Journal des débats 1985-nov-05 | Assemblée législative de l'Ontario

Mr. Speaker: I would ask all members of the Legislative Assembly to join me in welcoming in the Speaker's gallery today His Excellency Sheikh Humaid bin Ahmed al-Moualla, a distinguished visitor from the United Arab Emirates.

His Excellency is the Minister of Planning and chairman of the National Computer Centre, and he and his party are looking into computer and communications development in Ontario.

Please join me in welcoming His Excellency.

STATEMENTS BY THE MINISTRY

SUMMER WAGES

Hon. Mr. Kerrio: I would like to respond to questions raised by the member for Fort William (Mr. Hennessy) and the member for Sault Ste. Marie (Mr. Morin-Strom) on October 24 regarding my ministry's tree-planting contracts and unpaid wages associated with these contracts.

Because the issue falls within the mandate of the Ministry of Labour, I have had discussions with my colleague the Minister of Labour (Mr. Wrye). As members know, there is already in place a process within the Ministry of Labour that provides assistance to employees in collecting wages due to them.

In 1985, there were about 90 private planting contractors doing business in Ontario. To our knowledge, only six specific contractors -- a very small percentage -- have had complaints lodged against them.

The employment standards branch of the Ministry of Labour has looked into all complaints and has had a good degree of success in obtaining wage arrears upon completion of its investigations. In September, more than $14,000 was collected by the Ministry of Labour for 11 tree-planting employees of one company, and orders were issued in October to two other companies to pay more than $3,000 owed to employees.

While the percentage of contractors against whom complaints were lodged is small, the government is very concerned about the problem. I ask the members to recognize that contract tree-planting is a relatively new industry. There are still some wrinkles to iron out.

Under the Construction Lien Act, the Ministry of Natural Resources currently withholds 10 per cent of the tendered price of a contract for 45 days for cases such as the ones referred to by the two honourable members. We recognize this amount does not cover the total wage component of a tree-planting contract. We want a system that goes further.

I would like to outline what my ministry will be doing to avoid a repeat of what has happened this year. I have ordered ministry managers to ensure that all tender packages for the 1986 planting season contain certain conditions. One condition will be that before final awarding of contracts, each successful contractor must agree to provide all employees with information about the rights and responsibilities of both the contractor and the employees. This is in addition to information outlining health and safety regulations.

In addition, no contract will be awarded unless contractors attend one of a series of regional workshops scheduled to be held this winter. These workshops will ensure that contractors are fully aware of pertinent legislation and regulations as well as the rights and responsibilities of contractors and their employees in the areas of health and labour standards.

The ministry is also taking steps to ensure that it engages contractors who have high standards and good performance records. We are working on ways of improving standardization and efficiency of tree-planting across the province.

We are also looking into possible initiatives such as prebonding of contractors. While this is a possibility, it also poses certain problems that we have to consider. Many contractors who are starting out do not have the funds to become bonded but have excellent records as tree-planters, businessmen and employers.

We want to avoid unfairly ruling out people such as these who are trying to establish themselves but who do not yet have the resources to become bonded. That is why we are also considering establishing prequalification and disqualification criteria, which could be introduced before the 1987 planting season. These criteria would allow the Ministry of Natural Resources to judge potential contractors and disqualify unsatisfactory contractors who have done work for us in the past.

There are a number of ways of ensuring that we attract good contractors and that the people whom they employ are treated fairly and work in proper health and safety conditions. The government is determined to establish a system that will achieve all these objectives and put this new growth industry firmly on its feet.

ORAL QUESTIONS

Mr. F. S. Miller: It is a bit tough to ask questions with the front bench holding all of two ministers out of the whole group this afternoon. Even the second row is only mildly represented.

Hon. Mr. Nixon: More are coming.

Mr. F. S. Miller: More are coming. I would like to stand down my first question until the Premier (Mr. Peterson) arrives. I understand he is coming shortly.

TAX INCREASES

Mr. F. S. Miller: I will address my second question to the Treasurer. I am sure he will agree that he has a double responsibility in designing a budget; one is to raise the moneys the province needs, and the other is to improve the economy of the province by creating jobs and investment. I am sure too that he found every tax measure has a countereffect in stimulation of the economy: it costs jobs. For example, a few years back we pointed out that every $1 increase in the price of oil costs 5,000 jobs in this province.

I want to know what formula the Treasurer used to measure the tax costs in this latest budget, the jobs his tax measures eliminated. Will he tell us what facts he was given?

2:10 p.m.

Hon. Mr. Nixon: I know the Leader of the Opposition is extremely serious about his question, and I am serious about the answer. I say that first because I believe this is the fourth time the question has been asked. It also means, I think, that the honourable member and his colleagues have not listened to the answer.

It concerns me to say this, but if tax increases are directed entirely towards reducing the net cash requirements, then there is a direct cost in jobs. Our tax increases are directed towards the payment of expanding programs, many of which the former Treasurer himself initiated, and new programs that are a part of the new administration.

I say to the honourable member, as clearly as it was put to me by the same Treasury officials who formerly advised him, there is not a cost in jobs when the tax increases are directed towards programs, which I believe -- I do not want to quote them on this -- are stimulative.

We are aware that the rate of growth next year is going to be less than it is this year. The Leader of the Opposition, who is a fair man, will realize that all the projections from the Conference Board of Canada and other independent sources have indicated the rate of growth is going to be slower across Canada. They have blamed that on the lower rate of growth in the United States and the removal of consumer dollars as a result of the federal budget in May. The most recent report by the Conference Board of Canada -- issued today and in today's press, after the provincial budget -- still directs any blame at the federal budget.

In response to the question now asked for the fourth or fifth time, the tax increases do not have a cost in jobs because the revenues are directed towards strengthening old programs and paying for new programs. I wish we could have reduced the cash requirement, but we made other decisions, keeping the cash requirement just minimally smaller than it was last year.

Mr. F. S. Miller: With great respect to the Treasurer, that is the first time he has come close to beginning to answer that question. I am intrigued that he believes removal of federal tax dollars hurts spending but removal of provincial tax dollars does not. That gives his tax dollars a very special place in this province.

The Treasurer has admitted in his answer that the growth will be down next year. He has admitted that the taxes are up. His cash requirements are up by $500 million, no matter how he cuts it. To what extent are his taxes slowing down that predicted growth, that growth he just repeated, next year?

Hon. Mr. Nixon: I will simply say again that tax increases in the budget of October 24 are not slowing growth; we believe they have a stimulative effect on the economy. If the Leader of the Opposition does not agree, that is his right; it may even be his responsibility.

We are applying these new tax dollars to new programs for employment opportunities for people under the age of 24 and others, to new programs in agriculture -- two of which have been announced, and I believe there are more in the offing -- and to a housing program with its concomitant jobs. These are matters which we consider to be stimulative and necessary in the best interests of the growth of Ontario.

Mr. F. S. Miller: The point is becoming clearer. The Treasurer has access to those figures. He has chosen to say that the route he took creates jobs. The Treasurer should give us the figures and back them up, not just talk in the House.

Hon. Mr. Nixon: The increase in jobs will be 108,000 next year in general, with an additional 30,000 because of our home-building initiatives. These are precisely the numbers I put before the House on the last three days when this question was asked.

ACCESS TO MINISTERS

Mr. F. S. Miller: If I can, I now want to address to the Premier the question I was going to address earlier. In the past few days, the Premier has understandably been a bit touchy, particularly with the press, about the Liberal Economic Advisory Forum. I would like to look at the quote.

The Premier told reporters the other day in the hallway that he would not end the practice because "that would make it seem there was something wrong with it." There is something wrong with it. Why will he not acknowledge it and end it now?

Hon. Mr. Peterson: I have answered this question many times before. No one has special influence in this party. How many times do I have to tell the member that?

Mr. F. S. Miller: That indicates the Premier is worried about it. In fact, if there is no preferential treatment, and he has just said there is none, for this $1,000 to belong to his outrageous club, will he please release the names of those who are in the club? Will he tell us who has made those donations so he can let the public and the Toronto Star judge?

Hon. Mr. Peterson: First of all, everything we do is open and aboveboard. There are no secrets about that. As a Tory, the member is far more exercised than anyone else. Perhaps he is carrying some lingering doubt about the way his party does things. Let me tell him that is not the way we do things in our party. He cannot get it through his thick head sometimes that we do things differently over here from the way he does now or used to do. That is his whole problem.

I can tell the member, this party raises money; it is all reportable and will continue to be reported -- every donation, everything that is paid for leadership campaigns. There is no search for the loopholes in our party's financing to finance leadership campaigns using the Election Finances Reform Act.

Everything we do is open and aboveboard, and all those names will be published as they are under the rules. If the member does not like that, I cannot help him very much.

Mr. Rae: With respect to the specific LEAF program, I hope the Premier will agree what is different about LEAF is that it promises special access to people who contribute more than a certain amount of money to the Premier and cabinet ministers. That is precisely what it does.

I wonder if the Premier can tell us whether he or anyone in his office saw either the first LEAF letter or the second LEAF letter before they were sent to the potential contributors?

Hon. Mr. Peterson: I did not see either of them. My understanding is that people in my office did. As the member will recall the discussion in this House after the first one went out, I wanted to clear up any misperception. I said to members of the staff, "Make sure that people clearly understand why the party is raising money."

The letter says we are raising money to retire the deficit from the campaign and to finance ongoing party activities. That is clearly there, and only the most small-minded person could draw any other conclusion from that. It is very clear and open for all to see.

If the member would like to make a contribution, I would be delighted. He would be investing in good government, something they do not know very much about over there.

Mr. F. S. Miller: This government surely does things differently from the way our party does. Does the Premier not understand credibility, honesty and trust in the government are at stake? He tried to say he told Mr. Smith, then he reneged on it. His staff has had different stories. Does he not understand the contusion in the eyes of the public?

His letter to Donald J. Smith said:

"I want to hear what key Ontario business leaders have to say.

"In order to accomplish this, the Liberal Economic Advisory Forum must be an articulate group with limited membership." How limited? I wonder.

"On that basis, I think this is an excellent idea that we need to put in place as quickly as possible."

Yet the Premier had the nerve to say he had not talked to him; he did not know about it.

Mr. Gordon: Even a kindergarten child could see through that.

Hon. Mr. Peterson: I will not respond to that.

Interjections.

Mr. Speaker: Order.

Hon. Mr. Peterson: I can tell the Leader of the Opposition that if he continues to do his research out of the newspaper, he is very clearly wrong again in terms of any special influence. That letter was sent out by Donald Smith and not by me. The party is one of the inputs into policy. The government is the one that is ultimately responsible. We listen to many groups across this province -- business, labour --

Hon. Mr. Nixon: The opposition.

2:20 p.m.

Hon. Mr. Peterson: The opposition occasionally, if they have anything worthwhile to say. We are delighted to incorporate their ideas into good government.

Let me tell my friend, this situation allows no special access. I do not know how many times I have to tell him that. He can go on and rail as much as he likes; he can go on and criticize. He is entitled to do that; he is entitled to put his own perception of how things work in his own party on to our party, but I can tell him that is not the way our party operates.

Mr. Harris: Mr. Speaker, on a point of order: The Premier may want to correct the record. He stated the letter was sent out by Donald Smith. This is the letter to Donald Smith signed "Premier David Peterson."

Interjections.

Mr. Speaker: Order. That is not a point of order. I advise the member that he can get up on a point of order to correct what he said, but not to ask other people to correct what they have said.

ST. CLAIR RIVER

Mr. Rae: I have a question for the Minister of the Environment. The minister said in the House yesterday that it is his understanding there have been investigations by both police authorities and nonpolice authorities of a number of activities in and around the St. Clair River area and that those agencies would be from both sides of the border.

I do not think the minister can come into the House and make that kind of general statement without coming clean with the Legislature and telling us exactly what is going on. Can the minister tell us which police authorities are involved? Can he tell us precisely who is being investigated and, to his knowledge, what are they being investigated for?

Hon. Mr. Bradley: In the interests of the ongoing investigations, it would be inappropriate for me to reveal that at this time. I can tell the honourable member about the investigations that are going on, however, because I think that is a legitimate question.

As I said yesterday, there are Canadian police authorities involved in these investigations. There are Ministry of the Environment investigations going on. I cannot say which police authorities are involved on the American side. I have read in the newspaper, as the member has, about which groups might be involved in investigations over there.

I can assure the member there are full and complete investigations going on of all activities related to the St. Clair River area over a number of years. I wish I could be more precise for the member.

Mr. Rae: I am not going to let it lie out there. The minister cannot let it hang out there.

Can the minister confirm that, among others, it is officials in his own ministry who are under investigation? Can he tell us whether the Ministry of the Environment itself is under investigation by the Ontario Provincial Police? Can he tell us the nature of that investigation and what charges are being explored against those people?

Hon. Mr. Bradley: The investigation involves individuals in both the public and private sectors. It is fair to say that, when we look at the St. Clair River area, it is very clear we are looking at the activities of the Ministry of the Environment and of others who have been involved in certain situations in that area over a period of time. I can assure the member that is the kind of investigation taking place. There has been considerable media speculation about it, and there is validity in that media speculation.

At the earliest opportunity, when investigations are complete, I would like to reveal the results of those investigations and whether any charges will be laid. That would be important. I would like to be more precise for the member today. Unfortunately, in the interest of the ongoing investigations, I cannot be more precise today, but at the very earliest opportunity I will try to be more precise in that regard.

Mr. Brandt: I want the minister to know I respect the need for confidentiality with respect to the investigation.

Interjections.

Mr. Brandt: What is all the chuckling about over there?

When the OPP are carrying out an investigation, there is a need for the minister to use that information in a judicious and careful fashion, and I respect that.

I would like to ask the minister whether he will use his good offices to bring a conclusion to the investigation as soon as possible to remove the shroud of doubt and uncertainty that exists in that area relative to the public statements that have been made.

I am sure the minister can appreciate the fact that a very large percentage of innocent people are now under a cloud of uncertainty as a result of the investigations. As the local member and as critic for the Ministry of the Environment, I would like to see that matter cleared up as early as possible.

Hon. Mr. Bradley: That is a very fair assessment. I am attempting to have the investigation concluded and its results revealed as soon as possible. The honourable member will appreciate that we have been dealing with an ongoing problem, that a number of activities are being investigated and that the investigations have not been concluded at this time. However, it is important that a thorough investigation take place and that those results be provided at the very earliest opportunity to the members of this House.

Mr. Rae: The minister will know it was in August 1984 that this blob was first discovered by the Great Lakes Institute divers. When were the minister's officials first advised formally? When did they discover the existence of this chemical material? When was the minister first advised? Did he know about it in July? Did he know about it in August? Did he know about it in September? Did he know about it in October?

Why was it not until yesterday, November 4, that the minister made a statement to this House with respect to the presence of the blob and what it contained? Why did it take so long for the minister to inform us as to what he knew?

Hon. Mr. Bradley: If my memory is correct, we heard about the blob in September 1985. When we heard from Ministry of the Environment officials about the existence of the blob, of those oily puddles at the bottom of the river, I ordered more testing to take place.

The results of the testing were what I revealed yesterday. In fairness to the member, that was not a complete result, because I do not have the complete results. However, I knew he would want the nastiest materials in the House first -- I think the members would want that -- and that is why I provided that first.

The results of those tests were in my hands, personally, only yesterday. They were probably in ministry hands on the weekend or perhaps as early as last Friday, but I had them yesterday. That is why it was brought forward at that time. That is my best recollection of having discovered it.

As I recall, an Environment Canada sampling was taken as well as an Ontario Ministry of the Environment sampling. I think it was September when I learned about it, but as soon as I did we immediately undertook activities to address the problem.

Mrs. Grier: I also have a question for the Minister of the Environment. I am sure the members of this House will agree that the problems identified in the St. Clair River potentially are extremely serious for far more communities than merely those fronting on the St. Clair River.

I am not reassured by the answers we are getting from the minister as to who knows what on this whole subject. He has just said that what he released yesterday were preliminary results of the testing. An hour after he released those results, his federal counterpart in Ottawa released results on 38 various components of the same sample that were in far greater detail in their analysis than those made available to this House.

Mr. Speaker: Question.

Mrs. Grier: Can the minister please explain why the federal results are more thorough and comprehensive than those that have been made available to us? Who is going to be in charge of the ongoing investigation and the ongoing determination that I hope he is demonstrating to clean up this problem?

2:30 p.m.

Hon. Mr. Bradley: Because of the activities I have undertaken as minister, I have ordered a lot of additional work done by the laboratory since I became the minister. It has had its capacity stretched to the limit. For instance, we brought down 175 fish from northern Ontario in the Rainy River situation as we wanted to ensure that was well tested.

There are a number of activities. I have increased the amount of work the lab has had, and as a result our lab has not moved as quickly as perhaps the federal lab has; but I want to get those results to the members of this House as soon as possible.

The reason I released it in half-form was the rather nasty substances I wanted to get before the House first. There are others for which there have been tests, and I will get them here at the earliest opportunity. The federal lab may have more capacity and it may not have the same pressures I have placed on my lab at the Ministry of the Environment. As soon as we get those results, I will be happy to have them in the House for members.

Mrs. Grier: In addition, can the minister please tell this House who will be in charge of the examination? As we have heard the Sarnia office is under investigation, and perhaps because the capacity to do the testing is not there in our own labs in Toronto, can we have any confidence the investigation is going to be thorough? Who is going to be taking charge of it?

Hon. Mr. Bradley: I can assure the member the investigation will be extremely thorough. Is she talking about the investigation of the test results themselves in this case or of the other investigation that was referred to in the first question? I think she should clarify that.

Mr. Speaker: That may be in the final supplementary.

Hon. Mr. Bradley: If it is to be fair --

Mr. Speaker: Please go on very briefly.

Mrs. Grier: Who is in charge of the testing and who will be in charge of the task force the minister described yesterday?

Hon. Mr. Bradley: The Ministry of the Environment of Ontario will be in charge of the testing and it is centrally in charge. The deputy ministers here in Toronto will be in charge. The laboratory work, in effect, is done here.

I also should mention it is my understanding the Environment Canada results which were released were preliminary and the Ministry of the Environment of Ontario results were verified before they were released. One does some peer review when one does these tests; one goes through that protocol. I understand the federal results were preliminary and ours were verified. That is the information I have for the member.

Mr. Brandt: My understanding is that the so-called blob in the St. Clair River is a result of some contamination that may be as old as 20 or 30 years since the dumping took place, and that it is not a more recent blob that perhaps has occurred as a result of more recent activities.

Can the minister indicate, based on the information he has at hand at the moment, whether he has any indication whatever of any downstream contamination resulting either from that particular blob in the St. Clair River or from other contamination? Can he indicate whether any of the chemical companies that may be involved are currently exceeding the discharge orders issued by his ministry?

Hon. Mr. Bradley: First, in the interests of an ongoing investigation, I would want to ensure that I not tell the House if I know whether there has been a violation of provincial rules by certain companies. The member will know that when the charges are laid, if they are. I think that is important.

With regard to what has caused this blob or these globules down there, I have not ruled out a lot of possibilities. I have not ruled out that there might be ongoing spills, that the pressure wells that were used some years ago may well be bubbling up now underneath the river or the possibility that it is an historic problem from many years ago. It is important that I not rule out any of those and that all of them be investigated. I would not want to discount the first two in the interests of simply saying everything is all right today.

Mr. Hayes: There is a very strong concern because we are not getting the answers that are required about the quality of the drinking water the people upstream are consuming. We are concerned about its quality.

Will the minister assure this House that the monitoring of the drinking water will be done at least on a weekly basis for the communities upstream, for such things as hexachloroethane, benzene and perchloroethane, and the many other toxic substances that were detected in the study done by Environment Canada? Can the minister also assure us that the people who are going to be doing this monitoring are not the same people who have been in control of the environment in that area in the past?

Hon. Mr. Bradley: That is a very legitimate question. I can say to the honourable member, in the light of the most recent test results we have, that we are expanding our own capacity in the following way. Our lab is stretched to the limit at present; so we are going to augment our own laboratory by enlisting the services of at least two other outside laboratories to assist us in our general testing program.

For instance, we will divide up all the testing we have to have done and we will ensure then that it can be done. It will be done on a weekly basis -- that is a very reasonable request -- and it will be for the substances the member has mentioned. I can also say that the raw water and the drinking water will be tested, and it will be done at Wallaceburg, Sarnia, Walpole Island, Windsor and Amherstburg.

We will be looking at the tetradioxins. We will be looking for the worst kind, even though we have found no evidence of them. In fact, all 18 contaminants that were found in the oily material will be tested for, and it will be done on a weekly basis. It will cost a significant amount of money, but it is worth the investment to ensure the health of the people in that area.

ACCESS TO MINISTERS

Mr. F. S. Miller: I have another question for the Premier. We may seem a bit dense and we may seem a bit nitpicking on this side, but we are having trouble putting the facts and the statements together. I am talking, of course, about the Liberal Economic Advisory Forum. I want to go back to some of the letters that are now being disowned by people in the Premier's office.

The first one starts, "At the request of Premier Peterson, I have been asked to invite you to join...a select group of Ontario business leaders." It goes on to say, "Yes, Mr. Smith, I would like to join the Liberal Economic Advisory Forum and enter into a real dialogue with Premier Peterson.... Enclosed is my cheque for" -- there is a space and then -- "(minimum of $1,000)."

We have a lot of people denying they knew what was in that letter, and yet it appears even the Premier's staff are worried he is denying it. Why have the Premier and his staff continually denied that he understood what Don Smith was outlining in his August letter? He obviously understood what was in it. He sent a memo to the effect that he agreed with it. Why does he deny it?

Hon. Mr. Peterson: My friend is in the process of trying to make some allegations. If he is going to make allegations, he had better stop being so fuzzy-headed and make precise allegations.

The facts have been outlined on many occasions. If the Leader of the Opposition knows precisely what he is accusing me of, he should stand up and say it in this House. Other than that, he had better be a little more precise about what he is doing. What is he accusing us of?

Mr. F. S. Miller: I am not the one who said I was going to change the practice in this province. I am not the one who said I was going to have open government. I am not the one who said all those things. The Premier is raising funds for his ministries, for his government and for his party, all on the assumption that somehow those letters imply that paying money gets one in to see ministers and therefore have influence. Is that not so?

Hon. Mr. Peterson: It clearly is not so. Do I have to teach the honourable member how to read as well as solve all his other problems? It clearly does not say that. If the member wants to make a specific allegation, let him read it carefully, stand up in this House and make the allegation. He should not just fuzzify the whole thing. He should stand up and tell me what the problem is as he sees it.

He thinks there is a perception of buying influence. I can tell him that is wrong. The facts have come out very clearly along the way, and they are all there for everyone to see.

2:40 p.m.

ST. CLAIR RIVER

Mr. Rae: I have a question for the Minister of the Environment, who I see is being briefed by my colleague the member for Sudbury East (Mr. Martel). I want to ask the minister specifically what happened in his ministry, because I do not think he has given us a report.

In August 1984, divers went down looking for clams. Instead of finding clams they found some black goop, a black blob, on the floor of the St. Clair River. It has been described by people as having a chemical smell. They brought it up. One of the scientists from Environment Canada has said, "If you touch that stuff directly, it would kill a mammal."

Those are the facts. This Legislature got a statement 15 months later with respect to that blob. I want to ask the minister why it took 15 months for that information to come to this House and be formally reported by the Minister of the Environment. Who suppressed the information?

Hon. Mr. Bradley: I am not aware of previous information that may have been available to another minister. In terms of my own information, which I have provided to the House, I have provided the results of the retesting that was done. Those results are what I revealed to the House yesterday. I think that is as clear as I can be. What I have brought to the members' attention are the results of the retesting that has taken place. I am not aware why a previous minister did not bring the 1984 blob results to their attention.

Mr. Rae: I think it is important for the House to recognize there are two issues. There is an issue of pollution, an issue of the poisoning of the environment. However, there is also an issue of suppression of information by those very officials and authorities, provincially and federally, who are supposed to be informing the public with respect to what is going on in our air and water.

Will the minister tell us when he is going to investigate and not simply give us sampling results, which we are all grateful for? When is he going to tell us precisely who knew what, when, where and how? Why did it take 15 months for this information to come to the Legislature?

Hon. Mr. Bradley: As soon as I have that information for the member, I will certainly reveal it to him and to the House. As I indicated to the member, there is an ongoing investigation with regard to the St. Clair River area. I am personally reviewing the communications that are taking place within the Ministry of the Environment and those that have taken place in the past. When I have concluded that investigation, I will be happy to share the results with all members of this House. I think it is important that ministers have all necessary information provided to them as soon as possible. I am also saying it is important the public have that information as soon as possible.

Mr. Mancini: I want to congratulate the minister for making the information he received so readily available to the public. This problem affects part of the constituency I represent and I think it is important that we are able to inform on a continuing basis the community that may be affected.

May I ask the minister whether his staff could on a continuing basis have communications with the municipalities that may be affected and with the local news media so that they get a proper and continuous piece of information from the ministry and so that the municipalities know exactly what is going on and exactly what efforts are being undertaken?

Hon. Mr. Bradley: I would be pleased to ensure that the municipalities directly involved be kept informed of the activities of the Ministry of the Environment in that regard. Specifically, as to the drinking water itself, it is the medical officer of health who is informed. As late as yesterday afternoon, I was in discussion with the mayor of Wallaceburg. I indicated in the House I would be calling him. I discussed his concerns on that occasion. I will continue to discuss concerns with the communities that are affected.

ENVIRONMENT BUDGET

Mr. Brandt: This question is also for the Minister of the Environment. A few months ago the member's party made some environmental promises that totalled, I believe, in the range of $73 million. The budget the Treasurer (Mr. Nixon) has just brought down indicates that the minister is going to get some $41 million less than those promises and that there are a number of areas of the environmental budget that are not going to be addressed as a result of the most recent budget.

Can the minister explain the miraculous environmental healing process that has gone on in the past few months to eliminate the need for a $33-million general environment budget increase, a $30-million perpetual care fund, a $10-million beach cleanup, which he talked about rather frequently when he was on this side of the House, and major funding for acid rain, which he has put not one nickel in his budget to cover in spite of the fact that he was the first minister in the history of this province --

Mr. Speaker: Order. The question has been asked.

Mr. Brandt: -- who knew the federal government had committed itself to an acid rain abatement program?

Hon. Mr. Bradley: I find it most interesting that the former Minister of the Environment from a government that actually cut the environment budget has the gall to ask that kind of question.

Mr. Brandt: Answer the question.

Hon. Mr. Bradley: I will give the member credit for nerve, if not for anything else. I want to assure the member that all the commitments that this government has indicated during the election campaign and prior to that are commitments that will be met.

Let me give the member an example. He will understand that if a government is going to commit funds to the cleanup of acid rain in terms of, for instance, the federal smelter program, which has available in it up to $150 million, those expenditures would not even be taking place until the late 1980s. The member will know there would not be an expenditure this year, because the work would not be undertaken this year, next year or the year after. That is why he will not find that funding there.

I can assure the member I personally have met on four occasions with the federal Minister of the Environment since he became the minister. On the last occasion I met formally with the federal minister in Ottawa we discussed the matter of acid rain. I was able to obtain from him at that time assurances there would be sufficient federal funding to address the problems he and I saw relating to acid rain and the smelters.

I honestly do not know what the member is talking about when he discusses --

Mr. Speaker: Order. Supplementary.

Mr. Brandt: The sanctimonious, self-righteous, hand-wringing on the part of the minister over there will wash only for so long. He has cut needed environment --

Mr. Speaker: Order. I would remind the members this is not a debate period; it is a question and reply period. Would you please place your supplementary?

Mr. Brandt: My supplementary question, which I know you want me to ask, Mr. Speaker, is with respect to municipalities that require either upgrading or new programs relative to either water or sewage treatment. Why has the government cut that budget?

Hon. Mr. Bradley: The member will know when his government was in power, when it had the wonderful dream about what was going to happen at Townsend, that forced the regional municipality to oversize its water systems; and when we were going to build an airport out at Pickering, which his government was in support of, as I recall, the York-Durham system was very much oversized.

This placed a very difficult burden on the municipalities. If the member will look carefully, he will understand that we have assisted those municipalities and other municipalities by millions upon millions of dollars so they would not have this debt burden that would have to be placed upon those who are water users in this province. All the member has to do is look at the budget and he will find that out.

Mrs. Grier: Would the minister not agree that if he adopted a philosophy of making the polluters pay, then perhaps those who create the problems would make a sizeable contribution towards their solution?

2:50 p.m.

Hon. Mr. Bradley: I certainly agree with the member that is a very important component of the activities this government intends to undertake. She will know that when we had a situation where we had a request for a deferral of the implementation of a control order in Sault Ste. Marie, this ministry stood fast and did not allow a further deferral of that control order.

I came under a lot of criticism for that, but I think it is important that those who are in the industry make their fair share of the contribution as well.

REPORT ON FREE TRADE

Mr. Morin-Strom: I have a question for the Premier. It has to do with the Premier's oft-stated commitment to open government. On a number of occasions, the Premier has referred to a study done by the Ministry of Industry, Trade and Technology which details the 270,000 jobs which are at risk under a move towards a free trade agreement with the United States.

Could the Premier explain why, despite the commitments he made at a press conference on September 26 to make this report public, the Ministry of Industry, Trade and Technology has refused to make the study public to this point?

Hon. Mr. Peterson: My understanding is that it is in the process of being put in a form for release. Let me assure the honourable member that there are absolutely no secrets in that regard. I want that information public. I want a discussion of it and I invite scrutiny of it. Others may have different views of the information compiled. I can check into the details of why that is not available today or why it was not available last week, but I can assure the member that the view of this government is to make that report public. If there is a holdup, it is purely a technical one, not a substantive one.

Mr. Morin-Strom: In following up on this question, over the period of the last five weeks we on this side have tried to get the Ministry of Industry, Trade and Technology to release the study and apparently there is some reluctance within that ministry. Could the Premier give us a specific date when the study will be released?

Hon. Mr. Peterson: I am sorry I cannot, but perhaps I can refer him to the minister, who may be able to give him a specific date.

Hon. Mr. O'Neil: I thank the member for the question. Knowing of his and his party's concern about the free trade issue, I can assure him the report he talks about, which was the background research on Canada-United States free trade, is not yet completed. We would hope it would be ready within the next week to 10 days and immediately upon its completion that report will be released. He will be one of the first to receive copies of it.

In addition to releasing that particular report, over the next three to four weeks we will be releasing several other studies. Again, both the honourable member and the other members of the Legislature will be given those reports as soon as they are ready.

We have been reviewing the particular report the member asks for, and there are a few things we want to change that I did not think were quite right or put together correctly. He will receive it as soon as we have it.

TEACHERS' LABOUR DISPUTES

Mr. McKessock: I have a question for the Minister of Education. As the minister is aware, there are two teachers' strikes in my riding, one in Grey county and the other in Wellington county. One is in its seventh week and the other is in its eighth week. The feeling in the community runs from depression to hostility. They are asking me to push the minister to legislate the teachers back to work, and this I have been trying to do. It is my understanding that a jeopardy hearing would be helpful in this regard, and many people have asked for the same thing.

Would the minister consider directing the Education Relations Commission to come to Wellington and Grey counties and hold a hearing in each of these two municipalities to help them and himself determine whether the students' year is now in jeopardy?

Mr. Conway: I want to thank the honourable member not only for his question, but also for his many representations to me on behalf of the 13,000 secondary school students in the counties of Wellington and Grey who are affected by these two disputes. As the members know, we have Bill 100, the School Boards and Teachers Collective Negotiations Act, which clearly sets out a process and a timetable.

The Education Relations Commission is monitoring the situation very carefully in both the counties of Wellington and Grey. Of course, the act places upon the Education Relations Commission the responsibility to make a determination of jeopardy, which they have not done in either the county of Wellington or in the county of Grey at this point.

Mr. Sargent: Mr. Speaker, I have a supplementary, but I would like my friend the member for Wellington-Dufferin-Peel (Mr. J. M. Johnson) to have a shot at this too.

Mr. Speaker: If you give him that chance now, you will not get a chance.

Mr. Sargent: Say again.

Mr. Speaker: According to the usual routine and procedure for question period, you may have your supplementary now, but it is not possible after the member for Wellington-Dufferin-Peel has asked his. Go ahead with your supplementary.

Mr. Sargent: Since this is International Youth Year, since as of today all talks in Grey county are suspended and the teachers say they are through until next June, and since students must apply to the university this month for entrance, regardless of marks, will the minister not agree that the Education Relations Commission is a sham and that we have to find a better way to protect the future of these students?

Hon. Mr. Conway: I will say to the honourable member what I have said in this House on previous occasions. The best way to resolve unhappy and difficult situations such as the member is experiencing in Grey and my colleague is facing in Wellington is to bring pressure to bear on both local parties to achieve a locally negotiated settlement.

I want to be clear about this. There are 13,000 young people whose education is at issue in these disputes, but both local parties have it within their power to resolve this in the interests of those students and those local communities. I strongly encourage both local parties in Wellington and in Grey to undertake that responsibility in the most serious and immediate way, to return to the bargaining table and to resolve this in a locally negotiated way.

Mr. J. M. Johnson: On behalf of the students and parents in Wellington and Grey, will the minister answer one simple question? How long does he believe this particular strike can continue before a student's academic year is in jeopardy? In heaven's name, how much longer?

Hon. Mr. Conway: The act clearly establishes a responsibility with the Education Relations Commission in this matter of jeopardy. Bill 100 created the ERC. The ERC has had 11 years of experience. It has a mandate under the act to monitor those strikes and to make a determination of jeopardy. In both Wellington and Grey, as of this date, the ERC has not made a finding of jeopardy, but it is monitoring the situation in Wellington and Grey on a daily basis and reporting to me on almost a daily basis as well.

Let me repeat this so there is no confusion on this point. This minister feels the best resolution is a locally negotiated settlement in both cases. I want to say to my colleagues in the Conservative Party that their administration allowed secondary school disputes to go on in the case of Sudbury --

Mr. Speaker: Order.

3 p.m.

LAYOFFS AT MASSEY-FERGUSON

Mr. Gillies: My question is to the Minister of Industry, Trade and Technology. It concerns the decision of Massey-Ferguson to suspend combine manufacturing and to lay off 1,300 employees in its Brantford and Toronto plants. The minister will know that, added to the closure of White Farm Manufacturing, this means there are 1,700 workers in Brant county who were working in the farm equipment industry who are now not working, workers who were employed before his government took office.

What concrete steps is he taking now to stimulate employment for those laid-off and unemployed workers?

Hon. Mr. O'Neil: I would like to thank the member for Brantford for the question, because this matter of large job losses is of concern not only to him but to all the members of this Legislature. I might remind him that when he looks over at this government and prefaces his question with "since your government took office," those layoffs have been taking place for many years because his government did not take action on them. When one gentleman who has been employed there since 1950 says he has been laid off 54 times, the previous government is partly to blame for some of those problems.

Mr. Gregory: When are you going to start to take responsibility?

Mr. Hennessy: You are the government.

Mr. Brandt: What are you going to do?

Mr. Speaker: Order.

Hon. Mr. O'Neil: Getting back to the matter, it is also of great concern to us, and my ministry has been in touch with them. We will do everything we possibly can to maintain those jobs, even if we have to go back to the 1981 agreement. However, an excellent start has been made. The reason farmers cannot buy some of that equipment is the underfunding by the previous government in the past number of years.

Let me tell my friend that because of the hard work of the Treasurer (Mr. Nixon) and of the Minister of Agriculture and Food (Mr. Riddell), our budget is up by more than 20 per cent. I hope that enables some of the --

Mr. Speaker: Order.

Interjections.

Mr. Speaker: Order.

Mr. Gillies: If the minister is not aware, I will share with him that more than 90 per cent of the company's product is not sold in Ontario and that the agricultural policies of this province have absolutely nothing to do with it. The question is this --

Interjections.

Mr. Speaker: Do you have a supplementary?

Mr. Gillies: Yes. On August 14, following the closing of White Farm, the minister wrote to the mayor of Brantford and said, "Be assured my ministry will continue to make every effort to assist Brantford in its quest for viable industry." Since then this government has brought in a budget, which is the first Ontario budget in six years to make no mention of training or employment programs for workers over the age of 24.

I want to ask the minister, what are the concrete steps he is taking to stimulate new industry in my community? Also, is he going to ask the Treasurer to amend his budget to bring in meaningful training and employment --

Mr. Speaker: Order.

Hon. Mr. O'Neil: My ministry is on a very busy schedule of asking and talking to people in the Brantford area. The Treasurer has also talked to me several times about what we can do there, and my ministry staff has been instructed to do whatever it can to help provide new industry and jobs in the member's area.

The member's question on training and skills would be better directed at another time to the Minister of Skills Development (Mr. Sorbara), but I can assure my friend we will do everything in our power to make sure those jobs are maintained. We are told by the company these are temporary layoffs, but the problem is that if it were ever to close permanently those jobs could be lost never to come back.

We will do everything within our power to make sure the jobs are maintained, and we will do everything we can for the municipality of Brantford to assist in obtaining additional industries for that area.

Mr. Mackenzie: Inasmuch as the previous government, after the 1981 majority election, refused to reconstitute the select committee on plant shutdowns and employee adjustment, is this minister prepared to look at that committee and at some of the recommendations this party has made with respect to public justification and community adjustment funds to deal with plant shutdowns such as this?

Hon. Mr. O'Neil: The honourable member may remember I was the vice-chairman of that committee. It did some excellent work with the participation that came from all the members.

We have been looking at some of the municipalities, the one-industry towns, in northern Ontario. We feel that where we have a large employer such as this in particular areas, we should be giving a lot of attention to those areas.

I can only assure the member that many of these matters are still under review and that jobs are one of the most important items for this new government.

Mr. Speaker: New question; the member for Scarborough-Ellesmere.

Some hon. members: Resign.

Mr. Warner: And make them happy? Are the members kidding?

SALE OF BLOOD

Mr. Warner: I have a question for the Minister of Health. Will the minister bring in legislation as soon as possible that will prohibit the private sale of human blood?

Hon. Mr. Elston: That is a new question from the honourable member. He knows full well that the system in Ontario, and in Canada in general, is based on the voluntary donation of blood. The Red Cross, which is currently in charge of the collection and distribution of blood in the province and in Canada, has not got into a system of purchasing blood for delivery. I anticipate that will continue in Ontario. In fact, policy decisions have been made with respect to blood and blood products that indicate we support the voluntary donation system.

Mr. Warner: I am surprised the minister does not take the matter seriously. Does he not realize that unless legislation is brought in there may be more privateers like Jim Burgess, who are quite prepared to negotiate cost and to offer a discount if one is willing to receive their blood more than once? Privateers such as him can help to destroy the voluntary system this country prizes. Why will the minister not bring in legislation?

Hon. Mr. Elston: The member obviously misunderstands. When I say we support the voluntary system, we have taken strong steps to encourage and support the Red Cross in a number of its initiatives. We will continue to do that. We will look into particular legislation so that the initiatives of individuals such as Mr. Burgess can be addressed. At no time can the member say I do not take this issue very seriously. He is certainly misinformed.

ARTISTS' TAX EXEMPTION

Hon. Ms. Munro: I would like to respond to the question asked previously by the member for York West (Mr. Leluk). In my response to the question yesterday, I noted that arts-related tax issues were discussed in Halifax in September at the federal-provincial meeting of culture ministers.

Ontario made a presentation that included the issue of federal sales taxes and duties. Many artists have felt such taxes have not always been fairly applied. The federal minister agreed at the time to bring these issues to the attention of his Finance colleague. It was also taken as a significant critical document by the federal task force investigating funding of the arts.

However, I would like to point out to the honourable member that a provincial sales tax exemption on artists' materials has been available to artists in Ontario since 1961. The onus is on the artist to apply for such exemption.

In regard to provincial tax on the sale of art works, I should note that art galleries and museums that are primarily funded from public donations and/or government grants are exempt from paying sales tax on art purchases. Other organizations and individual buyers are required to pay the usual sales tax. Such tax is paid by the consumer and not the artist.

NOTICE OF DISSATISFACTION

Mr. Morin-Strom: I would like to file my dissatisfaction with the response given today by the Minister of Natural Resources to a question raised by myself and the member for Fort William (Mr. Hennessy) several days ago. I would like the opportunity to debate it this evening.

Mr. Speaker: I presume the member will take the appropriate steps set out in the standing orders.

3:10 p.m.

PETITION

ROMAN CATHOLIC SECONDARY SCHOOLS

Mr. Henderson: I rise to present a petition from the Kingsway council of the Knights of Columbus, signed by almost 2,000 petitioners, in support of completion of funding to the Roman Catholic separate school system.

"To the Honourable the Lieutenant Governor and the Legislative Assembly of Ontario:

"We, the undersigned, beg leave to petition the parliament of Ontario as follows:

"Whereas it is the sincere expectation of more than 500,000 students and staff of the separate school system of Ontario and nearly four million separate school supporters in the province of Ontario; and

"Whereas it was clearly the intent of our forefathers to treat both sectors of our common school system equally; and

"Whereas this intent is evident in successive acts of the Legislature since 1841; and

"Whereas the rights of separate school supporters are now protected under the Constitution of Canada; and

"Whereas deviation from past practice has occurred within the last 20 years, whereby trustees of the nondenominational sector of the common school system have been given the right to administer secondary education; and

"Whereas similar rights have not been granted to the trustees of the separate school sector; and

"Whereas the then Premier, the Honourable William Davis, on June 12, 1984, informed the Legislature that it was the intent of his government to empower Roman Catholic separate school boards to operate secondary schools for secondary students, commencing September 1, 1985; and

"Whereas this intent was unanimously supported by all parties in the House;

"We petition the Ontario Legislature to implement the policy on the funding of the completion of our separate school system without delay in order that it can applied on September 1, 1985.

"We further petition that this legislation protect the historic rights of Roman Catholics to maintain the special character of their separate schools."

That petition is signed by John H. Feeley of the Kingsway council of the Knights of Columbus and by almost 2,000 additional petitioners.

MOTION

PRIVATE MEMBERS' PUBLIC BUSINESS

Hon. Mr. Nixon moved that Mr. Treleaven be deleted from the order of precedence for private members' public business and that all members of the Progressive Conservative caucus listed thereafter be advanced by one place in their turn.

Motion agreed to.

INTRODUCTION OF BILLS

HEALTH PROTECTION AND PROMOTION AMENDMENT ACT

Mr. Pierce moved, seconded by Mr. Guindon, first reading of Bill 52, An Act to amend the Health Protection and Promotion Act.

Motion agreed to.

LABOUR RELATIONS AMENDMENT ACT

Mr. Mackenzie moved, seconded by Mr. Laughren, first reading of Bill 53, An Act to amend the Labour Relations Act.

Motion agreed to.

Mr. Mackenzie: The purpose of the bill is to clarify that the Labour Relations Act applies to employees who are engaged in agricultural employment in an industrial or factory setting. I trust the clerks will realize there is also a resolution dealing with landscaping workers, who are not covered under the employment standards.

ANSWERS TO QUESTIONS IN ORDERS AND NOTICES AND RESPONSES TO PETITIONS

Hon. Mr. Nixon: I wish to table the interim answers to questions 46 to 71 and responses to petitions presented to the House, sessional papers 176, 177 and 178, standing in the Orders and Notices [see Hansard for Friday, November 8].

NAMING OF MEMBER

Hon. Mr. Nixon: Mr. Speaker, on a point of order: I was concerned on Friday last when the member for Simcoe Centre (Mr. Rowe), in the course of his question, indicated to me that I was misleading the House and the province. When he refused to withdraw that point, you ordered him to leave the chamber. He was not present yesterday, but he did come in today. I did not have a chance to raise the matter during his presence, and he is now absent again.

My concern is this. If a member says another member is misleading the House, is asked to withdraw and does not and is ejected from the chamber, my concern continues, particularly under circumstances that tend to trivialize the House and the members such as we experienced on Friday when the member leaves the House for a very short period of time.

There is a tendency for the local newspapers to be informed of this important matter. It happened a week or two weeks before to another member. They come in, having served their penance, and continue business as if nothing had happened. I find this unsatisfactory.

Saying that another member is misleading the House may not be very serious, and it may be that the House ought to change its approach to this, so we might even accept that, since it has been so trivialized by overuse. I do want to express my personal objection, however, to a member being ejected from the House, then returning and assuming business as usual without withdrawing the remarks.

The matter has been before the House before, but I wanted to raise it again for your consideration. It may well be that it is a matter that depends on your judgement, rather than a reference to the standing committee on procedural affairs and agencies, boards and commissions.

Mr. McClellan: If I may speak to the point of order that has been raised by the government House leader, this is a matter I know he feels very deeply about. It is also a matter we have discussed and debated before in the House, but my colleagues continue to hold a different view from that of the government House leader.

It seems to us that standing order 20(b) is very clear. It reads very straightforwardly, "When a member is named by the Speaker, if the offence is a minor one, the Speaker may order the member to withdraw for the balance of the day's sittings." The standing order then sets out a second procedure to empower the Speaker to place a motion that a more serious punishment be imposed.

It seems to me the standing order is very clear and the incident to which the government House leader refers has been dealt with correctly. If further action were to be taken, the course is set out in the standing orders and we do not feel anything else is required.

Mr. Gregory: Mr. Speaker, on the same point of order: I tend to share the opinion of my colleague from wherever.

Mr. McClellan: Bellwoods.

Mr. Gregory: The member for Bellwoods. This has been going on for many years, and if we --

Mr. Laughren: Where is the member from? Is he a member? When was he elected? He is a stranger in the House.

Mr. Gregory: Who is that member anyway? It is my feeling that if this practice had been followed as suggested by the government House leader, probably very few Liberals would still be sitting in the House and almost no New Democrats, because nobody ever apologizes around this place that I am aware of. I do not think any change should be made to this rule and, with apologies, I take a different position from that of the government House leader.

3:20 p.m.

Hon. Mr. Nixon: Mr. Speaker, I wonder if you would permit me to comment before you speak.

Mr. Speaker: Is it agreed?

Some hon. members: Agreed.

Hon. Mr. Nixon: I appreciate the honourable members letting me speak again. I think my point might have been misunderstood. I think the whole process is losing any impact or importance. Perhaps it is even reversing and becoming just an ordinary parliamentary procedure, particularly if it results in a small story under the fold of page 1 in the local paper.

For that reason, Mr. Speaker, I would like you to consider the list of so-called epithets that are considered unparliamentary. It may be the views expressed by the honourable members opposite convey, let us say, the increasing laxity and lack of decorum in this House and the community in general. If so, I do not object to that, but let us quit fooling around with ejecting people for matters which the House obviously does not consider important.

We could stick with the one epithet which is unacceptable in this House and any kind of civilized society, from which this one tends to stem in a rather tenuous way. I just would suggest to the honourable Speaker that he might consider on his own authority simply dismissing that whole list of parliamentary adjectives that are not accepted and say let us stick with the ones that really are unacceptable and not go through this charade day by day.

Mr. Speaker: I thank the honourable members for their comments on this point of order. I have to say as Speaker that it is up to me to uphold the rules as set out in the standing orders, because they were set out by the members of this House. That is the way they wanted business carried out here. Therefore, I feel it is my responsibility to carry them out to the best of my ability according to those standing orders.

I would also draw to the members' attention that I believe there has been one previous occasion when a member has withdrawn a word at the insistence of a member. I believe that member used the word "liar" at that time. I also remember this being sent since then to the procedural affairs committee. It was certainly discussed, but there was no consensus.

I have no hesitation in suggesting that if the members so desire, it could go to the committee where I hope it would be looked at very carefully.

In reference to the Treasurer's final comment, I find it difficult to depart from the traditions of the Legislature, which go back many years. I feel it would be definitely up to the House to send the matter to the procedural affairs committee.

ORDERS OF THE DAY

CORPORATIONS TAX AMENDMENT ACT

Hon. Mr. Nixon moved second reading of Bill 45, An Act to amend the Corporations Tax Act.

Motion agreed to.

Hon. Mr. Nixon: This bill, An Act to amend the Corporations Tax Act, contains amendments arising out of the proposals in the budget of October 24, 1985, some required as a consequence of the recent changes in the federal Income Tax Act and others that are of an administrative or technical nature.

One of the budgetary measures being implemented by this bill is an increase in the basic corporate tax rate from 15 per cent to 15.5 per cent, with consequential changes to the small business tax credits. The tax rate applicable to profits from manufacturing and processing, mining, farming, fishing and logging will be increased from 14 per cent to 14.5 per cent. The increase will apply to taxation years ending after royal assent, with a proration adjustment for those taxation years, including that date.

The recent changes in the Income Tax Act (Canada) relating to small business tax simplification are being paralleled in this bill. The ceiling on the cumulative deduction account and the special nonqualifying business category will be eliminated. Both measures apply to taxation years ending after December 31, 1984.

The following changes are being made to payment requirements. Where a corporation is a Canadian-controlled private corporation throughout the year and had taxable income in the immediate preceding year of less than $200,000, it will be required to pay its balance of tax within three months of its taxation year-end. Other corporations will be required to pay the balance of tax within two months of the taxation year-end.

Consequent on these changes, the Corporations Tax Act is being amended to exclude from the small business tax holiday nonqualifying businesses and those corporations with taxation years ending in the period January 1, 1985, to May 13, 1985, whose cumulative deduction account in the prior taxation year exceeded $1 million.

For taxation years ending after the date of royal assent, the bill proposes to disallow the deduction of the three per cent inventory allowance. Also, certain management fees and similar non-arm's-length payments to nonresidents will continue to be subject to Ontario tax and no longer will be tied to the federal withholding tax requirement.

The bill contains amendments of an administrative nature which will reduce significantly the filing requirements and compliance costs for a large number of Ontario small businesses. In particular, a corporation which qualifies as a special small corporation for a taxation year will not be required to file a provincial tax return and financial statement.

In addition, the bill contains other technical and housekeeping amendments.

Mr. Dean: I welcome the short statement of the Minister of Revenue and Treasurer (Mr. Nixon) and lord high everything else on this piece of legislation. We in Her Majesty's loyal opposition welcome anything that is going to simplify the tax system and the amount of paperwork that corporations have to go through in preparing and remitting their taxes. We have no problem with those aspects of the bill, assuming they work out as planned.

In the main, I regret there seems to be a certain lack of concern for the problems that business has had over the last few years and a little too much incentive to tax businesses more heavily than perhaps should have been done. For example, I know the Treasurer has reasons for removing the three per cent inventory allowance which could apply to any business and which, in certain businesses, quite easily could amount to $25,000 or $30,000 if they have inventories in the $1 million range. This is quite possible in some businesses and it is an appreciable amount when one is talking about businesses that are just emerging from a difficult period.

3:30 p.m.

Also, it probably is hitting business when it is not exactly down but struggling to get up, to parallel the federal rule about the partial year capital cost allowance, which is now changed to be only half the normal rate if the capital item is acquired in the course of the year. This could be justifiable, but I do not believe it is something which is welcome or useful in an effort to stimulate the economy.

In response to many questions, the Treasurer has said the increases in taxation are all directed towards productive programs. Therefore, he claims they are not negative or disincentives in the economy as a whole. Something like this, where he is requiring corporations to reduce the kind of deductions they may use when they are making their tax returns, inevitably results in more taxes being paid at a time when many corporations are still just barely keeping their heads above water.

I also regret the Treasurer has not seen fit to continue the program our government had for some years, put in by the former Treasurer, now our leader, to give a tax holiday to small businesses. There is something that is intended, I believe, to be a substitute for that, in that newly formed small businesses are eligible for a tax holiday in their first three taxation years of activity. But many small businesses do not get to the point of having a taxable income in those formative years. In many respects, this is more a symbol than it is of practical assistance to a small business trying to get going.

I guess it is not necessary to remind the Treasurer or the other members of this House how important small business is, not only in this province but also in the country as a whole, in the creation of new jobs. I believe in the neighbourhood of 80 per cent of new jobs have actually been created by small business.

I am leaving some things for my colleagues to comment on, but the other thing I wish to comment on is the general effect the whole budget appears to have on business in general. We see people such as the chairman of the Ontario division of the Canadian Manufacturers' Association saying: "The budget merely increases taxes. Any increase in costs makes us less competitive at a time when we are struggling with the load we are already carrying."

I think I have already mentioned that there is a half a percentage point increase in corporate income tax -- the Treasurer referred to that -- across the board on all corporations.

The amount the Treasurer hopes to gain in tax revenue by the increase in the general taxation rate is approximately $15 million, according to his estimates for 1985-86. I was not able to find an estimate of what it would be for a full year. Maybe that is beside the point, but it looks as though there is a figure for the whole corporate area, I believe.

The other thing I want to comment on is that it does not appear there is anything in this bill that assists corporations that genuinely want to create the jobs I mentioned earlier. I think there could have been other measures the Treasurer could have taken to secure the revenue he feels he had to have instead of putting as big a burden as he has upon the corporations of the province.

That is the end of my comments right now.

Mr. Foulds: From that speech, I am not sure if the official opposition is supporting or opposing the bill. I want to say right at the beginning that we are supporting this particular bill. This will be of no surprise, but we do not think it goes nearly far enough. However, it does move to close two loopholes in what we call tax expenditures. It has moved to parallel the federal legislation and it has marginally increased the corporate income tax by half a percentage point.

There are basically two things I want to say. The party to my right may find it difficult to be fiscally responsible, but we in this party are fiscally responsible. If, as we have agreed in this parliament, we are going to advance social programs to the citizens of this province that are badly needed, then we have to look for the revenue somewhere.

I refer to programs such as housing, increased education financing and, I would hope, increased social assistance in excess of the four per cent the Treasurer indicated in his budget. In response to a question from my colleague the member for Scarborough West (Mr. R. F. Johnston), the Treasurer said this hurt him as well but that he could not find the revenues in this half-year budget to finance it.

I would suggest that although we cannot get all of that revenue, nor should we get all of it, from corporate income tax, we do have to look honestly and logically at that sector. It does seem to me, for example, that we have to look at what are called tax expenditures. I know this is not a catchy, a populist or even an easy concept, but tax expenditures have grown since the 1960s, so that at the federal level they have risen to almost 60 per cent of the government's expenditures.

What does this mean? It means we have a tax system that generally establishes a level of tax, but we have introduced into that tax system a number of exemptions, a number of loopholes, a number of incentives that deprive us of that revenue.

Some of those tax expenditures are probably both socially and economically useful, but this Treasurer and this government have not yet seen fit to publish an account of them. The Treasurer has indicated that by closing these two small loopholes he will be getting considerable additional revenue for the province. He indicated, in reply to a question I asked a week or so ago, that by closing two other loopholes he could get $185 million more in revenue for the taxpayers of this province.

I would like to remind all members of the House in all parties that if we grant a tax expenditure in one area, if we give an exemption for big business, for individuals, for small business or for whatever, we have to recover it in other places. Traditionally, what has happened in budgets in this province is that the burden of taxation has shifted dramatically to the personal level.

I know there is a Conservative argument, which I understand although I do not agree with it -- I follow it and it has some minimal logic to it -- called the trickle-down theory. They would say that any tax is a personal tax because the tax to corporations and so on is paid in an increased price to the buyer of the product. That is a fairly tortuous argument.

3:40 p.m.

All I would like to say on this bill is that we support it as far as it goes. We would like a simplification in respect of small business in particular. One of the biggest burdens on small business is not so much the level of taxation it pays -- and, by and large, small business pays a proportionately larger portion than does large business -- but the amount of paperwork that has to be done for all levels of government. That is really annoying to the small businessman. I can sympathize with that and I agree with the simplifications.

The Treasurer has moved one small step in this area. I would like him in his next budget to take -- dare I say it, after having called him a Progressive Conservative with respect to his budget -- a more radical and wide-sweeping look at the tax expenditures that are granted to corporations and to individuals in this province.

I would also like him to take a look at establishing -- which I believe he can do without seeking the authority of his federal counterparts to oversee it -- a minimum corporate income tax.

Mr. F. S. Miller: Of all the forms of taxation which I had to debate in my five years as Treasurer, none occupied more of my mental and philosophical time than corporate tax. One of the reasons the New Democratic Party and perhaps the electorate at large will always bless governments which increase corporate taxes is that somehow they see the money to run government coming from someone else. What they lose track of entirely is that only people pay taxes, not corporations. Corporations in the long run have uses for their funds. In the long run, they are able to get the return on investment they must have to survive by increasing prices to compensate for the taxes we have put on them.

Sometimes that can mean a corporation in North America cannot compete with a corporation in a country such as Japan because the taxes may be raised in Japan on value added taxes or some other forms which are taxed at the consumption level rather than the manufacturing level. Sometimes that means a product is exported with our taxes in to another nation, it does not compete and we do not have jobs at home.

A Treasurer will always have something of an internal tug of war when balancing the cash demands against the sources. He will always be damned for taxing individuals in any form and most of the time will be praised by about 98 per cent of the electorate for taxing corporations.

We want to get back to the basic purpose of a budget, other than the raising of funds. That other purpose has to do with making this province a good, safe and dependable place in which to invest.

Corporations, as we have discovered all too often in our last few years, can move pretty readily. if they do not like the cost of labour, the tax regime, the environmental laws or the labour laws here; whatever they do not like, whether we like it or not they can very often go somewhere else.

Whether I like it or not, they take jobs with them. They take them to the southern states, they take them to whatever jurisdiction --

Mr. Foulds: Does the member want to import Third World working conditions here?

Mr. F. S. Miller: I am only talking about creating jobs for the people the member and I represent. He and I have a community of purpose here.

I have argued that far more important than how much one taxes a corporation is when and how one taxes a corporation. I got a lot of advice as Treasurer, and I am sure the present Treasurer gets a lot of advice, to speed up the cash flow and get it in faster. Even if the same number of dollars come in over a 10-year period, if he can get them all in in two years instead of in five years he has solved his problems.

Maybe the Treasurer has solved his problems, but solving his problems is not his first responsibility. I know that must be very important. It is not very often an ex-Treasurer speaks to a current Treasurer --

Hon. Mr. Nixon: I am listening.

Mr. F. S. Miller: One cannot listen and talk too; at least I never could.

The very words "tax expenditures" are bruited about, and they have the connotation of a ripoff. Tax expenditures, forgiveness of tax, or loopholes are only useful if they bring jobs and investment to our regime. If I were speaking in a wholly idealistic way, and my staff has heard me say this, I do not think corporate tax serves any useful purpose. On the other hand, corporations must pay their share of tax to us one way or another.

One of the major problems facing those corporations that are surviving in this province is the balance sheet. I am sure the Treasurer has looked at companies like Massey-Ferguson and Canadian-owned corporations which survived the last recession. He may find tremendous debt-to-equity ratios on their balance sheets. I saw some statistics, which are probably a year and a half to two years old now, which said that Canadian-owned corporations which survived the recession had a debt-to-equity ratio of two to one and American-owned corporations operating in Canada had a debt-to-equity ratio of one to two.

The Treasurer knows what that means. He knows corporations live on their equity when things get tough because they cannot afford to live off anything else. It is like having some fat on the body. Luckily, I can survive some form of recession on that basis. Many corporations could not stand another recession now because they have not had time to build up the kind of equity needed to write down those loans which bled them white during the last recession.

Corporate tax plays a major role in readying those corporations for the next go-round. So we have this tremendous temptation to be seen to be taxing a corporation knowing it will pass it on to the consumer, knowing it is a way to get taxes out of people, appearing to get it from somewhere else, versus making sure those corporations can survive.

We practised what I am preaching with the small businesses in this province. We came to the conclusion that a small or a big business always looked at after-tax return on any investment it made to determine if it passed threshold tests. If the corporate tax rate is 50 per cent, as is approximated for most major corporations of this province, to have a dollar after taxes they have to make $2 before taxes. Very many investments which pass the first test will not pass the second. So one sees many corporations in this province gradually going downhill because they cannot get the after-tax return they need to survive. With them go the jobs of workers who are working hard but whose machines and factories are not efficient any more.

As tax collectors in this province, we have a major obligation to make sure the tax laws we bring in encourage incremental investment in new technology and better equipment which protect jobs. We did it with the small businesses by taking off the tax and saying, "We will tax you when it is all over on a personal income tax basis."

The point I want to object to most strenuously in this bill is one I know the government will win. If one went out to the streets tomorrow and said, "We have speeded up the collection of money on capital cost allowance," think of how many people would cheer because they would thoroughly understand what had been done -- what I mean is that no one will, outside of --

Hon. Mr. Nixon: I understand the member.

Mr. F. S. Miller: He does. Yes, I hope he does. He has the job.

Hon. Mr. Nixon: Then why is the member explaining his own bon mot?

Mr. F. S. Miller: Because, believe it or not, other people read Hansard. Because the Treasurer is a reasonable man, he should understand that by paralleling the MacEachen move of 1981 in the guise of simplifying and paralleling federal corporate tax moves, this Treasurer has slowed down the cash flow for companies making investments in new capital equipment to the point where it will make the difference for a lot of them in whether they do or do not make an investment in this province.

3:50 p.m.

If the member has talked to the Algoma Steels, the Dofascos, and the Stelcos, he will know that is about all that allowed them to make some of their investment decisions. While I may not be here much longer as leader of the party or as a member to talk to him, the piece of advice I would give him is this: the Treasurer should not be too quick to take what seems to be an easy way to make his cash requirements less this year and in the process kill the goose that laid the golden egg. That is the real test every Treasurer of this province and every finance minister in this country has to face, the temptation to solve problems in the immediate time frame and the need to solve the problems of average working people who depend on those investments for jobs.

I said that ideally I did not believe in corporate tax; I am also a politician and I realize it will never go away. I would have treated all profits of all companies as normal taxable income on the personal income tax side. The moment a company dispenses it, the moment it gives it to a shareholder, it should be treated as any other income.

That means as long as the money was at work we would be profiting through its reinvestment, assuming they make those decisions. The moment it was excess to the company's needs, the Treasurer would be collecting whatever tax rate the individual shareholder who received it was entitled to pay -- 53 per cent, 48 per cent, 29 per cent or whatever it happened to be. In the long run, that would have allowed companies to weigh the demands to pay dividends against the immediate need to improve balance sheets and to make investments that were in the long-term interests of their employees and their shareholders.

That is something the Treasurer will have time to reflect on in the while ahead. For a change, I am not talking in any partisan way today. As the Treasurer's staff will know, I am talking from my own deeply held convictions. I recognize that the tax regime of the province will be understood by one per cent of the people, but will affect 100 per cent of the people. I suggest to the Treasurer that some of the moves he is making, particularly this capital cost allowance and a three per cent tax on inventory on small business, are counterproductive. They have solved this year's problems and sowed the seeds for the next.

Mr. Warner: The bill is a modest move towards reforming the corporate welfare system.

Mr. Guindon: I am proud to rise on such an occasion to speak on Bill 45. I take grave exception to the member who just mentioned his kind words about small business. I hope the business sector remembers that when the next election comes.

I would like to mention a few words on the tax holiday for small business. Three years for a corporation usually does not make enough profit eventually even to have any profits to pay taxes on. A small business in Ontario is not always a small corporation. We understand why people get incorporated and it is certainly not always in their best interests.

On the other side, the Canadian Organization of Small Business in its prebudget submission to the government pointed out the business and personal income tax increase on small business. Taxes raise the cost of doing business and also hurt the chances of more job opportunities. The elimination of the three per cent inventory allowance will hurt small business.

I would like to remind the government that small business provides approximately 41 per cent of total employment in Canada. In the past five years, nine out of every 10 new jobs in Ontario have been created by small business. In addition, small businesses are responsive to community needs, hire local people and purchase goods they need on a local basis. Thus, small business creates many beneficial social spinoffs. Consequently, with these points in mind, I believe the members opposite could have done a bit more to help small business.

The one point I would like to bring up is the lack of an attempt, or the meagre attempt, to help eastern Ontario. In 1984-85 the small business development corporations program directed $7.5 million to eastern Ontario. This year, if I understand the budget correctly, there will be $9 million divided between north and east. The east needs more than that to back up job creation. The accounting firm of Clarkson Gordon estimated that more than 1,000 jobs have been created by SBDCs.

The government gets its money from taxes and small business is willing to pay taxes. Also, those who pay taxes are people who work. In the job creation field the Treasurer knows himself that if a businessman can hire, for every job that pays $20,000 a year the provincial government gets $1,770 in personal income tax. With the new rate going from 48 per cent to 50 per cent, the government will get another $70.

I sincerely say the way for this government to receive more taxes is to encourage jobs. Encouraging more jobs will automatically fill the coffers of this province and help with the social programs this government wants to bring in. In conclusion, I think this government has missed out on many opportunities to encourage the further growth, maturity and diversification of small business, particularly in eastern Ontario.

Mr. Lupusella: I am glad to rise and make a few comments about Bill 45. I understand the problem the Treasurer faced in the preparation of the budget. We would like to have more spending from Ontario but we have to make sure the revenues will be in place as well.

I have one simple complaint to make to the Treasurer, who is also the Minister of Revenue. We agree on this side of the House with the increase in the corporations tax. We view the budget as a small step to cover some of the loopholes that have been in place for so many years in Ontario and that were introduced by past Conservative administrations. These loopholes gave corporations the opportunity not to pay taxes.

We also understand the importance of the small business community and we share this concern. When I hear the Conservatives, or some of the Liberals in the past, say the New Democratic Party is completely opposed to business, profits and so on, I think some of the members should refrain from making those negative comments about the NDP.

We on this side of the House have a particular concern about the duty of all small businessmen in this province to create local jobs. We have a clear-cut political policy to make sure the government will give funds to expand small business operations to enable them to compete with big corporations and to create jobs at the same time.

4 p.m.

As I said before, we support Bill 45 and the clauses incorporated in it. In the future, for the sake of creating more jobs in Ontario, I would like to see some assistance being provided to small businessmen, because we understand they are the backbone of our economy, especially when the economy is in bad shape.

We also are convinced that in the future, perhaps in the next budget, the Treasurer in his capacity will cover all the loopholes which at present enable big corporations not to pay taxes to the provincial government. As a sign of goodwill, I hope he will introduce legislation in the next budget to ensure that big corporations will pay their fair share of taxation.

In the last provincial election, the now Premier (Mr. Peterson) highlighted the issue that every year this province is spending $26 billion on budgetary items and everyone in Ontario should pay a fair share. The people of Ontario, in particular the poor and low-income people, pay more than their fair share, but in turn do not get what they are supposed to receive.

I am sure the Treasurer has got the message that on this side of the House the NDP would like to see in the near future a complete closure of all the loopholes used by big corporations in Ontario to be exempted from all taxation. We have seen the final day of a terrible administration, portrayed by 42 years of Conservative rule, which penalized the poor while giving political leverage, through the loopholes, to big corporations.

Again, we have nothing against small businessmen. In the future, I hope that for the sake of job creation in Ontario, the Treasurer will do more to enable them to expand and compete with the big corporations. At the same time, we have to end the Tory regime, which in its 42 years created socialism for the rich people in this province and free enterprise for the poor.

Mr. Harris: I will be relatively brief, but I do want to say a few things about Bill 45, An Act to amend the Corporations Tax Act, and in particular about those sections of the bill to which I am opposed.

I am not surprised to hear that the New Democratic Party is in support of this bill or of the general budgetary direction the bill appears to take. I have said before in this Legislature -- I believe it was in a question to the Minister of Revenue; he was the Treasurer at that time -- that I likened this budget to the type of budget that came out in 1981, I believe; that is, the Trudeau-MacEachen budget.

I am convinced of that similarity by the comments of the member for Dovercourt (Mr. Lupusella) when he indicated that he liked the thrust of this budget, which closes what he called the loopholes and which takes more money away from the corporations and takes money away from the small businesses. That is what the Trudeau-MacEachen budget attempted to do.

It attempted to say, I think in a very arrogant way, that government would tell these companies how to spend their money and how to create jobs and would take any surplus money that might be sitting around for some businessmen, small businessmen or large businessmen, tax the money away and then give it back to them to create jobs.

It is an arrogant philosophy when one directly tells business people through these tax measures that government knows better than they do how to create jobs in their businesses and where they should be investing their money. I am opposed to that, and I think the people of this country were finally able to see the disasters to which the Trudeau-MacEachen budget of 1980-81 led.

Since that time the federal Liberal government of the day, which introduced that budget, backed off and realized it did not work. Sure, there were world pressures at the time and there were other problems, but even the Liberals in Ottawa recognized that there were errors in their ways and that some of the measures designed to allow business people to keep money -- not free from tax; the only way the money was free from tax was if they invested it -- created more jobs. They expanded their plants, they hired more workers and they grew. If they invested the money in the economy of the country -- in this case, in the economy of the province -- then somebody else paid the tax. When they took the money out, they paid it. The new workers they employed paid taxes. The goods they bought to expand generated taxes.

That type of activity has created jobs in Ontario. That type of activity was stimulated in the budgets of the member for Muskoka (Mr. F. S. Miller). Those types of measures have worked in the budgets of the former Treasurer, the member for St. Andrew -- I have to start to learn where everybody is from. Mr. Speaker, you can correct me and tell me the riding he is from.

Mr. Foulds: St. Andrew-St. Patrick.

Mr. Harris: The member for St. Andrew-St. Patrick (Mr. Grossman).

Basically, the theme of those budgets and of the federal budgets since the disaster of the MacEachen budget was that business people themselves know in their own various businesses what will create new jobs, what will allow them to expand and what will allow them to grow. That is why I do not like the term "tax holiday."

What we said in those budgets was: "Provided you spend the money to expand your plant, provided you spend the money to create new jobs and provided you expend the money for the good of the economy, you will not have to pay tax on it at that time. If you take the money out, you pay tax. If any individual benefits, he pays tax."

What we have now is a move in the other direction. We are saying, "We are now going to tax the small corporations 10 per cent." Yes, there is a little bit of forgiveness for new businesses, the ones that are not very often in a taxable position in the first three years. Quite frankly, it is better than nothing.

What we have in this budget is a move in the other direction, a move back to the Trudeau-MacEachen style of budget, in which the philosophy is, "Government will take this money from you, and then if you are good little boys and do what we say we will give it back to you." Of course, in collecting it and in civil servants handling it, by the time it comes back out, we start with $1 and we may get 10 or 15 cents back into the economy. That is one of the reasons I am opposed to this bill.

4:10 p.m.

The second reason I am opposed is what this government campaigned on, in my recollection very strongly. The Liberals agreed during the campaign, when they went to the people of Ontario, that corporations should be able to keep the money if they created new jobs. At the time, our position was the one I have stated, that the corporations can keep the money if they create new jobs or if they invest in the plant or keep the money for reinvestment in the company.

However, the party now governing, the Liberal Party, and the now Premier said: "No, we do not agree with the Conservatives all the way, but we do agree with them that the corporations should be able to get a tax credit for that 10 per cent, provided they demonstrate that they have created jobs." That was their commitment to the people.

I am opposed to this bill for what is not in it as well, because that commitment to the people is not in this bill. That commitment to the people is not in this budget. Half a measure is better than no measure at all. Why is it not in here? I believe it is not in this bill because of the same socialist philosophy that the government knows better. They say, "We will collect the money, then we will come up with a job creation program and we will give it back to them that way."

There are two or three things wrong with that. First, the job creation money in this budget appears to be less -- possibly it is the same in dollar terms, but certainly it is less when one talks about inflation -- than we had in former budgets. The job creation money, the training money, any of those funds -- when we roll all those programs together from our previous budget and from what was there and take that base, there is no new money there. They have grabbed the money, and they have broken their commitment to employers that they would give them a tax credit to create jobs.

Obviously, there is something coming in the future. I am not sure what it is, but I suspect they have taken that money and they will come up with some other program. They will end up giving back 10 cents or 15 cents on the dollar by the time the civil service gets it and they have committees. The Minister of Northern Affairs and Mines (Mr. Fontaine) will have his regional meetings, and they will go all around northern Ontario to get input from everybody and will pay all the expenses. They pay the expenses of collecting the money and they pay the expenses of delivering the programs.

For some reason or other, this government thinks it knows better than employers how to create jobs. It knows better than small business people what it should create, and it will come up with a great program to entice people to create jobs. For the same reason I am opposed to the 10 per cent tax on small business, I am opposed to what is not in this budget. There is no tax credit for employers to create jobs.

There is a hidden type of thing -- I hope that is not unparliamentary; when I explain myself, I am sure it will not be. There is a hidden little tax measure in this bill that bothers me. It is the elimination of the three per cent inventory tax credit. When I say it is hidden, it is hard even to find it in the bill. As I read through the bill, it took me a while to find it, even though I saw it in the budget.

I give the Treasurer credit for mentioning in his budget that, effective for taxation years of corporations ending after the date of royal assent to enabling legislation, for taxation years including that date, the inventory allowance will be prorated on the basis of the number of days prior to and including that date. It was in the budget document, and when one gets to the bill, it is section -- maybe the Treasurer can find it for me; I had trouble finding it earlier.

Hon. Mr. Nixon: The inventory allowance is subsection 3.

Mr. Harris: Where is it?

Hon. Mr. Nixon: Subsection 6(3) on page 4.

Mr. Harris: Yes. "Inventory allowance disallowed."

A lot of businesses, particularly small businesses, will not even realize this tax grab is in the budget until it comes time to file their income tax returns. This was a measure the NDP would call a loophole or a corporate ripoff of some kind. I believe it was designed to recognize that carrying large inventories costs a considerable amount of money, depending on the business and what it can borrow money at. Interest rates are now at 10 to 13 per cent. Back in the days when interest rates were from three to five per cent perhaps it was not as significant an item, but today it is still a very significant item.

We want to encourage businesses to maintain their inventories so they can maintain the viability of their businesses. That is what keeps their employees employed and the wages flowing. That is what keeps them ordering cars, if they happen to be car dealers. It is a pretty well known fact in business that one has to have a product to be able to sell it.

What this measure does is discourage businesses, particularly the small ones that have difficulty in passing on the costs, from maintaining the proper inventory they need to run their businesses. It is sneaky, because they will not know it for another year until they file their income tax returns.

I should point out that I am a former small businessman who thought he could stay in small business and do this job at the same time and found out both are full-time. I am not sure I made the right choice, but for some reason or other I am still here.

I have mixed feelings when I see the budget we are faced with today and bills such as this. Perhaps it is just as well I am here in the Legislature with my guaranteed salary, guaranteed at least for one year, six months or whatever, so I do not have to worry about a government coming in and grabbing more money away from my business.

It is another piece of money I presume this government for some reason or other feels it knows how to spend better than the small businessman. It feels it will be able to create jobs better than the small businessman and will be able to set the priorities for the small businessman. If any money is left after they go through the administrative bureaucracy of creating new programs to figure out how they are going to have the giveaway, they will give whatever dollars are left back to business people.

This bill is part of a budget that intentionally takes money out of the economy. The prediction of the Treasurer in his budget is for growth of 2.4 per cent. I acknowledge the years of growth of 6.5 per cent and 4.5 per cent were on a smaller base. We did go through a depression after the Trudeau-MacEachen budget. We did have problems in those days. However, things started to turn around once governments south of the border, in Canada and in Ontario recognized that if they left the money with business people they would make things happen and create jobs.

I was appalled yesterday or the day before when I heard the Treasurer say in this House that five per cent growth was not good for Ontario. He said: "We cannot handle all this growth. We cannot handle all this job creation." I do not know why he would say something like that, but he said it was not good.

Hon. Mr. Nixon: Maybe it is because I never said it.

4:20 p.m.

Mr. Harris: If the Treasurer checks Hansard, he will find that the comment was that we cannot handle this growth. Our leader pointed out that this province has handled five per cent growth year after year.

What does this growth do that we cannot handle? It creates jobs. It puts people to work. It generates economic activity. It is the backbone of what allows the Treasurer to get the increased taxes through the activity created; but if one takes the money away first and stifles the activity, then one has a problem because the activity is not created. Then in the final analysis, as was proven with that socialist budget of MacEachen and Trudeau, the money is not there for the programs either.

Concerning the 2.4 per cent growth, the Treasurer has indicated that some of it is a general slowdown. I submit that a large part of that economic slowdown -- I do not know what part, because the Treasurer will not answer the questions in the House -- is a result of taking money, pulling it out of the economy and pulling it away from those people who create jobs and who get the economic activity in this province going.

Let me move on for a moment to the tax depreciation allowance. What is that one called? Under the heading "Capital Cost Allowance: Property Acquired in the Year," the budget says, "The Corporations Tax Act will be amended to parallel the half-year rule of the Income Tax Act (Canada)."

It sounds good because we are doing the same as the federal government. The federal government brought that in -- what year was it? Can the Treasurer help me? Was it 1981?

Hon. Mr. Nixon: Yes. We are the only province that has not paralleled it.

Mr. Harris: When we get to the sales tax, we will want to talk about the only province that has a tax on the gold coin, too. We will get to that when we get to it.

I agree we were the only province not to parallel the federal move. We were the only province that very responsibly left money in the hands of those who create activity and jobs. The Treasurer will find, if he looks at the past year or two, that there was a net loss in jobs in every province but Ontario. When one looks at the jobs created during the past two years as a direct result of the budgetary practice of the former government of leaving money in the hands of small business people, those jobs were created here in Ontario and the other nine provinces had a net loss of jobs.

Mr. Foulds: They are all Tory governments too.

Mr. Harris: We have a Tory government in Ottawa that has seen fit to leave this on, and I am going to speak against that, too. I happen to be elected to serve the people of Ontario.

The Treasurer has rationalized this capital cost allowance and basically has said it is fair because if somebody buys a piece of equipment in the last quarter of the year, he should not be allowed to get the depreciation on it throughout the year. He is going to allow a half-year write-off.

How is this fair to the person who buys a piece of equipment in the first quarter of the year? He lays out the money in the first quarter and yet he gets depreciation for only six months, although he might have laid out the money for nine, 10, 11 or almost 12 months of that year. I do not think it is fair to those people.

What concerns me as well is that it generally tends to have businesses that want to reinvest in new capital equipment slow down that process. They say: "Whoa. We are getting only half a year here. We will wait until the last half of the year before we buy this piece of equipment, before we expand our plant, before we invest money to create the jobs and wealth this province needs."

I personally have no difficulty in opposing this measure. Our government opposed paralleling the federal government in 1981. We opposed it in 1982, 1983 and 1984, and we will oppose it in 1985. How did we oppose it? Obviously, we opposed the federal government leaving it in the way it is now. I do. We oppose this measure in the Treasurer's budget. It is a tax grab. It is another one of those measures -- I have mentioned three, four or five others -- designed to take more money from these corporations.

What is special about this one is the net effect of it. These businesses and these companies will probably defer expansion or defer capital purchases. I can only assume, and I think the Treasurer is a pretty sharp fellow, that he knows that. He is not uncomfortable, on top of all these other measures that are contained in Bill 45, sending that message out to the businesses, to the people who generate the wealth we need for our social programs.

I have gone on longer than I intended. There was even more to this bill that I did not like as I started to look at it. Let me conclude my opposition to this bill and the sections of the bill I have mentioned by once again reaffirming that there should be no mistake out there in the business community that the direction this government wishes to go is to grab the money first and tell the business community, those small businesses, that it knows how to create jobs better than they do. It is going to grab the money, take it through the bureaucratic system and spit back whatever is left. I do not know whether that will be 15 cents or 25 cents.

I do not think that is the way to create the wealth we need for the social programs. I think those little business people out there know far better than this Treasurer or than the Ministry of Treasury and Economics where they should be spending their money to create the jobs and to expand, and where further businesses should grow.

It is typical of the Trudeau-MacEachen budget, as I said. It was wrong then and it is wrong now for Ontario. I am surprised this Treasurer brought in a budget that would lead to a Bill 45 like this.

I said in the House before and I will say it again that this is not the member for Brant-Oxford-Norfolk (Mr. Nixon) I used to know. The member for Brant-Oxford-Norfolk I got to know here between 1981 and 1985 seemed to be concerned about tax increases, about the business community and about job creation. He seemed to be concerned about these issues. That is why I said at that time that what else bothers me about this bill and about this budget is where it came from.

Did it come from the accord? Is it the leader of the third party's budget? Is it his bill? Did it come from the same people who designed the budget that threw this country into disaster in Ottawa? Those people who designed that disaster in Ottawa now are here in Toronto breakfasting with the Treasurer at every opportunity, meeting with him at his farm, I am sure. Those are the people who led this country down that slippery slope of disaster from 1980 to 1983.

4:30 p.m.

I see the same signs here in Ontario. I know it did not come from the Treasury officials. After the last 42 years, I believe they know what makes this province work. It came from the Treasurer or from somebody who forced the Treasurer into an embarrassing budget that led to Bill 45. I believe it will stifle economic activity in this province. It will stifle job creation and, therefore, stifle the activity we need to collect the money we need for the social programs all three parties in this House agree are important.

The income tax rate increase is on page 27 of the budget. The reason I am here is that I cannot find it in the bill. I admit I am not a lawyer and I have trouble finding the section of the bill it is actually in. I am sure the Treasurer will tell me. Is there anything in here on manufacturing, logging and everything? Is that under the Corporations Tax Act? I assume it is. He has not nodded yes or no, and you have not ruled me out of order, Mr. Speaker.

There is a tax rate increase on mining. Is the Treasurer telling us the mining industry is in a healthy state in Ontario?

Mr. Warner: Is the member telling us they should not pay taxes?

Mr. Harris: No, I think they should pay taxes; but is this the time to increase taxes, when the mining industry is having a pretty rocky time? The logging industry is not generating a lot of activity either. Jobs have been lost in my community in North Bay, in Nipissing, in Sudbury and in Thunder Bay as a result of the difficulties the forest companies and the mining companies are having.

Jobs have also been lost in the farming community. I do not know how much money is being generated by this increase of 0.5 per cent on fishing, but it bothers me to see mining, logging, farming and fishing singled out for tax increases. That is not the member for Brant-Oxford-Norfolk I used to know.

Mr. Speaker, in case you have not gathered, I am opposed to many of the sections in Bill 45.

An hon. member: Did the member not find anything good in it?

Mr. Harris: There must be something good in it. I am sure the Treasurer will tell us about them.

Hon. Mr. Nixon: The member for Wentworth (Mr. Dean) said there was and he is a reasonable critic.

Hon. Mr. Scott: There is the courthouse for North Bay.

Mr. Harris: Can the minister show me the section? I want to vote for that one.

Hon. Mr. Scott: It is not actually named, but it is there.

Mr. McCague: I am pleased to join in the debate on this bill. I have a little problem on the revenue side on page 33 of the budget. I have not quite figured out yet why the Treasurer is going to have a negative $15 million less income in this fiscal year. Maybe when he makes his remarks he will address that.

The biggest problem I see with this bill is the effect it has on those on whom it is designed to have an effect. He is taking in a full fiscal year an additional $205 million from the corporation tax, as I understand it. Some of that money could have been better invested by companies in job creation. It would not have been so bad if he had taken this measure and if he had also taken some other measure to employ women and people who are out of work because of plant shutdowns or whatever.

I will admit, as I did before, that the Treasurer appears to have done a good job in the youth employment end, but he stops there and appears to have gone no further. It is entirely wrong to take this kind of money away from people who have been known to create jobs and not to have something to compensate for it in the budget. I can understand the Treasurer -- and we are addressing him now as Minister of Revenue -- would not have thought for a minute a year ago today that he would ever be in the position of having to prepare a budget and defend the actions he took in this House.

This bill is only a very small part of the $754 million he is taking from the people in increased taxes. As we have said, of that $754 million, $205 million is coming directly out of corporations in this tax. It was a bad move to increase this in section 13 where he goes from 15 to 15.5 per cent.

He does not provide any incentives to the corporate sector to undertake the kind of investment and expansion activity that is needed to sustain employment and economic growth. On the contrary, the provisions of this bill, in conjunction with other budget measures, explain why our rates of job creation and economic expansion will decline in the coming year. The best thing that can be said for the bill is not what it does relate to but what it does not relate to.

Noticeably absent from this bill, the budget, and apparently from this government's economic agenda and programs, is the $100-million tax credit program for small business which was promised last April. We must suppose the small business tax credit has ended up in the same file as the $200 million promised as a sales tax break, the doubling of the child tax credit and the $100 per household tax credit for northern families.

We welcome the fact the government has seen fit to follow the lead of the federal government in the small business tax simplification. Efforts to reduce costs and paper burdens, the area of compliance, must and will be supported by all parties. However, we regret the government has seen fit to eliminate the three per cent inventory allowance as a deduction from income. Representatives of the small business community have noted this is a most useful and helpful provision which will be sorely missed.

The increases in the general corporate tax rate to 15.5 per cent and in the tax rate for resource companies to 14.5 per cent are wrong and should not be passed. The Treasurer has projected corporate profits will be up by 8.2 per cent before taxes this year and 6.5 per cent before taxes next year. The government's proposed tax increases will mean the corporations will have less of these profits to invest in job creation, expansion and technological upgrading.

The Treasurer's budget makes note of the fact that Ontario is a trading economy -- indeed, a world-class trading power -- but the tax policies of his budget will do nothing to enhance the competitive position of Ontario's firms in either the domestic or international markets.

No doubt the Treasurer is aware of what people are saying about his budget. Les Solomon, tax counsel, Canadian Organization of Small Business, said, "Ontario is spending too much." That has been said many times over many years. Mr. E. A. Thompson, chairman of the Ontario division of the Canadian Manufacturers' Association said, "The Ontario budget is a revenue grab that will erode the competitiveness of industry and thus frustrate efforts to create jobs."

Judith Andrew, of the Ontario branch of the Canadian Federation of Independent Business, said the federation is unhappy "over the loss of incentives for venture capital and the loss of the three per cent inventory allowance in corporate income tax."

4:40 p.m.

Allan Lumsden, chairman of the finance and taxation committee of the Ottawa-Carleton Board of Trade, said he had expected to see tax incentives to create jobs and to encourage reinvestment of profits in Ontario. Jim Wright, Ottawa tax partner of Peat Marwick, chartered accountants, said the provincial Liberals had done what the federal Tories were afraid to do in the first budget. They hit everyone hard with tax increases so that later budgets nearer the election could be more appealing to the voters.

While the New Democratic Party seems to laud this bill and the budget, they are no doubt aware that organized labour in the city of London is saying the Treasurer has given working people in Ontario a nothing budget. Others suggested in the Kingston Whig-Standard, and I must admit I am quoting a particular sentence, "The extra revenue anticipated far exceeds the amount needed for the programs announced in Thursday's budget." What is the Treasurer going to do with the rest of the money he is raising through bills such as this?

The Hamilton Spectator says, "The double whammy of tax increases, first from Ottawa and now from Toronto, could stall the recovery which is helping to restore confidence once again."

Again, in the Peterborough Examiner I am just taking a sentence. It could all be read, but I am sure the Treasurer has read this, "But that leaves a lot of loot with which to woo voters when the minority government inevitably calls an election." I am sure the Treasurer would want to deny now that was a good editorial, or is that the reason we are dealing with this bill and that we are raising $754 million more in this budget?

Then in the Sudbury Star, a very important part of the province, "There is no incentive to create jobs, start new businesses or develop new products."

As previous people speaking on this bill have said, for the reasons set out, we are unable to support it.

Mr. Andrewes: My colleagues have eloquently alluded to what is popularly known in the small business sector as the tax grab, and my colleague the member for Dufferin-Simcoe (Mr. McCague) has certainly eloquently illustrated the public's perception of that tax grab.

What concerns me about this bill that is before us for debate is that it takes dollars away from that sector of the economy in which most of the jobs are created. I think even the Treasurer and his colleagues in the Liberal Party would accept that premise. It takes dollars away from that sector without providing a stimulus or a creative job manufacturing program for the small business sector.

I recall during that great campaign of last March, April and May -- and you, Mr. Speaker, may also recall those occasions -- when commitments were made on the part of the three political parties contesting that election with respect to the small business sector. Though I do recall elements of those commitments made by the Liberal Party, I do not see them put forward in this legislation.

I resent certain comments made by the members of the New Democratic Party which suggest the corporate sector of our economy does not pay its toll, does not pay its way. It seems their perception of corporations is that they simply strip the economy of profits, returning those profits to the shareholders, and ignore the corporate and the social responsibilities. That is a fallacious argument. It is a wrong argument. It is incumbent on those members of the NDP as a party and as citizens in this province to see through that fallacious argument and to speak out against the kinds of moves the Treasurer is undertaking in this legislation.

Mr. Eves: I would like to make a few brief remarks with respect to the small business sector in the Ontario economy. As has already been expanded upon at some length by my colleagues, some of the corporate tax measures in the current budget are going to be very detrimental to small business in Ontario. Anybody who has been in small business knows what the inventory allowance means to a small business person in Ontario. He also knows what capital cost allowance treatment means to the small business person in Ontario.

If the current Treasurer is truly concerned about the capital cost allowance provision and the abuses that may or may not occur -- in other words, whether one really owned a capital asset that one wanted to depreciate for the entire year -- then surely he could do better than just to adopt the federal government's rule of allowing half the allowance. If he truly wanted to be equitable about this and if that was his line of reasoning, he would prorate it to the number of days in the year one owned the capital asset one wanted to depreciate.

However, I think the capital cost allowance provision and the inventory allowance provision as they now stand provide some incentive to the small business person to invest in and to keep on reinvesting in his business, and this really creates jobs and keeps people employed in Ontario. I do not think any party disputes the fact that small business provides nine out of every 10 jobs in Ontario. Small business creates thousands of jobs every year in Ontario.

We also have in the current treatment of Ontario corporate income tax a change in the approach, or even a change, I think it is fair to say, in the definition of what small business is in Ontario. It is one thing to eliminate corporate tax for the first three years of a company's existence, and those in the House who have been in business for themselves, especially small business, will know that very seldom in the first few years of a company's existence are any great profits made in the first place.

It is important to keep the definition of small business as we now have it, as it is treated by the federal income tax and so should be treated by the Ontario income tax. Our party has always believed in the small business sector of the economy and we have always worked to encourage and support this sector of the economy. I do not think that is the example the current government is following with its present budget and this tax measure.

If we look at the election campaign of last May 2, some of the programs that our party was proposing would have encouraged new investment in small companies. The elimination of provincial corporate income tax on small business as long as the income was reinvested in the company would have returned about $325 million a year to the small business sector, after allowing for a new profits distribution tax applied to earnings not invested in the company. This exemption applied to the first $200,000 of income earned by independent Canadian-owned and controlled private businesses. In this program only companies with paid-up capital under $1 million were eligible.

The Liberal government has changed the ground rules for small business in Ontario with its budget. As I said, not only has it changed the definition of what constitutes small business, but it has taken away some key advantages that small businesses in this province have enjoyed. As my colleague the member for Nipissing (Mr. Harris) noted, small business people know what the three per cent inventory allowance means to them. They certainly know what it means to them when they fill out their income tax returns.

It changed the rules for capital cost allowances, which may have been abused by some but which for others were a very important and necessary tax provision.

4:50 p.m.

The Conservative Party, through its enterprise programs, would have provided small business with greater access to investment funds and Canada's employer pension plans for the purpose of creating new growth and new jobs in Ontario. A small business commissioner was to be established by Enterprise Ontario to cut through red tape for small businesses, and measures established to improve the information flow to people interested in starting a new small business.

The purpose of these measures was largely to stimulate employment, which small business does better than any other sector of the Ontario economy. Young people, women and members of minority groups usually get their first work opportunity from small business. It is a very key thing that the government of Ontario continue to support the small business sector. That support seems to be somewhat lacking, to say the least, in this budget.

The budget does not make up for this neglect of small business by introducing job creation measures of its own, especially for people over 24 years of age. That is a very important omission in this budget. That was certainly not the case under previous Conservative governments. As alluded to by the member for Brantford (Mr. Gillies) earlier this afternoon, this is the first budget in many a year in Ontario that does nothing for job training and retraining programs for people over 24.

What we need is a comprehensive skills development strategy in this province that includes the creation of a Ministry of Skills Development and provides for special opportunities for women, part-time workers and those in rural areas as well as older workers. This approach has been entirely abandoned in this budget. There is no mention of training or job creation for workers in our province who are 24 years of age or older. There are no new programs to address their needs.

There are no new programs for small businesses that would indirectly address the needs of these people in our society today. Rather, we see a budget of tax increases that impact directly on the small business sector. My colleague the member for Nipissing has highlighted these tax increases and the impact they will have on small business in our province.

It is important to bear in mind this is one crucial way in which our party and the Liberal Party of Ontario greatly differ. We believe in the small business sector in the Ontario economy and we believe in its job creation abilities. Judging from the current budget and the current tax measures as a result of that budget, the Liberals do not appear to have any new ideas to create jobs for Ontario.

Hon. Mr. Nixon: I appreciate the comments made by the members, most of them critical, yet in many respects constructive. I want to respond to specific questions that were asked. Of course, I ask the members of the House to support this bill, which we think is fair, equitable and eminently supportable.

The member for Wentworth indicated he supported the concept of simplification in the tax returns for small business. I appreciate that. It is costing us $50 million in Ontario to parallel the simplification measures.

One of the members -- it may have been the member for Dufferin-Simcoe -- asked why the tables on page 33 indicate a net loss in revenue from the action of this bill in this fiscal year. I think it is most readily explained by saying that the cost of simplification, even for the remainder of this year, is $50 million.

I bring that to the attention of the member for Parry Sound (Mr. Eves), who just sat down, indicating something that cut me to my heart. He said we are not interested in the plight of small businessmen and do not seem to appreciate the role they play in our economy. In fact, the opposite is the truth. The $50 million that it cost the province to give the simplification will mean 120,000 small corporations in Ontario will have their returns simplified to the point they do not really have to make a return and do not have to pay the $100 fee.

In most instances, the minimum tax is billed as a matter of course and automatically by the very efficient Ministry of Revenue. In almost 100 per cent of the cases, a cheque comes back for the minimum payment. Naturally, they have the right and alternative to make a fuller return if they see fit to do so, but this simplification is not just a line in the budget; it costs us money and really means small businessmen have a special benefit.

In this connection, I would say it is true we do not intend to forgo that revenue. We feel if the simplification for small business involved in this bill is going to cost the taxpayers of Ontario money, then the corporate sector should pay the cost. That is why we put an additional 0.5 per cent on the tax rate for ordinary corporations, that is from 15 per cent to 15.5 per cent, and for special corporations from 14 per cent to 14.5 per cent. However, small business remains at 10 per cent and does not pay any more.

I would say to the member for Parry Sound, there is a clear advantage to small business here of approximately $50 million; and to the member for Dufferin-Simcoe, who asked about the apparent loss in revenue, the apparent loss is a real reduction in revenue for the remainder of this fiscal year. The half-year convention will net us more than $15 million; the inventory allowance another $15 million; the rate increase, in other respects, $5 million; but simplification costing us $50 million means there will be a reduction of $15 million.

Over a full year, and I point this out to the member for Wentworth, who did not know what the full-year implication was, there is a net revenue gain of $205 million on an annual basis. I bring his attention to the table on page 33 in the budget papers. The information is there and we want to be sure all members are aware of it.

The member for Wentworth also brought to the attention of the House, as did other members, the three per cent inventory allowance which is removed. This is certainly an important change, as has been pointed out. I can well remember when it was introduced in the House, I believe about 1977, at a time when inflation was very high, but more than that rising very rapidly.

If inflation is high and fairly stable, then high prices look after any dislocations that may apply in big business, small business or even in the household where one is paying one's own bills and presumably one's income goes up with inflation as well as one's expenses. However, when the rate of inflation is changing rapidly, as it was in those days -- I think Mr. McKeough was the Treasurer -- it was deemed proper to have the three per cent allowance, which was a federal initiative, apply in Ontario.

In those days, the inflation rate was changing as if we were in Montevideo, Buenos Aires or Rio de Janeiro, by many points per month or per year. We are very pleased at the fact that inflation has reduced substantially to four per cent -- I wish it would go lower -- and we have stability. We do not have the volatility of those previous years when changes, particularly upward changes, were so rapid and dramatic. In other words, the raison d'être, as we say in Brant county, for this allowance no longer exists and we feel the rationale that allowed it to be granted in 1977 is now just as legitimate when the special allowance is removed.

5 p.m.

The member for Wentworth also referred to the partial-year capital cost allowance, and we were criticized for paralleling the federal initiative in this regard. It does not seem sensible for a business or anyone else to buy something associated with the productivity of the business in the dying days of the year and get the full capital cost allowance. The federal government in its wisdom -- and this is questioned by some of the honourable members on both sides of the House -- has seen fit to have a half-year capital cost allowance, which does not seem unduly unfair. We thought we would parallel this particular situation since we are the only province remaining in the old process. In so doing, there is an increase in revenue, which we have put to good use.

I was particularly interested in the comments made by the member for Port Arthur (Mr. Foulds), who referred to the balance of personal income tax and corporation income tax. I have more of a sympathy with his view than that expressed by some of the members of the official opposition. The Leader of the Opposition (Mr. F. S. Miller) in particular indicated there should be no corporation income tax at all and that when the money is disbursed to the shareholders or the people who receive salaries from the corporation, personal income tax would look after that.

As a matter of fact, there is a movement in the province -- and probably the main spokesman is in the city of Brantford -- which has a view that indicates there should be no property tax at all; that the ownership of property no longer is an indication of the ability to pay and that the tax should be put on personal income only. All those arguments have a certain superficial and active interest until one realizes we are a long way from that Utopian approach to taxation.

The best approach is that our revenues have to be based on the broadest possible spectrum of tax measures which can be reasonably understood and which can be seen by reasonable people to be fair and equitable. For that reason, I cannot agree with the Leader of the Opposition that we ought to be moving to abolish corporation income tax. I feel more sympathy with the view that corporation income taxes and personal income taxes should be in some sort of balance.

Once again, there is a bit of a delusion there when one realizes that corporations make their profits only when they sell their services or their products to the consuming individuals or to other corporations and so on down the line. It is more of an interesting point for political scientists, such as I and the member for Port Arthur, than for all members.

The share of tax between individuals and corporations has changed. Going back to 1977, it was about 63.7 per cent for individuals and 36.3 per cent for corporations. Last year, 1984, the 63 per cent for individuals went to 66 per cent, and the corporations' share went from 36 per cent down to 33 per cent. This year's budget reverses that -- not dramatically, but it does reverse it -- so the individuals' share goes from 66 per cent to 64.8 per cent, and the corporations's share goes from 33.4 per cent to 35.2 per cent.

The former leader of the New Democratic Party, Donald MacDonald, in writing a critique of the budget, made much of the point that individuals still pay far more of a share than corporations. That is true. I have a feeling they will continue to pay a larger share, but at least the trend has changed in this budget. I do not apologize for that. It was, for me, a deliberate decision, and it was not dictated over breakfast in the Park Plaza Hotel by any of the friends of the former Minister of Energy.

Mr. McCague: We did not say that.

Hon. Mr. Nixon: No, the members did not say that.

I was particularly interested as well that the former Treasurer, the present Leader of the Opposition, undertook to enter the debate. I have a very high personal regard for him, and he makes no bones about the fact that he is a Conservative. He may be a Progressive Conservative, but one does not normally apply the adjective to his political train of thought. I did not feel like applying the adjective "progressive" to what he had to say today, but that does not mean the members of the Legislature were not intensely interested in what he had to say. He pointed out clearly the importance of small and big corporations in job generation and the necessity for this House and this government to see to it we have an economic atmosphere that will encourage corporations to establish and begin in this jurisdiction, and then to grow, make profits and pay taxes.

I believe that if a corporation makes profits it should pay taxes and that the tax preferences established federally and provincially over the years ought in general to be reduced towards the point of elimination where there is a smaller tax on the overall profit. On the other hand, from year to year, certain preferences are seen to be useful in the policy of the government of the day. While they are often referred to as loopholes, handouts or scams, they still are the result of decisions taken by governments, federally and provincially, to encourage corporate activity along certain lines.

The member for Port Arthur has repeated his call, made also by his leader and others, for a more comprehensive approach to tabling information on these tax expenditures; in other words, the actual cost to the revenue of the province of these loopholes, tax preferences or whatever one calls them. When the question was asked some time ago, I indicated we would be pleased to provide, privately or publicly, the best information we have on the specific preferences that might interest the Treasury critic, the Revenue critic, the leader or anybody else in this House from any party. I have discussed it on more than one occasion with the officials of the Treasury, and I feel we ought to be moving towards providing the information as a part of the budget.

There is, however, a view that almost anything that is not taxed can be construed as a preference and that for us to think of all the things that could be taxed and to indicate to the House or an inquiring critic the specific cost is probably a chore that is not going to fill the need. I think it is much more practical for individual members to ask me in Orders and Notices or at any other time to give them the information, or even to phone the officials of Treasury. This is an open government and information is readily available to anyone who asks for it.

For example, I refer to the fact that we tax small businesses at the 10 per cent rate rather than at the ordinary corporate rate. That is an expenditure of $190 million. If we were to apply the full corporate rate to all businesses, we would have additional revenues of $190 million, but on the other hand we would not be providing the benefits to small business. I have already indicated that by paralleling federal simplification procedures, we are giving them an additional preference, if one wants to call it that, of $50 million.

It is also true that the corporate income tax for manufacturing, farming, fishing and so on is one per cent lower than the normal rate; that is a corporate tax expenditure of $55 million. It is well spent in my view, although in the comments made by the whip of the Conservative party, I believe, when he said we were not taxing farmers, fishermen and other people who should not be taxed at all, the indication was that we were not doing them much of a favour. The tax preference cost there is about $55 million.

I know the New Democratic Party is not satisfied with this answer, but we are prepared to use the resources of the Treasury and the Ministry of Revenue to provide information that the members think is relevant. It is difficult for us to know which aspects are relevant. If the honourable member wants to make a list and put it on the order paper, we will give him any information we have that is available.

5:10 p.m.

The member for Cornwall (Mr. Guindon) -- I was glad to hear him join the debate -- mentioned eastern Ontario. I can assure him that as the discussions on the budget went forward, the question was often asked by myself or others: "How does this affect the north? How does this affect eastern Ontario?" Sensitive, thinking politicians will quite often ask, "What is this doing for the north?" and forget that some of the same economic difficulties apply to other areas away from the central industrialized part of the province.

There are specific references in the budget to programs to improve business opportunities in eastern Ontario. The honourable member will have read them. They may be insufficient, and he may be well within his rights to criticize me for not being more generous, more sensitive or more open-handed, but a judgement has to be made in that connection.

Did the Guindons used to have a fuel business?

Mr. Guindon: Still do.

Hon. Mr. Nixon: They still do? Here is a real small businessman, or maybe he is not so small, who has some day-to-day interest and concern about the application, and certainly his addition to the debate was most welcome.

I have some comments I want to make about the member for Nipissing, who joined the debate in a rather effective way. It is amazing how changing circumstances change circumstances. Here am I defending a budget, something I did not think last year I would be doing this year, and the member for Nipissing undertaking a savage attack on its inadequacies. I intend to be complimentary to him, because I feel he does a good job. I do not agree with anything he says in this regard, but he says it so well.

The argument about taxation working against the good democratic concept, even the populist concept of leaving dollars in the hands of the sensible businessman who could then spend them all to make jobs and improve the economy rather than something else, is a speech I seem to have heard before. It was a little more effective the last time I heard it, but I assure the member the points he makes are ones I feel should be put here.

He referred to some aspects of the budget as being hidden. To tell the truth, when one opens up this tax bill, it is a very confusing matter. I have a good deal of sympathy, because one finds oneself essentially going back to the references in the budget for the overall impact of the specific bill and basing comments on that. For members to dig into the bill and actually base their comments on that is very difficult but worth while.

It is an extremely important bill. Although it reduces our revenues in the remainder of this fiscal year by $15 million for reasons I have tried to explain, in a full year the revenue increase is $205 million. I call that a rational and balanced increase in the corporate share of our revenues. My opponents refer to it as a tax grab. I used to use that phrase and they used to use mine; so perhaps they are interchangeable in meaning.

We know this budget increases revenue. There is no doubt about that. We feel it is necessary to fund programs not earmarked for business improvement but certainly extending and directing towards business improvement, job opportunities, training and retraining people 24 years of age and under as well as those 24 years of age and over. One need only look at the increased funding for universities and colleges to realize these centres of training are going to be more important as we become more competitive in the world trade situation.

There are other matters I should refer to, but I will not bother with them at this time. The bill is well drawn by the officials of the ministry. We believe it is eminently defensible and fair. We believe the impact of these revenues will not result in job losses, but just the opposite, since they are used to fund expanding programs that were in place when we took office and new programs that we feel are designed to improve the economy of the province and to improve the opportunities for our people.

NOTICES OF DISSATISFACTION

The Deputy Speaker: Before dealing with this matter, may I advise the House that, pursuant to standing order 28, the member for Fort William (Mr. Hennessy) has given notice of his dissatisfaction with the answer given by the Minister of Natural Resources (Mr. Kerrio) to his question concerning tree planting contracts. This matter will be debated at 10:30 this evening.

Also, I would like to advise the House that, pursuant to standing order 28, the member for Saint Ste. Marie (Mr. Morin-Strom) has given notice of his dissatisfaction with the answer given by the Minister of Natural Resources to his question concerning tree planting contracts. This matter will be debated at 10:30 this evening.

Hon. Mr. Nixon: Before you put the question, sir, may I inform you that by agreement of the House leaders, if in the unlikely event there is a division on a bill such as this one or one like it, it is agreed the actual vote will be taken, with your concurrence, after 10:15 p.m.

The Deputy Speaker: Are you moving adjournment of the debate?

Hon. Mr. Nixon: No. That process is done without further consultation with you. I believe we can undertake the vote without the adjournment mechanism that was used in the past.

The Deputy Speaker: Is there unanimous consent to that?

Agreed to.

The Deputy Speaker: Mr. Nixon has moved second reading of Bill 45. Is it the pleasure of the House the motion carry?

All those in favour will please say "aye."

All those opposed will please say "nay."

In my opinion the ayes have it.

The vote is stacked until 10:15 this evening.

INCOME TAX AMENDMENT ACT

Hon. Mr. Nixon moved second reading of Bill 46, An Act to amend the Income Tax Act.

Hon. Mr. Nixon: I have a brief opening statement on the bill. Bill 46, An Act to amend the Income Tax Act, contains amendments arising out of the proposals in the budget of October 24. It also includes some administrative and technical amendments.

The first budgetary measure being implemented is to increase the rate of personal income tax from 48 per cent to 50 per cent of the basic federal tax. The new rate will apply for 1986 and subsequent taxation years.

A second budgetary measure is a surtax of three per cent of Ontario income tax in excess of $5,000 for the 1986 taxation year. The bill also provides for some administrative and technical amendments required by the tax collection agreement with the federal government to bring the act in line with the Income Tax Act (Canada).

Mr. Dean: There is not a lot that is good to say about this bill.

Mr. Gillies: Tell us what is bad.

Mr. Dean: All right. I do not intend to touch on the administrative aspects, assuming they are really necessary if we are to continue having a tax agreement with the federal government, which makes a lot of sense as it always has in the past.

The general increase in income tax rates provided by the bill would take the provincial income tax to 50 per cent of the basic federal income tax from the present 48 per cent. Straight old mathematics would make it look as though that is a two per cent increase. It is a two-percentage-point increase all right, but it is really a four per cent increase in the amount of tax. I am sure the Treasurer (Mr. Nixon) recognizes that and is not trying to conceal it from anybody.

5:20 p.m.

An hon. member: Are you saying he is misleading the House in any way?

Mr. Dean: No. I do not think the Treasurer would intentionally mislead the House in any case.

We are talking about a four per cent change in tax as it affects him, me and everybody else in Ontario, compared to what it has been in past years. The result of this, naturally, is to make a considerable increase in the total revenues of the province, which are required because of the spending proclivities of government, especially in this budget where there are considerable expenses over last year's rates. According to the estimates that are included in the budget, $321 million for a full year is the result of this change in tax.

In addition, as the Treasurer has mentioned, there is also a surtax of three per cent on any provincial tax beyond $5,000. The effect of the basic income tax change is approximately $33 per year for a family of four with an income of $20,000 or $72 per year for the same family with an income of $30,000.

We could say that something in the neighbourhood of $30 to $70 is not a crippling amount, but we have to consider that this is on top of all the other tax increases that are provided by these bills. None of us really needs that additional tax increase to help us balance our own budgets. Revenue is where one finds it. The Treasurer has opted to find a large portion of it from the income tax.

My chief objection to the tax increase is that one questions the need for some of the other programs introduced in the budget which make this kind of increase necessary. I do not think this four per cent rate of take from everybody's pocket-book is something the province needs at this point, so we will not be supporting this.

Mr. Foulds: We will be supporting this bill with some reluctance. Nobody likes taxes and nobody likes increasing them, but my friends from the right once again, if I may say so, are trying to suck and blow at the same time.

Mr. Dillies: He cannot say that.

Mr. Foulds: I cannot say that? My colleague tells me I cannot say that. They cannot preach fiscal responsibility, I say to my legislative colleagues, if not my friends, on the right, who are becoming increasingly right wing during the course of this budget debate. If the official opposition is going to talk about fiscal responsibility, its members should tell us how they would raise the taxes to deliver government programs.

They should tell us how they would raise taxes to wipe out the deficit which was their shibboleth. If they remember, I suggested to them during the last several budgets that if they really wanted to wipe out the province's deficit they could do it at one fell swoop. They could do it by opposing all the tax expenditures that I talked about on the previous bill. I admit that would be too disruptive to the economy of the province and probably too disruptive to their tiny little minds, but it is one way they could do it.

Nobody likes tax increases, but by and large, except for the last 15 years, the theory has been pretty good that personal income tax is slightly more progressive than the taxes the Tories were fond of raising, such as the Ontario health insurance plan premiums, the sales tax and so on.

My quarrel with the Treasurer, and the reason I have some reluctance in supporting this bill, is that he did not combine the increase in the personal income tax with other progressive measures to make the personal income tax more progressive. Let me outline a few statistics.

While it is a progressive move to introduce the surtax of three per cent on tax payable in excess of $5,000, which largely means those with incomes over $50,000 pay that surtax, he has not moved to establish a minimum personal income tax. He says he needs the permission of the federal government to do that. I would get there on my knees just as fast as I could to get that permission. What has he been doing for the last 42 days? Why has he not got that?

Second, there still are people who earned in excess of $50,000 this year who will not have a tax payable of $5,000. Those tax expenditures and loopholes, which allow individuals who have incomes in excess of $50,000 to pay no taxes in Ontario, and I believe there are about 2,000 of them --

Mr. Pierce: There are not many of us left.

Mr. Foulds: The member for Rainy River (Mr. Pierce) is one of the few left who is able to use those dodges. He volunteered that confession on the floor of this House.

Those loopholes remain. As well, the Ontario tax reduction enrichment was bumped up merely to $1,630 from $1,400 and not re-established at a level of $2,000 where it was a few short years ago.

Hon. Mr. Nixon: Try not to say anything important for a few minutes.

Mr. Foulds: That is impossible. However, I shall try. I understand the needs of the Treasurer as he briefly leaves the chamber. I will repeat some of the things which are obvious to the Treasurer because of his budget but perhaps not to other members of the House.

Because he has not taken the steps to increase the Ontario tax reduction enrichment and allows some people simply to escape paying personal income tax, it means that, because of the distribution of income in Ontario, unfortunately, the bulk of the personal income tax revenue will still be generated from those who earn under $30,000. That is still a scandalous and shameful reality of the taxation system established by the Tory government over the last 42 years and not yet truly reformed by the Liberal government.

We will give them this half a budget for half a year, but I am telling the Treasurer and his officials we put tax reform very high on our agenda, as I said in my budget reply. We were very disappointed we were not able to get that in specific terms in the agreement.

5:30 p.m.

It means the cost of this tax provincially for a married person earning $30,000 is $72 a year. If one combines that with the federal Tory budget -- I emphasize the words "Conservative, Tory, Wilson," as he is a friend of all those guys over there to my right -- personal income tax for the individual will show an increase of $200 in 1986.

Increasing the personal income tax without dealing with the tax expenditures, loopholes, giveaways, whatever one wants to call them, that allow the wealthy to reduce their taxable income makes the system regressive. We would argue that an increase in personal income tax must be accompanied by an enrichment of tax credits. I outlined in my budget reply how the tax credits have been reduced in actual value for the citizens of Ontario since 1975.

There has been an enormous reduction in the amount of value that people get from the tax credits. The Treasurer caught me off base during that debate and asked me why that was. I did not understand his question. The reason for that is simply inflation. The tax credits have basically been maintained at a relatively stable level. Because of the inflation erosion, the amount that is of value to seniors, to property owners and to low-income people has been drastically reduced.

I hope the Treasurer's interjection was sincere and I hope he is genuinely planning to get these people more tax credits in the next budget, and also to get those who are not paying taxes in the next budget in order to plug some of those loopholes.

I want to speak briefly about the surtax. My budgetary reply was perhaps a little too complimentary to the Treasurer in praising him for calling it a surtax instead of a social assistance maintenance tax. There was something about the language of the budget I liked, and I stand by those words.

Over the next few months as we go towards the next budget, I would like to take a look at making some suggestions about the surtax floor. For example, the $5,000 taxable income or the $50,000 gross income may be too high and the rate may be slightly too low. We might look at establishing a balance that would give a little bit more than the $23 million that the surtax --

Hon. Mr Nixon: The member means a higher rate coming in at a lower level?

Mr. Foulds: A slightly higher rate at a slightly lower level. For example, $23 million for a surtax on the wealthy -- if I can use that term without being pejorative and I do not mean it pejoratively -- is not a lot of revenue. It is better than a kick in the head, I agree. It is better than a tax expenditure. However, in terms of what we generally think of as a $26-billion budget, to have the well-off in our society paying an extra $23 million does not seem to me to be out of hand. In fact, it seems to be relatively painless.

I make those reservations with a very real plea to the Treasurer and to his officials to look genuinely at tax reform, particularly in the personal income tax, to make sure that it is the progressive tax that we assume it is. Since the days of the Smith committee in Ontario and the Carter commission federally, it has become less progressive, and we have to look at ways of ensuring the progressivity of the personal income tax.

I would indicate that I have now found the statistic I was looking for a few minutes ago. It was the Progressive Conservative government that lowered the tax enrichment threshold to $1,433 from $2,026. We would like to see that threshold re-established so the working poor in our society can benefit from, if you like, tax breaks. That is why I take the Treasurer's advice in his last reply to me about listing the tax expenditures we want to see. There are some that, frankly, we do not know about. I would like to see a listing along the lines of the Michael Wilson statement of last August, because I believe we need to see which tax expenditures are in fact socially and economically useful.

I would not argue that in some cases the Treasurer may want to encourage the economy and job development in certain areas and he may want to have a tax incentive or a tax break to accomplish that. However, we should be up and above board and say what they are and how much they are costing us. We should do a cost-benefit analysis, so that after a year of the expenditure, tax giveaway or whatever it is called being in place, we have an accounting of what the impact is not merely in financial terms, in fiscal terms, but also in economic and social terms.

It is really important that we see taxation not merely as an accounting or a budgetary process, but as an economic and social process as well.

We will be supporting this bill. We do so with some reluctance. However if new revenue is needed to put forward new programs, by and large income tax is more progressive than other forms of taxation.

Let me say that if the Conservatives vote against this and speak against this, they have a responsibility to tell the public which of the taxes they would have increased. Would they have slashed social assistance programs? Would they have refused to bring in any new housing starts in the province in the next year? Would they have refused to make a commitment to northern Ontario development? Would they have refused to bring in day care spaces? Would they have refused an increase in aid to farmers?

I think it is important, especially on budgetary items, on matters of budget, on matters of budget bills, to speak responsibly so there is always a cost-benefit --

Mr. McClellan: Fiscal responsibility.

Mr. Foulds: Not fiscal responsibility necessarily, but social responsibility and economic responsibility.

Hon. Mr. Nixon: Is the member against fiscal responsibility?

Mr. Foulds: If I may echo some of the criticisms of the former leader of the party, Donald MacDonald, in his column in the Star he indicated that perhaps the Treasurer is using the term "fiscal responsibility" to handcuff himself from delivering as much social responsibility as the province deserves.

I was slightly diverted, but I think the official opposition does have a responsibility. If they are going to vote against this act and every tax measure in the budget and if they want to take their responsibilities seriously, they should tell us which taxes they would have raised or which programs they would have cut.

Would they have raised OHIP premiums? Would they have raised the sales tax? If they would have done that, then that is fine, let them put that on the record. If they would have slashed social programs, if they would have refused to bring in housing and day care and increased expenditures in northern Ontario, let them put that on the record.

Mr. Gillies: My friend the member for Port Arthur (Mr. Foulds) and, to use his terminology, legislative friend, although I would hope we are better friends than that, has indicated that his party will be voting with reluctance against this measure -- pardon me, supporting the measure with reluctance. I would like to indicate, speaking as one individual member of this party, that I will be voting with reluctance against the measure, but voting against it, none the less.

5:40 p.m.

The member for Port Arthur has raised a couple of questions that I think are worth responding to. He indicated the obligation is on the official opposition to indicate alternative measures.

Mr. McClellan: How would you pay for the throne speech?

Mr. Gillies: I would say to my friend the member for Bellwoods (Mr. McClellan) that we are not debating the throne speech here. We had an opportunity to do that. We are talking right now about Bill 46.

I would indicate to my friend the member for Port Arthur that I contrast the measures in this budget -- a tax grab overall of some $700 million and an increase in the deficit of some $500 million -- not with a series of what ifs, maybes and could haves, but with the 1984 budget brought in by the Treasurer of the province under this former administration. I will remind him that budget engendered no tax increases and a reduction of the deficit by some $900 million.

I think the record speaks for itself. There was --

Mr. Martel: There was not a program in it anywhere.

Mr. Gillies: If my friend the member for Sudbury East (Mr. Martel) wishes to join the debate, I wish he would do it on his own time.

I indicate again that the alternative is there. The 1984 budget maintained services, it did not drastically increase taxes and it led to a deficit reduction. I would say further that this measure, as has been indicated by our critic the member for Wentworth (Mr. Dean), is not a two per cent increase in income tax, it is in reality a four per cent increase. This measure will generate $26 million in revenue for the government.

I would be more sympathetic to this revenue generating measure and perhaps other revenue generating measures brought down in this budget if I saw the tangible benefits going to the people most in need, the unemployed and laid-off workers in this province. I have brought this to the attention of the House several times and I will say it again. We have here the first Ontario budget since 1979 that makes no specific reference whatsoever to skills training, retraining or job creation programs for other than young people.

Mr. Speaker: Order. Is that pertaining to Bill 46?

Mr. Gillies: It is, Mr. Speaker. As I have indicated, I would be much more sympathetic towards this tax generating measure if I saw some benefit from it to those people most in need.

Mr. McClellan: That's a bit tired; the member's comments are all the same.

Mr. Gillies: I think it is a pretty good line.

I have to wonder as to the benefit going to those people from this. Perhaps this is one point on which I would agree with the member for Port Arthur. As he indicated, the burden of income tax still falls on the people earning less than $30,000 a year. This is not a measure that is going to soak the rich. This is not a measure that will meaningfully redistribute wealth. This is a measure to reach into the pockets of working people across this province to generate revenue.

Which is preferable: to generate revenue for the government or to generate jobs? Is it preferable to increase taxes or to stimulate growth and increase economic activity in the province so there are more people working, more industries operating and more sources of revenue because of increased wealth in the province? That is much more preferable.

We talk about the benefits accruing to the province because of the tax increases in this budget. I can make reference to my own riding for a minute. On the very same day as the Minister of Industry, Trade and Technology (Mr. O'Neil) was telling us that measures taken by his ministry and the government are going to be of specific aid to unemployed and laid-off workers in one area, in my riding of Brantford, I had to meet with the board of directors of an unemployment service centre that is on the verge of closing because of inadequate, confused and too-cute-by-half funding techniques by the ministry.

Hon. Mr. Nixon: Which centre is that?

Mr. Gillies: The Ministry of Skills Development, the program for unemployed services.

Hon. Mr. Nixon: But which is the one that needs the money? Is it in Brampton or in Brantford?

Mr. Gillies: I am sorry, I am referring to the unemployment service centre in Brantford, which the Treasurer has endorsed by letter in the past, I might add.

Hon. Mr. Nixon: That is the United Auto Workers service centre.

Mr. Gillies: The Brantford Labour Council service centre. It is not just the UAW; it is the labour council.

The point is that if I could see some tangible benefit for the people most in need of these measures, I would be much more sympathetic. As I see it, it does not increase economic activity, it does not increase wealth, and it takes money out of the pockets of working people. I am not going to be overly dramatic. We are talking about only $26 million.

In a very subtle fashion, it puts a bit of a damper on economic activity in the province. There are better measures and better ways to do it. I offer the flip side of the coin. With reluctance, my friend the member for Port Arthur supports the bill. With reluctance, I oppose it.

Mr. Harris: I am pleased to enter the discussion briefly on the bill. Which one are we on? Is it Bill 46? I think it is Bill 46, An Act to amend the Income Tax Act. I share some of the comments made by my colleague the member for Brantford (Mr. Gillies) about his concerns in supporting a tax increase for the working man and woman of Ontario at a time when we cannot see tangible benefits arising from what is being done with that money.

I wish I were better prepared today, but in looking at the budget -- I have looked at it and our research staff has looked at it -- I still believe there are many hidden agendas in the budget which will unfold only as time unfolds. We have some difficulty. As expert as the Globe and Mail is at researching these items, it seems nobody can find out where $500 million to $700 million is being spent.

Let me get to a couple of specific things that concern me. The federal income tax is up. The federal income tax has been hiked. There is a surcharge. I cannot remember the exact figures. Maybe the Treasurer could help me. Could the Treasurer slip me that figure?

Hon. Mr. Nixon: Go ahead.

Mr. Harris: The Treasurer is trying to ascertain the figure. I asked his officials and they are researching it too. Maybe they will slip the Treasurer a paper if they have found the answer. There certainly was a federal surcharge on income tax.

Mr. Dean: It is five per cent on $6,000 and up.

Mr. Harris: It is five per cent on $6,000 and up. I thank the member very much.

Hon. Mr. Nixon: That is the same size as the surcharge of the former Treasurer, the member for Muskoka (Mr. F. S. Miller), two years ago.

Mr. Harris: All I am saying is it is there. That means the effective 48 per cent tax rate already increases by that amount without doing anything. Without doing anything with the ad valorem tax the Treasurer has left on -- it is important that I mention ad valorem. Let me digress. From what I have been able to ascertain, there are two areas where the ad valorem tax has been removed.

Hon. Mr. Nixon: May be removed.

Mr. Harris: May be removed.

Hon. Mr. Nixon: Unless it is blocked by that side.

Mr. Harris: It is recommended it be removed.

One area is gas taxes. I have heard the third party and I have heard the governing party tell us how bad ad valorem is and that the perception out there is we have to do away with ad valorem where it really means something, on income tax and on sales tax, which my friends will tell us is very regressive.

5:50 p.m.

Where the revenue is going up and the price of goods is going up and the ad valorem brings in more money, the ad valorem is left on. There are two areas where prices appear to be going down. The projection is that gasoline tax will be going down. This morning --

Interjections.

Mr. Harris: That is fine. I am not saying we are opposing it. I am just telling the members where we at. The perception is that gas prices will go down. That is number one.

On the radio this morning, if members happened to be listening, the big talk was on the tobacco war. Rothmans is now selling 30 cigarettes for the price of 25. Everybody is discounting, so the price of cigarettes is coming down.

They removed the ad valorem because it is a benefit when prices are coming down. They have freed the tax at the higher level. We are dealing with an ad valorem here. The federal tax is up, so the 48 per cent goes up; without doing anything, just by leaving it at 48 per cent. The public of Ontario should understand that is tax grab number one.

Tax grab number two has been billed by some at two per cent. My colleague the member for Brantford quite correctly pointed out that it is not two per cent. He called it four per cent, but it is actually more than four per cent. It is safe to say that, because if it was 50 per cent and two per cent was added, that would be four per cent, but it is 48 per cent. I do not know the percentage, but it is safe to say it is more than a four per cent increase in personal income tax. So the second hit is through personal income taxes on the average worker who is paying the bulk of this money.

The third hit is the surtax. I have to say honestly that those who are earning income in the range we have talked about have not expressed a concern to me about being able to afford paying the surtax.

Mr. Gillies: Is the honourable member addressing this to the "vice-premier"?

Mr. Harris: The "vice-premier" needs to hear a little bit of this as well . As a general principle, if there is great difficulty --

Mr. Gillies: On a point of order, Mr. Speaker: I have to ask the member for York South (Mr. Rae) how it feels.

Mr. Speaker: Order. The member for Nipissing.

Mr. Harris: I have lost my train of thought now; if I had it in the first place.

If it was a temporary surtax and there was a problem there and we knew where the money was going, it really would not bother me. But the trend here is to extract more money from all segments, from all the workers, from all the people, and well over 50 per cent of the money is now being taken out by personal income taxes.

Studies have shown that once more than 50 per cent of a guy's money is grabbed, the incentive to earn more diminishes. I warn the Treasurer, I am not so concerned with the surtax as with the cumulative effect of the three taxes he has increased: the ad valorem on the federal, the more than four per cent in general and then the three per cent.

Those are all multiples as well. I do not know what he is up, but he must be up more than four point something on five, and then a three on that; he could be up 10 or 15 per cent.

Mr. Foulds: This is called new math.

Mr. Harris: Maybe it is not quite that high. That is the new math. I know the Treasurer's officials will have it all figured out, the compounding and everything, and I am sure he would be glad to share that figure with us.

While the Treasurer was summing up on the increases in the corporation taxes, I believe he made a comment -- and I will check Hansard; it looks as though I am going to go beyond adjournment time and I will come back to it at eight o'clock -- I believe he said one of the good things about increasing the corporation taxes was that he was reducing that part paid by personal income tax.

Is he shaking his head? He did not say that? If he wants to clarify --

Hon. Mr. Nixon: A ratio of 100 per cent of the tax is now moving slightly towards corporations and away from personal income tax. They are both going up because the 100 per cent is just a little bigger than it was.

Mr. Harris: Thank you, Mr. Speaker, for allowing me the point of clarification.

It may be right; I do not know. Let me refer to a document called 1985 Ontario Budget, the Honourable Robert F. Nixon, Treasurer of Ontario. The Treasurer will see, if he wants to follow with me, though I am sure he has it in his heart, that if one looks at 1982-83 the percentage of revenue from personal income tax was 28.7 per cent.

The member for Muskoka came in with a budget, and in 1983-84 the percentage was 26.5 per cent. It went from 28.7 per cent to 26.5 per cent, a drop of 1.2 percentage points from personal income tax. The Treasurer told us earlier that this was a good thing. I agree it is a good thing, and the Treasurer will notice that in the member for Muskoka's budget the percentage came down 1.2 percentage points.

Then came the member for St. Andrew-St. Patrick (Mr. Grossman) with a budget in 1984-85, and the percentage went down again from 26.5 per cent to 24.8 per cent, which is a drop of about 1.7 percentage points. The trend the Treasurer is so proud of was indeed there through the budgets of the member for Muskoka and the member for St. Andrew-St. Patrick.

However, we now go to the projections for 1985-86 and see there is no change; it is still 24.8 per cent. I fail to see how the Treasurer's comment about its being a move in the right direction is in this budget document. It was there in the budget of the member for Muskoka; it was there in the budget of the member for St. Andrew-St. Patrick. It is no longer there, and I want to tell the members why it is no longer there.

Sure, the Treasurer has increased corporation taxes, but he has increased personal income taxes as well. How was it that it was there during the other two years? I want to spend some time on this chart.

If members will look at corporation taxes on the chart on page 52, in 1982-83 corporation taxes were only 6.7 per cent of the revenue of the province. Then in 1983-84 came the budget of the member for Muskoka, at which time, I might add, incentives were given for small business. Some call them corporate ripoff loopholes, others call them tax holidays, still others call it leaving the money in the hands of the people who generate economic activity. In spite of that, the share of corporation taxes went from 6.7 per cent to seven per cent, an increase of 0.3 percentage points.

Again, in the budget of the member for St. Andrew-St. Patrick, in which there was no increase in corporation tax, members will see that while the amount of corporation taxes was already massive, even the share went from seven per cent to 8.9 per cent, an increase of 1.9 percentage points, or almost two percentage points. So the move the Treasurer found so constructive went up two percentage points in that year. By leaving money in the hands of those who create the economic activity, more jobs were generated than the Treasurer has predicted in his budget and more money came in all around.

Mr. Speaker: I wonder whether the member could find an appropriate time.

Mr. Harris: Mr. Speaker, it being six of the clock, I will sit down.

The House recessed at 6 p.m.

5 novembre 1985