ESTIMATES, MINISTRY OF REVENUE (CONTINUED)
The House resumed at 8 p.m.
House in committee of supply.
ESTIMATES, MINISTRY OF REVENUE (CONTINUED)
Mr. Charlton: Mr. Chairman, I will try to pick up where I left off without having to go back over a lot of ground. When I stopped I think I was talking about assessment. I had just finished talking about all three parties in this House getting involved perhaps in a select committee to get on with the job of trying to come to some consensus on property tax reform.
I would like to make a few comments on a couple of things the minister mentioned in his opening statement with regard to assessments. One of the things he raised was a proposal to see that support staff were more usefully utilized so assessors could spend more time in the field in their neighbourhoods. As you may be aware, assessment regions are divided into neighbourhoods and an assessor is responsible for all the properties in his neighbourhood.
I cannot help but agree with the minister that it would be very appropriate and useful if assessors could find a way to spend much more of their time in the field and much less doing a lot of day-to-day paperwork. I sincerely hope his comments somehow come to reality. However, I should point out to the minister, just so he is aware of it, this has been tried several times in the past, even since 1970 when the province took over assessment.
I can recall one occasion when they even directed the managers who usually look after what I might define as a sub-region within a region -- it may include anywhere up to 10 assessors' neighbourhoods -- to spend about four fifths of their time in the field. Then, by looking at the properties along with the assessors, they had a realistic idea of exactly what was going on in the field in terms of the market value approach and how one area was stacking up against another.
It is hoped assessors have a good feel for what is going on in their own neighbourhoods but they do not necessarily have a good feel for what is going on in areas next to theirs. They attempted to get the managers to spend considerably more time in the field as well so somebody had a good overview how one area was stacking up against the next and whether things were working out in reality.
After a short period of pressure from the head office level, the whole project went by the wayside. I raise that not because I believe the minister and his staff are insincere in trying it again this time, but in the hope they make a real effort to see it honestly happens, not only at the assessor level but at some of the supervisory levels as well so there is a good overview of areas as to how things stack up.
Perhaps I can take that one step further. I recall in 1973 Grey county was going to market value for 1974. To get the market value assessments there finished by the fall of 1973 so they could go to market value for the 1974 assessment roll, they brought in assessors from a number of other regions that happened to be fairly well on in their own market value reassessment and could spare some staff for a few months.
I and a number of my colleagues from Hamilton-Wentworth spent about seven or eight weeks that summer working up in Grey county. We worked at Owen Sound for a while, we worked out of Varney for a while and in a number of other areas. Although it is well understood the approach to assessment and the approach to market value is supposed to be fairly uniform province-wide, there were some fairly substantial differences at that stage in the way the assessment office in Grey county was approaching market value, over and against the way we were approaching it in Hamilton-Wentworth.
That is not to say anything against the ministry because there have been a number of substantial changes in approach, both at the ministry level and at the local level, since that time. I hope some of those differences in approach that existed at the local level have been overcome, as we have gone beyond the early stages of the manual approach. But it is just something to keep in mind. Yes, it is important to keep assessors in touch with their own neighbourhoods and communities as much as possible, but it is also important to keep as much interplay going as possible between neighbourhoods, municipalities and regions.
The minister has made a considerable point of talking about reorganization in the ministry and in the assessment division and so on. However I think there would probably be a lot more useful purpose served in some of the ministry and task force staff doing straight comparisons, as opposed to a lot of the analysis work that appears to be going on. It seems quite often not to be very useful. It would be a very useful thing for the minister to have a look beyond the borders just to see how things stack up.
I wish to comment about budgeting now in relation to that whole question of assessors spending more time in the field and all the emphasis the minister has put on the zero-base budgeting approach and the supposed economies and efficiencies that kind of approach can provide. The examples I have come out of the assessment sector of his ministry, and we are talking about assessment at the moment. Budgeting, whether zero-base budgeting or otherwise, has its place and its benefits, but if it is strictly paper budgeting, even though it may appear to be very efficient in terms of the amount of dollars being spent and lack of increase from year to year and so on, it may be detrimental to overall efficiency.
A case in point popped into my mind when the minister made his comment about seeing that assessors spend more of their time in the field and in touch with their communities. This was a situation we had in the Hamilton-Wentworth office last winter where the mileage budget ran out in January and the budget-year end was March 31. Very early in January, the assessors were instructed that to all intents and purposes there would be no more field work because there would be no more mileage until March 31. It created a serious problem. To some degree they managed to get around it because of the bind the ministry was in last year trying to get the seniors' tax grants wrapped up.
8:10 p.m.
The assessors were saddled with the job of checking out a lot of applications that had problems, and they were given access to another budget in another section of the ministry. It was interesting that because they got access to another budget they found themselves able to get in their cars and go out with a pile of seniors' tax grant forms, talk to these seniors and get the correct information which was missing on these applications for the seniors' property tax grants. Fortunately they were able to take the applications that needed additional information pertaining to their own neighbourhoods for assessment purposes and make a few assessment calls while they were out checking seniors' tax grant applications.
This point is not a criticism. It is simply to say that budgeting on paper alone is not always good enough. There has to be some realism and some facility in the budgeting process to take into account the other stated desires of the ministry or of particular sections of the ministry. It has to be kept in mind that if assessors are to be out in the field more often for more of their time you are going to have to enlarge their expense budgets a little bit, because they are out there using their own cars. All those things have to be taken into account.
I wish to talk a little about the whole reorganizational approach in the Ministry of Revenue. It is something the present minister and the former minister have emphasized at fair length over the course of the last three or four sets of estimates, both in the budgetary process and in the structural process within the ministry.
I do not think anybody objects to reorganization, to modernization, to efficiency, to any endeavour that will get the same result for less money, or whatever the purpose is. I certainly do not. But reorganizations have to be done with a view to what service is really required at the front line in the service. It has to take into consideration the human beings who are going to be affected. Again this is not a criticism. We have all seen hundreds of things in the civil service that we consider to be inefficient, so we cannot complain about anything the government might try to do to make things more efficient.
There is, for example, the proposed reorganization in the retail sales tax branch. I have no criticism of this reorganization at all. At this point I do not know exactly what it is because we have had some difficulty getting information. The only point I want to make here is that large numbers of the minister's employees in the retail sales tax sector have been called together at the local level by their local management people and told that this reorganization is going on and that the offices are going to be restructured. They have been told many of them may have to move, that they may be reassigned to another area -- not 600 miles away across the province but far enough away that they may have to move or any number of other possibilities.
That is not necessarily inappropriate, either, but it seems to me from the complaints I have had from a number of my former colleagues in the ministry that, if nothing else, even if the reorganization he comes up with is 100 per cent appropriate, it has been handled in a very insensitive fashion. This is not because anybody has been bullied, but simply because the ministry was not really ready with a plan when the people were told.
Now they have been told, and for several months have been left hanging there. They do not know where they may go or where they may not go. They do not know whether they should apply for a job upstairs on the floor above them in another ministry, or in the same ministry in another section.
It is not a question of whether the reorganization will be exactly right in terms of the structure. It is just not good to leave people hanging like that. They get on edge, they wonder what the minister is up to, whether he really knows what he is doing and whether he is ever going to make up his mind now that they have been put on tenterhooks. It is just a question of being sensitive to that kind of thing when one is going through the reorganizational process.
That brings me to the question of the move to Oshawa. I think it is a little too far along for me to be critical of it. There was some criticism of it a few years ago when it was first announced and there has been some ongoing criticism from both sides. I would like to make some comments in regards to what the minister was saying today in his opening statement about that move.
The minister made it quite clear today about 70 per cent of the head office staff will be moving to Oshawa. Of the 30 per cent who will not be moving, many may have already found other jobs. I sincerely hope the ministry has made every effort to see that those who are not moving to Oshawa for whatever reason got employment elsewhere in the service.
The minister also made comments about the new head office building in Oshawa, an office building that is going to be a unique custom-designed structure featuring state-of-the-art technology, energy conservation and efficiency. I have no doubt the ministry is capable of that -- it is probably very true. He made a number of other comments relating to state-of-the-art technology. For example, on page 20 of his statement he referred to faster service in answering account inquiries, et cetera, via video terminals.
There is no question in my mind the ministry is capable of putting together a very efficient building from an energy point of view and putting all the latest technology into that building -- computer hookups and video display terminals. I feel fairly confident the ministry will do a good job of making that new head office a model of modern technology. However, I sincerely hope that while they are doing so they will also make that new head office a model in terms of labour relations. I refer to the number of very serious problems surrounding many of those new technologies, specifically video display terminals -- problems of eye strain, problems of whatever radiation emits from those, problems of lighting, problems of the adjustability of the equipment and the chairs on which people sit.
8:20 p.m.
I will give members an example of what I am talking about. On the procedural affairs committee, during the course of our agency review this year, we were reviewing the Ontario Racing Commission whose equipment has become highly computerized in the last number of years for a number of obvious reasons -- they can have racing stats on horse owners, jockeys and horses from all across the continent and the world. During our review, we were taken out to Mohawk Raceway to see the facilities.
We went into the racing commission office. It was in the evening, but they had two young women working on video display terminal computer hookups. One of the women was short, about five feet, four inches, and she fitted the equipment they had in place quite nicely. The other woman was quite tall, about five feet 11 inches, and she did not fit the equipment. She was doubled over like a pretzel trying to work that equipment.
It is a serious question. The minister smiles but it is a very serious question, having to work with a piece of equipment like that where one has to sit at the right distance to see effectively what is on the screen. If the minister had looked closely at them, he would have noticed if one stands a little too far or too close that one cannot see it clearly. One has to be just right. I hope the ministry in its new headquarters in Oshawa will make sure every precaution is taken to ensure all the technological equipment they put in will be in the best interests of new employees and those whom they take with them.
To move to the question of the seniors' tax grants and the experience over the last two years, I am glad the minister took the time to thank the members in their constituency offices for their time and effort in taking calls from seniors. I want to make a couple of points. The minister and the ministry are working honestly and sincerely to straighten out the problems in the tax grant process. From the number of calls we are still getting we are not as close to getting it sorted out as they would like us and the public to believe.
With any new program like this, there are problems. Perhaps that is something to think about. Although we spent a lot of time on the old tax credit system filling out tax credit forms for seniors, and going to courses provided by the ministry as well, or having our staff go or whatever the case happened to have been, if all we were doing for seniors now is helping them fill out applications, I think my staff in the constituency office would be very pleased. We are still getting dozens of calls every week.
One in particular comes to mind. It was a call I took last Friday night from a gentleman who received a letter from the ministry dated October 1 acknowledging receipt of his application, saying it was in process and if they needed any further information from him they would get in touch.
Mr. Ruston: They all say that.
Mr. Charlton: Yes, but it is now November 23. He has not heard anything from the ministry. He has not heard there is need for additional information. He also has not heard about where his cheque is. Everybody and their mother have their cheques. He is upset, and perhaps rightly so, especially since it is a month and a half since they said his application went into the process.
If he had heard three weeks ago they could not finish processing his application because something was missing I would not have had a call from him. He would understand what was going on. But in seven weeks he has heard absolutely nothing except that the processing of his application has started. No senior in this province can believe it takes seven weeks to process, print and mail a cheque for one senior.
There are still some problems in the system. It is something the government has to think seriously about if the administrative problems cannot be sorted out fairly quickly over the course of the next year. In the program we came out of there were some administrative complaints but few compared with the ones we are getting in the present system. When it was all handled on the income tax system, it is true we had the occasional complaint but, in percentage terms, they were few compared with what we are getting now.
I raise that because the minister has said the ministry is working hard to straighten out those problems. I have no doubt that is true. However, if they cannot be straightened out to a substantial degree over the course of the next year I think the ministry is going to have to think seriously about either looking at a totally different approach to the program or going back to some modified form of the old system where it was done on the income tax.
The minister is going to have to look at that because the kinds of things he is saying in organizational terms in the rest of his statement indicate that if he cannot get this straightened out with the seniors' property tax grants then, because of the budgetary and reorganizational process he has been going through in the rest of the ministry, he is going to have to look at a more efficient way of handling that whole question.
With that, I will quickly sum up my comments. Many of the things the ministry has done over the course of the last four or five years have been useful, forward, even progressive. But there are a number of areas, and I think I have touched on most of them, where there are some serious problems and roadblocks where no progress is being made. There are some areas we have to look at clearly and deal with.
I made a number of specific requests to the minister. In the case of property assessment, property tax and municipal finance reform, I suggested he seriously consider the possibility of having a committee of the Legislature established. After the lengthy debate we have been through over the last 15 years or so, and all the back and forth that has gone on in this House over the last four, five or six years since the delays started, perhaps he should propose a select committee of the Legislature where all three parties can get honestly involved in the process. They could look not only at the problems that stalled the progress of full market value and the shifts that would have resulted from that, but the problems that are developing in the municipal finance sector and the education system in terms of the grant structure and the whole package that needs to be worked out in that area.
I ask the minister to consider seriously allowing us to get involved in that process. As opposition parties we have been left on the outside -- left almost totally in an opposition role, unable to have any constructive input into what has gone on to this date. I honestly think we would like to get involved in that. As I said to the minister earlier, although there are some ideological aspects that separate all three parties here, for the most part we can deal with a large number of areas in trying to solve some of the very real problems between the province and the municipalities and that whole financial structure and the tax structure at the local level. Thank you, Mr. Chairman.
8:30 p.m.
Mr. Chairman: Thank you very much. To refresh the honourable members' memories, we are on supply committee, and we are viewing the estimates of the Minister of Revenue, the Honourable George Ashe. That is also for the benefit of those who have gathered in the galleries to listen to some of the interesting aspects of the committee. I recognize the member for Scarborough-Ellesmere.
Mr. Robinson: Mr. Chairman, I rise in my place on a point of privilege this evening to draw to your attention and the House's attention that with us tonight in the gallery, as you have just noted, are members of the finest riding association executive in Ontario. Of course, it goes without saying they are my executive in the great and glorious riding of Scarborough-Ellesmere. I know members of the House will join with me in bidding them welcome this evening --
Mr. Chairman: You are lucky to get that in.
Mr. Robinson: -- and I know they will not be affronted to note there are more of them in the Legislature tonight than there are members of this assembly.
Mr. Chairman: Are you suggesting that there is not a quorum?
Hon. Mr. Ashe: That is not what he said.
Mr. Robinson: No, I did not say that, Mr. Chairman.
Mr. Ruston: Mr. Chairman, I think it should be noted that is not parliamentary procedure.
Mr. Chairman: Yes, we attempted to reprimand the honourable member on that note.
Mr. Robinson: Mr. Chairman, I apologize to the House for not being better aware of the procedures of this assembly.
Mr. Ruston: We will watch for the next time.
Mr. Chairman: You are lucky I did not ask you to leave the House. The minister.
Hon. Mr. Ashe: Thank you very much, Mr. Chairman. I think before we go into the specific votes for the Ministry of Revenue, I would just like very briefly -- and I will not take any more than a few minutes -- to touch upon a couple of the issues that were made by the critics from the two parties opposite, so they will not escape me and get buried in the various specifics of the estimates.
First of all, the member for Erie: I appreciate that he was rather critical of the fiscal policies of this government, albeit some of his criticisms were probably misplaced, in that he should have been maybe looking a little to the northeast, to the municipality from whence I came a long time ago, where his federal colleagues happen to be in power; but so be it.
I will be nonpolitical tonight as usual and just suggest that with most of his comments I am quite sure he is well aware the policy, as far as taxation and the various elements of the taxation of this government are concerned are, quite rightly, within the purview of the Treasurer of Ontario and frankly not within the purview of this ministry or this minister.
Although I may have some sympathy with some of his suggestions, I am afraid they are rather misdirected. As I am sure the honourable member fully realizes, we do not set the policies vis-à-vis taxation. The Treasurer makes the balls and we kind of roll them, throw them and collect them at the other end. That is really our function, and I must say that the honourable member for Erie really did not touch very greatly upon the functions of this ministry but more on the tax policy of the government.
The honourable member for Hamilton Mountain did touch upon a few issues that I would like to mention very briefly -- working backwards, the sales tax and property tax grant. As he acknowledged, and as I acknowledged in my opening remarks, we have had some problems. We are dealing with a clientele group who get concerned when they hear of their neighbour who has a cheque or a form in the mail. It is a problem and we did ask, and continue to ask, for the support and the co-operation of all members of this House and their respective constituency offices in resolving some of these issues.
Let me assure him and all the honourable members that great progress has been made. I know I touched on this in my remarks, but I think it is worth emphasizing again. Whereas last year about 40 per cent of the applications that were submitted for the property tax grant were incomplete or inaccurate in one way or another, this year, through the changes we instituted, that figure was cut approximately in half, to 20 per cent. But when we are talking about well over 500,000, that still leaves a significant number, in excess of 100,000, that required extra handling, and there is no doubt this has taken some time.
But I think these problems are behind us; I think a lot have been resolved, for example, with the cheques that went out last week along with another 40,000 or so this week. I think the member will find that although quite a number of concerns and questions have been expressed in his constituency office during the past week or two, those numbers will drop off significantly after the mailing this week.
Concerning the specific case the member talked about of the early October acknowledgement and the current date of November 23, let me just emphasize that we have always stated in the administration of this program that eight weeks was considered the length of time appropriate to handle the process from beginning to end. I just hope this particular constituent has his cheque within the coming week, since we are coming up to week eight.
Let me tell the member that if this constituent does not have his cheque before the end of the month, I hope he will get in touch with me personally. We will follow through on it to see exactly what went wrong, not just for the sake of that person as an individual but to see what went awry in the system. I think the member will agree, and I think all honourable members will concur, that we are trying to find out what some of the problems are and we are trying to work them out.
To go backwards again to the sales tax office staff, I think this ministry has been more than fair in the process of reorganization within the sales tax offices throughout the field. I agree that we could have gone to the other extreme and tried to keep the whole process completely quiet and confidential. It is possible that this would have been the right way to go. In that way maybe most of the people affected would not have become aware of it, and maybe then their concerns would not have come forward until the decisions had been made and it just hit them all of a sudden.
We believe, and I personally believe, that this is not a very humane way to treat the very valued employees of this government and of this ministry. We have sincerely tried in every way possible to keep them involved in the process as it went along by consulting them and by informing them of what was happening.
It is true that we could not be very specific about the exact timing and about exactly who would be involved, because that was part of the process. We are all here, frankly, to serve the same constituency, namely, about 8.5 million or 8.6 million people in this province. The geography has changed over the last number of years since the sales tax offices were established. The clientele we are serving has changed significantly in that period of time, and we are trying to come up with something that would better serve our mutual constituency, namely, the taxpayers, the ratepayers and the vendors, in this case, in Ontario.
But I can assure the member that as this process has developed we have been mindful that people are involved and that people's lives are involved. When the ultimate decisions are made -- and I must tell him that we will get to that point very shortly -- the whole process will be treated, as it has been right along, in a very humane way and in a way that will cause the least disruption to the fewest people possible.
I am sure that for those who ultimately may be disrupted, we have systems and a process that will be very conducive to a very orderly change, whether it be to remain in our ministry in another capacity, as he mentioned, or to relocate to another ministry within this government.
8:40 p.m.
Working backwards, there was one other rather significant issue that the member for Hamilton Mountain raised and I would like to touch on. It goes back to an area on which he is very well informed, the assessment function of this ministry.
I can assure the member, having visited personally a great number of our assessment offices in the early fall of this year, that this new reorganized system of putting the assessors in a group within the office with backup staff is working, and in my view will continue to work exceedingly well, to release a great deal more time. However, I think it is safe to say that nobody will be able to completely unload the administrative part of his or her job. I think that is a great goal but a fictitious goal to think we can ever achieve.
I can assure him that I think this process of having the backup clerical staff working right with a couple of assessors and being very involved on a day-to-day basis with what is going on, getting the feel of the neighbourhoods those particular assessors are working with and getting a feel for the clientele those assessors are working with, is working well.
Over the next few months, as this expands into the various regional offices, it will continue to release -- it has already, and will do so even more in the future -- more of the valuable time of the assessor to perform the role he is trained and paid for, which is to deliver and continue to work on and update an equitable assessment system and ultimately a tax system in this province.
I have not tried to get into all the details that were raised by the honourable members opposite, but I have tried to touch upon a few of the major issues that were raised. I am sure, as we get into the specific vote items, there will be other questions forthcoming.
Mr. Chairman: We thank the minister for his rebuttal remarks. I now see the opposition has no one standing. Are we on to votes? We usually have a very free-wheeling approach to --
Mr. Philip: May I ask a couple of questions on the response, Mr. Chairman?
Mr. Chairman: Sure.
Mr. Philip: I recognize in the minister's statement that it is the Treasurer who sets the economic policy. However, from dealing with the former minister, I also recognize that recommendations often do come from the Minister of Revenue to the Treasurer on certain specific matters.
Since it is a matter of policy, I wonder if I may just take 30 seconds to deal with an area that has been of concern to me and to certain people, even though they are not constituents, to whom I have been speaking. I refer to the matter of sales tax on equipment which is payable by organizations that are serving the community through purely nonprofit means.
There is an organization in the borough of Etobicoke, although it is not in the riding of Etobicoke, called Beyond Tomorrow, which develops community programming, mainly for seniors. They run a television show on Maclean-Hunter Cable TV, covering all four ridings in the borough of Etobicoke and indeed some parts of the city as well. This group, needless to say, uses equipment that is very costly to it. On top of having to raise money to purchase this equipment, it has to pay sales tax.
I recall that a couple of weeks ago I sent a letter to the minister. Knowing the way the bureaucracy sometimes works, perhaps he has not seen it yet, and I recognize that. Basically, I pointed out to him that this association performs very important functions in our community in encouraging seniors to become active in the community as volunteers, in breaking down many of the stereotypes I think middle-aged and younger people may have about seniors and in showing just how many activities and what important things seniors are doing in our community. They were wondering if the minister might recommend to the Treasurer, or might be able to find, some way of waiving sales tax on television equipment and vans and other equipment they have to purchase.
I am sure the minister has received comments like this from other voluntary groups. I want to know what the minister's policy might be, and whether he might be recommending something along this line to the Treasurer.
Mr. Chairman: Perhaps I could point out to members that traditionally we should be looking at a specific vote, but I know the member for Etobicoke has been burning with interest on this particular inquiry.
Hon. Mr. Ashe: I agree. I think it is probably more appropriate under vote 802, item 9, but I am happy to at least make some initial comment at this time.
This whole issue of what should or should not be taxable in the sales tax area has been and will continue to be an ongoing area of discussion. I do happen to know that, as the member has indicated, we do from time to time bring issues to the attention of the Treasurer based on correspondence or actual activities in terms of administering this particular piece of legislation. We bring it to the attention of the Treasurer for his annual budget consideration and his annual review. I am sure this is an area where we may very well be doing that.
I know it is the concern of the Treasurer -- this Treasurer (Mr. F. S. Miller), as well as I guess to a degree, his predecessor -- that our sales tax system is becoming somewhat more difficult to administer, even administratively, in the sense of the number of items and areas that are becoming sales-tax exempt for one reason or another. There is some concern being expressed in two ways in that regard.
Firstly, it becomes more complex and much more of an onus on the retailer to determine whether or not his purchaser should pay sales tax. The auditor must then decide whether it has been correctly enforced, whether or not the purchaser should pay sales tax. So the whole administrative complexity of the Sales Tax Act is up for review.
Secondly, the other concern of my colleague the Treasurer is very rightly a matter of revenue. Every time we give an exemption, obviously there is a negative impact on revenue. All members may not agree as to where the extra thrust would be, but everybody will agree that if we save a dollar here for someone, we have to get it from somewhere else. That is part of his concern about the shrinking of the tax base through exemptions.
There is no doubt we can all make a case as to why something should not be taxed, or why the exemption should be raised on something. Shoes, for example, are taxed if they cost more than $30. We get many letters suggesting it should be $50. Similarly, on restaurant meals, we get many letters suggesting it should be above $6. But we all know in the long run that if we do not raise the dollars here, we have to raise them there.
They are all part of the challenging discussion each year by my colleague. As regards the specific item the member has referred to, I will be very frank. I do not remember seeing it yet personally. It may very well be that it is in the system and that I will see the question and the answer at the same time. But I can assure all members that when that kind of process does work, I am aware of the question before I sign the answer. And if I do not think the answer is appropriate, that does not become the answer. That one I will be watching for.
Mr. Chairman: Let us get back now to individual votes and items so that the committee has a proper understanding of where we are going.
With that in mind, I am looking at vote 801.
On vote 801, ministry administration program:
Mr. Haggerty: Can the minister give us a further explanation on this special warrant of $2,351,800?
Mr. Chairman: I am sorry; I do not see that.
8:50 p.m.
Mr. Haggerty: It is part of the ministry administration program, vote 801, which excludes a special warrant and the minister's salary, which is a big item.
Hon. Mr. Ashe: I can probably answer that in a general way, because the same issue will come up in every vote throughout the whole ministry's estimates.
If I can draw the member's attention to the very first page of the estimates book, he will notice that under the heading "Summary," it says, "Less: Special Warrant, $172,316,500." As we all know, the fiscal year started just after we became involved in a provincial election and before this Legislature reconvened, and all ministries of this government operated on the basis of a special warrant. That is the basis in vote 801 of the $2,351,800 under the heading of "Ministry Administrative Program." That same explanation applies throughout the ministry's estimates, as it would for every other ministry in this government.
Mr. Haggerty: I thought it was rather important that I ask that question, because in the estimates for 1980-81 it says, "N/A," which I took to mean "not available," and I thought there might be some special reason. Anyway, the minister has answered it.
The cost of the relocation project is given as $2,071,400. Will that be the final cost of moving the facilities from here to Oshawa? Will that wrap it up?
Another question under the same vote concerns the matter of legal services. It is pretty hard for me to follow, but I notice here that for legal services there is $2,000 for salaries and wages, $493,700 for services; then on the next page it is $3,100 and legal services are $504,000. And yet it says, "No manpower required; no staff." Can the minister give me an explanation of what we are buying in services here?
Hon. Mr. Ashe: As I am sure the honourable member is aware, all ministries of this government that have legal services provided to them contract -- I should not even say contract; that is not the correct term. All of the employees who deliver legal services, both the lawyers themselves and their backup personnel, actually work for the Ministry of the Attorney General and are supplied to the ministries. We pay for them under the heading of "Services," in that they are billed to us by the Ministry of the Attorney General.
The item in the estimates for salary and wages of $2,000 is strictly for GO Temp staff, whom we may require from time to time to assist the clerical delivery within the legal services department. All the other headings under "Services" are pretty well the offsetting billings we get from the Ministry of the Attorney General, which supplies our lawyers and their clerical backup staff.
Concerning the member's question in vote 801, item 10, the relocation project: These are not all the costs involved; they are the estimates for 1981-82. As the honourable member knows from my remarks and, I am sure, from his own knowledge, we will not move physically until the fiscal year 1982-83; so there will be a substantial budget item in the upcoming year as well. I think that would pretty well be the balance in the upcoming fiscal year, but this definitely is not the total by any means.
Mr. Haggerty: Concerning the relocation: Is this for the purchase of office equipment, or is the ministry going to rent all the office equipment? What are we looking at here if the ministry is not going to move until 1983? Is the ministry not going to relocate anything down there, any personnel, or is it just for the purchase of equipment?
Hon. Mr. Ashe: I am afraid that is not what I said. I said we would be relocating in 1982, which means the fiscal year 1982-83, from April 1, 1982, up to and including March 31, 1983.
As I tried to cover in my opening remarks, in these various estimates we are talking about many aspects of the move. We are talking about the actual preparation, which involves an ongoing permanent staff to make sure the staff within the existing organization is aware of what is going on vis-à-vis the move, an ongoing education of what the Durham region has to offer.
We are also now at the point of building up a bank of qualified people who have applied in the Durham region. If the member recalls my remarks, in the order of 3,000 people have applied for positions. Some have already been filled by people from the Durham region. We are also involved in getting ready for the duplication of staffing to some degree for the people who are not going to relocate.
This is all part of the project under vote 801, item 10. The reason everything is going into that vote rather than being buried within some of the others is to give a true indication of the actual, complete and, ultimately, final cost of the relocation to Oshawa by the Ministry of Revenue. The only way that could be honestly, sincerely and completely done is by having it as a separate vote and project within the estimates of this ministry.
Mr. Charlton: Mr. Chairman, can the minister tell us a little about the relocation in Oshawa? For example, can you tell us anything about how the accommodation cost in the new building in Oshawa will compare with the present cost on Bloor Street?
Hon. Mr. Ashe: Mr. Chairman, that is difficult to answer in that we do not really have a final cost. As the member is aware, we are going into a building that is ultimately ours. We really do not know the final cost. Even within our present situation, all our accommodation is provided by the Ministry of Government Services and not by the ministry involved, in this case the Ministry of Revenue.
As a ministry, frankly, we are not much concerned directly with the cost of the accommodation. Our concern, I think quite rightly, and the member alluded to it earlier in his remarks, is to make sure the accommodation we occupy is functional and practical to all sizes and shapes, to use his analogy.
Part of our relocation project is to make sure the accommodation being developed specifically for the Ministry of Revenue will suit our needs and those of the employees who will be involved, so that in a pleasant environment and atmosphere they will be able to deliver the services to the taxpayers and vendors within this province.
If the member wants to get involved in some of the actual or projected costs of that building, I have them. However, they are more within the purview of the Ministry of Government Services. I can tell him, for example, that the estimated building cost is $33.7 million for the completed Revenue building in Oshawa. On top of that there was the land cost, and there is a parking garage that is being built by the city of Oshawa for which we provided the land.
If the member is interested in those details, I can give them to him from my own background papers and knowledge, but not because it is within the estimates of this ministry.
9 p.m.
Mr. Charlton: I was not concerned so much with the overall cost of the building, because we are all aware that sooner or later buildings pay for themselves and become part of the public domain. I was more interested in the operating costs of the accommodation and the equivalent cost to the government over and against the rent the ministry is now paying for its space in Toronto; in other words, the costs that would normally show up in the ministry's estimates for accommodation.
Hon. Mr. Ashe: I emphasize again that the actual cost of space is not within the purview of this ministry. That is a concern of the Ministry of Government Services.
One item in my opening remarks that is relevant in the context of operating costs concerns the overall energy costs: the equivalence of 60 kilowatt-hours per square foot per annum in our present accommodation at 77 Bloor Street West to 10 kilowatt-hours per square foot per annum in the new building. In an operational sense, energy costs will be significantly less -- one sixth, as a matter of fact. This augurs well in actual dollars. In this age of energy efficiency, it is very important. My colleague the Minister of Energy (Mr. Welch) would be very quick to point that out.
As far as the actual costs of relocating are concerned, in this fiscal year, 1981-82, a lot of our estimates and the costs in vote 801, item 10, concern relocation costs and allowances for staff. Once people make the commitment to relocate, that becomes a credit they are building up. The double-banking I referred to earlier, of bringing people on staff who will be trained by the outgoing people, is a cost. In the upcoming fiscal year, the major costs will be furniture and equipment, which will be significant items. These will be one-time costs and will not recur from year to year.
The physical relocation, which I alluded to briefly in my remarks, is scheduled to take place over a three-month period; so it is phased. Physically, you could say it could be done over a weekend or two, but, as I am sure the member is aware, this is not practical in an operation our size, considering the massiveness of our relationship with the vendor public in the context of corporations and sales tax remitters, and with the public generally, the taxpayers. We have a concern to make sure there is no break in the process of our day-to-day collections, which are significant for the cash flow requirements of the Treasury. That will also be part of the relocation cost.
In any massive relocation such as this, the one-time cost at the beginning is quite significant. Once we get relocated and get into some of the new processes we are going into, the additional capabilities we will have in dealing with the sales and property tax grants will pay for the extra costs being instigated at the front end of the process on a nonrecurring basis.
Mr. Haggerty: Mr. Chairman, I have one question on the matter of supply and office services. I suppose that relates to the purchase of office equipment and supplies. Are these tendered, and is it through your ministry or is it through another ministry?
Hon. Mr. Ashe: When we are talking about smaller items, they are often acquired through our central stores and central purchasing capabilities. On specific items of any significance that are tailor-made for our operation, they are tendered.
Vote 801 agreed to.
On vote 802, tax revenue program:
Mr. Charlton: Mr. Chairman, I would like to ask the minister for some comments about the Motor Vehicle Fuel Tax Act amendment he introduced last week. With regard to the problem of tax exemptions and the colouring of fuels being proposed in that bill, there are a number of us who have had letters from different people across the province very strenuously objecting to that approach of dealing with the tax exemption problem; such as some of the co-ops across the province, and more specifically some of the co-ops in northern Ontario.
I would like to get a sense of the extent of the problem that exists, and exactly why they picked the approach of coloured fuel. One of the reasons I raise that is there is an oil company which operates in this province -- it is Suncor, the one this government just bought 25 per cent of -- that used to dye its fuel blue in this province. They used to call it Blue Sunoco.
The governments in this country forced them to take the dye out because it was a very serious pollutant. I am just wondering what has been done in the last decade to so improve dyes that this ministry is going to be able to instruct that they be put in fuels sold in this province so that they can identify them for tax purposes, when the very corporation in which this government just bought an interest was forced to take the dyes out.
Hon. Mr. Ashe: That is an excellent question on a subject I am very happy to expand upon. I really did not have enough opportunity last week on the introduction of the bill, because the Speaker, in his wisdom, after a point was raised by the Leader of the Opposition (Mr. Smith), did not allow me to continue my opening remarks. I had tried to touch upon many of the issues raised now by the member for Hamilton Mountain.
First of all, let me suggest to you that the extent of the problem we are trying to address with the introduction of coloured fuel is a matter of a bit of speculation. I am the first one to admit that.
Nobody really knows the amount of slippage going down the drain because of the way the system now exists. There are varying estimates, anywhere from a low of $10 million per annum to a high of $50 million per annum. There is a general acceptance within my ministry and within Treasury that the loss of revenue in the current system is something on the order of $25 million. To be very frank, we do not really know for sure. If we knew exactly where and how it was going, it probably would not be going. That is a safe assumption.
9:10 p.m.
One of the other concerns this government and this ministry is trying to address is deregulation. I must say one part of the particular bill I introduced last week to amend the Fuel Tax Act addresses this concern more than any other I have had the privilege to introduce for as long as I have been a member of this Legislature, since June 1977, in the context of delivering a deregulation bill.
I think we all agree that if there is one problem in government, it is more and more paper and regulations. Anywhere we can cut those down has to be considered a plus. Under the present system, there is a lot of paperwork and reporting that has to be done along the line. One of the other alternatives suggested by the industry which we examined would further accelerate and exacerbate this problem.
In other words, we would literally have to follow the gallon of fuel out of the ground right down to when it was burned within the car, tractor, stove or furnace, as the case may be. Although that was a suggestion and an alternative, it was discarded for obvious reasons. It would further compound the paper war and the reporting that goes on now.
What we are doing with the introduction of coloured fuel is having a very small number of people responsible for reporting, namely, the major oil companies that will be responsible for the injection of the colour within the tax-exempt fuel. Although there will be quite a number of injection points, I think there will actually be only 15 companies that are in the business of supplying the products we are talking about, which is the middle distillate line of fuels: stove oil, fuel oil -- I think kerosene comes in there -- which are tax exempt, and of course the diesel fuel which is tax-due.
The main area of concern that is part of the ongoing discussion is something we have looked at very seriously over the last six months. We have met with the industry and with the co-operatives on this. Their concern was that initially they had to put in significant capital investment in tankage, pipes and another line of fuel for, as far as they were concerned, no return on this capital.
Within the industry itself, there was the initial cost of putting in the colour injectors and the ongoing costs of the dyeing operation. Again, there was no return on this extra cost. In turn, they would ultimately end up with either a reduction in their profits or an ongoing and added cost to the consumer.
I think we have been able to accomplish the best of all worlds. We are eliminating literally tens of thousands of reports people have had to fill in. That will be eliminated. We will be down to this core of 15 companies. In the bill, there is compensation for the people who have to put in additional tankage, such as the co-operatives. At that level, as long as they were registered as dealers and distributors that could handle this type of product as of the date of the budget, May 19, 1981, they will be eligible for compensation for the full capital costs to maintain their present level of business.
That is key. We are not prepared as a government to finance expansion of their business. For example, if it is proven, and we will have expert advice in this regard, that a cooperative of significant size has the need for an additional 40,000 gallon tank, we will pay the full capital cost of that tank and its installation up to a maximum of $65,000.
I am told that maximum is not a hindrance and that it should cover every situation within this province with the possible exception of one. Those concerns, which I think were quite legitimate and quite fair, were financial in nature. I think we have taken care of them.
Similarly, as a government, we will supply suppliers with the dye. We will be supplying this on an ongoing basis and compensate them on the basis of, if I recall the number, 30 cents per kilolitre for the actual dyeing process, which over a period of years should not only compensate them for the ongoing costs of the dyeing process, but should also compensate them for their initial capital cost.
In this case, we are assuming Shell Oil, Ultramar, Sunoco and so on, actually have the financial capabilities to pay for it up front. They will recover their costs over a very few years. As well, and I think this is important, they will be able to build up a sinking fund to replace or upgrade those facilities when they need replacement somewhere down the line. There is no doubt that all of those things have been addressed.
I think the old blue gasoline was an excellent choice of colour. I cannot understand why that should have been a concern. As a matter of fact, maybe it should all be blue and then we would not have a problem.
In practical terms, I think the difference is that the actual dyeing is insignificant. I am told we are talking about 20 parts per million. It is a dye that is nontoxic in the context of those dilutions. It will not cause a problem in any sense of the word in terms of pollution. Having said all that, I have to take the advice of others. I am not an expert in that regard at all, but if one just thinks of that context of 20 parts per million, it is rather insignificant.
We are talking about colouring an estimated volume of nine billion litres a year. As members know, we will be colouring the tax exempt fuel, which means that somebody on a highway should be using clear or uncoloured diesel fuels. If they have coloured fuel in their tank, they are probably using it illegally. That is really the whole name of the game. It will be a relatively simple system to follow through. It does involve some ongoing costs. There is no doubt about that.
I might add that we are the last jurisdiction in Canada to go this route, so we are not the leader in this regard. Quebec was the last jurisdiction that went to the coloured fuel system, and they did it in 1973, if I recall correctly. Even with the difference in fuel costs at that time and taxation at that time, their first year's increase in revenue was some $15 million.
I think it is safe to say that people in Ontario are probably a little more legally inclined than in other jurisdictions, but when we consider the extra taxes that have come into being since 1973 based on the higher costs of fuel, annual projections of $25 million of additional gross revenue are probably reasonable and feasible.
It is our view and that of the Treasurer, that there will be net revenue, even after all of these costs have been covered, in year one of the coloured fuel system.
Mr. Charlton: I get the basic direction in terms of how the minister is going to get at some of the additional tax dollars, but who is he going to have checking vehicles on the highways looking for coloured fuel in the tanks?
For example, one of the middle distillates he talked about was diesel fuel. In case he has not noticed, there is an increasingly large number of diesel domestic passenger vehicles available that people are buying. Presumably some of them are people who will have access to tax-free or tax-exempt middle distillate diesel fuel. Are you going to start stopping cars on the highways in this province to see if they have coloured fuel in their tanks? I want to understand how the process is going to work. What is going to be done out there in the real world to find this? You have been talking about the elimination of all these people, who are going to be a part of the process. How does it work?
9:20 p.m.
Hon. Mr. Ashe: First of all, I am supposed to have said elimination of people. I do not think that is what I said, frankly. I said there would be an elimination of the paper war now necessary in the reporting system. It is true that will be replaced with a few more inspectors than we now have. They are going to be "dippers," for the sake of a better description. Part of their responsibilities will be checking at the point where the fuel is being coloured to make sure it is being done properly; to make sure the dye is being handled in a secure way; and they will also be checking on the consistency of the colour. There is an allowance allowed within what it should be, and that will be a very important part of their function.
At the same time, they will be checking at the distributor level, at the wayside station level, but to be very frank, they will be checking most particularly with the trucking industry. That is not to say they will not, on occasion, have an opportunity to check, or it may be suggested they check, certain people who operate private automobiles. As you well know, in many cases, in any tax system, part of the enforcement process comes about because somebody snitches on somebody else, saying, "Joe Blow is using something illegally," or "Joe Blow is claiming an exemption illegally," or "He is claiming expenses illegally." I am sure, on that basis, our inspectors will be reacting to that kind of concern and checking the odd private automobile, but this is not where we suspect or expect a great deal of the shrinkage has been occurring or where we will be expending a great deal of our inspectors' time. The shrinkage is much greater than that in size.
Another concern that appears in this shrinkage of revenue is not necessarily a problem at the consumer level that we hope to be able to find and eliminate with the new colouring system. It is the fact that people are suspected of buying tax-exempt fuel and selling it retail as a tax-paid item. This means the ultimate consumer is completely clear and honest in what he has paid, but instead of that paid tax coming to the provincial Treasury, it is going as a great excess profit to the middleman. Through coloration, we ultimately hope to be able to eliminate most of that.
We feel, other than in that aspect, it is at the truckers' level they are using significant amounts of diesel fuel on a regular basis. With their large tankage, it is estimated that on some of these larger tractor-trailers there could be a tax avoidance as high as $150 on a tank of diesel fuel. I am not using the term "gas," because, as I am sure all the honourable members know, we are not talking about gasoline as such but about the middle distillates, which include diesel fuels, stove oils, furnace oils and so on.
A very significant amount of avoidance can be made. For example, and I appreciate this is hypothetical and I am expressing it that way, I am told if an average middle-distance carrier in the trucking industry was using tax-exempt fuel instead of tax-paid fuel in one truck for one year, there would be an avoidance of $12,000 of tax. That is one truck on the highway. I am obviously not talking about a little pickup truck, I am talking about a tandem-trailer type operation.
The amounts are significant, and as the price of fuel goes up and as the taxation component of that fuel goes up, we feel, and are very concerned, that the attraction of using a tax-exempt fuel rather than a taxable fuel becomes more and more attractive. The problem will be compounded rather than shrunk over the years ahead.
Mr. Charlton: I realize, Mr. Minister, that we are going to get to debate this bill in the very near future. One of the reasons I wanted to ask you about it tonight was because we can get into a cross dialogue in this kind of setting, and because I will have to make a recommendation to my caucus tomorrow morning on the bill, I wanted to get a few things straight in my head.
We have discussed some kind of reporting in relation to this bill a number of times in the past. I should mention that one of my former colleagues, the former member for Brantford, used to raise quite regularly with the Minister of Revenue -- both in his role as the former revenue critic and even subsequent to that, after I became the critic -- the whole question of tax slippage and tax loss. It is something we are very concerned about. Any of the objections any of us may have had to the bill, or may not have had, did not relate to whether or not the minister should be going after tax losses, but whether or not this was a logical or good way to get at it. That is one of the reasons we are asking so many questions.
In a situation like this, would the minister be prepared, a year from now, to report back with some kind of a breakdown of what he actually thinks he has gained as a result of the colouring of the fuel. We go through that discussion with all kinds of different tax programs, but in this case it would be very interesting to see just how effective this specific program was in terms of actual gains in tax dollars, over and against the fact the ad valorem tax is going to be adding on tax dollars as well. We would like some kind of a breakdown, about a year after the bill goes into effect, to see how successful the program is.
Hon. Mr. Ashe: Needless to say, we would be very pleased and happy to report the progress on the implementation of the new fuel tax act. I just want to put in a word of caution when we talk about the period of a year. I know the member did say a year from the passage of the bill, but let me remind all the members that although we hope to have the bill passed within the next short while and have it receive royal assent before the end of this particular legislative session, it does acknowledge that it will take a significant period of time for the industry to adjust and acquire equipment, tankage, injectors and have it all in effect.
The new tax act really is not effective until September 1, 1982, so I do not know that next year's estimates will show anything to speak of, but they definitely will by the year after. We will be very happy to report back -- possibly even before the time element of the estimates -- to the Legislature on the results of the conversion from the present system to the new one.
Mr. Ruston: Just a clarification on that, Mr. Minister. Some of us were not listening as strictly as we should. Sometimes that happens around here, you know.
Is the colour going to be in the transportation field? Is that correct, or will the colouring be put in the fuel for heating?
Hon. Mr. Ashe: Heating is the word that is used, but that is not the criteria. The tax-exempt fuel will be coloured, but that could still include vehicles used on the farm or in commercial fishing, which are tax-exempt. Highway-used fuel will be clear.
9:30 p.m.
The Deputy Chairman: Is there any further discussion on this vote?
Mr. Haggerty: Yes, Mr. Chairman. On vote 802, item 5, taxpayer services: Does this include the advertising for the tax grant to senior citizens? If it does, what is the cost?
Hon. Mr. Ashe: Mr. Chairman, would the honourable member kindly repeat the question? I am not quite sure what it was. I know we are on vote 802, item 5.
Mr. Haggerty: Item 5 relates to the basic purpose of the taxpayer services branch, which is to assist the taxpayers in the tax revenue program and to resolve their related concerns, including providing a systematic distribution of tax information to taxpayers. That is the area I want to raise the question about. Does this include the advertising in all the local newspapers and weekly newspapers, the advice given to the pensioners on the property tax rebate?
Hon. Mr. Ashe: If the member is asking whether the cost of the advertising program is borne within this vote, the answer is no.
Mr. Haggerty: Where is that found, then? Is it listed in these estimates? I would like to know what it actually costs, since the ministry has been advertising for almost a year now.
Hon. Mr. Ashe: The actual cost of the advertising program is contained in vote 803, and we will come to it, Mr. Chairman.
The Deputy Chairman: So you will come to that in vote 803?
Hon. Mr. Ashe: Yes.
The Deputy Chairman: Is that satisfactory?
Mr. Haggerty: Well, I guess I will have to wait until that vote comes up, then.
I think I have one further question, if I can find it. Could the minister give a further explanation on vote 802, item 8, as it relates to transfer payments, grants under the Small Business Development Corporations Act'? I think there is $10 million for that, less recoveries of $10 million from other ministries. That was in 1980-81, but I thought I read someplace that the cost was still there for the current estimates.
Could the minister enlighten us as to just what that entails? It is under item 8, transfer payments granted under the Small Business Development Corporations Act, $12 million, and the recovery from other ministries is about the same figure. Could the minister explain just what this includes? Why is his ministry involved in this area when it seems that there is a special government agency to perform the activities and collect loans?
Hon. Mr. Ashe: The actual item referred to, of course, is the Small Business Development Corporations Act, which is an act introduced and administered, in the context of this assembly, by my colleague the Treasurer. The actual function of that program, the small business development corporations, is within the purview of the Ministry of Revenue. We administer the program on an ongoing basis, and I might say that there are some 200 SBDCs now in operation. The actual revenue disbursed, if the member will recall the program, provides a 30 per cent rebate to investors and a 30 per cent tax credit in the case of corporations. We actually pay out that money, but we get it back from the Ministry of Treasury and Economics. So that is why the program has an offsetting figure of disbursements to revenue.
Mr. Charlton: There are a couple of other items I would like to raise with the minister under this vote. I don't know if you are in a position to do it tonight, but perhaps at some time during the course of the estimates you could give us an update along the lines of those we have had over the last couple of years on the Small Business Development Corporations Act. I would like to know about investments, types of businesses, number of businesses and so on.
Hon. Mr. Ashe: There are too many pages around here -- including my own, which I cannot find.
I do have an update to October 31, 1981. As I indicated just a few moments ago, we have more than 200 registered small business development corporations, specifically 207. Of those there are 201 private and six public. At the moment there are 18 applications in process and there were a further 18 applications either withdrawn or rejected. The total number of applications. or proposals if you will, that we have received is 243.
I do not know if this is a very meaningful figure. frankly, but the total authorized applied-for capital is $796,850,000. The total issued capital, which I think is the more important number, the actual dollars up front, is $77,491,705. The grant tax credit commitment from that figure is $23,247,511. As I indicated before, there is a difference between corporate and individual SBDCs, and of the 207, 203 SBDCs have individual investors and only four SBDCs have a corporate investor.
I think it is very significant the investment made in manufacturing and processing is $41,328,000; in tourism activities, $18,128,000; and in exploration and development and other prescribed activities, $6,271,000. The total investments made by the SBDCs themselves number 245 for a value of $65,728,000.
There is no doubt at all that this program has been well received and is, in my view, quite successful, much more so than the program it replaced. It has obviously appealed to different sectors out there. In approving and ultimately signing each SBDC for registration, it gratifies me to see the number of what appear to be relatively small investors out there. They get together, in some cases three, four and five investors, and each put in $5,000 for example and end up with an initial $25,000 investment.
It is encouraging to know there is a vehicle now, not only for the million-dollar investors who are not the average person by any stretch of the imagination, but for these 25 people, for example, each putting in $1,000. It has proved to be exceedingly successful and the interest and activity has not started to decline. It is ongoing and there is no great change from month to month in the activity that has been taking place.
9:40 p.m.
Mr. Charlton: On the surface, the figures seem reasonably impressive. Is there any additional data you could provide us with about the types of business and processes, the areas of the province and the jobs created? Is any kind of statistical analysis available?
Hon. Mr. Ashe: I am sure that can be provided. I did touch on the areas of investments made as far as the sectors are concerned. We could become more specific in the breakdown of the three sectors I identified: manufacturing and processing; tourism activities; and exploration and development and other prescribed activities.
We also have a breakdown of the various areas in the province where the investments have originated. There is no doubt the biggest number have been in the Metropolitan Toronto area. But they are from all over the province from the far north to southwestern Ontario. We would be happy to supply that.
Mr. Charlton: That is the kind of thing we would be interested in, whatever statistical analysis has been done. It would not be necessary for you to come back and read the whole thing into the record. If you could supply us with the information, it would be helpful.
There was something I asked the minister's predecessor about some time ago. It is about staff who would, I believe, have been working on succession duties and the Gift Tax Act, people remaining in the ministry working on programs for acts that had been withdrawn and taxes that had been got rid of, who were going through the process of winding down operations for outstanding claims and so on. There was some overlap and some people were unsure where they would end up and how long the interim thing was going to go on. Could the minister give us some update on the situation with that staff and what has happened with the majority of them?
Hon. Mr. Ashe: The main area that has been winding down in the last number of years has to do with the corporation tax and the gift tax. Most of these people have been absorbed into other parts of the ministry and are just carrying through now. There are very few people, and I hope we will come up with the number in a minute, who are involved only with acts that are no longer in being.
For example, the succession duty and gift tax staff has been reduced from 87 in 1979 to 12 on October 1, 1981. To give you some indication how some of this staff has been utilized and transferred to other assignments, in the present small business development corporation complement we just referred to, that program is made up of several people transferred from previous succession duty functions.
You would probably be interested to know there were almost 1,000 unassessed succession duties files under review at the act's repeal in 1979, and more than 400 new ones have been received since. The unassessed inventory stands at something in the area of 70. As far as the future is concerned, a very small staff, as I have just indicated, will carry on the remaining administration, mainly dealing with about 1,500 possible contingent duty estate files.
These are primarily in the following categories: forgivable farm and business duty -- 462 estates have over $13 million in duty for possible forgiveness during the next several years, and as long as they follow through on the family farm concept there is no problem; deferred duty -- 320 estates have deferred the payment of an estimated $100 million in duty until some future event in each estate -- for example, the death of the income beneficiary. I think this is an excellent indication that, when an act becomes redundant by its repeal, the activity per se does not just eliminate overnight the existing files and existing ongoing contingencies that have to be taken care of, but the staff complement, on an ongoing basis, is adjusted accordingly.
Mr. Charlton: On the same topic, you have indicated that most of the staff have been absorbed in other areas. Were there any of the staff at all who actually lost jobs as a result of the repeal of the two acts? By that I don't mean somebody who just did not want to take another job. I mean somebody who actually wanted to stay in the ministry and you could not find a place for them.
Hon. Mr. Ashe: I am advised the answer to that one is no. Everybody who wished to remain within the ministry has been accommodated in other areas of the ministry's responsibilities. I am also further advised that, even of the 12 people I indicated who are still working on succession duty activities, this is not the exclusive activity of any one of that 12. It is just part of other activities they are taking care of at the same time.
Vote 802 agreed to.
On vote 803, standard accounts classification:
Mr. Haggerty: Mr. Chairman, I was interested in the minister's opening statement relating to the Ontario tax grant for senior citizens. He said it continues to have a major impact on the ministry's operations, and gave some explanation of some of the causes for it. Following the recommendations I understand there has been an internal task force set up within your ministry to find out some of the problems that relate to the property tax grant rebate for seniors. Like other members, I have had numerous calls since the new program was initiated here a year ago and last spring, when they received their first cheque. Has the minister considered perhaps going back to the old procedure where it was handled by the federal government when they filed their income tax forms, and they received one cheque in a lump sum?
It was brought to my attention last week that a couple of pensioners had been complaining they had not received their first instalment. Apparently, they received a letter back from your ministry, indicating that a cheque had been cashed, and asking, "Is this your signature?" The pensioners did some soul-searching, and discovered they had cashed the first cheque but had forgotten they had received it. Reading the advertisement in the papers, "Have you filed your application?" -- perhaps this is a problem some of the seniors have -- they have forgotten they received the first cheque, and are still making inquiries as to why they have not received it, as in this case they had.
I wonder if it is not better to go back to the old method you had. It was very successful. The ministry did not need staff here to administer it. It was handled by the federal government.
9:50 p.m.
When income tax was filed, it was a simple form that all pensioners understood. It is nice, when the cheques are received in the spring and at the end of the year -- it would be nice for Christmas time. But when I look at vote 803 -- and I am sure I misunderstand this -- it says the guaranteed income tax grants program estimate for 1980-81 was $89,000,473, and this year it is $401,000,000 and some. Would it jump that much?
Hon. Mr. Ashe: What page are you on?
Mr. Haggerty: I am on vote 803 -- that is on your explanatory notes there. If the minister could just take a look at that. The other area is that a number of persons are having difficulty in getting their sales tax rebates. Some have not received it as yet, and I am sure other members have run into the same difficulties. They do appreciate the help they receive through the ministry staff looking after this, but the biggest complaint I get from the pensioners is they can get the number and there are a number of lines that they can get, but they cannot get through. Why have so many lines there if all the calls cannot get through?
I suggest to the minister there is a problem there. They can spend days and days trying to get through and the line is always busy. There is one way to resolve it and that is to go back to the old method. Let them file their income tax here in January, and pay them the one lump sum for the sales tax and for the pensioners' rebate. I think that would solve all the problems. Perhaps the minister could reduce manpower in his ministry by doing it. Let the federal fellows handle it. It worked very successfully in the past, and there is no reason it cannot continue.
Hon. Mr. Ashe: There were several points raised there. I am not sure I found the specific number the member was referring to, whatever it was. I think the confusion is that he is putting together two different programs. He is looking at the numbers relating to the guaranteed annual income system that we also administer -- the Gains program as it is referred to -- and confusing it with the property and sales tax grant for Ontario pensioners.
The property tax grant and sales tax grant program, as I am sure all members are aware, are completely different programs. The Gains program is an ongoing program, and our estimates on that program for the fiscal year 1981-82 are something less than the actuals for 1980-81. We paid out in actual in 1980-81 $103,332,900 and our estimates for this year are $100,000,000, a decrease of $3.3 million.
The property and sales tax grant for Ontario pensioners -- yes, there are various debates by the members opposite as to which system is the most practical. The previous system was done through the income tax form versus the new program. I think, being fair to the issue, there are pros and cons to both systems. I think it safe to say the old shoe is somewhat easier to fit into than a new shoe, so the new shoe takes a little breaking in and takes a little adjustment.
I think that is exactly what we are going through with the property tax grant system as it is now, and to a lesser degree the sales tax grant. Having said all that and acknowledged the shoe does get broken in, I think ultimately we end up with a program that better delivers to our clientele a sum of money more appropriate to their needs at the time when they probably need it the most.
We are recognizing in the new system that the people are getting their money sooner than they were when they were claiming it back through their income tax form. Instead of getting it in the following year, they are getting it in the year in which their expenses are occurring. That is, I think, a significant advance. For example, in this year of 1981, under the old system they would not have got their tax credit until approximately April of next year. This year most people got an interim grant in the spring and most of them have gotten, or shortly will get, the second half of their grants in the fall of this year. The program delivers the funds in the same year. The previous program delivered it in the following year.
There is a form to fill in to claim the property tax grant. Familiarity with it will develop. We are finding, as I mentioned in my remarks earlier, that the error rate this year is 50 per cent of what it was last year. I would go so far as to suggest it will be 50 per cent of that again next year as the program becomes more mature and people become more familiar with it. I think it is also safe to say, if one looks back at how people filled in their income tax forms, that the client group in that category also made significant errors there as well.
Although they still have a form to fill in it is a specific form for a specific purpose. They know it is going to generate a cheque. Many of these people had to wait to file an income tax form for that sole purpose. They were not taxable otherwise. They did not have to fill in a tax form before, except to claim their property tax credit. Overall, I think we are delivering a better service to more seniors in a more appropriate way and at a more appropriate time with the new program.
Having acknowledged that, it is going to take a little while. Even this year, now we have reduced the error rate on the applications to 20 per cent, we are below the error rate experienced by federal income tax filers.
I am told that, for those who file federal income tax forms, there is an error rate of 30 per cent. We exceeded that last year. We had 40 per cent. This year we are down to 20 per cent. I do not think that example of errors being made or of having to fill in forms or so on is any longer an issue. We are already ahead of the game on that. I think we will be further ahead of the game by next year.
There is no doubt the new program delivers more money to more people. Granted, and I acknowledge it, it delivers less money to some people. It is a philosophy of what the plan is all about. It is designed to return all or part, as the case may be, of rent or property taxes. That is exactly what this plan is designed to do. Similarly, being able to return $50 in the way of a sales tax grant I think is more attractive to most people than the previous program.
Although philosophically we can debate back and forth which plan and which method of delivery was better, I think it is safe to say with another year of this program under our belts this one is now, and will continue to be, much further ahead and offer more benefits to the recipients than the old program.
As far as the problems in getting through and making contact on inquiries is concerned, I think I touched upon that in great detail in my opening remarks in acknowledging we had some limitations and problems. I think it is safe to say most people who phone now probably will not have great problems. I do not mean they are going to get through the first time because we are still getting a lot of activity. There is no doubt about it. But I think they have a better opportunity to get through.
Being in a time of fiscal restraint we have to be reasonable and responsible in the level of service we provide. I indicated in my remarks that last year we had 26 telephone lines dedicated to these forms of inquiries. This year we increased it to 29.
Similarly the trained staff made available to this program was increased significantly this year. To take the next step would require not only a great additional capital outlay, but a considerable monthly cost for a facility we are going to be vacating in the coming months. It would be a wasteful investment of taxpayers' funds to invest in the area of $100,000. That would be the initial month's investment to increase our capabilities. In our new facility in Oshawa we will be able to have these additional capabilities and facilities to respond to inquiries.
10 p.m.
I think we all have to keep in mind -- and I tried to allude to it in my opening remarks -- that we are dealing with a client group that can be easily upset. I am not trying to belittle that at all. There is no doubt one of the criteria -- and I think all honourable members have acknowledged it to me personally and in many ways -- is that when Mrs. Smith finds out that Mrs. Jones, Mr. Brown and Mr. Green have already got their cheques, she becomes concerned even though her own may have been in only for two or three weeks. We made it abundantly clear on the applications, through the whole process and even in our advertising program which was significant, that the program was designed to deliver a cheque, under all normal circumstances, in eight weeks. Only a very small percentage has not met that goal.
When it has not been met, in most cases some other problem has caused the delay, including, I might say, even in the odd case applications that have gone completely astray. Who knows. Did we lose them? Were they not mailed? Were they lost in the post office? Who knows? There are a few that fall into that category. It is unfortunate but it is factual.
But I sincerely believe that, considering the vagaries of the Canadian postal system and all other related situations, that what we have --
Mr. Haggerty: You have to blame it on somebody.
Hon. Mr. Ashe: Sure, we will blame it on the feds again. Why not? In fact, we have a pretty fair system that we are rationalizing and making better as time goes on.
The honourable members may be interested in what some of the problems were on last year's forms in the 40 per cent that I referred to. In the problem type in last year's program, omitting occupancy costs, the main criterion, was 54 per cent; the signature was missing on 18 per cent; the mutilated or spoiled application that was unreadable for one reason or another accounted for only one per cent and more than one problem or miscellaneous items of a lesser total than one per cent, all put together totalled 27 per cent for a total of 100 per cent of the errors.
Again, we will do a similar comparison after the substantial completion of this year's program. I am sure if it indicates we can design a better form for next year, we will do so. One of the reasons for the significant reductions this year was the redesign of the form to try to offset and compensate for some of the errors and omissions that happened in the 1980 program.
Mr. Charlton: Mr. Chairman, I do not want to get into a long rant about the seniors' tax grants, but we have had a couple of opportunities already this year to debate that whole question when we had the amendment bills in the House. But one of the other reasons why there were far fewer errors on the forms this year -- if other members' offices were anything like mine -- is because large numbers of those forms were filled out in our offices. Information was passed on by your ministry to our staff, I will grant, in order to facilitate that process.
But another area under this vote concerns me much more than the administrative problems in the seniors' tax grant area. That is the whole area of the tax credit programs which have not been altered at all for the rest of the people in this province. The minister will recall, even though he was not the minister at the time, that a year and a half ago when the seniors' tax grants were being introduced, we raised some serious concerns about the other people in this province on low and fixed incomes, people on provincial disability pensions, et cetera.
We were concerned if and when there was going to be some kind of an upgrading, even if it was under the tax credit program, of the amount of return that they would get. There is even an extension of that, the whole question of people in this province who used to get property tax and sales tax credits and no longer get any, or who now get a very much reduced amount on that credit, even though their real income may not have gone up at all in relation to the cost of living. They may, in fact, have lost ground and still lose the credit just because of an increased income, because of the fixed base figure in the tax credit formula calculation.
My question to the minister is, is the ministry doing any analysis of that tax credit program to see who are the people who are affected by it or used to get it but no longer get it? Is there any discussion going on between the ministry and Treasury about possibly upgrading that program to more reasonably reflect the current economic situations in the province?
Hon. Mr. Ashe: In the context of the tax credit program as it now exists to what existed previously, as the honourable member mentioned, there is an ongoing dialogue about the philosophy of the change. Where the distinction has come in is what the whole program was about to start with, whether it was just to benefit the tax program per se or whether it was designed to give some credits towards accommodation costs in the broadest sense. I do not know whether that difference in philosophy or opinion will ever be rationalized.
As the honourable member knows and has acknowledged, ultimately any changes in this regard will be in the context of a statement from the Treasurer in his budgets from time to time, the next one presumably being six months away, more or less. I know that is always one of the considerations of the Treasurer when he is looking at the equity of these programs.
Similarly, there is no doubt, if we look at the old basis of a complete tax credit and the new basis of tax credit plus tax grant, we are paying out more money now in total than we did before, albeit, and this is again part of the debate, some people are getting less but more people are getting more.
To be honest, in the context of whether any dialogue is going on in the sense the member means that, I would have to say 'no." The Treasurer is aware, as much as I am, of the issues that are raised within this Legislature, even in the sense that when I get correspondence on that issue, I quite correctly acknowledge it and then pass it on to the Treasurer for further consideration and response.
Whether there will be a change in policy as to property tax credits in the future, I guess only time and budget considerations will tell. As I talked about before in a different context, there is no doubt at all, if you give more credits in this area and you have to end up with the same bottom line in tax revenues, you have to raise the money somewhere else. Whether the present system will be enriched in the upcoming budget, I do not know, except I know it is always part of the ongoing considerations in the budgetary process carried out by my colleague the Treasurer.
I am sorry I cannot be more specific, but that is because I just cannot be. I can assure the honourable member that when inquiries or concerns come to my attention along those lines of a change in the amount of the tax credit, or who should or should not be allowed to get it, I do pass them on to the attention of the Treasurer so that they become part of his budget considerations.
10:10 p.m.
Mr. Charlton: I realized the minister was not going to be able to tell me specifically whether there was going to be anything in the budget next March. That is why I phrased the question, "Have any discussions been going on?"
Can the minister tell me specifically whether his ministry has done any analysis of the people in this province who have got lesser grants than they used to get? Has the ministry done any analysis of the way the grant that people have got has changed? It is one of the things that has always concerned me, whether you want to talk about it as a straight tax measure for the redistribution of income or whether you want to look at it as assistance specifically with the cost of housing and/or property taxation.
For example, the way the tax credit system in this province is structured you may have somebody who, although his income is substantially higher than it was in 1974, is now earning less in real economic terms than he was in 1974. Put another way, he may be paying a far greater percentage of his gross income in rent and property taxes than he was in 1974, and he may no longer be getting any tax credit at all.
Has any analysis been done of the whole program to show the changes in the kinds of people and the economic status of the people to whom this tax credit applies and who get some benefit from it?
Hon. Mr. Ashe: To answer the member's question of whether we can identify those people who are paying a greater percentage of their real income for accommodations than before, I do not think we actually do that kind of analysis. We are capable of supplying -- and I do not know that I can do it tonight, but I am sure we can do it, and I am sure the member has seen it before -- the number of people who are getting more, the number of people who are getting less and the number of people who are getting about the same. We do have those figures; they have been discussed in this Legislature on previous occasions.
But getting down to the actual percentage of income spent for accommodation to real income and how it compares to a previous time frame, say 1973 or 1974, I do not think we have done anything in that regard. I suppose anything can be done if you want to utilize all the figures available. I am not trying to pass the buck to Ottawa here, but they have the personal income tax form, which is probably a more appropriate vehicle for collecting that information, and I am sure they do have it right now in their normal analysis of the personal income tax forms that are filed not only in Ontario but also in every other jurisdiction across Canada.
Mr. Ruston: Mr. Chairman, there is always a kind of conflict or problem with regard to those over 65 who are farming and who have their farm tax rebate involved. They may get a cheque for $500 from the senior citizens' tax grant, but if their farm taxes are $1,600 and they have received $500 they then apply for a grant towards their farm taxes, which under the farm tax rebate program is normally 50 per cent of their taxes.
I know that two ministries are involved here, but I just wonder if the minister can give me his understanding of how that operates. From what we have gathered, there seems to be some conflict. I am not sure if everyone who was contacted has had his problem straightened out yet. One day while I was in my office, there seemed to be a conflict from the Ministry of Revenue as to how that balance was taken care of and whether there were any grants towards it on the farm tax rebate. Does the minister have that information?
Hon. Mr. Ashe: Frankly, the issue seems to be very fair and equitable to me. Let us use a specific example to keep it simple, in nice, round numbers. If the taxes are $1,000, the question is, should they get $500 from us and $500 as the farm tax rebate? The answer to that is no. What happens is they get the $500 from us and they get half of the balance as the farm tax rebate. This means they still end up with a net tax of only $250, which is quite generous. That is the way I understand the program is supposed to work.
I have had inquiries, usually by members on behalf of constituents, saying they should have received both: $500 from one half of the $1,000 and the other $500 being still available, for a total of $1,000 and, therefore, resulting in no net tax. There has even been the odd one who has received the wrong amount of money because of the wrong numbers being used, which I am sure has been completely unintentional. It is not designed to pay everything, but the two programs can come together so they really do get the benefit from both but not on the gross amount. It is only on the net amount after the property tax grant has been paid.
Mr. Ruston: The minister's understanding of it is exactly the same as mine, and I think that is the way it was solved. So that is fine.
Mr. Worton: Mr. Chairman, as the minister has said, this is a new program and there are a number of kinks to be ironed out. I think it is fair to say the new form is a little simpler than it was last year. On top of that, I think it is also fair to state that the minister's staff is very courteous in trying to correct these problems.
I wish to know what it would cost if we opened up our pocketbook and said to every taxpayer or every person who is entitled to it, "We will pay you $500 across the board;" that is, $250 twice. One of the problems we do encounter is that they get it in two installments, as has already been mentioned, and some of them forget the first one. When we write to the head of the program, he sends us back the cancelled cheque showing they got it.
The other problem I am running into now is with constituents who are calling me to say they are getting a tax return to fill out from the Department of National Revenue when the minister's predecessor certainly indicated that would not be the case, that they would not need to fill out an income tax return.
I appreciate that the Department of National Revenue can send you a form any time and ask you to complete it. Can the minister give us any thoughts as to what it would cost us if we made a straight grant of $500 in two installments? It must cause a lot of paperwork to adjust for those who are getting less in either senior citizen accommodations or small homes that are less than $500 in taxes.
Hon. Mr. Ashe: Mr. Chairman, based on what we are paying out now in the average tax grant, to go to a straight $500 for everybody would add something in the area of $54 million gross. There are about 540,000 at $100 average; so there would be $54 million of additional costs. One can assume there would be some reduction in program delivery costs; so I would suggest somewhere in the ball park of $50 million would be the extra costs involved in a straight delivery of $500.
10:20 p.m.
Mr. Newman: Mr. Chairman, I want to ask the minister whether, in setting up the plan, he considered using the local offices in some municipalities rather than having them call Toronto on the Zenith number. Constituents of mine have complained that there was no point in trying to get the Zenith number since the line was busy all the time.
In the bigger municipalities there are assessment offices and Revenue offices. We could have calls directed to, in my instance, a Windsor number so the individual could get an explanation for the question he wishes to pose rather than attempting to get through on the Zenith number and being unable to do so.
Hon. Mr. Ashe: There is no doubt that is exactly what some people do anyway, Mr. Chairman. They call the local office, whether it be a sales tax office, an assessment office or even the Province of Ontario Savings Office. I appreciate the accolades given tonight as to the co-operation and assistance of our staff at head office. I think the same would hold true for the majority of the staff in most of these other offices.
The problem in having them get the information directly arises from our not having the capability of keeping an up-to-date data base that the various offices can access. The program of calling the central area was developed so there could be access to the information to answer the questions as they arose. In many cases, people are calling the central Zenith number to have assistance, believe it or not, in the completion of the application.
Although we find the volume is down this year, a lot of the calls are taking longer because our staff are taking the time to work through the application form with the people. Where one might think a call would take two or three minutes, it is taking 10 minutes. That is what is tying up the lines. It is not the increase in volume. It relates more to the length of each call. I do not know what the answer is.
No doubt the answer is the fact I have given. We do not have available within the regional offices the data we have attempted to accumulate with the capabilities of the central line. That has had its problems. There is the volume. There are lines that are busy. In some cases, even after people got through, they found out that our access information, some of our equipment, was down.
It all comes back to the limitations of our present facilities which we hope will be rectified with our increased capabilities next year. Everybody would acknowledge that when one is operating systems in quarters with temporary lines strung here and there in the way of terminals, they have a tendency to break down more often than one would like.
This has happened and has meant some people call in, eventually get through and then, unfortunately, the person they are dealing with says: "I will be very happy to take down the information and get back to you. I cannot get the data now, because the machine is down." We are hoping to overcome that and to refine those things a little more next year.
The program has worked better this year. That is well illustrated by the greatly reduced number of forms that are incomplete and by the way we have been able to get back much more on the telephone to people to correct the errors or shortcomings on their application forms.
This has taken time. Other than things such as people not having signed their forms -- obviously we cannot sign their forms for them; we have to send them back -- in most cases where there are obvious mistakes in numbers, or deficiencies in the information supplied, or omissions of the information supplied, we have attempted to get to the people where at all possible. In some cases it is impossible, because the number is not there or there is no one there during business hours. We have attempted wherever possible to complete the application form and to get it on its way by way of a personal contact rather than having to rely on the mail.
There is no doubt that all of this has taken time. When we are talking about the volumes that we have, in excess of 500,000 for the property tax grants alone, that is a lot of people and a lot of paper. I am not even talking about the sales tax cheques, which do not involve an application but which still have involved the odd problem among the approximately 846,000 cheques. It is a lot of cheques and a lot of people. All in all, the error rate has been exceedingly small.
There is no doubt that we, as members, and the members opposite us, have had the questions, the concerns and the errors brought to our attention. By year three it will be that much better than year two, and I assure the members that year two has been considerably better than year one. It is not perfect, and I do not think, based on the data we have to go by and the clientele and human nature we are dealing with, we will ever get 100 per cent accurate; it is impossible.
Even when we get a list today, which is the most up-to-date list from the federal government -- and that is our base file, do not forget; it comes from the old age security file -- it is already out of date. Unfortunately, there are people who died yesterday, today and the day before; there are people who moved in that same time frame. So it will always be inaccurate, from the day we start working with it. That has caused some of the problems too. We are sending out applications to people who do not exist or who have moved.
All of these things, when they come together all at the same time, give an impression of a greater percentage of inadequacy than does exist. It is not perfect.
Mr. Newman: I accept the minister's comments and I know they are true. I have only tried to suggest that in the larger municipalities he should have one or two staff members in there. I am not saying that we mind handling them through our constituency office, and when we have problems we contact the minister's office and get the utmost of co-operation from the staff. Some people refuse to go to a constituency office and would rather call a local office.
In some municipalities, the local office might be a partial answer to improving the service the constituents get, even though there is not too much room for criticism with what they are getting now.
On motion by Hon. Mr. Gregory, the committee of supply reported certain resolutions.
The House adjourned at 10:28 p.m.