STANDING COMMITTEE ON PUBLIC ACCOUNTS
The House resumed at 8 p.m.
STANDING COMMITTEE ON PUBLIC ACCOUNTS
Resuming the adjourned debate on the motion for adoption of the report of the standing committee on public accounts re: decision of the federal government to change existing established programs financing legislation.
Mrs. Scrivener: Mr. Speaker, I am honoured to be the leadoff speaker this evening on the important subject before us. I refer to the report of the standing committee on public accounts which contains the following recommendations:
"In consideration of the decision of the federal government to change the existing established programs financing legislation and the direct effect this will have upon our health, social welfare and post-secondary education programs, your committee recommends:
"That the government of Ontario consider proposing as soon as possible the necessary time for a debate in the Legislature to provide opportunity for a full examination by the members of the provincial Parliament of the impact of the proposed changes,
"And that the government of Ontario request the government of Canada to rescind its decision to act unilaterally on this fiscal arrangement by reopening its negotiation with the provinces, in order to restore a climate of cooperative federalism, to ensure maintenance of existing levels of service in health, social welfare and post-secondary education and to avoid undue increases in fiscal and economic disparities."
The purpose of the debate this evening, Mr. Speaker, is to examine that recommendation and to determine whether there is a need for a general discussion in this Legislature to examine the impact of recent changes by the federal government to the established programs financing arrangements, amendments that make massive reductions in the transfers to the provinces, transfers that are vital to provincial support of health and post-secondary programs.
I wish to declare at the outset that, in my opinion, there is real need for such a debate. In the next few minutes I will undertake to give some of the reasons why such a debate should be scheduled and why we need to provide the opportunity for as many members of this Legislature as possible to participate in an examination of this complex subject.
While the public accounts committee recommendation does not call for an emergency debate, in my view, the character of the subject for discussion is of such a serious nature, coming as it does at a time when the national economy is in increasingly desperate straits, that we would be quite justified in classifying it as top priority. These significant changes to the system of federal-provincial finance, and the unilateral method by which they are implemented, present a serious challenge to the financial position of provincial governments across Canada and to their ability to provide the quality of services to which Canadians are accustomed.
Unhappily, these changes are very complex and are only vaguely understood, except by a relatively small group of people within the purview of the federal Minister of Finance and his staff, the provincial Treasurers and their staff and a small group of specialists, media people, economists and the like, whose business it is to familiarize themselves with such matters. Yet these are matters that touch the lives of every Canadian one way or another.
Members of the standing committee on public accounts spent considerable time last month examining the whole subject of transfer payments. I believe they are in agreement that it was time well spent in terms of achieving an understanding of the attendant issues.
As the discussion proceeded during the committee's hearings, members were impressed by the magnitude of the reductions in transfers payments and by the ramifications inherent in the shift of such a sizeable portion of the federal deficit to the provinces through such a change.
We appreciated the frank presentations by the Deputy Treasurer and members of his staff, since there has been a considerable amount of confusion and misinformation concerning these amendments. This has made the issue somewhat difficult to follow for those of us whose principal exposure to transfer payments has been through the daily press.
It seems to me that through their examination and discussion of the impact of these changes, members of this House will provide an important service to their constituents and will improve the general understanding of our countrymen about matters that affect us all. It is for this reason that I am proud to introduce this motion recommending the debate to the standing committee on public accounts.
I would like to commence by discussing briefly a few of the most important aspects of the transfer reductions that came to light during the standing committee's hearings. First and foremost is the impact of the cuts on provincial revenues. Ontario will lose $1.9 billion over the next five years, $290 million in this current fiscal year alone. Canada-wide, the five-year cutback exceeds $5.8 billion, an amount so large it is difficult to imagine.
By any standards, these are substantial amounts. The provinces have declared their support of public-sector restraint, but are most concerned that only they are singled out for federal restraint. According to the figures in the recent federal budget, overall federal spending this year, on a national account basis, is to increase 13.5 per cent but transfers to the provinces are to be held to a mere 2.4 per cent growth rate.
With such modest revenue growth alongside inflation rates of the order seen in Canada today, it is clear that provincial budget makers across the country are facing some very hard fiscal decisions. By passing off part of their deficit problems to the provinces, the federal government can only achieve overall restraint in the public sector if the provinces react by cutting back in the critical area of social services. Such restraint is illusory and ill advised, indeed, unthinkable.
I am strongly of the opinion that if the public actually understood the implications of the established programs financing changes, they would be very upset. People simply do not know -- the message has not been carried to them -- that from the taxpayer's viewpoint the alternatives are grim.
Reduction in provincial transfer payments means that either we cut back on spending and therefore on standards of service in health and post-secondary education, or we raise provincial taxes sharply; not a happy prospect.
Last August, the 10 provincial Premiers set out the options at their conference in Victoria. They fully appreciated that any reduction in transfers would result in an increase in provincial tax burdens, provincial deficits, and/or a reduction in the level or quality of services. Given the magnitude of the transfer reductions revealed in the federal budget, it is unavoidable that health and post-secondary education will be affected, along with all other provincial programs.
It is important to note that 10 Premiers issued the joint statement in Victoria. Interestingly, throughout the discussions on fiscal arrangements with the federal government there has been a remarkable unity among the provinces. One example of this common approach was the joint provincial report on EPF presented to the federal-provincial finance ministers' meeting last December in Toronto, which called for a one-year extension of the former funding arrangement. Provincial governments of every major political stripe sat down and jointly developed common positions. Nor was the position altered in any discernible way when Manitoba's government recently changed hands.
From the viewpoint of the provinces, I believe that at this moment we have a truly nonpartisan issue; not one party against another, nor one government against another, but a situation in which the 10 provincial governments have reached a united position because of the untenable financial position into which they have been forced.
8:10 p.m.
Support for this provincial position has been widespread. The report of the federally appointed parliamentary task force on federal-provincial fiscal arrangements concluded that it could not support the transfer reductions sought by the federal government and stated that: "There is no ground to suggest that federal transfers have been getting out of control. In fact, they grew at a slower rate in the 1970s than they did in the 1960s."
The Economic Council of Canada also undertook a detailed study entitled, Financing Confederation: Today and Tomorrow, and arrived at a similar conclusion, that federal-provincial transfers have not been a cause of the federal deficit as claimed by finance minister, Allan J. MacEachen, since transfers to the provinces have grown more slowly than other government outlays. The council stressed in its report that it is improper to shift the burden of expenditure cuts to provincial budgets, particularly since federal revenues are expected to grow sharply due to the energy pricing agreements.
The argument in support of the finance minister's claim of "fiscal imbalance" and the need for transfer payment reductions is certainly very weak. The unilateral decision by the finance minister to cut $5.8 billion from the EPF arrangement with the provinces is particularly unfortunate given the hopes that all governments shared in 1977 when the agreement was adopted. That new agreement was hailed by all parties at that time as a major step forward in federal-provincial relations.
The responsibilities of the two levels of government were clarified and disentangled, replacing the three previous rigid cost-sharing agreements for hospital insurance, medicare and post-secondary education. These programs had grown into place gradually since 1959 because the federal government wished to encourage minimum national standards in those rapidly growing areas of provincial spending responsibility under the Constitution.
However, by the first half of the 1970s, the federal government had become increasingly alarmed at cost escalation in these programs, slapping an annual ceiling on federal contributions to post-secondary education and subsequently to medicare. These arbitrary limits had a crude and uneven impact since most provinces were constrained by the unexpected inflation of costs in the mid-1970s.
As the system started to break down, criticisms were also being voiced by provincial governments and those they served. The provinces were not free to design the most cost effective range of services because of the narrow definitions of what Ottawa would help finance, particularly under the hospital insurance program where the cost of nursing home care and other low cost alternatives to hospitals were not cost shared.
The new deal, commenced in 1977 and continued until a few weeks ago, was the successful product of genuine federal-provincial negotiations. For its part, the federal government gained control and predictability over the size of its contributions and succeeded in tying transfer outlays to the growth of the economy. It considered this to be an eminently satisfactory move. For their part, the provinces gained the flexibility through block funding, to determine their own spending priorities and to experiment in more efficient ways of providing services.
It was thoroughly understood that this arrangement passed the burden of fiscal risk to the provinces, which now became fully responsible for meeting growing cost pressures in health and education.
Through that new financing agreement arrangement, the federal government acknowledged that it was serious about containing costs within the system. As Prime Minister Trudeau in 1976 said: 'The established programs financing proposal also suits the current and future imperative, namely, fiscal restraint, in that provinces will have a greater incentive to implement what are admittedly difficult measures designed to restrain spending in those fields to reasonable levels."
One of the basic principles of that 1977 financing arrangement was the long-term certainty it promised for federal contributions. It was almost like a guarantee. This dependability of payments was to provide the provinces with the opportunity to undertake proper expenditure planning, secure in the knowledge that federal grants would not be capped or withdrawn.
In the words of Prime Minister Trudeau, the EPF proposal would remove "a number of sources of federal-provincial friction" and "will constitute an important step forward in federal-provincial co-operation to the advantage of the people of Canada."
It is clear that the unilateral amendments passed by the federal Parliament last month are regressive and violate this principle of long-term certainty. In effect, they are a breach of the trust and confidence engendered by that 1977 agreement. How blatantly defensive it is that the amendments removing $5.8 billion from provincial transfer payments have been accompanied by claims by the federal government that in some way their support for post-secondary education and health is not reduced. However, the protestations one hears from the colleges and universities across Canada and from groups concerned with health care indicate that they do not believe this is true. They realize that the planned revenue reductions will have to be offset by the provinces.
The reality is that the federal government has deleted an integral part of the 1977 agreement in removing the revenue guarantee compensation, a quid pro quo that was essential to the satisfactory conclusion of those earlier talks five years ago. To claim that the rump of the EPF arrangement maintains an undiminished federal support is to strain the credibility of this House.
In the context of how the block funding arrangement for health and post-secondary education was intended to operate I offer these observations.
The federal government has repeatedly attempted to justify the transfer reduction by claiming that it has been contributing an inordinately high level of support in relation to provincial spending on health and post-secondary education, as evidenced by a high and sometimes rising federal share of these costs. Explanatory statements have appeared in the press, although without any consistency, which have varied with each Ottawa spokesman. In the main, these arguments have been easily refuted, some to an embarrassing degree. Officials in the Department of Finance, for instance, felt obliged to correct facts and figures used by the Prime Minister during a recent press conference.
Yet these arguments are contrary to the principles of a block funding arrangement. Prime Minister Trudeau underlined this in a 1976 speech. He said, "Provinces would agree to spend these federal EPF funds in the fields in question. . . but would not have to make matching expenditures of any kind from their own sources."
Attempts to isolate the federal share of spending within the various programs financed by EPF are necessarily very arbitrary. Occasionally the federal share has been exaggerated by including only a narrow definition of provincial spending -- for instance, by restricting health expenditures to those shareable under the old cost-sharing agreements. Although the provinces were reluctant to get into a complex statistical battle with the federal government they were forced to do so in the face of constant criticism of their spending policies.
The result of an analysis of provincial spending was released by the Premiers' conference last August in Victoria and endorsed by all 10 provincial governments. That report showed clearly that the federal shares have never reached 50 per cent and are currently declining. Although the federal share did rise initially, this was because of provincial success in bringing their spending under control, an objective EPF was designed to achieve. That the federal government contributed only 46.6 per cent of spending on health and post-secondary education in Ontario in 1981-82 is evidence that the established programs financing arrangement has until now been operating as it was intended.
Our debate this evening comes at a time when provinces are just beginning to appreciate how seriously the transfer reductions will affect provincial finances. Right across the country the provincial economies are lagging, with even oil-rich Alberta introducing a deficit budget. Yet the federal financial position seems to be entrenched in spite of the colossal criticism it has aroused. How ironic that Saturday's Constitutional celebrations should be held against such a national background of financial distress and mistrust.
8:20 p.m.
It is possible some members of this Legislature will indulge in the cliché accusation of fed-bashing. I hope they will not, but still they may do so. Fed-bashing can have a therapeutic effect sometimes, even for members of the provincial Liberal Party, but I would submit it is entirely wrong to suggest it tonight.
To sum up: The body of opinion concerning the federal shift in policy on transfer payments has resulted in a consensus which can only be described as astounding since it is not our usual Canadian style. Such a body of opinion cannot be shallowly labelled fed-bashing. Yes, there is a solid phalanx composed of all 10 provincial Treasurers who have met, examined, decried and condemned the federal changes. Were it not for the gravity of the situation, I believe we would be justified in calling it a dirty trick played by the federal Minister of Finance upon his colleagues, the provincial Treasurers.
It is much more than that. It is a change which has been grossly misrepresented in terms of its justification, a change which defies the orderliness, good housekeeping, strong fiscal leadership and goodwill we so desperately need at the senior level of government. As I have noted, the Treasurers have been supported in their evaluation by the Economic Council of Canada, by the parliamentary task force on federal-provincial fiscal arrangements and other organizations and individuals who all concur that the total effect will be disastrous. The universities, for instance, have no difficulty understanding what impact the reduction in transfer payments will have upon them.
Earlier this week, Mr. William D. Mulholland, chairman and chief executive officer of the Bank of Montreal, warned in a strongly worded address that prompt measures would have to be taken to divert the Canadian economy from its downward path. He indicated present federal fiscal policy is inappropriate for the times, that Canadians are now in "dangerous economic waters with the financial base of our economy seriously eroded," and that "current policy options now being debated are not adequate."
Since the changes to the established programs financing arrangement are directly related to the federal fiscal policy established in that oh-so-faulty budget last November, Mr. Mulholland's outspoken comments are a timely reflection of the gravity of the problem which confronts us all in our consideration of this subject.
By using transfer payments as a means of reducing that federal budget, the government of Canada is really ducking the issue, placing the onus for spending restraint on the backs of the provinces. The $5.8 billion reduction in transfer payments is a direct loss, not to the Premier (Mr. Davis), not to the Treasurer (Mr. F. S. Miller) nor to me as a politician; no, it is a direct loss to the people of Ontario who will have to pay one way or another to compensate for that loss.
I appeal to all members of this Legislature to set aside their partisan views and to give consideration as Canadians to the impact which reduction of transfer payments is going to have upon our province and our country. The achievement of 1977 in developing a harmonious and efficient method of funding our nationwide system of health care and higher education ought not to be squandered without a full public debate of the consequences in this House.
I put it to all honourable members that this is a matter which transcends personal or party positions and which requires from us all our best effort, our most inventive thinking and our most constructive proposals.
We are not talking tonight about philosophical differences or arguments between federal and provincial politicians. We are talking about the ordinary men, women and children of Ontario and about something that will affect them in a very personal way, placing in jeopardy our standards of post-secondary education and health care in this province.
For this reason, a unanimous decision from the Legislature of Ontario -- I will repeat that: for this reason, a unanimous decision from the Legislature of Ontario to the government of Canada should not fail to impress upon the Minister of Finance how seriously we, as legislators, view this matter and its effects upon our people. I would submit that each and every one of us in this House has an obligation to join in a united stand on behalf of the people we have the privilege and duty to represent.
Mr. Roy: Mr. Speaker, if there was any doubt at all that this was going to be an evening of fed-bashing, there was none the minute the member for St. David (Mrs. Scrivener) got up. It was obviously the Tory strategy to send out their best hatchetperson to do some fed-bashing this evening. Given the vehemence she put into her speech, or whoever wrote the speech for her, it is going to be very difficult to get some sort of consensus in this assembly after the member for St. David has given us this diatribe against the federal government.
The thing I find surprising about this whole process is that if the Tories are so concerned about what is happening on federal transfer payments, one would think they would be here this evening. Where are all those Tories? Where is the cabinet? Where is the concern about transfer payments? Is the Treasurer the only member of cabinet who is concerned about federal-provincial transfer payments? Where are all the Tories? Now the exuberant Minister of Transportation and Communications (Mr. Snow) has just walked in as further support. All the Tory benches, except for a very few, are empty for such an important debate.
There is some irony and some hypocrisy on the part of the Tories here this evening because they are bitching, they are fed-bashing, they are concerned about what the federal government is doing to them; but look at what they are doing to the municipalities. This double standard, according to the member for St. David, is just not fair. They are saying, "Do not do to us, feds, what we have just done to the municipalities." It is true irony that she was talking about some sort of sacred agreement on the part of the province and the federal government. What about the Edmonton commitment? What has happened to that commitment?
The other irony of this process is the fact that we have had a succession of Treasurers, starting with Darcy McKeough and then Mr. White, and now our friend -- no, McKeough, White, McKeough again and now the present Treasurer. Have I got them straightened out now?
Hon. F. S. Miller: Yes.
Mr. Roy: I have them straightened out. We have had a succession of Treasurers who kept saying to the feds: "Cut your deficit. Do like us. Cut your deficit down. Cut your spending." At the moment the federal government is doing exactly that on transfer payments and now the Tories are bitching. Now they are saying it is not fair. They are saying: "Do not cut your deficit on our back. We can cut it on the backs of municipalities but do not do that to us." What irony, what hypocrisy on the part of the people on the other side of the House.
I do not intend to talk very long. I just want to point out these ironies. The other point of interest is that we have heard a succession of provincial governments say to the federal government: "Stay out of our jurisdiction. Stay out of health. Stay out of education."
Interjections.
Mr. Roy: The money I earn in Ottawa is not from the public trough as is that of most of the members across the way. Most of those backbenchers' hands should shake when they pick up their pay cheques. They get big, fat cheques for sitting on their behinds and occasionally yelling like a bunch of trained seals. That is all they do.
8:30 p.m.
There has been a succession of times when the provinces have implored the federal government to stay out of the jurisdiction of the provinces, out of the fields of education and health, out of a variety of them, even transportation and communications. The federal government said: "Yes, okay we will stay out of it. We will have to start cutting down the payments."
Then the provinces say it is not fair. They say basically, "Give us the money involved in our jurisdiction, but do not get involved in any decision-making." They say, "Give us the funds to fund these programs, but do not take any of the credit."
How often have we seen programs which were funded to the tune of 50 per cent and up to 90 per cent by the federal government, for which the provinces were getting all the credit?
Mr. Havrot: Whose money was it in the beginning? Where did the feds get the money from?
Mr. Roy: Time after time, any time there is a problem, the province always blames the feds.
After a while, the federal government said: "Look, we are tired of carrying the majority of the load for these programs. It is time the provinces accepted their responsibilities and you are not prepared to toe the line." It is hypocrisy of the highest kind when members complain about the process being done to them when it is exactly what the government has been doing to the municipalities.
In closing, I am not here to defend the federal programs. All I am here to say is, before they start throwing rocks they should get out of their own glass houses. The government should not start blaming the federal government for cutting back on the payments when it is not a cutback on the payments but a cutback on the increase. It is a cutback on the increase and not on the overall funding.
In closing, having heard the member for St. David, it is very difficult for us to have sympathy with the government which on a succession of occasions has said to the feds: "Cut your deficit. Stop spending. Stop taxing the Canadian people." When they do accept the province's advice on that, the end result is there is less money. There is less money for the taxpayers and there is less money for the provinces.
They are not prepared to accept it. They are not prepared to shoulder the responsibility. I for one will not join in this hypocrisy on the part of the Tories this evening.
Mr. Philip: Mr. Speaker, I understand there is an announcement for the member for Ottawa East. There is a limousine waiting to take the member to the airport. It is at the back door.
Mr. Roy: That is okay. You didn't even get through law school, you dummy.
The Acting Speaker (Mr. Cousens): Order. I would tell the member for Ottawa East, who was given a fair reception by the other honourable members, that such a remark is out of order, if I heard you correctly.
Mr. Kerrio: What about him? That jackass doesn't have to make remarks like that.
The Acting Speaker: The member for Niagara Falls will withdraw that remark.
Mr. Kerrio: I withdraw the remark in calling that man a jackass. I do not think he is a jackass.
The Acting Speaker: The other member also made allegations about the member for Etobicoke which I would like to have withdrawn.
Mr. Roy: I apologize for having called him a dummy. He is only mentally deficient.
The Acting Speaker: I find the honourable member's effect on the House does not raise the debate.
Mr. Kerrio: He shouldn't have stood up and started making a speech like he did.
Mr. Cooke: Why don't you shut up?
The Acting Speaker: The member for Etobicoke has the floor.
Mr. Philip: I am in agreement that a debate such as we are having tonight, which the member for St. David has started, is an important one that should be debated by this Legislature. I recognize the value of this debate though, unfortunately, the bill that has done so much damage to the people of Ontario and to other people across Canada, namely Bill C-97, has already been arbitrarily passed by the federal government.
Even though I recognize that, and even though I recognize the value of saying to the federal government in no uncertain terms that we, as other provinces, deplore the arbitrary, unilateral way in which it has cheated the provinces, I still must question the way in which the standing committee on public accounts was used by certain members of this House.
As a member of the public accounts committee, I recognize the role of that committee is to do certain things and if those things are not done the taxpayers of this province suffer an immediate result. They are fairly clearly spelled out in Improving Accountability: Canadian Public Accounts Committees and Legislative Auditors, by John J. Kelly and Hugh R. Hanson.
All three parties approved this report and endorsed most of the recommendations and principles in it. It clearly outlines the nonpartisan responsibilities and the manner in which a public accounts committee must operate.
On page 13 it states that "written statement of role and responsibilities comprise a general statement of purpose and a list of issues that the committee is to examine, assess and report to the legislature." It outlines some of the things the committee should be doing. It talks about "the reliability and appropriateness of information in the public accounts to provide a full and fair accounting of the operations and financial transactions; the collection of, and proper accounting for, all taxes and revenues due; the maintenance of expenditures within the limits and for the purposes authorized by the Legislature; the adequacy of safeguards to protect assets from loss, waste and misappropriation;" and so forth.
If we go through that list, we see that our role is to examine the finances of this province and to find ways in which we can run this province more efficiently, to see whether the civil service and the public employees are carrying out the objectives of the government, whether we agree or disagree with those objectives.
When I see a member of one party introducing a motion that presents only one side of an issue and is going to be used as a forum for an attack on one government, in this case the federal government, I really question the use of the committee. It is even worse when I see a key public employee, a deputy minister, being used in what can only be described as a highly partisan political manner. That person lost credibility in the eyes of members of that committee on that day, whether we agree with what he said or not.
It is the role of politicians to argue the political arguments, to set objectives and to talk about whether or not those are being carried out. It is the role of public employees to provide the information on which those decisions are made. This government and we in the NDP can agree the federal government abandoned the co-operation and negotiations which we have relied on over the years.
Surely a key part of those negotiations is the senior civil servants who must co-operate and who must work in as nonpartisan a manner as possible with one another. The actions of that particular public employee from Ontario not only hurt his credibility with members on this side of the House, but will also have hurt the co-operation and integrity he must have to co-operate with his federal counterparts.
Having said that, I can only say I was disturbed because, when I am in the public accounts committee, I find my job is not to attack the public service but rather to ask for information. Its role is not to make policy statements but to provide information.
If one reads the Hansard of those days, we suddenly could not tell whether Mr. Campbell was the minister or not. How can we have confidence in asking for information from someone who has just debated in a highly partisan manner, as though he were another elected representative? I say to the members that if he wants to do that kind of thing he should run for office and not occupy a highly paid public service post.
8:40 p.m.
None the less, the cutbacks by the federal government are extremely serious. I find it interesting that if one looks at the cutbacks in health care and education, specifically in post- secondary education, we are already experiencing the sad results of those federal government cutbacks. The federal government will maintain that this is all the fault of the provincial governments, yet it seems to give different figures at different times.
For example, at the present time the figure of 55 per cent of the funding for post-secondary schools in Ontario is given by federal government spokespersons. It was interesting that Mr. Trudeau's right-hand man, a man who unsuccessfully tried to become a member of Parliament but failed abysmally in Spadina, was quoting 87 per cent. A few months later it dropped from 87 per cent to 55 per cent.
One must ask if the federal government is so incompetent that it cannot tell the difference between 55 per cent and 87 per cent? Are they so incapable or do we have people, in that case a federal civil servant with a high post in the federal government, acting in a highly partisan manner when he becomes a politician and misconstruing or distorting the figures? The people of Etobicoke have suffered as a direct result, as have people across the province.
The man in question had hoped to become a minister. His hopes have been dashed and I hope that in two years, since he has been nominated again, the same thing will happen when Dan Heap shows him exactly what it is to understand a community and to be sensitive to its needs.
The effects of the cuts by both the federal government and the provincial government are already felt in post-secondary education in Ontario. Next fall the fees will be raised by at least 12 per cent. When the cuts now processed by the federal government go into effect the fees will undoubtedly be raised for 1983.
There is a general cut in accessibility. Very recently in a speech on the supplementary estimates, I outlined for the Minister of Education (Miss Stephenson) exactly how difficult things were at Humber College. I showed that year after year the number of people who are not able to access the system is going up. I showed that in the case of Humber College we have the second lowest space per student of any college in the province.
I mentioned how, as President Wragg, who has served our community extremely well, has said time and time again, the noose was getting tighter and tighter. Basically, the federal government cutbacks have a compounding effect because in this province the reactionary actions of a reactionary federal government are being compounded by an even more reactionary government at Queen's Park. That makes things twice as bad.
During the past year 50,000 student applications were rejected by the post-secondary education system in Ontario because places were not available in this province. In fact, only 45 per cent of applicants for 1980 and 1981 were accepted. There simply is not enough room to educate the students that we have, even though the ratio of university educated people to the population is lower than that of the United States and certain other countries.
In the field of health, the well-known Toronto Western Hospital has closed its obstetrics department. This was not done cheerfully, but none the less we are faced with that. Similarly in Etobicoke we are faced with tremendous problems of people needing psychiatric help who are literally out on the street without enough facilities in our borough to handle their needs. I have documented this over and over again in questions to the Minister of Health.
In dealing very directly with this matter, we should look at the way it has developed, at the history of the financial arrangements between the federal and provincial governments, and that will give us some insight into the matter. The most outlandish lie -- and we have heard such statements from the federal government -- is that it is somehow blaming its deficit on its grants to the provinces.
The task force on this in the House of Commons stated that federal grants to provinces and municipalities, expressed as a percentage of total federal spending, have been fairly constant since 1970. The federal argument that somehow we in the provinces are responsible for the increasing federal deficit is a lot of nonsense. It just does not hold, if we examine the figures since 1970.
There is, therefore, as the task force pointed out, no ground for suggesting that the federal transfers have been getting out of hand. In fact, they grew at a slower rate in the 1970s than they did in the 1960s. So the arguments the federal government may have used for this obnoxious bill that was passed on April 5, Bill C-97, just have no grounds whatsoever.
Let us take a look at the position our party, the New Democratic Party, took in the House of Commons in examining Bill C-97. If we can understand the nature of the bill, then I think we can understand what our problem is.
First of all, with a majority government, unfortunately the public accounts committee has made a certain number of decisions that are not exactly nonpartisan in nature. In spite of the recommendations of our party members to hear both sides of the question, to call forward some key civil servants or public employees from the federal government to present their side and answer questions -- and I am sure they would do it in a less partisan manner than the political hack we had in front of us -- the public accounts committee decided to hear only one side, namely, the Conservative Party side presented by a deputy minister hiding behind his so-called nonpartisan civil service status.
We in this party had asked for both sides. Because it is such a complicated bill, having taken the wrong route, having taken the route of prostituting the public accounts committee for what can only be called a highly partisan, highly political act and measure, at least we could have tried to even it up by hearing both sides. But we did not do that; we refused to accept the position of the NDP in that committee, which was to invite a presentation from the federal government to deal with the arguments.
So we are faced with trying to understand what exactly has gone on over the years between the two levels of government. Our colleagues in Ottawa pointed out that we opposed the changes to the EPF because the removal of the revenue guarantee meant less federal support for medicare and post-secondary education programs. This gave provinces like Ontario the excuse for further cutbacks, and that is what is happening.
Second, our federal caucus opposed the spirit in which the federal government undertook these changes. The federal government abandoned the co-operative negotiations approach to federalism and replaced it with unilateral action.
8:50 p.m.
Finally, the federal caucus was opposed to the mixing of the established programs financing issue, a program designed to finance health care and post-secondary education, with changes in the equalization formula, a program designed to redistribute wealth from the well-off to the less-well-off regions of the country. The two principles, our colleagues in the New Democratic Party in the House of Commons pointed out, should be kept distinct.
If we look at the two major changes that result from Bill C-97 we see that the first place the federal government will substantially reduce the amount of money transferred to the provinces is for those three areas I have just indicated. Second, the equalization formula will be changed so that it is computed on a formula based on the per capita average of five provinces, and the revenue source base will be expanded to include sources previously excluded.
If we look at the background of how this happened we will understand the evolution since the 1970s. The Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, passed on March 31, 1977, has 10 parts, each dealing with an aspect of the overall fiscal arrangements between the federal government and the provinces. The established programs financing and equalization are two of the 10 parts of this act. This bill addressed these two parts, and they are the ones that are of most concern now since it passed on April 5.
I am told it is now 8:55 p.m., and I have a number of colleagues who want to speak. I have some 15 or 20 pages more in which to outline the background, but rather than do this I would be happy to share it with my colleagues over a cup of coffee if they would like to hear it. I certainly would not want anyone to miss our Health critic's comments on this important issue.
Instead, let me summarize. We in this province, like those in all the other provinces, are 100 per cent opposed to the removal of the revenue guarantee moneys, which we feel indicates the abdication of federal responsibility to medicare and to post-secondary education programs.
We are opposed to the unilateral imposition of the new equalization formula by which the government thumbs its nose at the co-operative federalism that has been developed over the last couple of decades. We resent the fact that this bill was rammed through the House of Commons in a very short time. We object strongly to the mixing of changes in the EPF funding with the changes in the equalization formula.
At the same time, we strongly oppose the way in which the reactionary government on that side of the House is using the federal government's cutbacks to the provinces as an excuse for further cutbacks to do exactly the kinds of things Joe Clark would have done to us if he were in power, but which they now are able to compound provincially.
I think our committee has been misused for partisan political purposes. I do not disagree with some of the comments that the members for the Conservative Party have made concerning the way in which the federal government has acted; but, as the member for Ottawa East (Mr. Roy) has stated, they are not without sin, for what the federal government has done to us they have done, under Darcy McKeough and ministers after him, to the municipalities.
To somehow take into the nonpartisan forum of the public accounts committee this kind of fed-bashing rather than introduce it into the Legislature, where we can act in a partisan way and where we are expected to do so, was a misuse of that committee; and I find the manner in which they approached it, considering their track record in the treatment of municipalities and their track record in piggy-backing on what the feds are doing provincially, to be quite hypocritical.
Hon. F. S. Miller: Mr. Speaker, I had planned to speak last tonight. But I understand there is no time agreement and I feel I should be on the record because I am one of those fortunate people who has had the opportunity to be involved from 1973 to the present in the Ottawa negotiations that led to the Established Programs Financing Act and which, to some degree this year, took it apart.
I think we should all understand the history of the act. This history involves an awareness that in a country as disparate as Canada there is great need to assure that each province has some degree of equality in the level of service in certain basic areas like health and post-secondary education despite their own fiscal incapacity to provide them.
It was Sir John A. Macdonald who once said that Canada is a triumph of politics over geography. One of the reasons it was such a triumph for politics was that we managed to find a glue strong enough to hold us together. That glue was the transfer of money from well-to-do to less-well-to-do regions.
We did it by a number of techniques. In recent years equalization payments have been extensively used, along with established programs financing. For many years cost-shared programs have been used. The realization dawned at the federal level that cost-shared programs did not bring equality but encouraged high spending. Rapid spending growth occurred in the years 1968 to 1972 or 1973 on hospital spending and doctors' services because they were cost shared. Little was done in such less expensive areas as nursing homes, sharing of ambulances and other such techniques.
So we have one of those rare and I think typically Canadian agreements, reached in December 1976 at a first ministers' meeting, following four or five years of frustrating but necessary trade-off negotiations, leading to replacement of cost-shared programs in health and post-secondary by formula financing.
We could go back into the records and look at the words of the Honourable Marc Lalonde and the Honourable Pierre Elliot Trudeau. They were saying, "Look, it is in the taxpayers' interests, in the provinces' interests, to get away from programs that cause spending, and to move to programs that improve management." At that point we wiped out any arbitrary funding for health or post-secondary education and put all the money in one pot, something people tend to forget.
All the attempts to say what we are spending on post-secondary education or what on health must fail. The quotations from those leaders showed that they were throwing responsibility for management, and the savings earned through management, back into the provinces' hands.
It was one of those rare success stories. The last of the compromises at the 11th hour was the rolling of a revenue guarantee, a vestige of the days prior to the Benson white paper on taxation which reformed the tax base, into the established programs financing formula.
The provinces, led by Ontario and Quebec, simply wanted tax room. The federal government insisted on a cash component because it thought tax room would give us too great growth and revenues. Roughly half the money was to be in cash, escalated annually by a moving average of the consumer price index weighted on a three-year basis, complex but there.
We were all wrong. If the provinces had had their way, growth in funding would not have been so great. The cash component grew much faster than the feds thought it would and the tax base did not grow so quickly. It still ended up being very fair; and the gross transfer stayed right on the projected targets, something a lot of people tend to forget. It did not grow as fast as overall federal spending; it was not causing the deficits at the federal level. It did improve management; it did all the things it should have done. Yet within two years we found the federal government trying to cap the growth, and within four or five years unilaterally trying to rescind the arrangements. Now, in the fifth year, they have done so.
9 p.m.
I say with some degree of sadness that they have destroyed something we thought was very important. You do not often find Socialist provinces, Conservative provinces, Social Credit provinces -- there are no Liberal provinces -- agreeing on one thing; but unanimously over the last year and a half the provinces have said, "Do not change that formula without the same kind of discussion we had when we created it."
I led the group. I was the provinces' spokesman, and I have to say that I echo the words in the joint provincial statement on February 4, 1982, when we said: "The provinces have proposed a temporary one-year extension of the current fiscal arrangements. We believe the extension is absolutely essential because of the flaws in the federal proposals. More time is required to redress those flaws and examine some of the options on the table."
Therefore, in proposing a one-year extension to the current system we suggested an overall cap of 12 per cent on federal payments of equalization and EPF combined, because that is what Mr. Trudeau said he could afford. We simply said we would live with the amount he said he could afford, and asked to let us have time to discuss it. That was not done, and as a result we may see some of the most dangerous undoing of a very effective rule that has ever occurred in Canada.
We finance ministers were called to Ottawa on September 30, 1981, to meet Mr. MacEachen. At that meeting he said: "I would like your advice. I will be bringing a budget forward shortly." We said, "Can we discuss established programs financing?" He said, "There is no need to discuss it; it is not in the budget."
We said, "How can you prepare a budget without doing something with the established programs financing?" He replied: "Don't worry. I have already taken the money out." We asked: "What is there, then, to discuss? What are we here for? What kind of nonsense are we getting?"
One can go to any province. The honourable member can ask his friend Tchorzewski in Saskatchewan; he will verify what I am saying. Not one inch of change occurred in meeting after meeting following the budget.
Mr. Worton: Seems like Queen's Park.
Hon. F. S. Miller: That is not like Queen's Park, and you know it.
Interjections are coming from the other side about the municipalities. The interesting thing about municipal financing is that it is now a smaller percentage of family income than it was 10 years ago. In fact, the increase in tax rates at the municipal level has been below inflation in almost every year of the past decade. That is because the provinces in general have treated the municipalities fairly. I just point that out. It is very easy to say we did not, but we did.
I have had $290 million taken directly off Ontario's funding this year. It is not an easy year to make it up. It did not allow me to cut one dollar off my spending. I would not have minded if the cut in federal spending had permitted cuts in total spending at the provincial level. But all they did was transfer their problems to us. So I think it is quite safe for the municipalities to stand up and say unanimously, as we still do, that there is a great need for a very useful formula to be carried on in the interests of quality health care, quality post-secondary education and good management.
The Deputy Speaker: Being newly arrived in the chair, I presume that we are going in normal rotation, so I will recognize the member for Haldimand-Norfolk.
Mr. G. I. Miller: Mr. Speaker, it is with some pleasure that I rise to speak in the debate tonight. I had the opportunity to sit on the public accounts committee in place of the member for Grey-Bruce (Mr. Sargent). I think it is only fitting that we should discuss financing, as the Treasurer has indicated tonight, and the resolution that has been put forward.
What was disconcerting to me as I listened in committee was to hear the Deputy Treasurer make a very political approach on behalf of the province, placing the total blame on the federal government. It was very unfair, as the member for St. David pointed out one more time as she made her presentation tonight.
We are in very difficult financial times, and the taxpayers and the people back in my riding tell me it is getting more difficult as the days go by to pay their taxes. As has been pointed out by my colleague the member for Ottawa East, the provincial government is just passing the buck along to the lower level of government; but it has to stop some place. An example is that education costs at the separate school board and our Norfolk Board of Education are rising by 25 per cent. The taxpayers are beginning to make rumblings about organizing to withhold taxes.
There are many companies today that are laying off. They are saying to their employees: "If you want a job, you take a 10 per cent cut and there will be a job there tomorrow." I have had heard that from several of the people in my riding.
The government has to take a fair look at overall financing and realize the position we have been forced into. No longer can we take 12.5, 15 and 25 per cent increases; we have to be realistic. We also have to co-operate. I am a strong federalist myself; I think we need a strong federal government and a strong provincial government. But we have to be realistic and, when the federal government says we have to accept the cut, we have to be responsible.
If we take it from the top level to this level and on to the lower level, and show some leadership in doing so, I am satisfied the people will understand, because everybody needs a job, that is the key to it. If we do not provide that, we are all in serious trouble.
Mr. Philip: If you are ever wondering where the real Conservative Party is, just listen.
Mr. G. I. Miller: Well, I think we have to respond to the elected people; if we do not --
Mr. Philip: The Social Credit Party all over again.
Mr. G. I. Miller: There are many other areas I would like to comment on, but I think the basic point is that we cannot be bashing the federal government; we have to work along with them. We cannot be directing the funding down to the local level. We have to take a very close look at it and work together to make the system work.
With those few remarks, I will leave it to the members of this Legislature.
The Deputy Speaker: We appreciate those few remarks.
Mr. McClellan: Mr. Speaker, I guess the Treasurer is still with us, although he is invisible. I want to make a few comments, not so much about what the federal government has done with established programs financing over the course of the last little while but what the province of Ontario has done with EPF since it was inaugurated in 1975-76.
I do not accept all the accusations that Mme Bégin has made with respect to the misappropriation or misallocation of EPF dollars, particularly in the area of health and post-secondary education. I am sure members who have been following this squabble between the province and the feds are aware of the history of name-calling and recrimination back and forth, with Mme Bégin saying that the provinces, and Ontario in particular, could not be trusted with no-strings funding, block funding à la EPF, because they simply siphoned the money off into roads and sewers instead of spending it on schools and hospitals.
9:10 p.m.
I think there was an exaggeration in Mme Bégin's critique. How the federal government arrives at the conclusion that the solution to this dilemma is to brutally slash transfer payments from the federal level to the provincial level is beyond me. It is simply an exercise in self-serving cost-cutting that has no regard for the consequences.
Still, I do not think we should pretend that Ontario's record in using the EPF dollars is anything to brag about. As a matter of fact, I think it is very clear that Ontario has used the EPF money to enhance its own political position and to maintain a lower level of provincial taxation than it otherwise would have had to do.
In other words, Ontario has used the enhanced federal contributions to be able to keep its own provincial rates of taxation relatively low.
I have a copy of a document that was prepared by the federal social development ministry, analysing federal support for both post-secondary education and health under the EPF arrangements between the years 1975-76 and 1979-80.
Let me refer first to the analysis of the post-secondary education expenditures and the comparison of expenditures on a per capita basis federally and provincially. I quote from the report:
"During the cost-sharing period" -- again, we are talking from 1975-76 to 1979-80 -- "the federal government paid somewhat under half of the operating expenditures for post-secondary education in Ontario. Since the introduction of EPF, the federal share has risen impressively by over 15 percentage points, while the provincial share has correspondingly fallen and the share picked up by students and other sources has remained stable at around 19 per cent. In fact, the provincial share has dropped so far that it is now barely larger than the other share."
In other words, the province has used EPF to reduce its share of post-secondary education expenditures on a per capita basis, and it has allowed the federal increase, measured on a constant per capita basis, to cushion the burden so that the government is able to run around and say: "Are we not clever? We have managed to control our costs, maintain our services and keep your taxes down all at the same time. Are we not clever fellows?"
The reason they have been able to do that is they have simply substituted federal money for provincial money and used that to hold the line.
The authors of this section of the report conclude: "By making real decreases in operating expenditures at a time when real federal contributions per capita were increasing, Ontario was able to make large real decreases in its own contribution to post-secondary education. Thus, measured on a per capita basis in constant 1971 dollars, while the federal government was increasing its real transfers by 25.64 per cent over this period, the province was reducing its per capita contributions by 48.19 per cent."
It is easy to boast about a restraint program when they are substituting federal tax transfers for provincial dollars.
Mr. Philip: There is no minister to answer that. This is so important, but there is not one minister in the House.
Mr. McClellan: This kind of sleight of hand is now producing its own reward with an equally nasty response from the federal government. When our Treasurer raises his hands and says, "My gosh, isn't it awful what they are doing to us?" it is simply the pot calling the kettle black.
I have the Treasurer's letter of February 25, 1982, to Mr. MacEachen. The most revealing sentence in this long, six-page letter is on page 2, at the bottom. It says, "Allan, as I said to you on an earlier occasion, how can I play when you are concealing half the deck?" In other words, the Treasurer concedes he is playing with only half a deck.
We have the rest of the report, dealing with health expenditures. I simply want to put this on the record too. This is an analysis of provincial health care expenditures measured on a per capita basis in constant 1971 dollars, compared with federal per capita expenditures through the EPF program. This is between the years 1975-76 and 1979-80.
I am using the most generous set of figures to measure provincial health expenditures. I am using the figures that come from the Hall commission of 1980, which are described as "total operating and capital costs incurred by the province in performing its health function as defined in the loosest possible terms, as accepted by the Hall commission and as approved by the province of Ontario." So I take the most generous set of provincial expenditure figures in this analysis.
What do we come up with? We come up with exactly the same thing. The conclusion of the analysis, measuring per capita expenditures from the federal government through EPF and from the provincial government through both general revenue and premiums, is as follows:
"None of the increased federal funding under established programs financing has been passed on to residents of Ontario in the form of increased provincial health expenditures." As a matter of fact, the per capita expenditure data deserve to be quickly read into the record: "Between 1975 and 1980, federal per capita expenditures went up 27 per cent. During the same period, 1975 to 1980, provincial per capita expenditures measured in constant dollars decreased 29.3 per cent. In dollar terms, they decreased $32.46 per person."
That is quite a saving. That is quite a little restraint program. The Treasurer has been able to pay for his restraint program, his constraint program, his hold-the-line program, whatever one wants to call it --
Mr. Nixon: No new taxes in the election year.
Mr. McClellan: Precisely; as the member for Brant-Oxford-Norfolk says, "No new taxes in the election year." The Treasurer is able to do that by using the cushion of federal transfer payments. It is surely no surprise that during the same period of time the Treasurer has increased the per capita expenditure on health, using the regressive premium tax, from $47 per person in 1975 to $60 per person in 1980, for an increase of 27 per cent.
In a nutshell, during this five-year period the federal government increased its per capita expenditures 27 per cent and, with characteristic cheapness, Ontario managed to increase its per capita expenditure only 3.6 per cent, and all that increase was on the premiums, on regressive taxation.
9:20 p.m.
This government's record of misusing block funding is pretty sordid. It is a pretty tawdry story. The figures are there and they speak for themselves. Now the Treasurer of the same government that unilaterally and arbitrarily reneged on the Edmonton commitment to the municipalities wrings his hands and sheds crocodile tears because the same lousy kind of politics are being applied to him by the federal Liberal government.
There is nothing in the stewardship of this Treasurer or his government with respect to established programs financing over the past five years that would warrant any kind of generosity. The real tragedy is that we will all pay and suffer for the mean-spiritedness and for the con game of our beloved Treasurer with respect to this federal revenue transfer we are all going to pay for. I guess we all owe an enormous debt of gratitude to the Treasurer for his wonderful stewardship.
Mr. Kolyn: Before I start, Mr. Speaker, I recall, as a member of the public accounts committee, that when we had to vote on the motion of the member for St. David, the member for Etobicoke (Mr. Philip) voted with us to have this debate. I ask him whether that is true or not.
Mr. Philip: Mr. Speaker, in rehearsing as a minister, I will be happy to answer his question. It is true. But the honourable member also voted against having the other side told. That shows the partisan nature of the committee and the way it was manipulated by the Conservatives for purely partisan reasons.
Mr. Kolyn: I thank the member. Mr. Speaker, while reaffirming my support for the motion proposed by the member for St. David, I wish to emphasize my concern and utter disappointment with the federal government's position on established programs financing.
An abundance of statistical evidence has already been introduced which throws doubt on the propriety of Ottawa's dealings with the provinces. As such, I will not discuss the fiscal details of the EPF agreements. Rather, I wish to describe the manner in which the agreements were negotiated, or should I say imposed, and the significant changes that can be expected in the relations between the two governments as a result of this most recent EPF experience.
I know the opposition benches are somewhat indignant at debating this motion. When it was originally proposed in the public accounts committee, I believe it was the member for St. Catharines (Mr. Bradley) who attempted to have the issue quashed. At the time he said, "In my view the purpose of the proposed debate in the House is simply to give the provincial government a chance to get off the hook. . . and to spend all its time directing its abuse somewhere other than its own responsibilities."
I should also point out that some members attempted to leave the impression in committee that Ontario should not complain about EPF cutbacks and should simply take the equalization grant to which it was entitled. For the record --
Mr. Breaugh: On a point of order, Mr. Speaker: I have listened with great interest to the honourable member's comments, and so far he has managed to impugn the motives of at least three different members. If you read carefully what he has just finished saying, he has attributed to the member for St. Catharines and to many other members of that committee, some motives I do not believe they had in mind. At the very least, if he wanted to raise those kind of things, he should have the decency to await the presence of those members in the House.
Mr. Kolyn: I presumed that as members of the public accounts committee, they might have been here.
Mr. Breaugh: On a point of order, Mr. Speaker: The honourable member assumes that the members of the public accounts committee should be in the House for this debate. I think the rest of us have the right to assume that the members of the cabinet, who are dolefully absent with one exception over there, ought to be here as well.
Mr. Philip: On that point of order, Mr. Speaker: I notice only two Conservative members, of whom there are six or seven on the public accounts committee, happen to be present; so the honourable member can hardly boast. On the other hand, the New Democratic Party has all its members from the public accounts committee present tonight.
Mr. Kolyn: For the record, Mr. Speaker, I will state that this province should not be receiving equalization and, in fact, is still not eligible. As it has been Ontario, historically, that has largely financed the equalization program in Canada, it does not seem appropriate that the richest province should receive grants simply because the formula is outdated.
Mr. Mancini: I think the member for St. David wrote that speech.
Mr. Breaugh: I would say, offhand, he is reading.
Mr. Kolyn: That's all right.
As a result, I must admit I find the honourable member's comments regarding established programs financing transfers both uninformed and unwarranted. It is indeed true that this government strongly opposes Ottawa's dictation of new rules regarding EPF transfers. It is also true that we wish to use this debate as a forum for our disappointment and discontent. In fact, today's debate is the first of many opportunities this government shall seek in which to publicize the hostile and dangerous attitude of Trudeau federalism and the inherent threat that Ottawa's approach poses to provincial governments across Canada.
Allow me to remind the member that his federal colleagues have pulled the plug on $2 billion in EPF funding for Ontario, including $290 million in the fiscal year 1982 alone. I will add that these cutbacks are in violation of an agreement we reached with Ottawa in 1977, an agreement that Ottawa has torn up without any input or comment from the provinces.
Indeed, the member might not want this debate to take place, because it is here today that I remind this House of our responsibilities to the taxpayers of Ontario and our duty to look after their interests -- not just those of this government but of this Legislature. I think it is appalling that Mr. Trudeau's provincial colleagues are so intimidated by his rhetoric that they would allow this pillage of the province's Treasury.
Where does the member think that money is going to come from? I assure him this government is not going to turn around and take it from municipalities. The answer is simple. Mr. MacEachen is telling Ontario that if it wants adequate health and post-secondary education facilities, it will have to pay more or expect less. We say this is not good enough. Ontario should not have to be denied its $2-billion entitlement for those services. We negotiated in good faith for it, and we should rightfully receive it. Most important, Ottawa should not be changing the rules half way through the agreement.
As a final reminder to the member and his party colleagues, are they aware that Mr. MacEachen's own parliamentary committee, a majority of whose members were from the minister's own party, came down on the side of the provinces in this debate? This federal parliamentary task force on federal-provincial fiscal arrangements was composed of a Liberal chairman, three Liberal members, two Progressive Conservative members and one New Democratic Party member.
At the public hearings of this committee, they heard from more than 100 organizations and 19 individuals, and 66 written briefs were submitted.
The parliamentary task force's final report on provincial fiscal arrangements said, and I quote:
"We hope that the general message of this long and complex report is clear. . . We are agreed that the programs examined in the course of our work are serving vital social needs and merit undiminished support. Overall funding of these programs should, in our view, be maintained at no less than current levels. . . We are all agreed, therefore, that federal-provincial negotiations should be directed towards the goal of undiminished funding for both the health and post-secondary sectors supported through EPF."
9:30 p.m.
I urge all members opposite to understand that this conclusion is drawn from Mr. MacEachen's very own colleagues. As such, I think it is important to note that the federal government is risking more than the equitable provision of health and post-secondary services across Canada.
After all, Ontario is going to survive this crisis, bruised but no worse for wear. We are indeed big enough to cushion the fiscal shock that will hit this province when the full measure of Ottawa's avarice becomes clear. But what about the weak links in the confederate chain? How are the economies in the Maritimes going to adjust to the cutbacks that Ottawa has targeted in that historically disadvantaged region?
It is somewhat perplexing that Mr. MacEachen would explain away EPF cutbacks on so-called restraint grounds. I am sure the member opposite knows, the member for Ottawa East, but is not proud of the fact, that Ottawa's expenditures increased 16 per cent in the same budget where $2 billion was cut in EPF transfers to Ontario. This is all the more ironic since it has already been independently established that the cost of running government in Ontario is the lowest per capita in Canada.
The greater issue here is that of credibility in future federal-provincial negotiations. Quite simply, how can we, or should we, trust the federal government when future agreements need input from different levels of government? This is the hard, cold fact which will live on long after our province's economy has absorbed Ottawa's last minute withdrawal of its word. Indeed, the consequences of Ottawa's new approach may well be an era of meanness and mistrust between the federal government and the provinces.
As an example, both levels of government at present do not levy taxes on propane gas. The result of this joint agreement is that the cost of using this alternative energy source is relatively low. But how can we be sure Ottawa is not going to turn around and levy a tax? The fact is, we do not know.
It reminds me of the old adage, "Once bitten, twice shy." I say that with abundant concern and absolute disappointment. After all, if that is where we are headed, the citizens of Ontario will be the ultimate losers.
Finally, I return to the comments of the member for St. Catharines (Mr. Bradley). He suggested in committee that we would use this debate to blame Ottawa for our financial difficulties; fed-bashing is what I think he termed it. In fact, his colleagues have spared no effort this evening to accuse this government of wrongfully fed-bashing Ottawa over the EPF agreement.
If we are indeed guilty of fed-bashing, I should like to point out that we share that honour with Mr. MacEachen's very own colleagues in Ottawa, both opposition parties, as well as every province in Canada. It makes me think the members opposite have abdicated their role as representatives of Ontario's citizens.
Mr. Breaugh: Hold it. Hold it. Mr. Speaker, on a point of order: I do not mind when he impugns the motives of the member for St. Catharines but, as I read that last line, that is a little beyond the pale. If he would read the last line of his prepared speech again, I think, Mr. Speaker, you will have to agree that is impugning motives.
The Deputy Speaker: The member for Lakeshore.
Mr. Kolyn: Mr. Speaker --
Mr. Breaugh: Hold it. Mr. Speaker, I have asked you --
The Deputy Speaker: Try to be a little more specific. What would you like me to do?
Mr. Breaugh: The rules are very clear.
The Deputy Speaker: What is the point? What would you like me to do?
Mr. Breaugh: Mr. Speaker, the point of privilege is that the honourable member has impugned the motives of other members of this House and I have asked the chair for a ruling on that.
Mr. Wildman: Has he done it or not?
Mr. Breaugh: Perhaps I could clarify and simplify it.
The Deputy Speaker: That would be more helpful.
Mr. Breaugh: Re-read the last line.
Mr. Kolyn: It makes me think that the members opposite have abdicated their role as representatives of Ontario's citizens.
Mr. Breaugh: Does that not impugn motives?
The Deputy Speaker: I do not think so.
Mr. Treleaven: Sit down.
Mr. Boudria: It's a good point, but it's not a point of privilege.
Mr. Kolyn: Mr. Speaker, if they would spend just one-half of the amount of energy listening to the voices of those who will be affected by these cutbacks as they spend blindly complaining about the rightful concerns of this government, I am sure Ottawa's stance on EPF could be changed overnight. Perhaps as some encouragement, I will add that the future integrity of federal-provincial relations is clearly at stake.
Mr. Ruston: Mr. Speaker, I would like to participate in this debate. So far, it has not been too enlightening, but I will say that some of it has been. The member for St. David gave a rather interesting speech. I did not get a great deal out of it except that she was right and everybody else was wrong.
If one talks about spending money, the member for St. David sure knows how to do it. She headed a task force on provincial rail policy, over which Ontario has no jurisdiction anyway. It was another one of those things where they are reaching all the time to appoint somebody to a commission or something, so they can pay them off; the senate of Ontario.
Just to give an idea of how she wasted that money -- and she ought to be ashamed of herself -- she spent $113,398.39 on 13,000 copies of the Future Role of Rail, A Policy Position; Public Submissions; and Working Papers. She sold them for $4,099 for a loss of $109,000. She ought to be ashamed of herself. When people today need money like they do, she threw it away.
Does the honourable member know where those books are? They are up on the fifth floor of this building, which is probably a fire-trap. They should all be burned. They are such nonsense. She gets up here and talks about the federal government spending money. I know they are cutting back as well as anybody does, but God help us, if the people on the other side of the House keep on wasting the money the way they are, we will all be broke.
There is an interesting thing about spending money, but I do not know if anyone has had the opportunity of reading a few remarks from the former Treasurer of this province, Darcy McKeough. He was a rather interesting chap; highly respected on all sides of this House, whether we disagreed with his policies or not. We had many occasions to disagree with him, especially when he was centralizing regional governments all through Ontario, but he has seen the light. Even in this speech, he admitted that he has seen the light since. This was a speech he gave at the Empire Club of Canada called Why Pay Twice? The Cost of Double Government.
He says here, and I am quoting a part of it: "The message itself is simple and brief. It is this: With a few exceptions, every responsibility currently held by the federal and provincial governments would be handled better, more efficiently, more effectively, more economically, and with greater accountability if it were handled by one or the other level, rather than being shared, or even worse, competed over by the two levels."
This happens many times. We now have 11 departments of labour, 11 departments of agriculture, 11 departments of industry, and so on, and so on. He explains that.
I had a case in my own area. The Minister of Housing (Mr. Bennett) had a plan in which the federal government joined whereby a small municipality could form a nonprofit corporation. In my area, the small municipality decided they would build a 20 unit apartment building in a small village. At that time, we could not get the province to build any senior citizen housing, so the municipality, being very aggressive and wanting to keep their people locally when they retired, formed a nonprofit corporation of the township to build this apartment building.
They wrote letters to Toronto to see if they could get permission to build one of these buildings. They hired a consultant to help them. They had surveys made on the need for it.
After about one and a half years, they asked me if I would bring them down to meet with the officials of the Ministry of Housing. We met with them for about an hour and three quarters, and the reeve of the township, a very sharp fellow -- he farms about 300 acres of land, and he is a very good farmer; he is an auctioneer and has a nice young family coming along -- what I call a real good citizen of Ontario --
9:40 p.m.
The Deputy Speaker: Order. Are we on the same topic?
Mr. Ruston: About money. That's right. Just hold your horses; just be calm.
The Deputy Speaker: All right. What is the reeve's name?
Mr. Ruston: After about an hour and a half the officials in the Ministry of Housing said: "Well, everything is in order. It looks as if you are going to be able to go ahead with the project."
Then the reeve said: "We are going to get all this money and we are going to get some of it at two per cent interest; that's all we are going to have to pay, provided that five units of the 20 are rent-geared-to-income and the other 15 are regular market-value rents. I wonder if you could tell me where this money is really coming from. I know you are going to send us a cheque when we get the contract and the building built."
The official said: "Yes, we will transfer the money to you and see that you get the building paid for, and we will not get involved in it for at least 20 years. If there is any shortage of rent, if you are not getting enough rent to cover the payments, we will probably get involved under some plan we have, but that would not come into effect for 20 years."
So the reeve said: "Well, you have not actually answered my question. Where does the money come from?" He said, "This is a plan we have with the federal government." The reeve said: "That still does not answer my question. Would you tell me how much of it comes from the federal government and how much comes from Ontario?" The fellow hesitated and said: "Well, 100 per cent of the money comes from the federal government."
It is no wonder that in the 1975 election, when the fellow running against me for the Tories had his picture taken with the mayor of the town, who was a Liberal, he said: "There is our new senior citizens' apartment, 32 units; 90 per cent of the money came from the federal government." But nobody knew anything about it. So you wonder why the characters over there go and spend this money -- and I mean it: they are characters. I blame Ottawa for it, though. I blame Ottawa for not insisting that they be recognized for it.
The Minister of Government Services (Mr. Wiseman) is looking on and is kind of interested. I wish he would get as interested in the pigeons that are ruining this beautiful building. He ought to be ashamed of himself. He should go around the north wall of all these buildings and see what a beautiful building we have. We want to keep it that way, but he is surely not looking after it. So maybe he had better go back and see what they are doing. He should go out there some morning and see the mess around. He would not allow that in his barn where his cows and cattle are.
Mr. McLean: Mr. Speaker, I rise on a point of order. I am concerned about what pigeons have to do with public accounts. I came here to listen to the debate on the public accounts. I could recite probably as many things that have happened in my municipality as have happened in this member's riding, and they do not have anything to do with the public accounts. I object to the time that is being wasted.
The Deputy Speaker: To the member for Simcoe East, that is a very good point of order. I tried to make that same point to the member for Essex North already, and he was trying to tie it in.
Mr. Ruston: Mr. Speaker, established programs financing is the sharing of expenses by the two levels of government, and if we talk about sharing by two levels of government, what about the Edmonton commitment? I have here a list of 11 municipalities in my riding, and it gives you an idea. In the township of Rochester, for instance, the municipal taxes are $250, the elementary school taxes are $280 and the secondary school taxes are $232; 79 per cent of the taxes paid there are education taxes alone, and the government members opposite never lived up to their commitment that they made in the Edmonton agreement.
The Deputy Speaker: Are you pointing at me?
Mr. Ruston: Yes. You are the Speaker.
Here is another example. In the township of Maidstone, municipal taxes are $215, elementary school taxes are $269 and secondary school taxes are $219. This government has never lived up to its commitment. I blame the federal government for making decisions that are probably premature. We are now in a very serious situation in our country because of unemployment and a lack of the people who are trained to do jobs they should have been trained for years ago. The government members opposite have the responsibility for education, and they have been letting that go too. They have been abandoning their responsibility to train the people of this province so they can compete in the work force.
Mr. Speaker, we must have co-operation between one level of government and another, but I think the key thing we have to remember is that in the future perhaps we should make those who spend the money collect it. Then we will have better representation.
Ms. Bryden: Mr. Speaker, I have listened to a great deal of federal-bashing from the other side of the House, and I have listened to several of my colleagues pointing out that the Ontario Conservative government is really in a very weak position when it goes in for federal-bashing on the cutbacks in the transfer payments.
We all know, as my colleague the member for Bellwoods (Mr. McClellan) said, that the Conservative government was not using the full amount of the transfer payments for health and post-secondary education which came to it under the block funding arrangement. Yet the Ontario government was one of the leaders in the demand for block funding. It appears that it wanted these transfers not because it thought those programs needed more money or because it wanted to be able to change the pattern of spending in those programs, but because it wanted to be able to divert the money from those programs as it saw fit in order to keep taxes down or to go in for other programs of lower priority. So Ontario's protests sound somewhat hypocritical.
Second, I think it is a case of the pot calling the kettle black, because in municipal grants they have done exactly the same thing they are protesting that the federal government has done: They have cut back below the inflation rate on their grants to the municipalities and, in so doing, they have very seriously affected the social services the municipalities can deliver. They are doing this at a time when we are in a serious economic recession -- some even call it a depression -- as a result of which welfare payments are going up, and all sorts of other social services are being strained to the limit. Yet the Ontario government is cutting back in the interests of reducing its deficit. It is doing exactly what the federal government is doing.
Third, I think the Progressive Conservative Party is very hypocritical when it criticizes the federal government for trying to reduce its deficit by whatever means. No party in the country has shouted more loudly for reduced government spending as the answer to inflation. It seems they do not care what kind of government spending is cut as long as it is cut and there is less government intervention in the economy. They are not prepared to have government spending used to stimulate the economy, to get people back to work.
When they start to demand less government spending they can expect their transfer payments to be the first to be attacked by an old party government because that is the easy place to cut government spending. Of course, the Progressive Conservatives are in favour of government spending when it comes to executive jets or bailing out Suncor, but when it comes to transfer payments to the municipalities, that is where they do the cutting.
9:50 p.m.
I think Ontario is going to have to start facing reality instead of passing futile motions of this sort because the federal government has passed Bill C-97. It went through on April 5 and it is not going to be changed. We are faced with a situation here that I think the provincial Treasurer is going to have to meet in his budget.
The federal Treasurer and the Minister of National Health and Welfare tell us that the established programs financing payments for our health and post-secondary education will go up by 12 per cent in the coming year and that there really are not serious cutbacks in that area. They are neglecting to tell us one fact and that is that the revenue guarantee payment was in effect considered part of the payments for health and post-secondary education. It was thrown in as a sweetener in 1977 when it was about to expire. In all of the federal figures on those transfer payments, the revenue guarantee payment money was included in the federal tables.
Therefore, if one is going to look at what the federal government is really doing in health and post-secondary education, instead of providing a 12 per cent increase, as the Minister of National Health and Welfare tells us, it is actually only producing a 4.6 per cent increase in those payments. This is far below the inflation rate and it is far below the needs in those areas.
We will have a second-class university system, as the university presidents and the university faculty associations have pointed out time and again in letters to the members of this Legislature. We will have a second-class university system, having not been able to attract new professors, and having cutbacks in staff and cutbacks in courses.
We will also have a second-class health system in this province under this kind of an increase in the transfer payments of 4.6 per cent. We will not be able to rebuild our plant, the hospital plant which is getting out of date and which lacks technological equipment that it needs. We will not be able to find the chronic care beds that we need. We will not be able to bring in the services that are not being covered under medicare, such as dental care. We will not have a first-class health system.
The provincial Treasurer is really going to have to face up to the fact that if he wants to have a first-class health and post-secondary education system for this province, he is going to have to at least make up the difference between that 4.6 per cent increase the feds are giving us and the rate of inflation.
If the Minister of Health (Mr. Grossman) is going to give all of any increase in health spending to the doctors, the doctors themselves will find they are working in an obsolete and outdated plant, that the hospital services they need for quality care are not there and that the beds are plugged with people who should be in chronic care beds. Even the doctors will lose out if they get all of the extra health dollars for themselves in their own pockets.
The provincial Treasurer is going to have to face these things when his budget comes down on May 13 and he is going to have to find out where he is going to get that extra eight per cent he needs for those two vital services.
I say it is time he started to look at the areas he has not been taxing or where he has been reducing taxes, the area of the corporate welfare bums of this province, the banks, and the other half of the capital gains tax. There is a considerable amount of money and wealth in this province that is not bearing its fair share of taxation that should be helping us provide those first-class health and first-class post-secondary education services that we need. But the provincial Treasurer, up until now, has shown no courage in taxing the areas where the money is.
The public, the general taxpayer, is not prepared for further tax increases beyond the $600 million he got last year. We are liable to have a tax revolt, I say to the Treasurer, if he tries to put another $600 million on. The taxpayer is not prepared to pay user fees for those two services of health and post-secondary education, because he knows user fees are regressive.
Everybody pays the same regardless of his ability to pay. This is also true of university fees unless students are able to get substantial student aid. Everybody pays the same if there are user fees on hospital care, ambulance services and that sort of thing. So the Treasurer is facing those choices: either get the money where the money is and keep those services first class, or admit that under this government we cannot expect first-class services in those areas.
Mr. Villeneuve: Mr. Speaker, I welcome the opportunity to speak in this debate, having sat on the public accounts committee. EPF is not an exciting sounding group of letters. It is a term that describes joint financing of health and post-secondary programs by the federal government and the provinces. It is, in its ideal form, the heart of what our federal system of government is all about. It is an agreement, a co-operative initiative, between two levels of government, designed to work for the greater benefit of all Canadians, no matter where they live.
EPF was a result of intense negotiations between the provinces and Ottawa back in 1976. At that time, the agreement was hailed as a breakthrough in federal-provincial relations, a glowing example of what our two major levels of government can achieve when working together. EPF clarified and disentangled the responsibilities of the two levels of government.
For Ottawa, it gave the federal government the opportunity to bring a greater measure of equity into per capita grants to the provinces. In addition, it made these grants more predictable and easier to budget.
This agreement gave provinces the luxury of time. We were better able to schedule our spending priorities. We could develop long-term programs with greater certainty that the money would be there. EPF gave the provinces greater opportunity to experiment in more efficient ways of providing services to the public.
From all aspects, the EPF agreement that resulted from the discussions six years ago was by no means a provincial raid on the federal Treasury. It was an agreement freely entered into by all parties involved. In addition, it was clearly understood by all parties that the burden of fiscal risk lay with the provinces, which were now fully responsible for meeting the growth cost pressures in health and education.
That was the idea behind EPF. It is on the record, and can be found in both federal and provincial documents dating from 1976 and 1977. Today, however, the story is different. Today, the co-operation promised in 1976 has been replaced by antagonism and confrontation. Today, what was a fine example of our federal system at its best is now the shame of our Confederation.
When Minister of Finance Allan MacEachen brought down his budget last November, he did more than declare war on the Canadian economy. In a series of short paragraphs, he buried the concept of co-operative federalism which at one time had been the goal of Prime Minister Trudeau.
The minister killed co-operative federalism by announcing substantial reductions in EPF grants to the provinces, but it is not just the deductions themselves which hurt; it is the fact that MacEachen and his aides refuse to discuss these cuts with the provinces.
10 p.m.
The reductions were laid before provincial treasurers and they were challenged to take it or leave it. They were not even challenged to do that. They were simply handed an ultimatum and told to swallow their pride in their legislatures back home. Despite provincial protests, despite the fact the treasurers banded together and offered to negotiate a consensus and offered to meet Ottawa part way, the answer was no, there would be no deal on EPF, no deal for provincial treasurers and no deal for the Canadian people.
What does the Finance Minister's no deal on EPF mean to the provincial government and to the taxpayers of this province who pay 43 cents of every dollar that goes into the federal Treasury? Our province will lose nearly $613 million over the next two years and face a loss of $1.9 billion during the five-year period leading up to 1987.
What will these cuts in EPF mean to the average family in Ontario? These are questions we have to answer. Will we all be forced to dig deeper to maintain our health care services, to continue support for scientists and researchers working at our universities, and to provide students with the latest books and journals and up-to-date equipment? How much more can Ontario taxpayers be expected to pay?
I happened to be a member of the federal House of Commons just 20 years ago. I am not trying to lay blame on one party or provincial government or anything. The total budget for all of Canada for administering everything, paying the interest and everything, was $6.5 billion. Our demands this year to meet our provincial health expenditures alone exceed that amount in Ontario. That is how serious it is to the taxpayers.
The Socialists over there are crying for more service for the poverty stricken. We have as much heart and consideration for poor people as anybody has. The beef producers and the farming community, the grain growers and the hog producers this last year are not even breaking even. We have 300,000 people unemployed. The revenue has to come from somewhere.
I am not blaming the federal government for cutting back but I think its approach was wrong. I realize that dealing with 10 provincial governments of different political stripes is not easy. Nevertheless, I do believe they should have laid out the facts and stated plainly: "We do not have the revenues to meet these continued expenses. You may just as well all know it now and settle in that manner."
We are all affected. Let us face facts. One cannot make expenditures if one does not have the money to meet the bills. Therefore, it is a serious situation for all concerned.
Every member in this House is worried today about what is happening with the medical profession. Everybody knows before it is all over it is going to cost the taxpayers of Ontario money. Look at the average citizens across this province. They are not in a position to accept much more in the way of taxation. Those who are carrying the load are at the stage where they are burdened such that if everybody sits down everything will stop. We are at that serious point in life whether we like it or not.
I am not condemning the federal government. I realize it has a lot more to suffer than we have for one simple reason: I read in the paper less than three weeks ago that it is costing $16.7 billion for interest charges on money the federal government has to pay interest on. When 20 years ago the country operated with $6.5 billion, it is time for all governments to think seriously of what we are going through and where we are going. It is nice to cry for money, but on the other hand, someone has to pay the debt.
I want to say the reductions will result in an additional burden on the provincial Treasury. We cannot get out of that. We are already beset with the challenge of meeting a variety of commitments in spite of high interest rates, inflation and a slow-growth economy.
Instead of encouragement and support from the federal government to meet new budget restrictions, what do we hear? Prime Minister Trudeau accuses the provinces of diverting EPF funds for purposes other than health care and education. Instead of a plea for co-operation, we are accused of pretty well robbing the public purse.
Are the Prime Minister's accusations true? Members will recall Mr. Justice Hall's report, Canada's National-Provincial Health Program for the 1980s. Mr. Justice Hall looked at the EPF grants, he looked at provincial health and educational programs and he looked into the Prime Minister's accusations. What did he find? Mr. Justice Hall found the accusation to be false. The provinces have not and are not diverting funds granted under EPF.
Ottawa has also claimed that the provinces are simply not meeting their commitments in funding joint programs. The Economic Council of Canada looked at this claim and concluded that the provinces are contributing their fair share. They concluded that Ottawa's claim was false.
Let us look at the statistics for a moment. The figures show that on the whole Ontario allocates more resources to health care and post-secondary education than the provincial average. Looking at health care expenditures as a fraction of total provincial budgets, Ontario spends two per cent more than the all-province average across Canada.
In 1981, Ontario's spending on education stood at 7.2 per cent, well above the national average of 6.5 per cent. Members can talk as they like, but these are facts. Certainly these figures indicate Ontario is meeting its commitments, in both fields of health care and post-secondary education. But the federal government is not content to let its accusations rest there. The Minister of Finance has defended his cuts in EPF on the grounds that grants to the provinces have increased far beyond Ottawa's ability to pay.
I repeat, if that approach had been taken, without making it a straight "no," I honestly believe men of goodwill would have understood. We all know when dealing with financial problems with our neighbours or friends it is not hard to come to a misunderstanding, especially if we feel we are being shortchanged. Nevertheless, if we are told the facts, generally speaking people who have a reasonable understanding will accept the facts.
Mr. Bradley: But didn't the provincial Premiers in Victoria --
The Deputy Speaker: Order. The member for Stormont, Dundas and Glengarry has the floor. This is not question period.
Mr. Bradley: Didn't the provincial Premiers in Victoria tell the federal government to cut its deficit?
Mr. Villeneuve: That might be. I am not going into that. How true is this claim? Statistics in the 1981 Ontario budget paper, Renegotiations of Federal-Provincial Fiscal Arrangements, show that growth in federal transfers to the provinces fall below growth in general federal spending. That is one of the difficulties.
10:10 p.m.
While it is true that Ottawa's share of all government revenue collected in Canada has declined, these declines came about during the 1950s and 1960s when the provinces introduced the social services and support schemes that are taken for granted today.
In many ways it is appropriate for us to be debating the established programs financing this week. To me, EPF and similar programs are what our Confederation is all about. It symbolizes our federal system at work. It demonstrates the good things that can happen when the massive physical power of the federal government is linked with the discretion of the provinces, the level of government best equipped to appreciate local needs and priorities.
Last week we witnessed the signing of a new Constitution for our nation. Our monarch, the Prime Minister and the chief law officers of the federal government all signed our new Constitution into law. In her speech following this ceremony, the Queen pointed out that this new Constitution can mark a beginning for Canada. We now have our system of government in our own hands, and it is up to us to shape and mould it to the best benefit for ourselves and our children.
I hope the spirit of that occasion will linger in Ottawa for a few weeks at least. It is my hope that discussion on EPF will reopen, because I know this province and other provinces will leap at the opportunity to create a more just settlement of this controversy. I see by the papers that the federal Minister of Finance is sounding out different views, and perhaps there is some hope.
No system of government, no framework for delivery of necessary services can be built on the foundation of rancour and distress. I ask co-operation from Ottawa. I ask co-operation from the federal Minister of Finance. I ask for a return to days I recall with pride when Frost and St. Laurent, Robarts and Diefenbaker, worked side by side to build a better Canada.
There may be discord abroad, but let us have peace at home. Let us have negotiations on EPF and the return of a harmony between Ottawa and the provinces on fiscal arrangements. Let the spirit of co-operation that brought our Constitution home exert a beneficial effect on the EPF impasse.
Mr. Nixon: Mr. Speaker, I do not have to tell you that all governments are facing tremendous fiscal difficulties and that we have come through many years of expanding economies when governments could undertake expanding programs.
During those years our negotiations with Ottawa have been largely amicable. Even in the days when the member who just sat down was a member of Parliament, there were sufficient revenues for Canada and the province of Ontario for us to look with benign generosity on other provinces, support without equivocation the concept of equalization and part with the many millions of dollars paid by Ontario to Ottawa and other provinces in the interests of national unity.
In many respects, however, since about 1975 we in Ontario have been living in a provincial fiscal fool's paradise. Beginning with the successful efforts of the government to win the 1975 election, we undertook one of the first of many very large provincial deficits. The Speaker no doubt recalls the programs of that time, the one-time home owner grants, the removal of the sales tax until after the election and so on, in addition to our deficit of close to $1 billion in 1975 dollars, which we thought then were inflated but which today we can refer to as real dollars.
Since that time, I suppose because of minority government, the government of Ontario has been afraid to cut back on some of its popular programs. It has been afraid to raise taxes and has made a virtue, a political virtue at least, of holding the line as fiscal pressures increased. This has been largely possible because of our deficits and our borrowings in New York and in Canada. It has also been made possible because of the established programs financing procedures, which had their precursors in various systems of grants that have been payable for many years.
It has already been pointed out that, as the federal per capita grant payable in Ontario went up during that period by 27 per cent, the provincial per capita grants for the same programs were reduced by 29.3 per cent. I believe those figures are telling. The responsibility to pay for these programs moved more and more to the government of Canada and the federal taxpayers and away from the provincial taxpayers. We know they are the same people, and that is where the reference to Darcy McKeough's speech has such a great significance. While we have three or four, sometimes five, levels of government, we really have only one set of taxpayers. What they cannot abide is the overlapping of services and the unnecessary increase in costs that often accompanies that.
If one refers to the most recent budget, which is now a year old, one will notice that the Treasury of Ontario is enriched by $3.3 billion in shared-cost programs. In addition to that, the government collects for us $4.38 billion of so-called provincial income tax. These are the days when many of us, if we have not already sent our income tax returns away, are worrying about them and wondering why our wives have not got them finished for us to sign. There are only a few days left, and when we write out those cheques or send the returns away -- actually they go to Sudbury, wherever that is, with great respect -- we write out the cheques to somebody we identify with Pierre Trudeau and Allan MacEachen.
Of course, a tremendous percentage of that, 48 per cent, is a provincial tax, which we have responsibility for by enactment here, but it is all collected in Ottawa and returned to us with no strings attached. I am glad the Minister of Revenue (Mr. Ashe) is getting involved. He keeps threatening to collect the tax himself, which is the most idle threat we have had from any provincial minister in my time. If it is all added up, it means the government of Canada is collecting close to $8 billion of this year's estimated expenditures of $17 billion. I know they are considerably larger than that.
Hon. Mr. Ashe: Where did you get $17 billion?
Mr. Nixon: Here it is in the book.
Hon. Mr. Ashe: It is $18.4 billion.
Mr. Nixon: Yes, that is right; but this is in the budget paper we received a year ago, which is where all these figures are collected. God knows the minister has spent a lot more money he did not budget for, and he has collected a lot more he did not budget for. We cannot help his inadequate predictions. If we had a Treasurer who knew what he was doing --
Hon. Mr. Ashe: It was $18.4 billion. You can't even read.
Mr. Nixon: I do not want my train of thought to be diverted by my friend from the reactor. He has been living in the shadow of that reactor so long that it is having an effect on him.
I want to point out that if one adds together the money that is transferred, no strings attached, by the federal government collecting our provincial income tax, to the amount it pays, no strings attached, on the established programs financing, it is paying 44 cents out of every dollar we spend.
At the provincial level, the services we provide under the Constitution -- I do not have to list them, although I will: schools, hospitals, highways, transit, parks, courts, pollution control and so on -- are all programs that affect people directly in their lives, in their ability to educate their children, to have a job themselves and to enjoy life in their environment.
When we consider, for example, that every time somebody goes out and opens yet another William G. Davis school, 44 cents out of every dollar contributed by the province comes from Ottawa -- it has already been pointed out that in some programs close to 100 per cent of the dollars come from Ottawa -- there is a dislocation in the democratic process associated with the fact that the people facing us here, the members of the government, are in their generous spirit providing programs and constructing buildings and highways that are to a great extent financed through the taxing powers of another level of government.
10:20 p.m.
We treat the municipalities in somewhat the same way. There are many municipalities and some school boards that receive a very large proportion of their dollars from the provincial level. Without going into the ramifications of the Canada assistance plan, members know that in fact we are nothing but a conduit through which federal dollars go to the municipality to pay for a good many of our municipal welfare programs and programs associated with them. It is absolutely confusion personified. I believe it interferes with the healthy projection of democracy when the taxpayers, who are also the voters, do not know to whom they should give credit or whom to blame for the inadequacies of certain programs and the generosities and sensitivities of others.
One of things I am also concerned with is that, as the economic pressures come on, governments are subject to almost relentless pressures to cut costs. We need only look at what the government of Quebec has had to face recently when it announced not only a freeze but also a cutback in payments to many people controlled by the authority of the National Assembly. That is going to be very difficult to make wash and to actually apply. People are not going to sit still very long while a government imposes a cutback on them.
The financial situation in Quebec is appalling, even compared with ours or that of the government of Canada. While their population is only a bit less than ours, their gross provincial product is substantially less; yet their budget is considerably more and their deficit is even worse than ours, which is pushing $2 billion for this year, and God knows what the Treasurer has in store for us a few weeks or a few days from now.
One thing we can be sure is in store for us is that the responsibility for all the economic problems he is going to unload on this House on May 13 is going to belong to the government of Canada. That may be all right for politicians speaking to some people who are ignorant of the difficulties in financing at all levels, but for the Treasurer himself, particularly if he acts as if he believes it, it is absolutely unacceptable.
The thing I find particularly unacceptable is that he is prepared to insist that his public servants, who in the past and in the grand traditions of this province have been apolitical and who have been advisers to the ministers rather than apologists for the ministers, take positions that are so crassly political that we wonder what sort of advice the Treasurer is actually receiving.
I want to quote a line or two from a statement by Mr. Tom Campbell, Deputy Treasurer, issued on Friday, March 19, 1982: "This is a sad day for the spirit of co-operation and trust that has made this country work for the last 115 years." I expected my friends to applaud violently, because that may be what they believe. That is the sort of thing a Treasurer can say, and Darcy McKeough, if he had been here, would have been saying it in spades; but it is surely not the thing for the Deputy Treasurer of Ontario to say.
Just as a side point as my time disappears very rapidly, the fact that the Treasurer is allowing the chief economic analyst for Salomon Brothers in New York to come up to Ontario to speak to a fund-raising dinner for the Muskoka Progressive Conservative Association is another case in point. Salomon Brothers have handled our external financing since about 1912. They are an institution in the province as governments have changed over these many years, a world-class institution that has been responsible for the borrowing of all of Ontario Hydro's money, all of the external debt, except our deutsche marks, for the province of Ontario. For their chief economic analyst to come to Ontario to speak to the Treasurer's leadership fund-raising is absolutely appalling. We must assume, if we believe in democracy, that governments can and will change.
How could a Liberal government ever deal with the Salomon Brothers, even though we have dealt with them in previous incarnations going back for more than half a century, when they are misled by the Treasurer of Ontario in a way that allows them to participate in the political affairs of this province? I am telling members that I believe the Treasurer of Ontario is losing his credibility and no more so than when he is prepared to blame the federal Minister of Finance and federal policies for all of our own economic problems.
It is great to have a whipping boy, particularly one as unpopular as the government of Canada and Messrs. Trudeau and MacEachen. There is no doubt about that as far as their popularity is concerned. I personally believe that Mr. Trudeau has given and continues to give the nation the best leadership of any Prime Minister in our history. That is my strong feeling.
Hon. Mr. Ashe: You don't believe that.
Interjections.
Mr. Speaker: Order. The member for Brant-Oxford-Norfolk.
Mr. Nixon: Mr. Speaker, I am glad you agree with me anyway. I do feel this whole approach towards blaming the federal government for all of our own provincial economic inadequacies and difficulties is a serious attempt to mislead the electorate into removing the pressures from the government of Ontario for the problems it is going to be facing in the next few days and the next few weeks as it is forced to bring down a budget.
This whole approach towards making a report from the standing committee is just a trumped-up affair. Tom Campbell went in and criticized the government of Canada and its policies more strongly than the crassest Tory over there. They would not have the nerve to criticize the government of Canada the way he did, and he is supposed to be our principal public servant.
I think back to the days when Rendall Dick was the Deputy Treasurer. We never would have seen him do that. He had a position that gave the kind of leadership to the public service that would establish it as one of the best in Canada, if not the best in Canada. I do not blame Tom; I blame the Treasurer for allowing the decrepitation of the public service, particularly in the Treasury in that connection. I am concerned about that.
I am told by the member for Etobicoke (Mr. Philip) -- the honourable member says he will vouch for it himself, and he is nodding to me even now -- that as the officials left after this fed-bashing project at the public accounts committee they were heard to say to each other, "This is a good rehearsal for the budget."
There is no doubt in my mind that for once, now that we have a majority government, we are going to hear no more of that old political bull about no new taxes and no reduction in services. We are going to have a slashing of services; we are going to have a huge increase in taxes; we are going to have a huge increase in our debt, and the feds are going to be blamed by the authority of the Treasurer, dictating to his deputy in a way that should not be allowed in a democratic system.
Mr. Speaker: The member for Oshawa.
Interjections.
10:30 p.m.
Mr. Speaker: I direct the honourable member's attention to the clock.
Mr. Breaugh: I am waiting for a little order, Mr. Speaker. I would like to address a few remarks to the Treasurer (Mr. F. S. Miller), but he does not care enough to be in his seat at the end of this debate. Failing that, I would like to address a few remarks to the Minister of Colleges and Universities (Miss Stephenson), who has not been here all night long, or perhaps to the Minister of Health (Mr. Grossman), who is also very directly impacted by this serious problem but who has not been around all night long either. There is nobody to talk to except a few depraved people trying to make a little political hyperbole.
Mr. Speaker: Is the member for Oshawa going to move the adjournment of the debate?
Mr. Breaugh: I would be happy to move the adjournment.
Mr. Speaker: The member for Oshawa moves the adjournment of the debate. Is it the pleasure of the House that the motion carry?
Hon. Mr. Wells: Mr. Speaker, it was my understanding that we were going to vote on the motion now.
Mr. Breaugh: I would withdraw my motion of adjournment but, listening to the smart-ass remarks opposite, I will let the motion stand.
Mr. Speaker: The motion is for the adoption of the report of the standing committee on public accounts. Is it the pleasure of the House that the motion carry?
Mr. Newman: The motion to adjourn takes precedence.
Mr. Speaker: Did the member not withdraw his motion?
The member for Oshawa has moved the adjournment of the debate.
All those in favour will please say "aye."
All those opposed will please say "nay."
In my opinion the nays have it.
Motion negatived.
Mr. Speaker: Shall the report of the standing committee on public accounts be adopted?
All those in favour will please say "aye."
All those opposed will please say "nay."
In my opinion the ayes have it.
Motion agreed to.
The House adjourned at 10:34 p.m.