Our Modern Economy (1967)

Mr. L.F. Mills – Chairman, Ontario Division, The Canadian Manufacturers’ Association and President Honeywell Controls Limited

To some people another word for pollution is waste. For waste, read sewage and that leads me to wonder if it is appropriate to have a speaker on this subject in a luncheon setting. That’s quite a sweeping generalization — and a deliberate one. I made it to emphasize that no field attracts more sweeping generalizations than pollution. Nor, more recently, a tendency to hysteria.

I hope, most sincerely, that your conference will be eminently successful in achieving its objective of promoting better public understanding of the nature and scope of the pollution problem. More important I hope, because of this conference, the residents of Ontario will become better informed on the complexities faced by all levels of government and by industry in finding practical solutions. Let us pray you succeed in establishing attitudes which pay no heed to sweeping generalizations and pat solutions which cause confusion and seem to stampede governments into actions of expediency.

In saying this I am not suggesting that the conference turn into an exercise in brushing the problem under the rug. Far from it. On the contrary I would like to congratulate all those responsible for arranging this gathering for the specific purpose of exposing the situation to public gaze and to promote informed discussion.

From that bouquet let me move to a brickbat. That is the criticism of government for not moving more quickly to direct the control of all forms of pollution. In 1958 The Canadian Manufacturers’ Association urged the Government of Ontario to take over the responsibility of air pollution control measures and to implement them on an area basis.

Apart from a preliminary step in 1963, action along these lines was not taken until this year — nine solid years after we first made our suggestions to Queen’s Park! What an opportunity for a brickbat! What an invitation for a flood of criticism from the impatient or uninformed! But I am not here today to deliver any such criticism on behalf of industry because we in industry are not completely wonderful and we understand the complexity of the problem and have an appreciation of the other fellow’s difficulties. In this case the other fellow is the Government of Ontario.

But I did want to get that part of the record absolutely straight. I know it is not understood that some nine years ago we in industry registered with the authorities that we were ready for more effective control of pollution. We recognized this as a special case where we were not crying for less government involvement. We asked for more.

While the government made its preparations for the new Air Pollution Control Act, industry did not stand still. Instead of indulging in carping, individual companies have taken giant strides to mend their own pollution fences. I will not catalogue them all but remind you, by way of example, that one company — just one company — has been spending over one million dollars a year in air cleaning devices on its smoke stacks.

Control measures have become an integral part of all plans for new plants, not just to control pollution but to try and avoid creating it in the first place. One company has isolated the cost of pollution control as five to ten per cent of the cost of a new plant or facility. It accepts this cost as an integral part of its planning. The same holds true for many other manufacturing enterprises.

Let me say, before I go any further, the manufacturing industry, as an industry, has no apology to make for its part in the overall pollution picture. In fact, as I have mentioned, it was years ahead of those who only now are making the most public noise about it.

Another example: Pollution conditions would be 100 per cent worse than they are now in the Sarnia area if the major industries there had not taken action of their own — 15 years ago — in 1952, to control pollution. I say that because industrial activity has doubled there in the past ten years, yet pollution has not increased significantly in the same period. In other words, without the direct voluntary efforts of Sarnia’ s own industries, things would be 100 per cent worse than they are.

The unfortunate thing is that industry does not get credit for what it has done. Of course much more must be done. This is now coming about through legislation which will apply right across the province. I am sure the government is in no doubt that it has the backing of manufacturers in its new program. If it has any doubts, or if anyone here has any doubts, let me put them to rest once and for all. The manufacturers of this province asked for more stringent controls on a province-wide basis and they will lend every effort to the success of the new legislation. Let there be no doubts about that.

May I also remark that in Ontario we now have more progressive legislation, for all forms of pollution, than in any other province or, indeed, in any of the United States.

There is no questioning the magnitude of the pollution problem. Let’s look at a few measures of its size. I understand that complete separation of sanitary and storm sewers in a large city would cost $10 million per square mile. Put another way, that is $1, 000 per family or, for a city the size of Winnipeg, $2 billion. Spreading costs of this size over a ten-year period would add an average of $100 annually in property taxes to every home. I don’t need to tell you how unpopular that would be with the municipal taxpayer. Remember, too, it is the cost for just one form of municipal pollution. Nevertheless, it is a cost which citizens may have to face just as industry faces its own expenses of pollution control.

Another measure of costs : the federal investigation of pollution of the great lakes will continue indefinitely and it is estimated that the annual price tag — note that, annually — will reach $5 million within three or four years.

Those are just some yardsticks of the size of the problem and the price of
the solution.

Another measure is the complexity of the technical knowledge involved. One of the plants in Hamilton recently installed a new process to re-use an acid solution instead of dumping it in the lake. The point here is that the process which permits this type of control was just not available previously.

While referring to Hamilton, let me mention another example from the ambitious city. A plant there has a control process which sounds as if it came from science fiction. Phenols are eliminated by a specially developed bacteria which can survive only by eating the normally poisonous phenols.

Why has the problem been allowed to develop to such proportions ?

There has been public indifference. Governments may not have moved as quickly as they should. Many industries have been reluctant to act quickly. This is a situation which involves all parts of our modern society.

A phenomena of the times is the dissent with and criticism of the social, business and governmental structures of the day.

Educational institutions criticize the policies of business leaders.

Many people criticize the conduct of the Asian war.

The Hippie criticizes the social order.

Provinces criticize each other — and everyone criticizes government.

Not all of this is bad. It is wise to establish responsibility and to define the areas of responsibility.

All criticism, good and bad, exerts influence for change and this is in the interests of progress.

In the matter of pollution — air, water and soil — one detects an intensity going beyond the bounds of constructive criticism. A bitterness and vindictiveness of an emotional nature.

Pollution has been with us for some years. We didn’t get there overnight. It is just that in the recent past we have become aware of, and have come to appreciate the magnitude and importance of the problem.

Certainly industry is a contributor to the pollution problem. So too is the car manufacturer and car driver — public transportation bodies — car, bus and train.

Municipalities are prime offenders as are other forms of government enterprises.

Citizens are pollutors of soil and water if not of air.

If all parts have been guilty, to some degree, then I object strenuously to those who cry: “Let’s close industry down until it does not cause pollution. ” Would the same people ask that all cars, trucks and buses be banned until a totally effective device can be installed on vehicles? Would the same people like to close down all coal burning power plants, apartment buildings, office buildings and municipal incinerators? Would they stop trains and banish ships from the Seaway?

Let us not imagine if everything which causes pollution in Canada was closed down until the perfect controls were developed that the rest of the world would wait while we put our house in order. We must act just as quickly as is humanly possible. Sacrifices will have to be made but, as far as possible, we must follow practical steps to sane solutions. The complexities are great, the solutions are not easy, but it will serve us all best if our approach to the pollution problem is devoid of emotional excesses and recriminations. Let us get on with solutions to our great problem — sincerely and objectively, acknowledging that we have been unwise and unthinking — and devote our energies to corrective measures. Government, the public and industry. Let us spend no further time hurling brickbats over inaction in the past, but let us also recognize that there has been more progress than is generally admitted.

Two final points before I turn from the pollution scene to the more general heading “Our Modern Economy” to which I was invited to address my remarks.

I would like to see recognition of two fundamentals — one: Industry is not the prime culprit on the pollution scene but has probably made the most progress in meeting its responsibilities.

Two: People must realize they cannot expect rural air and water in urban areas and, with Canada’s growing drift to the cities, this may be worse before it is better, despite new and strenuous efforts to provide cleaner air and water.

Misrepresentations about business and our competitive system are not confined to the subject of pollution. Many of these can be overcome by business as a whole giving more positive leadership where some of the great social issues of the day are concerned. Business already devotes a great deal of energy to such public issues as education and social services.

It must not be forgotten that running a successful enterprise is the primary social responsibility of any business. It cannot serve society at all if it does not survive and prosper. The primary concern of an enterprise is that it should endure. For it is the successful company which provides the job opportunities, which pays the lion’s share of all taxes to support such sound welfare benefits as old-age pensions and family allowances and which supports hospital, university and similar funds.

While it is constantly meeting the challenge of added social responsibility, business is simultaneously struggling to combat some popular misconceptions. One is that companies make a profit of 29 cents on each dollar of sales. The people who made up this survey figure also thought a profit of about half that — 14-1/2 cents — would be fair. How far they are from the truth. Manufacturers earned a profit of only 5. 2 cents on each dollar of sales in 1966.

Other surveys have shown similar misunderstanding of the difference between profit and mark-up. We have a constant job of getting over to people that, if a profit is made, it is not because the mark up was high enough to make it, but because it was low enough to give a selling price which attracted customers and because the cost of operation was kept to a minimum.

Another happy hunting ground for the critics of business is that manufacturers are among the rich of this country and inevitably the cry “Soak the rich!” follows. The theory is simple: If only the rich were soaked hard enough to carry their proper share of taxes, the rest of us would get a better break. Unfortunately, as the 1965 tax returns of the Department of National Revenue show, there just aren’t enough rich.

According to the most recently available statistics, some fortunate Canadians have an annual income of $50,000 or more. There are fewer than 5,000 of them, equal to 0. 1 per cent of all taxpayers, but they paid 5.3 per cent of all the income tax collected.

There are nearly five times as many in the $25,000 – $50,000 bracket — less than 25, 000 of them. They, as 0. 5 per cent of the total, paid 7. 8 per cent of the personal income tax collected.

At the next level, $15,000 to $25,000, there were 65,000 Canadians (1.3 per cent of the taxpayers) who paid 8. 3 per cent of the tax total.

In these three categories we have two per cent of taxpayers — about 100, 000 of them out of nearly six million. They paid 22 per cent of all personal income taxes in 1965. I suggest they have already been well and truly soaked.

There you have two financial areas of misunderstanding.

To round out the picture of Canada’s current economy, we are concerned with the problems of inducing more Canadians to buy Canadian- made goods; getting our export drive into high gear to meet the challenge of the Kennedy Round reorganization; meeting the conflicts of lower prices to meet world-wide competition and demands for ever-higher wages; expanding to provide more job opportunities for our growing population; some of which are further complicated by recent monetary devaluation and of course money cost and shortage.

Whatever the shortcomings of our business methods, no better way of developing our resources for the greatest good of the greatest number has yet been devised than our competitive enterprise system. It has provided a standard of life and a level of social security which are the envy of the world.

We must ensure its preservation by proving worthy of it. We must think in terms of an all-out effort to improve our total performance — and this, Gentlemen, most certainly includes our ability to improve our air, water and soil quality control.