L036 - Thu 31 Oct 1985 / Jeu 31 oct 1985

BUDGET DEBATE (CONTINUED)

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The House resumed at 8 p.m.

BUDGET DEBATE (CONTINUED)

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

Mr. Brandt: I am delighted to have --

Hon. Mr. Nixon: We need a new joke.

Mr. Brandt: I might insert one or two. If the Treasurer (Mr. Nixon) stays absolutely calm, cool and collected over there, I will do my best to be as fair, balanced and honest with my remarks as I can possibly be.

I have had the opportunity on many occasions to be in this House when the current Treasurer sat on the other side and I listened to him with great interest. I might add that I received a great deal of knowledge listening to the then member of the opposition share some constructive criticisms with our party when we were in a somewhat different position than we are in at the moment. I hope the Treasurer will accept my comments this evening in the same light as I received his comments not all that many months ago.

I have to say at the outset that it has been about 42 years since the last Liberal government brought in a budget in this province of ours that we all love so dearly.

Hon. Mr. Nixon: The Treasurer of the day was St. Clair Gordon.

Mr. Brandt: The Treasurer of the day was St. Clair Gordon. He will go down in history as being the last Liberal Treasurer to bring in a budget until the time we had this budget within the last few days.

Quite frankly, and this may come as a shock to the Treasurer, I want to say some nice things about the budget he has brought in. I want to, but I find it very difficult to. For that reason, I want to get into the substantive part of my remarks by dealing with what I think are some of the oversights and near misses brought into the budget by our esteemed Treasurer.

Hon. Mr. Nixon: It is going to be a short speech.

Mr. Brandt: It is a rather lengthy address and I apologize for the length of it this evening, but there is a fair amount of content to it and I know the Treasurer is looking forward to it in the spirit in which he has delivered similar addresses in the past. I know he is listening to it in the spirit of wanting to learn from us what it is that may be somewhat flawed in his budget presentation.

I would be less than honest if I did not tell him I am deeply disturbed about the increase in taxes he has brought about in this province by taking the almost unheard of move of increasing taxes by literally some $750 million.

Hon. Mr. Nixon: The only bigger one was that of the member for Muskoka (Mr. F. S. Miller) four years ago.

Mr. Brandt: I will get to that. I will be very happy to address the very point the Treasurer raises, because the $754 million in increased taxes came at a time when this province was enjoying one of the highest levels of growth in the entire history of the province in terms of employment gains and revenue gains.

Generally, when one looks at the economic position of this province relative to virtually any other jurisdiction in the world, we were in a position where we were moving ahead much more quickly than any of the other provinces and virtually any other jurisdiction in the world with which one might compare Ontario.

Not only did the Treasurer have the gall, if I can use that term affectionately, to increase taxes by $750 million, but he also added insult to injury by increasing the deficit some $500 million during a period of high growth. He increased the deficit from $1.7 billion to $2.2 billion. It is an unconscionable increase that even the Treasurer cannot justify with all the smooth rhetoric that he has become so known for over the years.

In addition to that -- and I have already talked about some very substantial sums of money -- there was something of the order of $642-million worth of campaign promises that the party opposite me at the moment did not keep; promises it made during the course of the last election campaign and promises that it intends to fulfil at some future point.

In every situation I can recall in this House, when the question has been raised about what it intends to do about denticare or about Ontario health insurance plan premiums or other campaign promises, the answer we get in almost a knee-jerk reaction is that those promises will be kept in the fullness of time or perhaps in early fall.

Hon. Mr. Nixon: Early fall.

Mr. Brandt: That has become almost a buzzword with the members opposite when they have not yet had an opportunity to bring about some of the changes they feel are so necessary in this province.

All of these changes, which I feel are going to impact very negatively on this great province of ours, have resulted in jeopardizing the triple-A credit rating of this province. What does that mean? I have heard the Treasurer indicate, almost with the back of his hand, that the triple-A credit rating is not of too much importance to this province and it does not provide a whole series of programs such as additional housing for those who require subsidized housing, social programs or health services.

I can agree with that, if one takes out of context the symbol of what the triple-A credit rating stands for and attempts to mislead the public of this province in some way by suggesting that the triple-A credit rating is a meaningless symbol. It is more than that. It represents hard dollars. It represents increases in the interest rates this province is going to pay from now until a long time into the future.

It means that programs of a social nature, programs that will stimulate the economy in some fashion and programs that are badly needed by this province will not be brought on stream as a direct result of the errors and omissions that have been brought about by the present Treasurer in simply ignoring the harsh realities of life; those being that during a time of rather buoyant growth one does not do two things in particular: increase the deficit and increase taxation. Those are things one does not touch when the economy is expanding and growing as rapidly as our economy is at present in Ontario.

The Treasurer has gone even further than that. In addition to virtually ignoring the importance of the triple-A credit rating, he has removed the funding for and indicated he is going to disband the Economic Council of Ontario. There was an independent objective body which looked at the finances of this province and came up with an overview. It was sometimes critical of the government of the day, but at least it was an objective outside opinion with respect to the position this province was in relative to its economic performance.

If I were the Treasurer and I brought in this budget, I would get rid of it too. I would not want some independent evaluation by an outside agency bringing forward the kind of critical reports that were absolutely predictable with the impact of this budget being felt in the months and years ahead.

8:10 p.m.

What do increased taxes mean to Ontario? How significant are they in this time of growth, as I have indicated? The Treasurer well knows, as do most of the members of his party who pay lipservice to the importance of small business, literally 90 per cent of all new jobs in this province are created by small employers, those people who take the initiative and have the entrepreneurial skills to be able to develop this province. What bothers me so deeply is that this Treasurer has literally ignored the interests, needs and opportunities that are present in the small business community.

I raised this question during question period, as the Treasurer will recall, and he indicated a couple of programs he had put forth in this budget, one of which, I believe, parallels the federal move to simplify the reporting procedures of small business. I applaud those moves. That is a very positive thing and, in the interests of balance and fairness, I want to applaud that move.

However, I have to ask, why did he increase corporate taxes by some $200 million? Why did he take away the incentive that was in the inventory allowances of about three per cent? Why did he increase the personal taxes as much as he did at a time when it was totally unnecessary?

The Treasurer reflected back to the time of our present leader of the Conservative Party and the former Premier, and indicated he had increased taxes and the deficit even more during his term as Treasurer. I think there is perhaps some justification in the comments the present Treasurer made with respect to the moves that were made at that time. However, I have to remind him they were made during a time of literally no growth and one of the deepest and most severe recessions this country has ever experienced. Ontario was suffering, not as badly as other jurisdictions, but it was suffering from some very serious economic problems that had to be addressed.

Interestingly enough, because we had managed the province in a very acceptable fashion over the years, this province had the flexibility to be able to raise the deficit without jeopardizing our triple-A credit rating. We were able to raise taxes when all of us would have liked to have been able to maintain the tax level in order to stimulate the economy through government measures.

That is where deficits can be used, to quote the Premier (Mr. Peterson), "as a creative tool." They can be used during periods of slow growth and periods of economic stagnation to bring on affordable housing for those who are marginally employed or perhaps unemployed and need some form of government assistance, social assistance programs of various types, or the assistance of government in some direct fashion.

That is the appropriate way in which a deficit should be used, but I would tell the Treasurer, and he knows this, coming from small-town Ontario, a deficit increase during a time of rather expansive growth is simply going to end up at some future time jeopardizing the capacity of this province to respond appropriately to the needs we all see ahead.

I have to say I am less than delighted, in fact I am extremely disappointed, with some of the moves that have been made by the Treasurer as they relate to encouraging private initiatives and encouraging the private sector to create the real, long-term, meaningful jobs our society so badly needs.

What else did the Treasurer do in his budget upon which I have to reflect and on which I offer constructive criticism? I do not mean this in a mean-minded way at all, I mean this very constructively. I have listened very carefully to what the Treasurer has said about the ad valorem tax increase. I have listened not only to his spoken word here in the House, but I took the time -- and the Treasurer will be pleased to hear this -- to read some of his speeches in this House.

I have to tell members it is not an easy thing to read some of his speeches, and to read them late at night, as I sat in my apartment here in Toronto with a glass of milk and a couple of Oreo cookies. But I read the Treasurer's speeches. I hung on every word, because the importance of what he said while he was in opposition would reflect itself in some way, I thought, in the principles and in the philosophy that he brought forward in this budget. But did he do that? The answer is no, he did not.

I have, for members, a Nixonian quote.

Hon. Mr. Nixon: I do not want to hear this.

Mr. Brandt: I know this is going to hurt. I know this is not going to be received kindly by the Treasurer, but it is important that I share with him part of the message he delivered in such a forceful, intensive fashion while he sat virtually in the same seat I am in now. The Treasurer said at that time, "As a matter of fact, eight cents per litre is bigger than the federal government grab from petroleum and almost as big as that of the government of Alberta." That is what he said when he was in opposition.

Hon. Mr. Nixon: But the Conservatives had doubled it in four years from 19 cents a gallon to 36 cents a gallon.

Mr. Brandt: But if what we did was wrong --

Hon. Mr. Nixon: We have just raised it 0.4 cents a litre.

Mr. Philip: Is the member going to vote against it?

Mr. Callahan: Yes or no?

The Deputy Speaker: Order.

Mr. Brandt: I will get to that point. I want to address the point of the third party, who signed an accord that has now been broken on this very point. I want to know what the third party is going to do about this measure. It will be interesting to see how they stand up for the principles that were written in their accord.

I tried to understand what the Treasurer was trying to say when he was so negative about the ad valorem tax. As a simple little boy from Sarnia, I thought perhaps it was the increases in taxes that he was opposed to; but no, that was not correct. What the Treasurer was opposed to was the philosophy of the automatic increase triggering as oil prices went up, which reflected itself in gas price increases and therefore in taxation related to the ad valorem process. The Treasurer made a very clear point of putting forward his view as it relates to the ad valorem tax; what he said was, "I am opposed to the philosophy of the ad valorem."

In our party -- and this is how we can be confused by the antics that go on over there -- we took this to mean that he was opposed to tax increases. But it was not tax increases he was opposed to, it was something called the ad valorem.

It just so happens that under this nasty phrase known as the ad valorem, the taxes on gas last year, I remind the Treasurer, were frozen. The ad valorem and its impact were meaningless as they related to our budget last year, because we recognized --

Mr. Mancini: In my view, it should be confidence.

Mr. Brandt: I hope I hear the member saying in the days ahead that it should be confidence, because I have not heard that from the Treasurer yet.

The Deputy Speaker: Order. Would you please address the chair.

Mr. Brandt: I am being baited, Mr. Speaker.

I was absolutely astonished, and I know the Minister of Energy (Mr. Kerrio), who I am pleased to see is in the House tonight, is astonished as well that when he was trying so desperately to get a good deal for Ontario on energy from the west, his own Treasurer pulled the plug on him by increasing taxes on gasoline in the Ontario budget.

Hon. Mr. Kerrio: There is a connection somewhere.

8:20 p.m.

Mr. Brandt: There is a connection because it relates very directly to the philosophy of increased taxation, irrespective of what the commodity might happen to be. It is very difficult for the Minister of Energy to be negative towards what is going on in Alberta when his government is doing more of the same right here in Ontario to the taxpayers of this province. It is very difficult because it is the height of hypocrisy to be negative about and to bad-mouth another jurisdiction when he as a member of the government of Ontario is doing the self-same thing.

I read the Treasurer's quote when he was in opposition and talked about how bad it was in Ontario with the per litre tax that was in place at that time. I guess my expectations were too high, but I fully expected that when he was looking for additional revenue he would do the honest thing. He would be straightforward with the citizens of this province and raise taxes in other areas, but leave the ad valorem tax alone.

That is exactly why my friends in the third party, with whom I am agreeing, are saying, "You have broken trust with the people of Ontario." That is what they are saying and we are agreeing with them that the Liberal government has broken the trust of the people of Ontario.

When I took a look at this budget as a former businessman, I had to look at what the total increase was not only in taxes but in deficits and promises. I was astounded at the figure I came up with. I say to my colleagues who believe in the philosophy, the policy of fiscal restraint, who believe in responsible government -- is that not correct?

My colleagues took a look at these figures and they were shell-shocked when they saw --

Mr. Mancini: It is because of May 2. That is why they are shell-shocked.

The Deputy Speaker: Order.

Mr. Brandt: Not only is the level of spending in this budget irresponsible, but the promises that are yet to come compound that whole irresponsibility to the point where, if one takes the deficit and the increase in taxes and puts the promises on top, one comes up with $1.8 billion, a figure I know would astound even my friend the member for Sudbury East (Mr. Martel). That is a lot of money.

Even though on occasion the members of the third party are somewhat more free-spending than we are, I know that figure must frighten even them just a little bit when they recognize what it is going to mean to the taxpayers of this province. It is going to mean a dark day ahead. The actual figure is $1.846 billion, for the record, if one takes the whole package and puts it all together.

What is the result of all that spending? One would think the result of all that spending was going to be some form of economic growth and development and a better day ahead for the people of this province, but that is not what is going to happen.

The members will be surprised to hear that in the documents the Treasurer tabled in this House the actual level of job growth, the actual number of new jobs that are expected to be created in this province, has been reduced from what we were able to achieve during the term of our government. Instead of 152,000 jobs, this government, with all its spending programs, with all the gloss and all the glitter associated with that budget, is going to be able to create 108,000 new jobs, a reduction of 44,000 jobs.

When I consider the population of the city I represent -- and I have the township of Sarnia, the village of Point Edward and the city of Sarnia -- as I drive through my constituency and as I look around at the people of my constituency who are so actively employed in many industrial activities and I think of 44,000 fewer jobs, the real truth of what 44,000 fewer jobs in our economy means comes home to me in a very direct fashion. That is almost the whole population of the city of Sarnia.

Can the Treasurer imagine that? He is denying the people of this province an additional 44,000 jobs. If only he had copied our budget, we would have applauded him. If he had brought in the same kind of sensible, responsible and responsive budget, we on this side of the House would have said, "At least he has learned something from those many years he spent in opposition." No, he did not learn. What he had to do was fall back on the philosophy -- I am almost reluctant to mention this -- of the Trudeau government.

The philosophy of that government, and I know I am oversimplifying, was: "We intend to spend this country into prosperity. We are going to raise the deficit, we are going to raise taxes and the people will be happier ever after." The last chapter of that book shows that it did not work. If we could simply raise taxes, raise deficits and bring prosperity to the people -- and that is why I am not in their party, I have to say to the members of the third party -- there would not be --

Mr. McClellan: Because you are a reactionary, Mr. Pollution.

Mr. Brandt: -- a poor country in the world. Listen carefully, my friend.

Mr. Martel: A billion for the bank. What is a billion to the bank?

Mr. McClellan: Here is Mr. Pollution. Talk about pollution.

Mr. Brandt: Let us talk about what that party is going to do about pollution. Mr. Speaker, I am debating unnecessarily. I want to get to the point.

The Deputy Speaker: Order.

Mr. Brandt: I am trying very hard --

Mr. Deputy Speaker: Will you keep addressing the chair, please?

Mr. Brandt: When one takes a look at the reduction in jobs, that alone is very frightening, but in addition to that the whole economy, as a result of this budget, is starting to grind to an absolute stalemate, to a halt.

Let me tell members what is going to happen. Two years ago the growth of the Ontario economy, which was so highly criticized by the members opposite, was 6.5 per cent. Last year, when there was a slight slowdown, we were able to achieve 4.5 per cent growth, which was criticized by those members opposite. They were highly critical of the fact that we did not have even more growth. Let me tell members of the third party who may feel very comfortable with the accord that they have signed with their friends over there that this government is now anticipating a level of growth which is about half what we were able to achieve last year.

When the 44,000 unemployed people who could have had jobs in this province go to the members' constituency offices to ask for a job, tell them it is the government's fault, because it is the one that is responsible.

Mr. McClellan: No, I tell them it is your fault. They believe me; they do not believe you.

Mr. Brandt: I would not go so far as to say they believe the member's party. I have heard some comments about the believability of the third party on some measures.

Mr. McClellan: What was the percentage of the Tory vote in my riding? The member's party got 11 per cent of the vote in my riding.

Mr. Brandt: I have to tell the honourable member I would be happy to campaign in his riding. Any time he wants to invite me, he should please do so.

One of the things I find absolutely appalling in this budget is that those who are unemployed and over 25 years of age have been abandoned by this government. They have been abandoned by the Liberal Party because there are no programs for small business to create more employment; there are no programs for skills training; there are no job creation programs that are directly applicable to that very important sector of our economy and that very important sector of the populace of Ontario.

I think that is an absolute shame because many of those people are young and have small, growing families that are just starting to school.

Mr. Martel: I know what the member's government did for us in Sudbury with all those growing families and with 15 per cent unemployed. You cannot suck and blow at the same time.

Mr. Brandt: If the honourable member thinks the Sudbury --

The Deputy Speaker: Order.

Mr. Mancini: I think we should have an election.

8:30 p.m.

Mr. Brandt: I have to remind the member for Sudbury East that Science North, which was one of the undertakings of this government, was brought about as a result of the concern we had for the people of the north. If he wants to look at the 15 per cent unemployment figure, let me talk to him in the House perhaps six months or a year from now when that unemployment figure has gone up very substantially as a result of the actions of the government across the way.

Let me tell of some of the other less than admirable things that will result from this budget. We are going to have fewer roads constructed in this province. The members should keep in mind that the deficit is going up; yet we are going to have fewer roads built because there has been a change in priorities. There will be less capital for hospital construction. A whole series of programs will have been cut by the government in spite of the fact it increased taxes and the deficit. It is extremely difficult for me to understand how those things could be put together, but the fact is there will be reductions in essential, critical programs at the same time as they are spending more money.

I cannot forget during the course of my remarks tonight what I refer to as the 25 per cent solution. During the campaign, there were some comments about the fact that the $4 placed on meals in this province for purposes of sales tax was an unconscionable move on the part of the government and should be removed. I watched as the now Premier, virtually with crocodile tears, talked about the poor little children going in and not being able to buy their Big Macs or their Burger Kings and whatever else because of the insensitive government of the day.

What did the Treasurer do? He came up with the 25 per cent solution. He moved the applicable tax, not to $4, not to $3, not to $2, but to $1.

Interjections.

The Deputy Speaker: Order.

Mr. G. I. Miller: You can get a good lunch for a buck.

Mr. Brandt: The member opposite says I would get a good lunch for a buck. That shows the 42-year-old mentality of the people on that side of the House. What they should have done was to bring in that kind of measure in the early 1940s. Probably back then one could have got a very substantial Shopsy's corned beef sandwich for a buck.

Mr. Andrewes: And soup.

Mr. Brandt: Maybe soup and coffee as well. What has happened now is that it is extremely difficult to buy a doughnut or a coffee for less than a dollar. One of my colleagues today, in a sense of fairness, attempted to send the Treasurer a hamburger. He tried desperately to find one that would sell for less than a dollar. To his disappointment he was unable to find one, so he had to cut one in half and send that to the Treasurer as an indication of how meaningful that tax cut is to the people of Ontario. They are just rushing out to take advantage of this new tax relief being offered by the Treasurer.

If he would apply the same 25 per cent solution to some of his other programs, we would have a solution to some of the problems in this province. As an example, at a time when it would be affordable, our party would agree to a denticare program. If the province can afford it, the government will get no resistance from our party as long as it does not increase taxes and increase the deficit.

However, if we use the Treasurer's methodology with respect to the 25 per cent solution, we could fix every fourth tooth -- it would be that simple -- or we could clean every fourth beach or we could close up every fourth contaminated landfill site. The 25 per cent solution would have application right across this province and would be a meaningful gesture on the part of this government. It would be a very major step forward from what he has allowed with respect to the $1 allowance on taxation for meals. That is absolutely ludicrous.

Every fourth pet would be nontaxable. This could be the start of something big. This could be the beginning of the method by which we correct all the economic problems of the world. It is a Nixonian solution that I really believe has boggled the minds of thinking Ontarians. How he came up with it I do not know, but he did.

There was a newspaper headline I thought summed up very effectively what this Treasurer has done to the province. I have to read it.

Mr. Mancini: Take your time.

Mr. Brandt: I will. I want to share these constructive comments with the member from my part of Ontario because I know he has looked forward to these for a long time.

The newspaper headline said, "If You Work, Drive, Drink, Smoke Or Save Enough To Buy A Home, You Are About To Be Nailed." Truer words have never been spoken, because this Treasurer has nailed the people of Ontario to an economic cross that is going to be on their backs for years to come.

It is interesting to note where the current government, this short-term, neophyte government has set its priorities.

Hon. Mr. Nixon: Neophyte?

Mr. Callahan: Fresh government versus stale.

Mr. Brandt: No, look it up. Neophyte as in brand new, untried.

Hon. Mr. Nixon: If I am a neophyte, you are a thespian. Put that in your pipe and smoke it.

Mr. Brandt: I had the honour of serving in the former government as the Minister of the Environment, so I was particularly interested in looking at the environmental initiatives of the new government when it came into office. Listening to the rhetoric during the campaign, I thought during the course of a few short months it would literally have cleaned up the environment of this province.

I am not so naïve as to assume my friend the member for Parkdale (Mr. Ruprecht) and his problems with the Junction triangle would be quickly cleared up. He has not said a word about that since he has been over there. Why has he not?

Hon. Mr. Ruprecht: On a point of order, Mr. Speaker: I do not think we should accept this honourable gentleman saying he has not heard a word. We have not only had some meetings, but the minister has indicated there will be no burning of polychlorinated biphenyls in the Junction triangle. That is better than the former minister did.

The Deputy Speaker: That is not a point of order.

Mr. Brandt: I have no intention of responding to what the member said, other than to indicate that at no time did any member of the government of which I was a representative indicate it was going to burn PCBs in the Junction triangle area. However, there are some members of this House, perhaps even present this evening, who found it necessary to encourage the environmental concerns of some of the people they represent.

It will be interesting to note the kind of improvements that are made environmentally as a result of the impact of this budget. It has provided very little, if any, money to the environmental protection fund, which was promised; or beach protection, which is a high priority with our party and which we funded when we were the government. We provided very substantive increases in dollars to the Metro Toronto area.

8:40 p.m.

Mr. Martel: Tell us about the spills bill.

Mr. Brandt: Does the member want to talk about that? I would be more than pleased to talk about that proposed legislation.

What this government has done is to cut out of the budget moneys that were needed for environmental protection and beach protection. I get some sense of frustration looking over at the newly appointed Minister of the Environment (Mr. Bradley) as he wrings his hands about every environmental problem. He talks about the problems of acid rain and sulphur dioxide emissions in our environment, but he has provided not one dime in his budget to do anything about it.

The federal government, which the members opposite take such great glee in criticizing, put $150 million in its budget to fight acid rain. That is what the federal government did. This government, which sits over there wringing its hands constantly about environmental problems, put absolutely nothing in its budget. They sit there piously on their haunches. They are a do-nothing bunch. They have done nothing for the environment and they are going to do nothing for the environment because they do not know what the problem is all about.

The Deputy Speaker: Perhaps you would continue to address your remarks to the chair.

Mr. Brandt: I am sorry. I got diverted for a moment.

In addition to some of the cuts in environmental programs I have mentioned, would members believe, after all the rhetoric we have heard about the environment from that side of the House, that they have cut capital projects by $8 million in the Ministry of the Environment budget? In addition, in the area of projects which are environmentally important -- I am talking about water and sewage projects, which are required by our municipalities right across this great province -- they have reduced the budget by some $21 million.

How can the government of the day suggest to us that it has a commitment to the environment when it is quite prepared to give the back of its hand to the environment, write it off as being unnecessary and unimportant and cut that budget right across the board? It makes little sense, if any, to me.

The Treasurer talks frequently about a certain Shell station in his riding, where he gets the advice from which most of the budget that he has put forward to this House came. I can almost conjure up a picture of the Treasurer as he rides up to Earl's Shell station in St. George in his designer jeans, his cowboy boots, his checkered shirt and a little twitch of straw hanging out of the corner of his mouth. He goes up there and sits around that hot stove to discuss some of the important matters of the day with his colleagues at Earl's Shell.

Mr. Andrewes: The fire in the stove has gone out.

Mr. Brandt: That is right. My colleague the member for Lincoln -- a very astute gentleman, I am sure we all agree -- says, "The fire in the stove has gone out." What was put forward in the Treasurer's budget did not reflect the positions taken by the same gentleman when he sat on the opposite side of the House. That is what is disappointing.

I can just hear what the boys at Earl's Shell are saying: "Bobby let us down." They truly believed; they had faith in that member, whom they sent to this Legislative Assembly. They feel they have been let down by that gentleman. I have to share that feeling with them, because not only has the Treasurer let down the boys at Earl's Shell but he has also let down more than nine million people in Ontario.

My colleague the member for Dufferin-Simcoe (Mr. McCague), in his response to the budget, very admirably put forth the options that were available to the Treasurer. In a constructive way, I want to share some of those options with the Treasurer, some of those alternatives and some of the steps he should have taken in his budget if he were really going to do something meaningful on behalf of the people of Ontario.

One of the things the Treasurer could have done, which my colleague the member for St. Andrew-St. Patrick (Mr. Grossman), the former Treasurer, did so admirably, was to reduce the deficit. That is what the member for St. Andrew-St. Patrick did: he brought the deficit down and got big government off the backs of the taxpayers of this province.

The Treasurer could easily have frozen taxes at a time of increased revenues, when the economy was expanding, growing and prospering as a result of the very positive initiatives that had been put forward by my colleagues on this side of the House when we were the government. He could have frozen taxes, rather than increasing them for the people of this province, but he did not do it.

He could have encouraged private initiatives. He could have done more than simply pay lipservice to the private sector, which in many respects is going to disappear in this province if this kind of absurdity continues in terms of a budgeting process. He could have given the private sector an opportunity to grow, to develop and to create the kind of long-term, meaningful jobs that are important to this province, but he did not do that.

What he did was to rely more and more on government programs, on government initiatives and on the kinds of jobs that do not last in our economy, the kinds of jobs that result in people digging holes and filling them back up again, the kinds of jobs that mean absolutely nothing to the quality of life or the standard of living of the people of this province. He ought to be ashamed of himself for some of the things he has done in that regard.

I have gone on at some length tonight and I know there are --

An hon. member: Continue.

An hon. member: More.

Mr. Brandt: My colleagues would like me to share a few more comments.

Mr. Sargent: On a point of order, Mr. Speaker: I just heard in a newscast that the member for Sarnia (Mr. Brandt) has declared himself a candidate for the leadership of the Tory party. Is that true?

The Acting Speaker (Mr. Morin): This is not a point of order.

Mr. Brandt: Without responding to the honourable member, let me say that I hold him in great esteem, but with advanced age his hearing is going bad. I do not want to be unkind when I say this, but any rumours he has heard to that effect are totally incorrect. They are vicious rumours that probably I have started personally.

When I think of the Treasurer, I think of the chap who had a great deal of difficulty going to bed at night and getting a good night's sleep because he owed the tax department some money. There are people right across this province who are going to owe the tax department a lot of money because the Treasurer is extracting so many dollars from their pockets.

The Acting Speaker: Please address the chair.

Mr. Brandt: This chap was having a great deal of difficulty sleeping one night, and he decided when he got up that he would send $1,000 to the tax department so he would be able to sleep somewhat more soundly. He put a little note in there to the Treasurer that said: "I am sending you $1,000 because I cannot sleep as a result of my unpaid taxes. If I still cannot sleep in the days and weeks ahead, Mr. Treasurer, I will send you the balance of what I owe you."

The people of this province are going to have to keep sending the balance of what they owe this Treasurer time and time again, because the growth of the deficit and the growth in the tax requirements of this province are insidious things. Once we start on the downward slide, there is no end in sight. That concerns me deeply, because I was part of a government of the day that looked at financial responsibility as a prime concern and looked at the spending capacity of this province in a fashion that was second to none in the entire country.

8:50 p.m.

When one takes a look at the social programs, the hospitals, the schools, the roads and the development in this province, this party does not have to take a back seat to anybody. Let me tell my friend the member for Niagara Falls (Mr. Kerrio), whom I happen to like on a personal basis but who is so misguided politically, that if the people of this province made a small error on May 2, they are going to correct that error at the next opportunity they have and put us back in our rightful place on that side of the House where we can conduct the affairs of this province in a responsible way as we had for 42 years.

I am going to wind up my remarks now, as I tried to do a few minutes ago. I wanted to be charitable to the Treasurer. The Speaker will note that during the course of my remarks I made some positive comments and some that the Treasurer could accept as being constructive. I did not intend or want to portray anything that even resembled meanmindedness.

I want to share these comments with the Treasurer because he has erred in his ways. He has made a mistake. He has fallen off the path of righteousness that he talked about so frequently when he sat on this side of the House. I can only hope that during the short time he drives around in that new limousine of his --

Hon. Mr. Nixon: It is the old car of the member for York Mills (Miss Stephenson).

Mr. Brandt: The Treasurer rides in it with such grace and decorum. As I see him zooming off to the great metropolis he represents, and as he sits in the back seat contemplating the major problems of the day, I want him at some point to think carefully about the importance of getting this province back on the right track again. We showed him the way, we showed him the method and we showed him how it was to be done, but he has not learned in all the years he has been in this House; and for that, his party is going to have to pay very dearly in the days and weeks ahead.

Mr. Morin-Strom: I want to commend the Treasurer for the effort he has put into this year's budget. I have one little remark to make regarding the comment of the member for Sarnia about looking at the example the Tories have set. I hope the Treasurer will continue to look at their example as one of what not to do with this province and will set a new direction for this province.

Mr. Brandt: Mr. Speaker, on a point of personal privilege: I wonder, just so it would be more convenient for all members of the House, if the member for Sault Ste. Marie would not mind sitting over there and holding the hand of the Treasurer --

The Acting Speaker: Order. That is not a point of privilege.

Mr. Morin-Strom: As I was saying, I hope these characters to my right are not used as an example of what is going to come about in this province in the years to come. We had 42 years of their government. The people of this province wanted to see a change, and they are going to see a change. If the government does not produce the change, we will be producing the change after the next election.

I am very pleased to be able to comment on the state of the economy of Ontario and the direction in which I feel we should be heading. The Treasurer has put together quite a clever piece of work in this budget. Overall, I confess my reaction is positive. This is a budget I can support because it is the first step in changing the economic and social direction of this province. The people of this province are tired of 42 consecutive years of Tory rule.

We have all witnessed the wrath inflicted on ordinary Canadians by the federal Conservatives in their first budget last spring. They took from the elderly, the poor and average families to give more tax breaks and handouts to business and the wealthy. Here in Ontario, in this budget, I see a glimmer of hope that we are moving in the right direction.

The right-wing, elitist establishment, represented by our colleagues to the right, has lost control of this province. We see a move to make the tax system slightly more progressive, along with hints that the Treasurer will take us further in this direction in the next budget in the spring.

At the same time, there is confirmation of a number of new programs announced recently by the government. These include expanded youth training and employment programs, 10,000 nonprofit housing units, an additional 10,000 subsidized child care spaces, funding for medically necessary travel for northerners and the five-year, $100-million northern Ontario development fund.

I applaud these initiatives and say thank heaven for the commitments the New Democrats got from the Liberals when we gave them the chance to run this province.

Otherwise, however, there is nothing new from the Liberals in this budget. I do not see a clear economic plan for this province; there is no industrial strategy and no sense of where we are going in the longer run.

The only new announcements in the budget are on the revenue side. The tax changes, on the whole, are fairer than we have seen from the Tories in terms of the use of progressive taxes, such as personal income taxes and corporate taxes, rather than increased use of regressive taxes, such as sales taxes and Ontario health insurance plan premiums.

I want to get into my recommendations and comments on where we, as a province, should go from here on both the revenue and expenditure sides of this budget. First, however, I would like to mention the importance of fiscal responsibility. I am pleased this was an important item in the accord between the Liberals and the New Democrats. I believe the Treasurer's budget is a responsible one and, on the whole, a balanced one.

I hope our deficit can be reduced in the future. Deficits are not for the benefit of the province in the long run. Interest expense is a notable waste of revenue, particularly in recent years, with the high interest rates we have faced in this country. It is imperative that action be taken, particularly by the federal government, to ensure that control of interest rates is implemented and that we can keep them as low as possible.

However, deficits can be justified if they are used to stimulate the economy and to provide an investment in the future of our province. I believe investments in infrastructure, roads, hydroelectric developments, hospitals and education are the kinds of investments that can be made and can be used to back up the borrowing of this province now and in the future.

Looking to the future of this budget and to next year's budget, I want to consider the individual items of tax revenue as discussed in the budget, and particularly in the chart on page 52.

I note that personal income tax for the year 1985-86 is projected to account for 24.8 per cent of the revenues of the province. I feel this is a progressive tax, and I hope the Treasurer will continue to use personal income tax in the future as a major and increasing source of revenue as compared to some of the other sources that have been used, particularly by the Conservative government in the past.

9 p.m.

However, in the area of personal income tax, much can be done to ensure that the share of that tax is distributed more fairly. The wealthy in our province in many cases are not paying a fair share of the tax burden. I believe we definitely need a minimum tax on earnings of more than $50,000 in this province. I hope the Treasurer will implement such a minimum tax whether or not the federal government goes ahead with it.

There are other inequities in personal income tax. I hope the Treasurer will look at some of the tax write-offs and tax deductions that are used primarily by the wealthier in our society to reduce their level of taxable income so that, on balance, we can get a fairer share of taxes in this province.

The second area in tax revenues is the retail sales tax. The chart indicates for this fiscal year that 18.4 per cent of the tax revenues are expected to come from the retail sales tax. This is a very regressive tax. It hits low-income earners much harder than high-income earners.

Hon. Mr. Nixon: We lowered that one.

Mr. Morin-Strom: I recognize that, on some items. I am pleased there was not an increase in the retail sales tax, as was proposed by the Conservatives to our right. Despite the fact there were a few exemptions added to those available now from the sales tax, I would like to see further exemptions for the necessities of life so that the retail sales tax does not apply to items that are essential parts of every household.

The third area of tax on the Treasurer's chart is corporate tax, and the indication is that 9.7 per cent of the revenue in 1985-86 will come from corporate tax. This is an increase from 8.9 per cent last year and seven per cent the year before, but even at the projected level it is an amazingly low percentage of the total tax revenue for this province. The major corporations of this province are not paying their fair share of tax. This should be looked at as a major source of tax revenues in the future.

The federal Minister of Finance, Mr. Wilson, has indicated that corporations in this country are paying an effective tax rate of 15 per cent on their profit, not the statutory rate of 36 per cent. This is an incredible reduction of more than 50 per cent due to their use of the available tax credits and write-offs.

These write-offs, or one might call them tax expenditures by the government, have to be looked at extremely closely. I believe we could generate considerable additional income from corporate taxes, which are paid more on the basis of ability to pay than are some of the other taxes, in particular the items that follow on this graph.

The next item is Ontario health insurance plan premiums, which are shown to account for six per cent of the revenue of Ontario. That is an extremely regressive form of taxation and I hope the Treasurer will use some of the additional revenues that I have indicated are available from the personal income tax area and the corporate tax area to move towards an elimination of OHIP premiums over the next several years. I hope to see some action on that item in the budget in the spring.

The final major areas of tax revenue for Ontario are the gasoline and diesel taxes, which are projected to account for 4.6 per cent of the province's revenue, not as large a proportion as any of the other items but still a very regressive tax. Members of our party are particularly upset about the proposed increase, not only because it is an increase but because it is indicating the wrong direction to go on a tax like this.

The federal government recently announced it had implemented a major increase in gasoline taxes. I feel we should be going in the other direction on this consumer tax which tends to be very much a tax on a per person or per family basis. Every family that drives a car drives similar mileage in a year and the cost of heating a home is similar for most families. This is not a tax based on ability to pay at all, but is an essential part of living for every person in Ontario.

I hope we can see some major reductions in this tax, particularly recognizing the fact that in northern Ontario our residents face a much colder climate. We have much higher home heating costs in the winter. In transportation, we have greater distances to travel and we put more mileage on our vehicles. It is a penalty for small businesses, and for industries for that matter in northern Ontario, which have to transport their goods, products and purchases from longer distances.

Another form of taxation I would like to mention is not part of the provincial revenue. That is property taxes, which are not a source of revenue for the provincial government but are a very important source of revenue for our municipalities. That is their basic source of revenue. I hope the province can assist the municipalities to reduce the burden of property taxes. Property taxes are an extremely regressive form of taxation, not based on income. Much can be done to reduce the levels of property taxes and make them fairer.

Market value assessment, in particular, has been extremely unfair to property owners in this province. Its impact on Sault Ste. Marie has resulted in an increase in taxes for low-income neighbourhoods and a reduction in taxes in the neighbourhoods that typically vote Conservative. Rural taxpayers have been particularly hard hit in the Sault Ste. Marie area and many of them are having to give up property they have owned for generations in order to pay these taxes.

I believe market value assessment, if it is to be applied at all, should be applied only at the time of sale when the actual gain on the property is realized. There should not be a penalty for existing property owners.

I would also like to see a move towards taking the funding for education and social services away from property taxes and putting the burden back on the province, which has access to more progressive vehicles of taxation. At the least, we would like to see the educational funding moved back to the 60 per cent level that was historical.

One suggestion I would like to see considered is to give municipalities the choice of implementing either an income tax or a property tax so municipalities would have the option of gathering their taxes on the basis of income and ability to pay rather than, as is now the case, on the basis of property values.

9:10 p.m.

I hope these suggestions on various tax areas will be looked at by the Treasurer for his budget in the spring and that we can set off in a new direction towards giving the people of Ontario a more progressive tax system, one that will treat all Ontarians more fairly.

Finally, I would like to express my concern about the fact that no clear economic direction is set by the budget. There is no program for this government. There are a lot of items from the New Democratic Party-Liberal accord that are being implemented, but it is not tied together into a common statement of philosophy or overall objectives. There is no specific economic plan indicated for the province's future.

The people of Ontario want to know where we are going and how are we going to get there. We desperately need an industrial strategy to ensure growth in our economy. I hope the Treasurer will look at the province's need for an industrial strategy by the time of the next budget.

Let us face it squarely: unemployment remains the major issue facing this province. Other social issues pale in comparison in terms of the number of people affected. A government committed to providing a job for every able-bodied person desiring one will go a long way towards curing the social ills affecting our society. It is time we had a government that took on that responsibility. To accomplish it, we need an industrial strategy that takes account of our resources, our people resources, our natural resources, our technology and our investment base.

Unfortunately, our federal Conservative government also has no economic solutions other than its starry-eyed gamble on a free trade deal with the United States. It is time for Ontario to take a firm stand on that issue. I ask the Treasurer to look at what the impact of free trade as proposed by the federal government would mean for Ontario and take a firm position on this issue that is critical to our economic future.

I am amazed the Treasurer could ignore that issue in this budget. It is the most controversial economic issue facing Canada today. I would like to include some of my own ideas on this vital issue. Canada now is once again into a serious debate on free trade with the United States. This debate has recurred regularly in Canadian history and the Canadian public has always come to the conclusion that Canada, as a hewer of wood and drawer of water, would be the real loser from economic integration with the United States.

The Macdonald commission report recommends that Canada negotiate a comprehensive free trade deal with the United States. However, even in a 2,000-page report there is no tangible evidence of the benefits to Canadians. Instead, we are asked to rely on their "leap of faith."

After reviewing the report of the federal task force and the Macdonald commission and having participated in 10 weeks of hearings on the select committee on economic affairs, I have serious reservations about our even discussing freer trade with the United States. However, that is not the direction in which Prime Minister Mulroney is taking us. I hope Ontario stands up for our interests on this issue.

On September 26 in the House of Commons, Prime Minister Mulroney launched the government's free trade move: "We hope that this action will lead to negotiations for a new trade agreement between the United States and Canada. We seek to negotiate the broadest possible package of mutually beneficial reductions in tariff and nontariff barriers between our two countries."

The process is now under way. We have passed the preliminaries, and all the stage setting and option manipulation that preceded the decision; we are now into the main event. We are no longer discussing an abstract possibility; we are confronting an immediate reality. This has made both clearer and less clear what is stake for us as a country. How the Treasurer and the Premier can issue a budget with no opinion on this major issue is amazing to me.

The issues now have become clearer for Canada because the United States is talking openly and precisely about what it wants from these negotiations. As usual, the Americans are up front and revealing. Before September 26, the Canadian government kept promising these talks would stop the US Congress from putting new restrictions on Canadian exports. This was sold as the one big plus of starting these talks fast.

Many of us did not believe it. Lumber producers, for instance, said they feared a Canadian free trade thrust would lead US lumber producers to push for special new restraints to cut back Canadian lumber exports. Those producers turned out to be right. Three weeks ago, key US senators wrote President Reagan saying the lumber export issue should be cleared up as a precondition to free trade talks with the United States. US Ambassador Niles has advised us to cut back our lumber exports temporarily to get a green light from Congress for free trade talks. Ironically, the first result of our free trade thrust is likely to be more restrictions on our sales to the United States.

Before September 26, the government also kept promising us these trade talks would win Canada exemption from the whole array of US trade institutions such as the United States International Trade Commission and countervailing duties and antidumping regulations that now are used to block off Canadian exports of items such as hogs and fish when we start to build up a US market. Joe Clark, Secretary of State for External Affairs, recently even repeated this expectation.

However, the United States again has been up front. Immediately after the Mulroney announcement, US Trade representative Clayton Yeutter said that he would not favour such a special exemption for Canada, and William Merkin, the deputy trade representative responsible for Canada, was even more categorical. "We do not believe," he said, "it will be possible to exempt any country from our countervailing duty or antidumping laws."

That is what many of us predicted before September 26 on the basis of the US-Israel free trade treaty which did not give Israel any exemption from these backdoor protectionist measures. Now US officials are proving our point. Some things have become clearer and these new insights suggest the government's manipulation of opinion to build its freer trade case was obviously misleading. It sold a bill of goods to Canadians that American honesty is now demolishing.

Other concerns in the debate have not been clarified; they are becoming murkier. While the US side has been blunt and up front, our government has resolutely, even self-righteously, refused to clarify for Canadians its key bargaining objectives and starting conditions. The Minister for International Trade, James Kelleher, has gone so far as to say, "In negotiations, like poker, you do not show the other side your hand."

Mr. Wildman: You also do not show your friends, according to Jim Kelleher.

Mr. Morin-Strom: That is right. Joe Clark has reached for new dimensions in hyperbole, saying it would sell out Canada to be clear about what we feel should and should not be negotiated.

Especially frightening has been the government's unwillingness to say our cultural industries and key cultural policies are not on the table to negotiate. The Americans have said they have to be on the table. That is not the only area our government has kept murky. They have also been vague about agriculture, certain social programs and the auto pact.

One ends up convinced the leaked strategy document from the Prime Minister's office was genuine, in which the government's communications goals were summed up in the statement: "Benign neglect from a majority of Canadians may be the realistic outcome of a well-executed communications program. In these circumstances, it appears that the best strategy for the government is to adopt a low profile for the general public."

9:20 p.m.

This low-profile approach has been especially irresponsible with respect to the employment effect of freer trade. The government is trying a selling job, as the leaked document suggests, talking constantly about trade, meaning jobs. However, there have been no detailed sector studies released to outline the expected job disruption from free trade changes in an industrial structure and no projections of where new jobs may emerge.

I might point out the Ministry of Industry, Trade and Technology (Mr. O' Neil) has a study which details the fact they have now identified sensitive sectors. Public testimony by representatives from that ministry indicates, "We have identified sensitive and highly sensitive sectors which account for approximately 32 per cent of Ontario's manufacturing employment."

It looks as if about 270,000 jobs would be sensitive to any removal of whatever levels of protection there are between ourselves and the United States. I would certainly hope the government of this province will be releasing these detailed studies as soon as possible so that we may investigate and determine what the true situation is in Ontario.

Despite the efforts that have gone on in studies and published reports on free trade, many questions remain unanswered. Which regions, industries and people would be the winners and which the losers in any free trade deal? Numerous companies and industries have indicated they and their workers would be devastated, but not even the free trade advocates can identify the winners.

Will the United States subsidiaries in Canada respond by investing in Canada or pulling up stakes to rationalize their operations? The indications are that we will lose a considerable number of jobs in the branch-plant area from plants that have been established in Canada simply to get around tariff and nontariff barriers.

Will we lose jobs currently guaranteed under the auto pact? This is a serious consideration, because so many jobs in Ontario are dependent on the automotive industry.

Will the family farm disappear in Ontario? Representatives of the Ontario Federation of Agriculture and the Ministry of Agriculture and Food have indicated that, because of climatic disadvantages primarily, agriculture in Ontario would be devastated. The family farm is likely to disappear and only through corporate farming would the province be able to compete with the United States.

Will we have to sacrifice unemployment insurance, environmental protection and workers' health and safety to conform with US practices? These are important considerations Ontario must be examining and dealing with in discussions with the federal government.

There is no question about the importance of US trade ties. About 40 per cent of Ontario's production is now exported to the United States. In recent years Canada has achieved spectacular export success in the United States, largely because of favourable currency exchange rates. Our trade surplus reached $20 billion in 1984. Tariff cuts from the General Agreement on Tariffs and Trade mean there are now no duties on 80 per cent of our exports, or at least there will not be by 1987.

US-Canada trade is already one of the most liberal trading relationships in the world. However, the extent of our open trading relationship leaves Canada vulnerable to US protectionist factions or threats against key sectors such as steel, lumber and agricultural products. Further movement towards economic innovation would leave Canada even more vulnerable, not less.

There is no doubt discussions are necessary to resolve contentious nontariff issues. They are going on now and they will continue, but it is the focus of these discussions that is in question.

The free trade advocates claim a comprehensive freer trade pact would solve the risk from US protectionism. However, the people involved in these nontariff fights, from the forest products, steel and agricultural industries, have stated their preference for the status quo, not for free trade. Instead of a new, comprehensive freer trade initiative, we need improved management of the current trade situation. This could be accomplished by setting up a joint commission aimed at helping to resolve trade disputes.

In dealing with the United States, I would far prefer us to operate from a position of strength than from one of weakness. Brian Mulroney to date has shown nothing but weakness. I hope the provincial government will show some strength in its dealings with the feds and with the Americans. Brian Mulroney has given in completely to Reagan on issues such as the Foreign Investment Review Agency, the national energy program, cruise missile testing and acid rain. We have received nothing in return. These could have been strong negotiating tools.

Many free trade advocates suffer from a branch-plant mentality of Canadian inferiority and subservience to the US. In fact, many of them are former executives of Canadian subsidiaries to US companies, as in the case of both Brian Mulroney and Donald Macdonald. These individuals are used to saying "aye" to the Americans and they truly do believe in the American ideals.

The most serious problem facing Canada in this debate is the American definition of free trade. It bears no resemblance to what the words might mean to the average citizen. Continually we hear reference to the US desire for a level playing field. The American concerns are not tariffs but rather our economic and social policies. Any economic, social or political policy that would give a cost advantage to a Canadian firm over an American one is viewed by the Americans as a subsidy that must be eliminated under their definition of free trade.

There will be pressure on the Canadian government to match the United States in such fields as taxation policies, labour laws, environmental regulations and private ownership of our forests. It could mean the end of Canadian social programs, agricultural marketing boards, government purchase preference for Canadian-made goods and regional development grants. In short, the US and the Macdonald commission would like to see severe restrictions on Canadian autonomy in economic and social policy.

In this light it is clear that free trade poses a severe threat to Canadian sovereignty. Most serious, a free trade agreement would take away the Canadian option to develop a serious industrial strategy. More than any other recommendation, the select committee on economic affairs has heard witnesses stress repeatedly the need for an industrial strategy before we set out on a new trade policy.

The Canadian economy remains severely unbalanced. We run large trade surpluses in raw materials and semi-finished commodities that utilize our valuable resources while providing relatively few jobs. At the same time, we have a large deficit in finished manufactured goods that have high value added and are more job-intensive.

The major exception is the automotive industry, where the auto pact with its Canadian content requirement has ensured a fair share of manufacturing jobs. The Americans would not permit Canadian content requirements under a free trade agreement.

Here in Ontario we need an industrial strategy that reduces our dependence on foreign ownership and resource exploitation. Instead of trade liberalization, we should aim for greater self-reliance by focusing on import replacement and more Canadian-content requirements and by putting more value-added in our resources by manufacturing finished products here in Ontario, particularly right in northern Ontario, where so many of the resources are located.

I certainly hope the Treasurer of this province will look at these types of programs as an area in which this province must move in the future to ensure that we get the jobs we need. After all, the real issue is jobs. I believe that only through a coherent industrial strategy can we generate the new jobs that Ontario and Canada need. Under free trade most of the jobs will move to the US, and that is where our workers will have to move also.

9:30 p.m.

In my home community, a move towards free trade could have dire consequences. At Algoma Steel there might be limited short-term gains in US sales while the American industry is modernizing. However, I expect Algoma will lose more business in southern Ontario from the shutdown of branch plants forming much of our secondary industry than Algoma might gain in the United States.

Gerard Docquier, national director of the United Steelworkers of America, strongly feels that Canadian steel companies would lose in the longer term, particularly in jobs. He has clearly stated that the jobs of steelworkers can best be protected by a regime of managed trade arrangements. Even John Allan, president of Stelco, has stated that the status quo is preferable to free trade.

Northern Ontario's opportunities for industrial diversification would be severely hurt if regional incentive programs were not possible under trade arrangements with the United States. The adjustment programs envisaged by the Macdonald commission provide assistance for workers to retrain and move out of the north to locations with better job opportunities. However, northerners would prefer to have the job opportunities near their homes so their families would not have to be relocated.

In the mining and forest product sectors almost all products are already shipped out of northern Ontario duty free to the United States, so there would be little benefit from freer trade. In fact, the Ontario forest products industry have told the Ontario trade review that they see no advantage in moving away from the status quo.

Of course, farming would be eliminated in a northern Ontario subject to free trade, and our only brewery, Northern Breweries Ltd., with four plants in the north, would have to shut down completely.

In summary, the risks of free trade for Sault Ste. Marie, for northern Ontario and for all of Ontario are considerable indeed. Serious questions have been raised about the benefits, the costs, the adjustment process and the threat to our national integrity. I feel that the ability of our children to live and work in Sault Ste. Marie and elsewhere here in Ontario would be seriously threatened by a move towards a comprehensive free trade agreement.

Instead, we need governments both here in Ontario and at the federal level that will implement an industrial strategy which will ensure that people in northern Ontario get a fair share of jobs from resource development. Our governments should be looking at ways to ensure that Canada becomes more self-reliant and that we develop strong industries to manufacture finished products from our natural resources right here in Canada.

In conclusion, I agree completely with Gerard Docquier's statement that free trade is at best a fantasy and at worst a social catastrophe.

I hope the Treasurer of this province will look at the economic direction in which he and his government are planning to go in the years to come and that by the time of his next budget he will have a clear statement that will include an industrial strategy for this province and will ensure that the people of Ontario have the right to live and work in their home communities in productive employment. I look forward to seeing what his response will be in the spring budget.

Ms. E. J. Smith: It is my great pleasure to address the House tonight on the subject of the budget, but I would like to speak first to what I think is probably the most important part of the presentation made by our Treasurer, namely, the paper entitled Reforming the Budget Process. I do not mean by this to undermine the importance of the budget in any way, but what we see here is to me a major step forward in the democratic process that will be with us for a long time.

Having come, as I have, so recently from city council and its process of viewing the budget, I have always found it amazing that the secrecy of the budget was so closely held and treasured, on the surface of it, by at least one person. The reason for doing this is that people might take advantage of decisions that were made. Obviously, this has very little to do with most of the budget and the most important parts of the budget. It has nothing to do with the spending processes within the budget.

In the city where the public has the opportunity to be informed of the financial state of the municipality and to view the proposed spending that may be undertaken, one gets not only a lot more involvement of the elected people but, furthermore, a lot more involvement of the public itself. This has many good effects. For one thing, the involvement of the elected people makes them become more responsible and more responsive within the budget process.

As well as that, because the public does appear and make presentations at public meetings, the general public, through the processes of the media, becomes aware of the choices that are in front of the politicians, the decisions that must be made and the facts on which they are made. This has the important effect of creating a well-informed public that is prepared for and understands the decisions made at budget time.

Having such a well-informed public is very important to the democratic process because it makes people very aware that we give mouth service so often to the fact we pay for what the government spends. Therefore, we as the people must understand and accept in the long run the programs the government puts forward. Democracy is based on a well-informed public. This new budget process will go a long way towards creating reasonable expectations on behalf of the public and towards its understanding and acceptance of the budget when it is presented.

Having said that and having put beforehand my very great admiration of this new budget process, I submit it will do exactly what I have suggested. First, it will tell us the state of the finances of the province and, second, it will allow us to share with the Treasurer and the public all the alternatives that can be put in front of us with regard to spending for the oncoming year.

Because I believe this will move forward and be accepted, since it makes such eminent good sense, I would suggest that what we have before us is the last of what one might call personal budgets that this province will see. This is the personal budget of the Treasurer and, as such, I am happy to say it reflects the very fine qualities of the Treasurer of this government.

In the first place, we were all most impressed the minute we sat down and started to hear the speech from the Treasurer. For once, we were being presented with a very readable, interesting and easily understood budget. I have recommended it to people in the public because I think they will enjoy reading it.

This is a credit to the kind of presentation and open thinking that went into it. This was not written for a few people and it was not written to fool the public. It was written to inform them and explain to them the decisions that were made. I admire it as a document.

9:40 p.m.

In another way, it expressed this same kind of openness in that it gave some opportunity for planning ahead, which has often been looked for, for such groups as municipalities and school boards that exist in large measure on our transfers. Here was an open statement to them of what they might expect, not only from this budget but from a budget ahead as well. This creates the kind of planning for those groups that will be very productive for the citizens in their communities, who are also our citizens.

A second way in which it expressed the personality of our Treasurer, if he will forgive my saying so, is its rather practical, down-to-earth approach to the problems. As do those who operate a business or a well-run household, he sat down and said methodically:

"Some of these things, dear, are nonsense. Suncor is nonsense. These land banks that were going to be big cities have not turned into big cities, and they are not likely to turn into big cities. These bad debts are never going to be paid. The money I owe my wife and she owes me is not going to make much difference in our overall funding; so let us get rid of all this nonsense and start talking about what we really have to work with in this household."

That is what one does in a business and in a household, and it is what the Treasurer has done in our budget. I thank him for that. W e got rid of a lot of nonsense, and we have started dealing with real facts.

On behalf of our Treasurer, I want to say also that the budget expressed -- maybe to the sorrow of our friends in the New Democratic Party caucus -- a rather cautious approach to some of the plans we have already put forward as our long-term plans.

We have recognized in the budget the promise of things to come, and we have seen in it the caution that not everything can be done at once. We see the freezing of health care premiums but not yet the hope for their reduction and removal. So too must we wait for the removal of dental fees for children and old people. We know these are still to come, because we saw the freezing of the health care premiums and a great deal of emphasis put on health care within the province.

We saw as well that in the examination of support for small business, our Treasurer said: "This small business development plan is working well, so we will increase its funding and make it work better. This other plan, the Innovation Development for Employment Advancement Corp., is not working at all; so let us forget it."

In another area, we did not see a complete removal of the tax on meals up to the $6 point, as we had hoped --

Hon. Mr. Nixon: The $4 point.

Ms. E. J. Smith: The $4 point. Excuse me; it is just wishful thinking on the part of the citizens. We did see the tax's removal to the $1 point; although it is only a small reduction when one looks at a whole meal, it represents a rather major cut in taxes for the province and therefore some substantial savings for the public.

Mr. Callahan: Worth $37 million.

Ms. E. J. Smith: In fact, $37 million. As well, it recognizes that an election hope was stated there and that the Treasurer has not forgotten it. It will be examined again when we can afford to do so.

Most especially, however, the budget represents what everybody in this House knows our Treasurer represents: a kind and foresightful look at the way our province must go.

In the area of health, on which our citizens put a high priority, we see an 8.3 per cent increase in the money passed on for health operating costs in this province. It makes one smile to remember the bells ringing on that last fateful Friday before we went home, when there was some suggestion that this government would not recognize the importance of health care. We do, and we have recognized it.

Health care in a preventive way has been particularly recognized for seniors in the $11 million that is put aside for home care for them to improve their health outside of institutional care.

In education, there is a forward look to improve the excellence in our school system at the university and college levels. As a former governor of the University of Western Ontario, this is something I know is much appreciated. At last this need for excellence is being addressed and recognized.

The problem areas of the province have also been addressed in special programs for business in the north and east, where they are most called for, and in programs for youth, who are the most disadvantaged in finding jobs. The areas that required special consideration did get special consideration.

The most important area of all for so many people, housing, has been looked upon as one of the major areas for funding in the coming year, and we look forward to the programs that will be introduced by our minister.

I cannot think of any area that affects more people in a more difficult way. I can remember when I first got married, the rule of thumb was that 20 per cent of income was spent on shelter. Now, for those in the lower-income bracket, 50 per cent may be spent, and for those in the middle-income bracket, 30 to 40 per cent may be spent. This is not the way it used to be, and it should not be tolerated.

Housing is probably needed most intensely when one is youngest and earning least. Housing is a major need when there are children running around. Once into the higher-income bracket, assuming that income went up as time went on, housing needs have decreased. For our wealthiest people, often the most expensive housing is in Florida.

It is towards those in the lower- and middle-income brackets that we must address the housing programs, and we will continue to do that. It is because of the need and the right of these people to have a place to live and raise a family that housing must become one of our major thrusts.

The main area where we see compassion and care for the less-well-off is in the area of revenue, where 390,000 families will be dropped off the bottom of the tax rolls and the taxes will be made up by those in the top income brackets. This is exactly as it should be.

I am sure it is a shock to all of us when we read statistics that prove that the poor in this country are getting poorer and the rich are getting richer. That was not intended for a democracy of this type. It is not a direction we expect the world to go in our country. I am delighted, and I am sure all parties share my pleasure, to see this province addressing in a major way an equalization rather than a separation of income levels in the province.

It is with great pride that I am able to say here in the House tonight that I commend our budget to the members. I am sure they will treat the individual portions of it with respect.

9:50 p.m.

Mr. Pierce: I could ask the Treasurer if he does all his own commercials, but I will not do that.

I am pleased to have the opportunity to speak in this debate. The people of the Rainy River district have been telling me what they think of this budget. There is a great deal to say, but I will try to be brief.

Let me begin by saying that, to my mind, a budget must be a positive guide for action. A budget should inspire new activity in the private sector. It should encourage communities to grow. It should say to the investor, "Bring your resources here and you will get a fair return." Does this new budget do any of these things? The answer is no.

I represent a riding in the northwest of our province. The Rainy River district can be described as a rural area. We depend on tourism, mining, pulp and paper, and trapping to make jobs.

Look at the major communities in my riding. There is Fort Frances with a population of 9,000. The Fort depends on pulp and paper for a living, but tourism plays a big part as well. The Fort is a major fly-in centre for outfitters and, of course, it is a busy border town.

Atikokan is the next largest community; it has a population of about 4,500 and owes its past prosperity to the iron mines. Tourism plays a role here as well, as does secondary manufacturing and resource management. Atikokan is right next door to Quetico Provincial Park, an enormous wilderness area linked with Superior Park in the neighbouring state of Minnesota.

I note with much interest that the Liberals campaigned very strongly on the fact that, as their commitment to the north, they would equalize gas and milk prices. A recent survey, copies of which we all have on our desks today, showed that the price of four litres of milk in the Rainy River district is anywhere from $4.19 to $4.30, while the price in Hamilton is $2.44. The price in Hearst is even lower at $3.89.

The Liberals said: "Yes, northern Ontario, we will give you a fair deal on milk and we will give you a fair deal on gasoline. Yes, we will freeze the tax on gasoline." The only place where the price of gas is going to be frozen is before one gets it into his tank.

Ignace, with a population of around 2,000, comes third. It is located on the Trans-Canada Highway. Its local economy depends on forestry, mining, trapping and tourism as well as on a strong commitment to the creation of secondary industry.

Finally, there is Rainy River, a community of a little more than 1,000 people. This is farming country. The Rainy River valley has some of the most fertile land in Ontario, a fact that may surprise many southerners. Again, tourism plays a role in the local economy, with the nearby Rainy Lake and Lake of the Woods.

Altogether, the Rainy River district has a population of about 23,000 people. Slightly more than 14,000 of those people live in the towns and cities that dot Highways 11 and 71 and the Trans-Canada Highway, the roads that provide the framework for settlement in the area. These are the people I represent. These are the economic interests that are important to Rainy River: lumber, pulp and paper, mining, trapping and tourism. It is from this viewpoint that I will speak tonight.

When the Treasurer said in his opening remarks that this budget would develop a fresh, comprehensive approach to industrial policy, I was hopeful; I really thought he meant it. When he talked about wanting to revitalize the tourist industry, I was pleased.

However, when the Treasurer got down to details, I realized that all those fine-sounding words meant absolutely nothing. I looked in vain for the comprehensive development plan. I looked in vain for measures to revitalize tourism. I looked in vain for programs to encourage new growth and development in the north.

Mr. Callahan: Was it the Tories' speech from the throne or our budget the member looked at?

Mr. Pierce: I am looking at the Liberal government's budget.

I even looked for promises made to the north by the Liberal Party in the last election campaign, and where are they?

An hon. member: They are not there.

Mr. Pierce: No, they are not. The question is, were the promises kept? No, they were not. Do the people in northern Ontario know that? Yes, they certainly do.

This budget abandoned the north. It has cut off our communities and our economy from the rest of the province. It has ignored our special interests and our needs. It is a slap in the face to all the northerners who expected justice from this minority government.

I tried to approach this budget with an open mind. I tried to find the positive aspects and a ray of light, any threads of hope.

An hon. member: Where was it?

Mr. Pierce: It is fine for the members on the other side of the House to laugh. In my area, the unemployment rate today is 32 per cent, if that is a joke to those members. That percentage will increase every day we are in this House.

I searched hard and long, and at last I can say I have found one positive point in the Treasurer's budget.

An hon. member: The end.

Interjections.

Mr. Pierce: My friends should settle down for a minute. I want the Treasurer to get comfortable in his seat while I give it to him.

I want to congratulate the Treasurer for breaking the Liberal promise to equalize hydro rates. As has already been proved by my colleague the member for Sudbury (Mr. Gordon), equalized hydro rates would have had nothing to do with equalizing them; they would have gouged the northern electricity users. Why the Liberal Party would want to identify itself with such a losing image in the north is beyond understanding.

An hon. member: What part of the north does he come from?

Mr. Wildman: What is he talking about? That would have charged more for high use, not equalizing rates.

Mr. Pierce: That is right. That is what I said.

Mr. Wildman: He said "equalizing rates."

Mr. Pierce: I said the Treasurer broke that promise, because it was his pledge during the campaign that the Liberals would equalize the rates.

Mr. Wildman: I think my friend is confused.

Mr. Martel: Who wrote his speech?

Mr. Pierce: I did. This is the only good thing I can find in the budget. I wish I could find more. I wish there were more because minority government should work for the north and the people of the Rainy River district as much as it works for the rest of the people of Ontario.

There is more to say about what this budget does not do for the north. There is more to criticize than to praise. If this is the best the government can come up with after 40 years in opposition, then I suggest it go back to the drawing board.

Let me remind my friends across the way of some of the realities of government. They cannot govern simply to please some 20 per cent of the population, no matter what schedule or prospective timetable they may have involved themselves in. They must govern for all of Ontario. They must be sensitive to the needs of all our communities, regions and districts.

There is none of this sensitivity in the Treasurer's budget. In the north it makes Liberals blush as scarlet as the tie of the Premier to think that this budget was the creation of a Liberal administration.

The government has failed the north and the people of the Rainy River riding. It has ignored its election promises and presented us with higher taxes, disincentives and roadblocks to continued growth. It has presented us with higher gasoline, land-transfer, personal-income and corporate taxes and increased fees for driving licences.

10 p.m.

Take a look at how the Liberal budget has affected drivers in the north. Unlike in the south, driving is a necessity in northern Ontario; few people walk to work in the north. Unlike in the south, driving is not a luxury; it is a basic for survival. How many people in northern Ontario get a chance to walk to work --

Mr. Laughren: I walk.

Mr. Pierce: -- other than the member for Nickel Belt (Mr. Laughren) and the trappers? I am sorry, even the trapper does not walk any more; he uses an all-terrain vehicle.

Interjection.

Mr. Pierce: There are still a few left, but that is coming to a very quick end.

Mr. Callahan: Why not say something positive?

Mr. Pierce: How can I? I am trying. I am looking. I have looked at everything I can, all the information, the budget, and I have searched hard for something positive. I am sorry. The only thing I can see that is positive about the budget, I would not want to say here.

In the campaign, the Liberal Party said it would equalize the price of gasoline. This may have resulted in lower prices for some of the northern communities. Today, at the gas pumps in northern Ontario, we are paying 60.9 cents per litre. If Liberal members think that is equalization --

Mr. Philip: Are you going to vote for that?

Mr. Pierce: No. I will vote against the increased gas.

Did they follow through on the promise on equalizing the gas prices? No. They did the exact opposite. They have taxed gas higher than it would have been taxed by a Progressive Conservative administration. They have gouged the drivers of northern Ontario.

They have raised the fees for licences. This would be understandable if they were going to improve the roadways. But are they going to improve northern Ontario roadways? No. There is no indication of any kind of improvement in this budget. Less is budgeted for road improvement by this government than was proposed by the Progressive Conservative government.

An hon. member: That is impossible.

Mr. Pierce: Take a look at it. They have made it more expensive to drive, more expensive to buy gas, and they are going to make the roads more uncomfortable to drive on. That is not progress; that is dereliction of duty.

What about the farming communities? What can I show the farmers in the west of my riding? Can I show them action on the Liberal promise to boost the funding for the drainage programs? Can I show them that, I ask the Minister of Energy?

No, I cannot. The Minister of Agriculture and Food (Mr. Riddell) should hang his head in shame over the file drainage program. What can I tell the cow-calf operators? It may come as some surprise to the gentlemen on that side of the House that we have cow-calf operators in northwestern Ontario.

Can I tell my constituents that the Liberals are dragging their feet in introducing the Tory stabilization program?

Mr. Callahan: Tell them the truth.

Mr. Pierce: They know the truth.

What does the budget give the farmer? Other than warming up the already announced programs, the only new undertaking is a $6-million program to encourage the farmer to leave his land. The poor farmer will get it in the neck anyway because of the increase in the land transfer tax. Whatever they give them, they are going to get it back.

When the Treasurer was simply the member for Brant-Oxford-Norfolk, he said the government should boost the agricultural budget to equal two per cent of all government spending. The member is now Treasurer. He could follow through with his promises, but he has not.

The only things the farmers of the Rainy River district will see from this budget are higher taxes: higher corporation taxes, higher personal income taxes if they are fortunate enough to make any kind of a living and higher land transfer taxes if they decide to sell or can even find a buyer. There is nothing to help our farmers with new assistance for food processing and storage to reduce the province's dependence on imported products. There is nothing for the northern consumer. There is nothing to reduce the price of milk in the north -- another promise from the spring campaign.

What about natural resources? What can I tell the people of the Fort when they ask me what is in the budget for the forest industry?

Mr. Martel: Two trees for one.

Mr. Pierce: I am glad the member brought that up. Let me tell him what has happened just since we have had a new Liberal government. The greenhouses were planned and the tenders were called; the Liberal government came into power and cancelled the greenhouses. Is there something wrong with having greenhouses where the trees are growing? Is that what we are saying?

Interjections.

Mr. Pierce: Are we supposed to build all the greenhouses in eastern Ontario? Is that what the member wants, or does he want them all in Sudbury?

Mr. Martel: The member had better look at where they are located.

Mr. Pierce: I know where they are located. They are located where the trees are growing and where the trees are cut, where they should be.

This budget says absolutely nothing about our forest resources. At a time when other provinces and the federal government are increasing their concern about our nation's forest heritage, this Treasurer closes his eyes and hopes the problem will go away. The $3.7 million increase in the Ministry of Natural Resources budget will not even begin to cover the Liberal promise to regenerate every acre of cutover land. The Progressive Conservatives committed $10 million to this. Nothing shows more graphically the difference in commitment and sensitivity to the needs of our forests than the difference between these two figures.

What about mining? What can I tell the people of Atikokan and the people of Ignace, who are supplying the mining operations, when they ask what is in the budget for them?

Mr. Pouliot: Tell them about Hemlo.

Mr. Pierce: Yes, I can tell them about Hemlo. I can tell them I have good news. I can tell them the Treasurer has simply played follow the leader and passed into law proposals on the Mining Tax Act that were in the works, thanks to the previous Miller administration. Can I tell them anything more? No.

Hon. Mr. Kerrio: Tell them about Mulroney's iron ore mine. Tell them how Mulroney ran his business.

Mr. Barlow: Is that in Ontario? Talk about Ontario.

The Deputy Speaker: Order, the member for Niagara Falls and the member for Cambridge (Mr. Barlow), please. The member for Rainy River has the floor.

Mr. Pierce: Can I tell them anything more? No, there are no new incentives for mining. There is nothing to say to the people who spent millions, and I mean millions, exploring for gold and other minerals in the Rainy River district. What this government has done to the gold mining communities after slapping a tax on the Maple Leaf gold coin is beyond description. How is that an incentive to becoming involved in mining?

What about tourism? What can I tell the tourist operators throughout my riding about the tourism problems dealt with in this budget? I can tell them this government slashed the budget of their ministry.

Mr. Callahan: Damned right we did. We saved $5 million that the former government gave away.

Mr. Pierce: That is great. It is interesting that in the 1985 campaign the present Premier campaigned on how many jobs the tourist industry creates in Ontario and how many jobs the reduction in tax on meals of less than $4 would create; something like 6,000 jobs for the sake of $3 meals. Where did that go? Where is the incentive to the tourism industry?

I can tell them this government has upped the price of alcohol, encouraging more people to buy their beverages in Minnesota, along with their gas and oil, prior to entering Ontario. In Ontario they can buy their bread and get their water, and if they get it together for less than $1 they do not have to pay any tax. That is the gift of this province towards the tourism industry.

Interjection.

Mr. Pierce: We are encouraging the pork-and-beaners. We are telling pork-and-beaners to bring their stuff with them. Does the member not agree with that?

The Deputy Speaker: Would the member address his remarks to the chair. There are likely to be fewer interruptions.

Mr. Pierce: I am sorry, Mr. Speaker.

I can tell them the Treasurer has kept the tax rebate for out-of-province visitors. That is a good idea, a good suggestion. However, then he has slashed the advertising budget so that fewer people from out of province will know what great attractions Ontario has to offer.

There is only one thing I can tell the tourist operators about this budget. This budget has brought a new meaning to the slogan "We Treat You Royally." This government has given the tourist industry the royal treatment. It has royally soaked a major growth industry and one of the largest job creators in Ontario, especially for young people. Where was the Minister of Tourism and Recreation (Mr. Eakins) when this budget was being drawn up?

Mr. Lane: Where is he tonight?

Mr. Pierce: That is another question.

If this is how the Minister of Tourism and Recreation protects his industry, which depends on his support and leadership, he should resign. The tourism industry has nothing to thank the Treasurer for in this budget.

What about our environment? The quality of our air, our water and our soil is a concern very close to the hearts of northerners. What is there for the environment in this budget? Thanks to the Treasurer's budget, this government has reduced capital expenditures and loan money available from the ministry. Communities hoping to expand their water treatment services will be left holding an empty bag thanks to this government. With the concern over contaminants in Rainy River, this budget offers no hope of increased environmental responsibility. In fact, the Treasurer has simply turned back the clock.

The Treasurer has done more than turn the clock back when it comes to northern development. Taking inflation into account, the total budget for the Ministry of Northern Affairs and Mines has been slashed by $1.3 million. The members opposite will talk about their five-year, $100-million program for northern development, but this program offers substantially less than what we were offering and it depends to a far greater degree on private investment, investment that will be uncertain about coming to Ontario now that the Treasurer has made veiled threats about a capital gains tax in this province.

Hon. Mr. Nixon: They were not veiled.

Mr. Pierce: He is in favour of capital gains in Ontario.

What about community improvements? What can I tell the local councils of Atikokan, Fort Frances, Ignace and Rainy River? Can I tell them the Liberal government will cut transfer payments by more than half?

This budget does nothing to provide jobs for the north. Sure, the Liberals will talk about jobs coming in as part of their housing program, but look again. Given the content of the Liberal budget few houses will be built in northwestern Ontario. We will be lucky to keep the jobs we already have in the construction industry. Where are the jobs for the people of the north? Where are the jobs for the young and the unemployed? The Treasurer has left them standing by the roadside.

Maybe the Treasurer expects northerners to get sick so they can fly south and take advantage of the travel allowance for medically necessary travel. Whether we get sick or not, if we are looking for work we will not find it in the north thanks to this budget. Maybe the Treasurer expects us to come south and build houses in Toronto. Is that what the people of Sudbury are to look towards? They can come to Toronto and build houses; that is where the jobs are.

This is not a budget for Ontario. This is a budget framed by a government that is out of touch. There is nothing here for the jobless. There is nothing here to encourage real growth. There are only higher taxes.

Earlier this year newspapers carried a story about the death of the Northern Ontario Heritage Party. I was never a supporter of that organization. The north belongs to Ontario. However, this budget will do more to fan a feeling of betrayal than the Northern Ontario Heritage Party ever achieved.

The budget talks about prosperity and new jobs, but those jobs and that prosperity will not come to the north thanks to the Treasurer. For 40 years the members opposite claimed they could govern and that they could govern better. After 40 years we get this sorry excuse for a budget. For goodness' sake, they should get their act together. They should go back to their drawing boards, write a better budget and try to remember that the north is just as much a part of Ontario as Metro Toronto and the riding of Brant-Oxford-Norfolk.

Mr. Allen: It is a pleasure to rise and participate in this budget debate in this session of the Legislature. I am not sure what one says following the former speaker other than to suggest that perhaps he ought to recognize a little more what is positive in the budget -- this is something I will come back to -- and also what has to do with past Tory budgets.

I was almost as much interested in the document Reforming the Budget Process as I was in the budget itself, because it does seem to me that the way in which we handle the budget in this place, review estimates, handle provision for supply, use Management Board orders and handle the budget debate itself all need a considerable amount of attention. I am pleased to see that this document heralds what will be happening in the course of this session and that perhaps next year we will be into some new procedures in this regard.

I want to echo the words of the member for Scarborough-Ellesmere (Mr. Warner), who, when he was contributing to the debate yesterday, paid some tribute to the straightforward language of the document. The document does not attempt to lay a heavy trip on us with some kind of fancy rhetoric, pretending that it somehow portrays or lays the groundwork for a magnificent transformation of the great Ontario economy. If that is the purpose of a budget, I do not want to hear it. That is not the purpose of a budget and I did not hear it. I want to pay tribute to the honesty it reflects.

In more particular terms, I like the straightforwardness of some of the comments, for example, on the triple-A credit rating. At last the legend, the mythology of triple-A is dispatched with suitably few words. In practical terms, the triple-A credit rating has little significance. Having a triple-A credit rating does not provide needed jobs for young people, nor improve access to affordable housing, nor improve the quality, affordability and availability of health care. Truer words were never spoken, and I praise the Treasurer for saying so succinctly and directly in the budget.

I do not want to echo my colleagues in this party who have spent some time while participating in the budget debate in commenting upon the various elements of the accord that have found their way into the budget. I am happy to see so many of them there. I am glad to see progress is being made on the other side in a responsible response to the accord and the agreement that was made. I am pleased to see youth programs at least inching upwards, additional housing units, additional day care provided and so on.

I want to make some remarks about the general character and overall cast of the budget and then relate that to some elements of education budgeting that I think we forget at our peril as we move ahead into a new regime and new budgets.

10:20 p.m.

The first thing I want to say about the budget is that while it does have some departures in some respects in style and occasionally in substance -- a little more on the revenue side than on the expenditure side -- from past Conservative budgets, none the less, our Treasury critic was correct when he noted in the media a few days ago that essentially the Treasurer has produced what is, after all, a Progressive Conservative budget.

As I look at the charts, the overall proportions of this budget, the shape of it, I am very much impressed with its paternity. I am not going to criticize the Treasurer for not launching a radical departure in his revenue or spending patterns. Obviously, for him to have done so in a radical departure from the past could very well have had very upsetting impacts on various sectors of the economy and on recipients of transfer grants and so on in both the upward and the downward scaling of priorities.

We make those changes rapidly at our peril, so I am not going to be critical of the Treasurer for not having departed in radical fashion from past performance in that regard. However, to say this is also to say that when we come to next May's budget we are going to look for certain kinds of directions to be much more solidly established.

Let us look at the proportions of expenditure and members will see what I mean. If we look at the proportion devoted to health, we see that for five years running health has had a constant escalation in its priority in the spending of the governments of this province. That was the case with the past Tory regimes; it continues with the present Liberal government.

If we look at education, schools, colleges and universities, we see that year by year there has been a downward scaling of priorities in terms of the percentage of the budget devoted to those objectives. It moves from 21.3 per cent five years back to 18.8 per cent this year; again, a budget commitment that lies solidly in the tradition of the past.

In resources and economic development, I am sad to say there has been a steady downward trend year by year, beginning with 19.5 per cent of the budget and following, five years later, with 16.5 per cent. The obvious message has to be read into that: this government at this time has not made any very significant moves forward or backward -- perhaps a little bit backward -- with respect to economic strategy and development proposals. I want to come back to that in a moment or two.

Community and social services is somewhat ahead of where it was back in 1981-82, but none the less for the past three years it has been substantially marking time in terms of priorities. General government has been roughly similar in recent years. Justice has the same priority. Public debt interest is up a little.

If one looks at the overall contour of this budget, one finds that essentially it retains the pattern of Tory budgets past. One looks at some other elements of it and, of course, there is not much change.

I referred to resources and economic development as not having made any upward movement. One sees the pattern reflected if one looks at capital investments. There is no increase; rather, there is a steady state with respect to capital investments; indeed, perhaps some backward steps.

One might have looked for some new job creation and for some industrial strategy to be reflected in capital investments in this province. Not only is none there, but also what there was from the past government seems to be disappearing, with the industrial and technological development commitment dropping pretty radically in capital terms.

The same is reflected if one looks at the Ministry of Industry, Trade and Technology. There is no increase in that ministry to speak of, and again no hint of an industrial strategy in the making or of any greater commitment in that department.

In some other respects, the budget does not change shape. For example, the commitment of expenditure as a proportion of the gross provincial product was 16.6 per cent last year; it is 16.6 per cent this year.

If one looks at the kinds of things that governments pat themselves on the back for: let us look, for example, at the chart "Increasing Efficiency in the Ontario Public Service: 1981 to 1985." The Tory government constantly told us how it was, on the one hand, increasing services to people and, on the other hand, reducing the number of people providing those services.

We kept hearing from those who tried to provide that service, ministry by ministry and service by service, about how increasingly difficult it was to maintain the level and quality of service to the people of Ontario.

Yet here we see the same chart again in this budget, by yet another government, which shows proudly how the population of Ontario is taking off somewhat skyward and yet the number of public servants continues to decline. One can only conclude that it is taking pride in the fact -- as did past governments -- that there is a squeeze going on on the service provided to the people of Ontario. I am not particularly happy to see that.

That Conservative aspect of the budget continues in the way in which the budgets of the ministries of Education and Colleges and Universities have been handled, and the commitments made by the Treasurer in those ministries.

Let me say I am quite happy to see that the Treasurer has begun to allow all those entities in our province which receive transfer payments some opportunity to plan ahead by offering them some indication of where funding is to go for at least a further year down the road. That is going to be appreciated by all those agencies, even if the commitments of funds might not be all that they would have desired.

Let me note what has been happening in the education sector in the budget. Basic operating grants for universities and community colleges are up by four per cent in the coming year. In the following year, by extension of the transfer commitment the Treasurer has made, there is yet another four per cent. There is an allocation of $80 million for colleges and universities in excellence funds. Funding for the Ontario student assistance program -- especially welcome -- will be increased by eight per cent. An increase of the formula tuition fees will be held to four per cent for the coming year.

There is $108 million to be provided this year to restore advances to school boards to their traditional seven per cent level. One has to argue that while that $108 million might show up as an additional expenditure this year in the provincial budget, when the receiver at the other end, the school board, looks back a year hence on what it has received from the government, it will not be any further ahead. There has not been any absolute commitment of new money.

General legislative grants to the school boards are up by 5.4 per cent next year. The regular capital support program for education has been allocated $67 million next year, and $25 million has been provided to top-priority capital projects in rapidly growing communities.

Funding for the extension of provincial support to separate secondary schools will rise to $107 million next year, and capital funding of $17 million will be allocated in 1986 to accommodate the expansion of separate secondary school systems.

I want to go on and make a few remarks about that program of funding for various levels of education. I want to do that with respect to both the way in which it is transferred and the consequences of the transfer, and I want to look at some of the background of educational financing over the past decade so we can put what is happening in this budget in the perspective of time and past budgets. Then we will be able to see whether we have made any advance with this new government's new budget.

We are approaching 10:30. Before I get into that program of presentation, perhaps it would be more suitable for me to observe that we are reaching 10:30 of the clock.

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

The House adjourned at 10:30 p.m.