year or longer, then the government should be able to do it too. The government doesn’t have to make a profit, and it’s certainly borrowing lots of money for its own purposes, and for Hydro’s as well.

I almost get the feeling that, if the government can’t go into the market for half a billion dollars, it’s hardly worthwhile fiddling around with the paper; the minister can phone Salomon Brothers, or whoever they are, and say: “Hi, it’s me again. Will you crank out some more of that stuff? Hydro needs some more.”

I have often felt that the Province of Ontario Savings Office--we don’t have to make it a bank--could be a vehicle to give the citizens a much readier access to a safe, convenient depository that pays good interest, and one where they know their money is being invested in the development of the province. I want to talk later about the small business development corporations; the savings office could be very closely related to them. In fact, the Ontario Development Corporation could be made a part of the savings office and could be expanded in that way.

I suppose the big banks wouldn’t like it. Since all retiring Premiers and Treasurers go on to be directors of big banks downtown, there is a tendency for the government to know what the big banks like and what they don’t like. I really think this would be a great thing for us to do, but I don’t think a Tory government could ever do it.

When one is a back-bencher, there is the thought: “God, maybe some day I will be a parliamentary assistant. Then maybe I’ll be Minister of Revenue or something like that. Then maybe I’ll get to be”--forgive me--“a real minister. And maybe when I leave there I will get to the board room of the Bank of Montreal and sit in Leslie Frost’s very own chair, on which there is probably a plaque.” There is always something in the Tory hierarchy to draw one on and to keep one’s decisions and actions very much in line. So I don’t really think the Province of Ontario Savings Office is ever going to do anything but just sit there like a mummy. Nothing is going to happen to it until life is breathed into it by a new government.

I am very interested in this, and I would suggest to the minister that he has an agency which is probably ignored by most people, but the people who know about it respect the savings office. It opens earlier, stays open later and pays better interest than the bank. It has got nice cheques, just like a real bank. The offices are pleasant; they are reasonably convenient in most places. Lots of towns don’t have them and never will have them unless the government does something about it.

In my opinion, this is a vehicle where somebody like the Minister of Industry and Tourism (Mr. Grossman), somebody who is on the cutting edge of government--and it is hard to find that; there are a few little things happening, and probably that minister’s is one of the areas where something is happening--is going to come along and use that.

I suggest to the Minister of Revenue that he could be the person to recommend that. Why doesn’t he push things in his ministry a little bit more? I’ve told him this before. There will never be a better chance. The Treasurer is not going to give the minister a hard time; he couldn’t even close the Willett Hospital, he is not going to give you a hard time. As he says, he’s Tarzan and everybody else is Jane. He said that himself, which means we don’t really have to take him seriously; and the minister doesn’t either.

This is an instance where the Ministry of Revenue and the minister can assert themselves. This is under his responsibility. Let’s see him sell it to his cabinet colleagues. He’s a long way from being on the board of directors of the Bank of Montreal. It can happen, but it’s more likely he’ll be vice-chairman of the Timiskaming and Northern Ontario Railway, or whatever they call it these days.

That figure of 13.5 per cent attracted me. I certainly wish I had some money that I could invest at that rate. I have to sit on select committees just to put food on the table. Man cannot live by soybeans alone.

Mr. Ashe: That’s just petty cash.

Mr. Nixon: That’s right. There’s just one other thing I want to say about the banks. I use the bank like everybody else does. As a matter of fact they really do a lot of business. You can’t go to the bank without getting in line any more. Have you noticed that?

The Bank of Montreal at St. George is very popular. It is the most popular place in town. I should tell the minister that we don’t have a liquor store there, but other than that it is the most popular place in town. There is a lineup there all the time and even in the great banks downtown. Some of these new buildings are world-class buildings. When you go into the banking hall it really takes your breath away. You think, my God, we built all this with our little deposits. It’s really amazing.

You have to line up there. They have about 15 of these little places with the nice ladies. There’s a sign saying, “Line up here.” They have velvet ropes that keep you under control as you go in to give them your money. Boy, the banks in this country have got it made. I was interested to see that the federal Bank Act was passed by the Parliament of Canada, but I was once more deeply disappointed. I pretty well knew what was involved in it--as much as I can understand it, and it’s a mystery largely; but really very little, if anything, was accomplished.

Mr. Rotenberg: Which party passed that?

Mr. Nixon: The brain work was done by the Liberals and the Tories came along and passed it. Maybe they’ll do better some other time, but they may not have a chance. Really, nobody has done anything really significant for the country with the Bank Act for a long time. We don’t do anything here, we can’t really do much about the Bank Act, but under the Ministry of Revenue we do have that bank capital tax--is that what you call it?

We discussed this when there was a small amendment to it. When we look at the colossal, obscene profits the banks are making in this country it is absolutely astounding that we tax the banks in this way.

It makes me feel as I felt when I was a tourist in Nassau. I went on one of those charters, an all-in charter. You stay at the Holiday Inn and it’s really marvellous. You go downtown and see the wealth around in certain places. Then you look at the town and the services that are provided for the real people there. Back off the main street you see the little storekeepers, the little homes and what they have there. They don’t even have sales tax. They don’t want to hurt the business people who take their money down there.

I feel the same way here. We are almost like the government in Nassau when we look at the banks, We forget that we have the responsibility to act and tax and deal for the people. We really have allowed bank profits to get out of hand.

You read that a wise investment is to buy bank stock. That would be almost as good as buying some of those investment certificates I was talking about, if I had any money.

Interjection.

Mr. Nixon: The member for Wellington south is an expert. I’m telling him if he just hangs on to those stocks probably they’ll be worth more in the next six months than they were in the last.

Mr. Worton: If I can hang on.

Mr. Nixon: I know he is pressed to the wall, but those stocks are very valuable. The tax we put on them is just an embarrassing insignificance. We ought to hit those birds, and I really mean it. We could do something with that as far as the revenues of this province are concerned.

The Minister of Revenue may make recommendations, but of course that, surely, is the responsibility of the Treasurer. I would hope we’ll have a chance to discuss that further.

Small business development corporations I find to be an interesting idea. It was announced in the budget, but we really haven’t heard much more about it. The idea we could form these corporations and would get a share credit from the province equal to 30 per cent of our investment is an exciting idea.

The very first time the federal government brought out their concept of registered retirement savings it was a good idea. We could postpone the tax on our otherwise taxable income to build up a retirement fund for ourselves and pay tax on it when we used it. The registered home ownership is another good idea. This could be in the same category.

I see I’m driving the audience out.

It could be in the same category. I don’t know why the government can’t get on with it a little more effectively. I would suggest to the minister he could utilize the savings office facilities to bring this out to the people a little bit. Maybe there is something of significance to report about this. All right, the minister is nodding that is so. There is lots of money in this province and most of it is scared money. It’s in Canada Savings Bonds; it’s in these bank deposits which look like high interest, but the effective interest is very low indeed compared with the rate of inflation. All these things are relative.

My good friend, the member for Kent--Elgin (Mr. McGuigan) in a comment the other day, brought home a very simple truth to a lot of us when he said the real interest is the difference between the rate of inflation and the per cent you’re getting. It seems to me we could give the kind of recognition for savings to the people of this province that would put this capital to use in our expanding industry, and particularly our small business, through the concept enunciated in the budgetary statement.

Frankly, I’ve been disappointed at the lack of action. Most people have forgotten about it. Canada Savings Bonds are being pushed at us now. The government has already raised the interest rate once or twice since they were announced. Most people are still waiting until they’re a little nearer the 15th to get the advantage of those extra few days interest, but if they’ve got some cash, if they’re the kind of ordinary investor like myself, and maybe like the minister, they will say, “At least it’s safe there.” Nobody can criticize the minister for putting all that indemnity and extra money into a savings bond; you can always get it out if you need it, and the interest is payable. But the province of Ontario ought to be offering the same kind, maybe even a little better deal for the taxpayers and the savers in this province.

This province is made up of a lot of people who save money, believe it or not. There are lots of people down at the Eaton Centre throwing it around. That’s fine, I suppose that keeps the wheels of business going; but most people really save money. This province has learned how to do that, but we’ve never learned how to put it to good use for the development of our own economy and our own business, particularly small business. I’ll be interested to hear what the minister has to say about that.

I think that’s about all I wanted to cover.

Mr. Worton: We can use the banks for offtrack betting.

Mr. Nixon: The honourable member makes a very interesting comment there. I’m not in favour of offtrack betting myself, but I suppose if it were so, after all we’re very big in the lottery business and maybe the banks would have, or at least the savings office would have, a function there. I’m not recommending it; it’s an interesting suggestion.

I certainly didn’t mean to be in any way personally critical of the minister. I’ve said it many times, I believe he has the potential, in a very common-sense way, to be an extremely useful force in the government and in the province. I would simply tell him again that he should not hesitate to move forward into what I consider to be a certain vacuum in the front bench of the government.

As I said to the Chairman, Management Board of Cabinet (Mr. McCague) the other day, there is nobody who is really concerned about cutting costs since Mr. McKeough has gone. There is nobody. I don’t feel the chairman of management board is. He is retiring, I have a very high opinion of him but he is somehow retiring. I said to the Premier (Mr. Davis) this afternoon in his estimates that a popular management board chairman means there is something wrong. Maybe he gives his colleagues a hard time but there is no indication to us that he does. I would like him to get tough, even about small things like deputy ministers’ cars; I thought I would throw that in.

The Treasurer; I feel there isn’t a great tough force and thrust there for new programs. The Premier is going along and going to renew his majority or--I can’t say die in the attempt, but he will damn well come close to it; he is going to renew his majority or burst, so what he is going to do is what is going to be saleable to the public.

I feel in the government there are people who are sort of upwardly mobile politically, and you can understand what they have in mind; but somewhere in the government there has to be somebody who is really thinking about the business of government; not thinking about how they are going to get a senior position or how maybe they are going to contest for the premiership some day, but in fact that they are a part of the big business of government with a fantastic responsibility, in our system almost a religious responsibility, to see that the work is done well, that the people are properly served, there are no undue ripoffs and there is somebody who is tough. I don’t know who is tough over there. I don’t think anybody is, but I am saying to the Minister of Revenue he could be the one if he wanted to do it.

On motion by Hon. Mr. Gregory, the committee of supply reported certain resolutions.

[9:45]

The House adjourned at 9:48 p.m.