L066 - Tue 10 Dec 1985 / Mar 10 déc 1985
CORPORATIONS TAX AMENDMENT ACT (CONTINUED)
The House resumed at 8 p.m.
House in committee of the whole.
CORPORATIONS TAX AMENDMENT ACT (CONTINUED)
Resuming consideration of Bill 45, An Act to amend the Corporations Tax Act.
On section 6:
Mr. Chairman: At six o'clock, we had just reverted to section 6 of the bill. Did the member for Lincoln (Mr. Andrewes) wish to speak to that?
Hon. Mr. Nixon: Mr. Chairman, I wish to inform members that Sewack Gurdin, senior manager for legislation, corporations tax branch, has joined the advisory group at the table.
Mr. Andrewes: Our concern about section 6 of the bill is subsection 12(16) of the act, which in effect does away with the three per cent inventory allowance. First, I would like to know from the Minister of Revenue (Mr. Nixon) what the federal government has planned here and whether he is simply getting a little carried away on piggybacking the federal initiative.
Hon. Mr. Nixon: I think it is our policy to parallel federal initiatives wherever possible. I cannot see any reason to apologize for that. There are obviously places where we not only feel we cannot, but also would not be prepared to support federal initiatives. I am aware this one has not been acted upon because it is correlated with other alternatives, including a reduction in the general corporation tax rate.
I was in the House in another seat in 1977 when the three per cent inventory allowance was brought in. In those days, if I remember correctly, the inflation rate was eight or nine per cent. It was brought in by the then Treasurer, who I believe was Darcy McKeough -- I am not sure about that -- with the idea that with a rapidly fluctuating rate of inflation businesses that had a substantial inventory deserved some sort of protection. This three per cent allowance was indicated at that time to be appropriate during times when inflation rates were high and fluctuating rapidly.
The member may recall that after 1977 the inflation rate went into a spiral . I am not sure how high it went, but it was up to 15 per cent or something like that in certain parts of the economy. The three per cent inventory allowance was extremely important and in fact essential.
I am glad to report that while inflation, currently at 4.2 per cent, is higher than we would like and certainly higher than we have experienced historically, it is still substantially down from our previous experience and is steady. The projections are that it will fluctuate between four and 4.4 per cent over the next year and perhaps even over a longer time, but with the general trend being a slowly reducing inflation rate.
I simply say again that the justification for the three per cent inventory allowance in 1977 was not so much a high inflation rate as a rapidly fluctuating one. Manufacturers and other businesses that had a large inventory found it practically impossible to cope with these changes.
That is not the case now. All the projections, federal, provincial and American, are for stability in inflation and a gradual reduction. For that reason, we thought it was suitable and fair to remove that allowance. The value of this to the Treasury is estimated in imprecise terms to be about $100 million a year. Therefore, it is an extremely significant part of this bill.
Mr. Andrewes: I think the minister's comments sum up our concerns.
With respect to his remarks that the federal government had not initiated this change, it is my understanding from the limited information I have been able to glean on the subject at this stage of the game, and the minister will appreciate that information is quite limited, that what the federal government is looking at is whether to trade off a lower overall rate for some of the specific incentives put in place. Examples would be this three per cent inventory allowance, fast write-offs on certain types of equipment, machinery and so on. They would be looking at whether to trade the one off for the other.
I expect that after a fairly lengthy consideration, with the politics being mixed in as part of the ingredients, no doubt the outcome is going to be a generally accepted lower rate. Under the stable conditions the minister set out for us, a generally accepted lower rate might be the appropriate solution.
None the less, it is a significant part of every business's calculation. I am told that in 1982, for instance, of 160,000 businesses that turned a profit -- God knows how many did not -- and actually filed a return and had to pay tax, 70 per cent used this allowance.
It is not something that pales in the face of other measures. Certainly businesses such as car dealerships, furniture manufacturers and dealerships, auto parts manufacturers, and even the farm machinery business, will be hard pressed to find a means of substituting for this considerable tax saving.
I am also told that this particular measure -- doing away with this three per cent inventory allowance -- could double the tax paid by some small businesses that carry significant inventories.
Therefore, we will oppose this section. In saying that, I only want to caution the minister that we should be proceeding carefully with these changes. It is a fragile economic recovery we are looking at. It is the kind of recovery that could be stalled by this type of action. We approve in principle the paralleling of federal tax measures and federal tax changes, but if this measure has not yet been taken, we would have to question why we have to move now so precipitately.
Hon. Mr. Nixon: There is nothing further I can add, because I am not concealing in any way that this amounts to just under 50 per cent of the revenue aspects of the bill. Our decision has been taken to proceed with it if the House will support us.
I have received comments from some businesses directly affected, as one can imagine. In a situation like this, which increases the revenue, I have not had any letters indicating they like the idea.
I simply say again that the province taxed corporations without this allowance for many years up until 1977. It was brought in as a palliative in response to wildly fluctuating inflation rates. They are no longer fluctuating. In our consideration, it is valid to move to remove this special measure. That is the motion before the House.
8:10 p.m.
Mr. Harris: I would not mind commenting briefly on this section. I have not heard the figure; I should have it. Can the minister tell me how many dollars we are talking about?
Hon. Mr. Nixon: It is $100 million.
Mr. Harris: This means $100 million?
The point I want to make is that I am not sure the entire business community, particularly the smaller businesses, appreciates that this measure is before the Legislature and is part of the minister's plan to take more money from corporations. If it were in the form of a higher corporation tax that removed $100 million from businesses across this province there would probably be a larger reaction and outcry.
It is very important to point out to the businesses across the province what this measure is. As the Treasurer (Mr. Nixon) has indicated, it is a very significant portion of his budget and of this bill before us. I thank the minister and the third party for agreeing to let us concentrate on this section. It slipped by us in the confusion of the opening few moments of this bill, and we apologize for that. One hundred million dollars is a lot of money.
The minister talked about the measure coming in during 1977 and the rationale for the measure. The bottom line is that between then and 1985, eight years later, operating under the rules of the day that the government has set out, businesses planned and budgeted accordingly. Far too often, governments of all descriptions change the rules on corporations in Canada and in Ontario. One of our problems is lack of confidence by our business sector, particularly among small businesses, which have great difficulty keeping up with these things. Nevertheless, these are the rules they have been operating under for the past eight years, from 1977 to 1985.
I remind the minister that income tax was first brought in during 1917 to finance the war; it was just a temporary thing. I do not think anybody argued at the time; it was necessary for the purpose it served. Other things took place in the intervening years, and for some strange reason or other the governments of the day decided there were other useful purposes for this money.
There has been no attempt to repeal income tax either at the federal or the provincial level. If one listens to municipal politicians one will find, much to the chagrin of many people, that they occasionally debate how they could get into the act of income taxes as well.
I do not think that argument holds a lot of water. I appreciate the minister trying to make it, because I do not think there is any other excuse for his using this method of obtaining another $100 million from the business community in the absence of any offsetting job creation measure, I say with a great deal of regret.
I have commented at length in second reading of some of the other budget bills that I disagree with the government's attitude that by taking more money out of the economy, somehow coming up with some magic programs in the future and putting that money back in, as the Treasurer has argued on many occasions, his budget, because of these offsetting measures, will create jobs in the long run.
I disagree that this is an effective use of the funds. In fact, during the past couple of years history has shown that the moves by the former Ontario government in former Treasurers' budgets to leave more money in the hands of the business community, particularly the small business community, and the federal government even talking about initiatives in that way, do create a climate for job creation in this province.
We have seen this during the past two years, particularly in Ontario where the former government took the tack, "Let us leave the dollar in the hands of the business person who can then spend that whole dollar to expand his business and create jobs;" as opposed to this government's approach, which is to tax it, pretending it can somehow come up with magic programs while ignoring the administrative costs of collecting the tax and dreaming up the programs.
By the admission of all the ministers and of this Treasurer, they have not dreamed them up. We are still waiting for them. The Minister of Northern Development and Mines (Mr. Fontaine) has indicated he has a new program that he is going to come out with at some time. We do not know whether that is early fall 1985, 1986, 1987 or whenever.
The minister wants this $100 million, and the other $600 million in taxes he is increasing now, with some promise that in the future he will come out with a program. By the time he collects the tax, the officials dream up the program, he sets up a couple of commissions -- as in the case of the Royal Commission on the Northern Environment -- gets all the people together and then puts in an administrative process to deliver this program, I am sure in some cases less money will get back than is actually spent.
I suggest that some programs probably cost more than $1 for every $1 that gets back out and are totally negative. We know the whole $1 does not get back. We know there are some costs; I think everybody will acknowledge that, and I have used figures up to and including the whole $1.
I strongly object to this section of the bill. I strongly object, in the absence of any meaningful way of spending this $100 million, to the government using this mechanism and this clause in the bill to get $100 million out of small businesses and all the businesses in Ontario.
If one wants to get directly to what this credit did, it encouraged businesses, small and large, to maintain proper inventories on the basis that one had to have a stock of products and one had to have a variety of products to be able to sell. The better equipped one was to stock product the more likely one was to have increased sales. In fact, this small credit to offset the interest charges -- one could say it could be for anything, but I used to view it when I was a small businessman before I retired to --
Hon. Mr. Nixon: The member was never a small businessman?
8:20 p.m.
Mr. Harris: Right. I viewed it as being a little bit of incentive to order that extra golf ball into my pro shop or that extra hunk of wax into my ski shop and to carry the extra inventory. And of course it offset the interest costs I would have to bear to carry these items. While inflation is about four per cent, as the minister is suggesting to us, it is the cost of the money that is detrimental to carrying inventory. The cost of that money, depending on the credit rating of the business, is still in the range of 10 per cent to 13 per cent.
If some of these businesses got locked into loans with one of my favourite institutions, the Federal Business Development Bank, back when the Trudeau Liberals were running it, some of them are still paying 22 per cent to 24 per cent. Perhaps the Canadian Imperial Bank of Commerce still has a few hooked in that way. It bothers me that the Federal Business Development Bank did that. I realize the bank may not be germane to the conversation, but the interest rates paid by these businesses are.
Normally, we are talking about the operating loan in a business. Those are still well over 10 per cent, in the 12 per cent to 14 per cent range. The three per cent tax credit does not compensate one for carrying inventory but it goes a small way to encouraging businesses.
When a business carries that inventory it is in a better position to sell, to make money and hire an extra stockboy to shuffle it around and a salesman to sell it. There are two jobs right there for every business in the province. I do not know how many that adds up to.
At the same time, when one orders the extra product one is encouraging other industries in manufacturing. Let us talk about the auto industry. With a car dealer, because of this small incentive perhaps has three or four more cars on the lot, not only is he providing better service and selection but in the case of our auto industry -- and I know the party to the left may consider supporting this just to help maintain those union jobs in the auto sector in Ontario -- it is also a tremendous economic benefit to the province.
If we want to talk about where it came from and why it is there, I can argue that way. I believe the Treasurer is a little wet in that argument. If one wants to argue that it is just $100 million, regardless of whether one takes it this way or another --
Hon. Mr. Nixon: I never qualify $100 million in that way.
Mr. Harris: I am sorry; did the Treasurer say "a qualified $100 million"?
Hon. Mr. Nixon: I do not qualify it; I do not say "just."
Mr. Harris: Does the Treasurer mean it could be more or less?
Hon. Mr. Nixon: No, it is $100 million, but I do not say "just $100 million." It is an important amount of money.
Mr. Harris: I appreciate that; however, when section 6 was skipped over the Treasurer did not jump to his feet to point out to the members and to the business community that there is a section here that grabs $100 million from all the businesses in Ontario.
Mr. Foulds: He said so in the budget.
Hon. Mr. Nixon: They know it. The question is, does the member?
Mr. Harris: I do know it and I acknowledge that in the confusion I can accept responsibility for being remiss because I feel strongly about certain --
Mr. Villeneuve: We just noticed it.
Hon. Mr. Nixon: Is the member going to accept being criticized in that way?
Mr. Harris: No, I am accepting responsibility. It is one of the sections I was particularly concerned about in our caucus. We want to spend some time on it today. I accept responsibility for missing this early on.
With regard to the three per cent opening inventory allowance, there are businesses and companies to which I have talked on the matter. A few weeks ago I had a discussion regarding the budget at the round table at Valenti's restaurant in North Bay. We were talking about what this budget was doing and I confess I raised the subject of the three per cent inventory allowance because I suspected that not very many people, especially the average guy in the street, had heard about it. It did not get a lot of play in the papers. It bothers me that $100 million does not get a lot of play.
They were surprised it was there. They send a message to the Treasurer and his friends at Earl's garage that they are not happy with this aspect of Bill 45.
The Treasurer talked about paralleling federal initiatives, and I missed the first five seconds. Can I confirm that the federal government has not moved on this initiative; that we are, in fact, leading the federal initiative here. Is that correct?
Hon. Mr. Nixon: Sometimes that happens.
Mr. Harris: I wondered why the Treasurer made the argument about paralleling federal initiatives with respect to this section.
Hon. Mr. Nixon: They recommended it. They say they are considering it. They are Conservatives; we are Liberals.
Mr. Harris: I applaud the Treasurer in his consistency with the same parallel that I know he strongly believes in with the capital gains. I know when we talk in the future, the Treasurer will want to parallel the federal initiatives.
What it all points to is that the Treasurer uses the arguments in any way he can to his specific narrow advantage in a section at a time. We are talking about $100 million throughout. I thought maybe the Treasurer was talking about paralleling federal initiatives concerning the half-year capital cost allowance.
I am informed this does not fit precisely into section 6. I am also informed this aspect of the budget can be done by regulation, which means that short of the House leader actually scheduling any debate on the budget I will not really have an opportunity throughout any of the considerations on the budget bills to comment on why I disagree with his argument on paralleling the federal capital cost allowance.
I disagree with the federal government's move in that regard as well. If I can tie it into the Treasurer's comments on paralleling the federal Income Tax Act -- I do not know how he got to use this argument, because I heard it -- he talked about six months as a fair and proper adjustment for depreciation of assets that a company acquires in any one year. I suppose that is fair for anybody who acquired it in the last month, but it is not very fair for somebody who acquired these assets earlier. We are talking about machinery now, equipment that is essential to a business. In many cases we are talking about extra jobs. Normally when people are buying these types of things, they are adding equipment or machinery to their businesses. They are either expanding or modernizing, which would ensure jobs; or they are getting into new jobs. Of course, one would also hope they are buying Canadian technology and creating jobs there too.
There is very little incentive to buy in the first month of one's tax year; in fact, there is a disincentive. I suggest any kind of disincentive at this time, during what I believe is a very fragile recovery period in the province's history, is not good. I am sure the Treasurer will acknowledge that the disincentive period is at least six months for those companies which are at the start of their fiscal year.
Mr. Chairman, I want to thank you for allowing me to get a few of those points on the record, because I appreciate they do not fall entirely within section 6, although I thought I made a good connection. I appreciate your allowing me to comment.
To get back to the inventory allowance, what section is that? Is it subsection 3?
Mr. Chairman: Under the old act it would be 16; it is subsection 6(3) under this act. I think that is the one you are referring to, the inventory allowance. Is that correct?
8:30 p.m.
Hon. Mr. Nixon: On page 4 of the act, there is a (16) before the three lines; that collects the $100 million.
Mr. Harris: Right. "The addition of subsection 12(16);" is that the part? What is the other part up there in subsection 6(3)?
Hon. Mr. Nixon: The note says, "Inventory allowance disallowed."
Mr. Harris: Yes, but what does the other little paragraph in subsection 6(3) apply to?
Mr. Foulds: Nothing; the Chairman was out of order.
Mr. Harris: I am concerned. I think I am going to vote against the whole subsection, and I am quite certain that after my argument the third party may join us. If there is something important the Treasurer has in that first paragraph maybe we could figure out the technicality so that it could stay in the bill. Those are my comments on the opening inventory allowance, the three per cent, being done away with.
In the light of that, the Treasurer might want to reconsider whether this is the appropriate time to take $100 million out of the business community of Ontario. I might even look at it in a more positive light if he were to tell me the removal of this three per cent would take effect when he announces the programs he says his government is going to announce.
To grab the money first and say that some time down the road we are going to have a wonderful program, I find a little too difficult to accept. I would encourage all members of the Legislature to consider voting against subsection 6(3) at this time.
Hon. Mr. Nixon: I find the member's argument compelling but not convincing. I want to refer to two or three things he said, particularly from his own business experience as a small businessman paying interest rates and so on, which are a substantial burden. The interest rates at 10 per cent -- I presume he got prime rate -- are too high yet, but except for recent history they are historically low and dropping slowly, which I am sure the member would agree is a nice trend.
He also referred to the absence of stated programs to utilize the money that will accrue to the Treasury. He must be aware of the commitments made by my colleague in Agriculture and Food. It has been the subject of considerable discussion here, and people in the agricultural community, individually and in editorial comments, have praised the Minister of Agriculture and Food (Mr. Ridden) to the skies for his leadership in this regard. They have praised his assistance to the federal Minister of Agriculture in establishing tripartite, in approaching an agreement with the tobacco producers and manufacturers -- unfortunately that is not yet a fact but we have high hopes -- and in producing the Ontario family farm interest rate reduction program, OFFIRR, a very appropriate acronym, which gives further assistance to the farmers.
My colleague the Minister of Skills Development (Mr. Sorbara) has announced a program called Futures. Members may have seen the compelling advertisements offering a chance to young people under age 24 for a full year of employment, something we think is needed now and has been needed for years, but which cannot be offered without its concomitant costs: $150 million this year, $200 million next year. I could go on.
To show you how effective those programs are, the member and his colleagues must be aware that the Statistics Canada report for November, the most recent report on employment, now just four days old, indicated a drop in unemployment for all of Canada of 0.1 per cent, something to be applauded. We read in the Toronto Star that the Prime Minister of Canada planted questions in the House so that he could respond with this good news, a 0.1 per cent reduction in employment.
In Ontario, directly as a response to the programs funded by this budget and with the confidence inspired in the business community by this budget, the unemployment rate fell 0.5 per cent, a historic drop. For the first time in many months, Ontario can now say we have the lowest unemployment rate in Canada, and we are very proud of that. The unemployment rate is now 7.4 per cent.
A year ago, when the member for St. Andrew-St. Patrick (Mr. Grossman), the Leader of the Opposition, was Treasurer and doing his best, his own inestimable best, the unemployment rate was nine per cent. I am not apologetic. I am a bit surprised the members of the opposition did not question the Treasurer or the Minister of Labour (Mr. Wrye) about the employment rates when it was generally known by anybody who follows these things as closely as the member obviously does that we have achieved a tremendous breakthrough, something that has been held back by the inadequate policies of our predecessors.
For the member to indicate the initiatives in the budget have somehow stultified the enthusiasm of the business community is definitely wrong. These are not my figures. They are labour force statistics collected by the government of Canada, not known for its Liberal propensities. I am glad to bring them to the member's attention without emphasizing them unduly.
In response to the points made by the member, the money has been allocated to programs, and we think they are good and appropriate programs. We campaigned on them in the election campaign, which resulted in us being on this side and those members being on that side. It is our responsibility to fulfil those commitments and --
Mr. Chairman: Order. I was patient with the member for Nipissing (Mr. Harris), who went a little astray, and I have been equally lenient with the Treasurer, who has gone astray. We are going much too far from the bill in front of us. Section 6.
Hon. Mr. Nixon: Before we leave this one, the inventory allowance still remains at 100 per cent. One does not pay tax on the inventory amount and one deducts that amount. The three per cent was an additional one put on in 1977 for a period of high and fluctuating inflation rates, and with the concurrence of the House it will be removed in 1985.
All the points the member made were good and interesting, but he did make an additional point which I thought was particularly apropos dealing with the capital cost allowance half-year convention. It is true that this, announced in the budget, which will also return us $100 million in revenue, is going to be accomplished by way of regulation, just the way it was adjusted previously. There is no change in the procedure.
The half-year convention was established by the government of Canada in 1981 and the member is aware of my commitment to parallelism wherever possible. In this instance we feel that paralleling is long overdue and we should follow the lead of the government of Canada in this connection. It was not a Conservative government, but the Conservative government has not seen fit to reverse the decision taken four years ago.
The federal government at the time argued that since capital expenditures are made throughout the year, it is inappropriate to provide a full-year deduction for every asset purchased during the year. For accounting purposes, depreciation charges commence when an asset is put to use. We do not feel that is anything but fair and equitable; and it turns out, coincidentally, that it is revenue positive.
8:40 p.m.
Mr. Foulds: I have listened to the arguments put on both sides of this question. Both sides have put flawed and selective arguments, if I may say so. There have been thoughtful points in the debate and some not so thoughtful. The last statement of the Treasurer and his puffery about the unemployment rate almost swung me to support my colleagues to the right.
Surely the Treasurer would admit that an unemployment rate of 7.4 per cent is totally unacceptable. It is slightly better than the previous rate, but I very strongly suggest that nothing the Treasurer has done in the budget has had a direct effect on the reduction of the unemployment rate.
Let me say this, however, about the new subsection 16 referred to in subsection 6(3) of the bill, which is what we are actually discussing. In my more rhetorical moments, which I am not going to allow myself this evening, and in the more rhetorical moments of some of my colleagues, it would be fair to say we would call this plugging one of the tax loopholes. For that reason, we will be supporting the Treasurer on this section. Flawed though some of his arguments are, they are less flawed than those of the official opposition.
Mr. Harris: I have a couple of comments that may lead to a couple of more questions of the Treasurer. Now that there is no opportunity to garner support, I do not have to be nice any more. The Treasurer alluded to a few things. I would argue that how this money is being spent is particularly relevant to whether this Legislature should allow passage of a bill that empowers it to garner this extra money.
I thank the Treasurer for his calculation on moving to the half-year convention of the $100 million. Quite frankly, I was not aware it was quite that much money. To my previous comments about that section, he can add further astonishment that this is another $100 million out of the business community of Ontario. I doubt that figure is well understood.
Hon. Mr. Nixon: The figure is on page 33 of the budget.
Mr. Harris: The figure that shows the extra $100 million?
Hon. Mr. Nixon: It shows a total of $205 million for the full year.
Mr. Harris: I thank the Treasurer not only for reminding me, but for putting it on the record during this discussion tonight and indicating he is not always trying to brush over quickly the extra $100 million here and the extra $100 million there.
The Treasurer did allude to the unemployment rate and why we had not asked him a question on it. That has now been answered pretty well by the third party. We are not self-flattering types of people. Pretty well everybody would accept that the moves in that direction are a result of economic measures and directions from governments that were taking place over the last couple of years.
I want to comment briefly on the Treasurer's reference to the unemployment rate. In the future, perhaps six months or a year from now, he will want to measure the effects of his budget and the effects of pulling all this extra money out of the economy. I am not sure the unemployment rate is exactly the best measure of how well one's budget has done to create economic activity in the province. The unemployment rate could go down when people leave the province. If that was the reason, it would not be one that a Treasurer of a government would be proud of. The unemployment rate could also go down because people gave up looking for jobs. In that case, the Treasurer would not be very proud of talking about it.
I assure the Treasurer we will be measuring the effects of this extra grab of money out of the economy, not so much on the unemployment rate, on which we are acknowledged to be doing better than the rest of Canada as a result of the former government's actions, but more in the area of the employment rate. How many people are working in Ontario? Those figures, I am sure the Treasurer will concur with me, are more meaningful in evaluating whether his budget will be anywhere close to being as successful as the wonderful budgets we have had for several previous years.
The Treasurer also talked about spending this money on programs such as Futures. He referred to advertising, and I am glad he did, because the only net effect we have seen so far as a generator of economic activity is what appears to me to be a significant increase in the advertising budget of the youth programs, the billboards I see and the advertisements I hear on the radio throughout my town.
Before I flew down here on Monday morning to partake of this challenging debate, I heard two ads on my way to the airport, and I live three minutes from the airport. I might have flipped channels; I will acknowledge that to both the Treasurer and the minister responsible. We are concerned about those advertising dollars. I serve notice to the minister, who I know is in the House tonight, that we will scrutinize very carefully whether the whole $150 million is going into advertising or what percentage of it is going there.
I also point out to the Treasurer that it has been very well established by irrefutable challenges in this Legislature from my colleague the member for Brantford (Mr. Gillies), both in question period and by press release, that no new money is going into the youth program. It has been reorganized and called different names. New brochures have been ordered and new billboards have gone up. There are new pamphlets and new ads, and we are calling it something different.
Maybe that is good. The member for Brantford acknowledged it was good, that there did have to be some consolidation of programs and some new direction. In fact, he was in the process of doing that himself. However, when we are talking about dollars, there is no new money.
I do not think that is a particularly good rationalization for the Treasurer to use. I assume he was trying to persuade me to change my mind, and that is fair. I issued the challenge that if I thought he was spending the money wisely I would change my mind on subsection 6(3). However, this is not going to change my mind. When no new money is going into programs, why does he need $700 million more?
8:50 p.m.
I point out as well that it is not just $700 million. These changes bring in $700 million, but if one looks over 1984-85, there are revenue inflows -- I suggest those are actuals -- of $25.196 billion. The 1985-86 budget plan appears to take in $30.483 billion, which is an increase of about $5.3 billion. The Treasurer has acknowledged that the measures we are debating this evening, of which section 6 is one, are $700 million.
I assume that increased economic activity, more people paying taxes and the modest rate of inflation would account for about $4.6 billion or $4.7 billion. I am not trying to add it correctly; I think the Treasurer gets the point of the numbers we are talking about.
The Treasurer has approximately $4 billion extra. He has talked about programs. I assume he used his two-star examples of agriculture and the Futures program. We think Futures is pretty well established; there is no new money. As to agriculture, we are very suspicious. We would like to see the total spent in agriculture at the end of this fiscal year, not the amount he says is going to be spent. There is $50 million in some program and the uptake so far is $5 million. There are another four months by which the Treasurer says by some miracle that money is going to be made available.
If the Minister of Agriculture and Food would stand in his place and say, "That money is there for agriculture whether it is taken up in that program or not," the Treasurer would have a little more credibility in his argument that this is in fact the amount of money going into agriculture.
I challenge the Treasurer to add up all the money put into agriculture by the former government through the Board of Industrial Leadership and Development initiatives and the other programs through which money was made available to agriculture. Let us see at the end of fiscal 1985-86 how much money has been spent this year. Then the minister may be able to stand in his place and say there was a modest increase. I hope he can. Most of us would acknowledge that agriculture needs more money.
While I am disappointed that the arguments I and the member for Durham-York have used have convinced neither the Treasurer nor the member for Port Arthur to vote against this section of the bill, I can equally assure the House that I have heard nothing that convinces me as being any reason on God's green earth that the Treasurer needs this $100 million so badly it has to be taken away from the business and economic activity of the province.
Mr. Chairman: Do any other members wish to participate in the debate on section 6?
Since there seems to be a bit of confusion as to whether we are voting on subsection 6(1), 6(2) or 6(3), let us carry them.
Mr. McClellan: They have already been carried.
Mr. Chairman: No, they have not already been carried. We had unanimous consent to revert to section 6.
Shall subsection 6(1) stand as part of the bill? Agreed.
Shall subsection 6(2) stand as part of the bill? Agreed.
Shall subsection 6(3) stand as part of the bill? The committee divided on whether subsection 6(3) should stand as part of the bill, which was agreed to on the following vote:
Ayes 60; nays 34.
Section 6 agreed to.
9:13 p.m.
On section 17:
Mr. Chairman: Mr. Andrewes moves that subsection 33a(1) of the act, as set out in subsection 17(1) of the bill, be struck out and the following substituted therefor:
"(1) There may be deducted from the tax otherwise payable under this part, for the first, second or third taxation year of a corporation, an amount equal to 15.5 per cent of the amount determined under subsection 33(2),
"(a) if the corporation is eligible to claim and has claimed, with respect to the taxation year, a deduction under section 125 of the Income Tax Act (Canada), and
"(b) if an amount equal to the deduction is reinvested in the corporation."
Mr. Andrewes: Briefly, because we want to move on and make some progress on this bill tonight, I do not want to repeat a litany of all the benefits of small business. This amendment exempts small businesses from paying tax. It was a position this party put forward in the spring when we had our last consultation with the people. We know it will cost the Treasury in the neighbourhood of $325 million a year, but it is important to realize that the reinstatement of this exemption does some very desirable --
Mr. Chairman: Order. Excuse me. Would the members on the government side standing and talking to the Minister of the Environment (Mr. Bradley) please remove themselves to some other place. Also, would the members behind the member for Scarborough Centre (Mr. Davis) either keep it down or remove themselves. The member is having trouble making himself heard.
Mr. Andrewes: Thank you, Mr. Chairman. Shall I speak more loudly?
Hon. Mr. Kerrio: Louder, no; faster, yes.
Mr. Andrewes: That is not fair.
As I was saying before I was so rudely interrupted, our position is that the tax exemption bears good fruit, as long as it is reinvested in the firm. We feel very strongly that small businesses do take initiatives. They are the best judges of where to invest these dollars. They are creative, enthusiastic and willing to be innovative and take chances. It is what this country was built on. The minister knows that very well, as I do.
9:20 p.m.
In the absence of any other direct initiative for small businesses or any businesses, the Treasurer has taken $100 million on this last bit of discussion we had, he has taken another $100 million on the increase and he has taken another chunk on the switch to the half-yearly thing --
Hon. Mr. Kerrio: To pay all the bills the Tories left us.
Mr. Andrewes: One does not pay for these things by riding on the backs of small businesses. That is the point we are trying to make.
My colleague the member for Nipissing made the point that this budget does not address businesses in any substantive way. That is what we are trying to do. There is nothing to stimulate the economic growth the Treasurer so vitally needs to meet his rather extravagant programs. There is nothing to encourage the maintenance of the growth that we have seen during the past 24 months or to reduce the unemployment levels we are all so very conscious of.
I ask members to support this amendment, particularly at a time when we understand the economy needs the stimulus and drive this amendment will create.
Hon. Mr. Nixon: The concept of the amendment is certainly good, but it is so ill defined we find it impossible to accept.
The Revenue critic has added a section as follows: "If an amount equal to the deduction is reinvested in the corporation." Until recently I would have thought that made good sense, but the verb "reinvested" has problems of definition.
A person who is accepting the exemption under the first three-year rule could very well decide the investment might be that he would not pay dividends. That may be all right, but it is not listed as one of the accepted reinvestments. He could invest in assets, and it seems to me that would be acceptable, but it is not listed there. It could be that, as president of a small company, he might lend himself as a shareholder a portion of the money, and that is not referred to. If he were a really aggressive executive, the president of a small company, he might decide he needed a Corvette, or even a car similar to those driven by the members of the opposition. The honourable critic goes steaming past me on the Queen Elizabeth Way in a very nifty car indeed, which he bought and paid for with his own money out of the peach trees he keeps telling us about.
The owner of a small corporation could take the Minister of Revenue to the cleaners -- and we do not want that, do we? -- by reinvesting money in a corporate vehicle that is not prescribed. The point is perhaps a bit extreme in the examples I put forward, but I think the point also is clear that the verb the member used in his amendment is so ill defined that we would find it unacceptable.
It is also possible that the time of the reinvestment under this amendment could be very brief; it could be a few months or perhaps a year. The member might want to contemplate something longer than that, but it is certainly not part of this amendment.
In concept I found the amendment attractive before the budget, and I find it attractive now. I can say quite sincerely that I will give it further review. The member must know of a good reason why I would find it reasonably interesting.
I must tell him, and this is perhaps a special prejudice I have, that basically I think if a corporation makes a profit it should pay its share of tax. The concept of the holiday does not fill me with enthusiasm. We have maintained it and I do not want to indicate it is in jeopardy, but as Treasurer and Minister of Revenue I can tell him that matter will be under review some time in the future if I have such an opportunity.
We do not want to support the amendment, and we urge the House not to support it. As is so often the case from the member the idea has merit, but we feel it is too ill defined to be acceptable in these terms.
Mr. Andrewes: I apologize to the Treasurer for my careless draftsmanship. I sought the advice of legislative counsel on these matters, and I can assure the Treasurer this drafting was done in a very professional way.
If we have missed the mark, I am quite prepared to accept that. What I am looking for is an endorsement in principle of the tax holiday. If I have convinced the Treasurer the principle is a good one, then perhaps we can sit down now and put our heads together and come up with the correct wording.
I tell him as well, if this amendment does not meet his specifications, we have another one that might.
Hon. Mr. Nixon: I have already indicated the tax holiday does not fill me with enthusiasm. As Minister of Revenue, I would prefer to go by the rule of thumb that if it is a profitable corporation it would pay tax.
We understand that with the initiative of our predecessors, particularly the member for Muskoka (Mr. F. S. Miller), the concept of the tax holiday became a rather major part of our corporate policy. As a matter of fact, there was a holiday for all small businesses for a time, a very expensive contribution indeed.
It is very difficult to determine how responsive the business cycle was to that stimulus. My own feelings are perhaps a bit prejudiced, and I am not prepared to indicate I believe it brought us out of a recession, since other jurisdictions without this particularly generous provision came out at the same rate or faster than we did.
9:30 p.m.
If the member is trying to get my commitment for that concept, it is here in this act; we are not removing it. Essentially, I feel the profitable concerns should pay their share. We are not prepared to accept the amendment he has put forward. It is not any particular criticism of the draftsmanship, because we feel the concept the member put to the draftsman was basically flawed.
9:44 p.m.
The committee divided on Mr. Andrewes's amendment to section 17, which was negatived on the following vote:
Ayes 38; nays 63.
Mr. McClellan: On a point of order, Mr. Chairman: Before we get to the next amendment and the next vote, do I understand we have an agreement to stack the votes on the remaining amendments to 10:15 p.m.? It is my understanding this is possible.
Mr. Timbrell: Mr. Chairman, that is what I discussed with the honourable member, that for the balance of the evening we would stack.
Mr. Chairman: Is it agreed that all further votes this evening will be stacked to 10:15 p.m.?
Agreed to.
Mr. Andrewes: I am astounded that my amendment failed, but since it did, I am quite prepared to move another one.
Hon. Mr. Nixon: On a point of order, Mr. Chairman: There may be some sort of modern approach to this, but the real rules of the assembly always were and should be that when an amendment fails, the section carries.
Some hon. members: No.
Mr. Foulds: On a point of order, Mr. Chairman: My understanding is that it is the usual courtesy to provide other members, or at least other spokesmen, with the proposed amendment that is coming forward. We have not seen it and I do not have it.
Mr. Andrewes: The reason we did not circulate the second amendment is that we expected the first one to carry.
Mr. Chairman: Mr. Andrewes moves that subsection 33a(1) of the act, as set out in subsection 17(1) of the bill, be struck out and the following substituted therefor:
"(1) Where a new employee is hired, 25 per cent of the salary of that employee may be deducted from the tax payable by the corporation hiring the employee if the corporation is eligible to claim and has claimed, with respect to the taxation year, a deduction under section 125 of the Income Tax Act (Canada)."
9:50 p.m.
Mr. Andrewes: Before the minister checks his rules, I had better get this off my chest. He did express some concern about our previous amendment and talked, in the extreme to some degree, about people exercising discretion with respect to a tax holiday that would allow them to invest in expensive sports cars, declare dividends, make loans to shareholders or even conduct expensive study sessions under the palms.
The argument is at least consistent with the arguments put forward by the leader of the Liberal Party who, some time ago in 1985, was equally critical of a program that somewhat paralleled our last amendment when he attacked the proposal of enterprise for not ensuring that the money companies saved on the tax break would create jobs. A company that spent its taxes on foreign imports, speculating in land or lavishly redecorating executive offices would be treated in exactly the same as a company that hired 20 new workers.
The Treasurer is at least consistent in making that argument, although he makes it much more convincingly than the then leader of the Liberal Party, now the Premier (Mr. Peterson), did on those occasions.
I have a little problem in that I feel there is an aura of mistrust for the small business owner. My colleague the member for St. George (Ms. Fish) reminds me that I am not to call them small businessmen, they are small business owners. The Treasurer has created an aura of mistrust by suggesting that people will take advantage of this tax holiday we propose.
We proposed this other amendment, which he will find much more to his liking, because on April 3, 1985, Alan Christie of the Toronto Star quoted the leader of the Liberal Party as saying: "Under the proposal, a Liberal government would introduce a refundable tax credit that would pay 25 per cent of the first year's salary of new employees hired by small business." Does that sound familiar? He went on to say: " `By giving up $100 million a year in taxes, 22,000 full-time positions would be created,' Peterson said."
I rest my case.
Hon. Mr. Nixon: The member saw me messing around with the rule book. Standing order 58 does not really apply, but the members ought to hear it: "When time permits, amendments proposed to be moved to bills in any committee shall be filed with the Clerk of the House at least two hours before the bill is to be considered, and copies of such proposed amendments shall be distributed to all parties."
In a commendable effort to save money, the Tories, the official opposition, put both these amendments on one page, but rather than obey the rules, they went to the trouble of tearing the bottom off the one they sent over to me so they could have this nice little surprise. We can, however, read them like a book; this is exactly what we expected, and a very good amendment it is, too.
The actual difficulty with the amendment is that in spite of other flaws I will point out in a moment or two, it would cost the Ministry of Revenue a minimum of an additional $100 million. That puts it in the same category as one or two other responsible and carefully thought-out indications made by our party during the election campaign that we fully intend to review in the future, such as the $4 exemption from sales tax for meals. Who could possibly be against that?
However, it is not possible to accomplish all these desirable and acceptable goals at once. After all, we have been in office for only a relatively short time and the members would all agree that we have accomplished a good deal, not the least of which is to reduce the unemployment level. I put that forward modestly and I will not repeat it.
The honourable member quoted from my esteemed leader, who even now is serving the province in British Columbia. No effort is too much for him to support the province.
Further, in quoting the former Leader of the Opposition in this regard, the member said it would be responsible for the provision of 22,000 jobs, but Statistics Canada indicates that as a result of the budget of October 24 -- it did not indicate that; I am interpolating it -- in the past month 51,000 new jobs have been provided in this jurisdiction.
If they are going to attribute that to the tax holiday of the member for Muskoka two years ago or to the removal of the sales tax on imported Japanese luxury cars five years ago, it does not make any sense. On the other hand, we attribute it to the initiatives in the budget. We have accomplished more than double the promise of the Premier, and we still have retained the additional $100 million we feel is essential for the responsible financing of our programs and those we inherited.
Miss Stephenson: Mr. Chairman, on a point of order: Can I ask an important question?
Mr. Chairman: No, but you can make a point of order.
Miss Stephenson: May I make a point? I am concerned because it is my belief the Treasurer intends to heat this entire complex this winter with the hot air produced by the garbage he is burning in this House. I do not believe we need to be subjected to that.
Mr. Chairman: Order. That is not a point of order.
Hon. Mr. Nixon: The honourable member from her own experience has made the mistake of identifying facts with garbage. The facts are what I put before the House.
Miss Stephenson: Unhappily, those facts have nothing to do with the Treasurer's efforts.
Hon. Mr. Nixon: That will remain for the judgement of a jury to which we all are responsible. Will I say the sooner the better? No, I will not say that.
In addition, I am sure the members are aware that the Liberal proposal was tied in a very responsible way to a detailed association with a ceiling on the wages that would be financed in this way, so that it would be subject to a maximum of earnings subject to unemployment insurance provisions.
Miss Stephenson: That amendment could easily --
Hon. Mr. Nixon: But it is not, and the member had plenty of time -- hours and hours -- to prepare this; in fact, there were weeks, but that is okay.
Under the amendment, it is also possible that a president could pay himself or his family additional money and get a 25 per cent break. There is no attempt to put any sort of cumulative effect on the pay increases. At the end of a year they could fire everybody and either hire them again or hire new ones and get a 25 per cent deduction again.
10 p.m.
I have already indicated that even if it were properly administered in the way that was put out so carefully by the former Leader of the Opposition, it would still be a very expensive program, but would undoubtedly stimulate employment. We chose other very successful ways to stimulate employment. We therefore feel this amendment, while its intent is admirable, is so inadequately drawn that we cannot advise the members of the House to support it and we hope it will not be successful when it is put to the vote of this House.
Mr. Andrewes: If I might make one point very quickly, the Treasurer is correct to remind us, as the press report did, that the proposed $100-million exemption would, it is anticipated, in the words of the Premier, create 22,000 jobs. I made a rough calculation and that is about $4,500 per job.
The Treasurer went on to talk about ceilings and so on, but I say he is very fast and loose with his interpretation of the province's economic progress. He can no more accept credit for that as a result of his budget than one might say the judicious operations of governments in the province for the last 42 years have led to that kind of stability.
I take some offence at the Treasurer's attitude towards the creation of jobs as a result of a budgetary policy that will take $700 million of additional revenue out of the pockets of people in the province when these budget bills are finally imposed upon them, suggesting it has created or helped to create 51,000 additional jobs.
I would be glad, once again, to offer to tidy up the amendment if that is the Treasurer's concern. I am a little astounded the Liberal Party can sit there and suggest to us now that a promise it made to the people of Ontario last April, a commitment that is in writing, can be denied. I have several press releases, several press accounts of the Premier travelling to small businesses, trying on lampshades, visiting wineries, doing all sorts of things. Now they sit on their rumps and deny that commitment.
Hon. Mr. Nixon: There is no doubt that when I talk about the substantial improvement in employment statistics and the 51,000 new jobs reported by Statistics Canada over the last month, I am not claiming 100 per cent of the credit. I am simply indicating it happened at this time and, compared with what was happening last year during a period of much more rapid growth measured on a percentage basis, we should not downplay the fact the economy is buoyant and productive. The cost-of-living increases have been contained and are steady at about four per cent -- in fact, they are dropping a bit.
Interjection.
Hon. Mr. Nixon: I am just stating the facts. The member may call it garbage if he chooses. The other fact is that real growth is better than projected. Revenues from corporation tax are higher than projected and these things look good.
We know there are terrible areas in the economy and we have tried to target those. Agriculture is probably the worst and that is why so much time has been spent in the House, using the initiative and the great abilities of the Minister of Agriculture and Food to bring forward programs that will do something, for once.
Another area is northern Ontario, which has suffered so long from inadequate leadership. We have made a commitment of a $100-million development fund that must be paid for.
These are attempts to target. The other, to which I have already referred, is youth unemployment, which is fortunately down a bit over two per cent from this time a year ago.
I honestly accept the argument that we are not 100 per cent responsible for these improvements. We are right with the member on that. We also say the concept of the amendment -- how can I say otherwise? -- is a good one.
The other side of the coin is that we are delighted the spokesman for the official opposition is supporting that concept. We cannot accept it now, but we hope in the future to bring in similar amendments which will stimulate employment. We think an additional $100 million now is irresponsible when we have substantial payments required, left over from the previous administration, and we talked about that. There are also new programs we are totally responsible for, programs we believe are useful and well accepted.
I certainly acknowledge the point the member has made. We welcome his support. Unfortunately, we cannot support him at this time. However, we are very confident that in the future an amendment similar to this, we trust and hope, will be put before the House by myself or my successor and that the member will be as enthusiastic in its support at that time.
Mr. Harris: I am delighted to enter the discussion on the amendment my colleague has moved. I might have a few comments on some of the remarks the Treasurer has offered in opposition to the amendment. I too have done the calculation of $4,500 a job, based on the Treasurer's figures that this amendment would cost the Treasury $100 million. I am quite certain that figure must be right or close, or he would not have given it to us.
I would like to zero in on the 22,000 full-time jobs the Premier indicated in his most recent consultation with the people would be the number this program would create. I would assume that figure is correct and that the $100 million is based on that figure, assuming the Premier and the Treasurer do consult with one another from time to time. I am sure they do.
It is important to look at this amendment on the basis of the $4,500 per job. If it created more than 22,000 jobs, then presumably it might cost more than $100 million. If it did not live up to the Premier's expectations and created 1,000 or 2,000 jobs fewer than 22,000, then it would cost the Treasurer less than $100 million. Perhaps the Treasurer could give me a little nod; I would like to ascertain those assumptions I am making are correct, and we can ball-park $4,500 as the cost per job as a result of this amendment.
The Treasurer is shaking his head. Does he disagree with his own figure of $100 million or the Premier's figure of 22,000?
Hon. Mr. Nixon: If the member is referring to his own amendment and basing the discussion of the jobs and the cost of the jobs on his own amendment, then I cannot agree with his basic premise. We have already indicated there would be ceilings in an amendment we would propose along these lines, and I hope it will be brought forward some time in the future, perhaps in the next budget or the one after. There would be other aspects that are not part of the Conservative alternative tonight. I am not going to nod in agreement with the member in his costing of these provisions.
Mr. Harris: I will carry on with the two figures, and assume neither the Treasurer nor the Premier lied to me or to the people. He said our amendment would cost $100 million. I am going to go with that assumption. As well, the Premier told every single citizen of this province that it would create 22,000 jobs, and I have not known him to knowingly mislead the people, although given a little more time in this Legislature, a situation could arise where that might be my viewpoint.
10:10 p.m.
We are talking about $4,500 per full-time job, and at $4,500 for a full-time job, presumably we are talking of a person working who was not working. I do not know the social costs of a person who is not working. I would say, many would argue and my friends on the left would argue that it is not enough, whatever that cost is. Whether it is a single person at some $8,000 or $9,000 or a family member at possibly $12,000, $13,000 or up to $15,000, that would be the first cost that this government would not have to bear. For $4,500 it would save, I presume, on average, $10,000. So they are $5,500 in pocket, according to the figures of the Treasurer and the Premier, before they start.
Second, once this person is working -- at the cost of $4,500 in forgone tax -- he will now presumably be paying income tax to the federal government and to the provincial government. One hopes he will have the ability to purchase more goods so the government can collect more sales tax. He may, if he is not driving back and forth to work and paying the abhorrent gasoline taxes the Treasurer tried to levy on Ontario -- currently, I might add, he is proposing in the bill before us 8.8 cents per litre for gasoline. He has indicated he may do otherwise; we will wait and see whether that develops. On the other hand, the person may be taking public transit, which all generates activity and additional tax revenue.
I do not know what I am up to now, but we are going to forgo an average of $10,000 in expenses, and perhaps we will pick up $5,000 in taxes without any multiplier effects. I can never figure out how the economists work out all these multipliers in the things they do, but I am sure a good economist could get this job up to be worth more than he actually collects. As I say, I cannot understand how they do it, but they seem to have the ability to do it.
I have a great deal of difficulty in understanding the Treasurer's comments. I do not think we should get into the semantics of why, whether it is one per cent to the credit of this government and its intentions in Ontario and 99 to the history of the province. The Treasurer might suggest that this is not the correct proportion. I do not think that is the point. He was talking about some 55,000 jobs.
Mr. Lupusella: The member forgot the New Democratic Party motion.
Mr. Harris: I am sorry. I plan to speak for quite some time, but if the member would like to interject, I do not mind.
I have lost my train of thought there. Where was I?
Mr. Foulds: If the member does not know, we do not know.
Mr. Harris: The 55,000 jobs the Treasurer had indicated had already been created. I am not sure it is particularly relevant why. What we are talking about here is his Premier's campaign promise that 22,000 additional jobs could be created if this type of measure were instituted in a budget. He promised the people of Ontario that, should he ever have the opportunity to form the government, this was what he would bring in with his first budget. This is what he promised.
Mr. Pope: He probably talked about ceilings.
Mr. Harris: I do not recall anything about ceilings. What I recall was the 25 per cent of the salary. I suggest to the Treasurer that it is a pretty slippery slope out there if he believes the people think that because there is some other little amendment he would like to see in this to conform precisely to his understanding of the campaign promise and the fact that he is not willing to have that in his first budget or he is not willing to make the amendment.
We will not insist on two hours' notice or whatever it is in the standing orders. I believe there is something in the standing orders that says, "or as soon as practical." The member for Lincoln indicated that he fully expected the first amendment would be accepted by this Legislature. That is why the second amendment, regretfully, had to be brought forward. We did prefer the first one.
This is precisely the commitment the Premier made to the people of Ontario during the last election. It is this commitment that his Treasurer, presumably with the Premier's consent, has not seen fit to bring forward. That is why we moved it today, on the off chance that it was an oversight. Perhaps the campaign commitment had not been recalled by the Treasurer and the Premier when they put the budget together. However, the Treasurer's reaction indicates it was not an oversight. He knew full well he was breaking faith with the people of this province.
That brings me back to something I have mentioned once before. Whose budget is this? I have said it before and I say it again: this is not the member for Brant-Oxford-Norfolk I knew for so many years. I suspect, as many suspect, it was a typical Liberal, Trudeau-style campaign promise. It was the type of promise we saw during those federal Liberal years when the strategies were organized by the likes of Coutts, Davey, Grafstein and Kirby; it was the type of campaign where one tells the people what one thinks they want to hear and what sounds good, but once one gets into power, one does whatever one wants.
That is precisely what has happened in Ontario. If it is not those four people, or perhaps one or two others, it is people with a similar viewpoint and similar ideas who say one thing and do another. They follow a philosophy of MacEachen-Trudeau, wrapping as much out of the old economy as they can to get it into the hands of the civil servants and the government, taking it away from the people who can best use the money and put people to work in Ontario. They try to suck as much as they can into the Treasury, recycle it around, hire all their friends and cronies and get them involved in consulting on how to come up with the new programs to give the people back their 15 cents on the dollar.
10:20 p.m.
Fifteen cents is the figure I have used most often when I have talked about this budget. Actually, I have never had it disputed. I am surprised. At some time, the Treasurer may take a stab. Fifteen cents is the figure I have used. I honestly confess I do not know whether it is 15 cents; it might be five cents or it might be 25 cents.
On average, however, when a government grabs a buck, takes the cost of collecting it, takes in all the time and money it has taken to keep this Legislature going until 10:15 or 10:30 at night to debate it, hires the consultants and pays them to come up with a program to give it back to the people and then delivers that program, 15 cents is not an unreasonable estimate of how much actually gets back into the hands of the people in the form of a subsidy, a tax break, a program, a handout or some form of incentive that the Treasurer feels is better to keep this economy going than leaving it there and having the people who do know how to create jobs and do know how to drive this economy use the money.
At some point, if not on this bill then perhaps when I speak on the others, I may refer to this 15 cents again. The Treasurer may wish to comment that he has information that it is more than that. I know it is a tough figure to pinpoint.
I was having a pizza and discussing the budget with several of the boys who own Cortina Pizza in North Bay. It is licensed. They are three young, very hardworking, aggressive and fine, upstanding citizens who have started a business in North Bay. They have beer, wine and the best pizza one might ever imagine; certainly it is far better pizza than I have been able to find down here in Toronto.
Mr. Pope: What was the name again?
Mr. Harris: It is Cortina's. While I was there I was having some pizza and we were discussing the budget. We were discussing what this small business thought of a government whose leader had promised that, if small business created new jobs, money would be put back into its hands by way of a deduction of 25 per cent of the salary of each employee. They were not happy to find that they had been misled in that way.
Hon. Mr. Nixon: A 99-cent pizza is tax-free.
Mr. Harris: It is not tax-free yet, is it? Not until the law comes into effect.
What we have here is one more example of a broken promise. We have one more example of what in my opinion is stupid economic theory that says to grab more money and, for some reason or other, that government can handle it better than that individual for the benefit of all the community.
Hon. Mr. Bradley: It must be Jim Coutts.
Mr. Harris: I mentioned Coutts. There were a few others. He is on tonight. That is what led to the disaster, in part. I admit there were other factors in this country, and this province was a part of that.
I say to the Treasurer and all members of the government party in this Legislature, whose leader and all of them campaigned and told the small business people in their ridings that, should they be in the government, this is what they would do, that they should reconsider the ill-founded position the Treasurer has stated on their behalf that they are not going to do this now.
Hon. Mr. Nixon: At this time.
Mr. Harris: If the government wants to live up to all its promises, it had better consider how much time it has. It has an opportunity right now to live up to the promise. It is not certain it will have all the opportunities in the future that it thinks it may have to live up to its promises.
Hon. Mr. Kerrio: I think we will.
Mr. Harris: I do not believe that --
Interjections.
Mr. Chairman: Order.
Hon. Mr. Nixon: I think this would be an appropriate time for the committee to rise and report.
Mr. Harris: Agreed.
On motion by Hon. Mr. Nixon, the committee of the whole House reported progress.
Mr. Speaker: The question that this House do now adjourn is deemed to have been made. Pursuant to standing order 28, The member for Cochrane South (Mr. Pope) has given notice of dissatisfaction with the answer to a question given by the Minister of Health (Mr. Elston). The member will have up to five minutes and the minister will have up to five minutes to respond.
Mr. Shymko: Mr. Speaker, on a point of privilege --
Mr. Speaker: Order. I do not think I can accept a point of privilege because I have just said that a motion was deemed to have been made. I suggest the honourable member keep that until the next sitting.
Mr. Shymko: Am I out of order?
Mr. Wildman: Yes, the member is out of order.
Mr. Speaker: Order. A motion has been deemed to have been made.
Mr. Shymko: All right. You are the Speaker.
Mr. Pope: The clock --
Interjections.
Mr. Speaker: I called for the member for Cochrane South.
Mr. Pope: Mr. Speaker, you made a ruling with respect to that point of order and it took a minute of the time during which I wanted to discuss this very important matter.
Mr. Speaker: I am in the Christmas mood. I will add a minute to what we have.
MEDICAL TRANSPORTATION
Mr. Pope: On November 25, the minister announced in the Legislature that his government was moving on a number of promises made by the previous government and said his government was now going to act. He indicated at that time a northern health travel grant program to provide financial assistance for northerners.
He also had printed a document called Health Travel Grants for Northern Ontario Residents. I have read this document very carefully and I have read his statement very carefully. I also read his statement last week very carefully. Nowhere has he told the residents of northern Ontario that they have to pay, under his system, the first $75 of the travel costs.
10:30 p.m.
In case there is any doubt about this in the minds of the third party or in the minds of the government members, on November 27, in the standing committee on general government, this exchange took place:
"Mr. Pope: I have a question about the grant levels. Why are the grants ranging from $125 to $350 and not for the full return air fare?
"Hon. Mr. Elston: I will just go through how we worked out that schedule. We have provided a system of grants based on the range of distances, and it is based on an economy air fare from the site to wherever the referral takes place. A $75 amount is taken from that. This equates the normal costs associated with driving 300 kilometres. That is the basis on which the amounts were calculated."
It was not until November 27 that we extracted from this minister the truth about this program, and that was that $75 was to be paid by the residents of northern Ontario under his travel grant system. It does not matter. He may think his program is better than ours. Fair ball, and we shall argue that.
The question I asked today was why were the northern Ontario residents not told and why are they still not being told they have to pay $75 up front on air fare. The minister knows as well as I do that that constitutes a deterrent fee that will prevent many northerners from using this program.
Lorne Henderson used to call it the "detergent fee," but it will affect northern Ontario residents. Some of them will not be able to afford the $75, and that will have a dramatic impact on the availability of the northern health travel program to the residents of northern Ontario. I have no wish to pursue it any further than this. Simply put, why in all the speeches and documentation being sent around the northern part of this province is there not one word that northerners have to pay $75? Why are they not being told that it is up front, so they will know and can plan?
I am not doing this just for political posturing. There is a Mrs. Dinsmore in Thunder Bay who talked to the member for Fort William (Mr. Hennessy) today. Her child, a four-year-old boy, Robbie Dinsmore, had heart surgery at the Hospital for Sick Children in July 1985 and has to come to Toronto to the hospital for a checkup on January 7. This woman and her son cannot afford the $75. We discussed this in estimates. The minister has no answer for those people, other than to refer them to the welfare agencies and the volunteer agencies in that particular community. That is not good enough. That is not a program that is going to be universally available to people of all economic strata in northern Ontario. The simple answer I want to get from the minister is why he would put this deterrent fee, this user fee, into this program. At least for the first flight, he could allow for the full return air fare to be paid.
There are other elements to the program we are going to discuss, but that is a very important problem northern Ontario residents and northern Ontario members are faced with.
Hon. Mr. Elston: I appreciate the points being made by the honourable gentleman. He will recall, as the other members will, that during our discussions we have been looking at ways of introducing these travel assistance programs to the people of northern Ontario for some time. We have had to come up with a grant program which reflects a reasonable contribution by this government for the travel of people out of northern Ontario to southern destinations, or from northern locations to northern destinations, to provide for some relief from those expenses that many people have incurred fully out of their own pockets up until now.
The indications are, as we look at how we structured our grants, that there very well may be situations where people will be fully covered by the grant system in place. We are currently negotiating a number of arrangements with air carriers, for instance, and doing a number of things which we are hoping will displace any of the deterrent fees or "detergent fees," whichever might be applicable. It will, I hope, come out in the wash.
In any event, as we implement this system, I want again to elicit the help of the members from northern Ontario and others to bring to my attention situations such as the Dinsmore case. I would appreciate hearing about these instances. As we implement this program, we are taking every step possible to try to eliminate the difficulties people will feel and are still experiencing with respect to paying for travel. What I described in the standing committee on general government was a method by which we set a series of grant scales in place. What we are doing is watching very carefully how the impact of those is going to be felt in northern Ontario.
In the early stages of the implementation of this program, we will be covering travel that was never covered before. I must remind the members that where there are emergency situations or transfers from hospital to hospital, those cases always are, have been and will continue to be fully covered. In emergency situations, there will be no want of transportation dollars to get those people to medically necessary treatment.
I thank the honourable member for bringing the concern he has expressed to my attention, but as we implement this program and go further to provide service for these people, we will be watching to ensure we are not deterring people from travel. That is not the desire or the point of the program. We are trying to get people out of northern Ontario communities to medically necessary sites, and we do not want to disadvantage them.
In every program, and this one is no exception, there are areas in which we have to draw lines of demarcation to try to set up guidelines. We have done that. We are looking at those areas of demarcation to figure out how we might further respond to the needs of the people. We are looking at how these programs are going to impact on the north.
As we have developed this program to its current stage, the honourable member, who comes from a northern community, and other northern members have provided valuable input. We welcome their continued vigilance to ensure that we deal with the needs of the people in the north.
I thank the honourable member for the question. Perhaps if we could share the information on Mrs. Dinsmore's child, Robbie, there may be something we can look at to try to assist her. Perhaps the member for Fort William will provide me with some details on that. I will ask the honourable members to keep their attention trained on how the program is introduced, how it is responding and how we are responding to the needs of communities there.
I also encourage the members to advise me on how the travel of specialists is working so we can reach some people in more remote communities in northern Ontario. We hope to be able to reduce the amount of travel which is necessary by providing incentives and opportunities for specialists to go into various communities which might very well be under the 300-kilometre limit at which this program kicks in.
I want to thank the honourable members and again ask them for their continued help in making sure this program is successful in northern Ontario.
Mr. Speaker: The member for Ottawa West (Mr. Baetz) has also given notice of his dissatisfaction with the answer to his question given by the Minister of Natural Resources. The member for Ottawa West has up to five minutes and the minister may have the same.
GOVERNMENT ADVERTISING
Mr. Baetz: We are here because the minister gave what can only be interpreted as a very flippant and facetious response to a sensible question this afternoon. This is a very serious matter. There is a profound difference, and the minister knows there is a big difference, between the kind of a self-congratulatory advertising paid for by the taxpayers and some honest-to-God information giving.
The minister and his colleagues have talked about this difference for many years. This afternoon, I felt it reflected a very high degree of arrogance which no doubt has been instilled in the minister by Senator Keith Davey and his cohorts, which was the trademark of his kissing cousins in Ottawa and the reason the Canadian public eventually kicked them into oblivion.
I would only suggest this kind of arrogance is not becoming to a very new minority government. If that is the approach it plans to take in answering questions in this House, I am going to be on the government's tail every time. There will be many more late shows.
I simply asked the minister and I will ask him again and again: what public service does he feel he provided by the advertisement under the picture of old curly locks himself and at what price to the taxpayer? Second, how many more of these silly advertisements does he intend to place and pay for at the taxpayers' expense?
10:40 p.m.
I suggest that was a reasonable question. His claim is that his advertisement provided a public service by providing valuable public information about our forests to the readers of the Ottawa Citizen. I can tell the minister that to the highly selective and the highly informed readers of the Ottawa Citizen, this is nothing new at all.
His observation which appears in this ad and for which the taxpayers had to pay is that: "Every tree lost to fire or insects today is a loss to tomorrow's forest." The people of Ottawa have understood this profundity of his for a long time; we do not need to be paying for an advertisement to find this out.
What we do not know and what he chose not to tell us in his advertisement is exactly what he is going to do to stop the plague of eastern Ontario forests by the gypsy moth, which is now destroying our forest. If he were to spend some money on an advertisement to tell us precisely what he has done or what he plans to do to solve that problem, it might have been money well spent.
I want to say again that I thought the question asked this afternoon was a sensible one. What public service does the minister think this kind of advertising provides? He knows the difference between this and public information because it has been documented many times by his colleagues. How long is he going to carry this on? What does this ad cost him? How many more ads is he going to place? How much are they going to cost him? For that, I am going to insist tonight, in estimates, down the line, day after day, that we find that answer. He is not going to carry on with this kind of advertising which he knows, I know and we all know is simply self-congratulatory and is a waste of the taxpayers' money.
Hon. Mr. Kerrio: I am very pleased this member is going to be on my tail at the estimates and everywhere asking questions because that will stop the very sensible questions from being put. I hope he does continue raising such ridiculous comments as he has made tonight. It is very important that what he has neglected to say is this ad was put in a section in our newspaper, here at least, that related to a report on the forest industry. There were many thousands of hours of input by the ministry over many pages in these newspapers sharing the concerns of every part of the industry with the struggle to supply lumber, the struggle to provide pulpwood and the struggle to deal with a tremendous amount of competition from all over the world.
This ad points out that this minister has a real concern about that ministry. I am going to address myself to that ministry in every way I can. This ad is a very cheap way to touch the public out there because I have travelled all across this province at greater expense and taking greater time on my part to take this message to every comer of this province to show them this new minister has the kind of will to bring the forest back into production; something that government failed to do over the last 42 years, that is the problem he is having.
I want to tell the honourable member something else that is very important. From my ministry I have cut $290,000 worth of advertising that those people were going to put forward if they had been lucky enough to be sitting over here where we are. The general public saw through their phoney advertising. This advertising has a real message. It has some depth. It is telling what we are going to do, it identifies a ministry and an industry that provides so many jobs in this great province of ours. All of those people in northern Ontario are going to know that this ministry is now in good hands, they are going to be told about it and they are going to share the responsibility as they never have before.
When the honourable member decided to make his point that I should listen to him and he would acknowledge and approve some advertisements he thinks are okay, he has another thing coming. We are the government now and they are not. We are going to make the decisions until the public decides differently.
The member brought the feds into the picture. They are causing enough damage in Ottawa without being dragged into this jurisdiction. They are closing down one of the finest aircraft companies ever built in this province and trying to lay the blame on everyone else. The federal leader could not even run his company. He had to pack his little bag and run, and now he is trying to tell us how to run this great nation of ours. Do not bring the feds down here because they do not know what they are doing.
Next time around the public of this great nation is going to turf him out. He can go back to New York and tell the people there, "I do not know why Americans would ever buy Canadian because they are inefficient and they do not know how to run a business." That is what Mulroney told the American people in New York City. The member should not tell us about his kissing cousins in Ottawa who, if left there long enough, will ruin this great country.
We are going to have to send out the message that Ontario is in good shape and is going to be better than it has ever been in the past 42 years. The member can put that in his little pipe and smoke it while he is going home.
Mr. Shymko: Mr. Speaker, can I rise on a point of order?
Mr. Speaker: No.
Mr. Shymko: Mr. Speaker, can you clarify the standing order that does not allow me to ask for unanimous consent of the House? Is the House in fact sitting?
Mr. Speaker: I would like the member to read carefully subsections 28(b) and 28(f) of the standing orders. I think they will explain that there is before the House a motion to adjourn that is deemed to have been made, and there being no further matter to debate I deem the motion to adjourn to be carried.
The House adjourned at 10:47 p.m.