TAX ON CONFECTIONS
TAX ON MEALS
EMPLOYEE HEALTH AND SAFETY
TAX ON MEALS
TAX ON LABOUR
HERITAGE LANGUAGES PROGRAM
TAX ON MEALS
TAX ON CONFECTIONS
TAX ON CLOTHING REPAIRS
ORDERS OF THE DAY
MINISTRY OF INDUSTRY AND TRADE ACT (CONTINUED)
The House met at 2 p.m.
TAX ON CONFECTIONS
Mr. Spensieri: Mr. Speaker, in the absence of the Treasurer (Mr. F. S. Miller), I will ask my question of the Premier. It is concerning the effect of the seven per cent tax on the confectionery industry. In the hope that this government will reconsider this unnecessary tax, I shall read a letter from the president of Neilson’s.
“The bulk of our product is sold to small neighbourhood stores and constitutes an important part of their total revenue. The resultant tax on candy bars and ice cream cones will reduce consumption and hence their revenue. It is hard to believe that the revenue accruing to the province can equal, let alone surpass, the cumulative negative impact, particularly at a time when the small retailers are facing serious economic squeezes resulting in many bankruptcies. The tiny amount of revenue generated by this discriminatory tax can hardly compare with the damage being done.”
Are the Premier and the Treasurer now prepared to accept the word of the president of Neilson’s concerning the impact on the province and is the Premier prepared to reconsider the imposition of this tax?
Hon. Mr. Davis: Mr. Speaker, I have always listened with interest to the judgement of the head of any company, large or small, and the president of Neilson’s is no exception to that. I am not surprised that he expresses this point of view, because part of his industry obviously relates to the confectionery side and there is no question that people will be paying tax.
I think history will show that while there may be some initial reaction, ultimately consumption levels will retain their normal pattern and, in fact, the small retailer will not be prejudiced. From the perspective of the head of Neilson’s, I do not think he could be described as being totally objective. I do not say that in any critical sense. If I were head of Neilson’s I might write a comparable letter. My expectation is that the company’s volume will not diminish over a period of time as a result of this tax.
The great problem is that one can single out any one item and say, in terms of the revenue that particular item produces, one could do away with the tax or not have it, but then one asks: “How many of those items? Where does it move from chocolate bars to something else?” I am sure one could obtain a comparable letter from the head of Coca-Cola, Canada Dry or Rowntree’s. I could go through the whole list so everybody would have equal time. I do not think we should single out Neilson’s. Its product is excellent, I would assume, although personally I have tried to stay away from that product in the past few months. But I think the view the company president is expressing would have application to a number of other producers.
Mr. Spensieri: In his letter, the president of Neilson’s puts the position of the confectionery industry clearly on the record. The industry advocates that the basic sales tax exemption level be raised, not lowered, an idea supported by the Ontario Restaurant and Foodservices Association as well, I might add. It urges the Treasurer to classify confectionery as a food, thereby removing it from attracting tax liability. Why did the Premier not bother to consult with the major people in the confectionery industry before his Treasurer drafted his budget? Why will he not now allow, as he said, equal time so that eminent witnesses could come before a committee to present their views?
Hon. Mr. Davis: I am sure we could invite the head of Neilson’s and the heads of many other confectionery producers, and with some measure of accuracy predict exactly what they will say. What they will say will be consistent with what the member would like his point of view to be, and I know what his point of view is, as he has already expressed it. It is not as though we were not aware of their points of view; it is not as though their appearance before a committee would bring any information or any point of view we are not aware of. It is very predictable.
If I were the head of Neilson’s, if I thought this might have some short-term impact upon the volume of the product I was producing, I would come before a committee and say, “Members of the committee, as a producer of this particular commodity I am less than enthusiastic about the tax.” Does the member honestly think the head of Neilson’s is going to change his mind in the next 48 hours and come to the committee and say, “Gosh, it’s not such a bad idea”? The member knows that and I know it.
Mr. Nixon: He should have a chance to come and see us.
Hon. Mr. Davis: Listen, send me a copy of his letter.
Mr. McKessock: Mr. Speaker, in his letter the president of Neilson’s also writes that the decision to extend the tax will reduce consumption of ice cream in Ontario. He goes on to state:
“The confectionery industry has been hard hit by current economic conditions with many resultant layoffs. Last fall we were forced to lay off 120 employees. Should the current softness in the confectionery market continue, we will have no alternative but to lay off further employees or consider extended plant shutdowns.” He goes on to write, “This move strikes right at the heart of Ontario’s valuable dairy industry.”
Before considering the tax on ice cream and confectioneries, did the Premier have any studies prepared, either alone or in conjunction with the Minister of Labour, on the effects of the new tax on the plant closures and layoffs in the confectionery industry? If he did, would he table those studies?
Hon. Mr. Davis: Mr. Speaker, I am not aware of any studies of that nature. I will certainly take it up with the Treasurer. I must ask the honourable member, who I am sure knows, if he might inform the House at some point as to the present actual content of dairy product in ice cream.
Mr. Nixon: Are you suggesting there is no cream in it?
Hon. Mr. Davis: I am suggesting that the makeup of ice cream today is not quite what it was when I used to make it. I may be totally wrong but if the member is looking for my help in drafting a reply to the head of Neilson’s, the member might seize upon one or two things that would reassure him.
I happen to believe -- I could be wrong -- that consumption of the product per se will not in the longer term and perhaps not even in the shorter term be affected by the amount of the tax. I think the member might say to the head of Neilson’s that as a result of the revenues from this tax we have been able to relieve many of the small retailers he is concerned about of their small business corporations tax. In so far as annual net return to the small retailers is concerned, this will be far more significant than a possible short-term modest reduction in the volume of the product they are selling.
TAX ON MEALS
Mr. Elston: Mr. Speaker, I also had a question for the Treasurer (Mr. F. S. Miller), who I understand is attending a wedding to try to ensure that enough tax is paid on meals catered by church groups. Instead, I will direct my question to the Minister of Revenue -- who is becoming the Treasurer’s hatchet man as it were -- in regard to the sales tax on meals to be served at weddings as of today.
Why, when the Treasurer and the Minister of Revenue decided to exempt church suppers from this tax, did they not also decide to include in that exemption wedding receptions which were catered or served in churches by church groups? Does the minister not realize that when a church group provides food for a wedding, or even in some cases a funeral, most of the food is prepared by the ladies in their own homes or in the facility provided by the church?
In addition to the food which is donated by those ladies, the labour is also donated by them in order to keep the cost to a minimum. Does the Minister of Revenue feel the province needs the money so badly that he must tax food donated to a church when it is providing a meal for a wedding or a funeral?
Hon. Mr. Ashe: Mr. Speaker, the Premier (Mr. Davis) has already alluded to the particular question, “Do we need the revenue?” We can look at any specific area of our revenue sources and suggest that no, we really do not need that, we can get away with out that. But in actual fact, if it is not raised here it has to be raised somewhere else.
I think the very important question here is whether we want to keep some realism in the marketplace. Some members opposite may not subscribe to this point of view but this party still believes in the marketplace system.
Mr. Speaker: Order.
Hon. Mr. Ashe: We would suggest that if there is any kind of organization, whether it is a nonprofit organization such as a church, or otherwise, that is in competition out there in the marketplace with other organizations who are there to make a profit, to provide jobs, to become taxpayers, then we feel it is only fair at least to give the same sense of competition among the various organizations which deliver those services.
Mr. Speaker: Order.
Hon. Mr. Ashe: Mr. Speaker, some of the members of the official opposition no longer subscribe to the free enterprise system -- perhaps they have been too close to the third party for too long -- but we still do. However, that does not mean we are in any way belittling the very important function carried on by charitable and other organizations in this province.
Mr. Elston: I wonder if the Minister of Revenue realizes that weddings are generally booked up to a year in advance and, therefore, every wedding that is to take place in 1982 will have its costs increased by an unexpected additional seven per cent? I wonder if the minister would like to make arrangements to remove that tax --
Mr. Speaker: Order, please. I ask all honourable members to respect the person asking the question. Please do not carry on private conversations during question period.
Mr. Elston: To complete the question, would the minister not think of exempting those weddings which have been booked in advance of this tax being put on to alleviate the extra seven per cent cost which is being dumped all over these young Ontario couples?
Hon. Mr. Ashe: I have never heard a number being so put out of perspective as we are hearing today and in the last few days vis-à-vis the seven per cent tax.
I would suggest that in many instances these same weddings that are being referred to will have a reduction in the actual cost. Before, there were items that would have come to over $6 and would have attracted a 10 per cent tax rate. As of today, they attract a seven per cent tax rate. In many instances that will be, even by my arithmetic, three per cent lower.
It is true that some that were not planned for will be higher. But if somebody were planning for a function which was, for example, $5 and it suddenly becomes $5.35, if that is the difference between a successful or unsuccessful marriage, I would suggest the parties are not ready for it anyway.
Mr. Breaugh: Mr. Speaker, I was not sure the minister was prepared to get into successful or unsuccessful marriages.
Is it the minister’s intention to have his revenue agents prosecute each and every coffee truck, each and every wedding, each and every function which in his mind is supposed to be out there collecting sales tax revenue for him? How does he intend to proceed now? Having grandly announced this new plan, how will he enforce that? Will he actively prosecute individuals who knowingly or unknowingly fail to collect the minister’s little seven per cent for him?
Hon. Mr. Ashe: Mr. Speaker, in regard to the expansion of the tax base, as with any new tax or expanded form of taxation, we think it is exceedingly important to work with the vendors, the new retailers who were not tax collectors on our behalf before, and to assist, guide and educate them. That will include some who still may not at this time be completely clear as to their obligations in collecting tax. In answer to the member’s question, I would suggest that in the next little while, if we come across vendors who are still not familiar with their responsibilities, we will attempt to work with them and encourage them.
On the other side of the coin, if we find some out there who are deliberately not going along with the law, who are deliberately not collecting taxes, there are penalties which undoubtedly will be put to them. The minimum penalty is the charging to a particular vendor of the tax loss even if he did not collect it. That is not a prosecution in the broadest sense of the word, but there is no doubt that it could itself be a significant financial penalty.
Mr. McGuigan: Mr. Speaker, there are three important events in our lives -- two of which most of us participate in and cannot escape -- birth, death and marriage. The imposition of this new budget has made it quite clear this government is intent on following the Ontario citizen from the cradle to the grave. To soothe a baby’s rash, to enjoy a wedding dinner or to have a wreath at a funeral now costs seven per cent more.
In expanding the retail sales tax base, was it the intention of the Minister of Revenue to attend every birth, marriage and funeral in the province? Will he now uninvite himself to these personal celebrations and times of sorrow and, in addition, will he refer this unwelcome guest to a committee of this House?
Hon. Mr. Ashe: Mr. Speaker, even if I had all those invitations I doubt whether I could get to them. Sometimes I even have difficulty getting to all the occasions I would like to within my own constituency.
The other question the member asked was, will we put this question to a committee? The Treasurer has answered that on more than one occasion. There is ample time for debate within the Legislature. Normally, it is not the accepted procedure that a budget bill of the government is put to a committee of the Legislature; there is ample opportunity to deal with it effectively and efficiently here. Nobody likes increased taxation. Nobody likes taxation at all, but it is one of those necessary evils, albeit that to some degree it does follow one from birth to the grave.
This government has in the past, it does now and will in the future continue to administer those various pieces of tax legislation as openly as possible and with fairness to all.
Mr. Martel: Mr. Speaker, I have a question for the Minister of Labour with respect to the Falconbridge layoffs. Is the minister aware that Falconbridge is in the midst of its negotiations during a strike between Inco and the United Steelworkers of America? Does he not realize Falconbridge is really playing a game of intimidation or bad-faith bargaining in the position it has taken with respect to these workers?
In view of the fact that we have been asking the minister to demand six-month notices of layoffs during the six or seven months leading to the supposed Falconbridge layoffs, is the minister prepared to establish a committee of this Legislature, as was done by the Premier (Mr. Davis) in 1977, with respect to the massive layoffs to look into whether that is a legitimate layoff, whether it is bad-faith bargaining, and to see if there are proposals that can be brought forward so that we can do something to alleviate the hardship that will be wreaked on the workers and the community?
Hon. Mr. Ramsay: Mr. Speaker, I have no evidence there has been bad-faith bargaining to date. I am very much aware of the very depressed conditions in the world market for nickel and copper and other allied products. There is no intention at this time to re-establish the plant shutdowns committee.
Mr. Martel: If the minister says there is no bad-faith bargaining, is he aware of the article in the Sudbury Star on June 7 by none other than Bill Brailey, Falconbridge manager of human relations? He stated: “The early retirement package was announced at the same time. Because of the number of applications for early retirement, there will be no layoffs.”
Is the minister aware they have not only closed Onaping but are now predicting what the situation will be seven months down the road? They made this statement about a further layoff of 1,000 workers four days after they announced there would be no further layoffs. What changed so dramatically in the world in four days -- last Monday they could say there would be no further layoffs and by Thursday they were extending the shutdown to 13 weeks and laying off 1,000 workers -- if it is not intimidation in the face of the contract before us?
Hon. Mr. Ramsay: I cannot put my hands on it readily, but a few moments ago I was reading a statement made by the president of the union for Falconbridge in which he indicated that he was not surprised at the announcements because he was well aware of the severe depression of the nickel market.
Mr. Laughren: Mr. Speaker, in view of the fact that over the years this government has been very generous to Falconbridge Nickel Mines and has allowed it to ship unprocessed ores to Norway for almost 50 years and allowed it to write off those processing costs against profits it would normally pay here in Ontario; in view of the fact the government has provided very lax pollution levels for Falconbridge Nickel Mines, and in view of the fact the level of taxes that Falconbridge has paid over the years both in corporation and mining taxes has been inadequate, why does the minister not now take a stand and tell Falconbridge that in view of all that the public purse has provided to it, the company will not be allowed to intimidate the workers in Sudbury in this fashion?
Why will the minister not establish a committee to look into ways of preventing these layoffs and, failing that, at least establish an adjustment fund so there can be assistance provided to help the workers in Sudbury find alternative employment?
Hon. Mr. Ramsay: Mr. Speaker, probably the worst day of my brief tenure as Minister of Labour was Thursday when I got the news about the situation at Falconbridge, which, coupled with the work stoppage at Inco, is extremely devastating to that community.
Mr. Mackenzie: What about the workers?
Hon. Mr. Ramsay: I am including them when I refer to the community. Workers make up the community and I did not think I would have to spell that out.
Mr. Mackenzie: It’s your concern that I’d like to know something about.
Hon. Mr. Ramsay: I do not intend to wage a battle of rhetoric at this time on such a serious matter as the layoffs in Falconbridge.
EMPLOYEE HEALTH AND SAFETY
Mr. Martel: Mr. Speaker, a further question to the Minister of Labour, who is going to play the part of Nero and do nothing but fiddle as Sudbury burns --
Hon. Miss Stephenson: Well, you’re the violin maker.
Mr. Martel: I suggest to you --
Mr. Speaker: To the Minister of Labour, please.
Mr. Martel: Last August, Local 207 of the Canadian Union of Public Employees requested that the library in Sudbury do a test with respect to asbestos. This test was done by a member of the minister’s staff on September 28. Is the minister aware that on December 7 when the union asked for the findings it was advised they had not yet been processed, and when it requested the findings in January it was again advised they had not been processed?
Is the minister further aware of the results of those tests by T. J. Gregor, medical consultant, Ontario Ministry of Labour, signed October 30, 1981, which state the following: “The bulk sample was taken from the boiler room of the library and was tested at 25 to 50 per cent chrysotile asbestos”? The test stipulates that because this material was exposed and falling out, workers are frequently exposed to this area of the library. It notes that 25 to 50 per cent means the air exposure exceeds the time-weighted average guidelines. “It is also cautioned that workers removing, replacing or sealing the asbestos should be educated in proper procedures, including protective clothing, approved respirators and careful disposal techniques.”
Is the minister aware that the union finally got that report six months after the tests were taken and five months after the report was signed by someone? Why did it take so long for the workers to get that assessment?
Hon. Mr. Ramsay: Mr. Speaker, I am well aware of the matters the member for Sudbury East is bringing to my attention. We brought personnel to Toronto from the Sudbury office on Friday to investigate it in complete detail.
I must say that the matters the member has brought before this House are substantially correct. I am terribly disturbed about the circumstances. Immediate steps are being taken to rectify the situation.
Mr. Martel: I think it is time this ministry started to lay charges. Is the minister aware that the janitor in that building was sent in to clean up that asbestos without a respirator and without any indication of how he should proceed when he was picking up 25 to 50 per cent asbestos?
Is the minister further aware that when his staff was asked to pursue this matter on behalf of the workers, one of his staff said, “No, it is up to the internal responsibility system”? Is it not time, unfortunately, that the minister started laying charges to make these beggars who continue to disregard the health and safety of workers realize that we mean business to protect the lives and safety of workers in this province?
Hon. Mr. Ramsay: Mr. Speaker, I do not feel that laying a charge in this particular case would have rectified the situation. I have admitted there was an administrative error. Steps are being taken to avoid those types of errors in the future.
Mr. Martel: Does the minister not find it strange that in this case he finds a reason for not laying a charge, in Wilco he finds a reason for not laying a charge despite 50 or 60 violations, and in Rothsay Concentrates he finds reasons for not laying charges, and that what he simply does is go in and tell people to clean up? As long as he is going to continue that policy of just going in once they are caught with their finger in the cookie jar and making them clean up, he is giving them the green light to go ahead and continue to ignore health and safety until such time as they are caught. Then all he is going to do is slap them across the wrist and say, “Clean up,” with nothing else. As long as he continues that, that is what is going to happen.
Mr. Mackenzie: The minister is not serious about safety and health.
Hon. Mr. Ramsay: Mr. Speaker, I resent that aside about not being serious about occupational health and safety. I think I have been proving it for the past while to the two members opposite, who have been very diligent in bringing several matters to my attention.
I respect the dedication and the seriousness for occupational health and safety that is demonstrated week after week and day after day by the member for Sudbury East, but I do not think he is alone in that. There are others who are equally serious and they include this Minister of Labour and the senior staff persons within our ministry. For every case that is brought before this House, I could bring 10 cases forward that would be, and are, success stories.
The member continues to bring up the circumstances in Wilco. There we went one step beyond the charge. We closed the plant down until it complied. We took a step more severe than a charge. In the case of Rothsay, we were able to move special advisers in and straighten things out to everybody’s satisfaction.
In this particular case brought before us today, I feel there has been negligence on our part. I have admitted that and we are taking steps to correct that. Just because I have admitted negligence in this case, I am not admitting widespread negligence, because the exact opposite is true. The Occupational Health and Safety Act in this province has been working very well and I can support those statements at any time in any place.
TAX ON MEALS
Mr. T. P. Reid: Mr. Speaker, in the absence of the Treasurer (Mr. F. S. Miller) -- whom we do not blame for not having the nerve to show up today, Black and Blue Monday in Ontario -- on behalf of myself and a lot of other people I would like to send this over to the Premier, who is now going to be part of the unseen guest at every meal in Ontario. As you can see, Mr. Speaker, some of my colleagues are supporting me.
Mr. Speaker: Question, please.
Mr. T. P. Reid: Mr. Speaker, I guess you know it is a sad day when we have to start taxing essential meals for senior citizens, students and others in the province. It is especially a socially backward step when some other provinces this year have gone as far as to exempt the sales tax on such meals. It is apparent this tax measure will have a devastating effect on senior citizens, students and the food industry.
Mr. Speaker: Do you have a question?
Mr. T. P. Reid: I would ask the Premier --
Mr. Piché: This is a statement.
Mr. T. P. Reid: If the member would not interrupt, I am just on my introductory remarks on Bill 111. if I was not interrupted so often, I could put the question.
Does the Premier not realize that one of the industries that is going to be adversely affected by this tax is that of the mobile caterers? They have to service a particular client group all within a 15-minute period in which their customers have a coffee or lunch break. That does not permit the people who are operating these mobile catering trucks the time to calculate the tax on each and every item and sell them as well. Most of them do not even have cash registers on their vehicles to assist them.
The government is liable to put some of these people out of business, both because people will not be able to afford to buy from them and because of the difficulty of collecting the tax. Does the Premier have a comment?
Hon. Mr. Davis: Mr. Speaker, I think one can say the Liberal Party of Ontario has demonstrated its great talents this afternoon. At least it can read ads and cut out paper dolls from newspapers. I am delighted it has that capacity. I always find it regrettable there is little or no substance with the style, and even the style is not selling too well.
We are very sensitive to the time frames within which a number of these people work in terms of selling their commodities to many groups. If the member for Rainy River checked the procedures carefully, I think he would find it is a relatively simple calculation. They do not do it on every single commodity they sell. They take seven per cent of the total and they remit that. It will not inhibit them one second in terms of time.
Mr. Peterson: Mr. Speaker, if the Premier, the Treasurer, or his representative had been at the rally this morning, and if they had had the courage to send someone to listen, they would have been presented with a black arm hand celebrating Black Monday. Would the page give this to the Premier, please? He may want to wear it.
Mr. Speaker: Supplementary, please.
Mr. Peterson: Is the Premier aware there were probably over 1,200 trucks and 1,200 gentlemen demonstrating this morning? Is he aware that the average daily take from one of these trucks would be about $300? That will contribute about $20 a day or $100 a week to the government’s coffers. The government is now asking these people to become tax collectors and is forcing upon them bookkeeping systems they have never had in the past.
The Premier is aware a lot of these people were “hanging on by a thread” and now he is going to punish them further. Most of these are small businessmen, whether he understands it or not. These are not the small businessmen who are being helped by the two-year tax remission. These people are very worried about being driven out of business. Now, because of our pressure, the Treasurer has agreed to have a meeting with them tomorrow.
Does the Premier not feel he has an obligation to listen to the serious plight of these people when we run the risk of putting hundreds of them out of business because of this ill-fated budget?
Hon. Mr. Davis: Mr. Speaker, there is no question there are many people employed in this business who are small businessmen, some of whom would qualify under the courageous policies of the Treasurer of this province. The Leader of the Opposition might also be interested to know that a number of them are also employees of fairly large entrepreneurs in this particular food service industry. That may come as a surprise to him, but it happens to be factually correct.
I think he will also find that the Treasurer will be quite prepared to listen to them when they visit with him tomorrow. I think he will find that in fact the actual administrative problems for them will not be significant at all. As was pointed out, they do not have to compute tax on every single item that is sold. If they sell, say, $300 worth per week, whatever the amount is, it is a relatively simple mathematical calculation to determine what has to be paid in tax. My guess is that most of them keep books in some form or other and this will not be a significant additional burden on them.
We do not want anybody to be burdened with these activities; but at the same time, unlike the members opposite, we have a responsibility for the tax policies. It is never pleasant, and I understand what they are saying, what they are trying to promote across the province. The one thing they do not do, of course, is explain to people that in some provinces the tax rate is as high as 10 per cent on many commodities and, in fact, on the same thing in some provinces.
The member’s knowledge is so great that when he was in northwestern Ontario he was saying everybody at Ontario Hydro was averaging $45,000 a year in salary. I understand somebody at the meeting who is employed by Ontario Hydro said this was not the case, and the member opposite said, “Well, after I fire Hugh Macaulay, we will make sure you get $45,000 a year.” That is the kind of intelligent, sensitive, logical politicking they are doing around the province.
Mr. Cassidy: Mr. Speaker, I have a supplementary to the Premier that concerns his sense of equity, since he does not want the catering operators to be burdened and presumably does not want working men and women who cannot even afford to go to a restaurant to be burdened with this tax. If that is the position of the Premier, since the tax to the catering operators will yield about $10 million a year, is the Premier prepared to sell his jet and scrap this tax for the mobile caterers and their customers?
Hon. Mr. Davis: Mr. Speaker, I suggest to the member for Ottawa Centre that he could single out any one of perhaps 200 or 300 items which are taxable and make a valid representation about why each item should not be taxed. I am aware of this; I have dealt with it for years. But in achieving equity, in trying to spread this evenly across the taxpaying public, I think this government has been relatively successful. When the member looks at the tax regimes in this province and the competitive position we have maintained with respect to our sister provinces and, incidentally, several states of the union, I think he will find that we have really done quite well.
Mr. Mackenzie: Mr. Speaker, I have a question for the Premier, in the absence of the Treasurer (Mr. F. S. Miller), which deals with the deepening economic crisis and the budget’s failure to deal with it. In particular, I want to draw the Premier’s attention to his government’s own figures. Layoffs in the first four months of 1982 were 147.5 per cent higher than they were last year, and the figures for the last month show an increase in layoffs of 281 per cent over the same month last year, with all of the economic forecasts predicting that the worst is yet to come.
Will the Premier not ask the Treasurer to review his budget and introduce the programs of economic stimulation and restructuring that we outlined in our prebudget statement and that are obviously needed to provide jobs for people so they can begin even to consider paying the seven per cent tax increase?
Hon. Mr. Davis: Mr. Speaker, I think the Treasurer read with some interest some of the proposals coming from the honourable member’s party, which I think were placed before a press conference by the missing leader of his party; I think Mr. Rae was the one who presented these to the media on that occasion. I was surprised -- not surprised, I guess -- that they did not receive a great deal of public attention or consideration.
This government never has been reluctant to seize any constructive ideas emanating from whatever source. I only say to the member that I think he is not being totally fair in his assessment of the Treasurer’s budget. If he singles out some of the areas, such as housing, which really emanate from people in the Ontario Federation of Labour, I think he will find that the Treasurer has introduced a very constructive, worthwhile program that will lead to more employment in the housing construction industry. The spinoff from that, in the white goods industry and in furniture, is evident to all of us.
I think he will also find that there have been very few more innovative tax measures introduced than the relief of tax for the small businessmen, affecting at least 60,000 industries which are, as a group, the largest employers in the province. I can only say that the response from that sector has been extremely encouraging.
If one moves to the larger business community, the fact that the government did not parallel the capital cost allowances introduced by the Liberal government of Canada in the nation’s capital was a signal to the business community that we supported the concept of investment, a recognition that they had a very important role to play in the investment to create new jobs and that it was part of the Treasurer’s proposal.
If one also looks carefully at the stimulus given to several ministries, including the Ministry of Transportation and Communications and some to the Ministry of Colleges and Universities and our own youth employment program, one can give a rough estimate of some 31,000 jobs that will be created because of these activities.
If the member is saying to me that the problem is greater than that, I agree with him. I also say, with great respect to the measures suggested by his missing leader, that they really do not represent solutions to the problems either. We all know what the solution is, and that solution relates to the question of interest rates, the rate of inflation and the fact that most of our market, in terms of some areas such as the auto sector and the farm machinery sector, happen to relate to the capacity of our customers outside Canada to be able to purchase those commodities.
I saw nothing in the proposal made by the member’s leader that lowered interest rates in the United States or stimulated automobile or farm equipment purchases in countries outside our own.
Mr. Stokes: You thought the election of Reagan was the greatest thing since sliced bread.
Hon. Mr. Davis: I never said that.
Mr. Stokes: Your whip did.
Hon. Mr. Davis: If you are going to quote me, quote me correctly.
Mr. Mackenzie: At least, Mr. Speaker, we got the Johnny Carson routine with a straight face this time. I am appalled at the answer. Maybe the Premier should talk to some of the people again, including the Ontario Federation of Labour, to find out what statistics --
Mr. Speaker: Supplementary, please.
Mr. Mackenzie: In a telephone survey of eight firms in Hamilton done within the past week -- Cambridge Clothes, International Harvester, Canron, Camco, Union Drawn Steel Company Ltd., Brown Boggs Foundry, Stelco and Westinghouse -- we were told that indefinite layoffs had reached the 2,000 mark and total layoffs were at the 3,000 mark.
The Treasurer claimed in his budget, “The Ontario government believes that policies for job creation must be an urgent priority.” Is the Premier aware that the unemployment figures in Hamilton now show a 65 per cent increase from May 1981 to May 1982? And those are only the figures we can identify; it is probably considerably higher than that. It is an increase that propelled the official rate of unemployment from 7.2 per cent to 11.4 per cent.
Where are the policies for job creation that will get Hamilton workers back to work? And is the Premier now ready to establish a community adjustment fund to assist the laid-off workers in hard-pressed communities to deal with what is, unfortunately, rapidly becoming a great recession in our country?
Hon. Mr. Davis: I would only say to the member, in reply to the last part of his question, that some of us on this side of the House recognized the present economic situation as being a recession some many months ago. It has not come to us, as perhaps it has to the member, in the last two or three weeks. We have recognized this for some considerable period of time. I am not familiar with all the commodities --
Hon. Mr. Davis: Let me finish. I did not interrupt the honourable member’s colleague.
Mr. Martel: That must be a first.
Hon. Mr. Davis: No, it was never a first. I never interrupt when the questions are being asked.
I say to the member that I am not familiar with the commodities produced by all the companies in Hamilton that he mentioned. I do not quarrel with the figures for a moment, but I do know the commodities of two of them. I am not exactly familiar with the products at the Hamilton plant of International Harvester, but I assume that they relate to the truck industry. Am I correct in that? If not, they relate to the farm machinery industry. Stelco does relate to the auto sector, and it relates to the energy sector. Quite obviously, as I have discussed in this House on a number of occasions, there is no --
Hon. Mr. Davis: Let me finish. There is no simple answer to one of the main commodity areas, and that happens to be the auto sector. I say to the member that this government, in terms of its representation to Ottawa and in terms of its discussions with the United Auto Workers, the parts manufacturers and the industry, has made it very clear what our point of view is on the issue with respect to imports.
Even acknowledging that, which I think the Ottawa member would do in private -- I do not expect him to acknowledge it in public -- apart from the question of imports there is also the very real problem of the domestic market in the United States. We are all aware of the destination of most of the cars produced in Oshawa, Brampton, Windsor, Oakville, near London and near St. Thomas. They go to the United States. No provincial initiative is going to solve that problem.
The member knows as well as I do that we are talking about roughly 25 per cent of the provincial economy. We have made our representations to Ottawa with respect to the auto sector. The member knows our points of view. With the greatest of respect, no provincial policy is going to solve the problem of the auto sector in the United States.
Mr. Martel: The Board of Industrial Leadership and Development was supposed to solve it all.
Mr. Speaker: Order.
Mr. Sweeney: Mr. Speaker, given the fact that the budget was released in this Legislature on May 13, surely the Treasurer, the Premier and whoever else was involved in putting that budget together were aware of the youth unemployment figures in Ontario, which had increased from 106,000 to 171,000 from April 1981 to April 1982. Surely the Premier and the Treasurer were also aware of the fact that businesses across this province would be in such economic conditions that they would not be able to hire people for the summer, particularly students going back to school.
Given those two facts, why were there no provisions in this budget for any permanent employment for young people in this province? There are 31,000 temporary jobs, maybe. Why did the Premier choose this year to reduce the activities of the government in creating summer employment from something like 10,000 to 12,000 last year to something just a little more than 8,000 this year? Knowing those facts, why would the budget reflect such a serious problem in this way?
Hon. Mr. Davis: Mr. Speaker. with the greatest of respect to the honourable member, my recollection is that perhaps he has not recognized the direction of the Treasurer’s budget. In total, we are not providing fewer jobs. There is no question that the number of young people unemployed this summer could be higher than last summer. In terms of funding and the priority, we have done extremely well and will continue to do so.
The member expresses his concern about the number of youth unemployed. His suggestion is that we put more money into these programs; that is directly what he is saying. He should encourage his finance critic to assist the Treasurer in getting his budget bills through the House so we can raise the funds necessary to produce the kind of money we are putting into youth unemployment, to see that we can carry on with these programs, which, incidentally, we are doing in any event.
It is so typical of a member of the Liberal Party of Ontario to bemoan tax increases on one hand and then to be critical and suggest we should spend more money on the other hand.
Mr. Bradley: Why don’t you sell your jet and Suncor?
Mr. Speaker: Order.
TAX ON LABOUR
Mr. Riddell: Mr. Speaker, my question for the Premier, in the absence of the Treasurer (Mr. F. S. Miller), concerns the potentially disastrous impact of the seven per cent tax on labour for a business in my riding known as AquaChem Tankar Services Ltd. AquaChem is the only wholly owned Ontario company in this province that is in the business of lining and relining railway tank cars and hopper cars for the movement of chemical cargoes.
As a result of the budget. AquaChem will be obliged, for the first time ever, to charge a tax of seven per cent on all its labour charges for installation, repair and maintenance. Therefore, the government has unilaterally raised the price of AquaChem’s services to its customers by seven per cent, an amount that is quite substantial for this industry. Inasmuch as a large percentage of AquaChem’s work load originates in western Canada, the unwarranted, onerous increase in the price of seven per cent may very likely make it uneconomical for lining work to be shipped from western Canada to AquaChem’s facilities in Huron Park.
The net result of the tax, therefore, will be likely to grievously injure the business of AquaChem and, moreover, to push the lining work into the arms of western Canada-based businesses, most of whom are subsidiaries of American companies.
Will the Premier not reconsider this tax and withdraw it before irreparable harm is caused to this company and to others in similar peril? Does he not think it is time he considered establishing a committee to hear these small business people who have the problems I just outlined?
Hon. Mr. Davis: Mr. Speaker, I am always sympathetic to any industry or group of industries which feels it is being negatively impacted by any tax policy. I am not familiar with this company as to whether its net is such that it would be beyond the limitations of the corporation tax in terms of the definition of “small business.” The member is perhaps much closer to them than I am, and he might get that information for me.
My guess is that if they are eligible for that two-year tax relief, the seven per cent imposed upon their cost to their customers really would be a relatively small proportion of what they will get back in terms of corporation tax. If they are beyond that limitation, of course, it would be a different situation.
I have always been prepared to ask any of my ministers if there is a particular problem related to a particular industry; of course, we would be delighted to chat with them about it.
If the member is saying this, though, because of what apparently is a rather good position on their part, being the sole supplier in Canada -- I think he said that -- then my guesstimate is that they will be able to continue to compete.
I would be quite prepared to visit with them myself at some time, although I would suggest perhaps they might be wiser to meet with the Treasurer or the Minister of Industry and Trade (Mr. Walker), because those ministers would be more familiar with some aspects of it. Certainly it is not our intent to inhibit or penalize any industry or to put it out of business. That has never been the case, and it will not be the case with this budget either.
Mr. Peterson: You are doing it and you don’t know; that’s the whole point.
Hon. Mr. Davis: No, we are not.
Mr. Peterson: You haven’t thought these things through.
Hon. Mr. Davis: David, what were you doing last night?
Mr. Speaker: Order.
Mr. Newman: Mr. Speaker, is the Premier aware that yet another unforeseen inequity which may arise from the seven per cent tax on labour deals with the confusion over whether the tax is required from those companies that own their own railway tank cars and lease them to chemical companies after applying the labour for relining and maintenance?
AquaChem’s competition in Ontario, a subsidiary of the American company, is in precisely this position. If the competition is exempt from charging the tax on labour, AquaChem will suffer an enormous competitive disadvantage.
The London office of the Ministry of Revenue advised AquaChem that the matter fell within a grey area. Will the Premier have this matter clarified for the record to assure that the Ontario government will not be placing AquaChem behind its competition in this aspect as well?
Hon. Mr. Davis: Mr. Speaker, I think both honourable members, in that obviously their questions were written for them --
Mr. Bradley: Like your statements over there. Your ministers get up and read statements.
Hon. Mr. Davis: To the member for St. Catharines -- well, I will not say it.
Mr. Speaker: Just ignore the interjection, please.
Mr. Van Horne: The member for St. Catharines is zeroing in as he does.
Hon. Mr. Davis: Zeroing in as he does? The honourable member should see him in St. Catharines; not only does he zero in, but he also rushes in to have his picture taken with the Minister of Energy (Mr. Welch) or the Premier, front and centre, applauding any time anything great is happening in St. Catharines. I know how he operates; who is he trying to kid?
I gather the member for Windsor-Walkerville (Mr. Newman) has had some personal conversation with the London office of the Ministry of Revenue over the inequity of what may be happening. Am I fair in saying that? And as a result of his personal conversation with the revenue officer in London -- he was speaking to him personally -- he then came up with this question.
I say to both members who asked the question about this company, if they would relay to me the information they have in their questions, I would be quite delighted to take it up with the ministry and with the Treasurer and see whether there is a problem here of equity and whether the grey area, as the member described it, which was not quite the way his colleague described it, can be more defined.
Mr. Breaugh: Mr. Speaker, to the Premier: Since the current legal status of these tax bills is still reliant on tradition -- that is to say, there is no legal requirement on the part of a business to collect this tax yet, only the tradition about parliaments and budgets -- and since there is since there is no legal requirement yet on the part of consumers to pay these taxes, as that little section in the act closing off the right to refuse to pay directly to the businessman has not been nailed yet, what is the legal status of someone, either a business person or a consumer, who says, “This may be the intention of the government but it is not yet law and I refuse either to collect this tax or to pay this tax”? What will the government do to them?
Hon. Mr. Davis: Mr. Speaker, it has never been my policy to venture legal opinions in this House or, quite frankly, in any other area. I ceased doing that some 20 years ago. and I do not intend to offer any legal opinions on this occasion. I think the honourable member knows the practices and traditions, and I am sure he will not be counselling his constituents not to --
Mr. Breaugh: I will be counselling them to obey the law.
Hon. Mr. Davis: I am just asking. Is the member going to be counselling them? Because if I can offer any advice, it would be not to counsel them in that direction. The member might do this over the next two or three weeks as he considers the lottery that is going on. Once again, we hear rumours that he is the low man on the totem pole and we may not see him next fall.
Mr. Breaugh: Wrong again.
HERITAGE LANGUAGES PROGRAM
Mr. Grande: Mr. Speaker, my question is to the Premier in regard to the heritage languages program during school hours. Given that on June 9 the Minister of Education (Miss Stephenson) served upon the Toronto Board of Education a negative decision on what the Toronto board was seeking; and given that the decision was not based on sound educational grounds, that is, what is good for kids; and given that the minister arrived at her decision without any consultation either with the Toronto board or the communities affected, would the Premier use his influence with the minister to ask her to reconsider that decision of June 9 and to consult with the ethnic communities and conduct a proper assessment of benefits to children in this province?
Hon. Mr. Davis: Mr. Speaker, I could take a long time answering this question, or I could be very brief and say that the Minister of Education in this province has, without question, concern for the educational interests of the many young people in the school system. That interest is evidenced not only in her dedication and commitment but in the very strong leadership she is providing, which still maintains in this province the best educational system available anywhere in North America. I say that very quietly and very objectively, but I think any objective assessment of that would arrive at the same --
Hon. Mr. Davis: No, a very small violin.
I would say to the honourable member that there has been public discussion. The minister heard the views expressed by the Toronto Board of Education. I consider her judgement to be most appropriate and I am sure that, if the member reflected upon it in a very objective fashion, he probably ultimately would support the minister’s point of view as well. But he will not be objective.
TAX ON MEALS
Mr. Van Horne: Mr. Speaker, I have a petition addressed to the Lieutenant Governor and the Legislative Assembly. It is a unique petition, I am sure you would agree, given that the material on which it is written is toilet paper. It reads as follows:
“We, the above signed, as members of the eating-out population, strongly object to the introduction of a seven per cent sales tax on everything to eat or drink in a restaurant, from a cup of coffee up, and urge that the tax be removed.”
There are 350 names on this petition and I would like to present it, Mr. Speaker.
TAX ON CONFECTIONS
Mr. G. I. Miller: I, too, have a petition addressed to the Treasurer (Mr. F. S. Miller) with approximately 2,500 names attached, and I would like to send it to the Premier (Mr. Davis). The petition reads:
“I believe the seven per cent sales tax on ice cream cones is unfair and unnecessary and I ask that Treasurer Miller please reconsider.”
The Premier made note of the ice cream not being made from milk products. I would like to assure him that where this petition was taken, ice cream is made from real cream, and it is some of the finest in Ontario.
TAX ON CLOTHING REPAIRS
Mr. Eakins: Mr. Speaker, I have three petitions to the Treasurer (Mr. F. S. Miller). They are from the Lindsay Cleaners and Dyers, Victoria Laundry and Dry Cleaning and the Kent Cleaners of Lindsay:
“We, the undersigned customers, support their protest on the June 14 expansion of the Ontario provincial sales tax that imposes this tax on charges for repairs and alterations to clothing by dry cleaners and launderers. We urge the Honourable Frank S. Miller, Treasurer of Ontario, to withdraw this application of his May 13, 1982, budget since it is unfair, inequitable, inflationary and an added hardship, especially on the elderly, the unemployed and the working poor.”
They are signed by 175 constituents.
Mr. Ruston: Mr. Speaker, on behalf of the Dry Cleaners and Launderers Association of Essex County in the city of Windsor I present a petition that reads the same as those presented by the member for Victoria-Haliburton. I present 150 names.
Mr. Swart: Mr. Speaker, I have a petition, the same as the last two, which protests the unjust imposition of the seven per cent sales tax on alterations of clothing and other repairs by dry cleaners and launderers. It is signed by 207 people from my area, and I would also like to send it to the Premier.
Mr. Newman: Mr. Speaker, I have a petition to the Treasurer signed by individuals in the Windsor area protesting the expansion of the Ontario provincial sales tax to the various items that have been mentioned by the previous speakers, and asking that the Treasurer withdraw the application of sales tax on the items mentioned.
Mr. MacDonald: Mr. Speaker, in keeping with the last three or four petitions, I have a petition from the Tru-Tone Cleaners, of 2529 Eglinton Avenue West, Toronto. In a matter of two or three days they have collected 54 signatures on this petition, which was set out for clients to sign voluntarily at that one little establishment. I present this on their behalf to the Premier.
Mr. Bradley: Mr. Speaker, I have a petition from the people who deal with York Cleaners, at 179 York Street in St. Catharines:
“We, the undersigned, who deal with York Cleaners, support the protest of the June 14 expansion of the Ontario provincial sales tax that imposes this tax on charges for repairs and alterations to clothing by dry cleaners and launderers. We urge the Honourable Frank S. Miller, Treasurer of Ontario, to withdraw this application of his May 13, 1982, budget since it is unfair, inequitable, inflationary and an added hardship, especially on the elderly, the unemployed and the working poor.”
This is signed by almost 100 people in the city of St. Catharines and the surrounding district, and there are more names coming in.
Hon. Mr. Gregory moved that the order of estimates in the standing committee on administration of justice be changed to have the Solicitor General follow the Provincial Secretariat for Justice.
Hon. Mr. Gregory: Apparently the justice committee and the ministers and critics agree to this, and according to rule 47(a) of the rules of the House it requires unanimous consent.
Motion agreed to.
ORDERS OF THE DAY
MINISTRY OF INDUSTRY AND TRADE ACT (CONTINUED)
Resuming the adjourned debate on the amendment to the motion for second reading of Bill 38, An Act to establish the Ministry of Industry and Trade.
Mr. Di Santo: Mr. Speaker, when we were debating this bill on May 11, I tried to put forward the position of the New Democratic Party.
Mr. Boudria: Refresh our memories.
Mr. Di Santo: I will refresh the memory of our friend --
Mr. Wildman: In detail.
Mr. Di Santo: Yes, in detail. For the balance of this afternoon’s session I will try to point out why the government is wrong in introducing this type of bill and why it should revise it, or should at least accept the reasoned amendment introduced by my friend the member for Algoma (Mr. Wildman) reading as follows:
“That Bill 38, an Act to establish the Ministry of Industry and Trade, be not now read a second time but be referred back to the minister with instructions to amend the bill to incorporate the following changes in its objectives, namely: (1) to increase the degree of Canadian ownership of Ontario industry; and (2) to provide for the use of crown corporations and joint ventures and to develop key sectors of the Ontario economy where imports dominate.”
Both these points are extremely important to the economy of Ontario and to that of the nation as well. I tried, with my modest means, to make a case as to why the Foreign Investment Review Agency should be strengthened at this very moment in the history of this country when we are faced with a structural crisis of the economy. It is not a crisis resulting from the present recession; it is much deeper.
In February 1979, the Science Council of Canada published a very interesting booklet called Forging the Links, which presented an extensive analysis of the Canadian economy. The members perhaps will remember that a year earlier the Science Council published a report titled The Weakest Link, A Technological Perspective on Canadian Industrial [Under] Development.
On page 14 of Forging the Links, the Science Council presents its case that the Canadian situation had structural problems that preceded the present recession. For the benefit of the members I will quote from that publication:
“Canada’s present economic problems are not short-term. Their origins precede the current recession in the western economic system. Indeed, while many other countries are suffering from the effects of international recession, Canada seems unique in the degree to which the long-term causes of structural weakness are the result of policies of its own making -- policies which have guided Canadian industrial development since well before the Second World War.
“An examination of some of the key economic indicators shows quite clearly that the trend to industrial failure goes back to the early part of the 1950s and, indeed, in terms of its causes, even further. Canada’s international trade has reflected this pattern for a considerable period of time. For example, since 1950 Canada has had a surplus on current account in only four years. In addition, the long-term decline of the Canadian economy has also begun to manifest itself in other, more dramatic ways. Nowhere has its competitive weakness become more obvious than in Canada’s declining share of world exports.”
If one looks at the export situation, one will see that our share of total exports in the world has been declining consistently, with a net result of loss of jobs in Canada, with an imbalance of payments, with induced inflation in the Canadian system and with a general deterioration of the economic health of the nation.
I think the case has been made quite clearly that investments from international corporations in Canada, the branch plant economy we have inherited and which has been widely encouraged by this government, have brought us to a point where we are now faced with a situation where we do not know what will come next.
If there is a recovery, we do not know if it will also result in a recovery of the performance of Canadian industry as a whole or if we will keep suffering the effects of decisions made elsewhere. Unless we address the real issues facing our economy, we will keep living day by day until the day will come when we will wake up and see that we are in such an irreversible position we will have no remedy and no recourse.
Last time, I tried to illustrate what the position of the critics of the multinationals has been in the past and is at present. From an analysis made just recently, some of the points the New Democratic Party has been pointing out time and again have been reiterated. The critics of the multinationals came to some conclusions recently in a large debate that was reported a month ago in the Globe and Mail of May 7, 1982.
What are the conclusions the critics came to as a result of observation and analysis of the situation we have before us? The critics argued that some of the most important decisions regarding domestic employment are made outside the country. I think nobody, not even the Minister of Industry and Trade (Mr. Walker), questions that. Last time we were debating the bill, he agreed with us that the decision-making process is totally imbalanced against Canada.
All the decisions are made outside the country. I mentioned several instances where companies and industries had made decisions and closed plants in Canada without even consulting the management of the Canadian branches.
I want to mention what Mr. Jack Pickett, vice-president of sales for SKF Canada, which has been shut down by the parent Swedish company, had to say. He told the select committee on plant shutdowns and employee adjustment in November 1980, according to the Globe and Mail, “that the company was unable to compete because of formidable trade barriers in other countries and the lack of effective tariff protection in Canada.”
York University had an analysis made of the situation because it seemed quite a peculiar case of a company that had been making profits all along, ever since it had been implanted in Canada. All at once, because of rationalization of production decided in Sweden, it was shut down.
The Globe and Mail reports, “The report of the York University researchers states, however, the Swedish parent firm ‘has the world sectorized and SKF Canada was not intended to compete with operations elsewhere.’”
We have a prime example of rationalization, not from the Canadian point of view nor, as the minister piously wanted us to believe in his statement on May 30, in a way that we can still at this stage talk of global product mandating for multinational corporations. The global product mandate works only if the directions come from the centre; that means from the parent company, as in the case of SKF. The parent company in this case has decided that the Canadian branch would not compete with the operations elsewhere of the same company.
It goes on: “The report adds that the Canadian firm invested only $100,000 in its plant” -- in Scarborough -- ”in 1979, while SKF’s world investments for the same period were $110 million. ‘In short, SKF Canada Ltd. was allowed to run down,’ said the York researchers, whose work is being financed by the federal Social Science and Humanities Research Council.
“Mr. Grayson (one of the York researchers) said that some former managers of the company have conceded privately that the Canadian operations could have been profitable and viable.”
The president of Local 901 of the International Association of Machinists and Aerospace Workers said, “If the plant had been owned by a Canadian firm, we’d still be operating today.” But since the decision was made elsewhere, the company was shut down and now they are operating a warehouse in Canada where they sell parts produced elsewhere in Sweden and the other branch plants. Of course, that is nothing new.
If you remember, Mr. Speaker -- I think you were personally in the chair on May 11 when I was making this point -- I brought to your attention that this happens in Canada because we have the weakest legislation in the whole world, legislation that allows companies to come in to raid the Canadian market and then disappear at the first occasion when it is not convenient for them to operate in this market any longer.
That happened with SKF and it happens every day. If one looks at every multinational branch that is shut down, one will see behind that there is the same lack of legislation in Canada, the same arrogance of the multinational companies, which treat Canada as an economic colony to exploit as long as it is convenient and to abandon when they no longer have any interest. That was the first point the critics of the multinationals made.
The second point was that “the foreign controlled firms are withdrawing production from Canada, leaving only assembly and warehouse operations to serve the Canadian market.” I gave the example of SKF. I could give the example of the television manufacturing companies that have moved out of Canada and are using this country as a warehouse or merely as an assembly operation.
Actually, I remember that two years ago we had the case of a company located in Taiwan. It not only used its Canadian facilities in Barrie as a warehouse but also brought in, with its television sets, female employees from Taiwan to stick on the bilingual labels that are required by Canadian law. That tells you what kind of situation we are operating in and what kind of guarantees we have for Canadian workers and for the future of the economy of this country.
Critics argue that “the large multinationals place export restrictions on their subsidiaries, thereby limiting economic growth and job creation in Canada.” Before I illustrate this point I should mention that as a result of our national energy policy and the threatened strengthening of the Foreign Investment Review Agency by the federal government -- which never materialized, by the way; we all know what happened to Herb Gray and his grandiose plan, which was not even published because the federal government retreated immediately when the Americans started criticizing its new approach.
But despite the fact that the federal government did not have the courage to implement the policies it announced before the last federal election, an internal study was done by FIRA which responded to the criticism of the Americans.
I want to entertain you briefly with this document, Mr. Speaker, but before that I would like to give a concrete example and read the results of a study done by a Toronto research group on the extent to which foreign multinationals are good corporate citizens in Canada, because that is also part of the problem. I want to read the summary so you will have an idea of how disastrous it is for Canada to persevere at this time with policies that may have given some temporary relief to the governments of this province and of Canada, especially during election time, but which in the long run have been proven to be detrimental to the country.
The report says more work needs to be done here but this project provides a number of important tentative conclusions that should be checked out with further study. The study was centred on communications firms, which is one area where everybody thinks Canada should and will expand because of the natural conditions of the country and also the availability of manpower and natural resources. If the 13 foreign computer communications firms included in this study were putting as much investment into Canada on a proportional basis as they are putting into their own countries, there would be 21,100 more jobs for Canadians in the computer communications industry.
If these firms were putting proportional investment into research and development in Canada, 2,320 of those jobs would be in research and development which is vital to this country’s technological future. If these firms were manufacturing in Canada on a proportional basis, they would have invested at least $500 million more than the $222 million they already have in property, plant and equipment. This represents employment over and above the estimated 21,100 jobs mentioned earlier.
Finally, and this is also an important aspect, if these firms had paid taxes in Canada in 1980 at the rate proportional to the rate in the US, the Canadian government would have obtained an additional $49 million or 30 per cent more than it actually received in 1980.
So we have a full picture. If the foreign companies had invested in Canada proportionally -- as I mentioned before in the case of SKF, $110 million total investment of the company, $100,000 in Canada -- we would have more jobs in Canada.
I remind the Minister of Industry and Trade (Mr. Walker) that this is one way to create jobs, and I cannot let pass his rhetoric and his statement of May 3, 1982, when he said, “I must say that I do not see government’s role as job creator.” If the Minister of Industry and Trade understands anything at all, I would tell him that if he looked at the foreign-owned companies jobs could be created. I reported on only 13 computer communications firms included in the research done by this Toronto research firm. In those firms, 21,100 jobs could be created. It is the role of the government to provide the conditions so jobs are created and this minister with his rhetoric about the private sector and the virtues of the private sector does not understand that.
If they had invested in research and development proportionally in Canada, more jobs could be created. If the firms were manufacturing in Canada instead of assembling only, then they would have invested much more money and created many more jobs as a result. Finally, if the firms had paid taxes the Canadian government would have obtained $49 million or 30 per cent more taxes than it actually did receive in 1980.
If the government had taken that approach perhaps we would not have the catering operators outside the Legislature today protesting the tax imposed by this government in the last budget. The government does not know where to get revenue and is taxing every possible sector of the economy.
It is unable to see that unless we restructure our economy and unless we are able to put our economy in a growth position we will not generate more revenue and we will keep inflicting taxes on consumers, on senior citizens and on people who pay Ontario health insurance plan premiums. That will be a scenario for an economy in recession, not a scenario for an economy which is growing.
That this is an economy which is in deep trouble is shown every day by every group which is working in the area of forecasting or economic analysis. If one looks at the provincial quarterly forecast of the Conference Board of Canada, we can see what it says about Ontario.
When people are sitting in the public gallery listening to the ministers and the Premier (Mr. Davis) today they probably have the impression we are in a dream world, the world of Alice in Wonderland where everything is fine and where the Minister of Education (Miss Stephenson) is providing great leadership to what the Premier described as the best system in North America. When we talk about our economic performance the Premier says that relatively speaking this is the best performance in North America.
Let us look at what the Conference Board of Canada has to say in its provincial quarterly report. “The decline in economic activity which began midway through 1981 and is forecast to continue well into this year, represents the most severe setback suffered by Canada’s economy since early 1950.” For the last 32 years, this is the most severe setback suffered by Canada’s economy.
The Conference Board’s first provincial quarterly forecast gives an indication of just how serious the current recession will be on a province-by-province basis. “For Ontario and Quebec, the reversal will be the most acute since the 1961 inception of record keeping on provincial economic activity.” In Ontario, according to the Conference Board, this will be the most acute crisis since 1961.
Let us see what the Conference Board has to say about Ontario. “The traditional complaint that Ontario is favoured with the lion’s share of Canada’s manufacturing capacity while other provinces must survive as mere hewers of wood and drawers of water rings very hollow in 1982. In the current recession, Ontario’s pre-eminence in manufacturing works to its distinct disadvantage. Its output in this sector is forecast to fall by nearly seven per cent. The decline is not only steep, but also widespread. In 1980, for instance, Ontario’s manufacturing sector had a drop of comparable magnitude but the downturn was largely an automotive recession. Motor vehicle manufacturers and their suppliers bore the brunt of the decline.
“In 1982, by contrast, no area of manufacturing would be spared since demand weakness is much more pervasive, affecting markets for consumer, industrial and capital goods both in Canada and abroad. Although other sectors of the Ontario economy will also behave in a sluggish fashion, the overwhelming negative influence comes from manufacturing. Ontario’s overall growth rate forecast would rise from minus 2.1 per cent to near zero if manufacturing were excluded from consideration.”
So we have a generalized crisis and a manufacturing output which will decline by nearly seven per cent. Faced with this type of forecast, what does the government do? The government proposes only to change the name of the ministry to Industry and Trade. We think that is not good enough. That is why the member for Algoma (Mr. Wildman) introduced his sensitive reasoned amendment, which would tackle the very heart of the problems facing us.
One of the premises of the bill is that there should be a liberalization of the Foreign Investment Review Agency regulations in order to encourage investment in Ontario. Let me go back briefly to the document produced by FIRA to respond to the criticism made by the United States. I might add that this government in its speech from the throne also criticized the restrictiveness of the FIRA regulations. As well, the Treasurer (Mr. F. S. Miller) makes sporadic efforts to dump responsibility on the federal government for his own inept leadership of the Ontario economy.
As I mentioned before, the Premier, in his speech to the Boston Economic Club, made it quite clear that Ontario is in favour of encouraging foreign investment, but unfortunately we have FIRA, that monster which prevents foreign investors from coming into Ontario and making profits and affects their excellent relationship with Ontario and Canada.
The FIRA document, which was leaked and widely publicized, makes the case, point by point, as to why we should go the other way if we want to build a strong Canadian-controlled economy. If we want to address ourselves to the structural problems I have been talking about -- and which the Science Council of Canada pointed out in its two reports, Forging the Links and the Weakest Link -- the FIRA report says we should address ourselves to those issues seriously.
Members will recall that the FIRA document was prepared to reply to American criticism. Indirectly, it also replies to the criticism by the Premier and the Treasurer.
The document addresses several issues. One is the multinationals in Canada. I have been speaking at length on this because I think it is very important for the industrial future of this province and, indeed, of Canada. The report says that the US parents of multinationals maintain a centralized control of the operation of their subsidiaries around the world. This was also the argument made by the critics of the multinationals operating in Canada, as I said before. They locate production in Canada with a view of maximizing their level of profits, and the result is that the Canadian industries, rather than making a full range of components and materials, import them from the US parents.
I do not think I have to prolong discussion on this topic because it has been proven, and if we look at the import-export figures we will realize that most of the imports to Canada come from parent companies and intercompany trade with a net loss for Canada.
In 1978 a Statistics Canada study showed that foreign-controlled firms are the major conduit into Canada for imported goods. The study concluded that foreign-controlled firms accounted for 72 per cent of all Canadian imports in 1978. Foreign companies’ ratio of imports to sales was almost five times that of Canadian industry.
The reason that Canadian industries cannot get a larger share of this market is that even if they have a better price they cannot compete with products transferred within a fully integrated multinational corporation.
For example. if there is a $2 profit calculated in the normal transfer of a $10 component part, the subsidiary will still buy from the American parent instead of a Canadian supplier who could furnish the part for $9.50. This is because the net profit of $2 minus 50 cents lost by not buying Canadian is such that the multinational as a whole is better off through buying from itself.
The study states that no matter how efficient the independent Canadian supplier may be, his price can never compete with the internal costing procedures of multinational enterprises.
The case is very clear, and when the previous Minister of Industry and Tourism (Mr. Grossman) tried to encourage the multinational corporations to adopt the concept of global product mandating in Canada he failed miserably because, as I said before, the concept of global product mandating works only if it is in the interest of the multinational corporation, not if it is in the interest of Canada or the branch plant. The multinational corporations have integrated production, and in their planning the production of each branch must reflect the total interests of the company.
If you are a Canadian supplier or a Canadian source of parts or supplies that are competing directly with those of an integrated multinational corporation, then, as the Foreign Investment Review Agency study says, there is no possibility that the Canadian company can compete with the multinational company because the profits of the international company have to be considered on a world scale and within the total performance of the international corporation, while the Canadian company, no matter how efficient it is, is limited and must perform and produce profit here in Canada.
The second point the FIRA study makes is on foreign exchange. The secondary effect of this transfer of components and materials within corporations is that multinational corporations are relatively immune from certain market fluctuations. A chart in the study shows that import levels do not appear to react to fluctuations in the exchange rate. In other words, the value of the Canadian dollar on the foreign exchange market has a relatively stronger impact on the Canadian producer who must import material for export products at fluctuating prices, and it will affect multinational corporations much less. This is a very important point because the fluctuation of the Canadian currency will have a much more severe effect on companies that are operating in Ontario and Canada than on companies that are operating on a worldwide scale. The multinationals can balance the fluctuation of the currency with internal arrangements.
Another point that the report makes is about the overcharge. This is a way to evade the Canadian legislation, weak as it is, and to maximize the profits of multinational corporations. “The multinationals are able to have it both ways,” says the report. The study quotes a private consultant’s study which showed that when foreign firms have a monopoly they charge their subsidiaries inflated prices for imported equipment. Since the increased income resulting from the overcharging goes to the parent company, the taxes stay in the home country rather than in Canada.
As an example, research done in Toronto on the 13 computer communications firms showed that if they had paid taxes in Canada, the Canadian government would have received $49 million, or 30 per cent more than it actually received in 1980. Based on that study, the document calculated that in 1980 computer firms paid $162 million in Canadian taxes; but as I said, they would have paid $49 million more. The document concludes:
“It is difficult to know exactly to what extent this is occurring with foreign-controlled firms operating in Canada, but as long as income taxes are levied on profits there is room for this kind of manipulation and the possibility that the Canadian people are being shortchanged, not to say anything of the Canadian supplier industry.”
The other point the study done by FIRA makes is on research and development. This is a very sore point. I do not understand how the Minister of Industry and Trade is always boasting of the efforts of this government as far as research and development and as far as encouraging innovation is concerned. If we look at the estimates of his ministry we will see that in 1982-83 the estimates for the Ontario Research Foundation are $4,222,000, as opposed to $4,178,000 in 1980-81. That is how the government is spending in order to encourage research and development in Ontario. The situation of research and development in Canada is, to say the least, pitiful.
In a study published by the Organization for Economic Co-operation and Development it becomes quite clear that Canada is running one of the last among industrialized countries. As a matter of fact, we are only ahead of Egypt in terms of the money we spend on research and development. I do not quite understand why the Minister of Industry and Trade keeps boasting about the commitment of this government vis-à-vis research and development. Going to the studies made by the Foreign Investment Review Agency, let us see what they have to say about the consequences of extending foreign ownership in Canada.
They say one of the consequences is the loss of highly skilled jobs in the research and development sector. In the United States the expenditure for research and development equals 1.84 per cent of all sales. In Canada the figure is only 0.78 per cent. Generally, Canadian controlled firms spend more money on R and D in the Canadian economy than American firms. In Canadian manufacturing firms the ratio was 1.3 per cent while American counterparts spend only 0.83 per cent.
The document estimates that Canadians spend $168 million to pay nonresidents for research and development the Canadian industry needs. I had mentioned before that we are only ahead of Egypt in terms of research and development. But if we look at other countries, we will see that in West Germany they spend 2.2 per cent of the gross national product in research and development. In Japan, which is obviously one of the most advanced industrial countries, they spend four per cent of the gross national product, as opposed to the 0.78 per cent spent in Canada.
I want to point out that these are not the peculiar ideas of the New Democratic Party trying to press the government to spend money in research and development because we have some ideas that are not related to the reality of the economy of this province and nation. There was a Senate committee whose chairman was Senator Lamontagne that, several years ago in the late 1970s, came out with a report on science and technology suggesting that if Canada did not want to recede to the point where it would be one of the last countries in the industrialized world, it should immediately bring its share spent on research and development from the present 0.78 per cent to at least 1.5 per cent of the gross national product.
Here we are several years later with the situation deteriorated and the government doing nothing. The minister keeps repeating platitudes that now have no credibility whatsoever, because we know very well -- and the study made by the Foreign Investment Review Agency proves it -- that while the general picture of expenditures in the area of research and development is pitiful, the situation is also aggravated by the fact that foreign-owned companies spend even less than Canadian companies.
My friend the member for Oshawa (Mr. Breaugh), who is very well versed and knowledgeable in the area of the automobile industry, told us four years ago that the only research by the automobile industry in Canada was in Kapuskasing, where they were trying engines in cold weather. We visited that facility with the then mayor of Kapuskasing, now the member for Cochrane North (Mr. Piché). The total employment at the peak season in the winter was between 35 and 40 people.
That is the total research in Canada while, on the contrary, we know that every year Canada pays the automobile industry in the United States huge amounts of money. In 1980, we paid $384 million for research in the United States, which is reflected in the cost of cars here in Canada. That is one of the reasons the price of cars is higher in Canada and, more important, why there is a loss of jobs here in Canada.
I do not have the figure for 1981, but the members can realize how many jobs we lose here in Canada, how many opportunities we lose for students who come out of our educational institutions with a degree in various areas of research and cannot find jobs because the jobs are elsewhere. The multinational companies operating in Canada are not interested in producing jobs in Canada but are interested in selling products on the Canadian market.
This is a very important and crucial point that must be made, because it is my impression that by introducing this bill at this time, without a very firm commitment to the strengthening of FIRA to create the conditions for the development of a genuine and indigenous industry in Ontario, this government is deceiving the people of Ontario. A few years down the road we will be in a situation where our industrial apparatus will disappear or will be dismembered because the multinational corporations no longer will have an interest in being located in Canada.
If we look at what happened to negotiations under the general agreement on tariffs and trade, and if we look just a few years down the road, we will see that the tariff barriers will go down to 40 per cent. At that time it will be extremely unlikely that the multinational corporations will locate in Canada.
I want to remind members that one of the reasons branch plants were located in Canada and flourished here was that there was a very high tariff barrier. Multinational corporations were interested in locating in Ontario behind that tariff barrier. In fact, if we look at the structure of the branches in Canada and in Ontario, we will see that those branches had peculiar characteristics. One was that they served only the Canadian market; they were not producing in Canada with the purpose of exporting. I gave one example, but it applies to virtually every branch that was set up in Canada.
The first aspect of the branch plant economy was that the branches were created in Canada to serve the Canadian market. Since the Canadian market is so huge but also so fragmented, the branches had short production runs; and a short production run has very low competitiveness. It is elementary, and everybody will understand, that if you have a long production run, then the basic costs, the overhead and research costs, will be spread over a larger production and therefore will bring down the price of the products. Conversely, if the production run is short, the prices of the products are higher.
This is an important point I wanted to make, because the Minister of Industry and Trade gives me the impression that he does not understand that. When he says we should leave it to the market to decide which products should be on the market, what productivity the companies should have and what the consumers want, he does not understand the basic fact that if one has a short production run as opposed to a long one, the costs of the branch plants in Ontario are much higher and, therefore, those companies are not competitive in the world market, let alone in Canada.
One of the reasons that Canadian products are not competitive in many instances is that production costs are much higher and therefore we cannot compete with similar products made by companies that are operating on a larger scale.
Everybody should realize that when tariff barriers come down as a result of the Tokyo accord, there no longer will be any reason for a multinational corporation to come to Ontario to serve the Canadian market. At that point it will be extremely easy for the American companies to have their production facilities south of the border and to export to Canada, because no longer will there be a tariff barrier that will prevent them from coming into Canada or that will make their product much costlier to Canadians to buy as opposed to products that could be made in Canada. At that point we will be faced with a situation that either we will have an industrial apparatus that is economically viable and operating in Canada or we will become a colony of American industry or only a market of consumers receiving manufactured goods from abroad.
I mentioned the cases of other countries that were resource-rich in the past but slowly went down and became underdeveloped countries. We all know resources are a depleted commodity and sooner or later will diminish and finish. Unless we have a modern industrial apparatus, we will no longer be in the position we are in today of being an industrial nation and we will be reduced to a Third World type of nation.
I think that was the issue that The Weakest Link addressed when the study was quite significantly called A Technological Perspective on Canadian Industrial [Under]Development, because the symptoms that were already there four years ago are now much more aggravated. In that respect, we have to see the study of the Foreign Investment Review Agency and why it gives so much importance to investment in the area of research and development. I do not understand why this government is neglecting this crucial area.
The situation is not helped at all by the window-dressing ideas this government comes up with once in a while. I received a glossy kit on the Ontario International Corp., the latest bright idea of the Ministry of Industry and Trade. I want to read for the record what the minister says in the presentation of the Ontario International Corp.:
“Over the years, ministries and agencies of the province of Ontario (Canada) have amassed an enormous fund of technological expertise, particularly on capital projects. The Ontario International Corp. has a threefold mandate: first, to assemble all pertinent expertise from ministries and agencies, then market it to the international sector; second, to help co-ordinate consulting and technical packages with appropriate companies from the private sector; third, to act as a government-to-government contact in foreign markets for Ontario consortia interested in offshore prospects or joint ventures.”
Then it goes on to say: “Ontario International Corp. is the primary international marketing agency for the Ontario government. It is also a promoter of prime capital project expertise in the province. Both the provincial government and private industry have established excellent global reputations in the areas of electrical power production, including nuclear, in urban transit” --
The Acting Speaker (Mr. Cousens): I caution the honourable member about extensive reading from the document. I think you have made reference to it. Would you please refer back to your speech, because if you are going on at the extensive length --
Mr. Di Santo: With all respect, Mr. Speaker, I only read two paragraphs. Is that extensive?
The Acting Speaker: I am cautioning the member about the document. I did not know how far he was going to go.
Mr. Cassidy: Mr. Speaker, on a point of order: I appreciate very much what you are saying, but I have seen speech after speech by the Conservative back-benchers, prepared by the Conservative researchers and put in front of the members five or 10 minutes before they began to speak, and read faithfully right down to the grammatical mistakes --
The Acting Speaker: That is not a point of order.
Mr. Cassidy: -- with never a word of caution. I would hope you would watch for that in the future.
The Acting Speaker: The member for Downsview has the floor.
Mr. Di Santo: Mr. Speaker. on the point of order --
The Acting Speaker: I was just cautioning the honourable member. That is fine; if you were not intending --
Mr. Cassidy: This is very relevant to the debate.
Mr. Di Santo: This document is very relevant to the debate we are having. It is only four paragraphs. If this is considered extensive, I want the Speaker to tell me so that --
Hon. Mr. McCaffrey: If you had any idea of the guts it takes to read one of our members’ services speeches, those people should get medals.
Mr. Cassidy: You’re a newly minted cabinet officer; now you can reveal all.
The Acting Speaker: Order.
Mr. Di Santo: Mr. Speaker, I was saying that in the document that introduces the Ontario International Corp., the minister says: “Particular emphasis is placed on the system approach to large and complex projects. These include offices, schools, power plants. transportation and communication systems. In its position as marketer for both the government and private sector, Ontario International Corp. will have to co-ordinate every aspect of the project: planning, design, implementation, on-site training.
“The various ministries have had a considerable and rewarding history in working with the province’s private sector. This relationship has produced a blend of skills that has proved most effective in offshore projects in exploring global opportunities.”
I have to read that because it is important to understand how serious the government is. If one reads this document, one gets the idea of a massive commitment by this government to explore global opportunities.
“Ontario International Corp. will work closely with the international marketing branch of the Ministry of Industry and Tourism” -- not only the private sector but also the marketing branch.
“The corporation is also most interested and dependent upon the mutually profitable relationship with Canada’s federal government agencies and foreign development banks. The Ontario International Corp. is not a funding agency. It will explore the $100-billion global capital project market for firm leads. It will provide contacts, screen projects for their practicality and also do preliminary analysis of contacts with the private sector operations together with the federal government research contacts.”
On the other side of the coin, also, the minister will assist in bringing influential officials from developing countries into Ontario. These visitors will be shown firsthand the Ontario potential. And also, the corporation will show these officials all the possibilities that will ensure a healthy profit for the private sector, and also would encourage joint ventures.
Then he says, “Please phone, telex or address all inquiries to our office in Toronto.”
How much is the government proposing to spend for all of this? If we look at page R-70 of the Expenditure Estimates 1982-83, Volume 3, Resources Development Policy Field, under vote 2203, item 4, Ontario International Corp., we see that the estimate for 1982-83 is $743,000.
Mr. Speaker, I know you are very interested in this area, and you will ask yourself, “What can this government accomplish with $743,000?” If the government is serious at this time about encouraging the private sector to export all over the world, to have access to a $100-billion capital market, if it is serious about encouraging Third World countries to come to Ontario and look at the potential of the economy of this province -- everything for $743,000 -- the only result from the production of these glossy brochures, which are quite colourful and interesting and have been produced most likely by a friendly small or medium-sized business, is that this is the only company that made a profit out of this grandiose project.
This is the reason we are opposed to this bill. This is the reason my friend the member for Algoma introduced an amendment which we think is crucial to the future development of the economy of this province. In the past, we have seen too much ad hockery in this government and too much playing around. Also, if we look at the episodes that are before us every day, we can see we are in a very serious economic situation. I cannot but repeat that again and again. We have layoffs, massive layoffs. Last year we lost 87,000 jobs in the manufacturing sector in Ontario.
If we look at this government, we see that not only does it not have an idea of a strategy but also it does not have any sense of direction whatsoever. If this government had a strategy, we would say: “Okay. It is the wrong strategy, but at least they have a plan in mind.” But they do not. When we come to the budget, what do they do? They try to make some of their friends happy; they give a tax remission to the incorporated small and medium-sized businesses and they reduce the share of the corporate taxes that the corporations are paying to the province. As a result of that and as a result of the disastrous economic performance of the province, they have to penalize every other person in Ontario. When we look at small, minuscule episodes, we see the parochial way, the outdated way of approaching every situation which is typical of this problem.
I want to give just a fairly small example that proves the mentality of this government. As members know, the Wintario tickets were printed in Toronto by a company called Ontario Banknote. All at once, and for no reason that has been given publicly, this company lost the contract. The new company that will print the tickets is located in Mississauga and is called Canadian Bank Note. As a result of the changeover of the contract, Ontario Banknote will lose between 26 and 28 workers and the business will go to Canadian Bank Note. If we look behind this operation, we will see that Canadian Bank Note is a non-unionized company, one of the friends, probably one of the winners who will get the tax exemption.
That proves the mentality of the government. Whether we look at the forest industry, whether we look at the resource industry or whether we look at the manufacturing sector, we will see a government that does not know where to go, a government that has no plan in mind and resorts to this small game that probably will make friends in the short run but in the long run will be detrimental to the province and to Canada.
Earlier, I mentioned briefly the crisis in the manufacturing sector and in the major industry in that sector, the automobile industry. We know the way this government is operating. I do not want to mention the laughable speech made by the Premier two years ago in an intellectual effort to illustrate the causes of the crisis in the automobile industry. He made such an effort that he came out with the most brilliant idea of the decade. He thought the reason for the crisis in the automobile industry was that we were importing too many Lada automobiles. I was not surprised. Even the serious newspapers, which usually support the Premier and take him seriously whenever he comes out with his platitudes, thought that it was a little bit too much and that 10,000 or 11,000 Ladas were not really the cause of the crisis in the automobile industry.
That is an illustration of the mentality of this government. It does not understand that we are no longer in the type of society it inherited 40 years ago. We are dealing now with problems that are very serious. The boom we had been going through for many years now no longer exists. We should reorganize our ideas. We should come up with innovative ideas and make them the foundations of our future. This government does not understand that. When we have a serious situation involving massive layoffs in the automobile industry, the only great idea that comes to the mind of the Premier is that we should get rid of 10,000 Ladas and the problem will be gone.
The same happens with the Foreign Investment Review Agency and with the philosophy behind this government’s position. I have been talking at length about the disastrous effects this has for our economy and the fact that we are totally dependent on multinational corporations. Right now, there is a very strong attempt on the part of this government, as well as on the part of the federal Conservative Party, to seek a relaxation of the FIRA regulations. The official reason at this time is that we need to relax the FIRA regulations so we can have investment in Canada and that investment, in turn, will do two things: (1) strengthen the dollar and (2) give confidence to the economy.
I warn this House that this approach will create more trouble in the future. That is one of the reasons we are opposing this bill. It is true that if we relax the FIRA regulations and allow an inordinate infusion of capital into the Canadian economy, there will be investors whose confidence we are supposed to encourage, in order to invest in Canada, who will be buying Canadian dollars. Everybody understands that. If they buy Canadian dollars, the value of the dollar will go up. Then they will invest dollars in the Canadian economy.
What will happen three, four or five years down the road? We will be burdened with more interest to pay, with more profits to pay, with more licence fees to pay. Right now, we are paying more than $7 billion to foreign companies for investments they made in Canada. In other words, if we accept the position of that government, if we accept the position of the federal Progressive Conservative Party, then we will be putting down the foundations of a situation that will become more and more detrimental for Canada in the long range. That has to be rejected.
The position of the New Democratic Party, both federally and in Ontario, for a long time has been that if we want to handle the situation we should address the real problem, which is interest rates.
Two weeks ago, the leader of the federal Conservative Party was asked by the Montreal newspaper, the Gazette, “What would you do about interest rates if you were Prime Minister?” He said, “I think we would do more or less the same as the Liberals are doing.” This proves we are faced with an approach that is detrimental to Canada, but to which this government substantially subscribes. Apart from the foreign domination of our economy, that is one of the main reasons we are going through a very deep and prolonged crisis in Canada. This government does not want to help Canadian companies to overcome a situation that is becoming more and more cumbersome.
I said before that from August to December 1981 we lost 235,000 jobs in Canada, approximately 87,000 in Ontario. One of the reasons was that many firms went bankrupt. The rate of bankruptcies among small and medium businesses rose by 37 per cent, more than in the previous year. What is the reason? I think this government has the expertise, it has people who are very well paid to make analyses. Perhaps they could go to those companies and ask them, “Why is it that you cannot overcome the present crisis?”
The government responded by giving them a two-year tax exemption. The reason those companies could not cope was because they had to borrow money from the banks and repay at very high interest rates. At some point, they could not cope any longer and they went bankrupt. If the government had any real intention of helping those small and medium-sized businesses who needed help at the moment to overcome a very difficult time, instead of giving them a tax exemption they could not use because they were not profitable -- if a company is not profitable, it does not pay taxes -- instead of rewarding those whom the Treasurer (Mr. F. S. Miller) cynically calls “the winners,” the government would have given them relief in interest rates and not a tax exemption that does not mean anything to them.
A 37 per cent increase in bankruptcies is a symptom of a malaise that is very deep and that this government does not want to address. It also proves that the government is not serious when it proposes programs, whether it be the BILD program or the technology centres, because all we get is doubletalk. We do not even have a ministry.
What did the minister say about the technology centres? In the New Democratic Party we have been talking at length about the fact that we are lagging behind other industrialized nations and our technological apparatus is not keeping pace with the needs of the industry in order that our industry can be competitive.
Then the government came up with the bright idea of the technology centres. We proposed in the amendment introduced by the member for Algoma, and we are still proposing, that there should be crown corporations or joint ventures with public intervention. We believe it is necessary that the government intervene directly to correct situations that may not develop in the way which would be desired in the best interests of the province.
The government, in the usual Tory way, did something that gave the impression it was moving in that direction, but of course it was only smoke to defuse the criticism, which came from several places, by the way, and not only from the New Democratic Party.
One of the proposals was for the technology centres. We pointed out that Ontario is one of the largest mining places in the world but we are also one of the largest importers of mining machinery. The government responded to that deficiency and to that need by doing what? It set up a machinery research centre in Sudbury; it did not provide leadership or, if necessary, enter into a joint venture or set up a crown corporation to develop a mining machinery industry.
Nobody knows what the centre will do except that it will provide advice to those who want to invest eventually. So, 10 years from now, we will be in exactly the same situation as we are in today. In the meantime, the government has given the impression to those who are not involved or who cannot take the time to be informed that it is moving somehow in that direction.
In a speech delivered to the Ontario Chamber of Commerce in Hamilton on May 31, just a few days ago, the minister talked about his ministry’s assistance to small and medium-sized companies. The effort which the minister called a major policy package amounts, needless to say, to more of the same.
How important was the discussion on the technology centres, auto parts, resources, agricultural machinery, food processing, robotics and microelectronics? The minister said: “While these centres are being initiated by my ministry, they will be managed by experienced business people, not by bureaucrats. Eventually it is my hope the centre will be turned over to the private sector.” That is on page 5 of the speech.
The minister, by repeating this old cliché, wanted to give the impression to the small and medium-sized companies that the government is providing a great service and an opportunity for the businesses to develop and therefore it will get out of the area.
I hope the minister realizes that if we have deficiencies in the areas of auto parts, resources, agricultural machinery, food processing, robotics and microelectronics, it is not because the private sector is not interested. If they were not interested, then we should ask why they were not interested. If there is a market and there are possibilities for growth then we should ask why they were not interested. The reasons are much more complex. I tried to explain what the reasons might have been and why we had an underdevelopment in those very areas where it is possible for us to develop in Ontario.
The minister reduces the whole problem to the simplistic assumption that the government gives leadership and the private sector and the market will solve every problem. I have said before, and I want to repeat now, that the world is much more complex than this simplistic assumption. It is not true any longer and it has never been true in the past, not even in the time of Adam Smith.
It is about time this government became more up-to-date and looked at what is happening around the world. I really wonder why it is that this government sends ministers to Japan and Saudi Arabia. I would be interested in knowing the great discoveries made by the Minister of Education (Miss Stephenson while she was in Saudi Arabia and in the Middle East, why the Premier went to Japan, and why the former Minister of Industry and Tourism (Mr. Grossman) went to Japan with the mission, if they did not learn anything.
I know that in the usual way of this government the Premier went to Japan to announce the great achievements of this government. He was announcing all the contracts that had already been signed by the Canadian companies and the American companies, such as General Motors, that had been working there. Of course, the Premier went to Japan just to make the great announcement to celebrate the achievements of the government of Ontario, at great cost to the Ontario taxpayers.
If they have learned anything at all when they have been around the world, they should realize that at this time in history it is no longer good enough to repeat the same platitudes because the problems do not go away. Let us look at what this government does. The minister issued a press release on May 11: “Ontario Launches Import Replacement Drive.”
I have explained at length why we have a situation where it is extremely difficult to replace imports, for the reasons I mentioned and the reasons made public in the study of the FIRA group responding to the criticism of the Americans. Despite that, the minister comes out with a press release in which he says his ministry will be involved for one month only to inform about the importance of buying Canadian-made products.
If this were not such a serious situation, it would be extremely laughable that the Minister of Industry and Trade should launch as a major program what everybody knows -- at least, I thought that for years it had been an assumption that was clear in everybody’s mind -- that unless we replace imports the situation will deteriorate because our balance of payments deficit will increase, inflation will get worse and we will lose jobs.
In the past, we in the New Democratic Party have explained, chapter and verse, what the deficit in auto parts costs us. Last year, we had a $5 billion deficit in the auto parts industry. That translates into 40,000 jobs lost; mostly in Ontario because 90 per cent of the automobile industry is concentrated in Ontario.
After so much noise made by the minister’s predecessor -- and members will remember the noise made by the government, and the campaigns to encourage buying Canadian -- the minister now wants us to believe that by sending his officials throughout Ontario for a month he will solve such a gigantic problem. We have a situation where, to order a few thousand medals on the occasion of the Constitution coming back, we had to go to Rochester to have them minted.
Hon. Mr. Walker: You know that is not accurate.
Mr. Di Santo: I know the minister said that it was only two cents’ value that went to Rochester, but it is symptomatic of the mentality.
I raised the issue of import replacement that the government is launching in Ontario. We think it is important, but it is important if it is done in context and in a general framework. That does not exist because I explained at length that this government does not understand that we need a plan and a direction from it at this time. We cannot solve our problems just by leaving it to the private sector or to the market. We know the problems will not go away.
I want to repeat this to the minister so that he will understand it: it is not our opinion but something that is well recognized by the forecasters, by the Science Council of Canada and by the Conference Board of Canada, that our problems are much deeper than the government would have us believe.
Canada’s present economic problems are not short-term. Their origin precedes the current recession in the western economic system. Canada seems to be unique in that it has allowed the structural weakness of the economy to grow over a long term, but this weakness is the result of policies of the government’s own making.
I have said that unless the government understands that we need a new approach, that we need a plan, we will not solve our problems. But, unfortunately, the government continues to use the same old tactics and to play the same old games in the hope that in time there will be an upturn in the American economy which will pull us out of our present recession.
Apart from the few ideas on technology centres, which I have already mentioned, the Board of Industrial Leadership and Development is just a smokescreen and will not help us to recover from the present crisis. The government continues to rework the same old areas and to present existing programs reshaped into new formats to give the impression that it is doing something new.
The only thing that this government is not short of is rhetoric. When the Treasurer presented the first report of the BILD program he boasted -- and I quote from his speech: “We have proven that government can take action to establish economic priorities and redirect spending to ensure continuing development in this province.”
We know what the results of the leadership of this government have been since January. We have had more plant shutdowns and more layoffs, and have a general economic climate which is deteriorating every day. People feel the lack of leadership. They feel that the people who should be leading the way out of the crisis do not know what to do -- apart from giving tax exemptions to winners, who are the government’s friends, and leaving other small and medium-sized businesses out in the cold.
I want to mention a firm in my riding, Toronto Wood Moulding Ltd. They had 36 employees in a company that has been operating for 30 years. They have a cash flow problem. They had to lay off 16 workers. The day after the budget was introduced they called me and said: “Mr. Di Santo, we would like to keep the workers; they have been with us for so many years. We cannot any longer. What is the government doing to us? It is giving us a tax remission for two years, taxes we cannot pay because we are borrowing money from the banks. We do not have a profit; we are not paying taxes. The government should help us by giving us relief from interest rates, not from taxes. If they helped us we could keep these workers with us, but we cannot any longer.”
That is exactly what the government is doing. According to our estimates, in which, I think, we are extremely generous, in the latest year of operation of the BILD, only 2,570 jobs were created, while at the same time in the manufacturing sector alone, which is very important for Ontario, we lost 87,000 jobs. We can repeat time and again that the situation is serious and that the government must change by accepting some of our ideas.
Today’s Globe and Mail, which is not a subversive publication, says, “The prospects for a business recovery have been further undermined by a slump in plant utilization that has left manufacturing companies operating at their lowest rates in 20 years.” That confirms the analysis I have been making: in the 20 years since 1961 this is the deepest and most serious crisis we have gone through.
To continue: “Figures released by Statistics Canada on Friday showed that plant operations in the first quarter of this year ran at an average 69.7 per cent of capacity, while the rate at which plant has been idled climbed a further five per cent.
“The low operating rates reflect an overall weakness that has forced down output and produced the sharpest rise in unemployment since the 1930s. But they are also a sign that more and more companies are unable to function normally, make profits and plan future investments.”
This proves that the very assumption on which this government bases its laissez-faire action -- leave the market to operate and all our problems will be solved -- is no longer true. In fact, companies are now in a position where they are unable to perform their basic role.
The Deputy Speaker: I can honestly say I think your last statement was not quite in reference to the bill in front of this House.
Mr. Di Santo: It is quite in reference to the bill, Mr. Speaker.
The Deputy Speaker: I beg to differ.
Mr. Di Santo: It is because they cannot function normally, make profits and plan future investments.
I want to thank you, Mr. Speaker, for your observation. It comes properly and at an interesting moment in my speech, because I said before, when you were not in the chair, that it is because of this government’s inability to address the real issues facing the economy of the province at this time that I am supporting the amendment introduced by my friend the member for Algoma, which says basically --
The Deputy Speaker: I was here for that. I was present when you made reference to the amendment.
Mr. Di Santo: You were present?
The Deputy Speaker: Yes.
Mr. Di Santo: The amendment addresses two aspects. The first is to increase the degree of Canadian ownership of Ontario industry, and the second is to provide for the use of crown corporations and joint ventures and to develop key sectors of the Ontario economy where imports dominate. That was the point I was making. It is necessary for this government to intervene massively where there is lack of activity from the private sector.
As I said before, the fact that the government has decided to set up technology centres points to a deficiency in our economy that it is perhaps worth while analysing. If we are in a position in several crucial areas where we are not producing, not producing competitively or far behind other countries, then it must be somebody’s responsibility.
If the government does not accept the responsibility because, as the minister says, it is the role of the private sector, then we must say the private sector has not performed one of its roles. Perhaps it is interesting to see why in the past we have had sectors that are very important to the economy of this province that have not performed well and why the private sector was not involved in areas that the government now thinks should be encouraged. We have seen that some of those sectors have fallen back quite disastrously.
For instance, if we look at the food processing industry we see that Ontario, from a position of pre-eminence in the past, is now in a situation where not only are we not important in processed foods but the industry is reduced to the point in the Niagara Peninsula where now we have only one cannery, which is owned by an American multinational company, Del Monte. A few years back we had almost 30 canneries and food processing plants there. I think that is a --
Mr. Nixon: Filibusters are supposed to be more exciting than this.
Mr. Di Santo: I thought I was raising an issue that is close to the heart of the member for Brant-Oxford-Norfolk and he would be interested in as he represents --
Mr. Nixon: I am the only one listening.
The Deputy Speaker: I beg to differ. I am listening.
Mr. Di Santo: I thought the member would be interested since he represents a largely agricultural riding that I had the pleasure to visit two years ago when he celebrated 60 years of involvement of the Nixon family in Ontario politics.
While travelling to Delhi, I could not refrain from thinking that if we had a more intelligent government in Ontario, perhaps we could now have a flourishing food processing industry and be an exporter, especially today when we know that food commodities are decreasing in the face of a growing world population. We need to rely more and more on our resources.
What did this government do in that area? They threw away our industry and we are left today with Del Monte as the only food processing company in the Niagara Peninsula. That is not only regrettable, it is disgraceful. If we look at other countries less endowed than Ontario and see how skilfully they use their resources and how they try to maximize their agricultural products, then we can see quite clearly that this government, despite all the rhetoric and the boasts about the ties it has with farmers and the agricultural community of this province, is slowly but consistently destroying the base of what today could be a very powerful industry.
As I said before, at some time the government realized it was at least necessary to have technological centres in order to divert the public outcry. That proves there was a deficiency and there is a deficiency. Auto parts is another sector where a technology centre was set up, and it was not by accident that it is in the great city of Chatham, represented by a Tory member. Chatham is one of the areas where the economic crisis is taking a very high toll.
In the auto parts industry we have a situation that has been deteriorating year after year, almost since 1965 when the auto pact was signed. If we look carefully at the performance of the auto pact, we can see that except for the first two or three years the situation has become worse and worse for Canada. While we have a trade balance favourable to Canada as far as the import and export of cars is concerned, the auto pact has become more and more dangerous for Canada. In fact, the deficit has been increasing year after year. Last year the deficit was $5 billion. That means not only a trade deficit for Canada but it means loss of jobs and a very serious industrial dislocation in Ontario where 90 per cent of the industry is located.
The reason we have such a situation in auto parts is the fact there are no guarantees for Canadian jobs. There are no guarantees in any agreement this government has signed with private companies or with an industry like the automobile industry. There are no content requirements. Since the automobile industry is the major industry in Ontario, and actually 90 per cent of the Canadian industry is located in southern Ontario, we have been asking year after year that this government should demand that there be a content requirement and that the American companies respect that content requirement, but to no avail.
The reason is this government is capitalist; this government has always played the game of waiting day after day for the situation to get better and hoping that by fluke all our problems would go away. If we look at the auto parts industry, we will see that most of the parts at a time of crisis are sourced from what in jargon is called in-house. That means they are the same big companies -- Ford, General Motors, Chrysler and American Motors -- that comply with the auto pact even though they are not signatories to the pact. They are the companies which are providing parts for cars that are assembled in Canada.
The Canadian independent manufacturers are becoming a smaller and smaller part of the industry, which in effect means that instead of developing an indigenous auto parts industry, every year we have more companies shutting down. Even the minister knows that in his own city, auto part companies have shut down or have substantially reduced their activity.
What is the answer of this government? The answer is: “Let’s kill the Foreign Investment Review Agency. Let’s open the door to more imports of auto parts.”
If we look at other countries, such as South Korea, Israel, Taiwan and Panama, which are trading partners with the United States -- perhaps not as strong as Canada but certainly strong partners with the US -- in South Korea there are guidelines that demand 100 per cent local content for local manufacturers. Israel offers special grants for purchases of machinery made with 50 per cent local content. Mexico requires that the content be 85 per cent.
I think it is just unimaginable that an industrialized nation in Europe would allow a multinational company to locate in that country without asking for content requirements. It is just unimaginable, but in Canada that is the rule --
Mr. Boudria: It is a shame.
Mr. Di Santo: It is a shame. In times of economic boom there are jobs going all over but when we come to the crunch and when we come to a crisis like the present one we realize that jobs disappear and we cannot do anything about it. The example of SKF proves my point. SKF did not shut down any plant in Europe. It did not shut down its plant in Italy or in South America, but it did shut down in Canada. Canada has no content requirements at all. It has no legislation to protect the workers from plant shutdowns. It is a disgrace. This government should take the responsibility as much as the federal government.
The automobile industry has been in a crisis, not only in North America but generally speaking all over the world. This government has been sitting totally powerless, watching layoff after layoff without saying anything and without providing any hope to the workers that, as their representative, the government would stand up to defend their jobs as much as possible.
Can we imagine something like that happening anywhere else in the world in an industrialized nation? I want to give the Minister of Industry and Trade an example I am aware of. Fiat has 264,000 workers. It has a huge work force. In 1981 it went through the same crisis other automobile companies in the world went through.
While the first instinct of the company was to reduce the work force by 24,000 workers, that was socially unacceptable. There were protests and demonstrations. At Fiat, the company came to an agreement with the unions and with the government. They sat down together and worked out a plan by which workers were sent home by attrition. The people with the most seniority who were at a more advanced stage were sent home and there was not a single layoff.
The plan was accepted by the workers with enthusiasm, to the point that the absenteeism, which is a problem and a fact of life that many large companies face, decreased substantially and productivity went up to a point where, last April, the president of the company announced at the annual meeting of the shareholders that not only was the company --
Hon. Mr. Walker: On a point of privilege, Mr. Speaker: It might be interesting for the House to be aware of a message that was just passed to me a few moments ago that the war in the Falkands appears to be over. The Argentines have surrendered and thousands of lives have apparently been saved.
The Acting Speaker (Mr. Piché): I am sure I speak for the House when I say this is very welcome news.
Go ahead, Mr. Di Santo.
Mr. Di Santo: Thank you, Mr. Speaker.
The president of the company announced at the annual meeting that not only was the company no longer in trouble but it had a profit of $81 million without a single layoff.
On the contrary, in Ontario the government has been acting in a way that would be laughable if it were not a serious situation. In fact, we remember the attitude of the previous Minister of Industry and Tourism and the Premier. The Premier said, “I will go down to Detroit, have a chat with the president of the company and we will solve the problem.” I remember vividly this was the same attitude that he took during the last election when McDonnell Douglas aircraft had already laid off workers and was threatening to lay off more. Because the company is in his riding, the Premier told the workers: “Don’t worry; after the election I will go down to the States and I will talk to the officials of the company. Everything will be okay.”
This is the cavalier approach of this government to problems that are serious. Unfortunately they do not take these problems seriously. We have had layoffs and plant shutdowns. We have been repeatedly asking the government to do something, to introduce legislation that will protect not only the workers but also the economic apparatus of the province, but our requests have been in vain.
When we look at the resources industry, for years and years we in the New Democratic Party have been pointing out to this government that we should finally come to the realization that today if we want to survive as an industrial nation we cannot keep exporting our resources because our resources are not unlimited; they are a depleting commodity. The time will come when we will not have resources to export.
We should encourage the development of secondary industry in this province because that is where the jobs are, that is where the value added is, that is where the prosperity of the nation is. If we look around the world, we will see that the highly industrialized nations which have the knowhow, the technology and the research and development are the leading nations in the world.
If we look at the performance of nations, the mineral-rich, resources-rich Third World nations are totally dependent on nations that are without resources but which have an economic apparatus which is modern, competitive and technologically advanced. The Third World nations are not only totally dependent on the industrialized nations for their survival but also the gap between them and the industrialized nations is growing year after year.
I want to bring up a prime example of what dependence means. Let us look at the oil- producing nations. In 1973, when there was the last major crisis in the oil industry, the price of oil went up immensely. For a moment we had the impression that the industrialized nations were at the mercy of the oil-producing countries, that a major crisis would hit all the nations in western Europe, in Japan and in North America, because they were totally dependent on oil imports from the oil-producing nations.
We imagined Japan, without a drop of oil domestically produced, as an enormous industrial apparatus totally dependent on Middle East oil, and Europe, West Germany, France, Italy, importing all their oil. All at once they were forced to pay prices that were four or five times the prices they were paying before 1973. Once the crisis came, the prices went up. A wave of inflation struck the industrialized world. But in the final analysis they were able to absorb that oil-induced inflation, and four years down the road we know that the nations having serious trouble are the oil-producing nations, because they are faced with the situation where their products are abundant and they have investment problems and they are totally dependent on the industrialized nations for all the products they need for their industrial development.
We can see that a country like Japan, which has not one single drop of oil, is a country with a growing industry, not comparable to the richest oil-producing nation. If we look at the South American continent, there was a time when the mines in Peru and the economies of nations such as Argentina were famous in the world. They were all producing commodities that were in demand and nobody thought that with the technological revolution that came after the Second World War and with the invention of new products they would end up in the situation they are now in.
That brings us to our situation at home. We have a forest industry that is famous throughout the world. I think many people in Ontario do not realize what a bad situation we are in. When one travels through Ontario and sees those immense forests, one thinks they will last forever. That was my impression every time I went to northern Ontario. That is the impression people have when they fly to the northern part of the province. In fact, I was shocked to read in the report of the House of Commons committee on the forest industry and on reforestation that Ontario will become a major importer of wood in the not-too-distant future because our forests have been mismanaged to the point where today we are replanting less than a third of what we harvest.
I remember the position taken by this government in 1977, when the then leader of the New Democratic Party drew attention in his campaign to the fact that the foresters and the forest industry of Ontario were very concerned about what was happening. The member for Muskoka (Mr. F. S. Miller) said, “We will plant three plants for each plant we cut.” In the Brampton charter the Premier said, “We will plant two plants for each three plants that we cut.” However, today the situation is so desperate that the industry itself is asking the government to do something before it is too late.
As members know, in the reproduction cycle in northern Ontario it takes 120 --
The Deputy Speaker: Even the member for Lake Nipigon (Mr. Stokes) is dubious as to whether this is part of the bill.
Mr. Di Santo: The member for Lake Nipigon is nodding, because he knows prima facie that the situation is desperate. On one of my visits to Lake Nipigon we spoke to a forester employed by the Ministry of --
Mr. Martel: Don’t give his name, though. He’d be fired.
Mr. Di Santo: I will not give the name, because he would be fired; and I thank the member for Sudbury East for reminding me of that.
The forester said something that depressed me, from Toronto, very much. He said, “The policy of the Ministry of Natural Resources is criminal.” He took us to --
The Deputy Speaker: Is that parliamentary?
Mr. Di Santo: Well, criminal --
Mr. Martel: The policy is criminal.
Mr. Di Santo: I think it is.
Mr. Cassidy: You are very attentive, Mr. Speaker. It is very much appreciated.
Mr. Di Santo: He took us to an open-cut area, and we were appalled to see that the wind and weather conditions were eroding the thin stratum of soil. He told us there was no possibility at all of a single plant growing in that area again.
Mr. Speaker, I have taken much longer than I had expected, but it is a very important amendment that the member for Algoma has introduced, and we in the New Democratic Party have decided to have a serious debate on this bill. It may be too late for us to deal with the problems afflicting industry in this province, but we have a moral responsibility to address these problems. We cannot let the government come in with smokescreen policies that do not mean anything, that aggravate the situation and that will prove to be extremely detrimental to the province and to the future generations of Ontario.
That is why, in a last-ditch effort, we are asking the government to accept our amendment. I realize it will be a major change in the approach the government has taken in the past, but it is also essential. It is not a partisan position; it is not the position of the New Democratic Party, as I explained before. It is a position that has been espoused by several organizations. The forecasts for the future are pretty bleak and, as I said, are the result not only of the present recession but also of structural problems that directly affect the structure of the economy of the province. I hope the government, even if it is too late, will realize that it is time to change.
I know we will have an opportunity to go to the people of Ontario and ask them to change the government so we can change policies, but we think the good of the people comes first and, therefore, we ask the government to change its policies.
Thank you, Mr. Speaker.
The Deputy Speaker: Thank you, member for Downsview. We were all most enthused with your debate.
Does any other member wish to participate? The member for Lake Nipigon?
Mr. Stokes: Yes.
The Deputy Speaker: I am sorry. Rotation. No member from -- okay.
Mr. Stokes: Go ahead.
The Deputy Speaker: The member for Ottawa Centre.
Mr. Cassidy: Thank you, Mr. Speaker. I have a number of things I want to speak about in the course of this debate. May I say in commencing that I want to join the minister in expressing gratitude and thanks that the affair in the south Atlantic appears to have come to an end.
I took the pains to look at the present terms of reference of the Ministry of Industry and Tourism, and it became obvious once I looked at them that the major reason we are having this debate, which now has been prolonged over several days, is basically that the government was embarrassed by the activities of the former Minister of Culture and Recreation (Mr. Baetz), who could not even give away money from Wintario without putting his foot in his mouth, and it therefore felt the need to create a Ministry of Tourism and Recreation, which is to be a safe haven for the minister where they hope he will not create the same difficulties for the government that it suffered before. In the process there were other consequential changes.
I do not know whether it is worth five or six days of legislative time to have the bill for the Ministry of Citizenship and Culture, the bill for the Ministry of Tourism and Recreation and this bill, when one considers that perhaps this time on the part of the minister, the government and the Legislature might have been more fruitfully spent in getting on with the very serious economic problems we have in the province.
Perhaps the reason the debate has gone on for some time, however, is simply that this House does not normally have any means by which we can talk seriously about some of the serious issues, such as jobs and where we are going in the economic future of the province. Since in the course of the last few months I have been occasionally a bit philosophical about where we are going, I want to bring that to the minister’s attention and yours too, Mr. Speaker, since I know you think about these things.
There is a sense of frustration among members of the Legislature, including the backbenchers on the Conservative side, over the fact that we seem to deal too often with trivialities in this Legislature, that we do not get our teeth into the really serious problems, that we do not have the mechanisms available by which we can confront such issues as those that have been confronted during the course of the debates from various sides on the creation of the Ministry of Industry and Trade.
I suggested some time ago that there was a requirement in this House that we should set aside a select committee on the social and economic impact of technological change. That was a speech I gave a few months ago with respect to technology which you, Mr. Speaker, listened to very attentively. I appreciated your interest at that time.
That was in part an effort to make a suggestion about a way in which this Legislature could begin to see what is happening and will happen to industry, jobs and the future of our economy, a way in which we could become educated and, in turn, perhaps serve as a vehicle for educating people across the province about what is happening.
I was struck by the good work of the half dozen task forces set up in Parliament a few months ago in areas like the handicapped and acid rain which produced some excellent reports. They were not particularly partisan. They were much longer on light than on heat, whereas too often in this House we are a bit longer on heat than we are on light.
We should be looking for a number of ways by which we can look seriously at the problems we have attempted to underline in the course of this debate by means of the reasoned amendment from my friend the member for Algoma (Mr. Wildman), which specifically says the objectives of the ministry should be enlarged to ensure it has a mandate to increase the degree of ownership of Ontario industry, to provide for the use of crown corporations and joint ventures and to develop key sectors of the economy where imports dominate.
The powers that are laid out for the ministry in the bill are barely changed from the previous bill. The previous 1972 bill provided that the ministry should “promote the establishment, growth, efficiency and improvement of industry, trade ... in Ontario.” It provided the ministry should develop programs “to assist the adaptation of industry to changing conditions and to changes in the techniques of production” -- that is, to changes in technology -- as well as helping “to identify ... industries that require special measures to develop an unrealized potential or to cope with exceptional problems of adjustments.”
The previous bill also allowed the ministry “to participate with other jurisdictions ... and with public and private enterprises” in the process of planning for the economic future of the province. All that was there 10 years ago.
The previous bill said the minister had a number of powers, including the power to “assist industry and tourism in any other manner considered to be proper.” The powers were so broad we did not need a new piece of legislation. What we really needed was a ministry that was capable and prepared actually to reach out and seize on the challenges we have in the province today and to take some action.
I was disturbed when I read the speech of the Minister of Industry and Trade (Mr. Walker) introducing the bill and saw that he talked about how the new ministry was going to solicit ideas from business and labour, from the research community and people like that as to what should be done in terms of rescuing the industrial economy of this province.
A new ministry? What the heck, we have had a ministry like this for some 20 years. We had Stanley Randal, who was leading trade missions all across the world and who was fathering development schemes for Ontario Place and that kind of thing back in the 1960s. In 1972, we had the creation of the Ministry of Industry and Tourism. At that time, brave and bold things were promised, but the sad thing is that opportunities were lost and nothing was done.
I recall in 1972, I think it was, the Premier (Mr. Davis) brought the member for Ottawa South (Mr. Bennett) into the cabinet as the Minister of Industry and Tourism. Never was a junior ministry more junior than that one when it was led by the member for Ottawa South. His greatest distinction was getting lost on the way from Brighton, I think it was, back to London some time in 1972 or 1973 when he was on a junket to England to say what great things Ontario had to offer in terms of co-operation with the British.
Over that time, when we could have been developing and putting in place the industrial infrastructure Ontario would need for the 1980s, this government fiddled, did nothing and frittered away those opportunities. Up until the time John Rhodes became the Minister of Industry and Tourism, there was no real mandate accepted by the ministry, and no real sense of challenge, excitement or leadership.
I am not sure whether that sense of leadership has been there since. What I can do is simply look at the record and at what the government is promising us now that we have a new ministry, and then weep over the lost time. It is a sad fact that every time we get a new ministry, we get new promises about what the ministry of industry in its current guise is going to do.
This minister says he is going to get the free enterprise system working again in Ontario. He replaces a minister, the member for St. Andrew-St. Patrick (Mr. Grossman), who was more of an interventionist, rather more a red Tory than a blue Tory, and who was prepared to see a certain amount of government involvement in industry. The sad fact is that there is no coherent overall strategy on industrial development as far as the government is concerned.
There is no coherent overall strategy. Instead, it is a series, one version of ad hockery succeeded by another version, then by a third and a fourth. Each new minister comes in and says: “It is about time we rolled up our sleeves and did the job. We are now going to get the industrial economy of this province going.” I happen to think the previous Minister of Industry and Tourism probably had a fair idea of what ought to be done. Too often he foundered on the rocks of the ideology of his colleagues in the Conservative cabinet.
Mr. Martel: There was no ideology. That was the trouble.
Mr. Cassidy: That is right. At the time when he might have been able to do something, suddenly political ambition loomed large and he decided he had better take on another ministry. Or perhaps the Premier decided his star was rising too brightly in the Ministry of Industry and Tourism. He was cutting too many ribbons, handing out too many awards. He had better be put into a tough job that could really bring him to task and stop him from the insistent and persistent campaigning for the leadership he carries out between two or three o’clock every question period in this Legislature as he talks to his colleagues up and down the back benches of the Conservative Party.
So the Minister of Industry and Tourism goes out and the Minister of Industry and Trade comes in. I am not sure whether the new minister is also considering a stab at the leadership -- is that correct? A shot at the leadership -- no, that is not right either. Anyway, a push for the leadership. Whether he will stab his leader in the back or shoot him, I do not know. That is up to his party. The fact is that now he is trying to say free enterprise is the way to go, and I guess that is because he is reflecting the blue tinge of the Conservative Party when it is anticipating where it should go in the future.
When one looks at the technological centres that are to be established under the Board of Industrial Leadership and Development program, which comes under the wing of this ministry, it says a lot about what we have been doing with the opportunities we have had in this province over the course of the last few years.
Take automobile parts, for example. As my colleagues have pointed out already, we have had a $2-billion deficit in our automobile trade with the United States and other countries over the past few years. Year after year -- it may be a bit better this year, because the auto trade is down so much overall -- there are tens of thousands workers out of work because the auto parts sector is so weak now.
The minister says: “Maybe we will get Toyota to come in and rescue us all. Maybe we will get a few sales to Japan.” We are selling peanuts to Japan now in auto parts. In most areas of the industry we are doing peanuts in terms of technological research and development, despite a few notable success stories. This industry has been active in Ontario for some 70 years. This government has been around for 38 or 39 of those 70 years. In all that time what has it done? It has done nothing.
It brought out a report under Darcy McKeough in the early 1970s saying there were problems. After that report was out, nothing was done. Now it has promised that an auto parts technology centre will be set up in Chatham -- or is it in St. Catharines? -- in the next year or so and that this centre is somehow going to pull everything together.
The sad fact is, that is the only initiative being taken in that area. Two or three more years will have to pass before that centre can possibly begin to have an impact. By that time, the automobile industry, if it is still surviving on this continent at all, will have committed itself in terms of the investments that will be required for the new generation of fuel-efficient cars and that opportunity will basically have passed us by here in Ontario.
In microelectronics, we have great things going for us, largely because of the synergy of what is happening in the Ottawa Valley. I challenge the minister to say what role Ontario played in seeing to the encouragement of that change in our industrial structure. I never heard the ministry even recognize that microelectronics was important until a month or two before the last election, when it finally began to dawn on them that there was something major happening up in the Ottawa Valley. I never heard them even talk about it.
The investments that came from the public sector were entirely investments that came from the federal government, with its investment in the Bell-Northern microelectronics company of the early 1970s and the investments that went into research and development and so on which have helped in a spinoff of small companies that are now growing to be extremely important. Now one sees the Ontario government hustling to get on the bandwagon and claim it was in the van all along.
With respect to farm implements, it waited until Massey-Ferguson was almost over the brink and the government had to take part in the rescue effort in bringing them back alive. Now they turn around and say, “Is it not time we had a technology centre for farm implements?” That industry has been active in this province for a century. After 38 years of Conservative rule, the Ontario government suddenly decides that perhaps it better do something about it.
It is the same thing with robotics. I understand the automobile industry may have a tenfold increase in robots installed in the plants in Ontario between now and 1985. I would like to know how many of those robots will be created, made or manufactured here in Ontario. I suspect the answer will be one big fat zero, because up until now there has been virtually no research and development or anything like that done on robots in this province. There are thousands of them being produced in Japan every month right now. They are three or four years ahead of us in this province in terms of robotics development.
Unimation and some of the other firms in the United States have order books that are three or four years long because of the demand in the United States, and we are just beginning to get together with a technology centre up in Peterborough with respect to robots.
In computer-aided design/computer-aided manufacturing, there are some good firms that have done some innovative work here in Ontario. My sister is working for one up in Ottawa, Omnitech, that has an excellent product once it can manage to break through the market barrier and actually sell it in large numbers. Even there, I am not sure to what extent this government is still aware of how far that is going to go. I am afraid we are going to be spending two or three years before we really begin to see much benefit from that.
What all of this speaks to is the fact that when the problems of the economy of this province began to be evident was not last month or last year but away back in the 1960s and the 1970s.
My friend the member for Sudbury East (Mr. Martel) was on the select committee on economic and cultural nationalism back in 1972 and 1973 --
Mr. Martel: So was the minister.
Mr. Cassidy: -- and so was the minister. If the recommendations of that committee had been taken seriously by the government at that time, we would not be seeing the need for the creation of this ministry and the mandate it is being given, because we would be doing it right now. Rather than debating it in this Legislature, we would be having the kind of initiative coming from government. We would be having the resource machinery production in the Sudbury basin which my colleagues from Sudbury have been talking about for so many years.
I, for one, am rather fed up with standing up in this Legislature year after year and telling the government what the needs of the day are and finding that several years down the line the government finally wakes up and, like a distant echo, it turns around and says, “Oh, we need to do what you were saying five or 10 years ago, but of course we will not give you credit.”
By the time the Conservatives get around to that, it is often too damned late to benefit. It is too damned late to get the jobs back for those workers who have been put on permanent layoff in the automobile industry, those 10,000 or 15,000 workers whose jobs may be irrevocably lost. It is too damned late to get jobs in the resource machinery sector for those Sudbury miners who now find there are no jobs at all because Falconbridge has laid off and has a three-month shutdown and because the number of workers at Inco has gone down from 18,000 to 10,000 in the course of the past 10 years and no new job opportunities have been created for them.
It is too damned late to give the kind of innovative support that might have kept White and Massey working steadily rather than led them to be reeling and just about out of business in the farm implement sector, at grave risk in terms of the future of our industrial economy. Those are the kinds of things that are happening now, and it is almost like chutzpah for the minister to say, “Don’t worry, it is going to be okay this time around.”
My colleagues have talked at length about the inconsistency of a ministry whose mandate includes planning, measures to strengthen the competitiveness of the industrial base and participation in the introduction of new technology, and whose minister says it is all going to be done by working through the private sector. The minister surely must be aware that he stands almost alone in the western world with respect to how industry is working with government these days.
In France they do joint ventures, and they did them long before the Socialist government of Francois Mitterrand came to power. In West Germany there is substantial public involvement; in fact, Volkswagen is substantially publicly owned. In Ontario the only publicly owned auto plant is in the riding of Brampton, where American Motors now is mainly controlled by Renault of France.
In Britain and Norway there is substantial public and private co-operation. It is occurring in Japan. It is even occurring in the United States, where they disguise it as the defence industry. But in this province the minister says he is going to do it through the private sector.
A number of my colleagues have been speaking about what we ought to do. I do not want to reiterate what they have said, but I want to point out several problems areas where this new ministry is liable to go.
The first is the rather naïve expectations of the ministry, which I have managed to discern from the pitiful and totally inadequate compendium provided by the minister with this bill.
“We want to help the private sector to expand trade, to encourage investment and to strengthen the competitiveness of Ontario’s industrial base,” says the minister. We want, in other words, to reiterate the policies that have brought us here, because if they were so good in bringing us to the current situation where 500,000 people are out of work in Ontario -- 325,000 on the unemployment rolls and 175,000 unacknowledged unemployed -- then we can let them do it to us some more if we just keep on going. The minister has some good people within his ministry, but he is not going to give them the kind of support they really need.
“We are going to expand the buy-back provisions.” My friend the member for Algoma pointed out that at the present rate it would take us 400 years to buy back what we are losing in Canadian industry. How the devil is the minister going to apply the buy-Canadian program? He never tells us. It is pious good wishes and nothing more.
The minister talks about world product mandates, and that is going to be the big thing in getting industry to do it. Who is going to bell the cat? Who is going to get General Electric to put small appliances production back into Ontario now that it has gone? Who is going to get Noranda to get the 20,000 jobs back? Why is the minister so pathetically proud of nine jobs for Elmira that he takes 10 minutes of the time of this Legislature to talk about them? How on earth is he going to insist that the world product mandate be given when the government’s actions on this front until now have been nothing short of pitiful?
Since the time is up, Mr. Speaker, I am going to suggest that we adjourn this debate. I want to suggest to the minister very seriously that he cannot hope in the 1980s to make an industrial policy work that was designed in the 1950s. The minister has to be aware of the kinds of problems that have been created for us in this province because of the degree of foreign ownership. The minister has got to stop uncritically touting more foreign investment as being one of the major answers to the problem when it has been one of the major reasons for the present problems we have.
I took pains to see what was happening in one particular industry with respect to the influence of foreign ownership, and I will conclude on this note. This is the area where the minister says we have such high hopes, the high-technology electronics industry.
In the electronics industry in 1980, research and development expenditures by foreign computer and related companies amounted to two per cent of their sales in Canada, whereas Canadian firms’ research and development amounted to seven per cent of their sales. This is from a study by Evans Research Corp. of Etobicoke.
In 1980, those foreign firms in Canada spent two per cent of their sales on research and development, whereas worldwide those companies were spending six per cent of their sales on research and development. The expenditure by those foreign companies in Canada was only one third their worldwide rate.
In 1980, those foreign firms assets were only seven per cent of their sales in Canada as compared to 24 per cent of their sales worldwide. In other words, they had far more manufacturing in the rest of the world than they had in Ontario.
In 1980, those companies spent five per cent of their revenues on taxes in Ontario and seven per cent worldwide. In other words, they were deliberately siphoning profits out of this province and taking them somewhere else.
The final point is that in 1980 those foreign- controlled, high-tech companies -- IBM, Honeywell, Sperry, Philips, NCR, Digital, DEC, Burroughs, all well-known -- for every $1 million in sales of the Canadian companies, had nine employees, but worldwide for every $1 million of sales they had 15 employees. In other words, they are sucking this province, this country, dry. They are not putting the employment into this country. They are simply using it as a fertile field from which to take profits out of the country.
Those are the kinds of people, the kinds of corporations and the kinds of policies the minister thinks are going to rescue us from our problems, and that is why we have such grave problems with this bill and why we have moved our reasoned amendment.
On motion by Mr. Cassidy. the debate was adjourned.
The House recessed at 6 p.m.