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November 23, 1976

30th Parliament, 3rd Session

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Hansard Transcripts

Hansard Transcripts

L119 - Tue 23 Nov 1976 / Mar 23 nov 1976

SUPPLEMENTARY ESTIMATES

UTDC TEST AND DEVELOPMENT CENTRE

ISOLATED COMMUNITIES ASSISTANCE FUND

WINTER TRAILS PROGRAMME

ECONOMIC STRATEGY

SALES TAX EXEMPTION ON PRODUCTION MACHINERY

THUNDER BAY SKI JUMPS

ECONOMIC STRATEGY

CONTRACT EMPLOYEES

ECONOMIC STRATEGY

NORTH PICKERING PROJECT

LAYOFF OF CASUAL AND UNCLASSIFIED EMPLOYEES

SEVERN PARK DEVELOPMENT

DEATH OF JAMES CULLEN

THUNDER BAY JAIL

STOUFFVILLE DUMP

REPORTS

MOTIONS

CORPORATIONS TAX AMENDMENT ACT (NO.3)

INCOME TAX AMENDMENT ACT (NO. 2)

RETAIL SALES TAX AMENDMENT ACT (NO. 2)

FAMILY LAW REFORM ACT (CONCLUDED)

MARRIAGE ACT

SUCCESSION LAW REFORM ACT

The House met at 2 p.m.

Prayers.

SUPPLEMENTARY ESTIMATES

Hon. Mr. Auld: Mr. Speaker, I have a message from the Honourable the Lieutenant Governor signed by her own hand.

Mr. Speaker: By her own hand, P. M. McGibbon, the Honourable the Lieutenant Governor, transmits supplementary estimates of certain additional sums required for the services of the province for the year ending March 31, 1977, and recommends them to the Legislative Assembly, Toronto, November 23, 1976.

Statements by the ministry.

UTDC TEST AND DEVELOPMENT CENTRE

Hon. Mr. Irvine: I would like to take this opportunity to inform the members of this House that at approximately 1:30 this afternoon in the city of Kingston, the Minister of Transportation and Communications (Mr. Snow) announced that Ontario’s Urban Transportation Development Corporation Limited will locate its urban transit test and development centre on a 480-acre site in Ernestown township in the county of Lennox and Addington. The specific site in Ernestown was chosen after very careful evaluation of a number of potential locations in the area.

The major UTDC programme to be conducted here will be development of an advanced technology rail system for urban transit. As members may know, this is a system which consists of small, quiet, steel-wheeled trains operating on exclusive rights of way. These trains can be operated at street level, on elevated structures or underground.

This programme began in April, 1975, when the Ontario government provided $6.1 million to UTDC to complete phases one and two of a five-phase programme. During these first two phases UTDC worked with transit operators, municipalities and planners to define the kind of system needed. Based on the results of this work the Ontario government authorized the corporation to develop and build a prototype system.

Phase three is a 36-month programme which will cost approximately $55 million, including the cost of the test centre.

Mr. Nixon: It sounds like the old Krauss-Maffei thing.

Mr. Cassidy: That’s like down at the Exhibition.

Hon. Mr. Irvine: Relative to this programme, the centre will be equipped with a 2,560-metre track with a station, with elevated and at-grade track sections and with automation --

Mr. Cassidy: You tore the last one down.

Hon. Mr. Rhodes: Never built it.

Mr. Speaker: Order, please.

Hon. Mr. Irvine: -- equipment to develop and test its prototype technology.

This new test centre will also play a large role in the development of both the new light rail transit vehicle for Toronto and future generations of light rail vehicles. The centre will include a 4,800-metre light rail track for just this purpose.

In addition to the two tracks, the site will also house office and technical facilities for as many as 100 staff members and subcontractors.

The selection of a site in the Kingston area is particularly appropriate in light of this government’s commitment to a policy of encouraging the development of eastern Ontario. In our view, the Kingston area represents a major focal point of economic development in the eastern sector of the province.

Mr. Cassidy: You didn’t pick Prescott. What about Prescott?

Hon. Mr. Irvine: It has a well-developed industrial and commercial base; it is central to both Toronto and Ottawa. It is the home of Queen’s University and it is accessible from the country’s major highways and railways.

Mr. Conway: Do you think it will save the Minister of Community and Family Services (Mr. Taylor)?

Mr. McEwen: Point of order.

Mr. Speaker: Order, please. Is there a point of order?

Mr. McEwen: Yes, Mr. Speaker, I would like to ask why this particular location was decided on.

Mr. Cassidy: He has never got up before, Mr. Speaker.

Mr. Speaker: Order, please. I’m sure that’s not a point of order. The hon. member may ask questions, during the question period, of the minister for information.

Mr. McEwen: I would like clarification if possible, Mr. Speaker.

Mr. Speaker: Can it not wait until the question period? I think it would be more appropriate at that time.

ISOLATED COMMUNITIES ASSISTANCE FUND

Hon. Mr. Bernier: Mr. Speaker, yesterday, my colleague, the hon. Treasurer (Mr. McKeough) of the province of Ontario, announced the establishment of the Isolated Communities Assistance Fund.

Under this fund, three-quarters of a million dollars will be available over the next 16 months to assist unorganized communities in northern Ontario to identify and tackle their most serious local problems.

I would like to stress today that my ministry is moving as quickly as possible to set up the necessary machinery to make sure that applications submitted to us will be processed with dispatch. We also want to establish as soon as possible the ground rules regarding eligibility.

To ensure that we have covered all the bases, I have already made contact with the two unorganized communities associations of northern Ontario, UCANO West and UCANO East, and I will be meeting with them in the very near future to obtain the benefit of their advice on these matters generally and more specifically the establishing of priorities.

In the meantime, I would urge any unorganized community seeking help with local servicing problems to contact its nearest Ministry of Natural Resources office or to write directly to me in Toronto in order that we may get on with the job of aiding our isolated communities to solve their problems.

WINTER TRAILS PROGRAMME

Hon. Mr. Bernier: The second statement is in connection with the winter trails programme. I’m pleased to announce that once again this year the government of Ontario will operate the winter trails programme to assist local trail clubs to provide outdoor recreation opportunities during the winter months.

Mr. S. Smith: Go right down off the end of the ski jump.

Hon. Mr. Bernier: The programme we are offering this year is made up of three parts. First, my own ministry will again be responsible for the winter trails grooming and maintenance programme. The funds allocated will be $250,000 and will be used in two ways: non-statutory grants to snowmobile and cross-country skiing clubs to do their own grooming and maintenance of trails, and for maintenance, repair and replacement of ministry equipment which we had loaned to the clubs for this purpose.

Second, the Ministry of Natural Resources will continue its winter trails programme on public lands in high-demand areas of the province.

Third, my colleague, the Minister of Culture and Recreation (Mr. Welch) has asked me to mention that trails clubs may apply to the Wintario fund for financial assistance for trail-related capital projects.

Mr. Breithaupt: I’ll bet he has.

Hon. Mr. Bernier: Applications for funding from my ministry’s $250,000 trail programme for grooming and maintenance should be made directly to the nearest office of the Ministry of Natural Resources.

Mr. Ruston: What a farce!

Mr. Breithaupt: The line forms on the left.

Hon. Mr. Bernier: Are the hon. members against the trails programme?

Mr. Kerrio: No, we are just getting the feel of it.

Mr. Speaker: Order, please. The hon. minister has the floor.

Hon. Mr. Bernier: Those clubs wishing to apply for Wintario funding should apply directly to the local field office of the Ministry of Culture and Recreation. It is our hope that this programme of government assistance will give thousands of Ontario people a rich opportunity to enjoy recreation on winter trails during this coming season.

Mr. Breithaupt: There’s a long, long trail a-winding.

ECONOMIC STRATEGY

Hon. Mr. McKeough: Mr. Speaker, today I want to set before the Legislature the government’s economic strategy for the upcoming year.

Mr. Breithaupt: That won’t take long.

Hon. Mr. McKeough: Our objectives remain unchanged: to sustain economic recovery without rekindling inflation and to keep Ontario fully competitive in terms of investment and new jobs.

The thrust of our policies in the last two budgets has been to reduce the growth in government spending and to trim our bureaucracy in order to make room for private sector expansion and improved take-home pay. I am convinced this has been the right course because it shifts economic resources into the market economy, thereby building a more solid base for future growth and prosperity. We intend to continue this basic strategy of public sector control and private sector expansion during 1977.

Mr. Cassidy: That is known as private affluence and public squalor.

Mr. Speaker: Order.

Hon. Mr. McKeough: In this statement I shall review Ontario’s economic performance and prospects. Though the Ontario economy is back on trend, continued healthy expansion requires perseverance in the attack on inflation and a positive climate for increased business investment and job creation. I shall also outline the main dimensions of the spending plan which the government has drawn up for 1977-78 and announce several tax changes. We intend to continue spending restraint in 1977 and to provide long-term tax incentives to ensure that this province records another dynamic and productive year.

Mr. Cassidy: Just like the last one.

Mr. Breithaupt: How big is the deficit?

Interjections.

Hon. Mr. McKeough: In my April budget, I predicted brisk economic growth for the Ontario economy during 1976.

Mr. Bain: You were wrong then too.

Mr. Speaker: Order.

Hon. Mr. McKeough: This was predicated on the strong surge of activity in the second half of 1975, propelled by this government’s expansionary actions plus anticipated recovery in the US economy. To date, the American economy has not rebounded as strongly as I had hoped --

Mr. Bain: They don’t have the benefit of --

Mr. Speaker: Order, please.

Hon. Mr. McKeough: I know this hurts.

Mr. Breithaupt: It hurts the province.

Mr. S. Smith: Just take an Aspirin and read it anyway.

Mr. Speaker: Order.

Hon. Mr. McKeough: Ontario, nevertheless, is having a reasonably good year. Our real gross provincial product is expanding at better than five per cent, while prices have risen considerably less than I had predicted. Productivity has improved and, adjusting for seasonal factors, nearly 100,000 new jobs have been created since mid-1975.

We can be justifiably proud of these economic results. Over the last three years -- that is, during the course of the last business cycle -- Canada has significantly outperformed such other jurisdictions as the United States, Japan and the OECD bloc of industrial nations. And Ontario’s record in industrial production has exceeded that of Canada.

Turning to the prospects for next year, I am quite optimistic. Published 1977 forecasts for the Canadian economy range from four per cent to better than six per cent real growth, along with a continuing reduction in the rate of inflation. No improvement is foreseen for unemployment in Canada however, and business investment is expected to remain sluggish. I anticipate broadly similar trends for the Ontario economy.

[2:15]

While there is weakness in our manufacturing and construction sectors, exports and consumer spending are advancing strongly. I look forward to a greater increase in new jobs in Ontario than in 1976 which should improve our employment rate.

Overall, I expect our real output in 1977 to grow at about the five per cent rate achieved in 1976, and prices should continue to moderate. This will provide a sound basis to begin the process of phasing out the anti-inflation programme.

The challenge for economic management in 1977 is to ensure that cost and price stability is restored in the Canadian economy so that controls can be terminated on schedule. The reason we have controls today is that during a period of international inflation Canada tried to have the best of both worlds. We wanted high levels of public services and low taxes; we wanted high wages, high salaries and high profits and low costs and low prices. All participants in the economic process -- government, labour and business -- must now accept with hard-nosed realism that we can’t have the best of both worlds.

Mr. Swart: With your government we can’t have either.

Mr. Speaker: Order, please.

Hon. Mr. McKeough: To ensure the growth, jobs and prosperities we all want, Canada must remain competitive with its trading partners.

Mr. Wildman: You are going to have high unemployment.

Hon. Mr. McKeough: We are now more than a year into the anti-inflation programme and I believe that the progress made is encouraging. As of October, the year-over-year increase in the consumer price index had declined to 6.2 per cent, a full four percentage points lower than the double- digit level of the previous two years. Certainly, much of this improvement is attributable to the decline in the food prices, which are only partly subject to controls.

Mr. S. Smith: Hurray for the feds.

Hon. Mr. McKeough: But there has also been encouraging moderation in other cost-of-living components.

Some people would lead us to believe that the AIP works only to control wages and salaries --

Interjections.

Hon. Mr. McKeough: -- while prices and profits go unrestrained. This view simply does not square with the facts. Collective bargaining settlements have indeed come down significantly to 9.7 per cent in the third quarter of 1976, from about 15 per cent in the spring of 1975. But real wages are rising faster today than they were prior to controls and the share of gross national product accounted for by wages and salaries has increased over the past 12 months. Corporate profits have not shown comparable gains; in fact, their share of GNP has declined.

An hon. member: Give them another tax concession.

Hon. Mr. McKeough: Later in this statement I shall discuss the matter of profits more fully. Suffice it now to note that shrinking profits bring falling investments and that our economy, with its still growing labour force, must invest and must grow.

I would like to table, for the information of the members, a report prepared by my staff which assesses the operation of the AIP since its inception last October. I am convinced the controls programme has been successful in restraining price inflation without sacrifice of jobs or real income. I am confident the programme can be phased out on schedule.

Mr. Warner: You should be phased out on schedule.

Hon. Mr. McKeough: Hon. members have been informed by the Premier (Mr. Davis) of Ontario’s intention to seek other constructive suggestions and proposals for actions this government can take on its own, as well as for directions that national economic policy should take following termination of the controls programme.

Mr. Conway: Did Turner write this?

Hon. Mr. McKeough: We intend, in a public way, to involve representatives of all sectors of society in the development of provincial positions on these matters.

I would now like to turn to the matter of improving productivity, which is the key to strong economic performance in the longer run.

Mr. Cunningham: Give Lorne a job.

Mr. Moffatt: He’s got a full-time job.

Hon. Mr. McKeough: Productivity results not just from the efforts of labour but also from capital investments, technological advance and human initiative. In my budget statement last April I drew attention to the wide productivity gap between Canada and the United States. Since then the American government has revised downwards its productivity statistics, and Canada’s relative performance does not look quite as bad.

Nevertheless, there is no room for complacency. The basic fact remains that productivity in Canadian manufacturing is almost one-fifth below that in the US, while our average wages in manufacturing are above US levels. At the same time, Canadian firms face higher interest costs and Canadian exporters face an exchange rate above parity.

Mr. Lewis: Where is the evidence for that statement?

Mr. Speaker: Order, please. Order.

Mr. Lewis: If that comes from the C. D. Howe Institute, it is not valid.

Mr. Speaker: Order, please.

Hon. Mr. McKeough: The problems created by this situation are well known.

Interjections.

Mr. Speaker: Order.

Hon. Mr. McKeough: Since 1973 there has been little expansion and not enough new job opportunities have been created in Canada’s manufacturing sector. Our trade balance in finished goods has continued to deteriorate. Even after the revival in the auto sector, the trade deficit has come down only modestly.

Productivity improvement is a question of vital significance for Ontario, because this province accounts for over half of all manufacturing employment in Canada.

Interjections.

Hon. Mr. McKeough: If we hope to maintain and expand our manufacturing base and the high-paying jobs that it generates, then we have no choice except to increase our productivity.

Ms. Bryden: You are operating below capacity.

Hon. Mr. McKeough: Later in this statement I will outline tax measures to encourage investment in new machinery and equipment, thereby upgrading our efficiency.

I am convinced, however, that there must also be a basic reorientation of thinking and attitudes if we are to remain competitive in the post-control period, including: A recognition that healthy profits are crucial to new investment --

Mr. Nixon: How healthy?

Hon. Mr. McKeough: -- a realization that only through increased investment and increased productivity can we secure permanent gains in employment; a recognition that our plants must be of world scale, even though this means more concentrated industries; and a reappraisal of foreign investment policies at both the federal and provincial levels to ensure that we are not discouraging beneficial capital inflows.

Mr. Renwick: What a reactionary approach.

Hon. Mr. McKeough: All members will appreciate the key role played by our private enterprises in generating the new investment, jobs and rising incomes essential to continued prosperity in Ontario.

Mr. Lewis: You sound like a public relations officer for the Chase Manhattan Bank.

Mr. Yakabuski: Will you listen for a change?

Mr. Speaker: Order!

Hon. Mr. McKeough: But this activity will only take place when corporations large and small are earning adequate profits and have confidence about the future.

An hon. member: What does that mean?

Hon. Mr. McKeough: They must also believe in the ability of government to guide the economy with a minimum of interference and to create an environment which encourages savings and investment and rewards private initiative.

Interjections.

Hon. Mr. McKeough: Weakness in profits reduces corporate cash flow and holds down investment. For the interest of members, I have provided a table showing the after-tax profits performance of 30 important Ontario corporations which have reported results for the first nine months of 1976. The figures show a decline for most natural resource companies, including mining, oil and pulp and paper. Overall, after-tax profits are down 2.7 per cent for these large companies, while sales are up 11.1 per cent. Profits before taxes for those 30 large companies show a similar adverse trend.

The rapid inflation of recent years has had both positive and negative effects on corporate profits. While inventory profits have been substantial in many cases, overall growth in profits has slowed considerably since 1974.

Interjections.

Mr. Speaker: Order.

Hon. Mr. McKeough: Pre-tax profits in Canada, which rose at an average of 22.1 per cent per annum from 1972 to 1974 after adjustment for inventory inflation, increased by 8.1 per cent in 1975 and are estimated to rise about 10 per cent in 1976. This downtrend is also reflected in the drop in pre-tax profits expressed as a percentage of gross national income from 13 per cent in 1974 to an estimated 10 per cent in 1976.

Mr. Moffatt: Has the member for London North (Mr. Shore) read this?

Mr. Foulds: where’s the member for London North?

Mr. Speaker: Order, please.

Hon. Mr. McKeough: The longer-run implications of these developments are unclear. In fact, there is much debate about the nature of the impact of inflation on corporation and its implications for social equity, investment and productivity. There is an obvious conflict between the conventional accounting tenets which show rapidly rising profits in inflationary periods and the stock market’s negative and nervous reaction. Profits and debt financing are the vital lubricants of business investment and growth and there will be enormous public and private demand for capital in the years ahead.

I believe it is essential that we understand better the implications of inflation on corporate finances. My concern is that dealing with the performance of profits in the economy, we substantially underestimate the impact of inflation on replacement costs to the individual firm.

Mr. Warner: Here we come.

Hon. Mr. McKeough: I think there is general agreement that financial statements, based on traditional historical cost accounting, understate the escalating costs to business of replacing machinery, equipment, buildings and inventory.

As members are aware, investments create jobs. The sensitivity of the investment climate is a real and frequently troublesome factor in the job creation process. I think we have to be concerned, therefore, if financial statements are overstating the profit performance of our industries and overstating the soundness of their position.

At the extreme, we have the example of British Leyland, a major United Kingdom automotive firm, which was forced into virtual receivership despite financial statements which continued to report profits. The chances are high that this kind of situation is more widespread than we suspect.

The effects of misrepresentation of financial status can affect us in a number of ways.

Mr. Cassidy: Expenses are high.

Hon. Mr. McKeough: Individual investors are faced with incomplete --

Mr. Cassidy: Where was your research in all of this?

Hon. Mr. McKeough: -- and inadequate information on which to base decisions. Even well-managed pension funds, which account for a large and growing share of business ownership, face this problem. Certainly, equity markets have discounted share values for the impact of inflation and the dismal results are plain to see. To the extent that traditional business accounting does not reflect these realities, company management is unable to assess accurately its own performance or to determine appropriately capital investment decisions.

I believe, furthermore, that the public interest is not properly served by a narrow access to information about the actual performance of the private sector. This affects not only the public perception of the business community but also government’s appraisal of the economic environment and the regulation of securities markets.

There has already been considerable discussion and preliminary study of so-called inflation accounting both in the private and in the public sectors. I believe the merits of such financial disclosure have been well documented and other jurisdictions are already pulling ahead of us in this matter. For example, a programme of action has already been initiated by the Securities and Exchange Commission in the United States, and various countries in Europe as well as Australia are either studying the matter or have taken action on it.

The capacity of the business community to undertake job-creating investment is vitally important to the economic well-being of Ontario and a matter of concern to all of us. Our citizens have a direct stake in the health of business through their pension funds and personal savings. Therefore, the government is establishing a committee to examine the various options open to us and to advise on a course of action for implementing a programme of financial disclosure of the effects of inflation in Ontario.

I understand that others both at the federal level and in various professional organizations have expressed an interest in the problem. I believe, however, that Ontario must take the lead. We have retained the Toronto chartered accountancy firm of Touche Ross and Company to undertake this study, and have asked Michael Alexander, a partner of this firm and a fellow of the Institute of Chartered Accountants of Ontario to take responsibility for chairing the committee. Mr. Alexander has previously been extensively involved in a major study of this issue and has been the author of a number of important papers on the subject.

In addition I have asked four other experienced individuals, representing a spectrum of interests and backgrounds, to assist Mr. Alexander in this undertaking. These four are: Mr. Adam Zimmerman, executive vice-president of Noranda Mines Limited; Mr. James Fleck, the Deputy Minister of the Ministry of Industry and Tourism --

Mr. Lewis: Oh, the Harvard business world.

Mr. Speaker: Order.

Hon. Mr. McKeough: Mr. Sam Martin, professor of business administration, University of Western Ontario, and Mr. Gordon Milling, director of research, United Steelworkers.

Mr. Lewis: If you could find a woman you would have every minority group.

Hon. Mr. McKeough: Peter Honey, assistant deputy minister in my own ministry, will serve as secretary of the committee. Additionally, Charles Salter, director of the Ontario Securities Commission, and Morley Carscallen, partner in Coopers and Lybrand and chairman of the financial disclosure advisory board of the Ontario Securities Commission, will act as advisers.

During the next six months, the committee will solicit the views of a broad range of people with an interest in the subject. I also expect they will involve other individuals and organizations with an expertise in the area to provide an input in the process. I anticipate a full set of recommendations of the scope, process, and implementation procedures for a programme of business disclosure of the effects of inflation.

Along with this statement is a more detailed description of inflation accounting, together with terms of reference of the committee.

Mr. Cassidy: You might begin with some business disclosure.

Mr. Speaker: Order, please.

[2:30]

Hon. Mr. McKeough: Mr. Speaker, a key element in Ontario’s economic strategy is control of government spending. The government of Ontario has clearly stated its philosophy on this issue -- excessive growth in public spending bids away economic resources from more productive uses, contributes directly to inflationary pressures and detracts from the long-run growth capacity of the economy. We have worked hard in this province to avoid these pitfalls and in the process have emerged with more efficient public services and less upward pressure on our tax structure.

This maintains our financial integrity, strengthens our inherent economic advantages and gives us more leeway to respond to short-term stabilization requirements.

Our approach of overall limits on spending growth plus sharper priority setting within these limits will continue in 1977-78. The government has established a ceiling of 9.6 per cent as the spending increase that this province and its taxpayers can afford for the next fiscal year. This compares favourably with the now estimated 11.5 per cent increase in the current year and, more important, is substantially below the expected expansion rate for the economy as a whole in 1977. I shall outline the main details of our 1977 spending plan in a moment, but first I would like to review for members the performance of our 1976 budget plan.

Mr. Speaker, in October we published the second-quarter issue of Ontario Finances. It showed that after six months of the current fiscal year our 1976 budget plan was right on target. On both the revenue and expenditure side our actual performance was within four-tenths of one per cent of the original total, and our cash requirements were virtually unchanged from the $1,230 million tabled in the Legislature on April 6, 1976. As we enter the eighth month of this fiscal year our finances are still on target.

As of today, I estimate our revenues at $11,378 million, up $32 million, and our expenditures at $12,616 million, up $40 million. This revises our cash requirements to $1,238 million -- only $8 million above my original plan.

Some hon. members: Only?

Mr. McClellan: What’s $8 million?

Hon. Mr. McKeough: All ministers and deputies of the government have responded to the Premier’s (Mr. Davis) strong leadership in controlling --

[Applause.]

Mr. Breithaupt: The member for London North (Mr. Shore) doesn’t applaud.

An hon. member: There is one for Roy.

Mr. Bullbrook: Now we know Marvin wrote that.

Mr. Moffatt: Who wrote that?

Hon. Mr. McKeough: I needed a rest.

Interjections.

Mr. Speaker: Order, please.

Hon. Mr. Davis: Great phrase.

Mr. Lewis: Just get to the revised version.

Mr. Speaker: All right now, order, please.

Hon. Mr. McKeough: Mr. Speaker, all ministers and deputies have responded to the Premier’s strong leadership in controlling our spending and have contributed to this success.

Hon. Mr. Davis: Ask my wife.

Hon. Mr. McKeough: They have made sure our new budget control system works, even though this meant shifting resources out of their own ministry estimates to meet unavoidable and unforeseen increases in other areas such as hospitals, community arenas and firefighting. This has allowed Management Board to keep in-year spending deterioration to a bare minimum. It demonstrates that with firm resolve, government can trim costs and shift priorities to meet new needs.

To date, the government had identified some $233 million in spending requirements over and above the 1976 estimates. The Chairman of Management Board (Mr. Auld) will table today supplementary estimates covering $159 million of this amount. The balance of $74 million represents statutory items and contingencies for other potential overruns. The important thing, however, is that our net additional spending for 1976 has been kept to $40 million; the rest of the unavoidable increases in spending have been offset by deliberate savings which we will realize within the original estimates.

The government’s top goal in determining its 1977 expenditure package was to contain the increase in our total spending well below the expansion in the economy as a whole. Our second goal was to ensure that our commitments to local governments were fully honoured. Our third goal was to minimize our operating costs and overhead expenditures so that more resources would be available for job-creating investment projects.

The 1977 spending plan which I am outlining today meets each of these objectives. Total outlays in 1977-78 are planned at $13,830 million, an increase of $1,214 million or 9.6 per cent over the current year. Originally the government had aimed at the extremely difficult target of an eight per cent increase for 1977 but found that this was unachievable without harm to essential provincial services. Let me emphasize, however, that this $13.8 billion amount is the spending ceiling for next year. If new requirements arise during the year, we will adjust our spending plan to find the necessary funds within that total.

Transfers to local governments will increase by $330 million, in line with our Edmonton commitment. This is a considerably more generous increase at 10.7 per cent than we have allowed for our own account spending, which will rise by only 9.3 per cent.

Ms. Bryden: Still taking some back on the Edmonton commitment.

Mr. Speaker: Order.

Hon. Mr. McKeough: Members will recall that the government announced this important element of our spending plan on September 10, and that early announcement has proved extremely helpful to municipalities, school boards and local agencies. It has allowed them to plan ahead and prepare their budgets for 1977, knowing with certainty the provincial transfers they would receive. I have received numerous messages of appreciation to this effect. To quote a recent letter --

Mr. Moffatt: Which is the other one?

Hon. Mr. McKeough: -- from the president of the Association of Municipalities of Ontario:

“The board of directors of the association and its member municipalities express their appreciation to you in fulfilling the commitments that you made last year to provide local governments with advance notice on proposed provincial transfer payments for 1977-78 and for having achieved this objective some six and one half months prior to the fiscal year-end of the province and three and one half months prior to the municipal fiscal year-end.”

Ms. Bryden: You are not living up to the commitment.

Hon. Mr. McKeough: I am hopeful that we can provide this early notice of provincial transfers again next year as it obviously is a great help in local budgeting.

Turning to our own account spending, after meeting the Edmonton commitment, we have provided $884 million in new dollars for all of our programmes. Health care is allotted $360 million, an increase of 11.6 per cent, including an additional $64 million for home care, extended care and mental health and other special health programmes. Support for universities and colleges plus student aid is increased by $89 million, up 9.3 per cent. Provincial social assistance is allotted $69 million or an 11.8 per cent increase. Spending on agricultural programmes is increased by $14 million or 12.8 per cent.

We have also allotted increases of $85 million and $150 million respectively for civil service salaries and interest on the public debt. The remaining $117 million is distributed among all other programmes, including provincial roads and transit, provincial loans and general government support.

I believe the government has drawn up a balanced and responsible spending plan for next year. When it is brought forward in the form of detailed estimates, I am confident it will commend itself to all members of the Legislature.

In concluding this explanation of our 1977 spending plan, let me report on two related matters. As of October 31, we have achieved our target reduction of 1,000 civil service complement positions during this fiscal year.

Mr. Wildman: How many casuals do you have?

Mr. Speaker: Order, please.

Hon. Mr. McKeough: We are now down to 66,537 complement positions, a cut of more than 4,200 since 1974. This pruning has been a very healthy exercise; it has left Ontario with a leaner and more efficient public service. The government has decided not to push for further complement reductions in 1977. Rather, we shall strive within the constraint of zero growth to achieve further efficiencies in the use of our manpower and better service delivery to the taxpaying public.

One of the most useful actions we have taken in waging our war on waste was to establish a special programme review committee. It brought us refreshing outside perspectives to the evaluation of our spending and challenged long-held views. Having completed its review of the special programme review report, the government agrees in principle with many of its recommendations, as indicated by the

summary response which I shall table today. Details on how specific recommendations are to be implemented or their purpose otherwise accomplished will be the responsibility of individual ministries. The job done by the special programme review committee was a very useful exercise for the government as a whole. We see great merit in undertaking such a searching examination of our spending on a regular basis.

Before proceeding with the tax actions the government now proposes, I should like to report on the fiscal aspects of federal-provincial affairs. As members know, the provinces have been negotiating with the federal government to devise new fiscal arrangements for the next five years. These negotiations have been conducted against a background of federal retrenchment on all major fronts.

On the positive side, however, the federal government has come around in its thinking and seems prepared to proceed with fundamental reforms of our fiscal arrangements, particularly in respect of the mature shared-cost programmes. Members are aware that Ontario and some other provinces have argued consistently that cost sharing should be replaced by tax sharing, providing provinces with the independent fiscal capacity to carry out their constitutional responsibilities. On the basis of the current federal proposals, it appears that Ottawa is now ready to accept this basic change.

I believe an important breakthrough among the provinces themselves has been achieved. After a number of meetings of provincial finance ministers, we have been able to agree on a common position to take to the bargaining table with Ottawa. Undoubtedly, this consensus reflects the concern of all provinces over federal fiscal retrenchments but it also represents a real achievement, given the regional differences that exist across this country.

The largest single issue for the provinces is the revenue guarantee. Its termination without equivalent replacement means an erosion of the occupancy in the income tax field that the provinces have held for over a decade. The provinces are unanimous that a fair and appropriate replacement requires the transfer of four personal income tax points. I believe the federal government recognizes the legitimacy of the provincial argument and will not act in such a way as to jeopardize the trust on which our federal system is based.

What Ontario seeks in these federal-provincial negotiations is disentanglement of responsibilities and a commensurate redistribution of fiscal resources between levels of government so that public services can be provided more efficiently. Obviously, this should be possible without an increase in the total tax burdens. I am optimistic that the current negotiations with Ottawa will lead to this result. As these negotiations will continue over the next few months, it would be premature for Ontario to prejudge the outcome by raising its income tax rate as of January 1, 1977.

I am announcing today, therefore, that Ontario’s tax rate will remain at 30.5 per cent until these fiscal negotiations are finalized. The Minister of Revenue (Mr. Meen) will introduce the bill today.

Mr. Lewis: Surprise, surprise.

Mr. S. Smith: They sure backed down on that one.

Mr. Speaker: Order, please. Order.

Mr. Roy: That’s called retreat.

Hon. Mr. Rhodes: You guys are the experts.

Hon. Mr. McKeough: While on the subject of the personal income tax, I would like to take this opportunity to draw members’ attention to an important --

Mr. Roy: You backed right off.

Hon. Mr. Davis: No. They’re showing some reasonableness up there.

Hon. Mr. McKeough: -- to draw members’ attention to an important research study just completed by my staff. Ontario Tax Studies 12, which I am tabling today, analyses the major growth characteristics of the personal income tax in Ontario and examines how the income tax system is used to encourage savings and investment. This province intends to continue its research on the tax system and to ensure that the 1972 reforms and subsequent changes work to the benefit of our economy and our taxpayers.

The temporary exemption of production machinery from retail sales tax is scheduled to expire at the end of this year. There is ample evidence that this has been an effective incentive. Our businesses have used it to expand production and improve their competitiveness.

Mr. Cassidy: There is no evidence of that.

Mr. Speaker: Order, please.

Mr. Lewis: There is no evidence.

Mr. Speaker: Order, please!

Hon. Mr. McKeough: All Ontarians benefit from these actions because the economy generates a high return from the tax dollars so invested.

Mr. Lewis: No evidence.

Mr. Speaker: Order, please.

Hon. Mr. McKeough: In recent years, Ontario’s share of total new investment in Canada has been declining. A number of factors account for this trend including the massive investment in energy resources and major public projects in other parts of Canada such as the Olympics.

On the other hand, Ontario’s share of new investment in machinery and equipment has continued upward, increasing steadily from 38.5 per cent in 1972 to 39.4 per cent in 1975. It is clear from these figures that this province continues to have a strong underlying attraction to the manufacturing and related industries.

Mr. Lewis: That is natural. That is nothing to do with the tax credit. That is just natural growth.

Mr. Speaker: Order. Order, please.

Mr. Lewis: Of course it is.

Hon. Mr. McKeough: Mr. Speaker, this reflects our favourable geographic location --

Mr. Lewis: Precisely.

Hon. Mr. McKeough: -- our highly skilled labour force --

[2:45]

Mr. Speaker: Order, please. The hon. minister has the floor.

Hon. Mr. McKeough: -- our strong resource base, and of course stable and conservative government.

Mr. Lewis: That has nothing to do with the sales tax credit.

Mr. Speaker: Order, please.

Hon. Mr. Davis: If you don’t believe us just recall what happened in British Columbia.

Interjections.

Mr. Speaker: Order. The Treasurer has the floor.

Hon. Mr. McKeough: Mr. Speaker, over the past two years there has been another significant trend in investment patterns in Ontario -- a productive shift in favour of private sector investments, particularly in machinery and equipment. The business share of total new investment has risen by more than one percentage point, and the share of machinery and equipment investment a full two percentage point. This transfer of resources directly reflects the government’s restraint programme and its tax policies.

In particular, the temporary exemption of production machinery and equipment, introduced in April, 1975, and the incentives provided to the mining industry since 1974, have proved to be powerful stimulants.

Mr. Cassidy: Not proven, not proven!

Hon. Mr. McKeough: In 1976, for example, the growth in new investment in our manufacturing and mining industries is expected to be significantly higher than in the rest of the country.

This province must remain competitive with other jurisdictions in terms of attracting new industry and investment. Even with the present exemption on production equipment, the sales tax burden on new investment is higher in Ontario than in Michigan, Ohio, Pennsylvania or New York, and about level with Minnesota and Quebec. A reimposition of the retail sales tax on January 1, 1977, would mean a much higher tax burden in Ontario than in any of these other jurisdictions.

Mr. Breaugh: You can’t even say it.

Hon. Mr. McKeough: This is clearly undesirable since it would reduce our competitive edge, hamper investment and retard job creation.

Mr. Lewis: What creation?

Hon. Mr. McKeough: I am including a table comparing our sales tax burden with that of other jurisdictions, to demonstrate why it is so imperative that we keep the sales tax off machinery and equipment.

Mr. Breaugh: Why don’t you compare the profits?

Mr. Breithaupt: How many jobs?

Hon. Mr. McKeough: Effective January 1, 1977, therefore, I propose that the current temporary exemption be replaced by a new long-term exemption. This will exempt from tax all production machinery and equipment used by the private sector in the production of tangible personal property. I estimate that this tax measure will be $160 million in a full year, and perhaps $10 million in the remainder of this fiscal year.

Mr. Moffatt: This is incredible.

Hon. Mr. Davis: Your union supports it.

Hon. Mr. McKeough: Examples of the tax savings which --

Interjections.

Mr. Speaker: Order, please. Order.

Mr. Lewis: We certainly know where we get the money for the taxes; right here!

Hon. Mr. McKeough: Examples of the tax savings which will flow to business making new investments in Ontario are set out in the following table.

The definition of production machinery and equipment will be simplified by closely paralleling the federal exemption provision described in

part XIII of

schedule III of the federal Excise Tax Act. This important tax simplification initiative will be beneficial both to the government and business enterprises. The new definition is also broad enough to encompass pollution control equipment and equipment used to remove waste and noxious fumes. Full details will be provided by the Minister of Revenue (Mr. Meen).

In addition to this long-term cost-reducing incentive, I will be considering the merits of extending the manufacturing and processing fast write-off for Ontario tax purposes. This incentive was introduced by the federal government and paralleled by Ontario in 1972 to reduce the tax burden on the manufacturing sector. This action was necessary to keep Canadian industry on a competitive footing in light of the United States export-encouraging DISC legislation.

In 1974, the federal government extended the fast write-off incentive indefinitely, while we continued it until the end of 1977. The cost of this incentive will be a significant factor in our determination of whether or not it will continue. Under the revenue guarantee, Ontario is reimbursed by the federal government for the loss of tax revenues due to paralleling the incentive, but only until the end of this year. If the corporation tax revenue guarantee expires on December 31, 1976, as announced by the federal government, then Ontario would have to absorb the cost of the fast write-off for 1977 and subsequent tax years. This may be as much as $80 million in the 1977-78 fiscal year.

The Minister of Revenue will also be introducing a bill amending the treatment of foreign income under our Corporations Tax Act. It will provide a full foreign tax credit to parallel the tax treatment in other provinces.

The above incentives are extended to large and small businesses alike. However, small businesses still face many problems in raising capital for expansion. I am therefore tabling a progress report prepared by my staff on venture investment corporations. You will recall that I introduced Bill 44,

An Act respecting the Registration of Venture Investment Corporations, for first reading only with my 1976 budget legislation. Since that time my staff have had extensive discussions with interested individual company representatives, federal and provincial government officials and private sector associations. A revised version of the bill is attached to the report which is being tabled. We have requested a commitment from Ottawa that there will be no federal attempt to discourage or neutralize this incentive programme through contrary tax treatment.

In conclusion, let me sum up my statement today. After reviewing current economic performance and anticipated future trends, the government of Ontario has decided its basic economic strategy for the upcoming year. We will carry forward into 1977 our concerted effort to restrain public expenditure and to foster private sector expansion. These positive policies will work to combat inflation, to strengthen the competitiveness of our industries and to create expanded employment opportunities for our people.

Mr. Wildman: Is this the best you can do?

Mr. Speaker: Order.

Hon. Mr. McKeough: I believe this is the correct policy approach at this time. It builds upon our generally good economic recovery in 1976 and our reasonably buoyant prospects for next year; but it also stimulates the lagging sector of investment, which is the key to improved productivity, job creation and real prosperity in the long run.

Let me state clearly, however, that we will not adhere slavishly to this approach if circumstances change. We are monitoring the economic situation closely and are prepared to take decisive stimulating action, just as we did in 1975, if new policy initiatives are needed. The performance of the economy will be reported in our 1977 budget along with the province’s fiscal and financing programme for 1977-78.

Mr. Cassidy: Never have.

Mr. Conway: How about an election?

Mr. Breithaupt: One election at a time.

Mr. S. Smith: New bicycle buyers grant.

Mr. Sargent: Election promises.

Mr. Warner: If this is the best you can do, resign.

Hon. Mr. McKeough: Mr. Speaker, I am optimistic about Ontario’s future. This province has proven consistently that with the right combination of public policies, our inherently strong economy performs dynamically and generates for our citizens a standard of living and a quality of life second to none.

Mr. Eakins: Who wrote this?

Hon. Mr. McKeough: This government, under the wise leadership of the Premier (Mr. Davis), is determined --

Mr. S. Smith: Methinks he doth protest too much.

Mr. Peterson: Who wrote this, Jim Fleck?

Hon. Mr. McKeough: We are determined to continue to provide that right combination of policies for all the people of Ontario.

Mr. Eakins: Tell us more about the Premier.

Mr. S. Smith: You are embarrassed.

Mr. Speaker: Order, please.

Mr. Peterson: Wasting our time with that.

Mr. Cunningham: How much did that cost?

Interjections.

Mr. Speaker: Order, please. Any further statements?

Interjections.

Mr. Speaker: Order, please.

Oral questions.

SALES TAX EXEMPTION ON PRODUCTION MACHINERY

Mr. Lewis: A question of the Treasurer: Is he aware that officials of the Treasury ministry, meeting with those in the lock-up this morning, indicated there was absolutely no study done in the province of Ontario to determine the impact on jobs of his sales tax write-off for the purchase of machinery and equipment last year? And since he has no knowledge whatsoever of the impact on actual new jobs created by this write-off, why is the Treasurer willing now to give another $160-million gift to the corporate sector?

Hon. Mr. McKeough: Mr. Speaker, if the Leader of the Opposition would get over some of his pink inhibitions --.

Some hon. members: Oh, oh.

Interjections.

Mr. Speaker: Order, please.

Mr. Lewis: On a point of personal privilege, Mr. Speaker.

Mr. Breithaupt: It’s like calling him a socialist.

Mr. Speaker: Order. What is the point of privilege?

Mr. Lewis: Just for clarification. I thought the Treasurer was going to say “if the Leader of the Opposition would get over his pique,” but as I understand it he said “pink” what?

Some hon. members: “Inhibitions.”

Mr. Lewis: “Inhibitions.” Okay, I wanted to get it on the record.

Hon. Mr. McKeough: Mr. Speaker, if the Leader of the Opposition would get over his pique that we use the word “profit” and are proud of it on this side of the House -- and if he doesn’t know what the word is all about, then he doesn’t understand it!

Mr. Breithaupt: How many jobs?

Interjections.

Mr. Speaker: Order, please.

Hon. Mr. McKeough: But you won’t get over that.

Mr. Yakabuski: The only time he knew about profit was when it was at Browndale.

Hon. Mr. Bernier: He sold a house one time.

Mr. Speaker: Please, let’s have the answer.

Hon. Mr. Davis: Where’s your Pilkey button, Stephen?

Hon. Mr. McKeough: Mr. Speaker, if the Leader of the Opposition would look at page 29 of the statement and find out that in Michigan, Minnesota, New York, Ohio, Pennsylvania --

Mr. Moffatt: You are wrong again.

Hon. Mr. McKeough: That’s where the competition is, and the sooner he learns it the better he’ll know that’s where the competition is. Let me say this, there’s no competition coming from Manitoba, none from Manitoba, none from Saskatchewan. Our competition comes from the States and he knows it.

Mr. Deans: He substitutes volume for logic. He has never been able to show it; never been able to substantiate it.

Mr. Renwick: Boy, it’s time to change ministers, I can tell you that.

Mr. Speaker: Order, please. Could we have a non-provocative question?

Mr. Lewis: I hesitate to ask a supplementary, lest he expire from hyperbolic apoplexy, but if he can return to a more civilized demeanour as the Treasurer of Ontario, may I ask him why he is proceeding with this $160 million gift to the corporations in the manufacturing sector, without any evidence or documentation, when in fact, according to Statistics Canada, the capital expenditure on machinery and equipment for Ontario, 1976 over 1975, declined from 23.9 per cent in the previous year to 10.5 per cent in that year; and when the jobs in the manufacturing sector declined, in 1975 over 1974, by 6.5 per cent, compared to an increase of 2.7 per cent in all sectors?

Hon. Mr. Handleman: What would you do with it?

Hon. Mr. McKeough: Mr. Speaker, as calmly as I can, I say that it’s those kind of figures that give worry to us, it’s those kind of figures which lead us to say that this province must remain competitive; and the actions we’ve taken today will ensure that we are competitive.

Mr. Warner: Stop giving money away.

Mr. Renwick: You continue to pursue a system which doesn’t work.

Mr. Lewis: Why does the Treasurer continue to use an incentive which amounts to a $160 million gift to the corporations when --

Hon. Mr. Davis: Nonsense.

Mr. Lewis: -- now just listen to this and explain it to me -- the 1975 intentions for capital expenditure on machinery and equipment, as set by Statistics Canada, were at $2.3 billion; after the Treasurer announced his special tax credit the actual preliminary investment amounted to something just over $2 billion, that is a quarter of a billion dollars less purchase of machinery and equipment and $160 million additional from the public purse? How does he justify that?

Hon. Mr. McKeough: Mr. Speaker, we’ll be debating this, no doubt, when the bill comes forward.

Mr. Cassidy: Answer the question.

Interjections.

Mr. Speaker: Order, please.

Hon. Mr. McKeough: But I have to ask the Leader of the Opposition, how does he go on justifying the bankruptcy of socialist policy, after seeing what’s happening in Europe, in Saskatchewan, in British Columbia? When is he going to get off the red kick?

Interjections.

Mr. Breithaupt: The best defence is an offence.

Mr. Speaker: Order, please. Can we not have a more orderly question period? This is not the time for a full debate; that will come later.

Mr. Singer: Why call order for that? It is not against the rules to call ministers to order too, you know.

Mr. Speaker: Order, please. Is there a supplementary question to that? The hon. member for Welland-Thorold.

Mr. Swart: May I ask the Treasurer a supplementary? How can he justify the exemption of this sales tax to the private sector and not give it to the public sector, particularly local government, when municipal taxes this year increased, by his own figures, on the average of --

Mr. Speaker: Order, please. That’s sufficiently far away that it can be a new question later.

Interjections.

Mr. Speaker: Order, please. We’re getting into a far-ranging debate here. Let’s stick to the original question as much as possible.

Mr. Swart: May I finish the question on supplementary?

Mr. Speaker: No.

Interjections.

Mr. Speaker: Order, please. I think it’s going too far afield for a supplementary. You may work it in at a later time. The hon. Leader of the Opposition.

[3:00]

Mr. Lewis: By way of an additional or new question, Mr. Speaker, leaving the Treasurer’s ideological dialectics aside again for a second: If he can, can he explain, since he has no evidence of any jobs being created, and since he is giving away this $160 million gift to the corporations, is he not concerned that according to his September 10 statement, if memory serves me, the revenues for 1977-78 will be $12.219 billion, and as the Treasurer has said today that expenditures will be $13.830 billion his deficit will therefore be tabulated at $1.6 billion, an increase over this year’s deficit of 30.1 per cent? Is that part of his fiscal constraint programme?

Hon. Mr. McKeough: Mr. Speaker, the statement today did not touch on our forecast of revenue; that will be done in the spring.

Mr. Lewis: By way of supplementary, in his statement to the provincial-municipal liaison committee, September 10, 1976, he set out his projected revenue yield at $12.219 billion quite definitively. Is he now reneging on that projected revenue bill? In other words, he is adding almost $400 million to our deficit in Ontario by this statement today --

Mr. Yakabuski: Question.

Mr. Lewis: -- $160 million of it to the corporations.

Hon. Mr. McKeough: No, not $160 million, because that --

Mr. Cassidy: In a full year.

Hon. Mr. McKeough: -- that is in a full year, $10 million for the balance of this year. The $160 million would not all occur in 1977-78. But if the hon. member is asking if my revenue forecasts have changed since September 10, yes.

Mr. Lewis: Where are they now?

Hon. Mr. McKeough: They will be disclosed at the time of the budget, I assume in March or April.

Mr. Lewis: It was only two months ago you know.

Ms. Bryden: Supplementary, Mr. Speaker, to the Treasurer: If the revenue forecast has changed, will the Treasurer change the amounts under the Edmonton commitment to the municipalities?

Hon. Mr. McKeough: Mr. Speaker, the change in our revenue forecast at this moment would not make a significant difference in the Edmonton commitment figures.

Mr. Lewis: He didn’t know the deficit was there.

Mr. Speaker: Order.

Hon. Mr. McKeough: But I’m not going to get into a discussion today of what revenue forecasts may or may not become next March or April.

THUNDER BAY SKI JUMPS

Mr. Lewis: I have only one further question, if I may, to the Minister of Industry and Tourism who sits back in a somnambulant state --

Mr. Yakabuski: Question.

Mr. Lewis: -- stunned by the Treasurer’s announcement, no doubt.

Hon. Mr. Bennett: In full support; in full support.

Mr. Lewis: May I ask him, in the words of the document we heard today, in the spirit of government spending restraint, can he explain what he did with those ski hills in Thunder Bay to cost the taxpayers of Ontario several hundred thousand dollars more than originally anticipated? And can he also please release the details of the lease arrangements with the private holding with whom he has entered specific rental arrangements?

Hon. Mr. Bennett: Over the last two or three years we have invested a total of about $460,000 or $470,000 in building two international ski jumps at Thunder Bay. While I am willing to admit to the members that they are not profitable -- and that’s obvious -- I think they’re a direct contribution to the sports and athletic sector of the province of Ontario as much as it is in the field of --

Mr. Lewis: It’s not Minaki Lodge.

Hon. Mr. Bennett: The member asked a question. Does he want an answer?

Mr. Lewis: Yes.

Hon. Mr. Bennett: Okay. Very simply, Mr. Speaker, we have invested funds because we believe it was in the best interests provincially and nationally in assisting our national and international ski jumping teams. Indeed we have been able to bring to Thunder Bay the American ski jumping team as well as other competitive organizations sponsored by the private sector.

The fact is, Mr. Speaker, at the moment the group in Thunder Bay -- and his own member knows as much about the situation as anyone -- would like a further investment which we are not committing the government to.

Mr. Breithaupt: Jessiman’s fault.

Mr. Lewis: Even for sports and recreation?

Mr. Speaker: Order please. The member for Fort William with a supplementary.

Mr. Angus: Thank you, Mr. Speaker. Can the minister justify to this Legislature the actions of his ministry through the NODC to lease from Mount Norway the land for the outrun of Big Thunder ski jump on only a year-to-year basis instead of a long-term basis?

Hon. Mr. Bennett: Yes, we can justify it because there is a 20-year lease that we’re involved in with the Little Norway ski organization.

Mr. Angus: Were you asking for renewal each year?

Hon. Mr. Bennett: Mr. Speaker, at the moment what we are discussing with them is that they are looking for a bigger percentage on the funds paid to them because of the low revenue factors that the Thunder Bay ski jump has derived.

Interjections.

Mr. S. Smith: Supplementary, Mr. Speaker: Will, in fact, the minister table the leases that have been asked for with regard to these agreements with a private report? And can he explain to us how it is that the jump itself is on Crown land and yet the government has still had to enter into a lease with a private company that seems to enjoy a lease on that particular Crown land? Surely some other arrangement could have been made. Will the minister table those agreements?

Hon. Mr. Bennett: I shall look into the fact of tabling the lease and the agreements, but may I say that, while the ski jump is located on Crown property, the run-off from the ski jump is on privately held property.

Interjections.

Mr. S. Smith: Not the jump itself.

With the interjections, Mr. Speaker, I did not hear the answer. Did the minister say he would table them?

Hon. Mr. Bennett: I said I would take it under advisement.

Mr. S. Smith: Under advisement.

Mr. Stokes: I have a supplementary for the same minister. Will the minister undertake the possibility of embarking upon the development of Nordic and cross-country skiing in order to enhance the possibility of recovering some of the investment the government has placed there now?

Mr. Breithaupt: You could have a jump in the lake too.

Hon. Mr. Bennett: I have had the opportunity of discussing that with the member in regard to cross-country skiing. I think it’s very obvious that it has a potential in which we might be able as a ministry to encourage the private sector to become much more actively involved. That should supplement and complement the investment we already have in the resort industry that relates to the skiing industry in that part of the province.

Mr. S. Smith: Could the minister please tell us what possible reason there would be for not tabling these leases which involve the expenditure of public money, the taxpayers’ money?

Hon. Mr. Bennett: I have already said I would advise this House. I did not say that there was any reason but I would like to review it first.

Mr. S. Smith: Why?

Mr. Speaker: That was the final supplementary. The member for London Centre with the lead-off questions.

ECONOMIC STRATEGY

Mr. Peterson: I have a question for the Treasurer. I am just reviewing his documents of today. On page 3 he projects real growth at five per cent. With prices continuing to moderate from the current 6.2 per cent level, that adds up to 11.2 per cent. Yet on the other hand, on page 18, he is projecting growth at 12 per cent. Could he explain to the people of this province the disparity in those figures, which comes out in gross numbers to about $500 million?

Hon. Mr. McKeough: Five and six don’t make 11 in this particular instance. Those two figures don’t add.

An hon. member: Like Minaki Lodge.

Mr. Peterson: Just so we can clear this up, the Treasurer is projecting --

Mr. Speaker: Order, please. We can’t hear the question.

Mr. Peterson: At one point in his report, the Treasurer is projecting almost 12 per cent but in another place, when one breaks down that growth, he is projecting real growth at five per cent and price inflation moderating from the current level of 6.2 per cent. I think maybe he needs my help. Five plus 6.2 equals 11.2, is that not so?

Hon. Mr. McKeough: The point is that they do not add. One can’t take A and B and add them up to C in this particular instance. Those two indicators don’t total.

Mr. Reid: How did the Treasurer arrive at 12 per cent?

Mr. Peterson: What figures is he using to get his 12 per cent real growth then?

Hon. Mr. McKeough: That’s a separate figure which is being generally used. It happens to be our figure as well, but that’s a separate figure. But one can’t break it down into parts A and B.

Mr. Roy: Why don’t you just say --

Mr. Peterson: Where does the Treasurer get that figure then? He is using two different figures in two different circumstances to explain the same phenomenon.

Mr. S. Smith: What else is there but real growth plus inflation?

Mr. Peterson: I don’t think we’ll pursue that now because I don’t know if the Treasurer understands it. I just want to refer the Treasurer to page 2 in his report today, where he says the Ontario economy is the top performer. He’s talking in those circumstances about industrial production, Ontario being the heartland of the industrialized country. In terms of real growth we are lagging behind the rest of the country. I would like to know his explanation of why we’re off in retail sales, in job creation, in housing starts and all of the other very important indicators. Why is there only one we’re ahead in?

Hon. Mr. McKeough: We debated this, as I recall, a year ago last summer. As much as anything there is no escaping the fact that there have been significant developments in other parts of Canada. We can’t always be ahead of the rest of Canada, although we would like to. There is no way that the other regions of Canada are going to come up to something approaching our level of prosperity without growing at a quicker rate than we are.

It so happens that specifically one has to look at the very large energy investments in western Canada and at Baie James in Quebec, and to some extent the Olympics. Also what influenced the figures for 1975 in particular were the very large crops on the prairies.

Mr. Peterson: The Treasurer realizes, of course, that Ontario pulls the weighted average down; in fact, the real disparity is much greater than the figures reveal between 8.9 gross and 8.7 gross.

Mr. Speaker: Order, please. Is there a question?

Mr. Peterson: Would the Treasurer not agree with that? He wouldn’t?

Mr. Nixon: We are not averaged in with the rest of Canada.

Mr. Peterson: Mr. Speaker, if I may ask a few more questions of the Treasurer on this important document.

An hon. member: You are doing so well.

Mr. Peterson: The Treasurer talked about productivity and paid lip service to it in a very general way. Could he tell what his goals are for growth in productivity and how he sees that coming about?

Hon. Mr. McKeough: Mr. Speaker, I specifically defined that this afternoon. I think what still gives us cause for great concern is that although we have been making productivity gains our competition has been making equal gains. The fact is that our productivity today is still something like 20 per cent below that of the United States in the manufacturing side. I don’t know whether it’s realistic to think we can ever close that gap completely, given our geography as a country, given a smaller market and given the --

Mr. Nixon: And given the government of Ontario.

Mr. S. Smith: And given the Conservative government.

Hon. Mr. McKeough: -- efficiencies of scale which are in the United States but which aren’t necessarily here.

Mr. S. Smith: The geography was a good thing a moment ago.

Mr. Peterson: Can I ask a supplementary, Mr. Speaker? Does the Treasurer have any plans or any projections that he is going to require capital investment of so much to get so much increase in productivity? Does he have any plans or any goals in this area?

Hon. Mr. McKeough: Nothing that I would say specifically. I think there is no question that productivity is the sum of several parts. It happens to be -- to put it in lay terms -- how hard we work; how much money we invest; how technologically advanced the machine is. It will be a combination of a number of those things which is going to bring about productivity gains or continuing productivity gains.

Without being specific this afternoon, I can only tell the member that the Premier (Mr. Davis), the Minister of Labour (B. Stephenson), the Minister of Industry and Tourism (Mr. Bennett), the provincial secretary and others have been giving this whole subject a great deal of thought. We have nothing definite to put in front of the House at this moment.

Mr. Lewis: A supplementary: Where is the specific information for the contention the productivity in Canadian manufacturing is almost one-fifth below that in the US? As I recall, when the C. D. Howe Institute revised its statistics in February, 1976 -- the statistics which had been used by Macdonald in October when the AIB was announced -- it showed that Canadian productivity in the manufacturing sector had come up to a par with or slightly in excess of the US rate.

Mr. Renwick: Yes.

Mr. Lewis: I remember seeing those statistics.

Mr. Renwick: The Citibank figures say the same thing.

Hon. Mr. McKeough: Mr. Speaker, the Howe Institute revised its figures after the Americans had revised theirs. What the original figures had indicated was that the Americans were making greater gains in productivity than Canadians. What was unchanged after the figures were revised was still a relative difference of about 20 per cent on the manufacturing side.

Mr. Peterson: A further question of the Treasurer, Mr. Speaker. He says in his document that he has produced 100,000 jobs since mid-1975 which, of course, was the low point in the business cycle. Could he tell me how many jobs he has created in calendar year 1976?

Hon. Mr. McKeough: Let me correct that. We don’t create the jobs. We create the climate, hopefully, in which jobs will be created. The employment figures for -- during this year?

Mr. Peterson: Yes.

Hon. Mr. McKeough: They would indicate that for Ontario, on a seasonally adjusted basis, the labour force and employment and unemployment have stood still really since about the beginning of the year.

Mr. Peterson: Just so that I am clear. Is the Treasurer saying there were no new jobs created? How many new jobs in gross numbers were created?

[3:15]

Hon. Mr. McKeough: What we have seen is -- there have been jobs created but not nearly as many, perhaps, as there should have been. What we have seen, though, are some people leaving the labour force, perhaps prematurely, but --

Interjection.

Hon. Mr. McKeough: -- from the beginning -- let me give these figures: Our serious problems began in the last months of 1974, or early 1975. During that time employment has risen from 3,539,000 on a seasonally-adjusted basis to 3,700,000, which is exactly what -- 161,000 jobs?

Mr. Deans: Can the minister provide the statistics with regard to which firms took advantage of the machinery tax rebate since its inception and the numbers of new jobs created in those particular firms?

Hon. Mr. McKeough: No. There is no rebate. They have not paid the tax. This is an expected line of questioning by the party opposite.

Mr. Lewis: Of course.

Mr. Deans: Of course, because it is relevant.

Mr. Lewis: You add to their profits. Interjections.

Mr. Speaker: Order.

Hon. Mr. McKeough: There is no way that our firms can compete with Quebec and with our neighbours to the south and pay a seven per cent tax. The question you should ask yourselves is how many jobs you want to “uncreate” by high rates of taxation.

Mr. Lewis: That wasn’t the reason for your intervention.

An hon. member: The facts of unemployment.

Mr. Deans: You haven’t produced one single job by that programme, not one. In fact, you have eliminated jobs.

Mr. Speaker: Order, please.

Hon. Mr. Davis: No.

Mr. Deans: Yes.

Hon. Mr. Davis: No.

Mr. Deans: Yes, you have eliminated jobs.

Interjections.

Mr. Speaker: The member for Beaches-Woodbine with a final supplementary.

Ms. Bryden: Supplementary, Mr. Speaker, to the provincial Treasurer regarding the unemployment rate. Is he not aware that --

Mr. Speaker: No, it is concerning the 100,000 jobs which were created. That is what the original question was.

Ms. Bryden: Yes, well since the unemployment rate on a seasonally adjusted basis has gone up between October, 1975, and October, 1976, from 6.1 per cent to 6.3 per cent and the numbers from 239,000 to 247,000, does that not indicate that not enough jobs are being created?

Hon. Mr. McKeough: I wouldn’t deny that for a moment.

Mr. Roy: I have a supplementary.

Mr. Speaker: This will be a final supplementary.

Mr. Roy: I would like to ask the Treasurer, in view of the expected high unemployment this winter and in view of the fact that the high unemployment has affected especially the construction industry, in view of the fact that there is a shortage of affordable housing especially in the area of rental accommodation, why didn’t you pump some money into that sector to get jobs going and to build affordable housing?

Mr. Lewis: Because it is too sensible.

Hon. Mr. McKeough: Mr. Speaker, I think that the thrust of what I have been trying to say today is that our present difficulties in the economy, both in terms of inflation and terms of job creation not being at the rate which we would all like to see it, are not going to be solved by higher government spending and therefore higher government deficits. Surely if we have learned something in the last two or three years, it’s that we can’t spend our way out of either inflation or recession.

Mr. Reid: What about these?

Mr. Roy: What about the rebates on cars last year?

Mr. Speaker: The member for London Centre has the floor with a question.

CONTRACT EMPLOYEES

Mr. Peterson: You have cut the civil service down roughly by 1,000 to 66,537. Could you tell me please how many employees are on contract to the government?

Hon. Mr. McKeough: That’s a question that should be addressed to the Chairman of the Management Board (Mr. Auld); but there have been answers to questions tabled in the House which would indicate that the number of people on contract, the number of positions, the amount of dollars being expended, have remained relatively the same.

Mr. Peterson: Supplementary: What is that same figure, just for our edification.

Hon. Mr. McKeough: I don’t have that in front of me.

ECONOMIC STRATEGY

Mr. Peterson: Just one final question. Rather than this optimism which the Treasurer is displaying, would he not agree with me that when we see these figures, we are lagging behind most of the other provinces in terms of performance in most of the indicated areas, that’s an established fact. The only area where it appears we are ahead is in terms of industrial production. When we are creating jobs more slowly, according to the conference board, would the Treasurer not agree this is a time for some very serious action, and indeed some pessimism that leads to some healthy action, rather than just some optimism, that’s really in a vacuum as I see it?

Hon. Mr. McKeough: I wouldn’t agree that this is the time to be pessimistic. I did indicate at the end of my statement that we would continue to monitor the economy. There are obviously worrying things -- and seldom have there not been, I think -- but I see no need to change the stance we have taken, other than to continue the stimulation which we have been able to provide for the last year and a half to one part of the economy and which we think is very much needed.

Mr. Speaker: Before we proceed, perhaps the lights might be turned down since the cameras are no longer in operation.

The hon. Minister of Housing (Mr. Rhodes) has the answer to a question asked previously.

NORTH PICKERING PROJECT

Hon. Mr. Rhodes: Mr. Speaker, yesterday the member for Durham West (Mr. Godfrey) inquired as to what action my ministry would be taking tomorrow at the home of one Roy Bambrough in North Pickering in the face of a contention by Mr. Bambrough that a visit from my staff in that area would have adverse effects on the health of his wife.

Through a series of court actions, Mr. Bambrough has been able to remain in possession of the property he occupies, which was expropriated in February 1974 and for which the ministry requested possession in December 1974. In October of this year, a three-man divisional court decision rejected his latest appeal against the ministry’s writ of possession and on November 15 his request for leave to appeal to the Ontario Court of Appeal against that decision was also rejected.

The October decision contained the proviso that the ministry would not take possession of the property for a period of up to three months provided that the ministry shall be entitled to enter on the premises at all reasonable times for the purpose of inspection and appraisal of same.

On November 17 an agreement was reached between Mr. Bambrough’s solicitor and the solicitor for the ministry, in which it was determined that Wednesday, November 24, would be an appropriate time for the ministry’s inspection and appraisal. On Friday, a member of my office staff was served with a notice, the contents of which were discussed by the hon. member yesterday, and we have interpreted this notice as a revocation of the agreement reached between the solicitors two days earlier.

Consequently, the ministry has withdrawn for the time being its instructions for the appraisal team to enter the property occupied by Mr. and Mrs. Bambrough. On Monday, Mr. Bambrough’s solicitor was notified to this effect and informed that the ministry would apply to the court for more detailed instructions as provided for in the divisional court order of October 14.

Mr. Nixon: A supplementary: I wonder if the Minister of Housing could indicate, since the expropriation of that property in the Pickering area has caused so much disruption, both in the community and in this case personal disruption, what sort of a timetable the government has got for the development of that property, which they have been messing around with now for about three years or longer than that. Surely the minister ought to be getting out of that business and not continuing the pressure on the property owners in the area.

Interjection.

Hon. Mr. Rhodes: The member is not sure where North Pickering is. What is he talking about?

Mr. S. Smith: The minister knows where it is by now.

Hon. Mr. Rhodes: The hon. member is correct; there have been some difficulties with the acquisition of the land. I think all members are aware of that. There are still some of these matters to be cleared up and until such time as they have been finalized, it is very difficult to get on with the project. Some of the planning is carrying on, as it has been for some time now, and the North Pickering Development Corporation is working towards the goal of that development.

Mr. Speaker: A final supplementary.

Mr. Godfrey: A supplementary: Will the minister confirm that the plans were to dispatch six to eight officials in order to carry out the appraisal inspection and rental assessment and is this the usual number which is sent on that sort of an expedition?

Hon. Mr. Rhodes: Mr. Speaker, I don’t know whether it was six, eight or a dozen and I don’t know whether it is the usual number. The only time I’ve heard about these figures is in the document that was delivered to my office, in which Mr. Bambrough indicates that he was informed that some six to eight officials or agents were proposed to go to his property. I don’t know what the number would be, sir. I have no idea.

Mr. Godfrey: I suggest you ask your officials.

Hon. Mr. Rhodes: I suppose I could ask and find out. But, with respect, I cannot always accept what appears in a document that really is just a typed document, whether it is accurate or not.

Mr. Godfrey: Find out.

Hon. Mr. Rhodes: I am quite capable of finding out; I will do so.

LAYOFF OF CASUAL AND UNCLASSIFIED EMPLOYEES

Mr. Wildman: Mr. Speaker, I have a question for the Chairman of Management Board. In view of the statements made by the Minister of Natural Resources (Mr. Bernier) and his deputy minister on October 27 of this year during the debate on MNR estimates, that they were very concerned about Management Board’s proposal to require a yearly three-month layoff of casual and unclassified staff and were appealing that decision because MNR has considerable investment in these people and could not function without them, has Management Board reconsidered this proposal?

Hon. Mr. Auld: Mr. Speaker, all I can say at the moment is that Natural Resources has a problem about complement and part-time staff and we’re attempting to resolve it and probably will in the next three months.

Mr. Wildman: Could the minister indicate how many other ministries, other than the Ministry of Natural Resources, and how many individuals on the staff of these ministries are affected by these decisions? Does the minister really consider it honest to agree to allow casual and unclassified staff to accumulate sick-leave benefits in the spring and then to propose a policy in the fall to prevent these people from working long enough to be eligible to collect these benefits?

Hon. Mr. Auld: In answer to the first question, Mr. Speaker, I can’t give that figure to the hon. member today. In answer to the second question, I will produce the information, which will take a little time to get, because, as perhaps the hon. member knows, there are different types of unclassified staff. There are those who will work sort of permanently but on a part-time basis, if I can put it that way. There are those who are working permanently on a short-term basis, say a year or two years, and there are those who work seasonally.

Some of the seasonal people, particularly in the north, work say in the wintertime for Transportation and Communications in snow-ploughing and they work for Natural Resources in the summertime in tree planting. It’s a rather complicated arrangement, but I’ll attempt to get that information for the hon. member.

SEVERN PARK DEVELOPMENT

Mr. Riddell: Mr. Speaker, this is the question I asked the Provincial Secretary for Resources Development (Mr.

Irvine) yesterday, but receiving the usual answer I must ask the Minister of Natural Resources: What rationale could he possibly have used in reaching a decision to turn over a 25-acre parcel of wooded land known as Severn Park, south of Grand Bend, to Grand Bend and Bosanquet township for a possible use as an area community centre and other recreational facilities when he knew that this park presently has a tremendous stand of oak and pine, it’s used as a day camping centre and picnicking area for tourists, and right across the road from this area is land owned by the province which is scrub land and could well be used for the construction of a community centre?

Mr. Conway: Any politics in it, Mr. Bernier?

Hon. Mr. Bernier: Mr. Speaker, the Severn picnic area to which the hon. member refers was surplus land picked up by the Department of Highways back in 1942. We have developed it as a day use area over the years, but it has become surplus to our needs and the Grand Bend people were in to see us with a very interesting proposal for the 28 acres, one that would continue --

Interjections.

Mr. Speaker: Order please.

Hon. Mr. Bernier: -- the area as a picnic area for day use for the people who now use it and also for expanded recreational needs of the entire area. I am confident that the decision we’ve made is the right one, in the best interests of all the people in that specific area where the greatest use can be made of it by the greatest number of people.

Interjections.

Mr. Riddell: Would a factor in the minister’s decision have anything to do with the fact that Don Southcott, a former executive assistant to the former Treasurer, Charles MacNaughton, within the last month purchased the adjacent lot to Severn Park, knowing that he’s a developer and knowing that he wants to develop that land for which severances have been turned down to this point in time?

Hon. Mr. Bernier: No, Mr. Speaker.

Mr. Ruston: Lorne must have had a finger in this.

Hon. Mr. Bernier: You are denying your people a recreational opportunity.

Mr. Riddell: Further supplementary.

Mr. Lewis: Give him another supplementary.

Mr. Speaker: The hon. Solicitor General has the answer to a question asked previously.

Mr. Roy: When you are embarrassed you back off.

Interjections.

[3:30]

Hon. Mr. MacBeth: Mr. Speaker, the Legislature will recall that yesterday --

Mr. S. Smith: Point of order, Mr. Speaker.

Mr. Speaker: Order, please, the hon. Solicitor General, if we may.

An hon. member: It’s a trap.

Mr. Bullbrook: Don’t get excited, sit down for a few minutes.

Mr. S. Smith: Point of order, Mr. Speaker. Under what rule of the House have you decided to limit supplementaries to one supplementary on a serious question of this kind?

Mr. Deans: That is his prerogative.

Mr. Speaker: In the first place the hon. member didn’t rise until after I started to call the Solicitor General.

Interjections.

Mr. Speaker: That is number one; number two --

Mr. Eakins: It was embarrassing.

Mr. Speaker: No, not a bit.

Interjections.

Mr. Speaker: I think really it wasn’t a proper type of supplementary at any rate.

Mr. Cassidy: You didn’t hear it, Mr. Speaker.

Mr. Bullbrook: That has never stopped you.

Mr. Lewis: Show some latitude.

Mr. Speaker: On top of that it is the prerogative of the Speaker. I see the time is just about up and I am sure the hon. minister wishes to give the answer to the member who asked a question yesterday.

Mr. R. S. Smith: You sound like the Premier (Mr. Davis).

DEATH OF JAMES CULLEN

Hon. Mr. MacBeth: Sorry to cause you so much trouble, Mr. Speaker.

The Legislature will recall that yesterday the member for Hamilton West (Mr. S. Smith) raised a number of questions concerning the death of James Cullen at Inco and the subsequent inquest into that death. I shall attempt to answer each of his points in turn.

The hon. member stated that the site where the death occurred was blown up before a coroner’s jury was able to view it. There were, in fact, two inquests concerning Mr. Cullen’s death. During the first inquest, held on July 15, the jury did visit the scene. However, when there were complaints about the verdict and recommendations made by the first coroner’s jury, a second inquest was scheduled.

On October 22 the lawyer for Inco met with the deputy chief coroner. One of the matters discussed was the possibility of the second jury visiting the site. Dr. Bennett doubted the value of such a visit -- I might say that Dr. Bennett is the deputy chief coroner -- because seven months had passed since the accident. During the intervening time the scoop tram which was involved in the death had been moved and blasts in other areas of the mine had altered the site. It should be stated, however, that the company was fully co-operative and did extend an invitation to visit the scene if Dr. Bennett deemed it necessary.

On November 11, Inco’s mines manager informed the lawyer for Inco that he planned to blast an area adjacent to the death site, but which would affect the death site. The lawyer told the mines manager to go ahead with his plans. The blast was carried out on November 13.

During the second inquest, the jury expressed an interest in visiting the site. Dr. Bennett arranged to take the jury to the mine where they viewed a similar scene just 200 feet from the actual site. While there the jury studied the scoop tram which was involved in the death.

In the second part of his question, the hon. member asked about the power of a coroner under

section 11 of The Coroners Act to order Inco not to disturb the site.

Section 11, which enables a coroner investigating a death which occurred by violence in a wreck to take charge of the wreckage, is interpreted to mean a vehicle such as a car, bus, train or airplane. This

section is not intended to cover buildings, mines or other sites.

It would have been impractical for the coroner to preserve the site for eight months. Because blasts in other areas of the mine had an impact on the site, Inco’s entire operation in that locality would have had to have been stopped.

In any event, the site was protected for several days to allow the coroner and the police to carry out their investigations. Photographs were made and samples were taken which were later examined at the inquest. This procedure has worked well in the past and I see no reason to amend The Coroners Act to broaden the powers of a coroner.

In conclusion, I will state again that the staff of Inco co-operated fully with the coroner’s investigations. I will also add that I am satisfied with the actions of Dr. Bennett, the deputy chief coroner.

Mr. Laughren: A supplementary, Mr. Speaker.

Mr. Speaker: The member for Nickel Belt.

Mr. Laughren: Has the minister taken any action on the recommendation of the inquest jury that there be an investigation by a joint committee of management, labour and government, to investigate conditions in mining at the Frood mine?

Hon. Mr. MacBeth: Mr. Speaker, we receive a good number of inquest reports from the various coroner’s juries and in turn we pass them on to the ministries concerned. I might say that the report of the second inquest has not yet been received by us.

THUNDER BAY JAIL

Mr. Foulds: Mr. Speaker, a new question to the Provincial Secretary for Justice, in the absence of the Attorney General (Mr. McMurtry). In the desire of his government to modernize the court system, will he undertake a full scale review of the administration of justice in Thunder Bay, particularly paying special attention to the scheduling of trials in Thunder Bay? I would like the provincial secretary to note in that review, if he would, the critical remarks of Judge J. C. Duthie with regard to the Crown attorney in Thunder Bay, having scheduled a full

schedule of trials for November 5 and then having left that to a part-time Crown?

Hon. Mr. MacBeth: Mr. Speaker, this sounds, rather than a general view, as if it had specific implications to a certain location and a certain set of facts, and I will pass that to the Attorney General.

Mr. Foulds: A quick supplementary, if I might: In the review that the provincial secretary passes to the Attorney General, will he ask him to look at the latest report from the new inspection panel that replaces the grand jury, which indicates that the average stay in the Thunder Bay jail is three months and sometimes as long as six to 10 months,

whereas the jail itself was built for prisoners staying from a mere two to three days? And might he, as Provincial Secretary for Justice, co-ordinate that investigation between the Minister of Correctional Services (Mr. J. R. Smith) and the Attorney General?

Hon. Mr. MacBeth: I will pass that as well, sir, to the Attorney General.

STOUFFVILLE DUMP

Mr. Gaunt: A question of the Minister of the Environment in respect to the Whitchurch-Stouffville landfill site. Why is the minister unable or unwilling to provide the hydrocarbon content of the drinking water, even though the town council of Stouffville has asked for this several times? And why was the certificate of approval issued before this was done?

Hon. Mr. Kerr: The certificate of approval -- dealing with the last part of the member’s question -- was issued in August and at that time we had the necessary data as far as drinking water is concerned. There have been more tests. I realize that the town council and some of the citizens in the area, at this time of year particularly, are interested in getting more recent tests as far as drinking water is concerned. I’ve had a request from some of the citizens for that; it’s a matter of getting the analysis done and getting the information to the town council.

Mr. Gaunt: Supplementary, Mr. Speaker: May I ask the minister why the monitoring programme is going to be carried on by York Sanitation instead of the ministry in view of the fact that the company has had a rather poor record in this particular area, and because of the fact also that the Environmental Hearing Board recommended against it?

Hon. Mr. Kerr: No, Mr. Speaker. The Environmental Hearing Board recommended that the company in fact do that monitoring on a regular basis and supply the ministry with that information. We have reasonable ways of checking the monitoring to make sure that it’s accurate and is done properly, and it applies to that site. We were satisfied with the information we received from the company, although not necessarily with the results. So rather than the ministry go to that expense, this is a requirement of the board’s recommendation in respect to the company, and it’s rather a normal thing to do.

Mr. Speaker: The time has expired.

Petitions.

Presenting reports.

REPORTS

Hon. Mrs. Birch presented the second annual report of the Ontario Advisory Council on Senior Citizens.

Hon. Mrs. Birch: Members of the Legislature will recall that the report was distributed during the summer recess of the Legislature. According to population statistics, Mr. Speaker, the senior age group in Canada by the year 2000 will be approximately 20 per cent of the total population. I am sure that you will agree that a greater effort must be made by all age groups to use more fully the human resources of this very large percentage of our population, so that our senior citizens may continue to contribute to the general welfare of our province and of our country.

It is with this recognition in mind that the Ontario Advisory Council on Senior Citizens was established in April of 1974, to advise the government of Ontario on matters pertaining to the well-being of the aged and the ageing process. The report outlines the activities of the council during its second year of operation. I know that all members of the Legislature will join me in welcoming the council’s very able chairman, Miss Hope Holmested, who, along with other members of the council, is with us today in the Speaker’s gallery.

Mr. R. S. Smith: Is that why you cut the grants?

Mr. Speaker: Motions.

MOTIONS

Hon. Mr. Welch moved that the supplementary estimates for the Ministry of the Environment be referred to the standing resources development committee.

Motion agreed to.

Mr. Speaker: Introduction of bills.

CORPORATIONS TAX AMENDMENT ACT (NO.3)

Hon. Mr. Meen moved first reading of Bill 168,

An Act to amend The Corporations Tax Act.

Motion agreed to.

Hon. Mr. Meen: As indicated earlier this afternoon by the Treasurer (Mr. McKeough), this bill amends the foreign tax credit provisions of Ontario’s Corporations Tax Act. The changes will bring Ontario’s Act more closely into line with federal legislation. These changes will provide more equity for Ontario-based companies doing business internationally and by more closely paralleling federal treatment will assist Ontario in its pursuit of tax simplification.

INCOME TAX AMENDMENT ACT (NO. 2)

Hon. Mr. Meen moved first reading of Bill 169,

An Act to amend The Income Tax Act.

Motion agreed to.

Hon. Mr. Meen: This bill contains two amendments. The first will set the provincial income tax rate, as indicated by the Treasurer, for the 1977 taxation year at 30.5 per cent of the basic federal tax payable. I would emphasize that this is the same income tax rate which the province has maintained since 1972.

The second amendment I propose pertains to Ontario’s sales tax credit and was precipitated by proposed amendments to The Income Tax Act, Canada. It will further simplify the calculations of the sales tax credit for all Ontario tax filers.

RETAIL SALES TAX AMENDMENT ACT (NO. 2)

Hon. Mr. McKeough moved first reading of Bill 170,

An Act to amend The Retail Sales Tax Act.

Some hon. members: Shame.

Mr. Speaker: Order, please.

Motion agreed to.

Mr. Lewis: I want to tell the Treasurer, he has given us $160 million a year to play with on the hustings, and we will. I have been looking for that chunk of money to underwrite other programmes. I owe him a debt of thanks.

Hon. Mr. Welch: Before the orders of the day I wish to table the answers to questions 147, 148, 149, 150 and 151 standing on the notice paper.

Mr. Speaker: Orders of the day.

FAMILY LAW REFORM ACT (CONCLUDED)

Resumption of the adjourned debate on the motion for second reading of Bill 140,

An Act to reform the Law Respecting Property Rights and Support Obligations between Married Persons and in other Family Relationships.

[3:45]

Mr. Roy: Mr. Speaker, I think you will recall that I adjourned the debate on this matter. I’d like to make a very few brief comments on the legislation at this time.

As you know, Mr. Speaker, this type of legislation has been a long time coming. Many of my colleagues and certainly the press have given lengthy accolades to the Attorney General (Mr. McMurtry) for bringing forward this legislation, and I suppose to some degree he deserves some. But basically the Attorney General, being the astute politician that he is, and having some personal initiative -- I’ll give him full marks for that -- is the fortunate beneficiary of the work of an awful lot of people and of many of his predecessors. And I think he’d be the first --

Hon. Mr. McMurtry: You are absolutely right.

Mr. Roy: -- yes -- to admit this. But fortunately for you, it’s not going to hurt, in the scheme of things, on your behalf, and in some ways I envy you. I say it’s great. It’s worthwhile legislation, and at least you had enough foresight and initiative to bring it on now.

But it must be said that across the province and in the country as well not only those of us involved with the law but I think the public generally speaking, have felt that the laws have not moved fast enough to keep up with 1976 society. I’m probably emphasizing the obvious by saying that, but this has always been a problem of the lay people who could not understand the laws and why the laws did not adapt quick enough to current situations. And that’s certainly the case in the question of family law reform.

We’ve had in the last while major decisions which have, to some measure, facilitated the task of the Attorney General to bring forward this type of legislation. Because there have been obvious cases which have stunned the public, or stunned at least the feminine population of this country. You talk about the Murdoch case; you talk about other cases that have come forward. Slowly but surely the pressure has been such that governments and Attorney Generals -- hopefully you’ll have some colleagues across the country -- will react and bring forward this type of legislation.

But the point is this: we mustn’t get all that carried away in the sense to think that this is something that is going to change the whole approach to the family law situation. I think this was highlighted today in an

article in the Globe and Mail which says that there’s still an awful lot of discretion. In fact it’s suggested in this

article that there is too much, in fact, discretion left in presiding judge in these cases. I intend to deal with that later, because I think, to some degree, it’s necessary that you have it that way.

But there are many of the aspects of course that are covered in this legislation which existed before, where the law was evolving to some degree. For instance, the question of the matrimonial home, the question of support payments, the question of obligations of parents towards children and of children towards parents, and so on, were highlighted by the press when the law came up. In fact there were existing laws to this, support obligations in fact in following common law unions. There was always law which said that the parents, the natural parents, the natural father, had some obligations towards his children. This is not a new concept. We had jurisprudence that was saying that before.

I want to deal with some general aspects of the law. If I may, I will start first of all with the question of the common law relationship; look at the way that we are approaching it and try to highlight some of the concerns that we have about giving some legality or some status to the common law relationship in our society.

The common law relationship is something, I suppose, that has flowed on the basis of necessity. In other words, the common law relationship, I think, has become a popular form of union in the past 25 or 30 years, basically because the laws have not reacted quickly enough to situations that existed in society. I think the proliferation of these unions across the country, Mr. Speaker, was basically due to the fact that couples who could no longer live together simply separated. it’s only a few years ago that the grounds for divorce were enlarged.

At that time the only grounds for divorce was, basically, adultery, so rather than get involved in expensive actions -- hiring detectives to find the people in the act of committing adultery -- rather than get involved in this type of hassle and the cost of it all, people felt it was easier just to live together.

I suggest to you, Mr. Speaker, that the proliferation of the arrangement, by and large, was due to some of this. I am not saying it is not that religion may be less of a factor in today’s society than in the past, and that people aren’t hung up about the fact that maybe they should live together for a period of time in sort of a trial marriage. Our sexual habits and behaviour have changed over the years, Mr. Speaker, and these are all factors which contribute to the proliferation of common law relationships.

But nevertheless, my concerns about giving some status to common law relationships are basically these: You are quite aware, Mr. Speaker, that the grounds for divorce have been enlarged somewhat, but to many people the grounds are still not wide enough. There is the suggestion, for instance, that the grounds should be basically a breakdown of the marriage, for whatever reason. I personally don’t find that approach all that offensive.

Coupled with the fact that there were more grounds for divorce was the fact that Legal Aid came into force. One has only to look at the budget of Legal Aid to realize how many divorces were cranked through the courts over the last few years through Legal Aid.

So my concern is that at a time when divorces are easier, when people who don’t have sufficient money can go to Legal Aid to get their divorces, we seem to be giving some status to common law marriage.

I think we should look at this very carefully. Are we simply legalizing a situation that exists out there in society or are we starting to look at alternatives to the pillars that support our community?

Our whole society is based on the family unit -- the family with the responsibilities, the contract between the parties and what that entails for the children, for their parents and so on; that is what society is built on.

Some of my colleagues have expressed this concern, and I think it is a valid one: I think we have to be concerned that we are not looking at a new sort of unit whether you call it common law or otherwise, a unit which involves an abdication, to some degree, of the responsibility of the spouses toward themselves or toward the children.

There are many people in our community who say that this is the case. Our church leaders have talked about this. Many in society at large see an evolution of history, and are concerned when you change the family unit for something else. In the history of mankind we have yet to find an alternative to good strong family units as the basis of society.

I suppose one of the answers to this concern is that what we are now doing with the law is not in fact establishing a new form of relationship but legalizing it; or at least determining the rights and privileges and responsibilities of the parties already involved in it. In other words that the law, instead of leading in this direction, is reacting to the present situation.

What the Attorney General is attempting to do with this law is to say look, there are all sorts of common law relationships out there and we don’t like the situation, where maybe some spouses don’t get their full rights under that type of a relationship, where maybe husbands or wives get away from their support obligations toward their children under this type of relationship. Possibly this is what we are attempting to do. I would hope that we would be careful when we move in that direction.

When the Attorney General first announced the legislation, he expressed some concern about exactly that and he said, “We are not trying to make it easier for people to live common law or we are not trying to make it look like an alternative sort of relationship which is going to be more convenient and a better relationship than marriage.” In marriage, we still have a situation in which we will be able to have some marriage contracts but that has changed in the last while. The Attorney General seems to have changed that. He says now we are going to allow contracting situations in common law relationship.

I would like to know the reason for that, the in-depth reason for that. I suppose the Attorney General has received comments from both camps. Some have said to him, “We are against bigamy in society and, by and large, with these common law relationships and giving them a certain status, we are contravening a basic principle of society that, for instance, you can have only one wife under the Criminal Code.”

In this particular situation a man can have a wife and a whole series of other common law relationships with certain rights and responsibilities. We have to be careful. I am sure our church leaders and people involved, leaders of the community, have expressed some concern.

On the other hand, we have other people saying it is none of our business. The Attorney General’s own brother said, “Stay out of my affairs. I will do whatever I please” -- with some validity. People got involved in common law relationships because they didn’t want all the hassle. They just didn’t want to be bothered and then big brother -- the Attorney General is big brother, isn’t he? -- comes along and says: “Look at all these responsibilities.” He has a valid point as well.

I take it the Attorney General has tried to arrive at some compromise -- maybe the criticism was made as well that it is going to be tougher on common law spouses in a common law relationship than in a marriage because in a marriage one can contract out of certain obligations but one cannot under common law. Maybe that’s the reason the Attorney General has sort of changed his approach and said: “We will allow contracts, certain contracts, pertaining to common law relationships.”

These are some of the concerns that certainly we have on this side and I have personally. I am anxious to hear all sorts of points of view on this because, as I mentioned, we must be very careful in our society that we don’t undermine its very pillar and that’s the family unit. As we proceed through this legislation it is going to be interesting to hear the points of view of many citizens, community leaders, lawyers and so on on the question of common law relationships. This is by and large my concern.

The other concern, of course, under the legislation -- I am trying to deal with some of the broad principles of it -- is that when it comes to sharing property, a lot of feminists and a lot of women’s groups thought that this legislation was sort of a godsend, but I would say be careful. In many instances, wives were better protected under a system other than this law under the present system.

I see the Attorney General frowning. I will give him an example and this is going on in our courts every day. A husband who is anticipating maybe some problems with his business puts the matrimonial home in the wife’s name to protect his wife and children from any business failure. Under the old system, the law presumed that he had made a gift at that point and he had to prove what was called the resulting trust.

Many husbands got caught in a situation in which the marriage broke down and said, “I just gave it to her to protect her from financial hardship.” But the wife said, “No, that’s not the situation.” It belongs 100 per cent to her and that was the case. Under the legislation now, this will not happen.

Hon. Mr. McMurtry: Why not?

Mr. Roy: It will not happen because, as I understand it, first of all the law deems it to be a 50-50 proposition and no one can contract out of that. That’s the way I read the legislation.

Hon. Mr. McMurtry: I will try to explain it to you.

[4:00]

Mr. Roy: You’ll try and explain it to me. Well I’ll look forward to that, because as I understood it, this was the case. My concern went a point further in that, and this has been expressed by some of my colleagues in a sense, that what happens in a situation if a husband attempts to do that now and the creditors say: “No, it’s a 50-50 proposition.” So a creditor could end up, in fact, being a partner of the wife.

Hon. Mr. McMurtry: That just isn’t what the law --

Mr. Roy: I’ve read the law and I tell you it’s not all that clear, it’s not all that clear on that point. I know you can bring a motion; I’ve looked at it; I’ve read it quickly and I’ve read further on some of these matters; but I’m anxious to hear your explanation on that because it is not all that clear how you will avoid that type of situation.

Mr. Deputy Speaker: I think you’ll always run into that trouble when you have laws written by lawyers. If you’ll continue --

Mr. Roy: Mr. Speaker, especially that lawyer there. That is one of the concerns I had about that.

The other concern is that we’re getting involved in this province in this whole business of marriage contracts. As one who has practiced in Ottawa, I see people coming in from Quebec, with the movement of people going both ways, and they come along with their marriage contracts at the time of dissolution of their marriage. I tell you that marriage contract was entered into at a time when there was marital bliss, everybody was in love and everything else. They sort of frown and there’s not much weight given, at least in Ontario, to these marriage contracts. I’m really concerned that we’re getting involved in this whole business of marriage contracts.

The first point is that if we enact certain laws, it is somewhat offensive to the whole principle that you have a law that you can contract out of. It’s offensive to the whole common law aspect, and that we have to be concerned about. But there is another problem, apart from making work for an awful lot of lawyers across the province -- although that might be a good thing the way they are cranking them out of the bar admission course or law schools; maybe they’ll need a lot of work in this because if there is one consensus about this legislation it’s going to make a lot of work for the lawyers, there’s very little doubt about that.

The marriage contract is going to be something else. I’m always concerned that parties are going to get involved in these contracts or be bound by contract at a time when the anticipation of what may happen in the future may well be different on the question of property, the relationship between a party and so on. In other words, you get two parties in love and prepared to compromise. Many of us just have to look back on those days and how easy it was to compromise then, to adapt and everybody is giving which and what.

Here they get involved and bound by this contract and a few years later all hell breaks loose at the time of dissolution or separation or whatever, and you try to enforce that contract.

I’m convinced that couples today, when we’re trying again to facilitate procedures for divorce, marriage and so on, the everyday individual on the street will not be running to his lawyer, or they won’t be running to their lawyers to get involved in a contract.

Maybe people with a proper income and education and so on will be protected; they’ll get proper legal advice and so on; but the everyday citizen of this province will not get involved in this type of situation. The fact remains, let’s be careful before we get involved in a situation of contract.

I’m not convinced it’s working all that well in Quebec; and again I express the concern that parties are entering into contracts at a time when they’re compromising and the contract of course only becomes valid or enforceable at the time the dissolution takes place. It seems to me that is a much different situation than at the time they entered the contract, it’s hard to anticipate what’s going to happen in the future.

I can see lawyers getting involved in drafting these contracts in anticipation of all sorts of problems. Boy, some of these contracts, if they start looking like some of our separation agreements that have been drafted by some members of the legal profession, are going to be something to read and something to enforce.

Like I say I think there’s going to be enough work for lawyers created by the legislation without getting involved in marriage contracts. As I say, I’ve got an open mind on this.

Hon. Mr. McMurtry: Have you consulted your colleague the member for Wilson Heights (Mr. Singer)? He is very approving of the marriage contract.

Mr. Roy: This shows that my colleague and I discuss these with open minds. In fact the approach of this party to this legislation is to approach it with an open mind and see whether we can contribute to it. We don’t want to defeat the minister on this, we want to improve it.

Hon. Mr. McMurtry: Like all other legislation it does have different approaches.

Mr. Roy: But I have a concern. I have to say I am concerned about getting involved in this marriage contract situation. I can give you arguments where it may be a good thing. I think if I was a 60-year-old millionaire who was marrying an 18-year-old chick.

Hon. Mr. McMurtry: Is that your colleague?

Hon. B. Stephenson: Mr. Speaker, that’s unparliamentary language.

Mr. Roy: You chauvinist, as you might say -- an 18-year-old female then.

Hon. J. R. Smith: Eighty-one-year-old.

Mr. Roy: Or I could reverse the situation for the Minister of Labour (B. Stephenson). A 70-year-old widow marrying a 15-year-old hood, or whatever --

Hon. B. Stephenson: A gigolo with acne -- you mean.

Mr. Deputy Speaker: I think you better drop that one. Get back to the principle of the bill.

Interjection.

Mr. Roy: The fact is I suppose that the marriage contract might be something that one might want to get into to set out what protection there may be for the parties under this type of relationship. But having set out certain principles in the legislation I really think it is somewhat offensive to think that only the parties -- and that is the interesting part -- only the parties, of course, who have the money, and who have access to lawyers -- and when you talk about access to lawyers it is a problem in our community. I say this very sincerely, Mr.

Speaker, because those who have very limited income or are on welfare and so on, okay, they get legal aid. But your middle class who are into a situation where they have some property but just make ends meet, to go and consult a lawyer and even to get involved in drafting a contract is something that might turn out to be a relatively expensive proposition. I put this concern on the record, Mr. Speaker, because I think it is something we should be very careful about.

The other thing I want to talk about, of course, is that I certainly applaud the approach taken by the Attorney General in this project on the question of unified family courts. I think this is going to be something that is going to be extremely important.

It is unfortunate that there is not more co-operation going on between the province and the federal government on this, because I think the public by and large cannot understand the present set-up where if the husband and wife are fighting together they are in family court, and if you are fighting over the children you are in county court, and if you are on alimony or divorce or something you are in Supreme Court. It just doesn’t make sense, and it is not conducive to proceeding and dealing with family problems the way we should be. It shouldn’t only be an adversary process.

There are things in the family relationship sometimes that the legal system is not suited to do and I think that other people should be participating in this. I think that the project in Hamilton certainly is a good thing.

The last thing I wanted to mention on the bill is a question that many people have expressed. There is an

article today in the Globe and Mail written by Lynn King and Charles Campbell, who apparently are both lawyers. And they say: “Marriage Bill: Too Much Power for Judges?” I don’t know if the Attorney General has had the chance to read this.

I must tell you that by and large I don’t see how we can have this type of legislation without leaving an awful lot of discretion with the court. I really don’t. For anyone involved in this type of work -- in divorce or in separations, and so on -- there are situations that are so different. In every marriage, I suppose, you can find a different situation than in another, and one cannot have hard and fast rules, because in some situations there are some parties that will not receive justice if there is not a certain amount of discretion left with the judges.

The judges haven’t gone on a frolic of their own, even with their having a certain amount of discretion now under the present law. There is jurisprudence still existing which will be applicable to some of the situations under the law as proposed by the Attorney General. I really think that one would run into situations where there would be inequities towards one of the parties if there was not some discretion left in every aspect. I note that they’re critical in the question of support -- that there’s too much discretion left for the trial judge on the question of support; on the question, I suppose, of family assets, and on what criterion should be used to deny a spouse support.

Again, they seem to be critical about looking at the conduct of the parties as one of the factors that should determine support.

I say to you, Mr. Speaker, it’s fair to consider conduct. I can recall a situation not too long ago where an individual was brought to court for about the 10th time by his divorced wife who said that she was not getting adequate support and was on welfare. Because he had a bank account of some $25,000 she felt she should be entitled to some of that for support.

When it was brought up to the judge that the dissolution was caused by her actions -- she took off with another guy for a period of time and caused the breakup of the marriage to start with; secondly, this man has had custody and supported the children, and in fact was still putting the children through university; thirdly, he was sick, had to retire and that was the only income he had ahead of him; he had to live on his own pension which was not sufficient to support himself and the lady he was now living with. Once all this was brought forth to the courts the judge said no, he didn’t think she was entitled to any more in spite of the fact that she was on welfare.

This was clearly a situation where the husband found himself in a predicament not of his own choosing, but resulting from the actions of the wife.

I recall the situation not too l