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YOUR MORNING SMILE:

Sign in Macintosh computer service centre: Sorry we don't do Windows.
- Stewart K. Henry, Dalhousie, N.B.

(Contributions to: smile@globeandmail.ca)

THE WEATHER
Forecast conditions for Wednesday, June 3

Calgary	14
Charlottetown	14
Edmonton	17
Fredericton	17
Halifax	16
Iqaluit	7
London	21
Montreal	19
Ottawa	15
Prince George	20
Quebec	16
Regina	16
Saint John	17
St. John's	11
Saskatoon	17
Sault Ste Marie	14
Thunder Bay	12
Toronto	16
Vancouver	19
Victoria	19
Whitehorse	23
Windsor	21
Winnipeg	14
Yellowknife	17

SPORTS

THE NATION

Ottawa pulling tobacco's plug
OTTAWA - The federal government will outlaw all tobacco-company sponsorship of sporting and cultural events but give sponsored organizations a transition time of five years to find replacement funds.

For the first two years, no restrictions will apply, and then curbs leading to a total ban will kick in over the next three years.

Health Minister Allan Rock has called a press conference for Wednesday to spell out the details of a compromise the Liberals have been working on since the controversial Tobacco Act was passed a little more than a year ago. The act was called a death blow to the Montreal Grand Prix, the Montreal Jazz Festival and other popular events.

The issue is particularly sensitive in Quebec, where many of the affected events are held and the tobacco companies are based.

The total ban on sponsorship is designed to win the qualified support of antismoking groups because it goes further than the limited prohibition announced in April, 1997, for a law that would have taken effect this October.

Under that law, as of Oct. 1, companies would no longer be able to use their logos or brand names in promotional advertising for events such as the du Maurier Open tennis tournaments.

Bouchard hums a Bloc-Reform tune
QUEBEC - Premier Lucien Bouchard approves of the initiative taken by the Bloc Quebecois to participate in a dialogue with the Reform Party on a "united alternative" being proposed by Preston Manning.

Mr. Bouchard acknowledged Tuesday that he has known about the initiative for some time and called Reform's proposal of massive devolution of federal powers to the province one of the most positive proposals in years from the rest of Canada.

"It goes much further than what we are used to hearing from the federalist camp," Mr. Bouchard said. ". . . [Mr. Manning] recognizes that Quebec has all the powers over language and culture. We have not heard that too often from the federalist side."

Reform MP Rahim Jaffer and BQ MP Pierre Brien will appear at two public forums - one in Quebec City Wednesday and another Thursday in Edmonton - to discuss Reform's proposal for a coalition to defeat the federal Liberals.

Psychiatrists feel stretched, report says
Canadians who need psychiatric treatment have to wait an average of two months for a first appointment because of a shortage in the profession, according to a survey of the country's 3,500 psychiatrists.

In particularly meagre supply are psychiatrists specializing in treating children and old people, says a report commissioned by the Canadian Psychiatric Association and presented to reporters at the American Psychiatric Association's annual conference Tuesday.

And the situation is likely to get worse, since a growing proportion of doctors entering psychiatry are women, and they tend to work shorter hours and see fewer patients than men because of family obligations, said Blake Woodside, a psychiatrist at the Toronto Hospital and one of the authors of the report.

"Everyone has a very long waiting list for routine referrals," Dr. Woodside said. "Everyone is working very hard. We have to increase the number of people in the system."

FINANCIAL NEWS

Howe Institute lauds bank mergers
A C.D. Howe Institute study has come out in support of big bank mergers, saying they will lead to lower service charges for customers as long as there is open competition in the industry.

The independent think-tank released a study Tuesday on two proposed bank mergers, saying banks may save up to 20 per cent a year in non-interest costs if they merge, based on experience in other countries. For Royal Bank of Canada and Bank of Montreal - which announced a proposed merger in January - that would amount to about $1-billion a year of cost savings, the study notes.

"If the federal government wants low-cost banking services for consumers, it must allow the banks to rationalize the staffing and physical infrastructure of their branch networks," the report concludes.

It says those savings will be passed on to customers if the banks are operating in a competitive environment, which means the government must permit other domestic and foreign companies to enter the banking business in Canada.

Tax change pinching the payer
About 3.9 million Canadians have been pushed into higher tax brackets because the income tax system lost full inflation protection 12 years ago, an Ottawa-based think-tank says.

The stealthy tax grab has meant a windfall of $10-billion a year for federal coffers, says a study released Tuesday by the Caledon Institute of Social Policy, which is non-partisan and privately funded.

As well, the provinces receive about $5-billion more in tax revenue than they would if the system were fully protected against inflation.

"Partial de-indexation has proved to be a potent though secret weapon in the war on the deficit," Caledon's executive director, Ken Battle, wrote in the report.

He calculates that a two-income couple with two children and $60,000 in taxable income is paying $1,613 more in federal and provincial income taxes as a result of de-indexation, while a couple earning $120,000 pays $3,283 more.