Ontario's Economical Prospects in 1957

BRIG. GILBRIDE: Many people go to the city to become successful enough that they can move back into the country. However, Premier Frost has achieved the ideal solution--he has become successful in the city while continuing to live in the country. There is no doubt that his home-town of Lindsay is as fine a community, and as typically Ontario, as any place that one could mention.

Premier Frost grew up in Orillia, was a Company Commander in the First War, was wounded and spent seventeen months in the old Christie Street Hospital, Mr. Frost and his brother, who was also a Captain in the Army, then attended Osgoode Hall and in 1921 established their law firm in Lindsay.

Mr. Frost was first elected to the Legislature twenty years ago, became a Cabinet Minister in 1943 and will have been Prime Minister for eight years next Saturday. One of the great men in Canadian public life, and one of the great leaders of this Province, Mr. Frost has been honoured by some six universities. He likes to fish and curl when he gets the chance and particularly likes to relax at his one hundred and twenty-five year old log cabin on the shore of Sturgeon Lake.

The Honourable Leslie M. Frost, Q.C., LL.D., D.C.L.

MR. FROST: Even the most cautious observer cannot fail to be impressed by the vast changes taking place in our Province. I propose to tell you something of the challenges, the opportunities and the burdens which very clearly concern us.

Population growth and industrial expansion are transforming the Ontario scene. The expansion of population is unprecedented. Since 1946 a million and a half people have been added to our population--an increase of one-third. In less than a decade we have added to our population a number greater than the present population of the whole of British Columbia, or any other Canadian province, with the exception of Quebec. To visualize our population increase closer to home: it amounts to more than the total population of Metropolitan Toronto. The increase this year--expected to approach 200,000--may break all records, being nearly 50,000 more than the average increase of the preceding ten years. A rapidly growing market is being created that provides a powerful incentive to the expansion of domestic industry and a compelling attraction to industry abroad.

Turning to industrial expansion, we have had a huge volume of investment in productive capacity as well as in public capital asset such as schools--elementary to university--hospitals, highways and the like. In this period total private and public capital investment in Ontario has been about $18 billion. Between 20 and 25 per cent of our provincial product has been re-invested in the strengthening of our capital structure. In some lines, the production of goods and services today is two or three times as great as ten years ago. With all of this, our economy has been greatly diversified and strengthened.

The problems of growth are very great. There are insatiable demands for schools, hospitals, water and sewage works, highways and a host of other things without which population cannot grow, nor industry flourish; nor indeed without them could we achieve the increase in living standards which our development should provide.

The Confederation document was a very wise one. The Fathers of Confederation entrusted to the provinces the services I have mentioned because they have the intimateknowledge of local conditions which is necessary to administer them. That is true today. The municipalities can carry out some services more thoroughly and economically than the Province. Similarly, the Province can perform some services better than the Federal Government. There was no mistake when these divisions of authority between the Provincial and Federal governments were made. Of course, financial adjustments are required from time to time. These can be satisfactorily achieved by the Canadian way of co-operation and understanding.

I shall not enumerate the reasons--geography, resources, etc.--which assure our continued development. Rather, I shall talk to you about some of the things we have to do in order that this development will not be retarded--in order that we can continue to better the way of life of our people. Our general objective should be devoted to strengthening Ontario's economy. By doing that we can best help Canada. It is our job to create an atmosphere conducive to the expansion of individual enterprise, the betterment of living standards and the re-inforcement of individual freedom, rights and privileges. What we are doing to meet this, and what is projected into the future is without any parallel in our history. But there are problems as well as opportunities. I shall deal briefly with just a few of them.

Firstly, concerning power--As you are aware Ontario's industrial development has been promised on an immense publicly-owned power grid which, if it had not been envisaged fifty years ago, would have left this Province vastly different from what it is today. At a cost of about $1.5 billion in the last decade we have made immense additions to our power resources. Three years from now the Commission's own generating capacity will amount to about 8 million horsepower or six times as great as it was at the beginning of World War If. This Province is power hungry. The projected requirements suggest a total of 22 million horsepower by 1975--nearly four times existing requirements. This will necessitate the continued investment of an average of about $175 million a year (a total of $3 billion over the next twenty years). With the completion of the St. Lawrence power project, however, we will have about reached the end of our economic water power resources. Accordingly, we have to get power elsewhere. Fortunately, there are at hand two great sources of power that were not in the picture five years ago--natural gas from the west and uranium.

Fuel for thermal power in other days would have to come from outside the country. Natural gas offered the first great opportunity to us. In 1951, we took the position that the pipeline tapping the massive quantities of natural gas in Western Canada should be on Canadian soil. We have given tangible support to this objective by providing, in partnership with the Federal Government, temporary financial support with respect to the Northern Ontario portion of the line. Half a dozen years ago, nobody anticipated that the hills of Algoma and Haliburton would be providing sources of electrical energy. Experiments--in which Hydro and the Ontario Government are participating--are being carried out in the practical utilization of atomic energy. The basic source of this energy-uranium--if found in this Province in quantities unrivalled anywhere in the world. In other words, new sources of thermal power will come from within our own Province. This changes the outlook very fundamentally. It appears that by 1975 water power may only contribute about one-third of our then power requirements.

Secondly, education. I have often referred to education as Ontario's greatest problem. This has a most direct and vital bearing on the development of our human resources.

From the early days of this Province we have built up a school population of 1,100,000 in the primary and secondary grades along with the physical equipment and teachers. This school enrolment will double in the next fifteen to twenty years. To cope with this increase is a great challenge. I warn you that the task will strain our resources to the utmost. It virtually means the doubling of the present school accommodation and the present staff in that period of time.

Our present university enrolment of about 22.000 is expected to double in the next ten years and quadruple in the next twenty years when we shall have between 80,000 and 90,000 students. The universities, and necessarily ourselves, are therefore, confronted with another tremendous problem.

In the last ten years the Province--from Provincial revenue alone--has invested in education about $3/4 billion. This year the Province's expenditure will be about $143 million to which can be added municipal expenditures of practically the same amount. The total of these is now about $300 million, and this is by no means the end of increases in expenditure for education. We must anticipate that annual costs will rise over the next twenty years. Certainly if we are going to meet the positive requirements of our Province and our Country in this age when brains and grey matter and the development of intellectual equipment will be the measure of our success, we will need to give this problem close attention.

Thirdly, another great problem is that of transportation. Our developmental problems do not come singly. With the reduction in capital spending during the war years, motor traffic out-stripped construction. The backlog created is one of our difficulties today. Added to this is the increase of motor vehicles, nearly trebled since 1945. The increase of registrations in that period is far greater than population growth. Our population has increased over the last ten years at something over 3 per cent yearly, while the increase in motor vehicle registrations has been over 9 per cent per annum. There is now a passenger vehicle for less than every four of our people, a ratio that is about the same as New York State. Then we are very glad each year to welcome about 6 million motor vehicles bearing visitors from other provinces and countries. Added to this again is the fact that people are driving more. Each motor vehicle is being driven annually about 27 per cent more miles than ten years ago. In the last decade, provincially and municipally we have spent about $11/z billion. In the next twenty years, the job would appear to involve an expenditure of at least $3 billion, of which the backlog alone, accumulated in war and depression, amounts to $700 million. This in itself is a tremendous program.

Fourthly, we have water and sewage, an important facet of the problem of conservation. Unprecedented population growth and industrial expansion have heightened the demand for water and sewage facilities. Industry and development cannot thrive and prosper without an abundance of fresh water and adequate sewage treatment. This is the purpose of the establishment of the Ontario Water Resources Commission, which is something new in public administration in this country, or indeed in America. It enables us to look at water and sewage projects on a regional basis. We, who are located on the eastern side of the North American Continent, are very fortunate in having our Great Lakes System and the many other lakes, rivers and streams. It has, however, become increasingly apparent to us, as our development proceeds, that we must take steps now to assess and safeguard this immensely important resource. It is estimated that over the next twenty years expenditures of nearly $21/z billion will be required to meet our needs for sewage and water facilities.

The following short table sums up the above capital expenditures for the next twenty years. Please remember they do not include many other essential works.

AN ESTIMATE OF PRINCIPAL PUBLIC CAPITAL INVESTMENT IN ONTARIO IN THE NEXT TWENTY YEARS.

There are many other matters to which I could refer, all of them important. I have selected these obvious services to give you an indication of our problems. They present, of course, an immense challenge. They may appear to be staggering. They do, however, spell employment, work and wages, unlimited opportunity for the individual and incomparably higher standards of living.

As sensible people we must face up to the situation. There is no need to waste time in appraising what has to be done and what are going to be the tremendous tasks of the Province and the municipalities. That has already been done. Read the submissions to and the reports of the Gordon Commission. They are available to every one. The question is how are we going to do it. You will ask me here today where will the money come from.

The money, of course, has to come from taxes. They should be progressive taxes which are directly related to the works we are creating. These works and developments produce employments, wages and industrial expansion of general benefit to our people. It is from progressive taxes, geared to these works, that the revenues should come. I can assure you that I have not been unco-operative with other governments. I think you will agree that that is not my record. I have been telling you the truth when I said that the solution to this problem, provincially and municipally, lies in a realistic division of tax sources in the direct tax field. Remember, the Fathers of Confederation were pretty wise. The direct taxes, such as personal income tax, corporation tax and succession duties, belong equally to the provinces and to the Federal Government. The Federal Government in addition has exclusive use of indirect taxes, such as sales tax at the manufacturers' or wholesalers' level, and excise and other taxes. The best way to drive the provinces, the municipalities and their people into an untenable position is not to recognize this vital fact and to force them into supporting expansion such as I have outlined from regressive types of taxation, which are not geared to expansion and prosperity. That is the way to drive up municipal taxes and to make it impossible for our people to own their homes--and home ownership is one of the main foundations of happiness.

Some of you may have thought that I have been talking pretty big money. I have said that this Province needs about $100 million from these direct taxes more than the present Federal-Provincial arrangements provide. Having regard to what I have said, you will, I am confident, consider this to be modest. You may well ask how the job can be done on just an additional $100 million.

The tax arrangements effective last April 1st will provide our Province with about $40 million more annually than did the previous arrangements. This is only sufficient to pay a portion of the increase cost of education, to say nothing of our other requirements. When I say that it is unrealistic and grossly inadequate I mean just that. Surely a division of 10 cents of the income tax dollar to the provinces and 90 cents to the Federal Government is not reasonable. The Province is now handing to the municipalities practically every cent derived from personal income and corporation taxes and succession duties and still municipal and education costs are rising and so are the taxes on real estate. This gives you some idea of the inadequacy of the present tax division.

In a moment of irritation I said that our Federal-Provincial system was a crazy patchwork. Perhaps you will not think that that was too strong. Can we view with equanimity increasing municipal and provincial debt on one hand and a $500 million Federal surplus on the other, and with Nova Scotia, New Brunswick and Prince Edward Island going in the hole? Tax fields which would run about half of the Federal surplus, say about $300 million, would make for orderly development on the part of the provinces and the municipalities. Our population is about one-third of the Canadian total, and as I have said about $100 million annually over the present adjustment is our requirement.

May I say to you gentlemen of the Empire and Canadian Clubs as businessmen, that the provincial-municipal position deserves your consideration. Some of my good friends here have been complaining to me in these last few days about added taxes because we have had to raise a number of them this year. Some of you have had long faces and said it was unfair. Of course, it is unfair to our people, particularly when you know that what has happened this year cannot be the end of it. Is there a common-sense remedy? The answer is, yes. With a realistic, common-sense solution such as I have suggested a practicable enlargement of the province's tax fields--a decent workmanlike job can be done in the very prosperity that will be created new revenues will become available to all governments. That solution appeals to me as being reasonable and based on common sense.

In speaking to you on Ontario in 1957 and describing our challenges, our opportunities and our problems, I do so in a spirit of confidence. One of the great attributes of the people of our Province and of Canada is common sense. I believe we can do the job ahead, and I am sure we shall not fail. On the other hand, remember that your Province and your country deserve your very best thought and consideration. I know that all of you are prepared to give service in some capacity or other. One of the crying needs of our country is for men and women with the education, the intellectual development and the know-how to do the job that needs to be done.

It has been a very great pleasure to come here and address the concluding meeting of your clubs.

THANKS OF THE MEETING were expressed by Mr. Donald H. Jupp, President of the Club.