Hansard Transcripts 1981-Jun-02 | Legislative Assembly of Ontario

Hon. Mr. Wells: Mr. Speaker, on a point of order: I would like to request the unanimous consent of the House to amend the final paragraph of Votes and Proceedings of Monday, June 1, 1981, by inserting in the third line thereof, following the words "standing order 94(a)," these words: "in the opinion of the Deputy Chairman of the Committees of the Whole House, who occupied the Speaker's chair at the time." That would mean that the paragraph in Votes and Proceedings would read as follows:

"and a debate arising, after some time Mr. Martel moved the adjournment of the House. A voice vote having been taken on the question, in accordance with standing order 94(a), in the opinion of the Deputy Chairman of the Committees of the Whole House, who occupied the Speaker's chair at the time, five members stood in their places to require a division. The whips not returning, the bells rung until 10:30 p.m. In accordance with standing order 3(a) Mr. Speaker then adjourned the House."

Mr. Speaker: Is it the pleasure of the House that we have unanimous consent?

Agreed to.

TRIBUTES TO VALENTYN MOROZ

Mr. Speaker: It is my pleasure this afternoon to introduce to the members of the House Mr. Valentyn Moroz. Mr. Moroz was released from the Union of Soviet Socialist Republics along with four other Soviet prisoners of conscience in a historic exchange in April 1979. Two years ago he was welcomed to the Ontario Legislature during his tour of Canada. After a two-year temporary residence in the United States, Mr. Moroz has decided to settle permanently in our province and in Toronto, and to become a Canadian citizen.

After Mr. Moroz's 11 years of imprisonment and persecution for basic human rights, we hope Ontario and Canada will provide him with the opportunity of a permanent home in which to live, and share, in peace and security, his commitment to those noble principles that were unattainable in his own land. I would ask the members to join with me in welcoming Mr. Moroz.

Mr. Shymko: Mr. Speaker, I would like to join you in welcoming Mr. Valentyn Moroz. Mr. Moroz has informed me that two years ago, following this unique, historic exchange, the first place the five prisoners of conscience landed -- they included a number of prominent dissidents -- was on Canadian soil at the airport in Gander, Newfoundland, as a symbol of the land of freedom.

On occasions such as this we are reminded by the presence of men like Mr. Valentyn Moroz that, despite the moments of criticism and frustration we often experience in the face of some of the imperfections of our system and way of life, four fifths of humanity are looking at countries like Canada, at our system and our society as their hope and dream. They would certainly take the very first chance offered them to be able to live with us, to share with us these very frustrations and to build this country, which is a symbol of liberty, freedom, justice and peace to millions of people in the world.

I welcome Mr. Valentyn Moroz as a symbol, as a man who stood for certain principles, certain ideals that go beyond our limitations as individuals and as a group. I hope his potential and his abilities will be shared with us in the building of this great province and this great country of ours.

Mr. Smith: Mr. Speaker, when Valentyn Moroz was able to leave the Soviet Union a few years ago he visited this very assembly, as many honourable members will recall. We had the honour to welcome him here; a number of us, as the member for High Park-Swansea (Mr. Shymko) will recall, also had the opportunity to address a large rally in his honour at Nathan Phillips Square.

We are delighted to see Mr. Moroz again. I treasure the signed copy he gave me some years ago of Report from Beria Reserve, a stinging report that he wrote emphasizing the hypocrisy of the Soviet regime. It gives us very great pleasure to see Paneh Moroz again. It is a real pleasure, and I just remind him again of a saying that I know we all believe, "Slava Ukraini."

Mr. Cassidy: Mr. Speaker, I too would like to welcome Mr. Moroz, and particularly for his decision to stay here in Ontario now that he has decided where he will settle and make his living after being freed from prison in the Soviet Union.

He is very much a symbol both of the Ukrainian resistance, which has been in existence for so long, and of the courageous campaign of so many dissidents in the Soviet Union who, small group though they may be, have held up a beacon, and by their courage have provided hope for many others in that country which has so betrayed the original ideals that moved people at the time of the Soviet revolution 60-odd years ago.

I believe that for all our faults and shortcomings here in Canada and in Ontario, in certain ways we have achieved some measure of liberty and democratic freedom. I hope Mr. Moroz will not lose heart in his campaign on behalf of his countrymen from the Soviet Union, or in his new countrymen in his adopted land of Canada.

Members from this party, particularly the former member for Parkdale, Dr. Dukszta, and others, have worked very actively and closely with people who have been seeking to enforce the Helsinki Accords and put into reality the agreements that were made, albeit it now seems hypocritically, by the Soviet Union.

With Mr. Moroz, I hope for the day when the ideals of the Helsinki Accords will apply in every corner of the Soviet Union and when the freedom for residents to travel to and from the Soviet Union is as great as the freedom for people in this country to travel to and from Canada.

2:10 p.m.

ORDER OF BUSINESS

Mr. Speaker: Before carrying on with the routine proceedings, I would direct the honourable members' attention to the announcement entitled Business for Tuesday, June 2, 1981. In the second item, marked "3:30 p.m. and 8 p.m.," "8 p.m." should read "9 p.m." as by motion last week. I am sure all members will remember that.

MARRIAGE OF MEMBER FOR SCARBOROUGH WEST

Mr. Cassidy: Mr. Speaker, I think this is a point of privilege. Normally, members do not have to provide a reason to be absent from this Legislature, but on Friday of this week we will celebrate the absence of the member for Scarborough West (Mr. R. F. Johnston), who will be engaging in other activities; namely, this Friday evening he will be married to Beatrice Schriever. The impending marriage gives us in the New Democratic Party caucus a great deal of joy and pleasure. I hope all members will join with me in wishing Richard and his wife every happiness in the future.

Mr. Speaker: I am not sure whether that was a point of privilege or not, but obviously we all join with you and wish him well.

Hon. Mr. Davis: It is a privilege for him; I don't know about his wife.

Mr. Speaker: As a matter of fact, we wish them both well.

Mr. Breithaupt: He's getting a new leader.

Mr. Speaker: Yes, he is indeed.

STATEMENTS BY THE MINISTRY

REGISTRY BILL

Hon. Mr. Walker: It seems appropriate, Mr. Speaker, to amend the Marriage Act at this moment. I don't know why he cannot be present during the day; the wedding is at night.

Mr. Speaker, later today I will introduce for first reading, proposed amendments to the Registry Act.

The first of these amendments will repeal part III of the act and enact a version that clearly limits the title search period to 40 years.

The second amendment proposes to change section 65 of the Registry Act to eliminate the 10-year period required before discharged mortgages can be deleted from the abstract index.

These proposed amendments would result in major time and cost savings to the users of the system and satisfy a recommendation of the 1979 report of the land registration management committee of my ministry.

The present title search provisions of the act were designed to limit the search period to 40 years, but they have lengthened it in practice because lawyers consider the provisions to be unclear.

Our second proposed amendment addresses the problems that have resulted from the provision in the current act that created a 10-year period during which discharged mortgages could not be deleted from the abstract index and thereby eliminated from the search of title. The act was amended in 1929 to provide that a mortgage that had been discharged for more than 10 years could be ruled off the abstract index. In 1972 the act was further amended to provide that mortgages that had been discharged for 10 years did not have to be ruled off the index. Under this amendment, claims against the mortgage did not affect ownership of the land even if the mortgage was not ruled off.

Despite this change, many title searchers still examine these documents where there has been no actual deletion on the index. This means hundreds of thousands of documents are needlessly examined each year, creating a considerable amount of unnecessary work for registry staff and users of the system.

Our proposed amendment would provide that land registrars could delete mortgage entries, once satisfied that a valid discharge had been registered. If the mortgage entry were deleted, it would be clear that claims under the mortgage would no longer affect the land. Not only would this change considerably ease the work load of the system's users and staff, it would also allow the discharged documents to be microfilmed and removed from registry offices.

We are also proposing that this amendment be complemented by a new section of the Registry Act, which would provide that persons who suffer loss through any improper deletion will have recourse to the land titles assurance fund. This remedy will be available where there has been any omission or other error in recording a registered document.

Our research indicates these changes will significantly reduce the number of documents that will have to be examined in an average title search in the registry system, resulting in a corresponding saving of time to the user.

Both proposed amendments will result in savings of time and money to the public and private sectors. I hope the House will give speedy approval to our proposals.

RESPONSE TO PORTER COMMISSION REPORT

Hon. Mr. Welch: Mr. Speaker, at the appropriate time later in the proceedings this afternoon I will table the government's response to the final report of the Royal Commission on Electric Power Planning.

In March 1980 the royal commission, chaired by Dr. Arthur Porter, published its findings. Since then the Ministry of Energy has coordinated a review of the recommendations of the commission. I am pleased to advise the House that following this review the government accepts 77 of the 88 recommendations. Nine of the 77 recommendations accepted have been referred to the federal government since they address matters for which the federal government and the Atomic Energy Control Board are responsible.

Of the 11 recommendations not accepted at this time, four require further study before a decision can be made, one is being referred to the federal government without a position being taken by Ontario, and six have been rejected.

As honourable members are aware, action was already under way prior to the release of the commission's final report in many of the areas on which the royal commission made recommendations. This implementation process, details of which are provided in our response, will continue. The spirit and the substance of the commission's findings have been and will continue to be translated into real improvements in electric power planning in the province.

I would like to summarize the reasons that the government has rejected six of the commission's recommendations.

Recommendation 8.2 stated that Ontario Hydro should accept financial responsibility for any addition to the debenture debt load of the municipalities in the vicinity of the Bruce Generating Station. The government agrees that municipalities should not bear additional costs due to construction of Ontario Hydro facilities. However, it does not think that the mechanism proposed in this recommendation is necessarily the best one for achieving this objective. Ontario Hydro has entered into other arrangements with municipalities to offset the burden of additional costs and is prepared to do so again in the future when circumstances warrant.

Recommendation 9.1 advised that Ontario Hydro should not -- and I underline "not" -- install sulphur scrubbers at its fossil-fuelled stations. As members are aware, on January 26, 1981, the then Minister of the Environment announced targets for reduced acid rain emissions from Ontario Hydro's coal-fired generating stations. As part of its program to meet these targets, Hydro will install scrubbers at two 500-megawatt coal units. Therefore recommendation 9.1 has been rejected.

Recommendations 12.6 to 12.9 all related to a proposal for an Ontario energy commission, which would advise the government on energy policy and electric power planning. These four recommendations were rejected on the grounds that such policy advice is and should continue to be the primary responsibility of the Ministry of Energy. The government feels it would be inappropriate to give a quasi-judicial body, such as the Ontario Energy Board, both regulatory and policy advisory responsibilities.

Further details on the government's views on these recommendations, as well as on all the others, are set out in the response that will be tabled this afternoon.

May I also touch on another matter addressed in the government's response, namely, that of bulk power transmission facilities in southwestern Ontario. In recommendation 6.7, the royal commission stated that Ontario Hydro should develop alternative routes for a second 500-kilovolt transmission line from the Bruce Generating Station. The commission noted the concerns raised by the farming community that any new transmission line should have a minimal impact on high-quality land.

2:20 p.m.

In recommendation 6.3, the commission also stressed that there should be full opportunities for public involvement in locating such facilities. Accordingly, Ontario Hydro developed a planning process designed to address these and similar concerns. On December 15, 1980, I wrote to the chairman of Ontario Hydro requesting that Hydro hold in abeyance its planning process in southwestern Ontario, pending the government's response to the final report of the Royal Commission on Electric Power Planning. This was based on the view that any planning process adopted should provide the widest possible opportunity for public involvement, especially in the early stages before any decisions are taken.

There was also concern that the process be an orderly and efficient one, free from unnecessary duplication, complexity and confusion. In this regard I note there are a number of statutes under which a public hearing in connection with a transmission line is or may be required. The proposed Consolidated Hearings Act introduced yesterday by my colleague the Minister of the Environment (Mr. Norton) will, I believe, meet both these concerns, namely to provide a fair and effective planning and decision-making process for new transmission facilities in southwestern Ontario with full opportunity for public involvement. Therefore the government is requesting Ontario Hydro to proceed with the next stages of the planning and approvals process in such a way as to conform to the spirit and the intent of the commission's recommendations 6.3 and 6.7.

To this end, tomorrow Ontario Hydro will initiate the first step of a two-stage process when it releases a report, to be distributed throughout southwestern Ontario, evaluating alternative transmission system plans. That report, however, will not -- and I underline "not" -- recommend a specific alternative. Rather, it will allow Ontario Hydro to obtain responses from the public on the alternatives available, as a result of which Hydro will select a preferred plan. That plan, along with the other alternatives, will then be submitted for review under the Environmental Assessment Act.

Following the submission by Ontario Hydro of its plan-stage environmental assessment document, a hearing by a joint board, established under the proposed Consolidated Hearings Act, will decide which of the alternative transmission system plans is best suited for southwestern Ontario. At that point, stage two, namely the route stage, of the approval process begins, with Ontario Hydro carrying out studies and consulting with the public in order to select specific locations for transformer stations and transmission lines, within the broad plan approved earlier.

Hydro will then submit its detailed route-stage recommendations for approval under the Environmental Assessment Act and the joint board will again hold a hearing. Under the Consolidated Hearings Act, the decisions of this joint board will be binding under the statutes listed in the act, including, as the members will recall from yesterday's announcement, the Environmental Assessment Act, the Planning Act, the Niagara Escarpment Planning and Development Act and the Expropriations Act.

As members are well aware, the need for additional bulk power transmission facilities in southwestern Ontario was the subject of a special series of hearings conducted by the Royal Commission on Electric Power Planning in March 1979, In its final report, the commission endorsed the need for a second 500-kilovolt transmission line from the Bruce nuclear power development. If the cheaper electricity from Ontario Hydro's Bruce B plant is to be available to all Ontario electrical consumers and not locked in, a second 500-kilovolt transmission line should ideally be in place by 1984 to avoid potential load rejection problems, or by 1986 to avoid potential economic penalties.

Meeting that latter date will be a major challenge because of the time required for public hearings, the acquisition of the right of way and the construction of the transmission line itself. While a number of activities can take place in parallel, others have to wait until one process has been completed before another can begin. For example, the public hearings process must be completed before a right of way can be obtained.

Mr. Haggerty: What is a million dollars?

Hon. Mr. Welch: I hope the member for Erie (Mr. Haggerty) is not being critical of the public participation process.

Given the desirability of completing the line by 1986 at the latest if potential economic penalties are to be avoided, it is essential that each step in the overall process be accomplished as quickly as possible. This is the reason the process under the Consolidated Hearings Act is so important. Assuming the public hearings process takes three years to complete, it could well be that the second transmission line from the Bruce complex would not be in place until about 1988.

I am sure all members will agree that every effort should be made to avoid the necessity of burning higher-cost imported coal. We should make full use of lower-cost electricity from the Bruce plant when it becomes available, all the while providing complete opportunities for full public participation. Clearly a balance has to be struck.

During the period of the royal commission's review, a number of significant changes took place in the public policy environment, changes that the commission had to assess as they occurred. For example, during this period we experienced the beginning of a world upheaval in oil pricing and supply and a move away from oil to other forms of energy. Energy costs have escalated and greater emphasis has come to be placed on environmental impacts. Furthermore, there has been a dramatic decline in the forecast rates of load growth in electricity, which is related to the reduction in the rate of growth in total energy demand.

The commission effectively involved a large number of Ontario people representing diverse views about Ontario's energy future. I would like to take the opportunity this afternoon once again to thank Dr. Porter and the other members of the royal commission for the important contribution they have made to energy policymaking and electric power planning in Ontario. In particular the government notes the commission's success in facilitating a reasoned, open and fair public debate on nuclear and other complex technological and social issues.

Unquestionably the commission had a major impact on electric power planning in the province even before it submitted its final report. The fact that the government finds itself in agreement with most of the commission's recommendations emphasizes the valuable contribution it has made.

ORAL QUESTIONS

BRUCE HYDRO LINE

Mr. Smith: I have a question for the Minister of Energy arising from his statement. He now says there is a great hurry to move ahead with the second 500-kilovolt line out of Bruce. Given that he has had in his hand the Porter commission report for about a year, why did Hydro feel the need to continue studying and thinking about matters? The eastern transmission facilities apparently were quite prepared for the environmental assessment long ago.

Why has Hydro stalled for a year and why is it now being instructed to hurry up lest there be an economic penalty? Why have we wasted a year since the Porter commission report came out with Hydro unprepared to go before the environmental assessment proceedings? Why have we waited a year in the west when we did not have to wait in the east? Why is the minister going to hurry us now to avoid penalties?

Hon. Mr. Welch: Mr. Speaker, I think in all fairness the Leader of the Opposition should review the admittedly somewhat lengthy statement. I was not trying to suggest in any way there should be any undue haste in this matter. We were attempting to set out in this statement what had to be brought into balance: the need to get on with the project and the compelling need to involve the public in hearings. I was simply sharing these dates. Because of the legislation of the Minister of the Environment (Mr. Norton) and other attempts to facilitate this, and in keeping with the spirit of the royal commission, we were hoping to find a way to accommodate both of those needs, keeping in mind the time frame required.

I do not think it is fair to say Hydro necessarily is now under some compulsion from us to speed up; we are making it possible by legislation to facilitate that. That is the spirit of this statement this afternoon.

Mr. Smith: Let me put it another way to the minister. If, as he says today, the second line should ideally be in place by 1984 to avoid load rejection problems and by 1986 to avoid economic penalties, why did he stop the work of Hydro preparing for this second line in December? Why did he do it then if he knew there was going to be some kind of penalty for any delay in the completion of it? What conceivable explanation is there for the year that has been wasted since the Porter commission report came out, and why did the minister personally stop Hydro's work in this regard?

2:30 p.m.

Hon. Mr. Welch: I certainly hope the Leader of the Opposition will see that a report from a royal commission of this stature required some study and some consideration. Indeed, that particular explanation is shared with the members of this House in my statement today -- that I wanted an opportunity for a number of government ministries to study the recommendations and to let me have the benefit of their advice with respect to those.

I personally suggested to Hydro in the last days of 1980 that it would be wise for us to have this response consolidated, that we should go public with this response and that the procedures they are to announce tomorrow could then be in place. I wanted to be satisfied they were in keeping with the spirit of the government's response to the Porter commission.

Also, the Leader of the Opposition will understand this is a fairly complicated matter. There are a number of factors to be taken into account. Certainly this goes back a number of years, to when the commission itself was put in place to satisfy ourselves that we were responding to the legitimate concerns being expressed by a number of people with respect to public projects such as this.

Mr. MacDonald: Supplementary, Mr. Speaker: Since the new approach by Ontario Hydro is that instead of presenting one possible route it is going to present five or six possible routes -- and that approach now is supported by the commission and the government -- is not the real reason for the delay over the last year, notwithstanding the economic consequences down the road a bit, that the government did not want to throw out this very highly controversial issue on the eve of an election?

Hon. Mr. Welch: Mr. Speaker, it is very important to underline that we had this particular report and we wanted to study the recommendations and satisfy ourselves that we were involving as many people as we could in the consultative process.

Mr. J. A. Reed: Supplementary, Mr. Speaker: Since the minister on page three of this document expresses the concern of the government to have fair and equitable public hearings, and I think the minister used the words "to bring matters into balance so there was full public participation," what is it that is so inadequate about the completion of the work for the eastern corridor system, which is already in place and which was presented to the select committee earlier this year, knowing full well that the western corridor links are needed prior to the eastern corridor links?

Hon. Mr. Welch: Mr. Speaker, the answer is that the honourable member will recall this was one of the specific assignments that was given to the royal commissioner.

VAUGHAN TOWNSHIP LAND USE

Mr. Smith: Mr. Speaker, I have a question of the Minister of Housing on the matter of the rezoning of the lands in Vaughan township.

The minister will recall that the Minister of Agriculture and Food (Mr. Henderson) explained to us how he and his parliamentary assistant, the member for Elgin (Mr. McNeil), found the land too steep for farming; in fact, they were responding to a phone call from the Minister of Housing asking them to reconsider the objections that experts in their ministry had made to the rezoning of that farm land.

May I ask the minister why he made that phone call and at whose behest, when there is a document dated January 25, 1979, signed by the director of the official plans branch of his ministry, with respect to those particular lands, which says among other things: "John, Rob and I toured the area and noted that although it was gently undulating, most of the area was treeless and actively farmed, certainly not conforming to our estate guidelines."

Given the fact that officials within the Ministry of Housing felt this was good farm land that did not even conform to the Ministry of Housing's own guidelines for estate residential areas, what right did the minister have to request that the Minister of Agriculture and Food change his ministry's view on the matter?

Hon. Mr. Bennett: Mr. Speaker, I had the right as the minister of planning for Ontario to request the minister to review his position.

Mr. Smith: Given the fact that the Minister of Housing has made a request to have these lands rezoned and to have the Ministry of Agriculture and Food rethink its view, in direct contradiction of the objective experts within his own ministry applying the guidelines of his own ministry, and that the Minister of Agriculture and Food then complied in direct objection to the experts in his ministry.

Does the minister not think there is something rotten going on in the government of Ontario? Who is calling the shots on this particular deal? Who called the Minister of Housing and asked him to call the Minister of Agriculture and Food; so that both of them went against the objective views of the experts within both their ministries to help the redevelopment on behalf of developers in Ontario?

Hon. Mr. Bennett: First of all, I am not aware of the particularity the Leader of the Opposition refers to today. I realize his research people had the opportunity of reviewing the file in complete form. I have not, since I have been at a federal-provincial conference for the last few days, discussing things in relation to housing.

If anyone wants to talk about what is rotten in Denmark, it appears that the Leader of the Opposition is likely the author of that particular phraseology, because he is the only one who believes that is the situation in this province.

Mr. Smith: This is a document from Mrs. D. Santo, director, official plans branch, to the executive director of the plans administration division, which says -- and I will read it a little more fully: "We have not yet heard from Webb regarding his request." That was a request from Mr. Webb, which was quite legitimate, by the way; it asked for his client's lands to be included within the same block that was being considered. It goes on to say --

Interjection.

Mr. Smith: I made that clear, Mr. Premier.

Hon. Mr. Davis: But you didn't the other day.

Mr. Smith: It goes on to speak of Messrs. Knight and Weinberg, who are going to be talking about it, and says very plainly that these are against the estate guidelines.

Given that these rural estate guidelines from the Ministry of Housing say very plainly that there should be a prohibition of rural estate development in locations where it is shown it will hamper the viability and/or flexibility of agricultural activity and so on -- and these guidelines are very clear -- it must be obvious to the minister that his phone call was not at the behest of anyone within his ministry or the experts within his ministry and therefore must have been at the behest of the developers or the developer's lawyer.

Why does he not own up? Who put him up to the phone call and on what did he base his call, causing both him and his colleague the Minister of Agriculture and Food to go against the objective experts in their respective ministries?

Hon. Mr. Bennett: I will be glad to review the file once again and to report on the whole facts to this Legislature on Thursday. I can honestly say that in the course of being the minister reporting on planning for this province, there are many members of this Legislature who will call me, as the minister, and ask for a certain file to be reviewed. I am sure the Leader of the Opposition is fully aware, because he himself has taken the opportunity of doing so, and so have the members of his party as well as members of other parties in this particular Legislature.

Mr. Nixon: Was it a member of this Legislature?

Hon. Mr. Bennett: Just a moment. I am not saying it was a member of this Legislature at all --

Mr. Nixon: Yes, but you both --

Mr. Speaker: Order.

Hon. Mr. Bennett: If I may be permitted to continue: As I was saying, there are many people in this province -- whether they happen to be mayors, reeves, wardens or lawyers, or whether they happen to be planners or developers or politicians -- who take the opportunity of calling the minister -- and I am not the only one they call -- to ask to have certain things reviewed. I do not find that at all embarrassing, because I think that is the proper position of certain individuals if they feel that a particular project in their community should be reviewed.

I say to the Leader of the Opposition, I will be prepared to review the file in its complete form and to report to this Legislature on this particular aspect. I might also take that opportunity to report on a few of the others that some people around this Legislature have asked to have reconsidered as well.

Mr. Cassidy: Supplementary, Mr. Speaker: In his responsibility as minister, and given the fact that he has a substantial number of high-priced help within his ministry to do some of the jobs for him, is the minister telling the House that, subsequent to questions being raised about this development in Vaughan a week or so ago, he has not already reviewed the file or had the file reviewed to establish what had happened when conflicting advice was being given and the experts were being over-ridden?

If that is the case, why is it the minister did not use his responsibility to review the file and have an answer now? Was he simply trying to wipe his hands of something where he was overriding his own experts?

Hon. Mr. Bennett: No, Mr. Speaker, because I do not take the same direction as the leader of the third party might. I said very clearly a moment or two ago that I have been out of this community at a federal-provincial conference in the city of Ottawa.

I do know there is a file ready for me, and I have not had a chance, since returning to this community at lunch hour, to sit down and go over this particular case with some of the staff in my ministry, including Mr. G. M. Farrow, whom I think this House holds in pretty high esteem for his competence, his capability in advising ministers and other politicians and his integrity in the field of planning and land use.

I shall report to the House on Thursday.

2:40 p.m.

HOSPITAL WORKERS

Mr. Cassidy: Mr. Speaker, I have a question for the Minister of Labour regarding the arbitration award that has been imposed on the hospital workers in 60 hospitals across the province.

Will the minister say whether he believes it is equitable that doctors who have the freedom to negotiate their pay and who are free to withdraw their services from the Ontario health insurance plan should get a settlement that will give them $12,000 in additional net income this year, while hospital workers who do not have the power legally to withdraw their services from OHIP should get a settlement of $1,600 this year under the agreement that has been crafted by the same arbitrator, Mr. Paul Weiler.

Mr. McClellan: In his spare time.

Hon. Mr. Elgie: Mr. Speaker, let me say to the honourable member, his spare time is much more useful than the member's full time.

I appreciate that the leader of the third party on many occasions and on many issues would like a minister here or a minister there to put himself in the place of the arbitrator, to judge the quality of the evidence he heard and to review the decision that was made. But that is not my role as a minister.

We have before us a competent and thoroughly thought-out document that clearly outlines the reasons for the decision, as was so in the case of the physicians, and I have no comment on the awards.

Mr. Cassidy: I find it unthinkable that the minister should abandon any sense of responsibility for the working people of the province, because that is essentially what he said right now.

Will the minister comment on those parts of Professor Weiler's report in which he comments on the hospitals where hospital workers were fired, where he comments on the unfairness of the treatment of different members of the bargaining committees and the local union executive? Some were not disciplined, some were suspended and some were fired. He recommends there should be an upper limit on the disciplining so they would not be discharged.

Bearing in mind that is the very least that can be expected, and since Professor Weiler believes he cannot do it in his arbitration award, what action will the minister take to implement the recommendation that there should be an upper limit on the disciplining and that no hospital worker should be fired?

Hon. Mr. Elgie: Professor Weiler is free, as is anyone writing a judgement or an arbitration award, to make what is called obiter remarks, but the facts of life are that this ministry and this government have been so concerned about a variety of aspects related to the illegal strike that, as the honourable member knows, we have in addition appointed a committee composed of Mr. Bob Joyce and Mr. Terry Meagher.

In spite of the gloom and doom story the honourable member is now telling us, in 25 hospitals the reprimands and suspensions have been resolved, in eight hospitals early settlements are anticipated, in three hospitals cases are already proceeding to arbitration and in eight hospitals there are discipline problems outstanding.

We are addressing the issues, and we have in place grievance arbitration procedures in this province which I think are second to none to help resolve the situations the honourable member is complaining about. I think that is the way to go.

Mr. T. P. Reid: Supplementary, Mr. Speaker: Does the minister recall last year when we had a threatened interns strike? Bearing in mind the increase given to the doctors, and since the doctors are as essential to the health care system as the workers in the hospitals, does the minister intend to bring in legislation outlawing any possibility of their striking if negotiations between the government and the doctors are not satisfactory?

Hon. Mr. Elgie: Mr. Speaker, the member has covered two or three issues. First, may I say that the hospitals and the interns have reached an agreement whereby they have voluntarily agreed they will go to arbitration.

To my knowledge, we have never had any serious suggestion that physicians in this province would give way from the responsibilities they must have towards their patients and strike. I do not have any reason to believe that is true.

Mr. Mackenzie: Supplementary, Mr. Speaker: Given the abject failure of the compulsory arbitration route to prevent the shafting of the hospital workers -- and that is exactly what is happening to them -- and given the fact that the arbitration did not stop the strike in the first place, is the minister now prepared to allow hospital workers in the province the right to strike that they are now denied?

Hon. Mr. Elgie: Mr. Speaker, this question has been asked before, and I think this minister has made it very clear that the government feels patient care in a hospital setting is of such serious concern to it and to society that it is one of those situations where the right to strike should not exist. We have no plans to change that legislation.

RENTAL HOUSING

Mr. Cassidy: Mr. Speaker, I have a question of the Minister of Housing about the rental construction loan program, which was announced in January and which the minister has been saying would result in the construction of 15,000 units.

Can the minister say what plans, if any, the government has to provide rental accommodation in the province, in view of the almost total collapse of that rental construction program?

Hon. Mr. Bennett: Mr. Speaker, first of all, there is nothing close to a near total collapse. I am fully aware of the fact that the NDP research officer has been in touch with one or two development firms in the province relating to their applications for loans under the program. Two or three have called me over the last few days and very clearly indicated this, even following me to Ottawa and telling me about their discussions.

Under the Ontario rental construction loan program, which we announced several months ago, we originally started at 10,000 units and $42 million. Applications came in from more than 300 communities all across the province, and we increased it to 15,000 units and $63 million in mortgages to these organizations.

We have now approved something in excess of 16,000 units through the Ontario Mortgage Corporation. When I use the word "approved," I trust members will understand that all have not yet taken up mortgages, because some of them are in the process of trying to get site plan approvals, building permits and so on in various communities.

While I realize the program originally was designed for and predicated on a 15 per cent mortgage interest rate, as a result of the mortgage rate moving to something close to 18 or 18.25 per cent, as indicated by Canada Housing and Mortgage Corporation in the last few days, some of the economics of the various projects or developments come into question.

I am sure the Leader of the Opposition and the leader of the third party will recall that Mr. Shiff of Bramalea Limited said in his annual report just a week ago, which was reported rather extensively on the business pages of the Globe and Mail and the Toronto Star and in other news media, as a result of the escalation in interest rates, he and his company would have to do a further review on some of the projects as to whether the economics still make them viable operations to continue or, as he said, the government should be rethinking the amount of the mortgage it is prepared to put forward on a unit basis.

Mr. Cassidy: A number of other developers have also communicated to the minister and the ministry as well as to the government that they cannot and will not build under the rental construction loan program at today's interest rates.

Mr. Shiff, the chairman of Bramalea Limited, wrote to the minister in mid-May to advise him that, because of the increase in interest rates and the increase in construction costs, the amount available under the program was inadequate and, therefore, Bramalea was going to withdraw.

Will the minister say how many other developers are withdrawing and what specific proposals the government has to meet the shortfall of rental construction this year which the minister himself has estimated at 37,000 units?

Hon. Mr. Bennett: First of all, the letter that the leader of the third party indicates he has from Mr. Shiff said that the company was reviewing the situation. If he reads the letter a little further, he will see that Mr. Shiff offers a proposal as to how much money the government of Ontario should put forward to increase the $4,200 allowance it made in the original program. He makes it very clear that he thinks a certain additional sum of money is required to overcome certain problems.

I realize this very clearly, as does the staff of the Ontario Mortgage Corporation -- and let me correct the member; if there are any withdrawals, they are not through the ministry but through the OMC, since it is the operator of the plan -- and I said in the original answer that we are reviewing the program as to the need for further assistance.

2:50 p.m.

Mr. Cassidy: So it is collapsing. The minister admits it.

Hon. Mr. Bennett: No, it is not. The leader of the third party jumps to conclusions all the time. He would sooner not do the research and just jump to a conclusion. I said we are doing the research, the study and the review of it.

Mr. Cassidy: Reviewing what? It is not working.

Mr. Speaker: Order.

Hon. Mr. Bennett: When I have that done, I tell the leader of the third party, in the course of time we will make the decision through this government and cabinet as to what is required to make this particular program more effectively produce rental units for the people of this province in all the communities of Ontario.

Just to go on from that: Yesterday I was at the federal-provincial conference on housing. The Ontario rental construction loan program was discussed, as were other programs of other provinces at that conference.

I want to say to my colleagues in the Liberal Party of Ontario that Mr. Cosgrove offered not one iota of a solution from the federal government to enhance the position of the Ontario rental construction loan program to bring rental units on stream in this province.

As the former mayor of Scarborough, Mr. Cosgrove realizes there could very well be a shortfall in rental accommodations, but he is not prepared to offer any solution to the problem save and except he says Mr. MacEachen, the Minister of Finance, will make the decision on what we are going to do about the housing situation in the future.

I say to this House very clearly that I have asked the Treasurer (Mr. F. S. Miller) and the Premier (Mr. Davis) of this province to try to resolve this problem at the first ministers' conference and the treasurers' and finance ministers' conference. If Mr. Cosgrove cannot decide on housing policy, maybe through the field of finance and with our Treasurer and our Premier they will be able to get Mr. MacEachen and the Prime Minister of Canada to come forward with a housing policy that will resolve some of the rental shortcomings of not only this province but also the rest of the country.

Interjections.

Mr. Speaker: Order. Mr. Ruprecht has the floor.

Mr. Ruprecht: Supplementary, Mr. Speaker: The minister has indicated that the rental construction loan program is well under way. I want to know how many units will be constructed under this program in the Metropolitan Toronto area.

Hon. Mr. Bennett: Mr. Speaker, at the time--[Applause.]

Hon. Mr. Bennett: I suppose that is the monkeys' cage that is now responding.

Interjections.

Mr. Speaker: Order. The minister will answer the question, please.

Hon. Mr. Bennett: I get a little tired listening to their great solutions, Mr. Speaker. With an endless supply of money, anything could be resolved.

In answer to the honourable member, I said very clearly and very distinctly at the time the program was being introduced that to our knowledge better than 50 per cent of the numbers we were allocating for construction would come from the Metropolitan Toronto area. Something in the range of 55 or 56 per cent of the units that have been applied for are here in the Metropolitan Toronto area.

If the member wishes to know how many are going to be constructed in the next year, I think we have to be slightly more realistic. I am sure the former member of Toronto city council will realize it usually takes about 18 months to construct a large apartment complex. I anticipate that between now and the middle of 1983 we will see a very substantial number of the overall 16,000-plus units in existence in Metro Toronto.

Mr. Philip: Supplementary, Mr. Speaker: Will the minister table with the House a list of those developers who, in his ministry's opinion, are firmly committed to the program and the number of units that are going to be placed on stream during the next year under that program? Can the minister give us any assurance that they will not disappear in the same way that the 1,285 units in Bramalea disappeared just recently?

Hon. Mr. Bennett: A correction first, Mr. Speaker: The 1,285 units in Bramalea have not disappeared.

Mr. Cassidy: Where are they?

Hon. Mr. Bennett: They are already under construction in the great community of Brampton, which the Premier happens to know a little bit about.

The members opposite ask, can I give a guarantee? I indicated already in my answer that interest rates going up to something in the range of 18 per cent will cause some of the developers and some of those in the field of designing and developing units to rethink their position on the economics.

Mr. Cassidy: Oh!

Hon. Mr. Bennett: Yes, "Oh!" I have no intention of suggesting that any developer should proceed with a unit that eventually is going to mean some financial disaster to him.

Frankly, I am prepared to table in this House -- and I think the honourable member's party research people already have it -- the number of organizations and companies, not only in this community but also across the province, that have made application for the loans and have been granted them. In due course I am sure a very substantial portion of them will be taken up and the construction will get under way and produce some man-hours of work.

Mr. Speaker: The Minister of the Environment has answers to two previously asked questions.

RADIOACTIVE WASTE DISPOSAL

Hon. Mr. Norton: Mr. Speaker, during my absence on Thursday, when I was at meetings in Winnipeg, I understand the member for Quinte (Mr. O'Neil) raised a question relating to the Madawaska Mines Limited site as a repository for radioactive wastes. Prior to that, the member for Hastings-Peterborough (Mr. Pollock) had raised the same concern, particularly with respect to whether it is likely to be a long-term site for the disposal of other radioactive waste.

I am not in a position to give that assurance but, in view of the concern the residents of that area have and the questions the two members have raised, I will certainly communicate with the Atomic Energy Control Board and seek such response. It has been made clear in communications up to this point that is not their intention, but I cannot give any ironclad assurance without further communication with them.

Mr. O'Neil: Supplementary, Mr. Speaker: The minister has representatives from his ministry who sit on the federal-provincial task force dealing with radioactivity in the Bancroft area. The federal government has refused to produce the contract it has with Madawaska Mines dealing with the Atomic Energy Control Board.

Since the minister has a representative who sits on that task force, is he prepared to produce for the Ontario Legislature a copy of that contract to tell us whether they have signed intentions to put further atomic waste in the Bancroft area?

Hon. Mr. Norton: I doubt very much if that is actually a supplementary to the original question. I can assure the honourable member I do not have a copy of that contract. I do not suppose I can get it if he cannot. If it is a contract between the federal government and some carrier, for example, or the mine -- I am not sure which contract the member is referring to -- then it may well --

Mr. Smith: Why have a joint committee if you don't know what is happening?

Hon. Mr. Norton: The committee does not necessarily enter into contracts. I do not even know which contract the member is talking about. I will include that in my communication, but I cannot give any assurance about producing a federal contract.

Mr. O'Neil: Since the minister has representatives on that board who have to okay whether certain materials are dumped in certain areas of the province, he should be able to get a copy of that contract for this Legislature. Will the minister supply a copy of the contract that mine has with the federal government so we can see where that nuclear waste is going to be dumped?

Hon. Mr. Norton: I think that supplementary reflects a total misunderstanding of the role of this province in serving on the task force with representatives of the federal government. We do not enter into contracts. To the best of my knowledge, the task force has nothing to do with arranging contracts.

I will make the inquiry I undertook to make, but I think the member should reflect upon the appropriate role of this province in that matter.

PRESENTATION OF CHEQUES

Mr. Eakins: Mr. Speaker, my question is to the Minister of Health. Will the minister inform this House how many schools received a $1,000 cheque last Friday for filling out forms regarding nutrition? What was the purpose of this exercise? Why did the minister's staff ask that this be kept confidential until the day of presentation?

Since the schools involved were asked by the minister's staff to invite mayors, other civic people, members of the school board and the press, why did they not extend that common courtesy to members of the opposition? In my own riding, for instance, the minister asked the Speaker of this House to represent him at the presentation of the cheques.

Hon. Mr. Timbrell: Mr. Speaker, the local members should have been invited; I thought they had been. I will check into it.

Mr. Eakins: Does the minister not feel that it is improper to have the Speaker of this assembly, who not only must be impartial but also must appear publicly to be impartial, handing out ministry cheques across the province? Why would the minister place the Speaker in this position and in effect use that high office to his political advantage?

3 p.m.

Hon. Mr. Timbrell: I think that kind of question is beneath the dignity I know the member possesses.

I have already acknowledged that local members should have been invited and I thought they were. With respect, I have known four Speakers of this assembly in my time here, and I have known other Speakers before my time; it has never been my understanding that the act of becoming Speaker removes one from dealing with people and their interests --

Interjections.

Mr. Speaker: Order.

Hon. Mr. Timbrell: It has been my experience that Speakers past and present have continued their interest in health matters. I thought the member opposite had been invited, and he should have been. I am quite prepared to acknowledge that and to check into why it did not happen.

Mr. Speaker: Order. For the edification of this House -- I think it is important, now that the matter has been raised -- I did have legal advice before I made that commitment --

Mr. Haggerty: Robinette?

Mr. Speaker: No, it was not. The advice was that it was not a conflict.

Mr. Roy: On a point of order, Mr. Speaker: I do not know what sort of legal advice you got, but it seems to me that your function is to serve the Legislature, not the Ministry of Health. The impartiality of the office is what this whole assembly rests on if it is going to work. It has to be impartial. Getting involved in highly partisan activities such as handing out cheques --

Interjections.

Mr. Speaker: Order.

Mr. Roy: Getting involved in highly partisan activities such as handing out cheques in opposition members' ridings is something that undermines your impartiality and that of the chair. I suggest, Mr. Speaker, that you not should be used by ministers of the crown in that fashion.

Mr. Speaker: As I said before, I was sufficiently concerned that I did ask legal advice. The legal advice was that it did not in any way interfere with my impartiality, nor was it a conflict of interest in any way, nor was it seen as acting on behalf of the government. I want to make that very clear. I have already assured all the members of this House, and I will do it once again, that I will serve each and every one of you with complete fairness and impartiality, and I say that very sincerely.

Mr. Haggerty: It was terrible advice.

Mr. Speaker: Just a minute. Whether it was terrible advice or not, I suggest to you that it was the best advice available to me at the time.

Interjections.

Mr. Speaker: Order. We are not going to debate this issue. I think it has been clarified --

Mr. Smith: No, it has not been.

Mr. Speaker: I think it has, with all respect. I ask for a new question from the NDP.

Mr. Smith: On the same point of order, Mr. Speaker: You were apparently given advice that this was not a partisan activity, and yet the member for Ottawa East (Mr. Roy) suggests that it was.

When you are thinking this over, Mr. Speaker, I ask you to consider that in the riding of Hamilton West, for instance, a cheque was given out by the only Tory member in the vicinity, the member for Wentworth (Mr. Dean), whose riding is some considerable distance from my riding.

A cheque was handed out at Agnes Macphail school in my riding, and I knew nothing about it until I was able to read about it in the newspaper. That should clearly tell you, sir, that this is a partisan activity in which Tories are being selected wherever they are nearby, to go into neighbouring ridings and present cheques on behalf of the government of this province.

Even though the member for Wentworth can be regarded as a lapsed Liberal, he is now a Tory; and the fact is that, with great respect, sir, you were chosen because of your political affiliation to a nearby riding. All other members have been used in that way, and I ask you, sir, to recognize that you have been misused by the government of this province.

[Applause.]

Mr. Speaker: Order, please. I would like to clarify one point in response to a statement made by the Leader of the Opposition. I had no prior knowledge of the activities he described. On the other hand, I was sufficiently concerned about the matter that I took several days, not only to seek legal advice but to speak to other people not connected with government. As I said before, the opinion was that it did not in any way affect my impartiality.

[Applause.]

Mr. Speaker: Order, please. Mr. Martel, would you like to speak to this point of order?

Mr. Martel: Mr. Speaker, on the same point of order: I hear everyone pounding their desks over there but I think realistically the Speaker himself has to realize that the legal opinion, for whatever it is worth, was poor. In fact, it was very bad.

The members over there cannot thump their desks and pretend they can have a totally partisan Speaker wandering about the province at the behest of some minister to hand out a cheque and suggest that impartiality remains. Let them stop the clapping for a moment and think of the position in which they put the Speaker. He is doing something at the behest of a minister; he delivers a cheque. My colleague the member for Lake Nipigon (Mr. Stokes) never did that; my colleague would not do that.

Mr. Speaker, the position you have unwittingly been brought into is that you lose your impartiality when you go into another riding. Certainly, in your own riding you have functioned as a member of this Legislature, but wandering around the province means that impartiality is lost. I think the legal opinion you got might be technically right, but politically it is disastrous.

Mr. Speaker: That was the very point with which I was concerned. It was the point on which I sought legal advice, and I was given assurance that it did not in any way affect my impartiality.

Mr. Dean: Mr. Speaker, on a point of order: Since the issue has been raised by the member for Hamilton West, I would like to point out to him and to the rest of the House that the presence of the parliamentary assistant to the Minister of Education at a function of that sort surely should evoke no surprise, because it is a joint program with the ministries of Health and Education.

Interjections.

Mr. Speaker: Order please. I am recognizing Mr. Conway.

Mr. Conway: Mr. Speaker, on that point of order: Would you at least undertake to tell me who provided the legal opinion and, if it is written, would you give us the further undertaking to table it here in the House?

Mr. Speaker: I would be happy to do that. It was not written advice.

Mr. Cassidy: Mr. Speaker, on the point of order: We cannot now remove the fact you were present where we believe you should not have been, but may we have an undertaking that as a servant of this Legislature you will not again as Speaker go on behalf of the government side to present cheques outside your own riding?

Mr. Speaker: If that is the wish of the Legislature I will take that under consideration and give it close attention. I want to say again that I did not accept this matter lightly. I did not see it as being on behalf of the government and neither did the legal opinion dwell on that. They did not see it as an action on behalf of the government.

Mr. O'Neil: Mr. Speaker, on the same point of order: I personally have no doubt that what you are saying is true, but my worry lies in some of the previous things that have happened, not only in other ridings but in my riding also. If I might quote what was said by that same Minister of Health on December 8 in regard to an announcement made in my riding without the member knowing it was happening, the minister said to me in return, "When he joins the Progressive Conservative Party, then I will add the member's name to those lists." I think it is about time the Premier started to discipline some of the members of that government so that we do not continue having the type of problems we are having in this Legislature.

3:10 p.m.

Mr. MacDonald: Mr. Speaker, since we are trying to make a clean breast of it this afternoon, I would suggest that maybe you should get advice -- and not from the same source -- on another of your activities since you became Speaker; namely, the week after you were appointed, on a CBC radio broadcast in which you were announcing your appointment you were promoting the government's youth employment program. That is not nonpartisan activity.

Mr. Speaker: Again, for the information of the House, those radio broadcasts are taped and I am not sure, although I will take a look at it, that I was aware of the appointment at the time the taping was made.

Mr. MacDonald: You announced it in the broadcast.

Mr. Speaker: Did I? I will check that. Thank you.

Mr. O'Neil: Mr. Speaker, on the same point of order: I would just like it to be known that after the comments I just made, the Minister of Health looked over at me and said, "Never again."

Hon. Mr. Timbrell: Mr. Speaker, that is not correct. I said, "Never now." The members opposite do not like it, but the fact of the matter is that the people of Ontario, having a very clear choice, on March 19 gave my leader and this party an overwhelming mandate to govern and those members never accept it.

Interjections.

Mr. Speaker: Order. I would respectfully remind the honourable members that question period is slipping by. If you wish to discuss it further, fine, but I just wanted to draw that to your attention.

Mr. Mancini: On the point of order, Mr. Speaker: I wish to bring to your attention that by your actions, sir, although they may in your mind not have had any political motivation, it certainly does appear to us that there was some political motivation and there was some political advantage to be gained by the government.

We on this side of the House certainly want to respect you as an impartial person who is sitting in the chair, one who is going to use the rules of the chamber in fairness and in an equal way to all members of the House.

I just want to bring to your attention that last year when the procedural affairs committee visited Ottawa, we had the opportunity to meet with Madam Speaker Sauvé and she informed us that she had to be so careful that she did not even attend partisan conventions so that the members of the House of Commons can in no way feel that she might be acting in a partisan way when she returns to the chamber and assumes her role in the chair.

We would ask you in the same fashion to be as impartial as humanly possible so that we can have confidence in you when you have to make these tough decisions down the road.

Mr. Breaugh: Mr. Speaker, I am a little reluctant to speak to this point of order but it certainly has been raised. There have been a number of matters which were raised to you today which are obviously of great concern to the members here.

I happen to live in an area where I see some of the communications media coming out of your riding, and I appreciate that in the first few weeks since you were appointed Speaker you have had the same problems that every Speaker has of adjusting from being a very partisan member of this assembly to one who plays a different role. I appreciate that those problems are there and I frankly appreciate the fact that you sought some legal advice. I think the consensus is in from opposition members that the Speaker must remain someone who shares the confidence of all members of this House and that cannot happen while you are sitting in the chair and then assuming a different role when you leave and go outside. There must be some permanence to that.

The other thing I want to say very simply is: I do not know how you will solve this, but there is a problem in here. Opposition members are being lectured about the realities of March 19, which is quite fair. To have that happen on the first day is okay, but to have it happen day after day is causing nothing but an uproar. If that is what this House wants to have, it is obviously going to have that.

I do not suggest we are going to get a chance to ask any questions about that matter and I would ask you to take it under consideration that you might perhaps speak with the House leaders to see if some consensus can be arrived at over these matters, such as whether it is courtesy to inform the local member if some function is being sponsored in his riding by any ministry, and to clarify the role that you play, Mr. Speaker, when you are not occupying the chair.

Mr. Ruprecht: Mr. Speaker, in isolation, this kind of action might seem to be very innocent indeed, but when you couple that incident with what has happened in many of our ridings, where information has been withheld and other people have been given cheques to give out, and when you couple that with the recent announcement of the Minister of Health that people are to be kept out of the Queen Street Mental Health Centre -- in fact, members of this Legislature are being kept out -- then we can come to only one conclusion. That conclusion is very simple, that this government operates under a vicious blanket of secrecy.

Hon Mr. Timbrell: Mr. Speaker, a point of privilege --

Mr. Speaker: Order. Order. That really has nothing to do with the point of order.

Hon. Mr. Timbrell: Mr. Speaker, with respect, if you would just hear it --

Mr. Nixon: Sit down, Dennis.

Mr. Speaker: Order. Order.

Mr. Martel: The Speaker is on his feet. Members are supposed to sit down when he is on his feet.

Mr. Speaker: I am glad you recognize that, because very few members have. Thank you.

Hon. Mr. Timbrell: Mr. Speaker, it amazes me how a nutrition award can be turned into a partisan issue opposite but --

Mr. Nixon: He is the one who does it. He did it last time too. For two years he has done it.

Mr. Speaker: Order.

Hon. Mr. Timbrell: -- I want to thank the members opposite. If there was ever any problem with publicizing the existence of the program, I want to thank the members opposite for making it universally known.

With respect, on the point of privilege, the honourable member said, or at least inferred that members had been denied access -- members had been barred from the facility. That is not true and I suggest that remark should be withdrawn.

Mr. Ruprecht: Mr. Speaker, on a point of personal privilege: I have in my possession a document that was given out by the Ministry of Health, which says members of any party, including our party, have been kept out of the mental health institution at Queen Street. I have that copy and consequently there is no need to take that back at any time.

Hon. Mr. Timbrell: I have a room for you.

Mr. Havrot: If you are so anxious to get in we will let you in.

Mr. Speaker: Order. Order. Has this matter been discussed sufficiently? I certainly have the consensus of the feeling of the House. It is not only that I should be impartial but I should appear to be impartial.

Ms. Copps: Mr. Speaker, on a point of order --

Mr. Speaker: The same point of order?

Ms. Copps: Mr. Speaker, this point of order will be very brief. In an effort that we, the members of this House, may ascertain in fact the impartiality of those members who have delivered the nutrition cheques, could the Speaker please table in this House a list of the members on the government side, the ridings that they come from, the positions in which they were acting when they gave out those cheques and the ridings where they delivered the cheques?

Mr. Speaker: I think that question should better be directed to the minister. I do not have any control over that.

3:20 p.m.

CONSTRUCTION OF LRT CARS

Mr. Foulds: Mr. Speaker, I have a question for the Premier. I wonder if he remembers his firm promise at the beginning of the election campaign in Thunder Bay, reiterated three days before the election, that there would definitely be a contract signed with Hawker Siddeley Can-Car Division of Thunder Bay for GO train cars. If he does, can he explain his apparent backing off from that commitment in his answer of Thursday last to the member for Fort William (Mr. Hennessy), when he said, and I quote, "Further GO cars might be constructed or manufactured at the Thunder Bay plant."

Is the Premier aware that unless the contract is signed soon substantial layoffs will occur at Can-Car, that about 1,000 people now work at the plant and unless a contract is forthcoming that will become a skeleton staff by the fall? Is it true that he is attempting to get Hawker Siddeley to lower its price from $1.2 million per car to $900,000 per car and that is the holdup in signing the contract?

Hon. Mr. Davis: Mr. Speaker, I do not know what the honourable member's source of information is. My recollection of my statement at a great nominating convention in Thunder Bay in the early part of the campaign was that the government or the Ministry of Transportation and Communications (Mr. Snow) would be negotiating a contract with Can-Car, Hawker Siddeley, whatever name --

Mr. Foulds: You called them National Steel.

Hon. Mr. Davis: National Steel, whatever --

Mr. Foulds: You had the wrong company.

Hon. Mr. Davis: Well, it used to be Can-Car, whatever it is -- that they would be negotiating.

I think it is important for the honourable member to understand -- because I know the member for Fort William understands this and has been in very close touch with it -- I indicated to him on Thursday that I felt the negotiations were proceeding. The government's obligation is, of course, to negotiate. We are negotiating for all of the taxpayers of Ontario. The honourable member would be the first one to be critical of us if we executed a contract that might be above what the market might require. He would not want us as trustees for the taxpaying public to give a contract even to that very distinguished company, if it were not negotiated in such a way that we could accept in good conscience the final results.

I have to say to the honourable member it would be very difficult for the Minister of Transportation and Communications to go to the head of this particular company and say: "I have a blank cheque. My government is prepared to pay any price whatsoever for those excellent vehicles." There are negotiations going on. As a result of negotiations, I think it is fair to state that a company, by and large, usually says, "We would like X dollars." Toronto Area Transit Operating Authority probably says it is worth Y dollars and the minister, in his wisdom, will probably come up with something close to X minus Y or Y minus X -- I forget which figure I used first.

Mr. Foulds: Does the Premier not recall his words three days before the election, when questioned by the press in Thunder Bay he said, "As long as I am Premier I can assure you that contract will be signed"? There was no hesitancy about the promise. Did the Premier not, in fact, give Hawker Siddeley a lever by prematurely announcing the contract for electoral purposes during the course of the campaign, and the company is now asking more than the Premier is willing to pay? If not, why has the contract been held up for as long as it has?

Hon. Mr. Davis: Mr. Speaker, I just told you, and I think the honourable member is trying to have it both ways. At one moment he is being critical because we are negotiating, the next moment he is being critical because we gave some encouragement to that very distinguished firm, because we want to see them stay in business. The member cannot have it both ways. I know he tries to argue things both ways, but he cannot get away with it.

As far as I am concerned, I am quite optimistic that, in fact, a negotiated contract will be arrived at. I am very optimistic that there will be more GO cars, serving the Brampton line perhaps, coming forth from the Fort William plant. But I say to the honourable member, we have to negotiate. We are doing it and I think we are very nearly in the final stages of those negotiations.

Mr. Foulds: How many cars is the Premier negotiating for and what price range is he talking about?

Hon. Mr. Davis: Mr. Speaker, I think it is fair to state the honourable member always likes to be fully informed and I am a great believer in giving him all the information. But I have to tell him I do not think it would be wise to get into figures during the course of the negotiations. I can assure the member that the minister will be delighted to share with him (a) the number of vehicles and (b) the per unit cost when the negotiations are completed.

Mr. Speaker: Just to demonstrate my impartiality, we will have a final, final supplementary.

Mr. Mancini: Supplementary, Mr. Speaker: I would like to ask the Premier if there are any other Ontario companies which are capable of building these GO cars? Would he say if any discussion has occurred with any of these companies and if so are they still in the running to have this contract? Finally, is there any price differential or any other matter which arose in any of these discussions which may give any of the Ontario companies an added edge over one of the others?

Hon. Mr. Davis: Mr. Speaker, I hate to disappoint the honourable member, who I am sure in his own way is trying to be suspicious and cynical about this process. If he asked any person knowledgeable in the transit field he would find out --

Mr. Mancini: That is why I am asking you.

Hon. Mr. Davis: The honourable member should just ask me a simple question -- is there anyone else -- and I would give him a simple answer. But the implication he is trying to draw is that Hawker Siddeley is getting some sort of preferential treatment. I am not totally stupid and I know what the member was attempting to say in his question. The answer is a very simple no. I wish there were a company in Brampton that could but the answer is no, it is Hawker Siddeley. If the member had asked that very simply I could have given him, for once, a very simple yes-or-no answer.

WINDSOR TRANSIT DISPUTE

Mr. Wrye: Mr. Speaker, I have a question for the Minister of Labour. The minister is aware that Windsor has suffered a public transit strike for almost 10 weeks now, a strike that shows no signs of ending soon. Could the minister inform the House as to the latest state of negotiations and whether he contemplates any initiative on his part to end the walkout that has so inconvenienced the public as well as causing serious financial harm to the workers involved?

Hon. Mr. Elgie: Mr. Speaker, the government has been very much involved in the negotiations and as recently as last week, May 27 and 28, gathered the parties together for mediation discussion, which did not result in a settlement. We will continue to keep in touch with the parties and if there is any evidence of a change in their position negotiations will resume.

Mr. Wrye: The two sides are reported to be far apart on the matter of wages. In fact they cannot even agree on the size of the offer from management some 10 weeks into the strike. Does the minister not feel the time has come to step in personally to try to bring the two sides together before the strike does any more harm to the business community in addition to the workers and riding public, especially the senior citizens of Windsor?

Hon. Mr. Elgie: Let there be no doubt the government is following those negotiations very closely and as recently as three or four days ago was involved in mediation. That is not ignoring a problem. We will continue to be closely involved in it and are prepared to intervene and offer whatever services we have that can be of assistance.

REPORT

RESPONSE TO PORTER COMMISSION REPORT

Hon. Mr. Welch tabled the response of the government of Ontario to the final report of the Royal Commission on Electric Power Planning.

PETITION

DRIVER EXAMINATION CENTRE

Mr. Dl Santo: Mr. Speaker, I would like to table a petition signed by some 35 residents of the riding of Downsview which says, "We the undersigned support the request to have the decision reversed regarding the hours and the volume of driving tests of the driver examination centre situated at 262 Falstaff Avenue, Toronto."

MOTION

COMMITTEE HEARINGS

Hon. Mr. Wells moved that standing order 72(a) regarding notice of committee hearings be suspended for the consideration of Bill Pr 10, an Act to Incorporate London Baptist Bible College and London Baptist Seminary by the standing committee on social development.

Motion agreed to.

3:30 p.m.

INTRODUCTION OF BILLS

REGISTRY AMENDMENT ACT

Hon. Mr. Walker moved, seconded by Hon. Mr. Sterling, first reading of Bill 92, An Act to amend the Registry Act.

Motion agreed to.

DANGEROUS GOODS TRANSPORTATION ACT

Hon. Mr. Snow moved, seconded by Hon. Mr. Norton, first reading of Bill 93, The Dangerous Goods Transportation Act, 1981.

Motion agreed to.

Hon. Mr. Snow: Mr. Speaker, in November last year the federal government enacted legislation to cover the movement and handling of dangerous goods in Canada. The Dangerous Goods Transportation Act applies to anyone who handles or packages dangerous goods, such as shippers, consignees and warehousemen, along with those who carry them under federal jurisdiction, airlines, ships and railways.

Shortly after the proclamation of the federal act, I introduced a bill in this House designed to promote the safe transportation of dangerous goods in all vehicles using provincial highways. Unfortunately there was not time to deal with that legislation last fall, so I would like at this time, as I have just done, to reintroduce the Dangerous Goods Transportation Act.

In the intervening months, there have been some slight modifications to the original bill to reflect the concerns of interested parties, but the form is consistent with the federal legislation and the intent of the bill remains unchanged. To briefly recap that intent, the bill makes it an offence to transfer dangerous goods in a vehicle on a highway unless in accordance with the federal safety regulations, including those regarding packaging and the placarding of vehicles.

Once enacted, this Ontario legislation will be strictly enforced by duly authorized Ministry of Transportation and Communications highway carrier inspectors who will be empowered to lay charges under the act. To ensure compliance we have set some pretty hefty fines for carriers who break the law. Every person who contravenes the act will be liable to a fine of up to $50,000 for the first offence and up to $100,000 for subsequent offences.

I am confident that our legislation will provide for the safe and efficient movement of dangerous goods regardless of origin on all provincial highways in the interests of Ontario residents.

ANSWERS TO QUESTIONS ON NOTICE PAPER

Hon. Mr. Wells: Mr. Speaker, I wish to table the answers to questions 94 and 96 standing on the Notice Paper. [See Hansard for Friday, June 5.]

ORDERS OF THE DAY

House in committee of the whole.

MASSEY-FERGUSON LIMITED ACT

Consideration of Bill 48, An Act respecting Massey-Ferguson Limited.

Mr. Chairman: Are there any comments, questions or amendments to any section of this bill, and if so, to what section?

Section 1 agreed to.

On section 2:

Mr. Cooke: Mr. Chairman, I have a number of questions. I will take them one at a time. Will the minister inform the House exactly where the negotiations are at this point for the agreement that will be signed eventually? When does he expect that agreement to be signed and at what stage are we now?

Hon. Mr. Grossman: As indicated at the time the original arrangements were made and the government undertaking was clarified for the public, the target date that all parties are currently looking at is mid-June and no later than the end of June.

Mr. Cooke: On some of the specific guarantees I assume we are going after, such as job guarantees, will the minister indicate exactly what job guarantees he is looking at? Is it six per cent of the world work force including subsidiaries or 6,100, whichever is the larger number?

Perhaps the minister can explain to us why these job guarantees are going to be adequate when in the Chrysler deal -- and I am looking at page five of the Chrysler deal -- it says, "The company shall maintain an average employment level in Canada of at least nine per cent for the period of calendar year 1980-81, 11 per cent for the period of calendar years 1982-86."

In that agreement, the minister indicated he would not support the federal deal because the job guarantees were not adequate, along with other guarantees which we will get into. The guarantees for Massey-Ferguson are almost identical, yet in this case they are adequate and acceptable.

Hon. Mr. Grossman: To clarify the number of jobs, the member will note in the information forwarded to him that "the company will make every effort to maintain the number of permanent jobs in Canada at least equal to the greater of 6,100 jobs and 13 per cent of the number of employees at the company and its subsidiaries throughout the world."

I remind the member there were many problems with Chrysler Corporation, one of which was that it was in a position where it could not give us as many other guarantees as Massey-Ferguson did. Because of its other guarantees, the value of the Massey-Ferguson deal to Canada is greater in some regards, for example, in sourcing, in upgrading its production facilities, in the potential for more research and development in Canada and in establishing an export office in Canada. All of those are guarantees that we simply could not get in the Chrysler arrangement.

As the member will recall, in the Chrysler arrangement job guarantees were insisted upon because in essence the original deal struck between the federal government and Chrysler contained nothing else that would guarantee jobs. Therefore, we said we would have to have a strict, hard guarantee on jobs because none of the restructuring of the company or the undertakings it had given us would ensure that jobs stayed in Canada.

We went to a straight, hard-nosed approach that required a job guarantee. If they had been able to provide other guarantees such as renovated premises, a certain time frame for putting light cars in Canada or a whole host of other things, perhaps the situation would have been different. That was not the case.

With Massey-Ferguson, it was the case. We were able to get a number of other undertakings. Taken together with the ratio of jobs to total jobs and the fact that Massey-Ferguson is a Canadian company operating in Canada and agreeing to repatriate some of its operations, it is quite an attractive proposition. It contrasts favourably with Chrysler.

Mr. Chairman: Mr. Cooke, just for clarification: Mr. Cunningham made a valid inquiry as to whether your approach is covering clause by clause of section 2 or you are asking questions generally about the whole section.

Mr. Cooke: Mr. Chairman, when I looked at the bill, I felt section 2 was the only section where we could go into details about the possible guarantees. That is my major concern.

3:40 p.m.

Mr. Chairman: I think it would make more sense to follow it clause by clause so we can attack each section. If there are any further inquiries with regard to subsection 1 of section 2, I think that probably would be the more appropriate route to follow. Does anyone want to speak to subsection 1 of section 2? No one speaking? Shall subsection 1 --

Mr. Cooke: I want to speak on subsection 1.

Mr. Chairman: I am sorry, Mr. Cooke; it is probably my fault for not getting clarification from you.

Mr. Cooke: I want to pursue some questions on guarantees, which I think all fall under subsection 1 of section 2, as I was attempting to do. May I continue?

Mr. Chairman: Yes. Please do.

Mr. Cooke: The minister raises the idea that the Chrysler guarantees in other areas were not as good as the ones we are looking at in the case of Massey-Ferguson.

The minister raised the idea of sourcing. I look at page three of a document that one of his people sent to us. It talks about the possible sourcing guarantees, and it says that it will "use its best effort to obtain supplies and services in Canada from Canadian sources."

What kind of guarantee is that? What makes that superior to what we negotiated with Chrysler, where it said pretty much the same thing, that they would do their best to increase purchases from Canadian suppliers?

I do not understand how this agreement -- what we have seen of it, and obviously we have not seen an agreement yet -- is superior to the Chrysler deal, and why the minister is so much more enthusiastic about this deal than he was about the Chrysler deal.

Hon. Mr. Grossman: I am not in a position to spend the rest of the afternoon discussing which deal is better, Chrysler or Massey-Ferguson, nor do I intend to do so, because it really is a fruitless exercise.

We had two companies in difficulty. The circumstances surrounding the two companies were obviously dramatically different. One cannot even begin to talk about comparisons between the two companies any more than one might talk about the difference between a local grocery store that is in trouble and a local car dealer that is in trouble. It is a fruitless exercise.

If the member wants to suggest that in the Massey-Ferguson case the best-efforts clause to obtain supplies and services is inadequate he is free to do so. I say to the member, however, that this company is and was in critical enough condition that any attempt to force them to source in Canada, where it would put the company in an economically less viable position, would defeat the entire intent of the bill and, if anything, lead the company into a position in which this government would end up paying $78 million to $80 million where otherwise it might not. So it would be counterproductive to force inefficient sourcing in Canada.

The undertaking is pointed towards obliging the company to make efficient, economic sourcing in Canada wherever possible. I think that is a prudent course to follow.

Mr. Cooke: Will the minister indicate how he intends to measure this and how he will be able to determine whether the company is making its best effort to source parts from Canadian suppliers?

Hon. Mr. Grossman: A monitoring committee has been set up to monitor those and other activities of the company.

Mr. Cooke: What criteria is the minister going to be looking at, and how is he going to determine whether they are making their best efforts to supply from Canadian sources? The minister has really given us no information as to how this clause, the way I have seen it worded, can possibly operate.

Hon. Mr. Grossman: If the member will think about it for a second, he will realize this is the sort of thing we have been doing -- for example, in the pulp and paper grants -- for some time. If companies wish to source outside Canada, or if we raise some objection to a particular piece of machinery, or in this case some materials, being purchased from other than Canadian sources, then we can sit with the company and ascertain what efforts they went through to ensure that there were no Canadian alternatives available.

If we are aware of a Canadian alternative or feel that the company has not sought out Canadian alternatives then we can do one of two things: in the latter case we can require them to seek out Canadian sources -- and Massey has undertaken that it will do that -- and in the former case if there is a Canadian source available then the company will have to prove to the monitoring committee that the Canadian source is inadequate in some fundamental way. It will have to satisfy us, in other words, that it would be bad for the company to buy the product made in Canada as opposed to the one made outside Canada. That seems to me the best way to do it.

Mr. Cooke: So, basically, the company is going to have to justify sourcing from outside Canada. If in the monitoring committee's opinion the company could economically source in Canada and it is not doing so, will this committee have some authority to impose restrictions on the company to ensure that this is followed? How is that going to work?

Hon. Mr. Grossman: As I say, how it is going to work on a day-by-day basis is part of what is being discussed with a whole range of other matters now. Suffice to say we are going to end up with a legal agreement obliging the company to source in Canada, as I say, to exercise its best efforts to obtain supplies and services in Canada. I remember from the time when I was in the legal profession that best-efforts clauses are not at all unusual in the legal field.

Of course, if there is to be a test, if one party to the agreement -- in this case the governments -- felt that Massey-Ferguson were not exercising its best efforts, then they would be in breach of the contract and I suppose we could withdraw from the transaction, which would likely cause all the other partners to withdraw and the company to fail. Ultimately, our right to do that -- or if it were challenged by anyone -- would be determined by the courts. It would be up to the courts to determine whether Massey-Ferguson had exercised its best efforts.

To be practical, the member will realize that like very many business arrangements, if all the parties to the arrangement are not operating in good faith, if all the parties are not co-operating and exercising their best efforts to meet the spirit, intent and letter of the agreement, then no number of legal words and no amount of court action is going to remedy the situation.

There are more than 250 banks involved. There are governments involved. Everyone has to make an effort to make this arrangement work. Massey-Ferguson, I believe, is very appreciative of the assistance it has been given, and I have every reason to believe it will exercise its best efforts. In fact, we have already seen the movement of an operation from the United States to Canada, which I think indicates pretty clearly that prior to the final agreement being signed they are going to honour the undertaking they have given.

Mr. Cooke: What is the long-term Canadianization of this company as the minister understands it so far? What types of commitments have they made to him in terms of Canadianization and repatriation of some of its company back to our country?

Hon. Mr. Grossman: The member will see in some of the information we have provided that Massey-Ferguson will ensure that any major North American investments for new product lines or increased production capacity will be made in Canada.

They will maintain and upgrade their production facilities in Canada. They will continue to manufacture large combines in Canada for sale in North America.

They will locate additional North American facilities for tractor assembly and additional North American facilities for the manufacture of axles and transmissions in Canada.

They will locate all research, development and engineering for all new manufacturing activities in Canada.

That is not the final list but it is an up-to-the minute list.

Mr. Cooke: If that is not the final list, what other things is the minister looking for?

Hon. Mr. Grossman: I think the member can presume we are looking at all of the kinds of things that maximize the jobs in Canada and at undertakings to anchor the head office, the principal office, here in Canada.

We would like to see what we can work out by way of undertakings, at least for some sort of consultation in the event the company should ever have to look to reducing or closing out one of its Canadian operations. We hope there will be some mechanism we can develop that will be realistic for consultation with governments.

Essentially, all of the undertakings relate to all potential new investment, all potential moves in North America coming to Canada and any international operations, of which to be fair there are very few that possibly could be located in Canada for various reasons, being transferred to Canada.

3:50 p.m.

Mr. Cooke: What is the realistic potential for diesel engine production in Ontario through Massey-Ferguson, either in a joint venture with Chrysler or on their own or in a joint venture with someone else?

Hon. Mr. Grossman: Let me put it this way: it is a very real possibility, and discussions are going on at present. There are problems with it, and it becomes very intricate; as the member has indicated I think both today and on other occasions, there are various partners and various sites that might be located, various permutations and combinations, but it is a real possibility. It is not a pie-in-the-sky dream; it is a real possibility.

Mr. Cooke: Are press reports correct when they indicate Victor Rice said that Chrysler is out of the running if diesel engine production does come to Canada? Is that possible joint venture completely out of the running, as far as the minister knows?

Hon. Mr. Grossman: No. As far as we are concerned, I do not believe it is out of the running.

Mr. Cooke: The other question I have is, when the minister was looking at a way to aid this company, rather than just going the route of guaranteeing the $78 million worth of shares, did he take an honest look at the possibility of direct government investment?

When I look at some of the potential returns on investment that the government could have made instead of the Royal Bank and the Canadian Imperial Bank of Commerce, it seems to me rather exciting that if we could have got some of these guarantees that we are looking at we would have had a direct input as to how they were implemented within the company and had some return on our investment.

With the present system, we seem to be taking the risk for the banks. Other than the jobs, which are very important, and the survival of this company, which is very important, we do not seem to have the option or the opportunity to get a return on investment, whereas direct investment would have provided for that.

Was that an option the government looked at realistically? If so, why was it rejected?

Hon. Mr. Grossman: Yes, we did look at that over the long period of time we were studying it. I guess our view after studying it was that if a direct investment was made it would entail many millions of dollars to be paid out by the taxpayers immediately as opposed to the deal we have struck, which may well call for no dollars ever to be expended by the public.

Second, we sought a mechanism whereby if we were to assist we would lever the maximum amount of private sector investment in the company because, of course, that is the best measure. There is no question about the desire among legislators of all political stripes to make sure that the employment stays there and that Massey stays there, but ultimately the best business judgement will be made by those who have to put some money up and the degree to which the banks, the current creditors and potential new investors are willing to put their money up behind the organization.

The reason was our desire to play a role in catalysing the maximum amount of new investment, be it by current creditors or new investors in the company, and to do so at minimum risk to the taxpayers. I think we have succeeded in doing that.

The third thing I want to say is related to what the member talked about in terms of direct investment having bought us some power or whatever. In terms of the size of this company, even with its problems, the amount required in direct investment by the taxpayers to have a real say in the company would have been quite large. So, unless the taxpayers of this province are willing to make a massive investment in a company that still has difficulties, let's face it, then we really would not gain very much say in the company.

I think the prudent course was the one we selected, which was to just test the market and see about the willingness of the private sector to come into this deal. Even though $200 million of the $720 million is government guaranteed, it is still an important test for the company, which it has passed so far.

Mr. Cooke: The minister talks about the risk for the taxpayers; obviously whether we had put $78 million into this company directly as an investment or whether at some point the company goes bankrupt, the risk under this deal is the same as if we had put the money in directly. The $78 million is still at risk, and we are taking the risk and will lose that money if the company does not survive.

But I understand with the $100 million that the Royal Bank is putting into shares, for example, it is going to be under the guarantees the company has made. It is guaranteed $920,000 a month in dividends or $11,120,000 a year, which means in 10 years it will have got back in dividends the amount of money it has invested, plus it has the opportunity at that time to have its shares bought back by Massey and to get its original $100 million back as well. So the potential return on investment is fairly good as well as the options that same shareholder has to buy common shares and to make significant amounts of profit on those common shares.

Of course, the government could have participated directly and, instead of the Royal Bank being the beneficiary of that as well as the beneficiary of lending the money to the farmers to buy this equipment that Massey is going to be producing at 25 per cent interest, the government could have done that and the taxpayers would have got a return on their investment.

I do not really buy the argument that there would have been greater risk putting the money in directly now, because if the company does not survive we are still responsible for $78 million worth of guaranteed shares.

Hon. Mr. Grossman: I do not want to deny the fact that, coming from where the member comes from on the issue, his argument has some degree of logic. We do not happen to accept it. We think our argument is more logical and has more to offer for this reason.

The choice we opted for puts us in a position to have $78 million at work today somewhere else in the economy of this province, perhaps through the Board of Industrial Leadership and Development or perhaps through one of the other economic development mechanisms of this government.

Seventy-eight million dollars is an awful lot of money. We now have that on hand for us to use, as opposed to putting the $78 million in the hands of Massey-Ferguson today, when it is obvious they could have acquired the money somewhere else; that is, from the private sector.

We entered into an arrangement whereby we could have the $78 million on hand, for us to use perhaps through BILD, and at the same time have Massey-Ferguson funded to the tune of $520 million by the bank. That $520 million was, in part at least, predicated upon the proposition that government would be in for part of the backing of the other $200 million by way of guarantee.

It becomes a very important aspect of it, that we levered $520 million out of the very banks the member is saying will benefit. I suspect, if one looks at the situation, the banks wish they were not in this position at all and did not have to put up $520 million. But, by virtue of the road we followed, the banks are putting $520 million into this company.

I much prefer to see the banks, some of whom I suppose played a role in what happened to Massey-Ferguson, having to come up with $520 million than to have the taxpayers of this province having to put in $520 million, or whatever figure we might want to talk about, and taking the banks off the hook to a large degree, letting them walk away. We also end up with shares of a company, which, as I said earlier, is still going through a difficult period of time.

I would rather see the current arrangement with the current shareholders and the banks putting up $520 million instead of the taxpayers of this province. It is that simple.

Mr. Cooke: I do not think we will ever agree on that particular point.

I would like a commitment from the minister. I understand that as soon as the agreement is signed it will be tabled in the House. Is that correct? The minister is anticipating that this agreement will be signed some time in mid-June; is that the goal that has been set at this point?

Hon. Mr. Grossman: Yes.

Mr. Cooke: You talked about June 15 the other night.

Hon. Mr. Grossman: It probably will be June 19.

4 p.m.

Mr. Cunningham: Mr. Chairman, I am not certain which section it comes under. I hope we get this signed before some Australian bank gets itchy and causes all the hard work of Red Wilson to go down the drain.

My primary concern is that Ontario exercises its opportunity with regard to the appointment of a director. I want to know from the minister whether it is the government's intention to exercise that privilege. I think it would be in the best interests of the province to do that. Most certainly it would afford us some accountability, which I think the taxpayers of Ontario are entitled to in view of the commitment the province is making.

During the course of my comments on second reading of this bill I suggested that if the feds were reluctant to exercise their option in this regard -- it is understandable why they may want to be as far away as they possibly can -- that possibly we should consider asking if we might have their appointment as well. But at the very minimum, I hope the minister can assure us today that we will be exercising that option and putting an Ontario citizen on the board of directors of this company.

Hon. Mr. Grossman: Just to clarify it for the member, Mr. Chairman, the right to appoint the director only comes into play when the guarantee is called.

Mr. Cunningham: I must have been misinformed; I am sorry. I thought that was an option for us prior to that. Is that not correct?

Hon. Mr. Grossman: Up until the point at which the guarantee is called there is monitoring. All the documents of the company are available to the monitoring committee. But until that point we do not have the right to appoint a director.

Mr. Nixon: Mr. Chairman, does the minister mean to say that in the event things turn to ashes and we have to deliver the goods under section 2 -- and via $78 million worth of $25 stated value cumulative, redeemable, retractable preferred shares series D -- the company need not go into bankruptcy?

It is one of the real dangers in a bill like this that we would have an opportunity to give them even more money and put a director on the board along with a director from Ottawa. Is the minister saying that is one of the alternatives we might have available in the ghastly event that this does not work?

Hon. Mr. Grossman: That could not be done, Mr. Chairman, at least not without coming back to this assembly. I refer the honourable member to section 2(3) --

Mr. Nixon: That would be with the $78-million limit?

Hon. Mr. Grossman: Yes. It points out that "the amount of money payable by the minister under this section to purchase shares of the corporation shall not exceed in aggregate the amount of $78 million." We consciously chose that route so we would have to come back to this assembly.

Mr. Nixon: I was simply pointing out the logic that must have been in somebody's mind that permits the minister to appoint a director in the event that he has to make the payment. In my mind, if the minister has to make the payment the company will probably be in fairly serious straits. But that is when the illogical aspect of putting in good money after bad may very well be presented to us. We will have to deal with that in the event it occurs, which I hope is very unlikely.

There is something, I know, that has been discussed in the questions the minister has been dealing with before. Can the minister, in a concise form, list the conditions that would open up the till on the $78 million we are making available?

Hon. Mr. Grossman: It is not quite accurate to say that simply because the $78-million payment is triggered the company is by definition in serious difficulty. It is conceivable the company could miss a dividend without being on the point of bankruptcy. The import of this is that, of the $720 million being put back into the company, $200 million of it was by way of the sale of those shares the member described so well a moment ago.

Mr. Nixon: With the nine modifiers.

Hon. Mr. Grossman: What it says is that those people who purchased the nine-modifier shares did not want to have invested in the company if they do not continue to get dividends.

In the event one dividend is missed, the banks may well decide they are not going to call their loans, that they are going to continue to back the company and that the failure to pay a single dividend, say some time next year if there is another drought, does not mean the rest of their money is at risk. They may well choose to stay in there. It is a clause meant to take out the shareholders who will have become nervous because one dividend was missed. It does not mean to say the company at that stage is automatically at the brink of bankruptcy.

The events which will trigger the payment of the $78 million are as follows: If in the next 10 years the company fails to pay dividends on the series D shares when payable -- those are the shares you are talking about -- or fails to redeem --

Mr. Nixon: Excuse me, the dividend amount is fixed in the agreement.

Hon. Mr. Grossman: It is fixed to prime. As you will recall, it was half prime plus one and three eighths.

The events are as follows: If the company fails to pay dividends on the series D shares, fails to redeem any series D preferred shares pursuant to a retraction privilege effective in 1991, voluntarily winds up or dissolves or in the event a receiver of the company is appointed -- in other words if the company is put into receivership -- and they fail to redeem in 1991 in accordance with the agreement or fail to pay a dividend.

Mr. Renwick: Mr. Chairman, I appreciate the question that was asked by the previous speaker. I take it from what the minister has said there are four conditions which will require the government to purchase the shares.

Hon. Mr. Grossman: I thought three.

Mr. Renwick: Three?

Hon. Mr. Grossman: The last one was generally descriptive of an insolvency, the last one being the company voluntarily winds up or dissolves or in the event that a receiver of the company is appointed and the appointment remains in effect for 30 days. That is the third one.

The second one is failure to redeem any of the preferred shares in 1991 and the first one is failure to pay dividends.

Mr. Renwick: That is for the whole of the period, not necessarily the missing of one dividend.

What are the conditions under which a receiver and manager could be appointed for the company, and does the government have any say whatsoever in the events that might lead up to that appointment?

Hon. Mr. Grossman: I am sorry, the default referred to in that last section may not be related, as I indicated earlier, to insolvency only. It may be related to an undertaking in the agreement, a part of an agreement made with any one of the many parties to the agreement whereby the company may come into default of one of the terms of that agreement.

In that situation, that particular creditor could have a trustee appointed on his or her or its behalf and the reason for the 30-day clause is that the rest of the parties to the agreement have 30 days to remedy that problem and to get the receiver out of there without triggering the $78 million.

Mr. Renwick: Is there any intermediary acting as trustee with respect to monitoring the company in the interval, in the next 10 years, to ensure there is forewarning of any impending event which will require the province to purchase the shares?

Hon. Mr. Grossman: As I indicated earlier, a monitoring committee is being set up, to be composed of representatives of our government and the company. The purpose of the monitoring committee is to put it in the position of having full and complete access to the ongoing affairs of the company, to review the finances of the company and its operating plans, to review the progress of its subsidiaries and to be informed of any changes to its operating and financing plans subsequent to the ones that will be tabled when the agreement is finalized.

4:10 p.m.

Mr. Renwick: I do not want to go to great lengths in trying to ascertain all the technical details that are in the agreement. I just assume that the government has good advisers on the question.

What I want to know is, is the agreement so conformable to a normal business transaction that the safeguards and protections that would be available and demanded by an institutional lender under similar conditions are available to the government? That is the kind of general question I want to have answered. I do not want the minister just to stand up and say, "Yes, they are." I want to know whether or not the document is going to contain those terms and conditions and the provisions for the protection of the province that would be normal in such a transaction if it were a private institutional guarantor who was coming up with these numbers of dollars, recognizing that they are very formidable provisions put into this type of document.

Hon. Mr. Grossman: I would say to the honourable member that to a large degree the agreement we are entering into tracks the same kinds of agreement that many of the private sector guarantors or the banks and other creditors are providing, so the answer to your question in a word is yes, for the most part.

Mr. Renwick: I take it there is an obligation on Massey-Ferguson and its investors to provide you with the maximum amount of information you will require if you ask for it to make a decision as to whether or not there is something that should be done in the interval or whether you are concerned about the state of the company prior to any event causing the purchase to be required.

Hon. Mr. Grossman: In point of fact the obligation of the company is to provide us with that level of information in the absence of a request. We are entitled to it as of right without request. If there is anything in the documentation that is coming to us as of right that would cause us to ask further questions, ask for further information, they are also obliged to provide that.

Mr. Renwick: On the question of when we will see the document, time goes by and I would not be surprised if on June 15 or June 19 you do not have the document. Can we be assured that if the House is not in session, a full and complete copy of that document will be filed with the Clerk of the House the moment it is signed and delivered, and will be available to the members for those who want to have a look at it?

Hon. Mr. Grossman: The answer is yes, it will be made available. Just to clarify, I was saying with tongue in cheek that it might be as late as June 19. I just picked that date because that is rumoured as the date when we might all be leaving here. Realistically it is hard to believe, but it could be if Mr. Nixon is co-operative. He can't have a bad day every day.

I think realistically it will be towards the end of the month. The parties are indicating that they are determined and feel obliged to get it done before June 30, but because of the complexity of it, it will not be long before June 30, and yes, it will be filed with the Clerk.

Mr. Renwick: I think this is my last question and then perhaps my friend would like to ask his questions. Is your obligation to purchase going to run with the shares? In other words, if the Canadian Imperial Bank of Commerce and the Royal Bank of Canada deal themselves out in whole or in part, will a purchaser down the road have the opportunity of coming to the government, or is the obligation of this government to purchase those shares personal to the Canadian Imperial Bank of Commerce and personal to the Royal Bank of Canada?

Hon. Mr. Grossman: They are not personal, they run with the shares.

Mr. Renwick: I assumed that the Royal Bank of Canada and the Canadian Imperial Bank of Commerce have had a close relationship with Massey-Ferguson for quite a long time so that they can bail themselves out, and down the line this province may have to pay to someone other than an indigenous Canadian operation. Presumably if the Canadian Imperial Bank of Commerce or the Royal Bank of Canada deal themselves out of it, they may very well deal themselves out abroad. Why is there not a requirement on the Canadian Imperial Bank of Commerce and the Royal Bank to hold the shares in order that you will have the protection of those institutions in the oversight of the management of Massey-Ferguson? At the end of the period of time, if all goes well, fine, but if over the period of time all does not go well, it is the people who are involved in the refinancing of Massey-Ferguson who have the right to come to the government and nobody else.

In the other event, why was it not considered possible or reasonable that if the Royal Bank or the Canadian Imperial Bank of Commerce deal themselves out, the province should be released from its obligation to pay?

Hon. Mr. Grossman: These shares have not been purchased by the Canadian Imperial Bank of Commerce. The major purchaser is the Royal Bank.

Mr. Renwick: Then I'm sorry, could I have the names of the purchasers?

Hon. Mr. Grossman: I'm sorry, we do not have an entire list.

Mr. Nixon: Is it a lot of purchasers, or just three or four?

Hon. Mr. Grossman: It just says six or eight purchasers. I will see if we can get some of that information.

Mr. Foulds: If it's just six or eight, why don't you have the names?

Mr. Renwick: My question still stands.

Hon. Mr. Grossman: It is a fair question. I make this point: First, the Royal Bank, unlike the Canadian Imperial Bank of Commerce, has no other major involvement with the company. To that extent, the Royal Bank is nothing more than another investor in the company as opposed to another manager or another decision maker. There would be no reason for keeping that particular financial contributor or partner in the deal as opposed to another financial partner.

Second, there were a whole range of things to be decided when we worked out this agreement. One of them, as a condition laid down, was that the vehicle used be a market instrument. I cannot tell you how much more the purchasers would have required by way of dividend payments had they not had the right to transfer. I do not know what that figure is or, indeed, if I am right in saying that, but I think it is safe to say that the degree to which you reduce the flexibility of the purchasers of a market instrument affects the return they are going to want in exchange for it. Their object was to raise the maximum amount of money and minimize to the greatest extent possible the amount of money that had to come out of this firm which is going through a financially difficult period of time.

All in all, putting literally hundreds of items into the fire, one of those that came out in the various matters to be traded off was the decision that, for dozens of other considerations, the instrument used would be a market instrument. In view of the fact that the major purchaser of those instruments is not a major player in the management of the company, there did not seem to be a major tradeoff being made for using the market instrument route.

Mr. Renwick: Let me just pursue it a little bit more, because this concerns me and I want to express my concern as clearly as I can. Even though it is called a purchase, there are certain events which would cause you to have to come up with the money. If I were dealing with Massey-Ferguson in downtown Toronto by way of guarantor, which is the position you are in, it would be difficult to conceive of another institution I would more like to have in the game with me throughout the time of my guarantee than the Royal Bank. Whatever their reasons, if they are putting up $100 million and they are simply a bare investor or whatever you want to call them, they have an awful lot of clout to make certain their $100 million is protected. You will not have the benefit of that if they deal off their shares for any price. As I understand it, they could divest themselves of their investment on a salvage operation and somebody else could come in for the full amount, if they wanted to play games. I am not suggesting they would.

It seems to me the obvious way is to say to the Royal Bank: "If you want to deal yourself out, we will be dealt out at the same time. If you want to sell those shares, you can sell them as they stand by themselves without our guarantee, but as long as you've got our guarantee, we need your protection in the game." It would seem to me that should be the position of the government with respect not only to the Royal Bank but to the other seven or eight persons who are putting up the total $200 million.

4:20 p.m.

Hon. Mr. Grossman: I think the history of this is important. Again, the member may conclude that the government ought to have acted differently. I would respond to that by saying that we had to look at all the circumstances on the table and all the negotiations going on and make the best deal we could. I think it was a good deal. Looking at the history of it, what happened was not that the government said, "As part of our $200 million financing, you must obtain the Royal Bank." I know the Royal Bank would be flattered to hear the confidence the member for Riverdale has in it. The Royal Bank may one day want to sell the United Automobile Workers' pension fund, and I am sure the member would have equal confidence in that administration.

That was not the object of the exercise. In fairness and in a serious way, it was a general underwriting. It was an underwriting of an issuance of this variety of shares which was undertaken by Ames and Company and this government, together with the federal government. We agreed to guarantee the purchasers of that general underwriting, whoever those purchasers might be. I understand the member may have some objection to our doing that, but that is what we did. We undertook to the purchasers of that $200 million worth of security -- or those securities which raised $200 million -- that we would guarantee them against their loss. The Royal Bank is protected. It is not as if the Royal Bank is very much at risk. We have already agreed we would take them out if any one of three things were to happen. Essentially, they bought nothing more than a market note with no rights in terms of management or running of the company, except, in essence, one right: to put the shares to the government if one of three events occurred.

While one may look at the Royal Bank in terms of a partner one would like to have, the arrangement that this government, Massey, and the 300 other creditors made was that as part of the $720 million there would be a general underwriting, which happens to be subscribed to by six or seven institutions, of which the Royal Bank happens to be one. One of the terms of getting that preferred share issued at that price with those undertakings and conditions was that it would be simply a market security. It was not pointed towards obtaining a certain partner, but towards raising $200 million. We succeeded in doing it.

Mr. Nixon: I think the question to which I wanted an answer previously follows from what we have been discussing. Before the refinancing, the Argus holdings, about 16 per cent of the previous shares, were sufficient for the brothers Black to run the company, have one of themselves appointed president, and when they got tired of it, to find Mr. Rice and see that he was president. I think the minister undertook at one time to tell the House what effect the writing down of the value of the shares -- which I do not understand at all other than that they decided they were going to give them away -- had for Argus. If that is not considered to be irrelevant, and it may well be by Mr. Chairman, who votes those shares? Why are those shares not sufficiently influential to manage the company, and since they are owned by the UAW pension fund it is interesting that those shares seem to have dropped from sight entirely.

Hon. Mr. Grossman: I guess this company, as a result of all it has been through, takes on a markedly different form than the companies you and I might be more familiar with.

Mr. Nixon: I am not familiar with any of them.

Hon. Mr. Grossman: Well, you have read about some. It does not have, any more, that dominant single shareholder, even though it is not a majority shareholder. Many firms have a controlling shareholder, because that shareholder owns, as the Blacks did at one stage, 16 or 23 per cent, whatever the percentage was.

Mr. Nixon: The number of shares is the same.

Mr. Grossman: But there is a massive dilution because they have been given to the employees' pension fund. You might take the position, and I suppose one theoretically could --

Mr. Nixon: Well there is one.

Hon. Mr. Grossman: That is right. However, you now have a series of banks that are holding some shares in the company, of which the Canadian Imperial Bank of Commerce would hold a number of shares. In essence, as a result of this and other measures, the dilution of the shares is quite massive.

Mr. Nixon: They are not management shares.

Hon. Mr. Grossman: They are terribly widely held though.

Mr. Nixon: They are preferred, redeemable, et cetera.

Hon. Mr. Grossman: The other part of the financing, however, involves the purchase of equity shares by banks to the tune of about $280 million. So while we tend to think of the Blacks writing down of their interest as a large writing down and, therefore, that block being very large, the dilution has involved banks as a part of the $720 million, for example about $300 million, with $720 million buying up common shares.

Mr. Nixon: I wonder if the minister could give us some information as to the effect on Argus of the so-called writing down. What is writing down? Is it a sort of petulant taking of the shares and saying: "We do not want these any more. We are going to give them away and forget about them as a sort of a bad dream"? Or is there a tax effect?

Hon. Mr. Grossman: I just wanted to complete my comments to give you some idea of what the $280 million of new equity meant in terms of shares to the company. That is about 40 million new shares of company.

Mr. Nixon: How many were there?

Hon. Mr. Grossman: Previously, there were about 18 million of which the Blacks held a portion. The Blacks had three million shares. That will give you some idea of what has happened with the company. The Blacks had three million and the banks now subscribe to 40 million shares. That is what we call a dilution.

An hon. member: That is watering down.

Hon. Mr. Grossman: I feel a little hard put on to explain to the honourable member what the writing down, or whatever you described as what the Blacks did is. I would even have a hard time if I were a lawyer being paid for it, but in essence it is not that much different from you saying that because the car you are driving gives you a lot of aggravation and costs you a lot of money to run, "To hell with it -- to heck with it" -- sorry, Mr. Chairman -- "I am not interested in it any more. I am not driving it ever again. I am putting it in the driveway and I am not going to pay for gas, oil or service it. There it is. It is worth nothing, so someone come and take it away. I am writing it down. I am writing it off. PS: Someone came and drove it away."

In terms of showing that on your personal financial statement as if you still owned a car, essentially when you file your statement of net worth with the clerk, or whomever you file it with, your bank manager who gave you the loan, you just decided that you did not want to have the car any more. The licence in your name is signed blank and you transferred it away and you are not going to show the car because you do not want it any more, even though it might have some value to some one who knew how to drive that car.

Mr. Nixon: I am sure you are aware that the block of shares that the minister refers to as some sort of Datsun, or something that I might have in my garage --

Mr. Eaton: Or a Cadillac.

Mr. Nixon: -- or a Lada; does that make you feel better? Anyway, the reference was in fact to the control of the most prestigious Canadian corporation. You see, it is very difficult for sort of a simple farmer from South Dumfries to accept the minister's explanation that the Black brothers in a fit of pique said, "Thank God we are out of that terrible mess and we are going to unload this lemon." The lemon was financial and administrative control of what really had to be the principal Canadian corporation.

It is incredible. It is absolutely mindboggling. The statements that were attributed to Conrad and Montagu, as reported in Maclean's, have never been explained, where besides saying "We are glad to get out," which we can understand a little bit -- I think the comments were somewhat expurgated -- they went on to say, "We stand to either lose nothing more or to make a great deal of money." Do you remember that comment? It was certainly read in the House three or four times.

4:30 p.m.

Hon. Mr. Grossman: I must say that some of the comments have stayed with me; that one has not. In any event, I should say to the member that a lot of parts of the Black history to it have yet to be understood by very many people --

Mr. Wildman: "Black history" is very appropriate.

Hon. Mr. Grossman: Yes, until we got involved and saved the company. But there are very many things, I suspect, that very many people will not understand for some time to come. I cannot add much more than that.

Sections 2 to 5, inclusive, agreed to.

Bill 48 reported.

On motion by Hon. Mr. Grossman, the committee of the whole House reported one bill without amendment.

RACETRACKS TAX AMENDMENT ACT

Hon. Mr. Ashe moved second reading of Bill 81, An Act to amend the Racetracks Tax Act.

Hon. Mr. Ashe: Mr. Speaker, this bill contains amendments to the Racetracks Tax Act that will implement the proposal in the Treasurer's budget of May 19, 1981, to increase from seven per cent to nine per cent the rate of tax payable on triactor bets at race meetings in Ontario.

Mr. Nixon: Mr. Speaker, I wanted to say something about the bill, since it is the first of a series of Treasury bills that we will be discussing perhaps later this afternoon and this evening. I am not knowledgeable about the activities at the track -- it is one of the few areas that I am not really expert in -- but I have read recently about some spectacular payoffs on the triactor. I think a $2 bet paid off $60,000 or something -- I missed that one.

Hon. Mr. Norton: I thought it was a tractor.

Mr. Nixon: So did I; this is the wrong bill.

I was quite interested that the Treasurer (Mr. F. S. Miller) in his budget would have undertaken to increase the revenues from racetrack activity with this rather selective, specialized approach. Frankly, I was also surprised that if he felt the revenues from the racing business could have been improved he did not take a broader approach -- much as I would be very much against an increase in the take, particularly since I understand that a good deal of it is paid back to some of the more needy citizens of the province who keep a stable of thoroughbreds and standardbreds as a hobby.

On a number of occasions the House has had lists of those citizens, not exactly persons in substantial need, who have been in receipt of upwards of $1 million to assist them in buying hay for the nags that are out competing.

As a farmer and a good judge of horseflesh myself, I am very keen that we improve the standards of the breed. But as one of my former colleagues, now I understand an estimable hearing officer for the Ontario Municipal Board, said on one occasion, the same number of members of the Legislature would be out at Woodbine if they were running Holstein cows. It is not so much appreciation of the breed and the excellence of the breed as it is actually getting down a $2 bet. Some of them were even known to make bigger bets than that on occasion.

Hon. Mr. Ashe: Oh, oh.

Mr. Nixon: Well, nobody on his side, of course; so that is all right.

If the revenues are going to be paid to these large payers of income tax who have large stables of thoroughbreds and standardbreds as hobbies, then I am not keen about raising the revenues on that basis. If, on the other hand, the emphasis is going to be to support the dirt farmer who on occasion through his own good judgement and selective breeding may be able to improve the breed, then those cheques are in an entirely different category.

If they are hard-working soybean farmers, for example, they probably merit the payment more than if they run a series of corporations like Argus, which we were just talking about and which is prepared to give up control of a major corporation like Massey-Ferguson simply because it cannot stand the heat in the corporate kitchen that particular day.

I am not too concerned about the bill. The increase in revenue is minimal. But basically the question is, why the triactor? Why not the exactor? Why not all the bets? On the other hand, why do they not leave it alone or even contact the government of Canada and, if they want to turn this into a real revenue proposition, go for offtrack betting?

I hasten to say that the dirt farmers, the people I represent who have a few horses in the stable, are not anxious to have offtrack betting, because they want to emphasize the opportunities the citizens have to go down to Ray Connell's racetrack at Flamboro Downs and take part in one of the most exciting sports there actually is.

Mr. Speaker, with these carefully prepared remarks, I should tell you that my colleagues and I are going to support the bill in principle.

Mr. Charlton: Mr. Speaker, I also want to raise with the minister the serious question my colleague the member for Brant-Oxford-Norfolk raised about the triactors. I wish to know what the government's thinking behind this move is. I am not over concerned about the bill either, but I will just make a few comments to the minister about the whole theory of what the government should be trying to get at.

Section 1 of the bill deals with the winners in terms of betting at racetracks in Ontario. The minister is surely aware that, under both federal and provincial legislation, the winners of those bet pools at the racetracks are technically subject to pay income tax on their winnings. I think most members of this House know, and surely the minister should know, that nobody ever declares his racetrack winnings on his income tax. I cannot understand why the minister is taking this particular approach to dealing with racetrack winnings.

4:40 p.m

I also want to raise with the minister the question of why we are discriminating between one type of winning at the racetrack and another type of winning at the racetrack.

I will be very interested to hear the minister's rationale for this particular move since it seems to me, and I think it should be widely known by anyone who has looked into it, that the winnings or the prizes in the case of triactor betting are usually larger since the numbers of winners are usually much smaller because of the way a triactor bet is set up, as opposed to the regular parimutuel betting.

It seems to me that perhaps the approach should be that all winnings at the racetrack should be taxed equally or, if not, perhaps those winnings that are most easily come by should be considered at a higher rate than others, as opposed to the way the ministry is approaching this.

With those comments, I am going to suggest, as my colleague did, that the taxes involved here are very minimal. We are not opposed to the bill, but it is a particularly confusing approach that the Treasurer and the Minister of Revenue have decided to take on this racetracks tax.

Mr. Renwick: Mr. Speaker, can I pick up on what the member for Brant-Oxford-Norfolk had to say?

I listened to Metro Morning, not long after the events of March 19. The former Minister of Consumer and Commercial Relations had an interesting dialogue about offtrack betting, in which he indicated it was the government's intention to pursue this matter with the federal government. He said they were going to go either over or around Eugene Whelan, and there were something like eight million reasons why the Treasury would be moving towards offtrack betting. I intended to get a copy of the tape, but I have not been able to get one.

He had some very interesting and discursive remarks to make about offtrack betting, indicating of course that it was only wealthy people who would engage in it so that nobody would be hurt, and probably the offtrack betting stations would be established mainly in the clubs, such as the National Club and the Toronto Club downtown, and there would not be any in Riverdale, I am told.

Does the government have any intentions about offtrack betting, and is this the opportunity they have been waiting for to disclose those intentions to us?

Mr. Wildman: Mr. Speaker, I just have a few short comments. Not knowing a great deal about triactor betting but being informed that there often are larger winnings, since the risks are greater and there are fewer winners, it appears to me that the principle of this bill is simply to try to get more money out of the people who win big.

If that is the case, is the real underlying principle in this bill that the government somehow does not really believe these kinds of winnings should be allowed or are legitimate and that in some way it is trying to punish big winners?

If it is not a punitive bill, can the minister please make clear to us how much the government expects it is going to be able to collect by increasing the tax on this type of bet by two per cent? What revenue is anticipated, and is it substantial? Is this an attempt to increase the revenues of the government, or is it in some way an attempt to punish big winners at the track?

Mr. Haggerty: Mr. Speaker, I want to address myself to Bill 81, An Act to amend the Racetracks Tax Act.

Listening to the previous speaker, I do not think there are many great winners at the racetrack at any time. Looking at the triactor, I do not think there are going to be many winners a day. But I support the bill in principle.

I recall that during the 1981 election there was quite an issue in my area particularly, where we had Conservative candidates coming in and saying if people did not elect the member from the government party they would not get any assistance to maintain the Fort Erie racetrack. In other words, if they elected an opposition member to the Legislature, the racetrack would close.

I suggested last year during discussion of the minister's estimates that there were other areas where they could provide some assistance to the racetracks -- particularly the Fort Erie racetrack -- so they can remain open. I said some of the additional revenues that have been collected over the years should pass back to Ontario horse breeders, perhaps increasing the purses, which would encourage more horse owners to take their animals down to Fort Erie and race them. It is considered a class B meet, which is a kind of training area for some of the jockeys and perhaps for some of the younger thoroughbreds.

I suggest the government has to put a little bit back in if it wants to maintain a viable racing industry in Ontario.

I remember my colleague the member for Brock (Mr. Welch) spoke at the nomination meeting in Port Colborne and stressed most forcefully that if the people wanted the racetrack in Fort Erie to remain open they should elect a member of the government party.

I hope this amendment, particularly as it concerns the triactor, will give the government some initiative to open the standardbred racetrack in St. Catharines known as the Garden City Raceway. There is a chance for the government member to fulfil a promise to move in this area. It would increase employment in the area and perhaps bring in additional revenue to the municipality. I hope the government will move in that direction. I think the Deputy Premier should keep that promise because the racetrack is in his riding.

I have had some discussions with the racing people in Ontario and with the representatives of the federal Department of Agriculture concerning offtrack betting. There are still some misgivings about it by the federal government and even by the horse breeders and horse owners in Ontario.

I would not move too hastily to bring about offtrack betting in Ontario. Eventually every place there was a booth selling Wintario provincial lottery tickets one would find a place to put down a bet, no doubt, for betting at any of the tracks in Ontario and perhaps outside of Ontario.

Offtrack betting has not worked that successfully in the United States. They have found there that all the revenues are being eaten up by civil servants who have been employed by offtrack betting agencies at pretty fair salaries and at the expense of the New York state government.

This is an area where one could throw in a little more political patronage, and this government is noted for that. I suggest very little revenue will go back to the Fort Erie racetrack if the government moves into offtrack betting.

Hon. Mr. Drea: Are you against offtrack betting?

Mr. Haggerty: Is the minister's mother still going down to Fort Erie?

Hon. Mr. Drea: I'll tell you, if she weren't, you wouldn't have to worry about offtrack.

Mr. Haggerty: I know the minister kept that promise.

Hon. Mr. Drea: You stayed there and did nothing.

Mr. Haggerty: I never attend the racetrack.

The Acting Speaker (Mr. Cousens): Order.

Hon. Mr. Drea: You did nothing to save an industry in the town --

Mr. Haggerty: What does the minister mean, I did nothing?

Hon. Mr. Drea: You did nothing.

Mr. Haggerty: I have to give the minister credit. We did meet with him and the mayor of Fort Erie.

Hon. Mr. Drea: You never met with me.

Mr. Haggerty: I certainly did, but I will not get into that argument. He had no other choice but to go in and give them some assistance or the next place would have been Woodbine losing the track. That is what would happen if there were offtrack betting. Eventually everything would be run from the American side. They have control of almost everything over here now. Where is Taylor now? He still has some of the top studs down in Kentucky.

Hon. Mr. Ashe: Speak to the principle of the bill.

Mr. Nixon: Speak to your colleague about the principle of the bill.

Mr. Haggerty: That is right. I suggest that if we were to get into the area of offtrack betting, Fort Erie would no doubt close its doors because it would be operating out of Woodbine. The minister knows that.

I support the bill in principle but there are other areas where we can improve and encourage horse racing at the tracks in Ontario. Perhaps there is more we can do to get the owners and the breeders involved in the smaller tracks in Ontario.

4:50 p.m.

Mr. J. A. Taylor: Mr. Speaker, I am not "the" Edward Plunket Taylor, but I do rise in support of this bill, because we have to raise the revenue before we can disburse the revenue. That is good common sense.

I know that horse racing has been compared with the political race. Maybe there is a similarity there. I want to assure my good friend the member for Erie that it is my very firm understanding that the revenue raised through this legislation will be applied to increase the purses. That is fundamental. I think in an area such as mine where we have a very good agricultural community and some excellent horseflesh, a little encouragement should be given to the little guy so he can afford to transport his horses to the track.

Mr. Laughren: Harry Parrott and his stable.

Mr. J. A. Taylor: That's right. One has to have a little encouragement to transport one's horses to the track. There is just a tremendous interest in many of the rural areas.

I want to assure my colleagues in the House that I received a commitment from the predecessor to the present Minister of Consumer and Commercial Relations that the money would be going to assist with the purses. As a matter of fact, if I am not mistaken, my good friend the previous minister issued a public press release --

Mr. Nixon: There sure have been a lot of those.

Mr. J. A. Taylor: Yes. That release pledged that these moneys were going to help with the little purses. I see the present Minister of Community and Social Services (Mr. Drea) nodding his head in agreement. That is what is going to happen with the money.

I am delighted to rise and support my good friend the member for Brant-Oxford-Norfolk and my friend the member for Erie and all the others here who are supporting this legislation so that we can help the little guy take his horse to the track.

Hon. Mr. Drea: Mr. Speaker, I want to make a few remarks concerning the entire package of self-help assistance to the industry, and this is the final part of it.

The racing industry, both thoroughbred and standardbred, has never asked for a handout. This is not a tax subsidy. It is not in the form of a grant. In fact, the 98 per cent of the population of this province who do not go to racetracks or parimutuel facilities will never pay a dime into this. As a matter of fact, if you go to a racetrack and you choose not to wager you will never pay a dime.

In 1968, the then Treasurer, the Honourable Charles MacNaughton, developed the incentive, or self-help, program for the industry.

Mr. Nixon: The chairman of the racing commission.

Hon. Mr. Drea: Not in 1968.

Mr. Nixon: No, now.

Hon. Mr. Drea: No, he is not.

Mr. Nixon: He was until recently.

Hon. Mr. Drea: We will come to his history.

Mr. McNaughton as the Treasurer raised the provincial tax, or the takeout, from six to seven per cent and refunded that one per cent to the industry -- not to the racetracks but to the horsemen and the people who worked for them, whose means of livelihood are generated entirely by the purse structure.

That program worked extremely well in this province for a number of years, particularly in standardbred, which is the little guy. As a matter of fact, it generated the most rapid growth of standardbred racing and breeding, the farm and the farmer --

Mr. Laughren: The little guys I know cannot even afford a swayback nag.

Hon. Mr. Drea: It is a pretty active industry in the honourable member's community. I do not think he would like to see it closed. A lot of people derive their livelihood from it, and a lot of people have fun.

It became apparent a couple of years ago that because of inflation and a number of other factors something else had to be done. I want to compliment the industry, both standardbred and thoroughbred, because it made proposals to the Treasurer -- in terms of horsemen, in terms of breeders, in terms of a total package -- that I supported.

In this final part of the package, the two per cent tax on the triactor, the moneys do not go back to the racetrack; the moneys go entirely to purses. They are administered by the advisory board of the racing commission, because they are public moneys. Indeed, we can already see the difference at the smaller tracks. I am sure the member for Brant-Oxford-Norfolk is aware of the increased purse structure at Elmira, a small track, I am sure the member for Erie is aware of the increased purse structure at Fort Erie, not just for the August meeting but indeed for the meeting that is going on now.

Ontario has always led in developing a racing industry in Canada. Forty thousand people are now employed by that industry. It is a very significant one in this province. It is a generator of balance-of-payment dollars, since more and more Canadian horses -- and when I say Canadian, I mean basically Ontario-bred horses -- are regarded as among the finest in the world, particularly in the standardbred field. It is an industry that has come a long way.

I am sure this program, the reduction of the takeout dollar to five per cent, which will be completed next year, plus this two per cent from the date of the budget, will enable the industry and the people in it to grow and prosper.

I would be derelict in my duty if I did not tell the member for Erie, as I have said many times before, that the future of the Fort Erie racetrack is tied up with off track betting. I said that at the time I produced this package, which kept Fort Erie open. It cannot stay open indefinitely unless there is offtrack betting.

The federal minister is pledged to bring in a form of offtrack betting, and this government through two throne speeches, plus some things I am going to do in the future, is absolutely committed to it.

5 p.m.

I draw to the attention of the House the fact that, because of these rebates, the community of Fort Erie today not only is looking at the racing facility there with renewed vigour but also has developed a tourism package. A community effort has been remarkably helpful already and will be even more helpful in building tourism around what stands as a major attraction in the area.

I have been to Fort Erie and I have taken my mother there a couple of times this year. I note a renewed vigour at that track. There are structural renovations going on. A year ago it was going to close. I said it would not close. It has not closed. It will go on. This government is committed to keeping it open and we have agreement that it will be open and expanded in terms of racing days.

However, practical consideration has to be given to the fact that over the long haul there is no substitute for a much more rationalized parimutuel approach, which is offtrack betting. It is worth remembering this is an industry that did not come for a handout. The industry is purely a self-help one. It is the bettor who puts money through --

Mr. Laughren: No free lunch.

Hon. Mr. Drea: That is right. There is no free lunch at a racetrack.

The Deputy Speaker: The minister should speak to the bill and try to avoid interjections.

Hon. Mr. Drea: Contrary to the way some people would like to portray it, it is not a handout. The person who wagers money wants a quality event. To ensure a quality event, the purse structure has to be high enough. Part of the $1 or $2 or whatever the bettor contributes goes back into the industry. It is an industry that employs 40,000 people. It is a prime protector of agricultural land, particularly marginal agricultural land.

This culmination of the package the government developed and the Premier (Mr. Davis) announced in January is already beginning to pay dividends in terms of employment and generation of additional dollars.

Hon. Mr. Ashe: Mr. Speaker, there were a number of points, issues and questions raised by the honourable members who addressed Bill 81. I would like to summarize and answer the questions.

The first question, asked by both the member for Brant-Oxford-Norfolk and the member for Hamilton Mountain was why the triactor form of betting was decided upon.

There are 24 racetracks operating in Ontario, and the triactor has become a more popular form of betting over the last couple of years. I do not mean it has replaced the traditional bets, the quinella, the exactor or the daily double and so on, but it has grown in popularity and is now offered at 13 tracks in the province.

Beyond that, as the House is well aware, approximately $55 million was raised last year through the racetrack tax. The projection for the upcoming fiscal year, as contained in the Treasurer's budget, is that some $60 million will be raised.

There was an area to be looked at to raise the amount of moneys needed to pass on through the industry, as my colleague the Minister of Community and Social Services recently referred to. This was one area of betting that produced the kind of moneys needed without making an overall increase in the seven per cent take across the board.

The figure that is looked upon in this area in increase, and that was another question that was asked, is an estimated revenue increase of approximately $2 million in the upcoming fiscal year. I think that has already been identified. This will be turned back through the Ministry of Consumer and Commercial Relations to the industry. It is not additional net revenue to the province. It is going back to nurture, foster and help the industry again take care of itself. That is exactly what it is doing.

The member for Hamilton Mountain mentioned income tax. Of course, this is not really the substance of this bill, but the reference was made that we all know this is taxable income. Of course, we all know this is not taxable income. In fact, if and when the Minister of National Revenue, Mr. Rompkey, in Ottawa decides to make a change to make taxable the forms of winnings, whether they be by lotteries or winnings at the track, as in the United States, then it will be taxable income, but at this time that is not the case. It is not taxable income per se, and it is not considered as a capital gain and, therefore, there is no income tax payable on it.

The member for Algoma brought up the question, "Is this form of betting chosen because more people win big?" Again, I would have to say that is not really the case. Yes, the odds of a big winner are more likely. Not being much of a horseplayer myself, I have difficulty picking one winner, let alone those that come one, two, three, which is the form of triactor betting, so the chances are that the possibilities of larger payouts are strictly because of the matter of numbers and the law of averages. But I would suggest that the extra two per cent on here is not meant to be in any way punitive upon those people who choose to bet in triactor form. The two per cent increase from the traditional seven per cent to nine per cent should generate the approximately $2 million that is the additional revenue being looked for.

There was a reference from the member for Erie about the Deputy Premier keeping the promise. Let me assure the member that the Deputy Premier, like all members on this side of the House, will, as always, keep the promise in the months and years ahead.

Mr. Nixon: You mean you are going to open up Garden City?

Hon. Mr. Ashe: I am sure when new tracks open or old tracks are reopened it will be when it is to everybody's advantage, the communities they are designed to serve as well as the operators who will deem it reasonable to operate them. I think this is a business like any other and has to be looked at in a businesslike manner.

In addition to my colleague the Minister of Community and Social Services who addressed some of the issues vis-a-vis offtrack betting, et cetera, which I see no reason to go over again, I think I have covered all the points made and I thank the members for their support.

Motion agreed to.

Ordered for third reading.

TOBACCO TAX AMENDMENT ACT

Hon. Mr. Ashe moved second reading of Bill 76, An Act to amend the Tobacco Tax Act.

The Deputy Speaker: Does the minister have an opening statement?

Hon. Mr. Ashe: Mr. Speaker, this bill to amend the Tobacco Tax Act will implement the proposals in the Treasurer's budget of May 19, 1981, that established the tax on cigarettes and on tobacco other than cigarettes or cigars as percentages of the retail prices of those products. The tax rates established are 36 per cent and 30 per cent respectively.

Retail prices to which the tax rates are applied will be determined from periodic samples taken by my staff in the ministry and adjusted quarterly, beginning July 1, 1981. Until this new procedure is implemented, the bill provides for an increase in the tax on cigarettes from 1.2 cents to 1.46 cents per cigarette. The tax on tobacco other than cigarettes or cigars is increased from 0.5 cents to 0.7 cents per gram or part thereof. The tax applicable to cigars will remain at 45 per cent of the retail price but will now apply to all price levels.

5:10 p.m.

In addition to these budget changes, I have also included an administrative amendment which will allow us to exchange information relative to tobacco tax with the Yukon and the Northwest Territories. At present, we may exchange information with the federal government and all other provincial jurisdictions.

Mr. Haggerty: Mr. Speaker, I want to address myself to Bill 76, An Act to amend the Tobacco Tax Act, and to say that we in the official opposition party are strongly opposed to the bill. The reason is we are opposed to the new mythology of tax in Ontario, the ad valorem mythology that is put forward by the Treasurer of this province. We feel this is not the right way or the right time to move into a new taxation area.

The revenue derived from the tobacco tax on the consumers is enormous. It plays a significant role in revenue producing. Looking at the government's tax record in this area, tobacco tax revenue in 1970-71 generated $75.3 million, and an estimated revenue in 1980-81 of $291 million, for a 10-year increase of about 287 per cent. This is an average of about a 28 per cent increase in revenue per year from this particular tax source. This is well above the annual inflation rate.

This indicates it is a tax increase that consumers have tolerated year after year. The prevailing public attitude, which is backed by health reports, is that the habit of using tobacco products is injurious to those who indulge in smoking and should therefore be expensive.

The discriminatory effects on the consumers are considered by many to be intended to restrict the consumption of tobacco, but this is not the case. Recent evidence indicates that more young people are using tobacco products. The ad valorem mythology introduced by this government will only add to the consumer price index and the upswing in the inflationary trend in Ontario, which is already high.

The other area that I am concerned about is the complexity of the administration. We will be placing more onerous record keeping burdens on the retailers. I would suggest this is an area on which the government should have more explanatory notes. What costs will be involved to the retailers to administer this new tax program? It will take additional efforts by the industry to keep the records straight.

I make reference to section 2 of the act. It says: "The section provides that tax will be paid on cigarettes at the rate of 36 per cent of the taxable price determined from time to time by the minister. For tobacco, other than cigarettes or cigars, the rate of tax is 30 per cent of the taxable price determined from time to time by the minister."

When I look at that, I think that means tax officers will be coming in to the retailers and perhaps be bugging them about every two or three months, going through all the records they will have to produce under this new taxing policy. I think it will be a burden for those retailers who are selling a product.

To take another look at this particular area, if they keep putting the price up on any of the goods that the consumer has to purchase, one of these days the government's taxing policies will be putting the price beyond the means of the consumer to purchase and they will be looking for other alternatives.

The Attorney General (Mr. McMurtry) has suggested that we should be easing up on the laws that relate to marijuana. I suggest if the government keeps raising taxes on tobacco it is going to encourage the public to go the other way and perhaps indulge more in the use of marijuana, and it receives no taxes from this source. I suggest to the minister he should be looking at this particular area. He may be pricing himself right out of the market.

I suggest that although there is a health hazard, perhaps some of the tax money he is going to collect could be put into education for our young people on the hazards of smoking and perhaps he could follow the guidelines the Attorney General has suggested in relation to marijuana use in Ontario and throughout Canada.

I suggest we are opposed in full to the new mythology of the ad valorem tax. We look at it as an area where there is no accountability by this government. That means they do not have to come back next year and bring forward a bill to justify tax increases. They can coast along until the next election and then go back to the public and say, "We have not increased taxes since 1981 and we cannot understand what your complaint is." They are adding value over the years as the industry increases the price of the goods. They are adding a percentage tax to that, which we are strongly opposed to.

On that basis, we stand by our original commitment on first reading that we are opposed to this bill on second reading.

Mr. Charlton: Mr. Speaker, I rise to speak about Bill 76 and should say at the outset we are not going to do as the official opposition is doing and oppose this bill. We have taken a slightly different approach to the tax bills in this budget. We intend to focus on the bills that are major and have some meaning to the people of Ontario.

I should take a few moments to point out a number of things to the member for Erie. The government's move to more ad valorem taxes in Ontario is not a mythology at all. It is a reality. It has already been a reality in a number of areas and will continue to be so. It is going to become a clear reality in the areas of motor vehicle fuel tax, gas tax, tobacco tax and the other areas they are moving into.

I should point out to the member for Erie that it is not something new. The government has been involved in ad valorem taxes for a considerable period of time. As a matter of fact, even under the act we are dealing with today, as the minister pointed out in his opening statement, cigars are already taxed by an ad valorem tax which is a percentage of the retail price. They have been for several years.

In the year in which the ad valorem tax on cigars was created, the members of this caucus stood in the House and opposed that change in tax structure while the members of the Liberal caucus supported the government in its move to an ad valorem tax on cigars. So the Liberal critic should take the time to be consistent in terms of his party's position on revenue matters such as ad valorem taxes on tobacco.

We are not opposed to taxing cigarettes and pipe tobacco in the same fashion they allowed the government to tax cigar smokers. We just want to see all tobacco users dealt with fairly and equally, because we no longer have the ability to stop this government from doing it that we had two years ago in the minority situation.

However, we do have some concerns about the government's approach. I think we would have preferred to see the government leave the tax on cigarettes, pipe tobacco and tobacco for other uses on a flat rate tax so that, as the member for Erie suggests, the government would have to come back to this Legislature on a regular basis to gain approval for increased taxation.

We would also have preferred to see it go back to a flat rate tax on cigars so all smokers were, in effect, treated fairly and equally. For this reason, since the government is not prepared to go back to a flat rate tax on cigars, we are not prepared to oppose the particular amendment this year, because we want to see all smokers dealt with equally.

5:20 p.m.

On the other hand, I want to express some concerns about the potential effects of this tax -- not on smokers either -- but on the industry which produces tobacco in Ontario. The Minister of Revenue and the Treasurer are well aware that the tobacco farmers in Ontario have had some pretty lean years over the past four or five, perhaps even six, that I am aware of. The tobacco farming industry in this province used to be a particularly lucrative industry. The movement in the province to ad valorem taxation on tobacco products -- wherein the taxes will continually go up as the retail price goes up as the costs of production and sale go up -- along with educational efforts and health related publicity campaigns in the province, in the long run are going to do serious damage to the tobacco growing industry in Ontario.

I am not necessarily opposed to that happening, but I want to suggest that the government should well be aware it is contributing to that process and speeding the process up by its approach in this tax. At the very least, it should take the approach it rarely seems to take with any taxation or economic approach, of relating that action to the other things that are going to happen in our economy as a result of it, and it should take the time to provide us with the planning and the long-range view of what it proposes for some rather major tracts of farm land in southwestern Ontario when eventually the tobacco industry in this province goes down the drain.

Mr. Nixon: Mr. Speaker, as has already been noted by the previous speaker, much of the best tobacco grown anywhere in the world is grown in Ontario, more specifically, in the Delhi area, which I have the honour to represent. I think we should be aware that, with a flick of the Lieutenant Governor's pen, assuming this bill is put before him for assent, the provincial Treasury will be making far more out of the tobacco plants than the farmers will be making themselves. When we think of the risk and commitment of capital, the hard work from dawn to dusk and then some, it seems somewhat unfair that, in fact, with the increase in the tax, particularly when it becomes automatic as is going to be the case with this new taxation methodology, the farmers themselves are going to take a reduction in the amount of money available to them. At least, there is a substantial fear that this will be so.

I was interested to see that the Treasurer is predicting a revenue of $350 million this year. One of the figures this can be compared to is the total amount the Treasurer is allocating for support of the whole agricultural industry in this province, about $191 million. The revenue from the tobacco tax then far exceeds the amount of money put back in support of the total agricultural economy of the province. A good deal has been said already. I am very glad that the parliamentary assistant (Mr. McNeil) to the Minister of Agriculture and Food has come into the House, because I have often felt that between the parliamentary assistant and the minister, we as farmers should get a better deal from the Treasurer and his colleagues.

Much was made in the previous bill of the idea that the additions from the racetracks tax were going to be ploughed back into the industry for the improvement of the courses and the purses. We certainly would be more than satisfied if a more substantial percentage of the revenue from the tobacco tax were made available for farm programs that would enable our farmers to compete on a fair and equitable basis with the farmers from other provinces and nearby states. Such is not the case, because the shortsighted policy of this administration means that the allocation of the revenues from the tobacco tax and other taxes directly related to the farm economy are not returned to the farms on any kind of fair and equitable basis.

I think we should be aware that the tobacco industry is relatively new in Ontario, and that from very small beginnings the tobacco farmers here have got to the point where the quality of their product is probably as good as or better than that of tobacco grown elsewhere in the world. Those of you who are fortunate enough to drive through the Delhi-Tillsonburg area leading down in towards St. Thomas --

Interjection.

Mr. Nixon: Simcoe, yes -- will find that those farms are among the very best in the province.

Much has been said about problems the tobacco farmers have experienced in recent years. A disease we have never had in Canada, blue mould, struck two seasons ago and necessitated another expensive and elaborate procedure of spray control. I well recall the situation: the blue mould actually struck at the same time Joe Clark had briefly taken over the administration of the government of Canada. I often felt they were related for some reason, because once the people saw the light and returned the previous administration, the blue mould was brought under immediate control.

Hon. Mr. Ashe: You have your tongue in your cheek.

Mr. Nixon: Well, I relate the two. The minister seems to think that is a bit far-fetched, but all you can do is to look at the facts, Mr. Speaker, and there you are.

The farmers had to face not only a tremendous reduction in revenues but really ghastly personal pressures when they saw their crops literally withering before their eyes as this strange disease, imported from the southern states because our borders were improperly guarded by plant inspectors, simply laid waste their crops.

This did not affect the government's take, because there was sufficient tobacco in storage and more was purchased from other areas so that tax revenues were maintained. There was some additional assistance through crop insurance, which was certainly appreciated by those directly affected, although the farmers got no payout at all, of course, if they had not paid for the insurance in the first instance.

I want to join with my colleagues and others who have criticized the government's use of the ad valorem approach to this sort of taxation. Even the concept of evaluating the retail price four times a year is going to be a bit unfair. It seems to me that the government is somehow or other simply going to pick a figure out of the air and say, "We are going to charge 30 per cent of that as the tax."

The minister is shaking his head, but the alternative, I suppose, would be a very elaborate and costly addition to the bureaucracy in which the prices would be monitored on a continuing and regular basis. Anything else means they are simply going to charge an ad valorem figure on some amount they think is fair without any kind of adjustment. It is simply going to maximize revenue and continue to make things tough for the farmers.

I must say that in spite of the problems the tobacco farmers have experienced -- and I have related just one of them; I perhaps should say something about the tornado that devastated this area a couple of years ago -- still they are, to be fair, among the most prosperous farmers anywhere, with the possible exception of a couple of bee farmers in the Elgin area who, I understand, continue to do better than average.

Certainly if you were to drive through the tobacco areas, Mr. Speaker, you would see the epitome of good farming practices: the soil there, which used to be blowing sand, has over the years been tied down with good reforestation and crop rotation principles. There is not a thing out of place. Not a weed is allowed to shove its nose above the ground, and I must say the farmers are a credit not only to themselves but to the whole community.

5:30 p.m.

The Deputy Speaker: Mr. Stokes wants to know if you are speaking to the bill.

Mr. Nixon: On the basis that the bill is going to increase the taxes on the tobacco that my constituents are growing, and that it will interfere with the possibilities of them maximizing their own revenues and the fact the basic principle moves from a fixed figure to an ad valorem approach, we cannot support the bill. I would hope the other members of the House would follow our example in opposing it.

Mr. Wildman: Mr. Speaker, I rise to participate in the debate on Bill 76 and to say that I am not necessarily opposed to the increase in taxes on cigarettes, especially if this could be seen as an attempt to try to deal with some of the health problems resulting from the smoking of cigarettes, despite the fact that my colleague, the member for Hamilton Mountain (Mr. Charlton) has just gone out for a smoke. Frankly, I cannot see it that way and I do not think the minister would argue that this bill is an attempt to deal with the health problems that might occur because of smoking cigarettes.

I think the member for Brant-Oxford-Norfolk would agree that when this government increases the tax on cigarettes it is an attempt to raise the revenue of the provincial government. It is interesting to note that at the same time it is doing this, the government is saying it has to increase OHIP premiums by 15 per cent. This is really having it both ways. To say we are going to make money from the sale of cigarettes -- and for that matter alcohol or whatever other commodity may or may not be pleasurable but may add to our health problems -- and to increase those taxes in an attempt to raise more revenue and then to say because of the large number of people who require health care in Ontario we are going to have to tax them for their health care and increase the taxes in that area too, is really to have it both ways, which this government is attempting to do.

I am concerned about the whole approach taken to increasing the tax on cigarettes because it appears to me, and the minister can correct me if I am wrong, that as a result of the increase in taxes, especially on cigarettes, Ontario will now have the highest taxes on cigarettes of any province in the country, except Newfoundland. According to my information, this province will now be the only province using the ad valorem approach to taxing cigarettes as opposed to cigars, which have been taxed on an ad valorem basis for some time.

The immediate tax increase from 1.2 cents to 1.46 cents is much higher than any other province. According to my information Newfoundland's cigarette tax is two cents per cigarette, the only province with a higher tax. Every other province is lower; some substantially lower.

In New Brunswick, Nova Scotia and Prince Edward Island the tax is one cent per cigarette; Quebec is 1.08 cents per cigarette; Saskatchewan is 1.32. The western provinces use a much different approach: Alberta charges eight twenty-fifths of one cent per cigarette. British Columbia is twenty-four twenty-fifths of one cent per cigarette. Manitoba is 1.2, which is what the rate used to be in Ontario. If those figures are correct, then that makes us the highest taxed in terms of this commodity of any province with the exception of Newfoundland.

When one considers, as the member for Brant-Oxford-Norfolk pointed out, that we are the largest producer of tobacco in this country and that we are charging more taxation on the finished product than any other province except one, we must wonder at the real purpose.

As I said at the beginning, if the purpose is to cut the consumption of cigarettes because of some concern over health and the cost of health care in this province, fine, but it appears to be simply an attempt to make one more tax grab from the consumers of this province. We are using an ad valorem approach to profit from inflation, because that is really what ad valorem is all about. If the price goes up, then the government gets more from taxation.

In his budget speech, the Treasurer made the comment that this was an inflation budget, that these were inflationary times, although he did not have much to say about inflation. The Treasurer is attempting to say that since we are in inflationary times, let us forget about trying to deal with the problem and live with it; not only let us live with it, but let us profit from it. Let us make as much money as we can from the consumers of this province.

I wonder how the Minister of Revenue can justify that kind of approach. It seems far more equitable to tax cigarettes in the same way one would tax other tobacco products such as cigars. Since the government has gone to ad valorem on cigars, they might as well go to ad valorem on cigarettes. When one considers the other tax measures that were included in the budget such as the ad valorem tax on gasoline one must wonder what will be the next ad valorem tax to be brought in by this government. For instance, instead of eliminating or cutting the sales tax do we face an ad valorem type of sales tax at some future date? That would be a retrograde step.

I understand from these figures that the tax changes on cigars will give us one of the highest, if not the highest, taxes on cigars in the country. If that is not correct, I would appreciate it if the minister would tell me. That seems to be the case from the figures I have been presented with. We feel taxation on tobacco products should be equitable. One type of consumer should not have to pay unfairly.

We cannot accept this kind of tax grab, profiting from inflation -- in fact contributing to inflation -- as the route we feel a responsible government should take. We will certainly be expressing our views on that when we deal with the gasoline tax.

Mr. McGuigan: I rise to join this debate on Bill 76, An Act to amend the Tobacco Tax Act. I do so because my riding of Kent-Elgin is a producer of three types of tobacco. In the Kent county area, we produce burley tobacco. To explain that to members who are only familiar with flue-cured tobacco, in the burley situation we harvest the whole plant. These plants are hung in very large barns that dot the countryside, mostly in Kent county. We also grow black or dark-fired tobacco. As the name implies, it is a very dark colour and is used largely in chewing tobacco. I think it is more often used by people who work in mines, in mills and forestry products industries.

Mr. Ruston: Baseball players.

Mr. McGuigan: Baseball players, right.

The Deputy Speaker: We are working towards the bill, are we? Is this the preamble to the bill?

Mr. McGuigan: Yes. It is used by people who cannot use tobacco when it might set fire to their environment. We also grow the flue-cured, or Virginia tobacco in both parts of my riding -- that is, Kent and Elgin.

5:40 p.m.

I rise to speak against the principle of using an ad valorem system in a world in which we all recognize the dangers of the inflationary spiral we are in. It has changed us from a nation of savers to a nation of speculators. Rather than working hard and putting aside a bit of money to invest in production or for our old age, the prudent person today takes the money and speculates with it. He can make more money buying houses, as happened in Toronto very recently, or in buying land or in any number of paper transactions that add nothing to production or to our well-being or the raising of our standard of living. It seems to me the government, by choosing this method of taxation, does harm not so much in actual method as in the symbolism, showing that the government has given up the fight. In fact it has a proprietary interest in seeing that the pace of inflation runs merrily along. So I oppose this measure.

To give an example, there is now an opportunity in the burley tobacco industry to double our acreage. It is something like 1,200 acres -- it is a very small acreage -- on which we are growing burley tobacco. There are overseas markets that would allow us to double that. At the present cost of putting up a tobacco barn, it takes about a $20,000 barn to house three acres of tobacco. The economics of it are that one simply cannot build a barn to take care of this increased production and these increased opportunities. The Burley Tobacco Growers Marketing Board has petitioned the Minister of Agriculture and Food (Mr. Henderson) for assistance in building barns.

I mention this to show the real effect that inflation has upon our producers. They must each year sit down with their suppliers and with the agents who buy the tobacco and hammer out an agreement. This must be done on an annual basis. The tobacco people right now, I believe, are meeting with the tobacco buyers and are hammering out an agreement. They do not have an automatic system whereby the price of the tobacco goes up as the costs of their input and of inflation go up. Those people feel particularly aggrieved when they see taxes tied to this system which give the government an automatic and proprietary interest in seeing inflation move along. They are very upset and angry about it. I wish, on their behalf, to make their views known to the government.

The Deputy Speaker: Before Mr. Laughren commences, I want to point out to members that sometimes there is an undue din of conversation. If you could keep your voices down, I know the members would appreciate it.

Mr. Laughren: If I read this bill correctly, and I am sure the minister will correct me if I do not, it would technically allow the minister -- I am not saying this is the intention -- to establish a different set of prices on which the tax would be based in the different regions of the province. It would technically allow --

Hon. F. S. Miller: No, it would not.

Mr. Laughren: Yes, it would. It says, "The minister shall use the median price obtained by him from such periodic sampling as he considers appropriate of the retail prices of packages of 20 cigarettes in such part or parts of Ontario as he shall direct a sample to be taken." Technically, I believe, the tax could be based on a different taxable price in different parts of the province. That is one of my concerns. It should be on record by the minister that this is to be a uniform tax across the province. I can see a situation where if the minister so chose he could establish a different one in northern Ontario or any other part of Ontario where the selling price might be higher. There are a number of us who would be reassured if the minister, in his response, would make that clear and state those are not, and never will be, the intentions of this government.

The other aspect of the bill that is so worrisome is the new trend. To my understanding it is a new trend for the government to plug in to rising prices this way in the collection of taxes. For many years, it has been editorialized across this country that governments profit from inflation -- if governments can indeed profit -- because the higher the rate of inflation, up go the revenues to government even though indexing takes away part of it.

Look at the provincial level. Is there any question the higher rate of inflation increases the sales tax that goes to the consolidated revenue fund of Ontario? There is no question about it. It seems to be an automatic thing. Now we are having a scenario built into bills like this, like the fuel acts; there is quarterly indexing to inflation because the minister has indicated this is going to be done quarterly. We now have not just an overall increase in provincial revenues because of inflation, but a deliberate indexing of inflation to increase tax revenues.

The obvious, blatant example is the fuel tax. I would ask members to think about it in terms of the tobacco tax as well. It is not just because of the commodity, in this case tobacco, but the principle involved of government plugging into inflation on a quarterly basis. It is ensuring inflation will take place, that as inflation goes up and prices go up, government revenues will go up as well. That is something new. If I understand taxation at all in Ontario, it is new to the province.

An hon. member: Except for cigars.

Mr. Laughren: Except for cigars, yes. I think the member for Fort William (Mr. Hennessy) has had his lobby at work to make sure it does not happen to cigars.

I would ask the minister to respond in two areas. One is the whole question of regional pricing and the second is to lay out before us his rationale and justification for plugging into the rate of inflation in such a blatant way as the quarterly indexing the government is now doing.

Does the minister think that is appropriate for all levels of government? What about at the municipal level? Should that be done there? Would he be satisfied if the federal government was doing the same thing in all sorts of areas as well? What about people who are in receipt of income from various levels of government? Should they receive it in an indexed form on a quarterly basis?

Once the government establishes that principle of plugging into a quarterly increase as prices go up, the principle is established and groups out there will have every right to claim they should be treated the same way in the moneys they get as the government is in the moneys it collects through its tax collection process.

The government is breaking new ground and is not particularly anxious to talk about it in a public way. It is not anxious to have people out there understand this is a new principle the government is using to ensure increases in revenues as the rate of inflation increases.

The government is big on issuing press releases about everything from cutting ribbons to nutritional grants but it shies away from any publicity that ties it in with benefitting from the rate of inflation in Ontario. I hope the minister, when he replies, will address himself to those problems.

5:50 p.m.

The Deputy Speaker: Is there no further discussion? Oh, there is.

Mr. G. I. Miller: Mr. Speaker, I would not want to miss this opportunity. The Treasurer is around collecting money. I can see why he has been appointed the Treasurer for Ontario. He says he is keeping the promise this time because it is going to a good cause -- the Rotary Club in Bracebridge -- and he has guaranteed that a Liberal might win the car.

The real thing I would like to speak on today is the tobacco tax, which is going to create considerable hardship in the tobacco industry and also contribute to inflation in Ontario. I think it is regressive. After all, tobacco farming is one of the progressive farming industries in Ontario. It uses class-five land. I see the Minister of the Environment (Mr. Norton) is sitting in his seat. I wanted to make clear the land he is using in South Cayuga is class one, two and three land. The potential there is just as great if only it could be turned around to produce other crops that would contribute to the economy of Ontario and Canada.

Tobacco contributes something like $240 million to our total economy. We export about 40 per cent of the amount that is produced. According to the Ontario tobacco board, the overall tax contributed to both the federal and provincial governments is something like $1.5 billion, which is split about equally between the two government levels.

So the honourable members can see that tobacco is a very important industry; it contributes so much to our total economy. It is like the old story that if you kill the goose that lays the golden eggs you will not have that income.

Before the election the government was giving away something like $350 million, and with one stroke of the pen they take $50 million out of the tobacco industry as soon as the election is over.

When we compare the tax in Ontario -- and I know it has been compared by the NDP to taxes in the other provinces in Canada -- Ontario will have the second-highest tobacco tax. It leads to the illegal transport of cigarettes from other provinces into Ontario -- that has come about within the last few days. It contributes to crime and misuse of our funds.

Again, if the government is going to impose this tax -- and I think the parliamentary assistant to the Minister of Agriculture and Food comes from a tobacco area -- then it should return the money to the farmers to give them interest assistance or programs of funding so they can continue to farm. Several farmers in the tobacco industry have come to me only within the past few weeks. They find they are in financial trouble because of the high interest rates. I think this government should show some leadership by using that money more wisely.

We are going to oppose the bill, as our critic indicated, and it gives me a lot of pleasure to speak on the bill today.

The Deputy Speaker: Any further discussion?

Hon. Mr. Ashe: Thank you very much, Mr. Speaker. There have been quite a number of points raised concerning Bill 76. Running generally through all of the discussion brought up by the honourable members is this great revelation that the ad valorem method of taxation is something brand new, something that was just thought up and never happened before, Of course that is not the case at all. As one of the honourable members in the third party pointed out, there has been an ad valorem tax on part of the tobacco industry, namely cigars, for some years. This bill is bringing in some uniformity.

Many other forms of ad valorem tax have existed for many years -- for example the sales tax, which in itself is ad valorem.

Mr. Haggerty: It is indexed.

Hon. Mr. Ashe: That was brought out, too. I do not know why the member opposite would suggest it is indexed. If he pays for something that is dutiable in terms of sales tax -- if it is $500 today he pays $35 and if it is $600 next year he will pay $42. That is ad valorem. So there is nothing new about the principle.

I would suggest that possibly we need a little form of education for some of the honourable members about taxation and the basis of taxes, even what the existing taxes in this province are all about.

In his remarks earlier in the debate, the member for Erie was talking about health costs. Frankly I would agree this is not the main thrust. There is no doubt that indirectly one of the reasons this government needs more revenues is to continue to add to the great benefits and the plans and expenditures of this government on behalf of the health care system. Anything that adds to revenue in this area is not untoward at all. An additional $50 million is anticipated in the upcoming fiscal year relating to the increase as proposed in Bill 76. There is nothing magical about that.

There was also quite a legitimate reference to the extra work and the extra bother and the extra expense to the retailer in administering the ad valorem tax on tobacco. Let me again bring the honourable members up to date. Since 1966 the retailer has not been administering any tax basis as far as tobacco is concerned. As a matter of fact, when we tie in these two, there was formerly an ad valorem tax on tobacco products because it was under the Retail Sales Tax Act until 1976. One of the reasons it was moved away from the retail sales tax at that time was to take away from the local retailer not only the detail but the administration costs that went along with keeping the records.

At that time it was moved to the wholesale level and so we are dealing as a ministry with 140 wholesalers within Ontario. I would suggest that is quite manageable and will not impose any great additional work load upon them. Again, we are going back to -- and I want to emphasize back to -- an ad valorem tax on tobacco; it did exist up until 1966. At that time it was being administered and collected on behalf of the province by the retailer.

Interjections.

Hon. Mr. Ashe: You don't want a division now?

Again, tying in with health costs, as was also mentioned, I would suggest that comparing taxes and a tax rate on tobacco and suggesting that this imposes a great burden on the average person is not very realistic. Whether one smokes or drinks, for example, really is a matter of choice. It is not imposed upon anybody. I do not think any honourable member would argue that it is one of the necessities of life that one does or does not have a cigarette, have a cigar or smoke a pipe. Some may feel that way, but --

Mr. Nixon: Only a nonsmoker would talk that way.

Hon. Mr. Ashe: Only a nonsmoker would talk that way -- I would agree.

The Deputy Speaker: Do we know what we are doing?

Hon. Mr. Ashe: Mr. Speaker, I don't know whether all of the honourable members are satisfied --

Mr. Nixon: I think you have answered all the questions.

Hon. Mr. Ashe: Okay. I think I have covered most of the items. Again, this is not new.

Let me just assure the member for Nickel Belt the basis for establishing the base rate will be done in the same area as to establish the base rate for gasoline. It will be one rate throughout the province. In fact they will have the advantage of volume in southern Ontario.

The Deputy Speaker: Hon. Mr. Ashe moved second reading of Bill 76, An Act to amend the Tobacco Tax Act.

Those in favour will please say "aye."

Those opposed will please say "nay."

In my opinion the ayes have it.

Motion agreed to.

Ordered for third reading.

The House recessed at 6:01 p.m.