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June 17, 1981

32nd Parliament, 1st Session

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Hansard Transcripts

GOVERNMENT PROTECTIVE SERVICE

STATEMENTS BY THE MINISTRY

PRISON FARMING PROGRAM

ACID RAIN

CO-OPERATIVE HEALTH SERVICES OF ONTARIO

ORAL QUESTIONS

CO-OPERATIVE HEALTH SERVICES OF ONTARIO

VAUGHAN LAND USE

AUTOMOBILE INSURANCE RATES

SEVERANCE PAY

RENTAL HOUSING

SOUTH CAYUGA WASTE MANAGEMENT SITE

SCARBOROUGH TRANSIT LINE

FORD WORKERS

INTEREST RATES

ACTIVITIES OF REAL ESTATE BROKER

REPORTS

STANDING COMMITTEE ON ADMINISTRATION OF JUSTICE

STANDING COMMITTEE ON GENERAL GOVERNMENT

INTRODUCTION OF BILLS

CO-OPERATIVE HEALTH SERVICES OF ONTARIO ASSETS PROTECTION ACT

MUNICIPAL INTEREST AND DISCOUNT RATES ACT

INSURED HEALTH SERVICES ACT

ANSWERS TO QUESTIONS ON NOTICE PAPER

ORDERS OF THE DAY

CO-OPERATIVE HEALTH SERVICES OF ONTARIO ASSETS PROTECTION ACT

THIRD READINGS

EMPLOYMENT STANDARDS AMENDMENT ACT (CONTINUED)

ROYAL ASSENT

The House met at 2 p.m.

Prayers.

GOVERNMENT PROTECTIVE SERVICE

Mr. Elston: Mr. Speaker, on a point of privilege: On Thursday and Friday last week you were asked about some serious events that had taken place between the Ontario Provincial Police and Ontario Government Protective Service personnel. I note you gave an undertaking to provide us with a full report. I wonder if you could tell us if the report is in the making now and if it will be available to us before the end of the session so we can have it before the summer?

Mr. Speaker: I will inquire into that. I really do not know. I have not received it yet.

STATEMENTS BY THE MINISTRY

PRISON FARMING PROGRAM

Hon. Mr. Leluk: A little over a year ago my predecessor in this portfolio, the member for London South (Mr. Walker), announced that the Ministry of Correctional Services would be putting inmates to work growing their own food and raising livestock. I would now like to report to members on the success of that farming program and our plans for the current year.

Last summer inmates produced more than 622 tons of root crops, 50 tons of fresh vegetables and about 1,200 pounds of fruit. In addition, the general farming activities produced more than 26,000 dozen eggs, five and a half tons of pork and 1,000 pounds of poultry meat. The wholesale value of this farming program was about $202,000, an important cost avoidance for the taxpayers of Ontario.

This year I am pleased to announce a substantial expansion of our farming operations. Sixteen institutions will put inmates to work growing potatoes, onions, carrots, cabbage, turnips, beets, corn and oats as well as a wide variety of fresh vegetables. In total, 438 acres of land are now under cultivation. In addition, six correctional institutions are employing inmates in the raising of livestock, which currently includes 178 pigs, 73 beef cattle, plus 2,730 chickens and other poultry. We expect to produce about 50,000 dozen eggs this year, two and a half times last year's output, and 30,000 pounds of pork, or twice last year's production.

The estimated wholesale value of this year's root crops, vegetables, feed grain, eggs and pork should exceed $530,000, or more than double the value of our first year's production. Needless to say, this represents a substantial cost avoidance for taxpayers and will help keep down our $5-million annual food bill for inmates. As it is, the ministry serves 6.3 million meals a year, which is more than many large hotel chains in Canada.

I want to take this opportunity to congratulate the ministry staff who supervise and administer the self-sufficiency program. This year's much- increased production is a significant accomplishment during a period of spending constraints, when funds are simply unavailable for the purchase of farming tools and other capital equipment.

Finally, I am pleased to announce that we have put inmates to work constructing a hydroponic greenhouse at the Maplehurst Correctional Centre. This special greenhouse, which uses nutrient solutions rather than soil, will enable us to grow tomatoes and salad vegetables year round.

In

summary, the self-sufficiency farm program provides useful work for inmates, saves the taxpayers money and makes productive use of prison lands.

ACID RAIN

Hon. Mr. Norton: Mr. Speaker, I am pleased to report to the honourable members on the latest in a series of measures that Ontario has undertaken in the battle against acid rain.

On March 12 my predecessor, the former Minister of the Environment, Mr. Parrott, launched our first major intervention in the United States when ministry officials served the Environmental Protection Agency with a legal intervention. It opposed the relaxation of sulphur dioxide emission standards in the state implementation plans of six states, affecting 18 power plants. Later, two more power plants were added. That intervention, and the subsequent actions taken under my direction, form an essential part of any effective campaign to combat acid rain.

Our pursuit of this intervention and other legal measures in the US is based on five key objectives:

1. To ensure that the memorandum of intent signed on August 5, 1980, by Canada and the US is considered in all decision-making that can affect acid rain loadings;

2. To take advantage of our scientific work and experience with acid rain to assist in developing a greater awareness and appreciation of the problem in the US scientific and policy-making sectors;

4. To increase awareness among the public in the US in the belief that Americans will respond positively to protecting our shared environment when they understand the depth of the problem;

5. To underscore our conviction that without American action there can be little hope for success in protecting much of our environment in Ontario and eastern Canada.

On Friday, June 19, the ministry will make a presentation to a hearing of the EPA in Washington concerning the effects of airborne pollution in the US. This hearing relates primarily to concerns expressed by New York and Pennsylvania about pollution arising from neighbouring jurisdictions. However, we feel Ontario has much to offer in the consideration of this matter, both on our behalf and on behalf of the two states.

First, we share a common airshed with these states and suffer from many of the same transboundary concerns. Second, we are presenting relevant evidence gained from Ontario's expertise and experience in researching the phenomena. The evidence includes our data on atmospheric modelling techniques, back trajectory analysis of weather systems, the nature and effects of transboundary pollution episodes that have occurred in the past, and the information from our extensive monitoring of acid rain effects on Ontario's environment.

While this hearing will consider evidence on many of the sources we underlined in our intervention, the EPA has severely, and I believe artificially, restricted many of the issues we are convinced need to be addressed. My ministry has therefore petitioned the EPA to expand the hearings beyond the limitations currently in place. This will ensure that the entire transboundary pollution problem is addressed before any relaxations are granted that would increase pollution.

2:10 p.m.

I believe the declaration by the former administrator of the EPA, the Honourable Douglas Costle, under

section 115 of the United States Clean Air Act, gives ample scope for a wider hearing on the key issues of acid rain.

While I do not expect any sudden breakthrough in our efforts to assist the Americans in recognizing this serious environmental threat, I am confident that in the long term Ontario's steps will help considerably to establish an informed, constructive atmosphere. A strong public awareness in the US is essential to develop the necessary understanding so crucial to the negotiation of an agreement to combat acid rain. Our actions represent positive and meaningful initiatives to assist in that goal.

CO-OPERATIVE HEALTH SERVICES OF ONTARIO

Hon. Mr. Walker: Mr. Speaker, I would ask for the indulgence of the House in view of the fact that I do not have a copy of the statement I am about to read about Co-operative Health Services of Ontario. Do I have the concurrence of the House?

Mr. Speaker: Do we have the agreement of the House?

Mr. Smith: Is this a long statement? It is a complex matter. Is it just announcing the bills that are coming up?

Hon. Mr. Walker: Yes.

Mr. Smith: Okay.

Mr. Speaker: Proceed, Mr. Walker.

Hon. Mr. Walker: Mr. Speaker, on Monday the member for Ottawa East (Mr. Roy) and the member for Riverdale (Mr. Renwick) asked questions relating to the disposition of Co-operative Health Services of Ontario assets, both advocating freezing legislation. I wish to respond to the questions posed.

Specifically, the honourable members were concerned about certain profits made on the sale of real estate in which the general manager of the co-operative had used funds of the co-operative in the acquisition of the properties. I promised to investigate the situation and report back to the House as quickly as possible.

I have determined the following facts: As members are aware, the Clarkson Company Limited was appointed receiver on February 9, 1981, to liquidate the assets of the co-operative in an orderly manner. The receiver was appointed by the Supreme Court of Ontario on application of the superintendent of insurance.

Two parcels of real estate were allegedly acquired by the former general manager of the co-operative, and mortgages in favour of CHSO were placed on these properties. One property was bought in the name of Ross Hitch in trust, the other in the name of the co-operative. The properties were subsequently sold for $1.2 million.

The sale of the properties was completed on the basis of the agreement negotiated with the liquidator that the proceeds were to be held in trust by Montreal Trust Company, pending the outcome of the liquidator's motion for an injunction that would have frozen the funds. We understand that this profit, after payment of costs and encumbrances, totals about $378,000. The receiver's position is that these funds rightfully belong to CHSO. Consequently, the receiver sought an injunction requiring these funds to be held in trust until the issue of ownership is settled.

On June 2, after full argument, the Supreme Court of Ontario rejected this request. However, I should add that the action claiming these funds is continuing in the Supreme Court at the moment. In the meantime I understand that Mr. Clarke and Mr. Hitch have demanded that the liquidator release the funds from Montreal Trust, pursuant to an agreement between them, Montreal Trust and the liquidator.

Our concern, which I am sure all members share, is that these funds may be dissipated before ownership of them is resolved. Consequently, later today I will be introducing a bill to preserve the funds in trust until all matters related to the distribution of the assets of Co-operative Health Services of Ontario have been determined. I will request three readings of the bill today. This bill is in specific response to a specific situation, and we are proceeding only with the full agreement of this Legislature.

Mr. Cassidy: Mr. Speaker, it is unusual to comment on a statement by a minister, but just a minute ago I had a chance to look at the legislation, which we will naturally want to look at --

Mr. Speaker: Order. You are out of order, Mr. Cassidy.

ORAL QUESTIONS

CO-OPERATIVE HEALTH SERVICES OF ONTARIO

Mr. Smith: Mr. Speaker, I have a question for the Minister of Consumer and Commercial Relations. The minister is making reference to the Co-operative Health Services matter. I would like an explanation from the minister as to the behaviour of his ministry with regard to this company, because it does look very much as though the barn door is being closed some months after the horses have left.

In particular, can the minister explain why it was that after the licence was renewed in April 1980 -- a renewal about which the ministry had considerable reservations -- the ministry implemented a policy specially for this company to demand monthly reports about the state of the company, but did not bother to demand that these monthly reports be audited?

As a consequence of that, in the few months after the renewal of the licence, the funds that backup the insurance policies, which amounted to $1.3 million when the licence was renewed, dwindled to $11,000. When asked how this could happen, the superintendent of insurance said, "If it is not an audited statement, how could we possibly know what was going on?"

Would the minister explain to this House the purpose of instituting a monthly statement procedure on the company, when such a procedure is apparently next to useless if the statements are not audited?

Hon. Mr. Walker: Mr. Speaker, I do not have the answer to that question, but I am prepared to get it and supply it to the member.

Mr. Smith: Mr.

Speaker, by way of supplementary: Given that these precise matters were those that were raised about Co-operative Health Services during the election campaign; and given that the minister has not read the Re-Mor file but assured us he was briefed on the Co-operative matter; and given that the essence of the entire Co-operative matter obviously hinged on the running down of a $1.3-million fund to $11,000 within a space of a couple of months -- a loss of $800,000 in June alone -- how can the minister possibly tell us he has been briefed on the Co-operative matter and not be able to respond as to why it was that the ministry, when suspicious of the company, implemented a policy that turned out to be worse than useless in following it up?

Hon. Mr. Walker: I was briefed on the Co-operative Health Services matter and, as I indicated to the Leader of the Opposition the other day, I was briefed on the Re-Mor file. Of course I have not read the 48 file drawers that the Re-Mor matter amounts to. Like the Leader of the Opposition, I too have been briefed on the contents of the file.

Mr. Cassidy: Supplementary, Mr. Speaker: The minister has now acknowledged there is a responsibility on the government to protect the funds which the courts may decide properly belong to the people who were subscribers to Co-operative Health Services, and not to allow the funds to go into the pocket of Mr. Clarke or anybody else who might have been trying to profit from Co-operative Health Services.

Since that acknowledgement has been made, is the minister now also prepared to acknowledge there is a responsibility as far as the government is concerned for those individuals who deposited funds in the Re-Mor Investment Management Corporation and who find themselves now out of pocket to the tune of tens of thousands of dollars? Their losses are far greater than the losses of people who were subscribers to Co-operative Health Services.

Since he is prepared to come to the aid of people who lost a few hundred dollars apiece in claims through Co-operative Health Services, is he now prepared to come to the aid and to compensate those people who lost tens of thousands of dollars in Re-Mor as a consequence of the negligence of this government?

Hon. Mr. Walker: The matters are totally unrelated; they have no bearing on each other whatsoever and the question cannot be connected in any way, shape or form.

Mr. Bradley: Supplementary, Mr. Speaker: Would the minister agree there are a number of questions surrounding the role of the ministry with regard to the licensing and monitoring of Co-operative Health Services? Would he state to this House that, in his opinion at least, this matter should be reviewed by an inquiry of the justice committee along the lines of the Astra/Re-Mor inquiry?

If he believes the justice committee should deal with this matter, would he speak to his fellow Progressive Conservative members and tell them to quit stalling around and avoiding any discussion of this matter as well as the Astra Trust matter?

Hon. Mr. Walker: I think the honourable member is looking for a job for the summer. It seems to me that the committee has enough work, and it is up to the committee to decide for itself --

Mr. Bradley: This morning I asked for it.

Mr. Speaker: Order.

Hon. Mr. Walker: It is up to the committee to order its own business. The committee is ordering its own business, and the member knows that. The opposition has members on the committee

Mr. Bradley: You have the majority. You have the member for Oriole (Mr. Williams) stalling around.

Hon. Mr. Walker: I can recall when the opposition had a majority on that committee and it made the decisions on the way things would be done. So, what is the difference? The only difference is there is a different majority at the moment. The member does not like the fact that someone else is making the decisions. He just does not like that fact.

2:20 p.m.

VAUGHAN LAND USE

Mr. Smith: I have a question of the government House leader. Given that it is his job to assist in making this House operate in a reasonably plausible manner, and a reasonably cooperative manner all the way around --

Hon. Mr. Norton: We all have a responsibility for that.

Mr. Smith: Yes, indeed, we all have that responsibility.

Interjections.

Mr. Speaker: Order. Will the honourable member proceed?

Mr. Smith: Given that the government House leader has a certain position here in respect of the House, could he undertake to give us a reasonable and plausible chronology of the events that took place with regard to the various phone calls and actions on the Vaughan land matter?

In particular, could he find out from the member for York North (Mr. Hodgson) why it was that the honourable member would have been asked in November 1978 to intervene with the Ministry of Agriculture and Food? Why would he have waited between nine and 12 months before phoning the Minister of Agriculture and Food (Mr. Henderson)? Would he undertake to find out how it is that the minister does not know the difference between the member for York North and the Minister of Housing (Mr. Bennett)?

Would he undertake to find out for us in particular why it was that the Minister of Agriculture and Food sent out the member for Elgin (Mr. McNeil), since the minister claims that he did it merely by having been handed a note that said there was a call from the Ministry of Housing -- a call which he denies answering, which he denies inquiring into -- and he simply took that as a signal that it meant he ought to send the member for Elgin on a mission to Vaughan in the middle of December?

Would the government House leader understand that these answers are simply preposterous, plainly beyond credulity, and unacceptable to the opposition or to any reasonable person? Would he please undertake to talk to the member for North York, the Minister of Agriculture and Food, and the Minister of Housing, and come up with a reasonable chronology of events to explain how the member for Elgin ended up out in a field in the middle of December? Would he please do that rather than stonewalling, as the Minister of Agriculture and Food has been doing in this House?

Hon. Mr. Wells: Mr. Speaker, I would be happy to refer that question to the Minister of Agriculture and Food, who I think has answered it or will proceed to answer it. Apart from that, I think if my friend, understanding the system of how this House works and how parliamentary government works, wishes to pursue that question any further in terms of the responsibilities of the various ministers of this government, he should direct it to the Premier (Mr. Davis) of this province and leader of the party.

Mr. Smith: In the absence of the Premier, and the government House leader being in the House, is it not so that the government House leader heard the statement by the member for York North, which purported to represent a situation where he spoke with certain developers in November or December 1978 and then called the Minister of Agriculture and Food when that minister was, in fact, not even the minister until nine months later?

Was the Minister of Intergovernmental Affairs and House leader not here when I asked specifically of the Minister of Agriculture and Food that he find out what intervened, what held up the call from the member for North York? He said he was not interested in finding out.

Recognizing that we cannot question the member for York North in this House, and recognizing that the answers are preposterous and inaccurate --

Hon. Miss Stephenson: Oh?

Mr. Smith: Yes, they are. I say again, they are preposterous and they are inaccurate.

Mr. Speaker: Proceed with the question.

Mr. Smith: Would the Minister of Intergovernmental Affairs end the stonewalling that we are receiving from the Minister of Agriculture and Food, talk to that minister, the member for North York, and the Minister of Housing, and give us an honest chronology of events, which is something we have not received so far?

Hon. Mr. Wells: Mr. Speaker, I have already answered the question.

Interjections.

Mr. Speaker: Order.

Hon. Mr. Wells: There are two of the ministers concerned with this particular matter here in the House. I suggest my friend direct his question to either one of those.

Mr. Cassidy: Supplementary, Mr. Speaker: I am sure the government House leader does not intend to have the government stonewalling and I am sure he would like to demonstrate to the House that this is not the government's intention. Would he therefore be prepared to have his party give unanimous consent to a brief change in the rules of the House, to allow the parliamentary assistant, who did intervene in this case, to answer questions and set the record straight as to what actually happened, who did what to whom, and when?

Hon. Mr. Wells: Mr. Speaker, the answer to the question is no, I would not. I do not think the rules of this House should be changed in that regard.

I think that once and for all we should put to rest the assumption that emanates from both the questioners that there is some kind of stonewalling. There is no kind of stonewalling from this side. They have been getting the answers under the rules of this House with regard to ministerial responsibility and so forth. Two of the ministers concerned with the events about which the members wish answers are here. I have referred the questions to either of those ministers, and my friends should accept that referral.

AUTOMOBILE INSURANCE RATES

Mr. Cassidy: Mr. Speaker, I have a new question for the Minister of Consumer and Commercial Relations regarding the announcement by Royal Trust, the largest automobile insurer, that it intends to increase its rates on July 1 by 20 per cent. Commercial Union also has announced it intends to increase its rates by an equivalent amount, and Allstate says it intends to have a substantial increase in automobile insurance rates in the fall.

If all the other automobile insurers follow these precedents from the largest companies in the field, they will be collecting $200 million more in premiums every year from drivers in the province. Given this fact, is the minister satisfied that increases of this magnitude are warranted? What steps is the minister taking to protect consumers and drivers against excessive increases in automobile insurance rates?

Hon. Mr. Walker: Mr. Speaker, we have been monitoring the rates for some time. It is the responsibility of the superintendent of insurance to monitor all the rate increases. In the monitoring process we can say, quite fairly, that the increased cost of claims has far outpaced the increased rates. It is the observation of our ministry that in spite of the actual increases being proposed by one company and another, there is a bargain for the consumer in light of the increases in claims that have preceded all this.

In other words, it is our considered opinion that the increases are warranted, given the increases in the actual payout of claims. We are satisfied with that. This is one ministry that has been extremely diligent when it comes to the question of insurance rates, ensuring that those properly reflect what are the expenses and overhead of the particular industry. There is no question on this. We are satisfied from the monitoring point of view that the public is further ahead than it should have been, by measure of the increase in rates versus the increase in costs that the companies have had. We have accepted that. It is our considered opinion, and I hope the member will accept it as that.

Mr. Cassidy: The department of insurance has never been known in the past to carry out any kind of monitoring of rates that are charged in the automobile insurance industry. Would the minister say whether this investigation has been carried out by the department of insurance? Will he table that report in the House this week to demonstrate whether or not the increases are justified? Will he also undertake to put legislation into the House to give the department of insurance the power to roll back automobile insurance increases that are not justified?

Hon. Mr. Walker: In answer to the last question first, I do not feel that is warranted. Certainly there has been no indication of that. In respect of the matter before us, in terms of the question the honourable member has asked today, the superintendent of insurance -- indeed the entire department of insurance in my ministry -- has been doing this monitoring for some time.

2:30 p.m.

Let me say to the member that there is a quotation in the newspaper that I think he should have. It is from today's Toronto Star. It indicates the consumers agree. It is from a story entitled, "Car Insurers Say Premiums Going Up 20 Per Cent." The subheadline says, "Consumers Agree." The story says: "All the fuss among insurance executives has consumer activists lying low for the moment. 'I think they're telling the truth for once,' Helen Anderson, cochairman of the Consumers' Association of Canada's economic policy committee, said last night." She said that last night knowing the facts of the increase.

Mr. Cassidy: Would the minister not agree that the comments of one representative of the CAC do not validate a $200-million increase on the part of the industry? While there has been some increase in the loss-payout ratio, that does not necessarily prove 20 per cent is justified. It may be that 12 or 14 per cent is justified.

The ministry should also be able to report on what increased profits the insurance companies were able to get as a consequence of the sharp increase in interest rates over the course of the past year, which would offset their loss ratio in terms of claims.

Will the minister undertake at the very least to establish an automobile insurance rate review board, which will publicly report on increases in insurance premiums and thereby follow the example of the protection for consumers that is given in the Conservative province of Alberta?

Hon. Mr. Walker: No, I do not have that within my present framework of thought. All I can say is the member is impugning the motives of the CAC, a group I find believable and credible. I have a great deal of respect, indeed a great deal of time, for the comments of the CAC.

I refer the member to the fact that this particular lady, who is the co-chairman of the economic policy committee, made this statement in the light of knowing about the 20 per cent increase. She knew of the 20 per cent increase and she said she considered they were telling the truth and she thought it was a fair increase.

SEVERANCE PAY

Mr. Cassidy: Mr. Speaker, I have a new question for the Minister of Labour. Is the minister aware of the situation of the workers in the companies that appeared before the select committee on plant shutdowns and employee adjustment?

In particular, is he aware that 45 per cent of the workers at the Armstrong Cork plant in Lindsay would not have benefited from the severance pay legislation now before the House because they had less than five years' service; that 62 per cent of the workers at Tung-Sol in Brampton, which appeared before the committee, would have not have benefited because they did not have five years' service, and that 25 per cent of the workers at the Bendix Automotive plant would not have benefited because they did not have five years' service?

In view of the fact the government's legislation on severance pay would have ignored the needs of such a large number of workers in the companies that were affected by shutdowns last year, would the minister now explain how anybody could consider his severance pay legislation to be adequate?

Hon. Mr. Elgie: Mr. Speaker, as the honourable member knows we are now in the midst of debating that legislation. I have expressed my views and the members of his party have expressed theirs.

This government feels that severance pay is a payment to workers in recognition of years of service and evidence of commitment to that company along with the loss of future benefits that go with it. In recognition of the first part of that two-part principle, we feel that there should be a floor as evidence of a commitment to that company, and we chose the period of five years.

The concept of the need to demonstrate a commitment to a company is not new. A five-year floor is present in the Canadian government's severance pay legislation and, as I have indicated, a number of governments in the United Kingdom and in western Europe similarly have established floors -- they have selected other numbers, admittedly, but nevertheless they have established floors -- all aimed at giving evidence of the employee's commitment and service to that company, because severance pay is in recognition of that service.

The member may not agree with it, but that is our position. We think that it is a legitimate one and that it recognizes the needs of those employees with a long-term commitment to that company who are put out of employment.

Mr. Cassidy: To take those companies again, given that 104 workers at Armstrong Cork would have been denied benefits out of the 227 workers who were laid off, that 75 of the 120 workers at Tung-Sol would have been denied benefits and that 150 of the 600 workers at Bendix would have been denied any severance pay, is the minister saying that somehow five years is a magic figure and, if one has been in a company longer than that, one has loyalty, dedication and commitment that one does not have at the period of four years and 11 months of service?

Is the minister saying that it is easier for people who have been four years with a company to put bread on the table and find a new job than for people who have been six years with a company?

Why is this arbitrary and artificial distinction being made, unless the minister is dedicated to the principles advanced by the chamber of commerce when they proposed the five-year limit? Why is the government not prepared to acknowledge that a worker who loses his job to a shutdown may be just as committed after two years of service as after 20 years of service and that when a shutdown occurs through no fault of the worker he should be entitled to severance pay without these artificial distinctions?

Hon. Mr. Elgie: I can simply reiterate in essence what I have said before, that this is the government's view, as is stated in the bill and as I have enunciated it very clearly.

I am surprised that there were some comments yesterday and today about the select committee and all the things that went with it. I refer the honourable member back to my statement of October 14, where I suggested very strongly that the committee should look at the issue of floors and ceilings and a variety of other matters, including supplementary unemployment benefits. They did not give it thoughtful, logical, argued consideration.

Those were matters that I put before the members as sincere opinions on which I wanted advice. We did not get that kind of thoughtful advice. This minister is acting in response to legitimate problems and proposing practical, progressive measures that are in the forefront in North America.

Mr. Wrye: Supplementary, Mr. Speaker: Since the minister in his original answer referred to establishing a criterion of five years as evidence of some kind of commitment to that company, can the minister explain why he put a cap of 26 years in the legislation? Surely an employee who has spent some 28, 30 or 32 years with the same company would have given evidence of the kind of commitment whereby in severance he could have received at least one week's severance pay for every year, not with a cap of 26.

Hon. Mr. Elgie: Mr. Speaker, I am sure the honourable member knows full well that employment standards legislation is not looked at as the median or the norm or whatever; it is looked at as the minimum upon which others should build if they wish to do so during collective bargaining.

We feel, and I think some collective agreements and certainly other governments may agree with us, that six months' severance pay is a reasonable figure. The member opposite may think that six months' severance pay for himself as a member of the Legislature would not be enough. I do not know. But it has been the conclusion of this government that six months seems like an appropriate figure.

Mr. Martel: Supplementary, Mr. Speaker: In response to the minister, I think he should tell the House that it is his government that chose not to reinstitute the select committee to give its advice to the minister. We have asked that all along.

2:40 p.m.

Is the minister aware that Harold Crookell of the Centre for International Business Studies, School of Business Administration, University of Western Ontario, has stated "it will be the first time since tariff protection was introduced that the level of tariffs across a wide spectrum of goods will be less than the difference in the cost of production," and that Hill from the Ministry of Industry and Tourism indicates that over the next couple of years there is a potential of 2,000 plants closing in Ontario as a result of the recent tariff agreement?

Does he think, based on those two statements, that what he is introducing and what we are debating today will in any way meet the needs of people who potentially can be laid off in 2,000 companies, either in severance pay or without putting in justification or things to otherwise offset the problems they are going to face in Ontario in the next six or seven years?

Hon. Mr. Elgie: Mr. Speaker, we can go over this many times, but this government has made it clear that we believe we have introduced a series of amendments that bring this province into the forefront in North America --

Mr. McClellan: Rubbish!

Mr. Cassidy: You have the branch plant mentality.

Hon. Mr. Elgie: Well, it does. Whether or not the members opposite like it, it does. If they do not like it, that is their problem. But I tell them that thoughtful people --

Mr. Speaker: Order. Will the minister ignore the interjections and respond to the original question, please?

Hon. Mr. Elgie: It is very difficult, Mr. Speaker. I now understand very clearly the problems you have.

Interjections.

Hon. Mr. Elgie: I have to ignore the interjections.

Who can comment on what will happen in the future? Certainly this legislation will be looked upon as the best present anywhere in North America. I think that is a great stride forward.

If the member is saying there may be some changes from the General Agreement on Tariffs and Trade, that is nothing new. A lot of people have projected the changes, and industry and business and government are trying to react to those changes.

But surely to goodness the member knows it is meaningless to use that figure unless he also has some speculation about the number of new businesses that are going to start up. Those who have studied the situation carefully know there will always be a percentage of businesses that fail and a percentage that start up and they usually match. That has been the case in history.

RENTAL HOUSING

Hon. Mr. Bennett: Mr. Speaker, the member for Parkdale (Mr. Ruprecht) asked a question back on June 8, and in a supplementary I thought I had answered his question, but I will go into it further today.

As of this morning, the Ontario Mortgage Corporation had the following report on the Ontario rental construction loan program: "We have received 185 applications representing 18,662 units across the province. Of these, we have given approval in principle to 11,992 units, plus final commitments to 3,074 units, for a total of 15,066 units."

You will recall, Mr. Speaker, we were aiming for something in the range of 15,000 new units in Ontario.

Now, for Toronto and district, which is the immediate area, the way we have defined --

Mr. Smith: Metro Toronto, he said specifically.

Mr. Speaker: Order.

lnterjections.

Hon. Mr. Bennett: I trust the Leader of the Opposition will sit and listen for a moment. It might not be his character, but I suggest this afternoon that he give us an opportunity to answer the question asked by his colleague the member for Parkdale.

Mr. Smith: The question was about Metro Toronto.

Hon. Mr. Bennett: Mr. Speaker, we have received 32 applications for 8,269 units. Of these, 5,941 have been approved in principle, with an additional 1,567 receiving final commitment, for a total of 7,508 units. In this area there are still roughly 1,000 units being processed by the Ontario Mortgage Corporation.

Mr. Ruprecht: Supplementary, Mr. Speaker: I had asked the honourable minister specifically how many units were to be approved in the Metropolitan Toronto area. We are not interested in Metropolitan Toronto and district. We are interested in Metropolitan Toronto. That is the answer we expected and that is the answer he told us here in his own remarks he was going to give this House.

Mr. Smith: Well, what is it? How many of the 7,000 are in Metro Toronto?

Mr. Speaker: Order.

Hon. Mr. Bennett: Mr. Speaker, since we break down our districts along the same lines as Canada Mortgage and Housing Corporation --

Mr. Smith: Oh, come on. You have the figures: we got them from your office.

Mr. McClellan: Hold your breath, Claude.

Mr. Smith: The answer is zero.

Mr. Speaker: Order.

Mr. Ruprecht: Mr. Speaker, on a point of privilege: With due respect, I asked that question and I expected a response specifically directed at the question that was being asked -- no obfuscation or confusion but an answer to the question.

Mr. Speaker: I am not sure whether the minister has the answer to that specific question or not. Does the minister wish to respond?

Mr. Cassidy: Supplementary, Mr. Speaker: Will the minister say how many units are involved where the developer has backed out, having had approval under this plan, since the plan has been in force now for four months?

Mr. Smith: The answer is zero, and the minister knows it.

Mr. Cassidy: And specifically for Toronto and district and the rest of the province, how many units have actually started construction up until now and in how many cases have developers decided to lie low because they do not see how they can build housing under the plan?

Hon. Mr. Bennett: Mr. Speaker, in relation to the number of units the individuals have not proceeded with after making an application, I refer to the town of Grimsby, where there are 32 that have been withdrawn because they did not feel there was a market of sufficient capacity to allow them to rent the units. In Kapuskasing there were 24.

In the city of Kingston there were seven that did not meet the specifications of the program. In Kitchener there was one that did not meet the specifications. In Little Britain there were 18; and that involved a church organization that decided, rather than going under this program, it should go under the nonprofit housing program and it withdrew its application. In London five were withdrawn because they did not meet the specifications.

In Ottawa there were 239, and I have to say those 239 were by a developer who found that what he decided would be an opening rent was not one that was acceptable by the Ontario Mortgage Corporation; they could not find a meeting of the minds, and so he withdrew his application.

In Pembroke 11 units were cancelled after they made their application. In Sault Ste. Marie six were withdrawn. In Toronto there were 129, in Brampton 53, in Mississauga 100, in North York seven, in Val Rita four and in Whitby 182. A total of 821 units have been withdrawn by the developers for one reason or other, some of which I have given this afternoon.

I understand there is something in the range -- and obviously I do not have the exact figure, because I have not been on site in the 100 and some areas where they are building these units --

Mr. Martel: You send Ronnie McNeil.

Interjections.

Hon. Mr. Bennett: I have a remark but I had best keep it to myself at this point.

I believe at this moment there is something in the range of a little better than 5,000 units where actual construction has commenced and some of it has proceeded very far along.

Mr. Smith: On a point of privilege, Mr. Speaker: The minister stood up purportedly to answer a question previously asked. That is what he told you he was going to do. The question previously asked was how many units of his vaunted program had been approved in Metro Toronto.

He has now answered the question twice. He has led us and this House to believe that those figures are somehow unavailable to him and that is why he has not given them. If they are available, he should surely have given them by now. If he claims they are not available, Mr. Haley in his office will be very happy to give them to him, because he has told us they are available.

Interjections.

Mr. Smith: What is the answer? Zero.

Mr. Speaker: Order.

SOUTH CAYUGA WASTE MANAGEMENT SITE

Mr. Kerrio: Mr. Speaker, I have a question of the Minister of the Environment. On June 1 my leader raised a question related to the hearings on South Cayuga. He was concerned because, according to our calculations, the hearings would not start until the spring of 1982.

I wonder if the minister recalls the answer he gave my leader when he said: "Certainly, according to my most recent communications with the board, that is not the time frame which they expected in their report. They expected the hearings would begin not later than early fall."

Is the minister aware that at the Ontario Industrial Waste Conference yesterday Dr. Chant, chairman of the Ontario Waste Management Corporation, noted that they would be getting their hydrogeological report from Gartner Lee Associates, putting together their proposal and refining their proposal, and he stated, "Therefore, full hearings won't begin until next fall," in other words, the fall of 1982?

Will the minister now admit that this whole ad hoc hearing process will not save any time but is in fact circumventing the Environmental Assessment Act and merely trying to railroad the proposal into South Cayuga without looking at any other alternative proposals, which is the very worst part of that whole new process the government has, to look at one place and one place only and not look at what is in the best interests of the people of Ontario? I am particularly concerned about when those hearings are going to start.

2:50 p.m.

Hon. Mr. Norton: Mr. Speaker, I was not present when Dr. Chant made his remarks at the waste management conference. As the honourable member knows, I was here in the House. I think, though, on the basis of what the member has read out to me, that there are clearly two possible

interpretations. The

interpretation I would place upon that, the meaning of "next fall," would be this coming fall. If he is talking about a year from this fall, then that is an entirely new time frame for me. I will certainly check to see if there has been some change in the time scheduling of which I am not aware.

I think it is also important to bear in mind that regardless of the specific time frame -- and even if there has been some change in that that I am not aware of -- there is the likelihood of hearings under the Environmental Assessment Act requiring a longer period of time. That is still there.

As I have indicated when asked this question by others, if we were looking, for example, at several options at the same time -- which I suppose is the principal difference in the way in which we are proceeding -- the intensity with which a proposed site for such a development must be examined requires a very heavy application of technical expertise.

I am advised that if we were looking at four or five possible sites within the province, the level of expertise simply does not exist in sufficient concentration to do it all concurrently. The requirement would be such that the work that is now under way in terms of the South Cayuga site would have to be conducted sequentially on the variety of sites. This would mean that before hearings could even begin under the Environmental Assessment Act, we would have to have completed three, four or five such investigations, and goodness knows how long it might require.

I am still of the opinion that the way in which we have decided to proceed in this instance is the most efficient way, and it is one that also ensures a very full and open hearing process and full involvement of the residents of the community and other interested parties.

Mr. G. I. Miller: Supplementary, Mr. Speaker: The minister, at the meeting in South Cayuga last Wednesday night, June 10, claimed that alternative sites could not be studied because of a shortage of expert consultants. May we suggest that five such consultants are available and that they are Morrison Beatty, Gartner Lee, Hydrology Consultants, Conestoga Rovers and Geocon?

How can the minister substantiate his statement in the light of this information? Since there is an absolute need for such a facility, since the ad hoc hearings will not get fully under way until the spring of 1982, since we would all like this facility in the safest location environmentally and since there are a number of excellent hydrogeologists who could conduct those studies on at least five sites, why does the minister not look at alternative sites now so that we can have a proper facility in an environmentally acceptable site as soon as possible?

Hon. Mr. Norton: Mr. Speaker, that is a question that I think I have answered on a number of occasions, and I do not intend to continue to repeat the answer even though the question may be repeated interminably.

I wish to correct one thing. During the time I was responding to the first question, prior to the supplementary, a member of my staff was in telephone contact with Dr. Chant to determine the intent of his remarks yesterday. I am advised that Dr. Chant says his intention was to refer to the fall of 1981, not the fall of 1982.

Mr. Charlton: Supplementary, Mr. Speaker: Has the minister at all considered the delays that will be involved in establishing an industrial waste management site in Ontario if this single process that is being conducted around South Cayuga should find that site unacceptable? Or is the acceptability of that site a foregone conclusion?

Hon. Mr. Norton: Of course it is not a foregone conclusion, Mr. Speaker. I recognize there are risks involved in terms of potential delay if this site is determined, as a result of the hearings -- or even if the hearings recommend it, it is still open to the Ontario Waste Management Corporation to reject that site. That is a possibility. It is not a foregone conclusion.

I think it has been clear from the beginning of this process that the relationships between the government and the waste management corporation and between the government and the hearing tribunal are clearly at arm's length. I have no control, nor will I seek to exercise any control, over the way in which they receive and consider the evidence presented to them. It will be a fair, open and public examination of the safety of that site and the safety of the technology. It will be the decision of that tribunal and the corporation that will determine whether South Cayuga is an acceptable site.

Mr. Kerrio: The minister has decided that this board can circumvent the Environmental Assessment Board involvement. Does he not agree that in each instance when they go to a new site, even if there were three or four sites to be examined, they would never be examined concurrently so that we could speed up the process?

Is the minister not afraid that, if he goes this route, every single place he decides to investigate will have to be investigated without any ability to do it concurrently -- even in two or three different phases -- if he does not have enough hydrogeological people to go into that one area?

Conveniently, the minister has achieved a position where he cannot consider more than one site at a time.

Hon. Mr. Norton: Some work -- admittedly, it was preliminary -- has been done on possible alternative sites. The member is aware of that, having seen some of the earlier reports. It is not as if there were no other possible sites that could be looked at. But I guess the short answer to the member's question is, 'Yes, I do not agree."

SCARBOROUGH TRANSIT LINE

Mr. R. F. Johnston: Mr. Speaker, I have a question for the Minister of Transportation and Communications regarding a Toronto Transit Commission decision yesterday.

Will the minister explain what role he and/or his ministry played in yesterday's TTC decision to move from the light rail transit extension to Scarborough Town Centre to an intermediate-capacity transit system line? The decision was made in spite of a contrary recommendation from two senior staff officers -- Mr. Berney, general manager of operations, and Mr. Lawrence, general manager of engineering and construction -- in spite of a minimum of $30 million in extra capital expenditures, and in spite of a possible two-year delay in the implementation of the line.

Is the minister so worried about the financial stability of the Urban Transportation Development Corporation that he has pressured the commission to switch its position, defy all logic and move to the UTDC line?

Hon. Mr. Snow: Mr. Speaker, I want to assure you, the House and the honourable member that in no way have I pressured the TTC, Metropolitan Toronto or anyone else to make the decision the TTC made yesterday.

I believe it was a good decision. A letter from Mr. Godfrey was delivered to me today officially advising me of the decision. I have not had a chance to consider the questions he asked. I will be doing that in the next few days and will be responding to the TTC.

3 p.m.

Mr. R. F. Johnston: Is the minister aware that the mayor of Scarborough has been receiving letters like this one from Equity Development Group Incorporated on the question of the LRT, saying: "We are not in a position to comment on the relative merits of the alternative technology being considered, although we favour one that can be operational for 1983, and only the LRT can be so"? Is the minister aware that this company and many others are part of a $250-million development boom that is linked to the early implementation of the LRT?

Does the minister not feel that should be given higher priority than getting the minister's Urban Transportation Development Corporation a little showplace in the city of Toronto?

Hon. Mr. Snow: It so happens this whole matter, as I recall, was raised by the elected council of the borough of Scarborough, which I understand voted unanimously with the exception of Mayor Harris to ask the Toronto Transit Commission to review its previous plans for the light rail system and to replace it with the intermediate-capacity transit system.

I did not talk to any member of Scarborough council to encourage them to take that decision. I am not aware of anyone else who did. The TTC were responding to a request -- and I think a valid request -- of the elected officials of the borough of Scarborough to review that decision. I believe our only role in that was to give a technical response to questions from the TTC as to the implementation of the system.

Mr. T. P. Reid: Supplementary, Mr. Speaker: The whole matter seems to be shrouded in a great deal of vagueness and cloud, and the minister has suggested that Mr. Godfrey has now written him a letter asking him certain questions.

Does the minister really believe that Metro council or the transit commission has voted to extend the time by one year and for the system to go into place at supposedly an extra cost of an additional $31 million?

Can the minister tell us who in the government -- either at UTDC, the Premier or whoever -- put the pressure on Mr. Godfrey to try, and he did accomplish it, to get this through the commission to extend the time and take a much more expensive proposition, which he does not know -- and the minister apparently does not know -- is even going to work in Scarborough?

Hon. Mr. Snow: I will answer the last question first, Mr. Speaker. I happen to have a lot of confidence that the system will work and that it will work very superbly in Scarborough or in any other installation.

Mr. T. P. Reid: That is why it is selling so well. What did you promise?

Hon. Mr. Snow: I think it is selling very well. The member for Rainy River may not be aware, but we have sold a $650-million system to the city of Vancouver and the government of British Columbia.

Mr. Breithaupt: You sold Candu reactors.

Hon. Mr. Snow: Yes, and I would like to see us sell some more Candu reactors. I think that would be a great idea. I am in favour of industrial expansion in this province. Maybe some of the members in this House are not.

In any case, to answer some more of the honourable member's questions, comparing the estimated $103-million cost of the light rail vehicle system to the estimated $130 million for the ICTS system is somewhat like comparing apples and oranges. The LRV system -- and I understand this was one of the objections of the borough of Scarborough -- had the streetcars crossing major traffic arteries at grade. In other words, there would have to be disruption of traffic on the streets for the trains to cross.

That is building somewhat of an outdated system, but it had been the decision to build it on that basis and to upgrade the system later by spending a lot more money to build actual grade separations. I think it was the opinion of the borough of Scarborough's elected representatives that those grade separations were needed now.

One of the benefits of the ICTS is there will be no at-grade crossings and, because all of the system is grade-separated, there will be no interference with traffic on the existing streets. That additional cost is being built into the system now rather than being added at a later date.

If one compares the light rail vehicle system with its temporary stations to the intermediate capacity transit system with its complete stations in the initial contract and with its complete grade separated system, when one takes into consideration future extensions of the system using technology I have every confidence will be the best technology in Canada, in North America and the world, I think it is the right decision to go with the best system and pay some additional money.

I am sure when one compares these and we have our staff pull out the total figures as to what the LRV system would be if one added in the grade separations and the stations, I do not think there would be much difference in cost.

FORD WORKERS

Mr. Wrye: Mr. Speaker, I have a question for the Minister of Labour. The minister will recall my question of May 11 regarding the use of American workers at the new Ford facilities in Windsor. I acknowledge his reply by letter to that question. He will also note that on Monday the member for Windsor-Riverside (Mr. Cooke) raised this matter again with new numbers in an open letter to the minister.

Those numbers, I might add, are higher than the figures I have been able to confirm but lower than other figures given to the member for Windsor-Walkerville (Mr. Newman). Will the minister now review with the federal Department of Employment and Immigration the applications approved for American workers in Windsor? Will he table in this Legislature a complete list of the Americans working at any Ford facility in that city and district, along with the reason Canadians were not able to fill these positions?

Hon. Mr. Elgie: Mr. Speaker, as the member knows, I have responded to that matter to him and to others in the past. I will be pleased to make further inquiries of the federal Minister of Employment and Immigration, Mr. Lloyd Axworthy. but I would remind him that in each case to date each worker has received a working permit from the employment and immigration service of the federal government. However, I will review the most recent complaint.

Mr. Wrye: The minister may not be aware that as a result of inquiries we have been making in the last week the manager of the Canada Employment Centre in Windsor is holding two meetings with Ford officials today in an effort finally to get some straight answers on the number of Americans working at the Ford facilities in Windsor.

Will the minister or his senior officials obtain details of those meetings and satisfy themselves we are receiving a full accounting of all Americans working in Windsor and the reasons those applications for work permits were approved?

Hon. Mr. Elgie: I will obtain what information we can.

Mr. Cooke: Supplementary, Mr. Speaker: This has been going on for a couple of years. I am amazed the minister does not take a stronger position with the federal government. After all, it is this government that gave $28 million to the Ford Motor Company for jobs for Canadians, not jobs for Americans.

Can the minister find out why it is necessary that the plant manager, the program manager, the controller, the industrial relations officer and the material control officer be Americans? The list goes on and on. Is it not up to the minister to protect jobs and make sure the $28 million his government gave on behalf of Ontario taxpayers goes to create jobs for Ontarians and not for Americans?

Hon. Mr. Elgie: Mr. Speaker, I am pleased the member has more confidence in this government than he has in the federal Liberal government.

INTEREST RATES

Mr. Martel: Mr. Speaker, I have a question for the Treasurer. In a letter I have received from the Sudbury Real Estate Board, it outlined the predicament existing home owners are faced with in renewing their mortgages. Is the minister aware that an average $50,000 mortgage bearing an 11 per cent interest rate carries a monthly payment of $481 and, when renewed, that same mortgage at 18 per cent interest will carry a monthly payment of $733.19, an actual difference of $251.92?

Can the minister tell me what the real estate board or I should do in advising people who are faced with mortgages they cannot cope with? How do we advise them? What do we advise them to do to protect their equity in their homes?

Hon. F. S. Miller: Mr. Speaker, I wish I had a pat answer for that. That kind of question, as the member knows, has been raised many times. The first part of his question was, was I aware of it? Without being certain of the figures, I will have to say they are in the right range. The same kind of percentages apply equally to people with higher and lower mortgages.

3:10 p.m.

I do not have any advice. I wish I had. I am only hopeful that the peak in the interest rates may have passed. I hope that tomorrow will see a downward trend, and indeed a number of forecasters are saying we will see a downward trend.

I have to say that the information I have received has been a little more encouraging this year. I do not have the statistics at my fingertips, but the kinds of things I have been hearing are that the rate of foreclosure has been lower than expected in view of the relative size of the interest rate changes.

I suppose one of the reasons for that is that this year we are one year more into the high interest rate cycle. Last year many people quite properly had no reason to expect the sudden and dramatic change of interest rates we saw in the months of April and March of 1980. People have been readying themselves for dramatic changes, knowing that the market rate has been much higher. I suspect the lower foreclosure rate than many expected is because a good many people have been making whatever room they can in their family budgeting to ready themselves for those changes.

Mr. Martel: In view of the fact that Ottawa is not prepared to do anything, can the Treasurer tell me if his government is prepared to use some of the money in his Treasury to assist people in some way to ensure they do not lose their homes?

Hon. F. S. Miller: I have no program that I could either afford or produce to do that.

ACTIVITIES OF REAL ESTATE BROKER

Mr. Sweeney: Mr. Speaker, I have a question for the Minister of Consumer and Commercial Relations, dealing with what his predecessor probably would have called a scam. It deals with a real estate broker in the city of Kitchener who is accepting or taking over Canada Mortgage and Housing Corporation mortgages from condominium units, not paying the mortgages, renting out the units and then allowing the mortgages to lapse.

It is estimated that this real estate broker, who is licensed in this province, has fleeced taxpayers of $300,000. Given the fact that he is licensed here, and given the fact that this minister has the power to require his registrar of real estate brokers, Allen Binstock, to order this man to cease and desist, or to lift his licence, will the minister take that action?

Hon. Mr. Walker: Mr. Speaker, I will not say at the moment whether I will take the action, but I certainly want to receive additional information, particularly the name of the individual. This is the first time the matter has been brought to my attention. If the honourable member will supply me with the details, I am prepared to supply him with an answer very quickly.

I do question the member on the one point; that is that the taxpayers have been taken for several hundreds of thousands of dollars. I am wondering how he comes to that conclusion because, even if the mortgages have lapsed, presumably there is a right to ultimately foreclose against those mortgages; so indeed the public may well be protected by the foreclosure prospect that CMHC might well have on it. Mind you, that is a problem for CMHC to resolve and beyond our purview, but I would not see any cost being imposed upon the taxpayers.

On the other hand, the matter the member raises is of a serious nature; I would like to have the details about this individual and to have our registrar investigate the matter thoroughly.

Mr. Sweeney: Given the fact that CMHC now has begun the practice of not allowing people to simply walk away, and given the fact that this real estate broker has provided this scam technique for allowing them to walk away, the Canadian taxpayers, through a real estate broker licensed by this province, are being forced to pay out approximately $300,000.

It is my understanding that the real estate brokers' code, under which they get their licences, says those people have to operate with honesty and with ethics. It would clearly seem, given the fact that this man in a premeditated way refuses to pay the condominium fees and therefore is cheating the condominium corporation out of that money and refuses to pay the mortgage fees and therefore is cheating CMHC out of that money, he is certainly not operating in an ethical way. Would it be the minister's opinion that such a person should not hold a real estate broker's licence in Ontario?

Hon. Mr. Walker: I think we have to be careful that we do not prejudice whatever defence there may be in this case. If the facts are as the member has set them out, then indeed I think all of us will have great concern about the matter and action will undoubtedly be taken. On the other hand, I have been involved in law often enough to realize there are almost invariably two sides to a story. I would want to hear the other side before I go any further and make a comment as to the guilt or innocence of the individual. I think it is very dangerous for us to do that. Indeed, I think it is very dangerous for us in this House to do that and may prejudice future proceedings in a court situation.

I would caution the member about doing that unless the facts are without any degree of capacity to be controverted. Pending all the details being supplied to me, and the entire story being out, I think it is wise for both of us to attempt to reduce our rhetoric on the matter to ensure there is a fair hearing for the individual. As I say, if the facts are as the member has set out, then certainly that person will be up on the carpet, but for the moment I think it is wise for both of us to exercise some caution.

REPORTS

STANDING COMMITTEE ON ADMINISTRATION OF JUSTICE

Mr. Treleaven from the standing committee on administration of justice reported the following resolution:

That supply in the following amount and to defray the expenses of the justice policy field be granted to Her Majesty for the fiscal year ending March 31, 1982:

Justice policy program, $577,400.

STANDING COMMITTEE ON GENERAL GOVERNMENT

Mr. Barlow from the standing committee on general government presented the following report and moved its adoption:

Your committee begs to report the following bill with certain amendments:

Bill Pr 14,

An Act respecting the City of North York.

Motion agreed to.

INTRODUCTION OF BILLS

CO-OPERATIVE HEALTH SERVICES OF ONTARIO ASSETS PROTECTION ACT

Hon. Mr. Walker moved, seconded by Hon. Mr. Wells, first reading of Bill 120,

An Act respecting Certain Potential Assets of Cooperative Health Services of Ontario.

Motion agreed to.

MUNICIPAL INTEREST AND DISCOUNT RATES ACT

Hon. Mr. Wells moved, seconded by Hon. Mr. Bennett, first reading of Bill 121,

An Act to provide Alternative Methods of Fixing Penalty Charges, Interest Rates and Discount Rates on Payments to Municipalities.

Motion agreed to.

3:20 p.m.

Hon. Mr. Wells: Mr. Speaker, this proposed legislation will offer, as an alternative to existing legislation, a consistent formula for setting interest penalties on delinquent payments and discounts for prepayments for all municipal related levies. The new formula will apply to levies imposed on ratepayers as well as to payments between municipalities and upper tiers, school boards and other local government entities.

The formula, as set out in the bill, will allow local authorities to establish an annual maximum rate to be fixed by bylaw at the prime lending rate of a designated chartered bank plus one and a half per cent. It should be noted that this is an omnibus bill which applies to all interest rate provisions in the various statutes governing local government activities. These include the Municipal Act, regional acts, the Education Act, the Assessment Act and the District Welfare Administration Boards Act.

I believe the bill offers the local government sector a more responsive means of setting interest rates by directly linking the prescribed rates to conditions present in the economy.

INSURED HEALTH SERVICES ACT

Mr. Martel moved, seconded by Mr. McClellan, first reading of Bill 122,

An Act respecting Insured Services under the Ontario Health Insurance Plan.

Motion agreed to.

Mr. Martel: Mr. Speaker, the purpose of this bill is to declare that surgical procedures for breast reconstruction are insured services under the Ontario health insurance plan.

ANSWERS TO QUESTIONS ON NOTICE PAPER

Hon. Mr. Wells: Mr. Speaker, I wish to table the answers to questions 62, 70, 84, 85, 87 and 89, and the interim answers to questions 114 and 115 standing on the Notice Paper. [See Hansard for Friday, June 19.]

ORDERS OF THE DAY

CO-OPERATIVE HEALTH SERVICES OF ONTARIO ASSETS PROTECTION ACT

Hon. Mr. Wells: Mr. Speaker, I would ask the consent of the House that standing order 53(

a) be waived so that the House might proceed with Bill 120,

An Act respecting Certain Potential Assets of Co-operative Health Services of Ontario, the bill that my colleague the Minister of Consumer and Commercial Relations (Mr. Walker) has just introduced.

Mr. Speaker: Do we have the consent of the House?

Agreed to.

Mr. Breithaupt: Mr. Speaker, I just want to be clear the agreement is the bill would pass all stages today.

Hon. Mr. Wells: There does not seem to be any other standing order that stands in the way of the other stages, but that would be understood.

Hon. Mr. Walker moved second reading of Bill 120,

An Act respecting Certain Potential Assets of Co-operative Health Services of Ontario.

Hon. Mr. Walker: Mr. Speaker, I will refrain from opening comments in the light of the statement that was made earlier which I think can be applicable here. I merely encourage members to proceed with all expeditiousness, given the fact that the money is there somewhere and we are a little concerned about getting this matter through in time to get that money before it disappears from its present location. With the help of the House, I think we can achieve that.

Mr. Breithaupt: Mr. Speaker, while we certainly agree there will be some expedition in this matter, I think there will be the requirement to say a few words on the general subject so that you, sir, at least will know how this matter has come before us this afternoon.

At the moment we are attempting to obtain control over some $377,000 which results from the assets of certain transactions that have been referred to in the press. I understand the minister has arranged that notice of this intended bill has gone to Messrs. McMillan Binch, the solicitors for the Clarkson Company Limited, the liquidator of the estate, and notice has gone with respect to the intentions of the Legislature this afternoon to the Montreal Trust Company, which is holding these funds.

The way this matter has come before us has been well publicized in the press over the last several months. Co-operative Health Services of Ontario, including its subsidiary, Delta Dental Plan, was a company providing dental insurance and extended health insurance plans for approximately 140,000 subscribers in Ontario. The company also acted as an agent in providing Ontario health insurance plan coverage.

The company was licensed under the Prepaid Hospital and Medical Services Act, which is under the jurisdiction of the superintendent of insurance in the financial institutions division of the Ministry of Consumer and Commercial Relations. The company was ordered into liquidation by the Supreme Court of Ontario on February 9, 1981, and this action was initiated by the superintendent of insurance, who had suspended the licence of the firm on February 6.

Particular problems arose with respect to the cancellation of this licence. A great variety of communities and organizations were badly discomfited by the loss of insurance coverage and we read in the press of a variety of these groups. One clipping in the London Free Press on February 21 referred to the town of Port Stanley and to Yarmouth township. There were problems with respect to the Ontario Federation of Agriculture, which had a plan with this organization covering some 3,500 Ontario farmers.

The Canadian Bar Association's Ontario branch was involved as subscribers to this plan and, indeed, there was some comment earlier on that the student members of the law society at Queen's University was about the sue the bar association if it failed to reimburse them for expenses they incurred under this dental plan.

We noted that the employees of North York Hydro, of de Havilland Aircraft and the municipalities of North York and Toronto were also affected because of the various coverages which this company had set out to attend to in accordance with the terms of their contracts. One way out of the problem, I suppose, was decided on by Mayor Hazel McCallion of the city of Mississauga: she simply sent the bill of $28,050 for the unpaid dental claims to the Ministry of Consumer and Commercial Relations. I can only assume the chief government whip, the member for Mississauga East (Mr.

Gregory), is fully in favour of having that bill paid by the Ontario public. I think his service will no doubt be appreciated by Her Worship the mayor in the claims which may occur.

What happened at that point is that a variety of other companies in the province moved in immediately to ensure that coverages were not lost to a variety of the persons who might otherwise suffer. I think that should be noted, because the insurance system within the province was quick to move in and attempt to protect a variety of these groups.

For example, Allstate Insurance took over the 700 employees in the city of Oshawa. In the city of Brantford it happened to be Mutual Life that took over the benefit packages for dental, drug and hospitalization care and other matters that had been attended to by this company. The Co-Operators Insurance in Guelph took over, as I understand, all of the general coverages for policy holders caught up in the bankruptcy and on an application they agreed to handle all claims from individuals and group accounts until the original policy period lapsed or for about six months, whichever might come first.

So health plans were available and in spite of the immediate losses at least the continuing losses which might have occurred were covered by various aspects of the industry.

3:30 p.m.

There were particular concerns with respect to travel agents who attempted to attend to problems for people who were already en route or were somewhere else and had to arrange other insurance coverages. They attempted to protect their clients as best they could. I suppose extra premiums for the new arrangements would have to be billed, and if not preferred to be paid by those clients, the travel agents themselves as part of their obligation would be attending to that particular situation.

In my community, in the Kitchener-Waterloo area, some 2,500 residents had taken out cover- ages under the Health Plan While Outside Canada and, of course, there were other coverages that I will refer to in a moment.

At the time the insurance licence was suspended on February 6, the then Minister of Consumer and Commercial Relations (Mr. Drea) congratulated his staff for moving quickly to uncover what he called a scam within this company. However, the circumstances surrounding the eventual collapse of the company and the warning signals that the superintendent of insurance and his staff were receiving raise a lot of questions as to the sort of monitoring of this company which was being practised by these regulators. These are matters I would hope the justice committee would have the jurisdiction and the responsibility to investigate in due course.

In April of 1980, Co-operative Health Services had its licence renewed by the ministry, although the ministry at that time had some concern about the operation of the firm. There had been an investigation into the firm, though according to the superintendent of insurance, Mr. Murray Thompson, there was not sufficient reason to refuse to renew the licence.

In April, their capital surplus was about $1.3 million. According to Mr. Thompson, this amount was similar to what it had been in previous years, but Delta Dental Plan's business was expanding so that the amount of the premiums it was collecting and the claims it was paying were higher. This had eroded the four-to-one ratio that the department guidelines demand -- that for every $4 in premiums, an insurance company should have $1 in surplus. Delta Dental was slightly over that four-to-one ratio.

Along with the renewal, the department sent a warning to the company to tighten its budgetary controls and to improve its premium-to-surplus ratio. In addition, according to Mr. Thompson, it also started to monitor the company and receive monthly reports of their claims records. However, this monitoring by the ministry did not alert the ministry to the fact that in the month of June 1980 alone, Delta had used $800,000 of its surplus to pay claims. Between April and October 1980, the company used all but $11,000 of its $1.3 million capital surplus to pay claims which would normally have been paid out of premiums collected.

This afternoon, my leader asked a question of the Minister of Consumer and Commercial Relations (Mr. Walker) with respect to the running down of the assets of this company. The minister responded, as I recall, that in the briefing he had received, he had not been made aware of the reasons for this or how it could have happened. Yet surely, the only question one would immediately ask when faced with this kind of problem is, how did the assets get run down that quickly and who would be responsible? Indeed, it is as though Little Red Riding Hood was wandering around asking, "What wolf? What wolf?" That is the kind of circumstance that one would think would have come immediately to mind.

According to the superintendent of insurance, the monitoring procedures by the department would not have indicated that the company's surplus was being eroded because the reports did not indicate whether claims were being paid out of premiums or surplus. The department learned about the payments out of surplus only in October 1980 after it received Delta's audited financial statements. It was this reduction in surplus that resulted in the suspension of the company's licence by the department. The question then arose as to how to deal with the kinds of assets with which we are faced today in this bill.

What surprised me is, given the concerns the ministry had, to the extent that it even began monitoring the company on a monthly basis, that it did such an inadequate job. Surely if they were concerned they could have required monthly audited statements. That is the kind of issue I suggest I would like to see pursued by an investigation of the justice committee in the same way as my colleague the member for St. Catharines (Mr. Bradley) suggested today as the critic for the Ministry of Consumer and Commercial Relations.

Another matter related to the events of December 1980 is with respect to the hearing to determine whether the ministry should suspend Co-operative Health Services' licence. An adjournment of that hearing was asked for and received. The next day the company pledged all its good assets to the Canadian Imperial Bank of Commerce to secure a $2 million line of credit. The former minister said in February: "I will tell you right now, we are going to take on that bank. That money should be given back.

That is the customers' money." Of course, this bill before us is attempting to rectify that situation, because there appears to be a very strong belief that the funds on hand at Montreal Trust are the customers' money.

Mr. Gregory Morris, vice-president and regional manager for the Canadian Imperial Bank of Commerce, said in a statement following the minister's comments that perhaps not all the facts were known to the minister and that the bank had acted properly and responsibly. Clearly there is a difference of opinion here, and I have not heard or read anything since then concerning the resolution of that difference. This is another reason why the justice committee investigation might well be useful.

The more one delves into the affairs of this company and the circumstances surrounding its collapse the more questions one raises. On February 10, 1981, shortly after the company was placed in liquidation, the then Minister of Consumer and Commercial Relations (Mr. Drea) was asked how much the company owed in unpaid claims. He responded, "It has been a relatively hectic time, and the company's records are not in the best of shape."

I was a bit astonished to read this comment by the minister. I would have thought that with the concerns the ministry had and the investigation it was doing, its records would have been somewhat more up to date and it would have required them to have been in good shape.

The minister was also quoted on February 10 as saying, "We have been concerned about them for a couple of years." Of course, he was correct in his comment that it was understandable that a young company might have financial ups and downs while it was dealing with very strong competition for a share of the market as it was developing its business.

But those comments of the former minister raise a lot more questions than they answer. If Delta had been undercutting its competitors, how might that affect its capacity to collect revenue? Was it offset by a significant increase in premiums? Is it not the case that dental insurance plans cost the insurance company a great deal in claims in the first few years as people take advantage of cheaper and better access to dental care? It is quite possible a significant expansion of those plans can seriously harm a company's prospects of financial stability. Was this what happened?

Was it noticed by the regulators, and if so, what did they do about it? Those are the kinds of questions I think an investigation might answer.

This morning I tabled in the justice committee a motion that I will read to the House:

"Pursuant to the petition tabled in the Legislature on Monday, April 27, 1981, requesting the referral to the standing committee on administration of justice of the annual report of the Ministry of Consumer and Commercial Relations for the year ending March 31, 1980, that the same annual report be brought before this committee for consideration beginning Wednesday, June 24, 1981, so that the committee may investigate the role of the Ministry of Consumer and Commercial Relations with regard to the licensing and monitoring of Co-operative Health Services of Ontario."

Because of other activities within the committee this morning we were not able to reach the motion I had placed. It was just at noon, after the estimates for the provincial secretariat for justice policy, for which this minister is also responsible, that the minister came to me and told me that today we would be considering this bill. We agreed to proceed through all the stages of the bill today. I understand that even His Honour is available to make sure this bill is dealt with promptly, that royal assent is given and that, as a result, the funds on hand at the Montreal Trust Company will not otherwise go astray.

As I mentioned earlier, in my own community not only travel agents were involved in attempting to arrange other coverage but actual organizations as well. The city of Waterloo had a contract with this organization. The Waterloo County Board of Education also had a contract covering almost 3,000 employees. Even more interesting, the union members at Joseph E. Seagram and Sons Limited, which provides products that are most useful on occasion in this building and elsewhere, were concerned about their dental care. No one would want his beverages prepared by people whose teeth were aching. As a result, I am sure we would be interested in that particular as well.

This scam involved thousands of people -- possibly some 120,000 to 140,000 people in Ontario -- and the claims clearly affected a large number of people in nearly all the constituencies we represent, particularly in southern Ontario.

3:40 p.m.

There is one thing I should refer to, particularly because of my responsibilities as chairman of the select committee on company law. During the hearings last summer in which we were dealing with the fifth area of our insurance industry -- namely accident and sickness insurance -- there were a number of comments about the operation of various health and accident insurers within Ontario.

Let me quote briefly from an

article which appeared in the Toronto Sun on February 23: "'One major problem was that being a cooperative, Co-op Health was not technically an insurer under the Ontario Insurance Act. If it had come under the act, we could have taken over the company and its assets when it began to smell.'" That quote was from Murray Thompson.

"The irony is that Thompson wanted Co-op Health Plans to come under the insurance act, but on July 4, 1980, Co-op Health argued for special treatment in a submission to the Legislature's select committee on company law. Co-op Health pleaded that it was a nonprofit organization and should be exempted from the more stringent controls.

"'Regulations that are applied to profit-making insurance companies are way off base and have ulterior motives,' its submission said, 'but it becomes intolerable when power is exercised by a faceless bureaucracy.' The board of directors, having no money of their own in Co-op Health felt no personal responsibility and left financial affairs in the hands of one man, Thompson said."

I will give credit where it is due in this circumstance, because at that time we on the select committee were quite certain of the wisdom of the approach taken by the superintendent of insurance in order to have these kinds of operations clearly under close and effective rules of scrutiny. I presume if we have the opportunity to finish our report in July, as is the expectation, we will be able to address this problem.

I am sorry we are somewhat in arrears of the event but clearly the resolution of this kind of circumstance must be attended to by changing the laws to ensure that the superintendent of insurance has control in these situations and that this kind of problem will not happen again.

Of course there are others who are concerned about the circumstance. None other than the former Minister of Consumer and Commercial Relations suggested on February 17 when he still held that portfolio that he would immediately introduce legislation making nonprofit health insurance companies operate under tougher controls -- the kinds imposed on ordinary insurance companies. It is now about three months since the election and almost four months to the day since those comments were made.

That kind of legislation has not come before us but I hope we will have the prospect of it following the consideration which the ministry may be able to give to the report of the select committee on company law in this area whenever that is completed.

I realize the suggestion he made at that time would be that it was only going to involve the nonprofit health insurance companies. According to Brian Mead, the chief operating officer of Blue Cross, it might have meant a two per cent increase in premium for that kind of trust fund. I think the prospect of a trust fund or a commitment involving probably all the providers of these insurance coverages would be a somewhat fairer way to go. It is the kind of thing that may become part of the cost of doing business, as it has done through the travel agents' industry fund, and also with respect to the coverages under the mutual farm insurance companies.

In both those areas, strength is developed within those two commercial operations because of co-operation and the requirement to cover each other's losses in the best interests of the system. This unfortunate circumstance with respect to the background of the bill we have before us today may well lead to this kind of thing as a cost of doing business. Certainly if a fund is to be large enough to meet all its obligations, as the Toronto Star pointed out on February 24, it must receive contributions from as many sources as possible.

It must also involve the strong companies as well as the weaker ones, and it must require contributions based on some relationship to the dollar value of coverages in order to attend to the circumstances here and to ensure this will not happen again.

In many ways I regret -- as I am sure the minister does -- that we are required to debate legislation like this today. I believe the bill is worthy of a quick passage because, obviously, these funds must be held at least until their ownership is clearly defined. They may well be, as is the presumption at least by the members of this House, the property of the persons who should have received insurance coverage and not the property of the individuals who are named in the bill.

While I may suspect that is the case I would not presume, of course, to judge in advance what decisions may be made by the courts. However, the opportunity will be there, at least until the time of the relief of the liquidator from its responsibilities to find out and to deal with this circumstance. I wish the minister well in getting these funds. I certainly hope we will be in good time to ensure this kind of thing will never happen in Ontario again.

Mr. Renwick: Mr. Speaker, I do not intend to delay the House in the passage of this bill. It is an urgent matter, and the sooner it is over and done with the better. I think there is a more appropriate forum to discuss the problems that led to the collapse of the Co-operative Health Services of Ontario than this House. That does not mean I dissent, or necessarily depart from any of the historical remarks made by the member for Kitchener who has just concluded speaking on second reading of the bill.

I am certain we will have an opportunity to discuss this matter in the standing committee on the administration of justice at an appropriate time. Whether it is through the vehicle of the annual report of the ministry on the motion that was presented to that committee this morning or whether it is when the estimates of the Ministry of Consumer and Commercial Relations come before that committee, we will have an opportunity to discuss the ramifications of the collapse of the Co-operative Health Services of Ontario.

However, I want to clearly state a number of my concerns so there will not be any misapprehension about the bill. I seldom do this but once in a long time an initiative of this party produces government response, and very quickly. The minister, I know, will recognize that the leader of this party raised this question of a method by which these funds could be held for the liquidator until their ultimate distribution is determined by the court. It was raised on Monday in the House with the request that this kind of legislation be produced.

I must say it gives me some sense of satisfaction that we had something to do with the process of alerting the ministry. I want to compliment the ministry for the immensely prompt response it made to the suggestion that the distribution of these funds should await the determination of the court.

I have a couple of matters, however, that are of concern. I do not want anyone to be under any misunderstanding, either in this chamber or outside this chamber, that we are interfering with the judicial process. It must be very clear we are not interfering with that process.

As everyone knows, last week in the course of a lawsuit brought by the liquidator against Mr. Clarke and another to determine the ownership of a piece of property and, ultimately, the disposition of the proceeds of the sale of that property, the liquidator moved for an injunction. Disposition of the proceeds of the sale will take place at some point in the future when the court has heard the substance of the arguments and made its determination. Until that should occur the liquidator quite properly tried to move in the court for an interim injunction for the period of time until the court made its final disposition.

3:50 p.m.

The court did not grant that injunction. This was not because there was no merit in the case of the liquidator but simply because the only question before the court was whether an award in damages would be an adequate remedy in the processes of the court. It was not because of any other determination. It was not a determination as to whether or not, if an award of damages was made, the moneys would be there to pay the award. I do not know how to make that perfectly clear, but that is the way I want to express it.

We are not interfering either with the decision of the judges of the court who refused the injunction, nor are we interfering with the due process to the time when it is ultimately settled by decision of the court. What we are doing is very properly exercising a power to legislate in this House on a matter of urgency to make certain that those funds are available to await the final outcome. If the liquidator wins, they will be available for the settlement of the claims. These are estimated to run to $3 million to $4 million against available assets of somewhere between $500,000 and $1 million.

If the court decides the liquidator did not have a claim, then the other parties to the suit, Mr. Clarke and another person, will be successful and the moneys will ultimately be paid to them.

I want to make a second point in that connection. We have been bedevilled in this House for many years on an understanding of the rule called the sub judice rule. I would not want anybody to indicate anywhere, either in this House or anywhere else, that we are breaking the sub judice rule by passing this legislation.

I want simply to state, without any further elaboration, the parliamentary principle relating to the undoubted discretion of the chair in sub judice cases -- and I emphasize this -- and to the right of the House to legislate on any matter. In other words, the sub judice rule cannot, under any circumstances, interfere with the right of a parliamentary assembly such as this to legislate on any matter. Therefore, I want to state very categorically that this has nothing to do with a sudden desire on this House to interfere with the application of the sub judice rule which governs our proceedings.

The next point I want to make is that we are, by consent of the House, very deliberately breaking a rule of the House, or agreeing that it will be set aside so that this bill can be heard through its first and second reading in one sitting.

There is no problem under the rules with respect to the third reading of the bill, once the second reading has taken place. But I did think it appropriate to put on the record the specific rule of the assembly, rule 53(

a) of the Legislative Assembly of Ontario's standing orders, dated December 14, 1978. It states "The Order of the Day for second reading of a bill shall not be called until the bill has been printed and distributed and marked PRINTED on the Order Paper." That is the particular rule, as I understand it, that we, by consent of the House today, have agreed to waive because of the urgency of the matter.

I need not go on at any length. The bill appears to me to be adequate. The bill appears to me, as usual, to have had the intelligent draftsmanship of the legislative counsel of the assembly, assisted no doubt by members of the minister's ministry, in order to make certain that it carries out our intent.

A person reading the bill may have some difficulty with it because it simply states that notwithstanding the decision of any court, the trust property shall be held by Montreal Trust Company of Canada as trustee, or by such other trustee as may be named by the Lieutenant Governor in Council, until such time as the Clarkson Company Limited applies to the Supreme Court of Ontario for discharge as liquidator of the estate and effects of Co-Operative Health Services of Ontario.

It is very clear the Clarkson Company are officers of the court. They are appointed by the court. They are subject to the jurisdiction of the court and their ultimate discharge depends upon a decision of the Supreme Court of Ontario.

It is also clear the trust property we are speaking about is the net funds that remain after the sale of certain real properties. They are now in the hands -- as I understand it -- of Montreal Trust Company. The net result is a wise precaution by this assembly to protect those funds as to their availability to the liquidator of this company awaiting -- I emphasize "awaiting" -- the decision of the court in the lawsuit, whatever that decision may be.

I trust the House will move quickly now so that the bill will receive royal assent as early as possible. It may well be that having been given notice of intention to pass this bill the Montreal Trust Company is, to say the least, in a difficult position if other people are claiming those funds. I would ask the assembly not to delay it by diversionary addresses about the history of Co-Operative Health Services or what properly may be dealt with on another occasion.

I ask the House simply to pass the bill through the remaining stages and to have it receive royal assent as quickly as possible so there will be no doubt those funds will be available ultimately, if the court so decides, to the Clarkson Company as liquidator of the Co-Operative Health Services of Ontario.

Mr. Bradley: Mr. Speaker, I wish I could share the optimism that the various legislative committees or the House would have the opportunity to deal in a detailed way with the collapse of the Co-Operative Health Services in this entire issue.

Earlier today in the justice committee we in the official opposition attempted to introduce this as a subject for discussion. It would have meant approximately an hour or an hour and 15 minutes of discussion -- I make a subjective evaluation -- but we were prevented from doing so by the usual procedural stalling of certain members opposite. That would have been the ideal forum in which to discuss this. Oftentimes when members engage in that kind of nonsense in committee they do not realize the chickens will come home to roost.

We wish to see this bill passed this afternoon. The member for Kitchener has indicated very clearly his support of the bill, as I do. We think it is a necessary emergency measure. We do feel there are some issues associated with this bill which must be addressed as well. Members will note the Leader of the Opposition (Mr. Smith) did deal rather extensively with this matter in a question this afternoon.

When the former Minister of Consumer and Commercial Relations (Mr. Drea) said he had been concerned about Delta and Co-Op for a couple of years, we hoped the ministry would elaborate on what sorts of concerns these were. We hoped they would say how they were dealt with and how the companies responded to these ministry concerns if and when they were communicated. The minister offered the qualification that the financial ups and downs were normal for a fledgling company.

Members will recall Delta Dental was incorporated and registered to provide nonprofit prepaid dental services to premium-paying subscribers since December 1971. Delta employed no personnel of its own but was operated on a management-fee basis by Co-Operative Health Services. Indeed, Delta Dental and Co-Op consisted of the same personalities and were even treated as one and the same entity by the ministry. I think a company that has been in business for 10 years can hardly be considered a fledgling operation.

It is interesting to look at the history of Delta's and Co-Op's relationship with the ministry. Between 1972 and 1976 the ministry's main problem with Delta was getting it to stay within the so-called four-to-one rule, where biannual premiums collected must not exceed four times the unimpaired equity in the company. This rule, which many consider too high, is a protection against a high run of claims, which could break a junior insurer.

4 p.m.

Beginning in 1975 other irregularities were continually being pointed out to Delta by the ministry. Finally, after a series of letters, the superintendent of insurance issued on June 10, 1976, a formal proposal to refuse to renew Delta's registration.

A hearing was held and the superintendent's decision was confirmed on September 8, 1976. The major reason for the decision was that Delta Dental had, over a year, exceeded the four-to-one ratio by a very wide margin. In addition, numerous other management practices were involved: possible breaches of the statute, including illegal investments, unacceptable expenses for directors' trips and meetings outside Canada, and extra payments to certain employees for administration purposes over and above Co-operative's management fee.

The superintendent's decision was appealed by Delta to a divisional court, and the appeal was denied on June 7, 1977. On June 6, 1977, however, Delta Dental Plan of Ontario was taken over by Co-operative Health Services of Ontario for the sum of $1 and on the condition that Co-operative set up a $5,000 yearly bursary for the purpose of assisting in the education of a dental student while attending university, supposedly.

Thereafter, it was Co-operative Health Services that was registered with the ministry, although the only difference from the previous situation consisted in a personnel change in the office of a general manager. Delta continued to operate as a division of Co-operative Health Services.

I would like to know, if this matter ever gets to committee, whether the ministry's approval was needed for the sale. What factors were examined by the ministry in approving the takeover? Did Delta's or Co-op's operations, financial stability and managerial strength change, and if so, how?

When one reviews the financial history of Co-op, one finds the same patterns. The annual reports of the superintendent of insurance show that for the nine years 1971 to 1979 inclusive, Co-operative Health Services never had an operating profit. They show administration expenses far in excess of the cost of doing business that is normal for that type of insurance writing. They show that a net profit was achieved each year by the receipt of other income, namely, investment income at ratios more appropriate to speculative investment than to a company that was incorporated as a nonprofit co-operative.

These reports also show, starting in the fiscal year 1977-78, a recourse to large bank loans to maintain liquidity. Such loans could only have been secured on the collateral of securities and mortgages owned by the company at a significant additional cost to operations. It seems to me that this sort of activity should have alerted the regulators to suspect that something was amiss or at least should have given them reason to examine the operations of the company more closely.

I would like to know how these annual reports are examined and whether any concerns were raised as a result of these annual reports. If not, why not? If so, what was done about it? This is a very important area that can be examined only by an investigation conducted by the justice committee. We would be unable to explore that to the extent we would want to this afternoon.

It should be noted that many of the irregularities and questionable practices complained of in the case of Delta Dental, which was closed down in its original form in 1976, were also apparent in the case of Co-operative Health Services for quite a period of time before the company was closed down in 1981, before the company was being closely monitored by the ministry in the latter part of 1980 and before the reluctant renewal of its license in April 1980.

Just to give some examples: Administration costs in this type of insurance writing should run between 15 and 20 per cent of premium income. Co-op's administration costs ranged between 20.7 and 41.4 per cent of premium income during the years 1971 to 1979. There is no discernible reduction in administration expense as business increased. Just as a comparison, the administration cost of the Blue Cross plan in 1978 was 11 per cent of premium income, against 20.7 per cent for Co-operative Health Services.

Here is another example. After Co-operative took over Delta Dental in 1977, the company reported the following performance: In 1977, when we look at the operating profit column, the loss was $340,640, other income $500,987 and net profit $160,347; in 1978, the operating profit column was $418,770, other income $510,431 and net profit $91,661; in 1979, when we look at the operating profit column, the loss was $646,000, other income $700,000 and net profit $53,613.

This other income consisted largely of income from investments and was a net figure after deducting the cost of pledging a significant portion of the company's bonds, securities and mortgages as collateral for bank loans. It would appear that Co-operative Health Services was receiving a return of 16 per cent or better on investment.

One would have to wonder what sort of investments these were back in the late 1970s to have earned such a high rate of return. Were they nonarm's-length dealings? Were they high-risk investments? Were they appropriate types of investments for an insurance plan? Did the ministry become concerned over the rate of return for other income? If not, why not? If yes, what did it do about it?

As members of this Legislature, we can see there are many serious questions that have to be answered concerning the role of the Ministry of Consumer and Commercial Relations. I urge members of this assembly to prevail upon the Progressive Conservative members of the standing committee on administration of justice to vote in favour of the motion of the member for Kitchener which will be proposed once again -- it is unfortunate he did not get the opportunity to propose it earlier today -- to begin the inquiry.

Municipalities have been adversely affected by this when they were involved in Co-operative Health Services, individuals have been adversely affected, and in one case a woman had $25,000 worth of medical work done in Florida and was hard-pressed to do any collecting because of the collapse of this company. In our view there is obviously inadequate monitoring in this regard.

I could go on at great length but we have to recognize there is some urgency this afternoon. Once again I regret I have had to take this time in the House when it could quite easily have been dealt with in the committee this afternoon. In this party we will support this bill, because we think it is absolutely necessary that it go through this afternoon. For that reason I have spoken in favour of the bill and I hope it will be expedited before the six o'clock adjournment.

Mr. Cunningham: Mr. Speaker, I wish to speak very briefly to this bill, if I may. If we were not in such dire straits, I would be afforded an opportunity to speak at some length, because I have a number of things I would like to put on the record. In view of the rather serious situation, I am going to limit my comments.

One should be mindful of the comments made by the minister at the time this company went under in February. The minister said the company had been the victim of sharks and in that time period the company really had been solid as a rock. This latest episode is one more example of a litany of failure in that ministry, one that must be a real concern to the new minister and to the cabinet itself. In my view, the situation is a culmination of some real neglect, particularly on the part of the former Minister of Consumer and Commercial Relations (Mr. Drea).

During the month of February, when this matter was of great public interest, the former minister took it upon himself to blame almost everybody he possibly could, except himself and senior officials within the ministry. The Canadian Imperial Bank of Commerce was blamed. The select committee on company law, of which I am a member, was blamed for not detecting what a terrible scam this would be.

The entire matter was obfuscated by some comment by the former minister that clearly there were defects in the legislation and the legislation itself might have to be repealed because of the failure of this company.

I cannot begin to say how frustrating it must be for people who are on the wrong side of claims in this matter, people in the province who were dealing with a company licensed by a registrar who, in my view, has let the side down.

As early as 1974 at the minimum it was apparent that this company was in incredible difficulty. Yet year after year this particular company and its successor have, in my view, pushed around the senior officials in the ministry who really should have known. The street talk within that ministry was they thought they were bad. They thought there were some things that were radically wrong with this particular company.

4:10 p.m.

My friends and colleagues the member for Kitchener and the member for St. Catharines have gone into some detail with regard to a number of the more serious defects in that particular company.

I will not quote at great length, but there are some interesting items of correspondence, such as the March 1, 1974, letter to the lawyer for Delta Dental from the deputy superintendent at the time, Mr. Thompson. The last paragraph will be of interest:

"Under the circumstances, unless the association is prepared to cancel the reinsurance agreement, it would be necessary to impose cancellation of this agreement as a condition of continued registration under

section 9(2) of the act."

That is almost the standard closing in almost every item of correspondence directed to this particular company. "Unless you clean up your act, we are going to be forced to take you to court," or "Unless you clean up your act, we are going to be forced to cancel your registration."

The ministry should have been well aware of the disposition of the senior people in this company with regard to their reticence to restrict themselves to the ratio conditions outlined by the ministry.

Another item of interest is the general manager's report, dated January 29, 1975, to their special committee. On page two of his letter, Mr. James, the general manager at the time, said:

"Taking all of this into consideration, we have decisions to make today. I made the following recommendations:

(1) We completely ignore Brewerton's letter as far as it refers to the four-to-one ratio;

(2) We go politically, as my lawyer advises, and have this discrimination and restriction of trade removed by authorities higher than Mr. Grundy."

The receipt of that particular item should have been a very clear indication to the people in the ministry as early as January 29, 1975, that this operation had no intention whatsoever of living up to the guidelines wisely imposed by the ministry.

Again, on June 6, 1975, Mr. Thompson had to write to them, and the letter was delivered by hand. He advised them, again in the last paragraph: "Failure to comply with the above suggestions by June 12, 1975, will compel us to make the matter public and take legal proceedings against your department." That was the import of a letter to Delta Dental from the province of Ontario.

It is a litany of failure. It is almost a reminder really of the Astra/Re-Mor matter; the same personnel generally, the same office within the ministry and a minister who was reluctant under public scrutiny and considerable questioning to admit that it was not the Canadian Imperial Bank of Commerce that failed, it was not some defective portion of the governing legislation, it was not a scam, and that the company was not taken over by sharks; the harsh facts of reality were that the people within that ministry sadly were not doing their jobs.

I do hope that a committee of this Legislature is charged with the responsibility of taking a very detailed, objective and nonpartisan look at what exactly went wrong. There is nothing sub judice that would be infringed upon at this particular time. It is something with which I think an appropriate committee of the Legislature would be properly charged. I am only sorry that the member for Oriole (Mr. Williams) is not in his place today where he might be able to afford us his treatise on sub judice. The situation is almost analogous, completely, to the Astra/Re-Mor matter.

I hope the spirit of co-operation that has been afforded the government on this particular occasion by members of both opposition parties is reciprocated by the minister through some direction that a committee of this Legislature, more particularly the justice committee, should be seized with this matter to take a look at exactly what went wrong. I believe that is our function as legislators.

In conclusion, I say this represents yet one more very serious failure in administrative management within this particular ministry. The minister has Astra/Re-Mor, the failure of Argosy and Co-operative Health Services and some problems within the travel industry. These are very real problems. It is an indication to me that there is something radically wrong in that ministry.

In the interest of the public in Ontario, I hope these deficiencies in administration within this ministry are corrected before other taxpayers, who rely on various statutes passed in good faith, are put in a position of disadvantage.

Hon. Mr. Walker: Mr. Speaker, there are a number of comments that I would normally make but, in view of the hour, it would be propitious for me to ask that the bill be read a second time.

Motion agreed to.

Third reading also agreed to on motion.

THIRD READINGS

The following bills were also given third reading on motion:

Bill 20,

An Act to amend the Personal Property Security Act;

Bill 103,

An Act to amend the Toronto Islands Act.

EMPLOYMENT STANDARDS AMENDMENT ACT (CONTINUED)

Resuming the adjourned debate on the motion for second reading of Bill 95,

An Act to amend the Employment Standards Act, 1974.

Mr. Gillies: Mr. Speaker, it is a pleasure for me to rise in support of Bill 95.

Being a new member of the Legislature, I did not have the benefit of being here during the deliberations of the select committee on plant shutdowns and employee adjustment and the ongoing discussion this matter and related matters have had in the last year or so.

However, I do have some personal knowledge of what it can mean to an employee and a family when a company closes, in that my father lost his employment in 1969 after 12 years with Westinghouse Canada in Brantford. I know what that meant to him and to our family at that time.

Therefore, I am particularly pleased to support the Minister of Labour (Mr. Elgie) in what I feel is a very progressive and necessary piece of legislation.

Members who are familiar with the bill will appreciate that it is in two parts. The first

part is not designed to institute new policy but rather to make some technical changes to the existing legislation. It shows the concern of this government and the care we take to constantly reexamine and upgrade legislation.

Section 1(1) completes

section 40(5) of the present act by giving the Minister of Labour the power to require companies to participate in the establishment and operation of employment adjustment committees and to contribute to the reasonable cost of such committees.

Of course, the government will continue to try to work with the companies on a voluntary basis wherever possible, but it is necessary that the government has the power to act when required by the interests of the workers to make the companies act responsibly.

Section 1(2) deals with the loophole whereby an employer is required to make payments in lieu of notice but is not required at present to continue contributions towards employee benefits. Particularly important is the provision in the bill which provides that the period covered by payment in lieu of notice is to be considered as part of the time employed for purposes of pensions and other benefits.

However, the focus of this debate on the bill is on

section 2, as this establishes a new policy. I am proud to be a member of the first provincial government in Canada to provide legislated mandatory severance pay. Not only are we the first province in Canada to have such legislation, but also we are one of the forerunners in North America. Only the Canadian federal government and the state of Maine have comparable legislation, and I will argue they are not up to the standards of what we are proposing in the bill before us.

I am equally proud of the manner in which the Minister of Labour has handled this issue. While accepting severance pay in principle, he took time to examine the real concerns of everyone involved and the alternative forms of severance pay and their implications.

4:20 p.m.

As early as October 14, some time before I was in this Legislature, the minister stood in the House, answered several questions that needed to be answered in formulating the legislation and asked for help from both the select committee on plant shutdowns and employee adjustment as well as from outside interests in resolving these difficult questions. After consultation and examination, these questions have now been answered and are explicitly addressed in Bill 95.

To the question, "Should severance pay be in addition to payment in lieu of notice and/or unemployment insurance?" the answer came back, "Yes." The bill also answers yes to the question of whether it should apply to partial as well as complete closures, and it resolves the question of minimum service requirements and protection for small businesses by requiring five years of service and 50 employees to be laid off.

I am well aware that this is perhaps the most controversial clause for the members opposite. I am very conscious of the remarks already made by my friend the member for Windsor-Sandwich (Mr. Wrye). All I will say on this is that we are introducing new legislation. It goes a long way. Time and experience will tell whether it went far enough or whether it went too far.

I say to the member for Windsor-Sandwich that there are many people who would argue on both sides of that, and I am sure these arguments will continue to be heard. There is nothing in the rules of this Legislature that says the bill cannot be amended later one way or the other.

Mr. Grande: Oh!

Mr. Gillies: It is nice to see the member for Oakwood (Mr. Grande) would agree with that.

Mr. Stokes: Yes, you may take one teeny weeny step.

Mr. Gillies: With respect, to the honourable member, this is a very big step that could have been a tangible help to my father. When I think back to 12 years ago, he would have precisely fitted into the framework of this bill.

Mr. Speaker: Confine your remarks to the bill, Mr. Gillies, please.

Mr. Gillies: Thank you, Mr. Speaker.

Mr. Grande: Was he laid off?

Mr. Gillies: He lost his job.

There are those with a very real concern that legislated severance pay may increase the problem of plant shutdowns by actually adding yet another financial drain, another debt on marginally profitable companies.

Some would argue that a company that is essentially sound, but overextended, will not be able to pare down its operations, thus securing the jobs of the remaining workers. Consequently, these companies, the theory goes, will be forced to operate in an overextended fashion until they are finally forced into bankruptcy.

There are also those who are concerned that strict severance pay provisions may act as disincentives to those businesses considering locating in Ontario, and therefore in the long run it is detrimental to the interests of the work force.

At the same time -- I would have to say to members that this is the view I am inclined towards -- businesses that have profited through the use of the work force and have located in Ontario cities have an obligation to those work forces and to those cities. They cannot m