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January 17, 1983

32nd Parliament, 2nd Session

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Hansard Transcripts

Hansard Transcripts

TAKEOVER OF TRUST COMPANIES

SUPPLEMENTARY ESTIMATES

DEATH OF ALLAN REUTER

BARGNESI MINES LIMITED ACT

STATEMENT BY THE MINISTRY

TAKEOVER OF TRUST COMPANIES

CONSIDERATION OF REPORT

ORAL QUESTIONS

TAKEOVER OF TRUST COMPANIES

SALE OF RENTAL UNITS

TAKEOVER OF TRUST COMPANIES

CLOSURE OF CHRYSLER PLANT

REGULATION OF TRUST COMPANIES

RAILWAY CAR INDUSTRY

DEPOSITORS' ASSETS

WELFARE COSTS

FINANCIAL INSTITUTIONS

MOTIONS

HOUSE SITTING

ESTIMATES

COMMITTEE HEARINGS

RESPONSE TO WRITTEN QUESTIONS

SECURITY OF LEGISLATIVE BUILDING

MOTION TO SET ASIDE ORDINARY BUSINESS

TAKEOVER OF TRUST COMPANIES

The House met at 2 p.m.

Prayers.

TAKEOVER OF TRUST COMPANIES

Mr. Peterson: Mr. Speaker, I rise on a point of privilege. I believe my privileges and rights as a member of this assembly have been abused. I believe also that there has been a significant breach of the rights and privileges of thousands of Ontario citizens by this government.

It has been revealed that the Minister of Consumer and Commercial Relations (Mr. Elgie) gave information of the proposed takeover of Greymac Trust, Seaway Trust and Crown Trust to several individuals in the trust company industry days before that takeover, and that at least one institution, according to press reports, on the basis of that insider information removed money from Crown Trust just hours before the government takeover. This option was denied thousands of families, pensioners, widows and widowers who have substantial savings frozen in these trust companies.

I would like the minister to account to this House and to those thousands of anxious depositors for the reason he perpetrated such a shameful --

Mr. Speaker: I must point out to the Leader of the Opposition that this is not a point of privilege, and I suggest that the question be put to the minister at a more appropriate time.

SUPPLEMENTARY ESTIMATES

Hon. Mr. McCague: Mr. Speaker, I have a message from the Honourable the Administrator signed by his own hand.

Mr. Speaker: W. G. C. Howland, the Administrator, transmits supplementary estimates of certain additional sums which are required for the services of the province for the year ending March 31, 1983, and recommends them to the Legislative Assembly, Toronto, January 17, 1983.

DEATH OF ALLAN REUTER

Mr. Barlow: On a point of privilege, Mr. Speaker: I would like bring to your attention and to the attention of the members of the House the passing of a former occupant of your chair, a former Speaker of this House, the Honourable Allan Reuter.

Mr. Reuter passed away on December 31. He was held in high esteem, I believe, by all sides of the House. He was a personal friend of mine and one I always looked up to while he served as the member for Waterloo South and then, as it came to be known, Cambridge.

BARGNESI MINES LIMITED ACT

Mr. Speaker: I beg to inform the House that the Clerk has received from the commissioners of estate bills their favourable report on Bill Pr34,

An Act to revive Bargnesi Mines Limited.

STATEMENT BY THE MINISTRY

TAKEOVER OF TRUST COMPANIES

Hon. Mr. Elgie: Mr. Speaker, I would like to report to the House on the action taken by the government on January 7, 1983, when, pursuant to an order in council, the registrar of loan and trust corporations took possession and control of the assets of Seaway Trust Co., Greymac Trust Co. and Crown Trust Co.

Let me say at the outset that this is an interim or preliminary report on events to date. As I will relate in more detail shortly, the work of the registrar is continuing and I am not yet in a position to provide a complete report to the House, and it may be some time before I can do so. In the meantime, I undertake to keep the House informed of developments as they occur.

As I stated on January 7, 1983, the decision to proceed under the new powers contained in the amendments to the Loan and Trust Corporations Act made on December 21, 1982, was taken by the province in the belief that, in the case of each of the three trust companies, among other things, "There exists a practice of or state of affairs within the corporation that is or may be prejudicial to the public interest or to the interests of the corporation's depositors, creditors or shareholders."

Without going into any depth of detail, I would mention the following circumstances that were significant influences on our decision to proceed with what undoubtedly was and remains a very difficult and complex operation.

The general scheme of the Loan and Trust Corporations Act is that there are a number of different provisions aimed at protecting the public in respect of their deposits in corporations subject to the act. One of the most basic provisions is that the amount of public deposit liabilities cannot exceed a prescribed multiple of the corporation's borrowing base. This base is computed by determining the excess of the corporation's qualified investments and other assets over its relevant liabilities.

From our review of the transactions involving the Cadillac Fairview properties, we concluded that there was insufficient evidence to warrant an increase in the value of these properties from the $270 million at the time of their sale by Cadillac Fairview to the $500 million claimed to have been placed on them in the course of the sale to the numbered companies.

It would appear that a great deal of the justification for the higher lending value for these properties was based on various assumptions about the ability of Kilderkin Investments Ltd. to ensure that the payments were made on the $375 million in mortgages secured on these properties. We were not satisfied that this ability could be guaranteed or that such a guarantee should be treated as part of the value of the properties being mortgaged.

It was concluded that there were not sufficient grounds to justify a value of the Cadillac Fairview properties in excess of $300 million. As there were already first and second mortgages on the properties aggregating about $223 million, none of the third mortgages could then fall within the 75 per cent of real estate value statutory requirement for the mortgages made by trust companies, and they are, therefore, not qualified investments. As a result, a substantial portion, if not all, of the mortgages placed on these properties could not be taken into account in computing their borrowing bases.

In addition to the Cadillac Fairview transaction, it was apparent that there was a risk of other transactions treated in a similar fashion with a corresponding further adverse effect on the financial condition of each of the companies.

The registrar, therefore, took control of the companies to determine the extent to which these mortgage practices may have prejudicially affected the financial condition of the companies and the depositors, shareholders and other creditors doing business with these companies and, if our opinion about the financial state of the companies was verified, to determine the courses of action that in such circumstance would best serve the depositors, shareholders and other creditors.

2:10 p.m.

I would like to take a few moments to comment upon the process by which the registrar has taken possession and control of the assets of these companies and the steps that have been and are being taken by him to determine the state of affairs in each trust company. The process was a major and unprecedented logistical exercise which was organized and put into place over a very short period of time once the course of action was decided upon.

Cabinet approval to act was given on Friday afternoon, January 7. Beginning around 5 p.m. on that day, teams of the registrar's staff and other persons appointed by the registrar commenced taking possession of the Crown Trust head office in Toronto as well as that company's offices in Brantford, London and Windsor; its three offices in Montreal, Quebec; the offices in Winnipeg, Manitoba, Edmonton and Calgary in Alberta, and Vancouver and Victoria in British Columbia.

At approximately the same time, other teams took possession of the three Seaway Trust offices located in Port Colborne, Welland and Willowdale, and another team took possession of the four main Greymac Trust offices in Toronto and Mississauga.

The initial administrative objectives in taking over the companies were to effect a smooth changeover in the control of the company offices, to identify and secure the various records and to commence the process of reviewing the asset portfolios, particularly the mortgage investment portfolios, without delay and without unduly interfering with the normal operations of the offices.

To carry out the various functions involved in this process, the registrar has used resources from a number of sources. To the greatest extent possible, the existing staff of the companies have been left in place to carry on their usual duties and to assist the registrar where necessary.

However, some company officials who might not be sympathetic to the registrar's actions have been excluded from the premises. In this regard, I wish to commend the staff of these companies for their co-operation in what must be a difficult situation for them. I was advised that many of them worked through to 11 o'clock on that Friday night, without complaint, to assist in the orderly changeover.

Approximately 21 members of the registrar's staff, mainly examiners and investigators of financial institutions, have been assigned to work on the review.

In addition, to effect the taking of control of the Crown Trust offices located in five different provinces, the registrar used the services of Woods Gordon. Not only was this company able to supply staff for each of the Crown Trust offices, but also it was able to dispatch immediately to each office in the country a computer terminal that enabled all the Crown Trust branch offices to be directly linked with the head office in a way that would permit an almost instant verification of amounts being withdrawn by various persons who may have deposits in more than one office. In total, approximately 70 staff of this company are involved.

The basic resources for the control of Seaway Trust and Greymac Trust came from Touche Ross. That firm supplied approximately 50 professional staff to secure the records at the head offices and branch locations in addition to using data processing experts to handle the logistics of securing outside data centres used by these companies and setting up and co-ordinating controls to monitor withdrawals made throughout the province.

I would like to draw attention to a group of persons whose services are being supplied without cost to the government. At our request, various trust companies have volunteered the services of a number of their senior mortgage officers. In total, we have had approximately 20 such personnel from eight different trust companies who have been assigned to reviewing the mortgage portfolios of these three trust companies. I think it is fair to say that without this voluntary assistance from the trust industry, it would not have been possible to carry out the review of the three trust companies involved in a timely and effective manner.

There is one other group of people who have been recruited to assist the registrar in carrying out his responsibilities and who deserve special attention. I am sure that their association with the work of the registrar has done much to maintain the public confidence in trust companies. I refer to Allen T. Lambert, a former chairman and chief executive officer of the Toronto-Dominion Bank; Thomas J. Bell, chairman and former chief executive officer of Abitibi-Price Inc., who is in the gallery today; A. Roy Voelker, CA, a former chief financial officer with Great Northern Capital, a land development company; J.

David Taylor, QC, a director of Hudson Bay Mining and Smelting Co. Ltd. and a former senior officer with companies in the Anglo-American group; and Ainslie St. Clair Shuve, who at the time of his retirement in January 1980 was president and chief executive officer of Crown Trust Co.

Mr. Shuve has agreed to reassume his former position of chief executive officer of Crown Trust Co., and Mr. Taylor and Mr. Voelker have agreed to assume the same positions in Greymac Trust and Seaway Trust, respectively. This group has been meeting daily to discuss and resolve problems that arise in the day-to-day administration of the trust companies.

In addition to the above, and since December 4, 1982, the government has been advised by a group of lawyers who are specialists in corporation law from the firm of McMillan Binch, headed by W. A. Macdonald, QC, a senior partner of that firm.

We have also had the advice and assistance of J. L. Biddell, the former chairman of the Clarkson Co. Ltd. and one of the most knowledgeable persons in Canada in respect of the type of financial situation we are dealing with in the three trust companies. Mr. Biddell, in addition to providing ongoing advice, has co-ordinated our dealings with the Canada Deposit Insurance Corp. and with the various companies that have expressed interest in any of the trust companies.

One aspect of our operations gave us considerable concern in the planning stage. I refer to the possible reaction of the depositors to the registrar's action. Not having a precedent for what we are doing made it difficult to judge what was likely to happen. We thought we had to be prepared for such possibilities as an extensive run on deposits, altercations at company offices and a substantial demand for information from depositors.

To deal with, these possibilities, a number of precautions or actions were taken. Bell Canada responded to our request for additional phone lines and, even though we were not able to provide Bell with all the information needed until Sunday afternoon, they still were able to install 10 trunk lines and 20 phones at the Crown Trust head office and 15 additional phone lines at Greymac Trust.

It was not technically possible to add more public lines at Seaway Trust; so we were limited to installing additional private lines for use by the registrar's staff, thus freeing up the regular phones for inquiries. In addition, three phone lines in the ministry serving the Toronto calling area were allocated to respond to inquiries, and a Zenith line was installed to provide province-wide, toll-free service.

Most of this work was completed by Bell Canada in the early hours of Monday morning before the trust company offices were open for business. We are very appreciative of the effort put forward by Bell Canada staff in responding so promptly to our requests.

I have already said that the registrar's actions were without a precedent, and this aspect of uniqueness carried over into our dealings with the deposit insurance aspects of the matter.

As I am sure members are generally aware, deposits in trust companies are insured to a limit of $20,000. In all provinces but Quebec, this insurance is provided by the Canada Deposit Insurance Corp. In Quebec, it is provided by the Quebec deposit insurance organization, Régie de l'assurance-dépôts du Québec.

The legislation governing the deposit insurance is basically designed to deal with a situation where the insured deposits are among the liabilities of a financial institution that is being wound up or is in receivership. In those circumstances, it is possible to determine rather precisely the liability of the deposit insurer and the rights of the depositor. In the cases we were dealing with, one of our main objectives was to take action that would prevent some or all of the companies from requiring liquidation or winding up.

In these circumstances, the Canada Deposit Insurance Corp. found that its legislative powers were limited in ways that made it difficult for the corporation to respond as effectively as both we and they wished to. It was these difficulties particularly that caused us considerable concern over our inability to free up estate trust and agency accounts and to allow them to be used in a business-as-usual manner.

2:20 p.m.

In commenting on this deposit insurance issue, I would like to put on the record that the Honourable Jacques Parizeau, Minister of Finance for Quebec, has been most co-operative and helpful. He personally assisted in those early days in working out problems that were encountered in this area.

Under the arrangements made with Quebec and the Canada Deposit Insurance Corp., funds were to be made available to the three trust companies should the withdrawal of deposits exhaust the cash resources of the companies. As a condition of making these backup funds available, the Canada Deposit Insurance Corp. required that we limit withdrawals to a maximum of $20,000, the insurance limits.

To date it has not been necessary to call on this backup funding, and I might add that there have been no problems with depositors wishing to withdraw their funds that required any intervention by the police. I am advised that requests for withdrawals subject to the $20,000 limit are being handled without difficulty and that the daily volume of requests diminished as the week passed. It is clear that the message contained in my announcement got through to depositors that they were fully protected up to $20,000.

As I have indicated, taking control of the trust companies involved three objectives: (1) to carry on the businesses as usual to the extent possible in the circumstances; (2) to review the practices of and state of affairs within the three companies, and (3) to determine the appropriate courses of action to be taken once we have sufficient information from the review to permit us to make this determination.

I believe we are successfully meeting our first objective and that we are well on the way to completing the review. I would point out that Mr. James Morrison has continued to pursue his special examination and has made important contributions to our state of knowledge. He is also benefiting from the large amount of information available in the hands of the registrar as a result of his efforts over the past 10 days. As Mr. Morrison is still in the process of interviewing persons under oath, I am not yet in a position to report further to the Legislature on the progress of his inquiry.

I would like to make it clear that we have not seen it as our responsibility either to initiate or to negotiate any offers that may be made for the shares of Crown Trust Co., Greymac Trust Co. or Seaway Trust Co., and we have not done so. For the advice and assistance of any parties who may be interested in acquiring the shares of any of those companies and so that the public know the position of the Ontario government, we have established the following basic conditions that must be satisfied by any agreement that may be reached with respect to the acquisition of shares:

1. The Canada Deposit Insurance Corp. must approve of the transaction.

2. Any arrangement must result in the trust company being left in an assured financial condition that fully protects depositors.

3. The acquiror must be acceptable to the registrar and to the Canada Deposit Insurance Corp. as one likely to maintain the trust company in an acceptable condition and to operate it in a manner that recognizes the fiduciary responsibility for public funds.

4. The present owners of the trust company cannot receive any direct or indirect payment for their interests unless no public moneys are used or placed at risk to support the financial position of a trust company and all depositors and other creditors have been provided for.

5. No waiver will be given by the province in respect of any existing or future legal responsibilities of any party that have arisen or may arise relative to these companies.

I would now like to give the highlights of the draft interim reports received last Saturday from Woods Gordon with respect to Crown Trust Co. and Touche Ross and Co. with respect to Seaway Trust Co. and Greymac Trust Co.

To deal first with Crown Trust Co., the following summarizes the major comments of Woods Gordon:

1. The company's lending practices since September 1982 have departed from the conservatism practised prior to that date and have resulted in serious deficiencies now apparent in the security underlying approximately $130 million of its investments.

2. At January 7, 1983, the company did not appear to be in compliance with certain liquidity, investment and borrowing requirements of the act under which it is regulated.

3. There was a serious deterioration in the confidence of the financial community and investing public towards the company in the period leading up to and including January 7, 1983.

4. As a result, the company could not be considered a viable going concern at January 7, 1983, in the absence of (

a) a substantial injection of additional capital, (

b) interim support to assist in meeting liquidity demands and (

c) restoration of confidence by the public and the financial community.

Turning now to Seaway Trust Co. and Greymac Trust Co., the following summarizes the major comments of Touche Ross Ltd.:

1. Neither Seaway nor Greymac has any "borrowing base," for the purposes of

section 118 of the act, to support its deposits and other borrowings.

2. The basic cause of this situation in each company has been its mortgage lending and investment practices.

3. In the case of Seaway, the total mortgage portfolio as at December 31, 1982, has a book value of $273 million, of which approximately $151 million appears to be related in some way to Kilderkin Investments Ltd.

4. In the case of Greymac, the total mortgage portfolio has a book value at December 31, 1982, of $192 million, of which $78 million appears to be related to Kilderkin.

5. In most, if not all, instances of Kilderkin-related mortgages, the Seaway or Greymac mortgage is subsequent to a first and sometimes to a second mortgage and represents a loan in excess of 75 per cent of the value of the property as permitted by the act.

6. The books and records of both Seaway and Greymac were found to be seriously lacking in accuracy and completeness and are not up to date.

I now turn to an important and positive announcement which provides encouraging confirmation of the wisdom of the steps taken by the Ontario government on January 7, 1983.

I and my special advisers, J. L. Biddell and W. A. Macdonald, concluded early last Saturday morning, on the basis of the results of the Woods Gordon investigation of Crown Trust Co., that in the interests of protecting depositors against any possible losses and of seeking to support the operations of Crown Trust Co., a new arrangement should be made between the registrar and the Canada Deposit Insurance Corp. and Régie de l'assurance-dépôts du Québec, the Quebec deposit insurance board.

It would be the intent of those discussions that such an arrangement would enable Crown Trust to make payments to its depositors without restriction in amount as such deposits become due. The arrangement under discussion also would contemplate an early transfer of the company, or its business and assets, to new acceptable ownership. Without the backing of the deposit insurance institutions, this would not be possible because of the absence of a borrowing base in Crown Trust Co. on which to justify continuing any loan or trust operations.

Messrs. Biddell and Macdonald explained these conclusions late on Saturday morning to representatives of the Canada Deposit Insurance Corp., as a result of which active discussions have been carried on with that corporation during the weekend. I am confident that these discussions will be brought to a successful conclusion within the next few days so that there will be no restrictions on the ability of Crown Trust Co. to meet all its obligations to depositors as they fall due.

In the course of these discussions, some of which are still under way, I have undertaken to the Canada Deposit Insurance Corp. and the Quebec Deposit Insurance Board that at an early date I will introduce legislation related to Crown Trust Co. to confirm that the registrar, in pursuit of the objectives of protecting all depositors and creditors, has the full power to sell all or part of its assets and undertaking or make other appropriate arrangements.

2:30 p.m.

It is our objective that, notwithstanding what has happened to the company during the past few weeks which made government action to protect depositors necessary, the new arrangements respecting Crown Trust would mean that all depositors, estates and trusts with Crown Trust would be safe and secure and that business could thus carry on in a normal way. The preliminary assessment of Seaway Trust and Greymac Trust indicates that they are in a more difficult financial position than Crown Trust, but it is too soon to say with certainty what might happen to them.

In my statement to the House on December 21 past, I said we should be addressing a broader range of issues than was covered by the unnumbered bill proposing amendments to the Loan and Trust Corporations Act that was put out for discussion by my predecessor. I also stated I believed that the most appropriate method of proceeding would be by issuing a white paper on these issues. This view has been strongly reinforced by our experiences of recent weeks. The registrar has obtained a great deal of information respecting the operations of each of Seaway Trust, Greymac Trust and Crown Trust that will be very useful in developing proposals for that white paper.

Without wishing to prejudge any issues or to limit the scope of the white paper as it is subsequently developed. I think it is clear we must address the question of ownership of trust companies, the definition of inappropriate non-arm's-length transactions, the impact of rapid changes in interest rates and real estate values on the operations of trust companies, and other related issues.

I do not believe it overstates the situation to say we should rethink the basic scheme of the act and ensure that the requirements placed on the owners and operators of trust companies are consistent with the needs of the current business environment and with the fact that there is no inherent right to operate a trust company independent of a corresponding obligation to protect the public moneys entrusted to it.

It is a privilege to be permitted to seek deposits from the public and only those who fully accept the fiduciary nature of the business should be able to operate a trust company in Ontario. The goal of trust company legislation must be to ensure that only such persons are allowed to operate a trust company and that they meet this fundamental requirement in their business conduct. A first and necessary step was taken on December 21 with the enactment of the requirement for registrar approval of trust company share transfers where more than 10 per cent of its voting shares are involved.

It is also apparent that the $20,000 limit on insured deposits should be changed immediately. In this regard I am encouraged by the recent statements of the Honourable Paul Cosgrove, Minister of State for Finance, that Ottawa is considering this issue. I would strongly encourage him to urge his colleagues to move now to announce a substantial increase in the insured limits that will be made effective immediately. I have just received a note indicating that the Honourable Paul Cosgrove is at present announcing to the House of Commons that there will be a new $60,000 limit that will be effective as of today.

It has also become apparent to me and my staff that there is an urgent need to review in depth the administrative procedures and the resources allocated to the supervision of financial institutions. I believe our current legislation and administrative procedures are designed in large part to deal with honest and responsible business administrators conscious of their financial responsibilities, which has been the overwhelming majority of those operating trust companies in Ontario.

They have not hitherto been designed to deal with those who can so structure their affairs that it is exceedingly difficult to detect irregular or illegal activities. It would appear to me that in the past we have relied on the records of companies being what they appear to be. We may, in the future, have to commit greater resources to the review of financial institutions to enable us to make more detailed and extensive examinations of some operations on a more regular and routine basis.

In consultation with my deputy minister and the executive director of financial institutions, it has been decided that a complete review of our administration and procedures in the area of financial institutions will be carried out. As a preliminary step, an internal but independent review has been initiated.

In addition to the general objectives I have just indicated, this review will also be designed to raise issues related to administrative procedures that should be addressed in the white paper and, further, to determine whether the review should be supplemented by a review carried out by an outside organization that is very familiar with the operations of financial institutions and the problems that arise in the course of administering regulatory legislation.

I attach a high degree of urgency to the preparation of the white paper and I have asked my staff to give it all possible priority. In saying this, I trust the members will realize that the current review of the three trust companies has monopolized just about all the time of the senior staff working in this area. However, as I have indicated above, this experience will provide them with insights into many of the problems that should be raised in the white paper and should therefore assist them in this task.

CONSIDERATION OF REPORT

Mr. Peterson: Mr. Speaker, I have a point of order which I would bring to your attention.

It is our belief that this entire trust company matter should be examined by a complete royal commission and also, at the very least, by a committee of this Legislature.

The annual report of the Ministry of Consumer and Commercial Relations is not a statutory annual report and cannot, therefore, in the normal course of events be referred to a committee by a petition of 20 members. Nevertheless, that report has been referred to a committee by this House in the past, a reference which formed the basis of the examination by the standing committee on administration of justice of the Astra/Re-Mor affair, which I am sure you and government members will recall.

My point is that a reference to a committee of the annual report of the Ministry of Consumer and Commercial Relations has a very significant precedent. A reference of this affair to a legislative committee would require the unanimous consent of the House. As a consequence, I would like to seek the position of the government House leader on this issue as to whether the government will consent to this matter going before a legislative committee.

Under standing order 33(b), I have a petition which reads, "We, the undersigned, petition that the annual report of the Ministry of Consumer and Commercial Relations for the year ending March 31, 1982, be referred to the standing committee on administration of justice." I ask the government House leader to give this unanimous consent.

Mr. Speaker: I must point out to the Leader of the Opposition that this is not a point of order and I must rule that it is out of order.

Mr. Nixon: Mr. Speaker, on the point of order, if you will permit me, I think my leader has pointed out to you that there is a precedent for the report of the ministry to be sent to committee. Surely it is sufficient for the Leader of the Opposition to ask you to put to the other members of the House that a similar reference could take place at this time so that the justice committee could proceed, without delay, to review the matter.

Mr. Speaker: I must point out to the House leader of the opposition that nothing is out of order. It is not a point of order, as I said before, and therefore I rule the motion out of order.

ORAL QUESTIONS

TAKEOVER OF TRUST COMPANIES

Mr. Peterson: Mr. Speaker, obviously this statement raises a great number of questions. From what I can determine, about half of it is describing a military operation in taking over these companies and the rest of it is self-justification.

It is already out of date, as I am sure the minister is well aware. On page 4, he states that the objectives are to continue the business in an ongoing state even though the circumstances are unusual.

The minister is aware that Mr. Rosenberg has issued a statement today saying that he has instructed the lawyers for Greymac Credit to proceed with the voluntary winding-up of Greymac Trust Co. So the minister's information is already out of date.

The critical question is at page 17 of his statement where the minister says the practice has "resulted in serious deficiencies now apparent in the security underlying approximately $130 million of its investments." Is the minister saying there is $130 million missing from Crown Trust Co., and if he is saying that, where is it?

2:40 p.m.

Hon. Mr. Elgie: Mr. Speaker, first of all, on this side of the House we are getting a little tired of the member's dribs and drabs techniques. This daily habit the member has been indulging in of dropping a little information to try to leave the false impression that this minister, this ministry and this government have not been in control of things, depicts the kind of thing that is questionable about their whole performance this week.

Mr. Epp: Tell us about Re-Mor.

Mr. Breithaupt: How about Argosy? What about British Mortgage? You said it would never happen again and it is happening.

Mr. Speaker: Order. The Leader of the Opposition has asked a question. The minister will reply, please.

Hon. Mr. Elgie: Mr. Speaker, I have received the statement made by Mr. Rosenberg at 11 o'clock today and I am aware of his intentions. Those will be legal matters the parties will have to look at, but as of this moment the registrar is running those companies and is in control of the assets.

With respect to the member's other statement regarding the assets of Crown Trust, I want to make it very clear that because of the principle that I outlined clearly in the statement with respect to valuation and the value of mortgages, in our view those mortgages are overvalued and have seriously impaired the borrowing base of that company.

Mr. Peterson: Is the only irregularity here then the questionable mortgaging practices, which I am sure the minister knows have been going on for several years in some of these companies? Is that all the minister is saying today, or is he saying there are some assets which cannot be accounted for? The minister is aware of press reports indicating that a substantial amount of money is missing from the assets of these companies. Indeed, is that or is it not the case?

Hon. Mr. Elgie: I think I have made it very clear to this House and to the public that as further information becomes available to me, I will relay it to this Legislature. When that information is available to me, I will provide it to this Legislature.

Mr. Rae: Mr. Speaker, there seems to be an ambiguity in aspects of the minister's statement. On page 24, he refers to the fact that the laws "have not hitherto been designed to deal with those who can so structure their affairs that it is exceedingly difficult to detect irregular or illegal activities. It would appear to me that in the past we have relied on the records of companies being what they appear to be."

I would like to ask the minister if he is saying there has been a process of deliberate concealment or fraud with respect to any one of these three companies.

Hon. Mr. Elgie: I think the statement is quite clear. What I have said is that the legislation has "not hitherto been designed to deal with those who can so structure their affairs that it is exceedingly difficult to detect irregular or illegal activities." That is what I said. When I have more to report to this House with respect to these three companies, I will do so.

Mr. Peterson: Is the minister saying he does not know if there is any money missing? The police have been investigating this for some time. Mr. Morrison has been in there for close to nine weeks now. Surely he owes us more of an explanation than he has given us today. What is the state of those deposits and the assets? He has a responsibility to this House to tell us. This is the first time he has had an opportunity to become public. This is a very inadequate response to the information people in this province are demanding.

Hon. Mr. Elgie: I am well aware of my responsibilities, as I am well aware of the obligations of a minister of the crown, because 'minister" means "servant of the public."

I am reporting to this House and therefore to the public on the information that is currently available. The Liberal Party can play the games it has been playing for several days -- political opportunism, self-serving, self-righteousness, whatever it wants -- but the facts, as I can relay them to this Legislature within the limits imposed on me by legal obligations or other matters, will be reported to this House.

Mr. Peterson: The minister has learned nothing in his ministry.

Let me refer him to page 18, where he is discussing Seaway Trust Co. and Greymac Trust Co. In point two, he says, "The basic cause of this situation in each company has been its mortgage lending and investment practices." Is he aware now that this has been going on for two years right underneath his nose? Why were his regulators not there to find out this series of transactions before we had to come to this calamitous action he had to take in the past few weeks?

Hon. Mr. Elgie: Mr. Speaker, the calamitous action the member refers to results from legislation that the Legislature passed in this House on December 21. To talk about the results of that legislation producing calamitous activities I think is so inappropriate that that young man should go out and talk to his advisers, because if he knows who he is talking to he should look over his shoulder.

Interjections.

Mr. Speaker: Order.

Hon. Mr. Elgie: Got you going, eh? The Leader of the Opposition should be grateful to the member from St. David; that adviser of his is over his shoulder all the time, baby.

Mr. Speaker: Order.

Hon. Mr. Elgie: The statement I made is reported and taken out of the Touche Ross report. When there are more results of those investigations and those examinations to report to this House, I will report them.

Mr. Peterson: Let me ask the minister a simple question. When did he first find out that these strange financial practices were going on in the subject companies, that is Seaway and Greymac? Did he just find out after Touche Ross went in or did he and his ministry know before? In particular, I would remind him that Seaway came before cabinet for two or three orders in council to increase its authorized share capital. I would also remind him that the registrar's responsibility is to issue an annual report looking into these companies. Did he know before or did he just find out?

Hon. Mr. Elgie: I am satisfied that the registrar has been conducting his activities very effectively.

Mr. Rae: Surely the minister will agree there is a basic problem here. On page 18 he states, "The basic cause of this situation in each company has been its mortgage lending and investment practices." The minister will also know that the cabinet, twice in 1982 alone, authorized an increase in the capital base of Seaway Trust. In the light of those two facts, I would ask the minister, would he not at least agree there has been a fundamental breakdown of the regulatory process with respect to this company?

Hon. Mr. Elgie: I indicated quite clearly in the statement that I have asked for an internal review of the administrative practices and procedures of the ministry and have also indicated that, in addition to using that information for inclusion in the white paper, if circumstances warrant it I am prepared to have an external review by someone competent in the financial institutions area.

Mr. Peterson: I just cannot figure out whether the minister is saying he is happy with the regulatory performance of his ministry or he is not, but let me tell him that I am not. Let me also tell him these things have been obvious to prudent people for some time.

Mr. Speaker: Question, please.

Mr. Peterson: Is the minister prepared now to submit this entire matter to a royal commission inquiry to look into not only the financing practices of these companies but also the performance of his ministry, to make sure this never happens again in this province?

Hon. Mr. Elgie: We have the Morrison special investigation going on. We have possession of the assets by the registrar with 100 to 150 people involved in obtaining information and, in the midst of this, here is the member calling for a royal commission. I have to tell my friend that the information that will come out of what we have under way today will be far more effectively obtained as it is being obtained today and will produce results far more effectively than any royal commission.

Mr. Speaker: The member for York South with his first question.

Mr. Rae: Morrison may not give us the answers with respect to the minister's conduct and the ministry's conduct, which is a separate problem.

SALE OF RENTAL UNITS

Mr. Rae: Mr. Speaker, my question to the minister has to do with the tenants of the original Cadillac Fairview buildings. Let us get back to basics. As I read the statement, the minister is saying that in his view there were not sufficient grounds to justify a value of the Cadillac Fairview properties in excess of $300 million. What does this judgement and finding with respect to the mortgage question and the valuation question do to that entire transaction? Can he tell us now, since it is mentioned nowhere in the statement, exactly what the status of that transaction is and who those numbered companies are?

We still have not got an answer to that question, and we have been waiting three months for an answer.

2:50 p.m.

Hon. Mr. Elgie: Mr. Speaker, with respect to the obiter dicta at the beginning, I am quite confident in my own performance in this ministry and in any ministry I have been in in this government. If the honourable member is slurring or imputing a slur --

Interjections.

Mr. Speaker: Order.

Hon. Mr. Elgie: -- on the civil servants in this ministry, I have to tell him they are the finest, most dedicated and hardworking people I have ever encountered in my life, who have worked way beyond the duties required of them. So if that is what he is saying I resent it personally and on their behalf I resent it.

With respect to the tenants, the member knows very well that the reason the government moved as it announced on November 16 was to protect tenants who might be exposed to increased rentals on the basis of financing charges as a result of sales or resales such as this while the whole issue was reviewed by Stuart Thom.

As to the legal effect the statements made by the particular companies involved, that I have reported to members today, have on that transaction, those are matters that will obviously have to be looked at as the days and weeks go by, and as I have further information I will report it to him.

Mr. Rae: I wonder if the minister could tell us why the tenants should have to pay any increase at all, let alone five per cent, three per cent or two per cent, when from the minister's own statement the transaction is something of a bogus transaction because it is based on hyperinflated mortgages. When Leonard Rosenberg's profits are beyond reach and Mr. Player's profits are apparently beyond reach and we still do not know who the numbered companies are, why in goodness' name should the tenants have to pay anything?

Hon. Mr. Elgie: In his haste to put his question I suspect the honourable member has overlooked the fact that the legislation puts a five per cent cap on rent increases related to financing charges, but the guidelines introduced by the commission limit financing charge pass-through for a period of five years to the first sale. That is the option they have, and the legislation clearly states that it shall be the lesser of the two if the commissioner in charge makes that decision. So tenants are not faced with increased costs relating to the resales of those properties, and it is inappropriate to suggest they are.

Mr. Peterson: Mr. Speaker, I know the minister wants to protect the tenants in the circumstances because he has constantly told us he cares about them. Perhaps he would care to explain to me how he intends to handle the following problem. The minister is aware, of course, that Mr. Player is unable to bank at the moment, so it appears that no banks are prepared to take the 25,000 or 30,000 rent cheques that he handles on a monthly basis. The minister is also aware that he has over $2 billion in financing, paper that is coming due and has to be refinanced, and a lot of the financial agencies are not prepared to touch him.

What is the minister doing to make sure these buildings are refinanced in the orderly course of business? What is he doing to make sure that those cheques are received and distributed appropriately and to make sure that these buildings, if Mr. Player cannot refinance them, are going to be well managed and the rights of the tenants protected in those circumstances?

Hon. Mr. Elgie: Mr. Speaker, I think the Leader of the Opposition understands quite clearly that the decision by various banks with respect to Mr. Player and Kilderkin's banking practices has nothing to do with this government. That is their decision.

Mr. Peterson: It is becoming your problem.

Hon. Mr. Elgie: You may think so, but I am telling you those are decisions not made by us and over which we have no control; in any event, Mr. Player will have to make the best arrangements he can. With respect to the other obligations that other people have vis-à-vis their mortgages, they will have to seek legal counsel.

Mr. Rae: Can the minister tell us how he intends to find out who owns the numbered companies? Can he tell us when he is going to find this out and when he is going to give the House and the tenants of Cadillac Fairview this kind of information so they will know who their landlords are and we will know who the ultimate owners of these buildings are?

Hon. Mr. Elgie: As the leader of the third party knows, the Morrison special examination is still going on. They are still examining people under oath, including persons who should have that information. In any event, I believe it has been made clear to members of this House and to the public that in circumstances where the Residential Tenancy Commission deems it important to have information about ownership it will require it.

Mr. Rae: It would be interesting to know what basis in law that has. It would be immediately challenged, I would suspect.

TAKEOVER OF TRUST COMPANIES

Mr. Rae: Mr. Speaker, I would like to ask the minister if he can confirm the news reports which say that he met with "representatives of a select group of trust companies on January 4, 1983." Can he tell us exactly what information was given to those present at that meeting, three days before the takeover of Crown, Greymac and Seaway? Can he also inform us of any other meetings with trust company officials prior to January 7, 1983?

Hon. Mr. Elgie: Mr. Speaker, first, the cabinet met on Tuesday, January 4. Unfortunately, because of flight arrangements I was unable to be there in time for the cabinet meeting, and discussion and decision on the matter before cabinet was postponed for further consideration on Thursday and again on Friday.

I am advised and I accept that in view of the possibility that a decision might have been reached on that Tuesday, January 4, the trust industry association was contacted, not individual trust companies. They, in turn, brought representatives to a meeting following the close of business. At that time they were advised that cabinet had contemplated some decision but the nature of the decision was not relayed to them and further discussion about anything related to that matter before cabinet was not put to them.

They were not recalled until I requested the president and the administrative executive of the Trust Companies Association of Canada to meet with me again on Friday after the close of business, when I advised them of events that had happened and went on from there.

With respect to other meetings, to the best of my recollection, there was one meeting which the Premier (Mr. Davis) and I attended -- I believe it was the day before legislation was introduced -- in which we indicated to them our intentions but did not ask whether they wanted us to do it. We were there to tell them what our intentions were and to receive their views. I believe that after the legislation was introduced there was a further meeting with the trust industry by a representative on my behalf, again not with selected trust companies but rather through the industry representatives.

Mr. Rae: I wonder if the minister would care to comment on the propriety of the alleged withdrawal by the Trust Companies Association of Canada of $64,000 from Crown Trust and the attempted withdrawal by Guaranty Trust of a 51-million deposit certificate, also of Crown Trust. How does he feel about that?

Hon. Mr. Elgie: Again, I do not want to be critical, but I got into the habit when I was a practising physician of finding out the facts before I operated. I think the first step to take is to find out the true facts of those accusations.

Mr. Breithaupt: Which end are you starting at this time?

Hon. Mr. Elgie: I have cracked a few heads in my lifetime too, and yours might be the next. Mind, I think the skull would be a little thinner and it would not be as much work to get the bone flap up, but you would not find anything beyond the skull.

Interjections.

Hon. Mr. Elgie: Is the member for Hamilton Centre (Ms. Copps) shocked? That was my job. I am sorry to tell the member, but that is what I did.

As soon as the facts of those reports are ascertained, I will make a determination as to whether or not the issue should be reviewed further. If they are as reported, certainly I have the same concerns as the member has about it.

Mr. Peterson: Mr. Speaker, the minister has had some time to find out. It happened last week, 10 days ago. Would the minister investigate and report to this House tomorrow whether any of the people who had inside information and knew about his takeover -- and there were a lot of them -- used their insider information to withdraw money prior to his takeover of those companies?

Surely he should be concerned about the propriety of this situation. One of the whole questions we are dealing with here is insider information -- the improper use of information for self-serving purposes. Surely he has to be clean in this matter and so far he has not been. Will he come back tomorrow to this House and report on everything that transpired?

3 p.m.

Hon. Mr. Elgie: Mr. Speaker, unlike the Leader of the Opposition I like to find out facts before I try to get political Brownie points.

Mr. Peterson: No you do not. You have been --

Mr. Speaker: Order. Will the honourable Leader of the Opposition please resume his seat?

Hon. Mr. Elgie: I have indicated what I will be doing. I will first of all be verifying the facts of the reported story and if they are found to be so I will be making decisions about other measures which should be taken. When I have the information required for a report to this House on that matter I will make it.

Mr. Rae: Mr. Speaker, my final supplementary has to do with the contrast between those with insider information and those who do not have it. I refer to the advantage those on the inside have apparently -- or allegedly -- been able to take compared with a retired couple in Ottawa who sold their house and invested the proceeds in guaranteed investment certificates of various trust companies. They use the monthly interest of those GICs to pay their rent. I am told $20,000 of their GICs are with Seaway Trust and they have discovered that no one will cash their monthly interest cheques which they need for their rent.

The minister should be aware there is a real concern over what is happening here, a perception of a genuine inequality. Certain people were able to take advantage of insider information, take out $64,000 before the companies were taken over, and other people --

Mr. Speaker: Question please.

Mr. Rae: -- who need the money for their rent are not able to do anything about it. So the minister should be aware of that.

Hon. Mr. Elgie: Again, I would think that on reflection the member would say it is alleged there were withdrawals on the basis of insider information. He did not quite say that -- if he looks at Hansard he will not find that. I am sure that is what he meant to say but in his haste -- I understand all that.

I am very sympathetic for the plight of people like those he has described in Ottawa. We have done and continue to do our best to allow the company to operate in as normal a fashion as possible, taking into account the constraints under which we are operating. As the member knows, those people are quite able to withdraw up to the limit of insurance at this time.

Mr. Peterson: The minister is no doubt aware that under the Ontario beef cattle financial protection program, all dealers in Ontario must be bonded under the Ministry of Agriculture and Food legislation. This deposit is intended as protection for livestock producers who sell their products to these dealers.

I want to bring to the minister's attention an example of his failure to act to restore confidence in the current situation which arose last week. The livestock commissioner of the Ministry of Agriculture and Food assessed Bright Veal Meat Packers of Toronto that on the basis of the size of their operations they should post a $280,000 bond as required under the current legislation. That was on January 11 and 12 of last week, Tuesday and Wednesday.

Bright Veal Meat Packers then tried to use a guaranteed investment certificate of $500,000 issued by Crown Trust as collateral. All the appropriate directions were obtained, yet the Ministry of Agriculture and Food refused to consider the Crown Trust certificate as security although they were prepared initially to accept other trust companies' --

Mr. Speaker: Question please.

Mr. Peterson: The question is are these companies in business? Why are his colleagues in other ministries not accepting security on the basis of those companies? What is the status of those companies? Are they going on or are they not? What instructions is he giving?

Hon. Mr. Elgie: I indicated very clearly, in the depth that I am able to at this time --

Mr. R. F. Johnston: Let somebody else ask some questions.

Mr. Speaker: Order.

Hon. Mr. Elgie: -- the extent to which businesses have been operating under the severe constraints that we all have during this period of assessment. When there is further information to report to the Legislature I will be glad to give it. In the meantime, if there were concerns about why that was not acceptable as a bond I think the member should address that to the minister involved.

Mr. Nixon: You are the minister involved.

Mr. Speaker: Order.

Mr. Peterson: He is the minister. He shut down the operations. He has jeopardized the security so people cannot carry on a normal commercial transaction. He should take this opportunity to make a statement of how people in this situation should act. What can they do? No one is providing any answers and I want the minister's answer right now. Is that good security from Crown Trust and the other trust companies or is it not?

Hon. Mr. Elgie: I understand the game the member is playing. We all understand the game he is playing. I have clearly reported to him the present information that is available on the three trust companies and have indicated the intentions of the government regarding discussions that are taking place at present relating to Crown Trust. When all those matters are resolved and when I have further information to report to this House, I will do so.

Mr. Rae: Mr. Speaker, I wonder if the minister could at least agree to negotiate with the banks and with members of his cabinet with respect to some of their activities? Will he negotiate with the banks concerning their obligation to at least cash the GIC monthly interest cheques instead of standing back and allowing them to close ranks, not simply against the trust companies but against the trust companies' depositors? That is the issue. The minister should know that cancellation of a GIC costs money.

Hon. Mr. Elgie: That is one of the issues we have been discussing with the banks. To date it involves not just us but primarily the Canada Deposit Insurance Corp., which has put guarantees of backup funding and made that available to the trust companies. It is an issue we are aware of. It is a very difficult one, I understand that. If it can be resolved, it will; if not, I hope to be able to report to the House when I have further information.

Mr. Speaker: New question, the member for Welland-Thorold.

Mr. Swart: Mr. Speaker, on the same subject, I have a question for the Minister of Consumer and Commercial Relations.

On page 21 of the minister's statement he makes this comment: "The new arrangements respecting Crown Trust will mean that all deposits, estates and trusts with Crown Trust are safe and secure and that business can thus carry on in a normal way." The next statement is, "The preliminary assessment of Seaway Trust and Greymac Trust indicates that they are in a more difficult financial position than Crown Trust, but it is too soon to say with certainty what might happen to them."

Is the minister telling us that there is not the same kind of hope, or that there is very little hope, of working out a plan to secure the depositors with Greymac and Seaway?

Hon. Mr. Elgie: I am really not saying any more than I reported in the statement. The preliminary information we have to date on the basis of the interim report indicates they are in a more difficult financial position. Clearly, as I stated at the outset and as I repeated today, if any way can be found to keep any or all of these companies viable, it will be found. When I am able to report to the House with that information I will do so.

Mr. Swart: I think the minister said the increase to $60,000 in the deposit insurance that he announced would be effective today. Will it apply to the three companies so that all depositors will get their $60,000 -- including the depositors at Greymac which announced its dissolution today? If the federal deposit insurance does not apply will the minister change his legislation to ensure that this province will give that $60,000 guarantee on deposit return, in view of the fact his legislation and policing are inadequate to meet these problems?

Hon. Mr. Elgie: I simply reported a phone message to the Legislature. I will have to get further details. The information I have been given is that the new $60,000 deposit limit would be effective as of today. Certainly I will be pleased to report to the House what that means in terms of the questions the member has asked.

I am sure the member, as a great reader of parliamentary history, will recall that in 1967 this government raised the issue of deposit insurance, introduced legislation and prompted the Canadian government to bring in the whole issue of the Canada Deposit Insurance Corp. Having done that and having commended the federal government for doing it, as a country we now look to the Canada Deposit Insurance Corp. to provide nationwide coverage with respect to deposits in trust and loan institutions and in banks.

Mr. Peterson: With respect to the health of the various trust companies, no doubt the minister is aware that a number of people have been withdrawing their assets from these companies and indicating their intentions to so do. Pension fund lawyers are withdrawing their estates from Crown Trust and the others as well. Does the minister know how much has been withdrawn? What are the indications to date of how much that will be? What is the accounting, after the first week, of how much those assets have deteriorated?

3:10 p.m.

Hon. Mr. Elgie: Mr. Speaker, it is wrong to believe there was in any sense of the word a run on the trust companies, either these specifically or trust companies in general. I do not have the figures before me yet but when they are available and when I am able to report them to the House I will. It has been made clear to me that the number of withdrawals diminished rapidly as the week went by. To date, I would suggest there has not been any serious impairment of any of the companies from withdrawals. Again, I would have to await a further report on this.

Mr. Peterson: The minister is aware that Ian Outerbridge, the lawyer for Mr. Rosenberg, wrote a letter on or about January 9, 1983, to David Richardson, the president of Clarkson Co., who are acting as agents for the government in the control and takeover of the assets of Crown. In that letter it is indicated that with respect to the potential sale of Crown, Mr. Rosenberg was prepared to put up $35 million from the purchase price for a two-year period to secure "a list of particular transactions which you indicated to us were presently advised soft."

Would the minister indicate which transactions of Crown Trust are considered soft? Is it just that Cadillac Fairview deal and all the transactions attendant thereto, or are there other transactions in the Crown portfolio that are considered soft?

Hon. Mr. Elgie: I have indicated in a general way the number in dollar terms with respect to those elements of the mortgage portfolio in which there may be some overvaluing. However, until further information is available to me I will not be reporting on this issue further.

Mr. Peterson: When did the minister first find out about this whole matter? Was it after the Cadillac Fairview deal, or did he have any indication beforehand that this was going on?

Hon. Mr. Elgie: I do not intend now or at any time to get into a detailed review with respect to the financial affairs of trust companies in this province. I have indicated that an internal review of the practices and administrative procedures is under way and I have indicated what I intend to do after that.

CLOSURE OF CHRYSLER PLANT

Mr. Cooke: Mr. Speaker, I have a question to the Minister of Industry and Trade regarding the Chrysler situation. I would like to ask the minister if he is aware that Chrysler is today announcing the closure of the spring plant in Windsor? This puts 300 people out of work as of July 15, 1983, in addition to cancelling contracts sourcing parts from SKD, National Auto Radiator, Cardon Press, Tecumseh Metal and several other companies within Ontario. Thus it means several hundred other jobs will be lost. What contact has the minister had with the corporation?

Perhaps he could also indicate the position of the provincial government on the cancellation of the negotiations on the loan guarantees. Where does the Ontario government fit in on this and why has the minister been so silent on this very important matter?

Hon. Mr. Walker: Mr. Speaker, I am aware of the impending closure of the spring plant in Windsor and, of course, virtually everybody is aware and has been aware for many months that this was likely.

I was in touch with officials of Chrysler this morning and I have been in touch with them a number of times in the last few weeks, particularly as it related to the spring plant. I am aware that Chrysler is the last company of the automobile firms to be manufacturing at their own spring operations. AMC, Ford and General Motors have completely phased out that operation.

Second, I understand that Chrysler was losing $5 million per year on this plant, and these figures have been verified by the federal government. It has been inevitable that the closure would occur; it has been known for the last year. Today it has taken effect. I am informed the employees of that plant will all find work within the system in the next while.

Chrysler at the moment has a disproportionate share of its employees working in Canada as opposed to those in the United States. It is anticipated that all of the employees who might have been phased out of the spring plant in Windsor will be deployed in other plants and I am informed that virtually nobody will be out of work.

I am aware Chrysler has something like 11,000 employees working in Canada at this moment, some 8,500 of whom are in Windsor, so in many respects they have lived up well to that particular obligation of maintaining employment contracted for some time ago.

Mr. Cooke: Mr. Speaker, it does not matter what a corporation does in this province. They can always count on the Minister of Industry and Trade to protect them and defend them in this Legislature.

Mr. Speaker: Question, please.

Mr. Cooke: Does the minister realize the seniority clause within the contract means the 300 employees at the spring plant will probably be protected but that they will bounce other employees and 300 people will be thrown out of work? Does he not even realize that basic fact?

What is the provincial government's position on the renegotiation of the loan guarantees? What role does the minister plan to play? Does he intend to encourage the federal government to designate all the van wagons, the T115s, that are produced in Canada as trucks so that Chrysler Corp. has to maintain the production of cars in Canada, which is crucial for that corporation and for the employees? What are his expectations? Does he know what the seven demands of the corporation are with respect to the amendments to those loan guarantees?

Hon. Mr. Walker: Mr. Speaker, I think it would be a little easier to deal with one question at a time. The honourable member might find it a bit easier to ask them that way than to go through about nine different questions at once.

Let us go through the questions the member has posed as much as I can remember them. In the first one he talked about the people who will be displaced. At the moment there is an attrition, I am informed, of 75 Chrysler employees a month. When added up that will equal the 235 hourly-rated employees who will be laid off in the process and the 43 salaried workers who are currently working at the facility. So I think it is fair to say that by the attrition process there will not be an absolute displacement. What will happen, of course, is that there will not be a restoration of that employment.

Mr. Cooke: You will probably redefine that as job creation.

Hon. Mr. Walker: I think the member has to pipe down long enough to hear the answer, then respond if he would like. Would he give me the benefit of that? I was extremely quiet when he was speaking and I would like him to do the same, if he would not mind. It would be beneficial to the House if he just kept his trap shut for a few moments.

With respect to the T115s, as the member knows that program is going forward and they intend to have that conversion in place. It will mean the displacement of the automobile production.

We are at present attempting to get Chrysler to source its automobiles somewhere in this province. The member has heard about the alternatives: there are other plants that are readily available and well known to him. We would expect Chrysler to maintain its obligations under the loan arrangements. Mr. Lumley has indicated there will have to be a renegotiation of the terms. We have not paid one cent out relating to the diesel plant. As far as understand the federal government has not paid out one cent either. So we are fully protected from that point of view.

Mr. Wrye: Mr. Speaker, I have a supplementary to the minister, who is either incredibly naive or incredibly uncaring about the unemployment problem in Windsor.

Let me take him back to December 23. At that time there were going to be 1,000 new jobs at a diesel engine facility he was so grandly down in Windsor in August to co-announce; there were 300 jobs in a spring plant; so today we are short 1,300 jobs in a city with 18 per cent unemployment already.

What contacts has he had with M. J. Closs, the president of Chrysler Canada, and/or Lee Iacocca, the president of Chrysler Corp.? Has the minister agreed to a meeting that was requested on January 12 of this year by Local 444 to discuss all these matters, specifically the cancellation of the diesel plans and the cancellation of the spring plant?

Since he has always cared about moving forward with jobs and with announcements he and his government have made, whatever happened to the $20 million research and development facility we were to get, which his predecessor, the current Minister of Health (Mr. Grossman), announced? The government was to put in $10 million. Is Windsor going to get that facility? If so when are we going to get it?

3:20 p.m.

Hon. Mr. Walker: Mr. Speaker, Chrysler has not drawn down anything with respect to the original loan agreement for that research and development facility. It had the option of drawing down on the $20 million. It has not drawn down any of the funds and I would assume there will not be an R and D facility there.

There was to have been a $10 million R and D facility in relation to diesel technology. Presumably that is not going forward because obviously the diesel plant in Ontario is not going forward. I will be meeting with Mr. Gerard on Wednesday of this week to discuss the situation. I have had approximately five discussions with Mr. Closs in the last three and a half weeks in relation to the question.

REGULATION OF TRUST COMPANIES

Mr. Peterson: Mr. Speaker, I have a question for the Minister of Consumer and Commercial Relations. The minister has said he is satisfied the registrar and his staff have been doing a good job, yet on page 19 of his statement he says, "The books and records of both Seaway and Greymac were found to be seriously lacking in accuracy and completeness and are not up to date." From what period are those books inaccurate and not up to date? How long has the ministry known; or is that the kind of behaviour the minister condones, believing as he does that his ministry is doing a good job?

Hon. Mr. Elgie: Mr. Speaker, those again are matters that will be reviewed both by the internal committee and through whatever other advice I can get from those who are at present in possession of the assets of those companies. When I have that information I will report it to the House if there is no constraint on my doing so.

Mr. Peterson: Given the seriousness of the charges the minister has levelled against his own staff on the one hand --

Hon. Mr. Elgie: No.

Mr. Peterson: Well, he is saying the books are inaccurate, are seriously lacking in accuracy. On the other hand, he is saying they are doing a good job. I maintain he should have known about this some time ago and we must get at the root of why his ministry failed. Will he use his influence as minister at least to allow this matter to go to a committee of this House for a thorough review of his ministry's behaviour throughout this whole matter?

Hon. Mr. Elgie: I have indicated the steps I am taking with respect to a review of the procedures and the administrative practices of the ministry.

Mr. Renwick: Mr. Speaker, I want the minister to tell us, in response to the attempted question by the Leader of the Opposition, did the registrar --

Interjection.

Mr. Renwick: It was a good question. It was the minister's failure to answer that made the problem.

Prior to the minister's appointment of Mr. Morrison under

section 152 of the Loan and Trust Corporations Act, did the registrar of loan and trust corporations take either of the actions permitted to him, which are his responsibility under

section 51 of the Loan and Trust Corporations Act, with respect to obtaining reports with respect to Seaway and Greymac; or did he make any report to the minister under

section 158 with respect to the adequacy of the assets of those companies? I emphasize again to the minister, this is prior to his appointment of Mr. Morrison.

Hon. Mr. Elgie: Mr. Speaker, I do not want the member to think I am avoiding an issue, but I have indicated clearly that I am carrying out an internal review at the present time. When I have information from that, and if there are no constraints, I will be pleased to report to the House.

RAILWAY CAR INDUSTRY

Mr. Mackenzie: Mr. Speaker, the Minister of Industry and Trade was here a moment ago. Oh, he is still here.

Is the minister aware of the concern of the workers at National Steel Car in Hamilton where more than 1,000 of them are currently laid off? In the railway car industry generally there is a large unused production capacity. Now those workers have gotten the announcement that Canadian National is considering upgrading its own Winnipeg facilities at a cost of several million dollars to build the 890 gondola cars that are supposedly going to be ordered in the marketplace shortly. Has he any comments on that matter?

Hon. Mr. Walker: Mr. Speaker, I am very disappointed in the federal government. In effect, it is Canadian National which has made the decision to acquire the vehicles from another source in another province. I find that disappointing, particularly when we have excess capacity here in Ontario. I have registered my objection in the strongest way with the federal government and directly with Canadian National.

Mr. Mackenzie: Other than just laying the blame on the feds, where some of it may belong, has the minister responded to the union's request that he meet with them as well as the federal minister in an effort to straighten out this matter? What specific steps has he taken to see we do not have the ludicrous situation of spending tens of millions of dollars to build another plant when we have three such plants in Canada not operating right now?

Hon. Mr. Walker: Yes, I am prepared to meet with the union and to attempt to meet with the federal government on that very issue. The federal government has off-loaded the decision on to Canadian National and claims Canadian National had the authority to make the decision and did so. Presumably Canadian National would indicate it was done on a variety of grounds.

Whatever the case, in light of the fact that we have that idle capacity here in Ontario, an existing plant facility capable of producing a very fine car, I cannot possibly understand what would cause Canadian National, which is really a very distinct limb of the federal government, not to purchase from the Hamilton works. It is beyond my imagination.

I think the decision is ludicrous. I have registered that opinion and I am prepared to take what other steps seem reasonable under the circumstances. If the member has some suggestions on this, I would be glad to assist him.

Ms. Copps: Mr. Speaker, could we ask the minister to do a little bit more than simply registering a strong objection? Could he take the initiative and organize a meeting with the federal minister as well as with Canadian National to discuss an issue which is critical to the employment situation in the Hamilton area?

Hon. Mr. Walker: I expect to be speaking today to the responsible minister of the federal government in this case and I will be talking to him in those terms.

DEPOSITORS' ASSETS

Mr. Peterson: Mr. Speaker, I have a simple question for the Minister of Consumer and Commercial Affairs that will require a simple answer.

Is the minister now saying that he is guaranteeing that no depositor in this province, in any of these companies will lose any money as a result of these takeovers and all these strange transactions? Is he making that statement clearly and simply?

Hon. Mr. Elgie: Mr. Speaker, I do not think I have said that anywhere. What I have said is that a final report on the examination of these companies that are now in the possession of the registrar will be made to this House when that information is available to me. That is the kind of information I will provide when it is complete, not while we are at the interim report stage. The Leader of the Opposition really does not expect that.

Mr. Peterson: Just so I understand it very clearly: The minister is not guaranteeing there will not be losses and there may indeed be some losses by the depositors of these various companies.

Mr. Speaker: Question, please.

Mr. Peterson: I want the answer: I am asking the minister. He is running the companies and I want to find out the state of the depositors' assets at the present time.

Let me ask the minister this question: What, in his opinion, is the extent of the jeopardy? Is it $130 million? Is it less? Is it more? What are the projected losses of these companies? How much public money will be at jeopardy through the federal deposit insurance corporation as well as any guarantees this province may be called upon to make some time in the future?

Hon. Mr. Elgie: As I have indicated to the Leader of the Opposition and to members of this House, when I have that information it will be reported to this House. It will not be made on the basis of incomplete information at the present time. It will be made when there is complete information.

Mr. Rae: Mr. Speaker, without attaching any personal blame whatsoever, there is at least a possibility it is the process of regulatory breakdown that has caused the problem with respect to these three companies.

I refer the minister to page 18 where he talks about Seaway and Greymac. He says, "The basic cause of this situation in each company has been its mortgage lending and investment practices" -- presumably over the long term.

Can the minister tell us why any innocent investor or depositor should suffer as a result of this regulatory breakdown, which is surely the responsibility of the government alone?

Hon. Mr. Elgie: That seems to be a conclusion the member has reached. It is not a conclusion I have reached.

WELFARE COSTS

Mr. R. F. Johnston: Mr. Speaker, my question is for the Treasurer and is with respect to welfare numbers across the province.

Is the Treasurer aware that in London, from December 1981 to December 1982, there has been a 51 per cent increase in the number of people on welfare? There are 1,240 more on welfare in London this year than last year; in Ottawa, an increase of 1,305; in Hamilton, an increase of 1,310; and in Kitchener, an increase of 1,391, or 45 per cent.

Is the Treasurer also aware that month over month, just from November to December, there have been increases of 10 per cent in Sault Ste. Marie, 8.49 per cent in London and 13 per cent in Peterborough?

3:30 p.m.

If the Treasurer is aware of these incredible, continuing, skyrocketing numbers on the welfare rolls, will he tell us whether he now is ready to move and give the extra help that he said in many newspaper reports across the province in December might be available? And if he is ready, which of these areas is he going to help with these incredibly increased costs to the municipalities?

Hon. F. S. Miller: Mr. Speaker, I am aware of the increases in welfare costs across the province, and I am sure my colleague knows they are shared by all three levels of government. I think the sharing formula is fair as long as the tax base of the municipality is able to pay its share.

I have been quite aware that there might be municipalities, particularly municipalities in single-industry cities or towns, that would be faced with pressures that were too grave for them, and in that kind of instance I would be guided by advice from the Minister of Municipal Affairs and Housing (Mr. Bennett), who would be in a position to tell us whether the municipality could or could not pay its share.

One should try to put all this cost in perspective on average. That is why on average there may not be a problem but in specifics there may be. We have to have that ability to differentiate between the average and the specific. On average, I am told, it has added about one per cent to the total costs of municipal government in the province, but for certain municipalities it is going to be adding a considerable amount.

Before getting rid of or greatly modifying a system that has been proven to work surprisingly well over the years, I would ask for that kind of advice. We said months ago that if it were demonstrated that a specific municipality honestly could not raise the taxes, then we would be listening to proposals.

Mr. R. F. Johnston: If the Treasurer feels it is not a problem of the system but, rather, something that may just affect some individual municipalities across the province, what is his response to the fact that in response to a letter from me suggesting that property tax no longer should be the basis for welfare costs, the municipalities of Sarnia, Guelph, Timmins, St. Catharines, Sault Ste. Marie, Durham region, Etobicoke, East York, Scarborough, North York, Belleville, North Bay and London have all endorsed my suggestions and suggested that it is time we got welfare off the property tax? In fact, it is the system itself that is wrong.

Hon. F. S. Miller: With great respect, if we petitioned any municipality in the province and asked whether, for example, education should be on the property tax base, we would be told it should not be. If we asked them whether roads should be on the property tax base, they would say they should not be. They simply transfer the base, naturally, to any other level.

FINANCIAL INSTITUTIONS

Mr. Peterson: Mr. Speaker, since the Minister of Consumer and Commercial Relations (Mr. Elgie) has chosen to leave, I will ask a question of the Premier.

I am sure the Premier is concerned about the deterioration of confidence in trust and financial institutions in this province in the past little while, and I am sure he has followed all these events with great interest. What is the Premier going to do and what is he prepared to do to try to restore confidence, particularly when one of his own ministries is not prepared to accept as security the certificates of one of the subject trust companies? Can he tell me what his responsibility is in that regard?

Hon. Mr. Davis: Mr. Speaker, I have complete confidence in a general way in the financial institutions in this province. I have always felt this and I continue to feel it. There are those situations that on occasion disappoint and concern us, but I think one has to keep it in perspective. If one looks at the history and traditions of our financial institutions in this province, and I know the honourable member can always seize upon four or five examples, but when you take that as a part --

Mr. Sweeney: Astra, Re-Mor, British Mortgage, Atlantic and Argosy.

Hon. Mr. Davis: Listen, I am as aware of them as the honourable member is; I have been here a lot longer than he has. But if the member really canvasses the views of people in other financial centres outside Ontario, in spite of the problems we have experienced on rare occasions, the integrity or the trust or the competence of the financial institutions in this province is regarded very highly.

I think it is important during the current discussions, in relation to the minister's statement and to some of the questions emerging from the Leader of the Opposition, that the members of this House and the Leader of the Opposition do not create the impression that there is far more difficulty than, in fact, exists within the financial institutions in this province.

I think it is fair to state, if members want my general observation, that I have confidence in the basic financial institutions in this province. If that is what the member is asking me to say, I have that confidence.

Mr. Peterson: I take seriously the advice of the Premier that it is important that I, my caucus and no one else in this House should create an unnecessary panic. But I also feel, and I am sure the minister will agree with me, that absence of information, stonewalling, not returning phone calls, not explaining what is going on to the public in themselves create anxiety.

The Premier now has admitted that the legislation needs a complete overhaul, something that should have been done some years ago; that we have had some 10 or 15 financial collapses in this province under that legislation in the past 10 to 15 years, roughly the time he has presided over this province as Premier; and that he now is going to have to investigate his own regulators and see whether they are well financed and competent enough to handle the difficult job they have.

Given these facts, does the Premier not feel that he personally could help create confidence in these institutions if he were prepared to stand up in his place today and say, "No depositors will lose money in these situations"? Through the Canada Deposit Insurance Corp. and his own guarantee, should it be necessary -- I gather we do not know the extent of that liability yet -- he could say, "We will make sure no one will lose as a result of the trust companies." As a result of that, people across this province will have faith in all the institutions he wants them to have faith in.

Hon. Mr. Davis: The next thing the Leader of the Opposition will be suggesting is that we guarantee as a government, or I stand up and personally guarantee, everybody who invests in the stock market in this province. I have to tell him, we are not prepared to do that.

I think it is fair to state that the minister has made it abundantly clear today that his ministry and he personally -- and members can interrupt or heckle me if they want, but I want to give public credit to the Minister of Consumer and Commercial Relations for the way in which he has handled this very difficult situation in the past three weeks. He has done it with great confidence, and I want to express my public appreciation to those who assisted him. He has done it extremely well.

I say to the member that because of the minister's actions there is no question that the interests of the depositors in the three companies that have been a subject of this discussion are in a much better position and have been enhanced.

Of course I am not in a position to guarantee everybody about everything.

MOTIONS

HOUSE SITTING

Hon. Mr. Wells moved that, commencing January 19, the House will not sit in the chamber on Wednesdays unless otherwise ordered.

Motion agreed to.

ESTIMATES

Hon. Mr. Wells moved that, in the standing committee on social development, the estimates of the Ministry of Citizenship and Culture be taken before the completion of the estimates of the Ministry of Health.

Motion agreed to.

COMMITTEE HEARINGS

Hon. Mr. Wells moved that standing order 72(a), respecting notice of committee hearings, be suspended for the consideration of Bill Pr27,

An Act respecting the City of Ottawa; Bill Pr42,

An Act respecting the Corporation of the City of Pembroke; Bill Pr48,

An Act to revive Glanworth Investments Ltd.; and Bill Pr51,

An Act to revive Beth Sholom Synagogue by the standing committee on regulations and other statutory instruments on Thursday, January 20, 1983.

Motion agreed to.

3:40 p.m.

RESPONSE TO WRITTEN QUESTIONS

Mr. Wrye: Mr. Speaker, before the orders of the day and while the government House leader (Mr. Wells) is here, I rise on a point of order.

I notice in looking through the orders and notices, and I will not even enumerate them, that dozens or perhaps even a couple of hundred questions remain unanswered. The answer to question 191 was to be available to my colleague the member for Essex South (Mr. Mancini) back on October 15, 1982, and most of the remainder were given interim answers.

The approximate date the information was to be available was December 17, which coincided quite neatly with the day we had expected to be out of here. Since it is now January 17, 31 days later, may I ask the government House leader on a point of order whether he could report to us when those questions will be receiving answers?

Mr. Speaker: I must point out to the honourable member that it is not a point of order. However, I am sure the government House leader will take it under advisement and will respond as quickly as he can.

SECURITY OF LEGISLATIVE BUILDING

Mr. Conway: Over the holidays, Mr. Speaker, I read with a great deal of personal upset that the government House leader, in consultation with others in the House leaders panel, has considered the possibility of installing plexiglass in this chamber at very considerable public expense. I do not know where the debates are, although my colleague the member for Brant-Oxford-Norfolk (Mr. Nixon) informs me there has been some discussion. I just want to quickly indicate my very strong personal disapproval that anyone, anywhere, is thinking of that kind of scheme.

Mr. Speaker: Again, I must point out to the honourable member that it is not a point of privilege --

Mr. Roy: Isn't it? I thought it was.

Mr. Speaker: No, and he knows it as well as I do. However --

Mr. Conway: I will accept that.

Mr. Speaker: Thank you. Just for the information of all honourable members, several options are going to be reviewed by the Board of Internal Economy in the near future.

Mr. Breithaupt: Mr. Speaker, on that point: Might we ask when there may be some report on that theme and what the input might be?

Mr. Speaker: At the next regular meeting of the Board of Internal Economy.

Mr. Roy: I will tell you --

Mr. Speaker: Order. Will the member for Ottawa East please resume his seat?

MOTION TO SET ASIDE ORDINARY BUSINESS

Mr. Rae moved, seconded by Mr.

Renwick, pursuant to standing order 34(a), that the business of the House be set aside to discuss a matter of urgent public importance, namely, the real concerns of thousands of Ontarians who are tenants in buildings formerly owned by Cadillac Fairview and depositors and customers not only of Greymac Trust Co., Seaway Trust Co. and Crown Trust Co., but other financial institutions; the failure of the government to give a full and complete explanation of its actions, including the implications for legitimate savers and innocent investors in the three companies; the continuing mystery surrounding the Cadillac Fairview apartment deal, and the role of Greymac, Seaway and Crown, and some of their principals, in that deal; the history of failures and problems concerning loan, mortgage, trust and finance companies in Ontario, such as Atlantic Acceptance, British Mortgage, York Trust, Re-Mor, Astra Trust, District Trust and Argosy; the obvious inadequacy of the Loan and Trust Corporations Act; the failure of the government to regulate the industry in an orderly and competent way; the refusal of the government to act on the problem of concentrated ownership in the financial institutions sector in Ontario; the ramifications of this entire issue on the tenants of Ontario whose buildings are used as trading chips for unknown interests; and the refusal of the government to call a full public inquiry into all aspects of this issue.

Mr. Speaker: I would like to ask the co-operation of all members in limiting their personal conversation. It is very difficult to hear the person who is speaking.

I am pleased to accept the notice of motion under standing order 34(a). The notice was received in time. I shall be pleased to listen to the member and to others for up to five minutes as to why the ordinary business of the House should be set aside.

Mr. Rae: Mr. Speaker, I can think of few issues that have caused greater concern, both to the general public and to those people who are directly affected by these transactions and the problems facing these companies, than the Crown Trust, Seaway Trust and Greymac Trust affair, which has preoccupied many of us in the Legislature for some time.

There is a very real contradiction in the statement the minister made today. That contradiction is simply this: at the end of his statement, the minister recognizes there is a serious and severe problem with respect to the trust company industry and with respect to the legislation that governs trust companies.

He says, for example: "I do not believe that it overstates the situation to say that we should rethink the basic scheme of the act and ensure that the requirements placed on the owners and operators of trust companies are consistent with the needs of the current business environment and with the fact that there is no inherent right to operate a trust company independent of the corresponding obligation to protect the public moneys entrusted to them. It is a privilege to be permitted to seek deposits from the public and only those who fully accept the fiduciary nature of the business should be able to operate a trust company in Ontario."

The very fact the minister had to state that, as if this was somehow a dramatic change or shift in public policy, is in itself an indication of how far removed this government is from its obligations with respect to this industry. When the Premier (Mr. Davis) stated today that there was somehow a comparison between risks and gambles taken on the stock market and investments that are made in trust companies in this province, that in itself showed just how far removed this government is from the average, everyday concerns, beliefs and views of the average citizen of this province.

I do not think the average citizen of this province thinks he should be taking a gamble, or that he is taking a gamble, when he goes into a trust company. The average citizen of this province thinks that "trust" in the words "trust company" should mean something, that those people who have the right to manipulate other people's money have strong fiduciary obligations, and that the money they deposit in trust companies should be safe and should be guaranteed.

There is a fundamental contradiction in the statement by the minister today. It is not simply that half its content is almost like an academy awards speech -- for example, congratulating Bell Canada, saying how many phones it set up and what a wonderful job everybody has been doing, giving us all manner of information that does not give us any further insight into what has happened or with respect to whether there has been any concealment or fraud.

There is no insight as to precisely what action the government plans to take. There is no indication whether it is going to find the identity of the numbered companies and whether the Cadillac Fairview deal still stands or whether it has been set aside because of the fact the mortgages have been overvalued. There is no indication as to the exact position of the depositors and the tenants, as to what the future of loan and trust reform in this province is going to be and whether there are any criminal investigations under way or whether the government contemplates laying any charges.

That is the kind of information we expected today from the minister; that is the kind of information we did not get.

The minister has admitted there is a profound problem with respect to regulatory reform. He admits there has been an ongoing practice for a number of years with respect to at least two of these companies which is unsatisfactory and which causes problems, and yet at the same time the cabinet agreed twice in 1982 to a dramatic expansion of the capital base of one of those companies.

The minister can take it as personally as he wants. I suggest to him he should not take it personally and should not see it as a personal attack on him or his ministry when we in this party say we are not satisfied with the process of regulation of the trust industry, that there have been too many problems for too long a time, that it is something that has gone on for a very long time in this province, and that people in this province do not think the trust industry is a gambling, stock market or speculative industry. The people in this province do not think people who speculate should be in the trust business; that is the assumption we have.

The concern we have is that this government, if I may say this to the minister in all frankness, has waited too long to act; it should have had some information which it has not had. If the minister is saying, as I understand him to be saying, there is a possibility there has been direct concealment or concealment in some way with respect to the conduct of those companies, I hope he says it very soon. I hope he says it clearly and publicly.

3:50 p.m.

Mr. Speaker: The honourable member's time has expired.

Mr. Rae: I am prepared to accept, as the minister says in his statement, that "it is exceedingly difficult to detect irregular or illegal activities." What I am indicating is that the statement of the minister today is not satisfactory; we do need a public inquiry, an inquiry that is independent of the government and independent of the minister. I hope very much that the government will agree to this motion being heard and that the members of the Liberal Party will agree with it as well.

Mr. Breithaupt: Mr. Speaker, of course the official opposition feels that this is a matter of urgent public importance. We are delighted the third party is finally involved in this area. Certainly the member for Riverdale (Mr. Renwick) said from time to time that they did not have the resources to dig into these kinds of themes, but the fact that they get paid 30 for 22 has perhaps allowed a bit of research money to be otherwise available.

There are three themes here. One theme is to ensure that depositors and investors are protected by the province in accordance with the legislation that now exists. The second theme is to ensure that the tenants of the province, particularly the occupants of those some 10,000 units, are going to be protected so that any resultant shortfall in this financial wheeling and dealing does not impinge on their obligations, which otherwise are being unfairly imposed on them. The third theme is the ultimate responsibility for these kinds of events.

As members well know, during my 15 years in the Legislature I have been involved for my party in a number of financial critic roles in Treasury and Economics, in Consumer and Commercial Relations, as chairman of the public accounts committee and, over this past year, as acting critic for the Ministry of Consumer and Commercial Relations during the convalescence of my colleague the member for Essex South (Mr. Mancini).

Throughout these years I have observed from time to time on the variety of financial disasters that have occurred and are cited and highlighted in the motion that is before us. As you well know, Mr. Speaker, as do other members of the House, as a director of a trust company I have some knowledge and background in these kinds of circumstances and some of the difficulties that can arise.

We have seen, therefore, these three themes. Let me look at the third one first, which I believe will make the Premier's office an area of ultimate responsibility in this matter.

We know that the member for York East (Mr. Elgie) now has been Minister of Consumer and Commercial Relations for a year. We have seen the member for Scarborough Centre (Mr. Drea), the member for London South (Mr. Walker) and the member for Brock (Mr. Welch), in their terms, be ministers of this ministry. We know of Eric Winkler's involvement. We have seen two or three others over the eight or 10 years during which this ministry has existed. Ministers come and go with great regularity. It is a ministry that is responsible.

I believe, for some 72 pieces of legislation, and it seems to me that the only consistency throughout this piece has been the involvement of the Premier as first minister, with the responsibility that perhaps is a little too much for the revolving-door ministry involved to accept.

The Premier has the ultimate responsibility, and I am sure he accepts it. He knows full well that a variety of financial institutions are going to be put under pressure because of these events. But from time to time on each of these occasions, whether it is Astra and Re-Mor, whether it is Argosy, whether it is the British Mortgage situation, we have had the minister of the day say, "Well, it will never happen again." Unfortunately it seems to continue to happen.

There is a web of regulatory agencies that exists. We should know --

Interjection.

Mr. Breithaupt: That is true.

Hon. Mr. Davis: In fact, I do not think we had the ministry then.

Mr. Breithaupt: No, we did not have the ministry there, but I think the Premier has had some responsibility for a fairly long time around here.

Mr. Speaker: One minute. This is not a debate.

Mr. Breithaupt: There is a web of regulatory agencies that should be protecting us in this province. Properly employed, they should be able to deal with these kinds of problems. The registrar under the act, the superintendent of financial institutions, of course, can require quarterly filings. There is a duty to review assets and to disallow overvalued assets. We also have the Ontario Securities Commission with its disclosure requirements that are applicable to Crown Trust and Seaway Trust, and the ability to call hearings and to investigate.

We have information available to this government not only under the Canada Deposit Insurance Corp. but also under the Mortgage Insurance Corp. of Canada with respect to its filings and its requirements, a variety of information that should enable us, through the ministry's overview, to decide whether companies are acting properly and appropriately.

Finally, we also have had the occasions of Seaway Trust going for its capital increase. So we have had a variety of these themes. I believe they are worthy of discussion, and I hope this urgent public importance will be seen by the House so that we may have a debate.

Hon. Mr. Elgie: Mr. Speaker, my remarks will be very brief. First, I hoped the long statement given today with respect to the state of affairs, as we know them to date, would have indicated to honourable members the ongoing concern and the serious way in which the government looks at the issue before it. Certainly no one can say -- and I suspect none of the members opposite could say -- that the government has not acted promptly and expeditiously in a way that has to be seen to be very appropriate to the problems that presented themselves to it.

I also believed the members opposite would have appreciated that there was an ongoing special examination by Mr. Morrison, with ongoing investigations now being carried out by the registrar and others while they are in possession of the assets, and that they would be able to provide information that would make this debate even more meaningful.

Having said that, and understanding that the opposition parties view this as a matter that has to be discussed today for their own reasons, whatever they may be, and with this government understanding the seriousness and the import of this issue to the public, certainly we will not object to the debate proceeding. But I want it very clearly understood, to reinforce what the Premier said, that this government and the public of this province have the greatest respect for the trust and loan industry in this province in general as to its stability.

To cast broad nets and aspersions indicating otherwise shows a degree of irresponsibility that warrants careful consideration before anyone makes those statements.

Mr. Speaker, this government will not object to the debate proceeding.

Mr. Roy: We have concerns about the government's responsibility.

Hon. Mr. Elgie: It is Monday. What is the member for Ottawa East doing here?

Mr. Speaker: Order.

Mr. Roy: That is an important issue. That is why we are here. Some of us came back from down south.

Mr. Speaker: Before I make a ruling on this matter, I would like the indulgence of the members to make some observations.

I point out that a notice of motion under standing order 34(

a) should, according to the rules and precedents, pertain to a specific event of recent occurrence which is of an emergency nature, requiring immediate attention and not readily debatable under some other procedure. I conclude that the specific event contemplated is the takeover by the government of certain trust companies, and on that basis I am going to allow the question to go to the House as to whether the debate should proceed.

I point out at this time, however, that the additional subjects, such as the various references, are out of order in the notice and will have the effect -- and this is the important part -- of precluding debate on those subjects on another occasion under this standing order.

I find the motion in order. Quite obviously, everybody is in agreement that the debate should proceed; so the debate shall indeed proceed. I am told we have to put the question anyway. The question before the House then is, shall the debate proceed?

Motion agreed to.

4 p.m.

TAKEOVER OF TRUST COMPANIES

Mr. Renwick: Mr. Speaker, I find it difficult to deal with the Minister of Consumer and Commercial Relations (Mr. Elgie) when he is under the gun like this because he is so defensive about his comments in relation to these matters. We share with him and with the Premier (Mr. Davis) the concern about the respect that is due to the trust operations in Ontario.

Indeed, Ontario and trust companies are in a very real sense synonymous. It is important for us to be able to say to the government that when one examines the statement made today -- and our emergency resolution was drafted in anticipation that the minister would be forced by circumstances to make a statement to the House today -- we were very concerned to make certain of a number of questions.

The questions are myriad and I do not have any skill or ability to outline all of those questions before the House, but there are two or three areas that have to be dealt with and have to be answered by the minister, and with which, with great respect, he has not dealt in his statement to the House. I have not memorized his statement; I have only listened to him read it.

I have a copy of it and I do not intend to address all of the matters in it. First of all, in no particular order, I say to the minister, the Premier and the government here today that the start of this, the transaction which led to all of these problems, still relates to the real estate and the apartment buildings in Ontario. That is the fixed point. Nobody can take them away. What I am suggesting, and I know the Premier and the minister will say that they know very little about the law, and I know very little about the law, particularly the law of mortgages, but in very simplistic terms --

Hon. Mr. Davis: I do not believe that.

Mr. Renwick: Believe it. If the Premier knew how little I know about mortgages he would be surprised. It is about the same as he knows about them, I would think.

Hon. Mr. Davis: I was hoping you knew more.

Mr. Renwick: No, but we can talk in very simple terms. The registrar of loan and trust corporations has possession of documents which reflect what I am going to call third mortgages on real estate in Ontario on which apartments are built and on which there are between 10,000 and 11,000 units. Those apartments have tenants. Those tenants are paying rent. Who is the rent being paid to?

That is not a rhetorical question, because what I am saying to the Premier is that the ranking on those properties is the first mortgagees, the second mortgagees, the third mortgagees and whoever it may be that at this point in time holds the equity of redemption. The tenants are paying their rent and as I understand it they are not paying their rent to this government or to any of the trust companies.

If this province is interested in the security of those mortgages, for whatever they are worth, and the validity and subsisting nature of those mortgages, for whatever they are worth, and if it is interested in the tenants of the province, it will now, as it has done with the assets of the three trust corporations who hold the mortgages, and if necessary by legislation, take possession of and manage and receive the income from the apartment buildings which are at the root of this problem.

It will have certain beneficial effects. It will assure the tenants that the management and operation of their buildings is being carried out properly. At least, I think it would. I think it would assure that the rents were coming to the third mortgagee, which is to the trust companies which hold whatever there is on the value of those properties, because if the third mortgagee's interest is of no value then it is fair to say that the equity of redemption is of no value.

Whatever the procedures are, my first point and a very simple one is that the government should take possession, now, of the land, buildings and apartments and provide for an orderly method to assure the tenants of security. I emphasize again taking possession of those buildings, because the real estate is here and the apartments are here. That is my first point.

My second point is also a very simple one. The member for York North (Mr. Hodgson) chaired a select committee related to loan and trust corporations some years ago. It is appalling to me to find that, at this time, the Minister of Consumer and Commercial Relations ends his statement with the kind of language which was of concern to us in 1974 and 1975, with respect to the adequacy of the staff, with respect to the skills and abilities of the regulatory authority vested in the government and with respect to this long, drawn-out process which is going to take place before there is an adequate Loan and Trust Corporations Act in force.

The minister did not disclose today what steps, if any, had been taken by the registrar of loan and trust corporations prior to the ministry's appointment of Mr. Morrison, who is to report to him as the responsible minister. Whatever we may have to wait for with respect to Mr. Morrison's report or any of the other reports that we are going to get at some point, this assembly is entitled to know whether the registrar or the minister discharged the responsibilities which were imposed on them under the Loan and Trust Corporations Act. I say that particularly with respect to Greymac and Seaway.

There is an interesting dichotomy in this statement which my friend the member for Welland-Thorold (Mr. Swart) picked up on. In some way, the government is making a distinction between Crown Trust and Greymac and between Seaway and Greymac. The distinction appears to me to be very clear.

Woods Gordon, referred to in the minister's statement to the House today, talked about September 1, 1982, as being the date on which the problem started to appear in Crown Trust with respect to its practices and the procedures it was following. But with respect to Greymac and Seaway, there is no such statement as to the time at which the trouble started to take place.

I am going to level, in as easy and simple a way as I can. Until I am satisfied otherwise, I am going to assume that there was serious default by the registrar of loan and trust corporations with respect to the investigations of Greymac and Seaway. I am talking here about questions relating perhaps to concealment and fraud, to adopt the phrase used by my leader. I want to know and I think the public of Ontario wants to have some sense about the rumours which have been floating about with respect to the sources of money that has been finding its way into the trust business.

I note that Meyer Lansky died in Florida over the weekend and I want to know whether the skills and knowhow which he brought to the laundering business have found their way into Ontario and whether perhaps some laundering has been done which ultimately will lead to fraud and concealment.

Next, in addition to the takeover of the three trust companies, I want to know, very clearly, what other actions the minister has taken with respect to any other trust companies as a result of the legislation which was passed in this assembly on December 21.

We have been concentrating upon the three trust companies. We know, by report, that a transfer of shares of another trust company was stopped. I want to know what, if any, further steps were taken by the minister, in the light of the authority which we willingly gave because of the gravity of the situation in which the government had either found itself or placed itself on December 21.

One could read with interest the concluding words of Mr. Justice Hughes at the time when he completed his royal commission on Atlantic Acceptance, because we are repeating here today in Ontario the kind of situation which he indicated could be adequately dealt with by proper public regulation properly enforced.

Those are the matters which lead us, as an emergent matter, to require this debate today because the minister has failed to answer the substantial questions of which he already has full and complete knowledge.

4:10 p.m.

Mr. Breithaupt: Mr. Speaker, in my opening comments before the Speaker allowed this debate, I did refer to the web of regulatory opportunities which at present exists within Ontario and which, in my view, should have caught some of these transactions before they had blossomed into the problems which we have before us today.

The superintendent of financial institutions -- that is to say, the registrar under this act -- has the quarterly filings required and a duty to review assets and to disallow overvalued assets. Second, the Ontario Securities Commission has certain disclosure requirements, applicable particularly to Crown Trust and to Seaway Trust, and the ability to call hearings and to investigate.

I referred to the Canada Deposit Insurance Corp. and the Mortgage Insurance Corp. of Canada arrangements and then finally to the matter of the increased capitalization for Seaway Trust, because if the capital is improved within a trust company it then allows, on a variety of multiple opportunities, up to 20 times borrowing power, based upon the capital involvement in the company.

These are the kinds of areas where the persons who are responsible to investigate and to have reports made to them are able to make value judgements as to the activities and actions of a variety of trust companies.

This matter first came to my view with rather a jolt last Sunday morning when, having returned from church, I received a call somewhat after 11 o'clock from the treasurer of the city of Kitchener, and Mr. Eby reported to me that $1 million belonging to the city of Kitchener was involved in Crown Trust. This was a payment of money put in on December 24 which was going to be due on January 10. Would the money be available? Are the funds going to be paid out the next day?

I could only tell him that I would contact the office of Mr. Murray Thompson first thing next morning and try to find out everything I could. I did that. I got an immediate reply. The relationship there is not at all in question. I was able to tell the treasurer of the city of Kitchener that he could take $20,000 out but the best he could do with the rest was to roll it over on a day-by-day or perhaps a week-by-week basis until the air had cleared.

Then we heard the city of Brantford had some $4 million involved in like consequence. The regional municipality of Waterloo has some funds, and there are others; be that as it may, moneys which are and have been acquired through tax collections and otherwise, and not immediately needed for the payment of salaries and other municipal obligations. That is just fine; that is a prudent way of putting out funds, benefiting from interest and as a result benefiting the citizens of the community.

But what about the circumstances where a person might not receive a variety of cheques payable on interest-bearing accounts or on guaranteed investment certificates? The city of Kitchener, I believe, can afford to wait that couple of weeks to see how things may work out. I certainly hope that the funds will ultimately be there to deal with that obligation, but at this point all I could tell the treasurer was that I did not know. I did not know whether the city would get its funds on January 10 if at all. It is not a very cheery message to have to bring to someone.

These matters have been raised in this House since October 26, when my leader first urged the minister to investigate the Cadillac Fairview sale by way of a select committee or a committee of the House. That request to submit the matter to a committee was reiterated on almost a daily basis throughout those first few weeks in November and indeed until it was learned, almost too late, that the sale had closed about 11 days early, November 5 and 8, 1982.

The focus of concern at that time was the extent of rent increases that would be permitted under the existing guidelines. The figures released regarding the sale price at first seemed to justify, at that point, expected rent increases of 30 to 50 per cent rent. Going back to the themes I raised, we not only had to protect the depositors but we also had to consider protection for tenants who might otherwise be called upon to cover these skyrocketing obligations.

Our policy would have restricted rent increases to five per cent during the restraint period imposed under Bill 179. Those changes in the rent review legislation were ultimately approximately accomplished.

The sale by Cadillac Fairview to Greymac, the involvement of Kilderkin, the machinations of Mr. Player and Mr. Rosenberg, all these other circumstances have been burdens that have been dumped upon us in great bundles over the last several months.

We talked about the circumstance in London and the armoury's location. The matter of the head office building of Greymac was raised. The curious financing of City Park Apartments in Toronto was brought before the House.

A variety of these questionable transactions where overvaluation of assets and greater mortgage financing might well pyramid up the expected value of shareholders' equity, which shares could then be sold, was going to be a problem that might see another kind of "Ponzi" scheme that would ultimately result in the bubble bursting.

I hope the minister is familiar with

section 193 of his act. I would like to read it. "The registrar may request any corporation to dispose of and realize any of its investments that are not authorized by this act, and it shall within 60 days after receiving the request dispose of and realize such investments, and if the amount realized therefrom falls below the amount paid by it for such investments, its directors are jointly and severally liable for the payment to it of the amount of the deficiency, but if any director present when any such investment is authorized, forthwith, or if any director then absent, within 24 hours after he becomes aware of