1967-03-10

SUPPLEMENTARY ESTIMATES (F).

[Stage Direction]
A message from His Excellency the Administrator transmitting supplementary estimates (F) for the financial year ending March 31, 1967, was presented by Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board), read by Mr. Speaker to the house, and referred to the committee of supply.


Hon. Roger Teillet (Minister of Veterans Affairs):: At the request of the Minister of Indian Affairs and Northern Development, and in his absence, I am tabling today copies of part 1 of a report entitled "A Survey of the Contemporary Indians of Canada" generally known as the Hawthorn-Tremblay report.
This is the first of two parts of the study which was commissioned by the government in 1963. I am informed that the second part will not be submitted by the authors for some time yet. Part 1 is being translated into French but the translation is not yet available. However, in view of the current speculation and concern among both Indians and others it is considered to be in the public interest to make part 1 available at this time.
The minister has hoped to have his detailed comments ready at the time the document was made public, but his study is not yet completed and a substantive statement will not be available for one or two months.



FISHERIES


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I want to direct a question to the Minister of Fisheries regarding a matter on which he has shown a commendable concern. I refer to the senseless slaughter of harp seals.
Is the minister in agreement with the views expressed by an outstanding Canadian conservationist, Mike Cramond, that unless a stoppage is put to this slaughter, within five years at the present rate of reduction-there were 3.5 million seals ten years ago and there are only 750,000 now-the seal population will be wiped out?
In view of the fact that Canada receives only about 10 per cent of the actual pelts that are secured in the harvest yet receives all the opprobrium connected with the slaughter, would the minister be prepared to communicate with the U.S.S.R., Sweden, Norway and those countries that reap the largest benefit materially, with the aim of putting an end to this slaughter? No matter what the minister has done, commendable though it has been, everywhere across the nation there has been a universal demand in this regard. Canada is getting a black eye from something which brings little return to this nation.


Hon.   H.-J. Robichaud@Minister of Fisheries: Mr. Speaker, I would probably agree with the right hon. gentleman that Canada is getting a black eye from what is happening in the seal hunt, but as I have said before and I want to repeat, this is a result of irresponsible representations made by people who have nothing in mind but the complete abolition of this operation.
With regard to conservation measures, I want to assure the right hon. member that the conservation measures adopted covering such things as the length of the season and the quota which was established in 1964 are sufficient to provide adequate protection. Last year a million and a quarter adult seals were spotted on the ice pans in the gulf of St. Lawrence and hundreds of thousands more were spotted on the front, so there are no signs whatsoever that the seal herds are being depleted.
With regard to the international operation, I am sure the right hon. member knows we have succeeded in having control of the seal hunt on the front, that is, on the high seas east of Newfoundland, being accepted under the protocol of ICNAF, the international convention on the northwest Atlantic fisheries. Further, with regard to the methods used in killing the seals, I am sure the right hon.
March 10, 1967

Inquiries of the Ministry member will agree that all possible measures have been introduced and are being implemented to the letter of the law. I have been pleased to hear in recent days from responsible representatitves of the S.P.C.A.-unfortunately not all of them can be so classed-to the effect that these measures are being fully implemented and fully controlled by officers of the department.


John George Diefenbaker: I thank the minister for that statement. I now ask him will he communicate with these other nations that are benefiting materially and overwhelmingly while Canada's name suffers, with a view to greatly reducing the present scale of the slaughter and ultimately ending this practice for Canada's benefit?


Mr. Robichaud:: Mr. Speaker, I also wish to inform the right hon. member that we have been in communication with the countries to which reference has been made. We had a meeting in Copenhagen last fall at which this matter was discussed. We are trying to control the killing not only in Canadian waters but, as I have said, we have succeeded in bringing it under the protocol and control of ICNAF. This matter will be further discussed at an ICNAF meeting which will take place in Boston next June.


Mr. J. R. Keays (Gaspe):: Mr. Speaker, I have a supplementary and relative question.

A news report from iles-d e-la-Madeleine advises us that posters on seal hunt regulations were sent in English only, even though 99 per cent of the population is French speaking.
Could the minister see to it that French posters are sent to the Iles-de-la-Madeleine?


Hédard-J. Robichaud: Mr. Speaker, the Department of Fisheries usually sends out regulations posters in both languages, in French and in English. It may be that, in this case, only English posters were sent, due to the error of one of our employees. I can assure the hon. member that my attention was called to the incident and that the employee responsible for this will be asked to replace those posters by French ones.


Mr. Lawrence E. Kindt (Macleod):: Mr. Speaker, for the benefit of those of us who


are not as closely associated with this matter as others may I ask the minister to put on the record the value per pelt and the total receipts from the seal hunt. I have heard it is about $11 per pelt for a total value of $1,889,000 for 170,000 pelts harvested by Canadians.


Mr. Speaker:: Order, please. Perhaps the minister might do this on another occasion, I do not think it should be done at question time.


Mr. Marcel Prud'homme (Saint-Denis):: supplementary question, Mr. Speaker.


Mr. Speaker:: I wonder if the hon. member does not feel that we should go on to another subject. If time permits I shall be pleased to revert to the question he would like to ask.


Marcel Prud'homme: Mr. Speaker, the point is I received this morning a petition from the students of a Montreal school.
I should only like to ask the right hon. Prime Minister whether he has received a petition from the students of the Peace Centennial school asking that the gulf of St. Lawrence be made into a seal sanctuary?



COMMUNICATIONS


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, may I direct a question to the right hon. Prime Minister regarding the science secretariat's report, commonly referred to as the Chapman report which suggests the establishment of a national space agency and urges an agreement which would reserve to Canada space for communications satellites. In view of the fact that apparently there are only some 10 such spaces left and Canada will need three by 1980, unless Canada moves quickly we may have to rent communications satellite services from other countries.
I should like to ask the Prime Minister what minister is being charged with this matter and whether any representations are being made by the Canadian government to the United States government to work out an international agreement to reserve certain space areas to Canada for communications satellites.
March 10, 1987

Righl Hon. L. B. Pearson (Prime Minister):
Mr. Speaker, not only is this a matter of importance and urgency as my hon. friend points out, but the report already has been given consideration by the cabinet and referred to the science council. I have asked the science council to report back as quickly as possible. When this report is received we hope to be able to take some action. The Minister of Transport is the minister directly concerned, but I also am keeping in close contact with the matter because it also comes within my jurisdiction.


Thomas Clement (Tommy) Douglas: In view of the fact that if the United States continues to put communications satellites into space Canada will be completely shut out of the area, are any representations being made to the government of the United States with a view to reserving space for Canadian communications satellites?


Mr. Pearson:: This is a matter which will have to be included in the considerations. We will have to work out with the United States mutually agreeable arrangements. This is one of the matters with which we will have to deal.



INQUIRIES OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Real Caoueiie (Villeneuve):: Mr. Speaker, I should like to put a question to the right hon. Prime Minister.
In view of the fact that the new governor general is about to be appointed, is the Prime Minister in a position to say whether he will recommend the appointment of someone as perfectly bilingual as General Vanier was?


An hon. Member:: That will not be easy.


Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, my question is for the minister of external affairs. Is it the intention of the minister to utilize in some capacity in external affairs the self recognized expertise of the hon. member for Red Deer (Mr. Thompson) in order to shore up the minister's shaky position?


Mr. Speaker:: Order, please. The question contains allegations and as such is not in order.
Inquiries of the Ministry EXTERNAL AFFAIRS



NIGERIA-STEPS TO SAFEGUARD CANADIAN INTERESTS

[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revel-stoke):: Mr. Speaker, my question is for the Secretary of State for External Affairs. In view of the ominous reports coming from Nigeria setting March 31 as the deadline for dissolution of that union, is the government taking any steps to safeguard Canadian interests should that union be dissolved at that time?


Hon. Paul Martin (Secretary of Stale for External Affairs):: Yes, Mr. Speaker. Recently we had a talk in Ottawa with the new high commissioner for that country in Canada. This general matter was discussed with him, and we have taken certain steps.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: Mr. Speaker, I should like to address a question to the Minister of Finance. What consideration is the government giving to the introduction of incentives to persuade Canadians to invest more of their savings in Canadian development?



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: Mr. Speaker, I have a question for the Minister of Transport of which I gave the hon. gentleman notice. Is he now in a position to report on the inquiry by his department into the recent marine tragedy near the mouth of Halifax harbour?


Hon. J. W. Pickersgill (Minister of Transport):: Mr. Speaker, I could not give more than an interim report, as the investigation is not yet complete. I hope to have something more definite to communicate at a very early date.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. David Lewis (York South):: Mr. Speaker, last Friday I directed a question to the
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Inquiries of the Ministry parliamentary secretary to the Minister of Labour in the absence of that minister. The minister has been unable to be in attendance since, and I am wondering whether the parliamentary secretary is now in a position to reply. May I remind him that the first part of my question was:
-what progress the minister has made in drafting the appropriate regulations and in appointing the board or boards of arbitration to deal with the dispute between the railways and those unions which rejected the terms submitted by Mr. Golden-berg as mediator.
The parliamentary secretary may not be in a position to answer, but if he can I should be grateful.


Mr. B. S. Mackasey (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, I have been informed that the progress being made in relation to these regulations is considered by the department to be quite satisfactory, and that some of the recommendations implied in the question by the hon. member last Friday are being taken into consideration.


David Lewis: Mr. Speaker, I rise on a point of order. I asked the parliamentary secretary a question rather than to have him to interpret what I said. I made no recommendations last Friday. I asked whether in drafting the regulations the department intended to deal with the terms of the award. I made no recommendations, and I would thank the hon. member if he did not put words in my mouth.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: Mr. Speaker, my question is for the Minister of Public Works. In light of the recent series of severe winter storms along the east coast, particularly in the areas of Halifax, Lunenburg and Guysboro counties, I am wondering whether he would have his departmental engineers in that particular district conduct a review of storm damage to ascertain whether there has been any serious damage that might stand in the way of normal spring fishing operations.


Hon. G. J. Mcllrailh (Minister of Public Works):: Mr. Speaker, I will be very glad to take the hon. member's suggestion under consideration and give the matter immediate attention.



CANADA ASSISTANCE PLAN


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to direct my question to the Minister of National Health and Welfare. Is he now in a position to give us some idea how soon the regulations under the Canada Assistance Act will be approved by at least some of the provinces, in order that many needy people can obtain assistance under this act which was passed last July?


Hon. A. J. MacEachen (Minister of National Health and Welfare):: Mr. Speaker, the regulations have been approved by the governor in council and have been published in the Canada Gazette. The agreements with the provinces pursuant to the act have been forwarded for signature, and it is now a matter for the provincial governments to come to an agreement and sign the documents. This is the next step, and I hope it will be completed very soon.


Wallace Bickford (Wally) Nesbitt: A supplementary question, Mr. Speaker. Could the minister tell us whether any of the provincial governments have as yet signed these agreements, and could he give us any forecast as to how soon he might expect some signatures on these agreements?


Allan Joseph MacEachen: Mr. Speaker, I hope all the provinces will sign very soon. I do not think I have yet received a returned, signed agreement from any of the provinces.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Barry Mafher (New Westminster):: Mr. Speaker, I had a question I wanted to ask the Minister of Labour, but in his absence perhaps the parliamentary secretary will take it as notice. I want to know whether he can say what is the situation in the dispute between United Press International and the wire service guild. I am receiving letters to the effect that this dispute may lead to a picketing of the parliament buildings because UPI has facilities here. Can he clarify this situation?


Bryce Stuart Mackasey: Mr. Speaker, in February of last year the wire service guild was certified to begin negotiations

March 10, 1967

with UPI. These negotiations deteriorated and the services of a conciliation officer were requested in March. This was granted. Then both parties asked for the services of a conciliation board. The board in turn tabled a report in October which contained no recommendations other than that the parties continue negotiation. Finally, in February of this year the guild requested and obtained permission from the minister to take action against the UPI for alleged violation of the I.R.D.I.A., section 46, which stated in effect that UPI allegedly changed working conditions before a collective agreement had been reached. That was in February, and that is precisely how the matter stands at the moment.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Jack McIntosh (Swift Current-Maple Creek):: Mr. Speaker, I wish to direct my question to the Minister of Veterans Affairs. I should like to ask whether he has completed the government's guest list, and have all the invitations been forwarded to those veterans who are going to participate in the pilgrimage to Vimy?


Roger-Joseph Teillet: Mr. Speaker, I am not certain that the list has been completed. I believe we are still receiving recommendations from various units throughout the country. We are trying to complete it as quickly as possible, and the letters go out immediately as soon as the names come in.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. E. D. Fullon (Kamloops):: Mr. Speaker, I should like to ask the Minister of Finance a question about the bank legislation. I do so because of the uncertainty as to whether we will be proceeding with the debate today, and the matter is urgent. Has the minister received representations from one of the chartered banks requesting that proposed clause 72 of the bank bill be referred back to the standing committee for further review and representations; and if so, will the minister move immediately that the subject matter be referred to the standing committee on finance?
Inquiries of the Ministry


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, I understand that the president of the Royal Bank sent a letter to the chairman of the committee on finance, trade and economic affairs, but not to me. I have received, as the hon. gentleman knows, a letter from him making this suggestion. I have examined into this matter and do not feel it will be necessary to have any hearings on it; and I believe it would interfere with the progress of the bill through the house if the committee were to be sitting while the house was sitting on the same legislation. I believe I can explain to the satisfaction of hon. members the misunderstanding that arose. Certainly the government has no intention of changing the proposal that is contained in the bill.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I should like to put a question to the Minister of Public Works.
It deals with the demolition of the former building of the printing bureau. Could the minister tell us why no contractor from Hull has been asked to tender for that demolition work?


Mr. Speaker:: This question should be put on the order paper.


David Réal Caouette: Mr. Speaker, at ten o'clock this evening.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct a question to the Minister of Industry in his capacity as reporter for the Queen's Printer, and ask the hon. gentleman whether he would consider making the report "A Survey of the Contemporary Indians of Canada", prepared by Professor Hawthorn and tabled today by the Minister of Veteran Affairs, available gratis to all the Indian bands in Canada so they would have an opportunity to see at first hand and without cost to themselves the implications of the some 91 recommendations covering various aspects of Indian activities.

March 10, 1967
Inquiries of the Ministry


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, the responsibility for this lies with my colleague the Secretary of State. I am sure she has heard the representations and will act on them.



CONTINUATION IN PARLIAMENT OF LEADER OF OPPOSITION

[Stage Direction]
On the orders of the day:
Mr. Auguste Choqueite (Lotbiniere):: Mr. Speaker, I wish to direct my question to the right hon. Leader of the Opposition in his capacity as one of the first officers in the house. It relates closely to the business of the house. According to a recent press report the hon. member for Brome-Missisquoi (Mr. Grafftey) won a primary. I wish to ask the right hon. Leader of the Opposition whether it is his intention to continue to serve in parliament under the leadership of Heward Grafftey after September 9, 1967.


Some hon. Members:: Oh, oh.


Auguste Choquette: Ten o'clock, Mr. Speaker.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: wish to address a question to the Minister of Veterans Affairs. Although the United States army officer concerned has apologized for the statement he made in a United States magazine-and I am sure the minister sincerely appreciates this excellent apology- that allied troops fled in the face of the German gas attack at Ypres on April 23, 1915, and in view of the concern this has caused Canadian veterans who took part in that action, for the sake of the record would the minister obtain the facts concerning this battle and place them on the record of this house in a brief paragraph at the first opportunity?


Roger-Joseph Teillet: Mr. Speaker, of course I have read the apology of Colonel Fair and I would agree that it is certainly an apology which we should accept. It was expressed in a gentlemanly manner.
I do not think I can do any better on this occasion than quote Sir John French, the British commander in chief, who wrote in his dispatch on the battle:
In spite of the danger to which they were exposed the Canadians held their ground with

a magnificent display of tenacity and courage: it is not too much to say that the bearing and conduct of these splendid troops averted a disaster which might have been attended with the most serious consequences.
I place this on the record in the belief that this certainly meets the needs of the occasion.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I wish to direct a question to the Secretary of State and ask her whether the C.B.C. has advised her that no further answer would be given regarding the identity of the 107 persons who have received the beneficence of the free use of colour television sets. Does the C.B.C. intend to give an answer? I need that information from the minister before further action can be taken.


Hon. Judy V. LaMarsh (Secretary of Slate):: Mr. Speaker, as the house knows I transmit the answers which are given to me by the C.B.C. I have not had any further information transmitted to me since the C.B.C. provided the answer which was given in the house.


John George Diefenbaker: Will the minister ask for an unequivocal answer, if that is possible, from those who run the C.B.C. as to whether this information will be given rather than the expunged record which we received? At the same time will she also find out from the C.B.C.-and let us have an answer to both these questions possibly on Monday-whether the C.B.C. requires regular reports on the quality of C.B.C. television programs from those who are supplied these colour television sets, in the light of the explanation that these sets were supplied to 107 persons, unnamed with the exception of three, for the specific purpose of monitoring programs?


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, of course I will convey that question to the C.B.C.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. Ian  Walson@Chaleauguay-Hunlingdon-Laprairie: Mr. Speaker, I wish to raise a point of privilege relating to the Hawthorn report which was tabled this morning, since it
March 10, 1967

affects my position with regard to my con-stitutents in Caughnawaga.
Last week reports were circulating in the news media across Canada that the Hawthorn report recommended the removal of Indians from reserves in various areas of Canada, and more particularly the removal of Indians from the Caughnawaga reserve in my constituency, with the land to be used for various industries and apartment buildings. These reports in the news media were then followed by a question in the house put by the hon. member for Skeena, in which he asked whether there was a report recommending that the Caughnawaga Indian reserve be leased to a trust company for development and that the Iroquois people of Caughnawaga be moved elsewhere. He then stated:
If such a recommendation has been made will the minister reject it as preposterous, monstrous and completely contrary to our concept of human rights?
The member for Skeena then added.
With all due respect I agree with the second part of your ruling, but this question involves a matter which is of immediate importance affecting the human rights of a number of Canadian citizens who are liable to be moved from their home lands. I think the minister should be given an opportunity to answer.
As soon as the Hawthorn report was tabled this morning I contacted the Indian affairs branch of the department and I asked them where the reference to Caughnawaga appeared in the report. I have been given that reference, and I would like to read it to the house.


Mr. Speaker:: Order, please. I am sure the matter to which the hon. member now refers is of great importance to him and to many others, but he must realize that he rose on a question of privilege. I will therefore ask him to state his point of privilege as quickly as possible.


Mr. Watson (Chateauguay-Huntingdon-La-prairie):: Mr. Speaker, my point of privilege involves my position as a member and the position of other members of this house. The Caughnawaga people took these reports at their face value and as a result demonstrations which threaten to block several highways leading to Montreal have been scheduled for tomorrow. I would like to clear the air.


Mr. Speaker:: Order, please. The hon. member now says he wishes to read part of a report on a question of privilege. To my mind this is not a question of privilege at all. I do
Inquiries of the Ministry not see how the point he has raised can be a question of privilege by any stretch of the imagination. It may be that hon. members would want to hear the representations of the hon. member for Chateauguay-Huntingdon-Laprairie regarding the state of Indians on this particular reservation, but I suggest this cannot be done under the guise of a question of privilege.


Ian Watson: In view of the fact that there appears to have been a leak of this report I feel it is a question of privilege affecting members of this house, and since this is the first opportunity we have had to clear the air on this matter and since it is urgent I would respectfully ask to be allowed to put this on the record.


Mr. Speaker:: Order, please. The matter may be extremely urgent and it may be important to put certain information on the record, but certainly it cannot be done by way of a question of privilege.


John George Diefenbaker: Mr. Speaker, I should like to speak on the point of order just raised. There is nothing more important than that our Indian population, and most particularly the Indians of the reserve to which the hon. gentleman has referred, should see justice done. I suggest that the hon. member be given the opportunity to state the case, because the people on the Caughnawaga reserve are being treated in a way that none of us can justify.


Some hon. Members:: Hear, hear.


Mr. Speaker:: I have already made my decision that there is no prima facie case of privilege. However, if there is unanimous agreement among hon. members that the hon. member for Chateauguay-Huntingdon-Laprairie be allowed to make a statement at this time, which is obviously a very unusual procedure, I certainly will not stand in the way since hon. members are masters of their own procedures.


Some hon. Members:: Agreed.


Mr. Watson (Chaieauguay-Huniingdon-La-prairie):: I will simply read from page 192 of the Hawthorn report:
In some cases, bands may refuse to lease reserve land that would contribute materially to their revenue where they fear that an influx of outside business or industrial interests may cause disruption in the community and threaten their survival

March 10, 1967
Inquiries of the Ministry as a distinct cultural entity. Such has been the reaction, for instance, among the Caughnawaga and Six Nations. While such reactions may be uneconomic in the orthodox sense, they seem justified in terms of human goals and satisfactions. Economic development, after all, is merely a means for fulfilling the goals that a people deem important, and if cultural survival is a prior value of a band's members, they should be given every assistance to use their economic assets to that end.
This, sir, is completely the reverse of the press reports on the Hawthorn report which have been appearing during the past week.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, I have a question for the Minister of Industry. Is it a fact that as a result of the great decrease in car sales and the number of unemployed people, the United States-Canada automobile agreement is in danger of falling apart and that certain car manufacturers have asked to be released from certain requirements?


Charles Mills (Bud) Drury: can say quite categorically, Mr. Speaker, that in spite of the down-turn of the market there is no danger of the agreement falling apart.


Mr. Starr:: You are sticking with it, regardless of how many people lose their jobs.


Paul Joseph James Martin: Or how many more get jobs.


Michael Starr: Where?


Paul Joseph James Martin: Windsor.


Alfred Dryden Hales: Has the minister received an answer to his request to the car manufacturers that the prices of cars to Canadians should be reduced in line with United States prices?


Charles Mills (Bud) Drury: We have dealt with this particular question quite frequently. I have pointed out on earlier occasions that progressively since the inception of the pact manufacturers' prices to dealers have declined relative to similar prices in the United States. This trend, I trust, will continue.


Michael Starr: I have a supplementary question for the Prime Minister. I should like to ask him what was the gist of his reply to a letter Mr. George Burt wrote him-Mr. Burt is from Windsor-on March 7,
[Mr. Watson (Chateauguay-Huntingdon-Laprairie).)
in which he made reference to the Prime Minister's reply in the house on March 2. Mr. Burt alleges the Prime Minister misled the house by not giving the full text of the report of the Economic Council of Canada, and charged the Prime Minister with keeping the truth of the matter from the House of Commons and the Canadian public.


Lester Bowles Pearson: I will be giving very careful consideration to my hon. friend's question.



NICKEL-REPORTED DEVELOPMENT OF BLACK MARKET

[Stage Direction]
On the orders of the day:
Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, a few days ago the hon. member for Moose Mountain (Mr. Southam) asked me about the position of Canadian users of nickel in view of what he referred to as "inflated prices". The Department of Trade and Commerce has been advised by the producers that Canadian users of nickel have been assured of receiving, at producers' prices, at least as much nickel as they consumed in 1966 if they require it. In these circumstances users should not find their competitive position in world markets adversely affected.



PRESENCE IN GALLERY OF STUDENTS FROM THE UNIVERSITY OF VERMONT

[Stage Direction]
On the orders of the day:
Mr. Healh Macquarrie (Queens):: May I direct the attention of the house, and especially of the Prime Minister who is an alumnus of the University of Vermont, to the presence in the gallery of the students and faculty of the Canadian studies division of that excellent and ecumenical institution of learning.


Some hon. Members:: Hear, hear.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: My question is for the Minister of Manpower and Immigration. May I ask the hon. gentleman if he is in a position today to reply to a question I posed on March 2, which in his absence was directed to the right hon. Prime Minister, with reference to launching a
March 10, 1967

crash program of training to assist the unemployed steel workers and others who are unemployed on Cape Breton Island?


Hon. Jean Marchand (Minister of Manpower and Immigration):: I think I can answer that question on Monday.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. John Gilbert (Broadview):: I have a question for the Minister of Finance. Has he anything to report on the financial condition of Oshawa Acceptance, which unlike the Prudential Finance is a federally incorporated company?


Mitchell William Sharp: No, I have no report to make to the house. There is at the present time no legislation on our statute books relating to such companies, and it is for this reason, or more accurately this is one of the reasons I am calling a conference of the provinces and the federal government to repair what I consider to be a serious omission.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: I have a question for the Secretary of State for External Affairs. Is the minister able to give any assurance to the United States authorities, as well as to the Canadian people, that Canada will play its full part in anti-submarine warfare operations instead of withdrawing from that role and relying solely on the United States for the protection of Canada?


Paul Joseph James Martin: The question is falsely based; there have been no suggestions of withdrawal, and my hon. friend knows quite well that that assurance could be given in all good faith.


Gordon Minto Churchill: May I ask a supplementary question. Is the minister aware of the alarm in Washington concerning reports that Canada is reducing her commitment with regard to anti-submarine warfare operations?
Inquiries of the Ministry Mr. Martin (Essex East): I am aware that there is alarm existing in the mind of my hon. friend.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I wanted to direct my question to the hon. Solicitor General of Canada. However, in his absence I could perhaps put it to the right hon. Prime Minister.
In view of the equivocal answer given last night by the parliamentary secretary to the hon. Minister of Agriculture (Mr. Beer) with regard to Inspector Ryddel of the Royal Canadian Mounted Police, could the right hon. Prime Minister tell us what are the exact functions of this inspector of the Royal Canadian Mounted Police in Expo '67? Is he actually a liaison officer between the R.C.M.P. and the Expo '67 security service?


Mr. Speaker:: This question should be put on the order paper.



RESEARCH

[Stage Direction]
INQUIRY AS TO SUPPORT FOR HEART PROJECT On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: I have a question for the Prime Minister. In view of the assistance given by the government in recent weeks to research projects, one in Montreal and one in British Columbia, is there any program currently under consideration for the support of the heart research project as a result of the Gundy report in Toronto?


Lester Bowles Pearson: I shall have to look into that question and discuss it with the minister.



AIR CANADA


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, may I direct a question to the Minister of Transport. On February 13, February 20 and February 24 the house was assured that the question of the greater use of the maintenance facilities of the Air Canada base at Winnipeg would be discussed with the
[Stage Direction]
March 10, 1967
Equalization Payments to Provinces management of Air Canada. My question is, was this done and has the minister any progress to report to the house?
John Whitney Pickersgill: As a matter of fact, although I recognize it is a hazardous thing to do in replying to the hon. gentleman, I must say my recollection was that I undertook to make certain observations known to Air Canada. This has been done and up to the moment I personally have had no observations from them with respect to these representations.



OLD AGE ASSISTANCE


[Stage Direction]
On the orders of the day:
Mrs. Grace Maclnnis (Vancouver-Kingsway):: My question is directed to the Minister of National Health and Welfare. Is the minister aware that the British Columbia government is blaming the federal government for a situation in which some old age pensioners in British Columbia are being denied the former $30 a month supplementary allowance given by British Columbia? If so, would he clarify this situation?


Mr. Speaker:: Order. I do not think the question as asked can be put at this time.
[DOT] (11:50 a.m.)



FINANCE


[Stage Direction]
The house resumed, from Thursday, March 9, consideration in committee of Bill No. C-277, to authorize the making of certain fiscal payments to provinces, to authorize the entry into tax collection agreements with provinces, and to amend the Established Programs (Interim Arrangements) Act-Mr. Sharp-Mr. Richard in the chair.
Clauses 2 to 16 inclusive agreed to.
On clause 17-Failure to file return.
David Lewis: Mr. Chairman, I am afraid the committee has been going very fast and I may or may not be in order in speaking on this clause. My colleague the hon. member for Burnaby-Coquitlam is out of the chamber for a moment, but the other day he asked the minister whether he would supply certain information and I am wondering whether the minister will do so now. I do not have Hansard before me, but the question related to some comparative figures as between the

new plan and the old one, as I recall it, particularly in regard to education and the like.


Mitchell William Sharp: Mr. Chairman, the committee has been proceeding very quickly and perhaps I owe it to the committee, notwithstanding the fact that some of these clauses have been approved, to provide two or three answers asked for when the house was considering the bill on second reading.
The hon. member for Burnaby-Coquitlam raised questions concerning the level of equalization, the distribution of equalization payments, the exclusion of municipal revenues and the inclusion of natural resource revenues in the calculations. Perhaps I might be permitted to give some brief answers to these questions.
If the committee were disposed to equalize all provincial revenues to the level of the top province rather than use the national average basis, the cost would be $2,530 million. On this ground alone I think the committee will agree that at the present time this would not be a desirable redistribution of revenues, considering the level of federal taxes that would have to be imposed in order to effect such redistribution.


David Lewis: That is compared with what, Mr. Chairman?


Mitchell William Sharp: That compares with $500 million odd included in the tables I placed on the record yesterday when we were on second reading. The various methods of equalizing revenues were very carefully considered, and we came to the conclusion that the change from equalizing the two revenue sources as had been the practice under previous equalization arrangements to equalizing all provincial revenues was a fundamental change of enormous value to all the provinces. Indeed, the additional cost of effecting this change was in the order of hundreds of millions of dollars. It also had the effect of making for a much more equitable distribution of federal assistance.
We looked at the possibility of equalizing to a higher level, but as I have already said the cost was quite unrealistic. To equalize all provincial revenues to the top province would result in a cost to the federal government- that is, a transfer from the federal treasury, or from the taxpayers looked at federally to the taxpayers looked at provincially-in excess of $2.5 billion.
March 10, 1967	COMMONS DEBATES	13833
Equalization Payments to Provinces


Thomas Clement (Tommy) Douglas: Mr. Chairman, may I ask a question at that point. The minister has attempted to answer by using the process of reductio ad absurdum. I do not think anybody suggested that the total revenues be equalized to the top province. Under the present agreement two sources of revenue are equalized to the average of the two top provinces. What I was suggesting yesterday was that instead of bringing those two sources of revenue down to the national average, the equalization should be based on raising the equalization formula to the top province in respect to these two sources of revenue, using the same formula the minister is using now except that it be equated to the top province rather than to the national average.
I feel that going back to the national average is a retrograde step. We did use the national average method at one time, and it went up to the average of the two top provinces. The minister is now going back to the average of all the provinces. I should like to ask the minister what it would cost the federal government to make this transfer if, based on these two sources of revenue, all of the provinces were equalized to the top province.


Mitchell William Sharp: What the hon. gentleman is suggesting, Mr. Chairman, is that we should revert to the present situation; that is to say, we should continue the present practice of equalizing the two sources of revenue up to the top two provinces. After examining this the government came to the conclusion that this was not an equitable way of equalizing the positions of the provinces. Indeed, one has only to look at the results to realize that the combination of equalizing to the two top provinces on those two sources of taxation and paying the Atlantic provinces grants is not an equitable way of dealing with the situation.
The effect of the change we are now proposing to equalize all provincial revenues is to give more money to the maritime provinces than they received under the Atlantic provinces grants, as well as to effect a very substantial improvement in the position of Quebec, which obviously had received the short end of the stick under the rather hodgepodge arrangements that had been in effect. So I would defend the present proposal most vigorously as being very much superior in its results to the plan we had in effect which equalized the two sources of revenues to the top two provinces.
I can see no logic, of course, in equalizing two of these sources of revenue to the top two provinces and the other sources of revenue to the national average. That would not make any sense whatever. I suggest to the committee that what we have done now in substituting objective tests based upon the existing rates of tax of all the provinces, applied to their existing tax bases, is to take a very forward looking step.
[DOT] (12 noon)
Hereafter the amount of equalization payments will be determined by the growth in the general tax base. It will reflect also the changing decisions which the provinces make about their own rates of taxation. All this is taken into account. The new formula looks very complicated, and it is, but it has great virtues which I have indicated; namely, it is objective, and the results are determined by developments in the economy and the taxes imposed by the provinces themselves. It is a system which operates automatically and objectively without the federal government having to interpose judgments as to relative needs. The payments are based upon objective tests which I would recommend as being very equitable.


Thomas Clement (Tommy) Douglas: The only way of knowing how equitable they are is to look at the figures. The minister has given us a comparison; he placed the figures on record in Hansard yesterday. It is not a very good comparison, because the hon. gentleman has taken figures showing the equalization payments in the present fiscal year and compared them with the payments which will be made during the next fiscal year under the proposed arrangements.
This comparison, I suggest, is misleading in the first place. Surely if he is making comparisons he ought to make a comparison between the results of the present arrangements for this fiscal year and what the benefit to the provinces would have been if this formula were applied in the present fiscal year. Or he ought to have taken the next fiscal year and compared the results under the present formula with those which would be obtained under the arrangements now proposed. The minister has given us figures which I do not believe are really comparable.
Even on the basis of his own figures, on the basis of the total payments to the provinces it is significant that the change would mean an increase in payments to Newfoundland of $29.2 million while Prince Edward Island,
13834	COMMONS
Equalization Payments to Provinces which has a very limited tax base and extremely limited development resources, with little prospect of getting revenue from resource development, would receive an additional $3.5 million. If one looks at the figures the minister has given us on the basis of per capita payments, the increase for Newfoundland is $55.25 while for Prince Edward Island it is only $29.78.


Mitchell William Sharp: Taking all the proposed transfers it is $45 per capita.


Thomas Clement (Tommy) Douglas: I was taking the amounts tabled here.


Mitchell William Sharp: I gave two tables yesterday.


Thomas Clement (Tommy) Douglas: Yes, but we are talking now about the equalization payments. In all the experience I have had with tax sharing arrangements I cannot remember a time when Prince Edward Island did not have the highest per capita benefits derived from this redistribution of tax revenue. Now, for the first time, Prince Edward Island will drop to second place under this tax sharing proposal.
I am not arguing that Newfoundland is getting too much, but it seems to me there is something wrong about a formula which gives Newfoundland a return per capita of $129.90 while giving Prince Edward Island $127.02. It seems to me that the formula is not producing the equity which the minister says it was designed to produce.


Mitchell William Sharp: May I answer the first question asked by the hon. member. I cannot give a comparison between the two formulae for the fiscal year 1967-68, but I can do so for the year 1966-67 on the same basis. I provided this comparison to the tax structure committee in September, 1966 and it is to be found at page 17 of the report. These figures may have been slightly changed, indeed they have been, but the changes are so small as to be insignificant.
Under the present arrangements for the year 1966-67, equalization payments on the basis of the earlier calculation would amount to $353 million. They are down in the new tables as $354 million, a slight correction. Had the proposed arrangements been applied to the same year the cost would have been $491.5 million. That is a direct comparison.


David Lewis: I think the minister gave an earlier table on the new basis for the year 1966-67 and put it on record at page 13687 of Hansard. The total shown there is, I think, $494 million.

DEBATES	March 10, 19G7


Mitchell William Sharp: Yes. I think we are both looking at the same figures. I had forgotten I had placed the same figures on the record in Hansard. They were based on an earlier calculation, but in any case the totals are approximately $350 million in 1966-67 and $490 million under the new arrangements had those arrangements applied in that year.
May I add one further comment on the changes. One of the great difficulties when shifting from an inferior to a superior method of calculating equalization is that the change is bound to have different results when one looks at the position of the various provinces. Indeed, every time the basis has been changed there have been pleas that there should be the same percentage improvement in the position of everyone. Otherwise someone is thought to be getting the short end of the stick.
In fact if one takes the whole of the proposed arrangements, including the fiscal transfers relating to the new education offer, the province of Prince Edward Island is still the largest per capita recipient. On the basis of equalization alone, per capita payments to Prince Edward Island rise from $97 to $127, as the hon. member has pointed out. It is true that Newfoundland, which apparently was not as well looked after as it should have been, will benefit by an increase in the per capita grant from $74 to nearly $130, but the fact that Prince Edward Island is now second is really a tribute to the progress of P.E.I. and certainly should not be a reason for criticism. It is, I suppose, the outcome of somewhat better performance in economic terms.
[DOT] (12:10 p.m.)


David Lewis: Mr. Chairman, I want to raise a different point. I appreciate that the proposal does not deal with this point at all, although the hon. member for Burnaby-Coquitlam drew attention to it yesterday. To me it has great importance. In passing I may say that the minister recommended his new proposal highly, and one of the reasons he gave was that it obviated the necessity for the federal government to make any judgment. I can only say, in view of some judgments we have experienced, that this is certainly a recommendation for the proposal. But seriously, Mr. Chairman, the minister says this proposal is objective because it sort of automatically takes into consideration certain statistical factors which occur.
From that point of view it is objective, but a much more important basis for reallocation
March 10, 1967

of funds is the question of need in the provinces. I appreciate that that, of course, is reflected to some extent in the provincial tax structure, but not necessarily so. You may easily have a provincial regime that does not meet need and does not impose taxes which it ought to have imposed in order to meet certain social needs. The result is that it will keep its level of revenue low and get more out of this arrangement. Whether that is a good thing for Canada is a different story, but my major aim in speaking-and this is not in criticism of the minister-is to ask whether this was considered at all, or whether any studies are being initiated to deal with it.
The major problem I see in all these proposals is that municipal revenues and taxes are ignored. When you had a comparison at one time of only three sources of revenue and gave them the weight for equalization purposes, and later only two sources of revenue, you were of course in a sense being arbitrarily selective as to the basis of your comparison. But the moment you go to all the sources of revenue in a province and submit them to a national average, I respectfully suggest you are not dealing with the whole problem when you do not include in that consideration the needs of the municipalities and the revenues which they have to raise.
I repeat that if you take only a few sources of revenue you are making an arbitrary decision and the rest is not counted; but the moment you try to erect a structure on a basis which pretends to include, and is intended to include the total revenues of each of the provinces, geared to the total average of all the provinces for the purposes of equalization to bring everybody up to that average, then if you ignore the increased cost of welfare, education and all the other activities which the municipalities have to perform you are ignoring a very important part of the taxes raised in this country.
I am particularly concerned about that, as I am sure are all other members, because as the result of our constitutional arrangements and for other reasons the municipalities are limited almost entirely to perhaps the worst kind of tax, the tax on the home owner, which is unrelated to need, which is ungraduated, and which in most cases is a very great hardship on the lower income people.
I do not know if the minister and his advisers have considered whether it is possible to take municipal revenues into account and get the municipal picture as part of the total picture we are comparing. If they have not, I would like to ask whether some studies will
Equalization Payments to Provinces be made in that direction. I do not think I misunderstand the situation in Canada in this case, and I do think it is an important matter about which to be concerned.


Mitchell William Sharp: Mr. Chairman, I can assure the hon. member for York South that the government did look very carefully at alternatives including the equalization of municipal revenues as well as provincial revenues. For the information of the committee, the cost of averaging all municipal revenues on the same formula that we use to equalize provincial revenues would be approximately an additional $200 million for the year 1966-67, which was the year to which we applied our formula.
However, we decided, at least for the time being, that this would be going a very long way, apart altogether from the additional revenues we would have to raise for this purpose, because in fact the provinces themselves do not equalize the positions of their municipalities. For the federal government to move ahead of the provinces in this respect seems to me to be of rather doubtful wisdom. The time may come when the principle of the equalization of municipal revenues should be considered, but I should think it would be for the provinces to take much greater initiative in this direction before the federal government did so.


David Lewis: If that is the reason then I could not protest more strongly. Each time there is a desirable national goal, desirable from every social consideration, the federal government takes refuge, when it can, by saying "It would be too bad if we went ahead of the provinces." Why is it too bad? In a federal country what is the purpose of a federal authority if not to give some leadership to the country? If we are merely the sum of ten provinces then we do not need all this elaborate stuff that we have got in the federal government and federal parliament. We should take the responsibility of giving leadership, of indicating a road which is desirable to follow.
Because the minister has more staff at his beck and call than I have, he knows more than I do about this subject, but the fact is that some equalization does take place in some of the provinces, and the fact is that inequality of municipal burdens is one of the most difficult problems in Canada today. The undesirability and the inequity of most municipal taxes are one of the most serious problems facing the ordinary people of
13836	COMMONS
Equalization Payments to Provinces Canada. From the figures I have seen in recent years it is clear that the cost of primary and secondary education is a problem as acute for the municipalities as is post-secondary education for the provinces and the federal government. Merely to say that because the provinces are not equalizing municipal revenues and taxes when we should not take any step in that direction simply does not impress me at all. It seems to me to be a complete abdication of leadership in an area where leadership is sorely needed.


Jean-Luc Pepin: It might impress some of your supporters in Quebec.


David Lewis: I did not hear the minister's remark.


Jean-Luc Pepin: The fact that the federal government is not interfering in municipal affairs might impress some people, like your supporters in Quebec.


David Lewis: Not only is the latter part of the minister's remark inaccurate, but may I put something to him in a way which I hope will not too greatly offend him.
[DOT] (12:20 p.m.)
When I was bringing up my children, before they become 18, when they would be independent, one of the things I always said to them was that they ought to learn to listen with their ears instead of their prejudices. The minister ought to learn that too, because I did not for one moment suggest that he should interfere in municipal affairs. I did not for one moment suggest that the federal government should take any steps which would in any way invade the municipal government area. I asked the minister whether they took into account municipal revenues, and his answer was that it would cost $200 million more, which I suggest is not a very serious problem in the context in which we are discussing it. Then he went on to say that the provinces must take the lead in equalizing municipal revenues before the federal government steps in.
I am not asking the minister to produce this tomorrow; he does not do things in that way. I suggest that the Minister of Finance meet the various provincial governments and discuss with them a method to equalize municipal finances, or do something to assist in this situation. The minister must have known that was what I had in mind.
I am neither suggesting an amendment to this bill nor asking that the minister bring

DEBATES	March 10, 1967
one in. I merely suggest that the way to do this is for the federal and provincial governments to take a very careful, concerted look at this painful problem of municipal need and municipal taxation across the country, as well as the requirement for the federal government to give some leadership in stimulating the provincial governments to take steps to remove some of the unbearable burden which the small home owner now carries and make possible a greater equality of social service and treatment for these people across Canada.
In the municipalities and similar smaller jurisdictions occur a great many of the things which affect the daily lives of the people. This is the level of government which is responsible for it. It is for this reason that I have raised the matter. I quite accept the fact that the minister could not give an answer to that kind of difficult problem at the snap of a finger. If I became a little strong in my wording it was because I am personally fed up to the teeth with the tendency on the part of this government to refuse to take any leadership in matters which require urgent and constant responsibility at this level of government.


Mitchell William Sharp: May I say a word in an effort to reduce the temperature of my hon. friend from York South?


David Lewis: I do not know that you should.


Mitchell William Sharp: The effect of the equalization proposals we have placed before the house is to help the provinces which want to help their municipalities. If the provinces wish to transfer part of the responsibility from the municipal to the provincial taxpayer, we will equalize that source of revenue. Therefore I say to the hon. member that perhaps he has misunderstood the purpose of the proposal we have put forward.
May I add one other thing. Even if we were to include municipal revenues, the effect would not be to help the municipalities in any province which had a standard of tax capacity higher than the average. It would not help the municipalities of Ontario. They still would not receive any equalization payments from the federal government, because they still would be in a better fiscal position in relation to the provinces and municipalities elsewhere. The same would be true of British Columbia. This proposal is only a means of redistributing the revenues so as to bring the tax revenues of the poorer provinces up to a national average so that rates of taxation higher than normal do not have to be applied
March 10, 1987

by them in order to raise the necessary revenues to produce a reasonable standard of services.


David Lewis: I appreciate the fact that provinces like Ontario and British Columbia would not likely benefit any more than they do now, but would it not follow that the other provinces which are in dire need of added revenue, because of their tax capacities certainly would receive more money? If there is an additional amount of $200 million someone must get that money. So this $200 million obviously would go to those provinces and in turn to their municipalities for the general improvement of their social and educational services.
I believe I understood what the minister said when he stated that if the provinces were to take over more of the municipal costs and thereby increase their taxes there would be a certain situation. I am not quite sure, however, that the situation would help the have-not provinces. If they increased their share of municipal costs and their tax revenues the result would be that they would receive less equalization and not more. If a have-not province which now receives an equalization grant were to take over some of the expenses of the municipalities and increase its tax level to deal with this, then of course its equalization grant would drop rather than increase.


Mitchell William Sharp: It would go up. This is a very important point. Perhaps I ought to underline it again. The great virtue of the new system of equalization payments being introduced now is that it will be objective and automatic. It will take into account the taxes imposed by the provinces and the taxable capacity of each of the provinces in relation to the whole country. Therefore if the provinces as a whole, or any of them, decide to raise the present level of taxation this would affect the national average and would result in more being paid to the provinces which imposed taxes additional to what they are raising from their own taxpayers.


David Lewis: Mr. Chairman, I do not intend to continue this much further-


The Acting Chairman (Mr. Richard):: Order. Unless the hon. member for York South wishes to ask only a short question, the hon. member for Kamloops wishes to speak and I think he should be given the opportunity.


Edmund Davie Fulton: Mr. Chairman, if the hon. member for York South wishes to complete a certain point I would be glad to wait.
Equalization Payments to Provinces


David Lewis: I am grateful to the hon. member. This is not the first time the minister has made mathematical assertions which with the greatest of respect I suggest have no validity. The minister knows perfectly well that if Newfoundland or Prince Edward Island should raise their provincial taxes as a result of taking over municipal costs, the effect on the national average would be almost nil. When you have a small community with a small revenue, what effect would that have on the national average? A province like Ontario, Quebec, or at least British Columbia or Alberta, would have to be involved in order that the national average would be affected in any degree which would be of value to anybody. If we have in mind the four Atlantic provinces which have a relatively small revenue in relation to the total on which the national average is based, obviously an increase which would fall within their reach would have almost no effect on the national average. I suggest that the minister's answer on this point just does not hold water. [DOT] (12:30 p.m.)


Mr. Fulion:: Mr. Chairman, I should like to ask the minister what discussions if any have been held and what discussions are contemplated with the provinces with a view to assisting the provinces to relieve the municipalities from the increasing burden of taxation for education. The provinces get assistance under this bill in respect of the cost of post-secondary education; and what I should like to know is whether, if a province assumes an increasing or extra share of the cost, thereby relieving the municipalities of that amount, it will get higher assistance from the federal government. Because surely this would encourage the provinces to take over that burden, and I feel strongly that the only way we are going to get an ultimate settlement in respect of the cost of education-the only way we are going to get the level of education brought within the means of our people-is through this kind of assistance. The more this cost is loaded directly on the municipal taxpayer, the property owner, the less able is this country to provide the kind of educational program this country increasingly needs.
Will the minister indicate what discussions have been held or are contemplated with the provinces with a view to working out a system under which, if a province assumes an extra cost in relation to education thereby relieving the municipalities, the province will be assisted by the federal government or the
13838	COMMONS
Equalization Payments to Provinces national treasury in order that we will in effect have a national solution to a national problem?


Mitchell William Sharp: To the extent that we are transferring to the provinces increasing sources of revenue, as the tables I have distributed show, between 1966-67 and 1967-68 we are making available to the provinces in one way or another something like $375 million more. These revenues are distributed in various ways. Some provinces get more than others, but to that extent we are putting the provinces in a better position to discharge their responsibilities generally and thereby putting them in a better position to take on other responsibilities or to finance them.
Let me point this out, and it relates to the point made by the hon. member for York South whose comments I think were fair in relation to what I said, and I did not mean in any way to mislead the house. If, for example, other provinces were to follow the New Brunswick lead in taking over responsibilities for education this would result in very substantial increases in equalization payments to all provinces. For example, if some of the larger provinces followed New Brunswick's lead there would be a very substantial effects upon the level of equalization payments.


Thomas Clement (Tommy) Douglas: In the meantime, unfortunately New Brunswick would suffer from that.


Mitchell William Sharp: No, it would not suffer. It has acted in the interest of the taxpayers of New Brunswick and I think it made a sound decision. To the extent that other provinces follow that lead the transfer of revenues from the federal government to the provinces will increase to the benefit of New Brunswick and the other provinces.


Edmund Davie Fulton: It is a well understood principle, I suppose, that ministers of finance do not normally encourage provinces to follow policies which will result in the minister on behalf of Canada passing out more money to them. But I hope this minister will vary that rule because I feel strongly, and I think this feeling is generally shared, that we need a nation-wide effort to find a solution to this increasingly acute problem of bearing the costs of education.
So let me come back to my question. To what extent have there been discussions or has any plan been made to hold discussions

DEBATES	March 10, 1967
with the provinces to encourage them to follow the general pattern that has been mentioned of assuming more of the cost of education, thereby relieving the municipalities, so that ultimately we can have the resources of this nation, through the federal government, placed behind provincial efforts to bring about the equitable distribution of the burden of education costs? Are such discussions contemplated?


Mitchell William Sharp: I cannot say that we have any specific discussions in mind along those lines, but I am confident that at the next meeting of the tax structure committee the implications of the equalization proposals now under discussion will be well understood by the provinces. We now have a plan in effect that is both objective and, it seems to me, tends to support the right kind of development in our tax structure.


Mr. Nowlan:: Is there any objection to the suggestion of the hon. member for Burna-by-Coquitlam relating to the production of a comparison between the present and the proposed fiscal arrangements for this year, rather than the two years together which certainly gives a false comparison? Is there any objection to that production?
I should like to ask another question relating to the national problem of sharing tax revenues between the federal and provincial governments. This whole process has created a fundamental and persistent constitutional problem. Perhaps the minister would give us some interpretation of these objective tests without getting into great detail in respect of the equalization formula.
After 90 years the Atlantic area achieved the Atlantic provinces adjustment grants. It is my understanding that as a result of the proposals before us these grants will disappear under the over-all equalization formula. Am I right in stating that the Atlantic provinces adjustment grants will no longer be a fact of fiscal life in Canada, and have the special needs and responsibilities of the Atlantic area, which does not have the tax capacity of other areas in Canada, been taken into consideration in respect of the objective tests that have been discussed?


Mitchell William Sharp: Mr. Chairman, perhaps the hon. member for Digby-Annapolis-Kings was not in the house when I gave the tax structure committee figures for the year 1966-67, which is the same year of comparison. The table I placed in Hansard on March 2 appears at pages 13686 and 13687. The exact comparisons
March 10, 1967	COMMONS
the hon. gentleman is asking for appear at the bottom of that table in respect of provinces as well as on a national basis.
At the bottom of the table on page 13687 in numbered lines 10 and 11 there is the comparison the hon. gentleman wants. It shows, for example, an increase in the year 1986-67 from $354 million, which would be the yield under the present arrangements, to $494 million under the proposed arrangements if applied to the same year. In other words, in applying the proposals to the same year the increase would be roughly $140 million. Let me put this another way. If the provinces had this choice last year they would have selected the new arrangements because they would have been advantageous to all of them collectively to the extent of $140 million.
Let me draw attention to the figures in respect of the province of Nova Scotia in which the hon. gentleman is most interested. The increase would have been from $50 million to $69 million. I can assure the hon. member that all of the Atlantic provinces with the exception of Prince Edward Island, which chose the other alternative, would prefer the present equalization arrangement to a continuation of the Atlantic provinces grants.


John Patrick (Pat) Nowlan: Perhaps I could follow that up. I thank the minister for pointing out this comparison. I appreciate that under the proposed formula there will be more money, but what does concern me is this. Ten years ago there was such a thing as an Atlantic adjustment grant. That legislation was put into effect in recognition of certain special circumstances relating to limited tax capacity.
Under the proposed equalization formula, even though more money will be available for the next year is the principle of special consideration being wiped out?
[DOT] (12:40 p.m.)


Mitchell William Sharp: Mr. Chairman, I would point to clause 9 of the bill wherein a guarantee is given, which I think will perhaps satisfy the hon. member, that the Atlantic provinces adjustment grants, although they have been superseded by superior arrangements, are still embedded in the bill and provide a sort of guarantee.


John Patrick (Pat) Nowlan: I have one last question, Mr. Chairman. I appreciate that clause 9 contains the floor and base for the individual Atlantic provinces. Nova Scotia is dealt with there. Is that base calculated on the basis of the present Atlantic provinces adjustment grants?
Equalization Payments to Provinces


Mitchell William Sharp: Yes, Mr. Chairman, these
figures are the present Atlantic provinces adjustment grants.


Herbert Wilfred Herridge: Mr. Chairman, as a member from British Columbia, and in an effort to be helpful, I should like to ask the minister a question. The minister knows that our premier has repeatedly told us that our province is completely debt free. I assume the premier has informed the minister of that fact, and we are proud of it.


Mitchell William Sharp: Mr. Chairman, would the hon. member permit a question? How can it be that a province in such a very strong financial position should have asked me for a $100 million loan?


Herbert Wilfred Herridge: That is just the point I was coming to, Mr. Chairman. I want to ask the minister this question. It is apparently obvious now that the government of British Columbia will be short by about $100 million with respect to building the projects under the Columbia river treaty. They will be short this amount of money after taking into consideration what they have received from the United States government for this purpose. The premier of British Columbia has asked for a loan of $100 million in this connection. My question is: Under the circumstances, what should the premier of British Columbia do? How should he approach this question to receive favourable consideration of his request from the Minister of Finance?


Mitchell William Sharp: Mr. Chairman, I am surprised at the modesty of my hon. friend. I thought that his championing of the cause of the premier of that province would certainly guarantee as much success as is possible.


Mr. Patterson:: Mr. Chairman, the minister made a remark about the possible change in the financial status of British Columbia that would prompt the premier to request a loan of $100 million. I wonder whether there is any change in the financial position of the federal government, because after stating that several hundred million dollars were available just for the asking the Minister of Finance has now rejected the request of the premier of British Columbia for this loan.


Mitchell William Sharp: Mr. Chairman, if the hon. member had read my reply to the premier of British Columbia he would have seen that I asked only that British Columbia act as all other provinces have in putting forward a

March 10, 1987
Equalization Payments to Provinces well substantiated claim setting out the particular circumstances that would justify the federal government breaking with tradition and financing provincial hydro developments in this country. In respect of all other provinces, when requests have been made they have come about as the result of long, detailed negotiation in which the provinces concerned have placed before the federal government a detailed statement of why they needed the money. I said to the premier of British Columbia the other day, in replying to his wire, that the federal government would be very happy to deal with the province of British Columbia as it has dealt with all other provinces in which special arrangements have been made.


Howard Earl Johnston: Mr. Chairman, the minister has pointed out the way in which he says the provinces should go about seeking loans of this type. I wonder whether the minister would hold a seminar for the Liberal members from British Columbia in order to explain thoroughly to them that this is the way to go about obtaining such a loan?


Mitchell William Sharp: I suggest, Mr. Chairman, that the seminar should not be conducted by the Social Credit members from British Columbia. I think it would only confuse the issue still more.


Alexander Bell Patterson: Mr. Chairman, we have heard a lot of these snide remarks from the Minister of Finance in the last few days. I should like to ask him whether he has any understanding at all of what Social Credit stands for and, if he has, would he indicate it to the committee? I think it might possibly clarify the situation.


Julia Verlyn (Judy) LaMarsh: Who has any such understanding?


Mitchell William Sharp: Mr. Chairman, I have been trying for most of my adult life to understand Social Credit, I have not succeeded very well. But what has puzzled me even more is how anyone could accept these doctrines.


Alexander Bell Patterson: Mr. Chairman, I think ridicule is the weapon of the ignorant. The Minister of Finance has stated that Social Credit principles and philosophy are completely "out" as far as his ideas are concerned, but he now acknowledges that he does not know anything about them. A number of years ago a resolution was passed in the United States which called for the implementation of Social Credit, and I think the

minister would do well to read the records and the evidence given at that time.


Herbert Wilfred Herridge: Mr. Chairman, before this brief debate terminates I wish to make known that it is the intention of the hon. member for Kootenay West to participate in the debate on the Bank of Canada amendment bill. At that time I am going to deal with some aspects of Social Credit in respect of which I fully support my colleagues to the left.


Mr. Barnett:: Mr. Chairman, I think we have been led astray a little from the point originally raised. The Minister of Finance led us away from the point by starting this dissertation on Social Credit. As I understand it, the question of this $100 million loan really has nothing to do with Social Credit principles or philosophy-


Julia Verlyn (Judy) LaMarsh: Or the bill.


Thomas Speakman Barnett: -unless, of course, we are going to be social by handing over $100 million without any questions being asked. It seems to me that the really relevant question raised by hon. members to my left was the one about the holding of a seminar. My suggestion, for the benefit of other hon. members from British Columbia who are displaying an interest in this question, would be that the Minister of Finance sponsor a seminar in Ottawa to which he would invite the members of the cabinet of British Columbia in order to acquaint them with some of the fundamentals in discussing serious financial questions, without any suggestion that the seminar have as one of the items for discussion what is philosophically referred to here as Social Credit.


Mr. Cowan:: Mr. Chairman, since we are bandying about the question of this $100 million loan, I wonder whether I might ask the Social Credit members from the province of Quebec whether that province has repaid the $100 million that the province of British Columbia was kind enough to lend them a year or two ago?


An hon. Member:: They have paid the interest.


Ralph Bronson Cowan: They have repaid British Columbia under the equalization payments, but I am not certain whether the debt has yet been repaid. I think this points out that the Liberal government of Mr. Lesage understood Social Credit at the time and knew where to get $100 million.
March 10, 1967


Mr. Fawcett:: Mr. Chairman, we appreciate the co-operation of the Minister of Finance in answering some of the questions raised yesterday. I should like to refer in particular to the question raised by the hon. member for Edmonton West and also the hon. member for Burnaby-Coquitlam. It concerns the determination of revenue sources as set forth in clause 8 (d) (xi) which reads as follows:
[DOT] (12:50 p.m.)
(xi) sales of Crown leases and reservations on oil and natural gas lands.
Both hon. members pointed out that these are capital assets and should not be taken into account in determining revenue sources. In the majority of cases they are a type of asset that cannot be replaced. I would ask the Minister of Finance to answer that question for us.


Mitchell William Sharp: I am happy to do so, Mr. Chairman. In dealing with natural resource revenues the federal government has simply accepted the practice of the provinces. Under the formula the federal government has undertaken to equalize the provincial revenues as reported in their public accounts. All provinces treat their natural resource revenues as current revenues and the federal government proposes to equalize all current provincial revenues. Also the revenues equalized will be the current net general revenues of the provinces, and the federal government will follow provincial practice. Provincial services are financed by revenues the provinces derive from different sources. It is not so much the source of the revenue which is important for financing provincial services but the amount of revenue at the disposal of provincial governments.


[Stage Direction]
Clause agreed to.
Clauses 18 to 24 inclusive agreed to.
Clause 1 agreed to.
Title agreed to.
Bill reported.
The Acting Speaker (Mr. Richard):: When shall the said bill be read the third time?


Some hon. Members:: By leave, now.


Mitchell William Sharp: the third reading of the bill.
Motion agreed to and bill read the third time and passed.


Mr. Monteith:: Mr. Speaker, I wonder
whether we may call it one o'clock and after lunch proceed with item 86?
Provision for Portable Pensions Mr. Sharp: I was going to make the same suggestion, Mr. Speaker. It is possible that we may be able to proceed with the Bank of Canada Act after the luncheon adjournment. The missing documentation in French has been provided and I am hopeful that we may be able to proceed at that time. If not, we will call one of the other items already announced.


The Acting Speaker (Mr. Richard):: Pursuant to the order made on Friday, March 3, this sitting stands suspended until two o'clock this afternoon.



SITTING SUSPENDED


[Stage Direction]
The house resumed at 2 p.m.


George James McIlraith: the second reading of Bill No. C-221, respecting pension plans organized and administered for the benefit of persons employed in connection with certain federal works, undertakings and businesses.


Mr. Jean Chretien (Parliamentary Secretary to Minister of Finance):: In moving second reading of this bill, Mr. Speaker, I should like to say a few words in explanation of the background and contents since it is a bill which did not require a resolution prior to being given first reading on July 7 and was not subject to any detailed explanation at that time.
Hon. members will recall that the former minister of finance announced the government's intention to introduce legislation of this nature when speaking in the House of Commons on December 18, 1964. At that time legislation relating to the portability and solvency of private pension plans applicable to employment under provincial jurisdiction had already come into force in the province of Ontario. In October of that year an interprovincial conference on uniform pension legislation was convened with the object of developing a model act which could be approved by provincial authorities and submitted to their legislatures in the hope that there might be uniformity of conditions to which pension plans in employment under provincial jurisdiction across the country would be subject.
March 10, 1967

Provision for Portable Pensions
This government then decided that as soon as there was the widest measure of agreement as to the approach to be taken by the provinces to this problem as it applied to employment under provincial jurisdiction, the federal government, as a measure of co-operation with the provinces, would introduce similar legislation applicable to employment in works, undertakings and businesses under the jurisdiction of parliament. Since then the legislatures of the provinces of Quebec and Alberta have passed similar legislation and it is now in force. The legislatures of the provinces of Manitoba and Saskatchewan have recently introduced such legislation. Certain other provinces have expressed their interest in similar legislation, so that the introduction of this bill at this time is in accordance with the intent expressed in 1964.
The bill before the house is based on the model act which was developed at the conference on uniform pension legislation at which federal officials were present. There are, of course, a number of changes necessitated by the slightly different role of the federal government. On the other hand, since the bill covers any works, undertakings or businesses of a local or private nature in the Yukon Territory or the Northwest Territories, the role of the federal government in this regard will be similar to that of the provincial governments, in dealing with pension plans in employment under provincial jurisdiction. I should add that this inclusion of the pension plans in these territories was made at the request of the territorial governments concerned.
[DOT] (2:10 p.m.)
The administration of this legislation will be handled on behalf of the Minister of Finance (Mr. Sharp) by the Department of Insurance, which will have responsibility for the registration and continuing review of the pension plans which are subject to the bill once it becomes law. In accordance with the approach followed in the model act to which I referred, the standards for registration are spelled out in the bill but the detailed provisions dealing with the handling of pension funds have been left to regulation.
The qualification date to which many of the provisions in this bill are related is defined as the first of January, 1967. This date was included when it was hoped that this bill might have been passed well in advance of that date. Therefore in order to give the administrators of the pension plans affected by it enough time in which to amend their pension plans, when the relevant clause is reached at the

committee stage the government plans to move that the definition of the qualification date be amended to read October 1, 1967 instead of January 1, 1967.
The bill contains registration provisions requiring the employers to whom it applies to file their existing plans and any amendments to them with the Superintendent of Insurance. The same requirements apply to new pension plans as they may be developed.
In this connection I would like to make it clear that the bill contains no provisions requiring that a pension plan be introduced where none exists now, or which prevent a plan from being terminated. Neither does the bill require that all employees of an employer must be members of the plan. However, it does require that a plan must meet the requirements of the legislation so long as the plan remains in force.
In the case of termination or winding-up of a pension plan, there are provisions dealing with the application of all pension fund moneys in order to provide deferred or immediate pensions for both former and present members of the plan in accordance with their respective entitlements.
The standards for registration require that these pension plans must provide for the so-called "locking-in" of certain contributions made after the proposed qualification date of October 1, 1967. This will mean that any member of the pension plan who has attained the age of 45 and who has been in the service of the employer for a continuous period of ten years, or has been a member of the plan for ten years, shall be entitled under the plan upon retirement or termination of his service to a deferred or immediate annuity, depending on whether or not he has reached retirement age. This annuity must be related to at least his service under the plan after the qualification date. These "locking-in" requirements do not apply to contributions for service before the qualification date or to voluntary additional contributions.
There is nothing to prevent a plan from having the "locking-in" provisions apply from an earlier age or in respect of service for less than ten years. Limited payments of lump sum amounts is also permitted in cases where the monthly pension under the plan would be less than $10. In addition, a plan may provide for payment of a lump sum not exceeding 25 per cent of the commuted value of the deferred annuity benefit. This may be paid upon
March 10, 1967

or after the termination of service of a member of the plan before he attains the retirement age under that plan.
There is nothing to prevent a plan from providing for the payment of reduced or increased annuities because of early or deferred commencement of payment. Reduction in the amount of an annuity before it commences is also permitted in order to provide for survivor benefits, for example. Variation in the amount of the annuity in order to take account of pensions payable under the Old Age Security Act, the Canada Pension Plan or the Quebec Pension Plan is also permitted. These plans must meet the funding and solvency requirements to be set out in the regulations as well as meet the requirements for investment fund moneys. These requirements are also to be prescribed by regulation.
In view of the keen interest which has been evidenced and the indication of the acceptability which was given of the policy behind this legislation, particularly when the Statute Law (Superannuation) Amendment Act, 1966 was before the special joint committee on the public service of Canada, I feel certain that the provisions of this bill will commend themselves to hon. members.


Jay Waldo Monteith: Mr. Speaker, I shall be very brief. As the parliamentary secretary has outlined, this bill was given first reading on July 7, 1966. At that time the minister gave a very brief explanation which really did not give us any information whatever. Today the parliamentary secretary has given some further details, but I think it is obvious that we will have to question him when we reach committee stage.
The parliamentary secretary intimated that this legislation is similar to that passed by the provinces of Alberta, Ontario and Quebec, and that the Yukon and the Northwest Territories are included in the over-all picture. The parliamentary secretary outlined several requirements of the legislation and also mentioned a few of the things which would not be requirements under the act. I am wondering whether the clauses of this bill and the requirements under the bill have been discussed with and approved by any employee groups. For instance, as I understand the bill the Canada Pension Plan is to be co-ordinated with certain other plans, or this may take place. Have any employee groups objected to this particular provision?
I understand that provision is also made for portability, and that is a good thing. I think we will have to wait and see what further 23033-875
Provision for Portable Pensions information we can get when we discuss the individual clauses of the bill.
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, I well remember the occasion on December 18, 1964, well over two years ago, when the then minister of finance, now head of a committee that has a certain task force under it, announced that there would be federal legislation providing for the protection of pensions coming within federal jurisdiction. We welcomed that announcement. As the record will show, we have asked repeatedly for the implementation of that commitment. We are sorry it has taken so long for it to be implemented but we are pleased that the legislation is now before us.
[DOT] (2:20 p.m.)
Let me say at the outset that this is the kind of legislation which can lead to misunderstanding and confusion. I would hope that the public relations services which seem to be available to the government in respect of some other matters might be used with respect to this measure.
The first type of confusion which arises quite easily concerns the kind of coverage the bill provides. Whenever a reference is made to matters coming under federal jurisdiction, particularly if those matters relate to employees, many people get the notion that we are talking about employees of the government. I hope it can be made clear that this is not the case with respect to the legislation before us. This legislation concerns itself with employees who come under the federal labour code-employees who work on the railways, in communications, banks and so on. In other words, they work mainly for employers outside the government but they are in the kinds of labour which are regarded as coming under federal jurisdiction. To put it in another way, this bill will cover employees who are within the jurisdiction of the Canada Labour (Standards) Code and the Canada Labour (Safety) Code as well as the Industrial Relations and Disputes Investigation Act. This is a confusion which in the nature of things is bound to continue, I suppose, but I hope that at least we can get things straight here in this house.
The other source of confusion in legislation of this kind is demonstrated by the fact that already workers who are affected by it are divided in their opinions about it. Some feel that this is simply legislation which locks in their pension contributions and denies them access to money that they may have regarded
13844	COMMONS
Provision for Portable Pensions in the past as though it were money in the bank. Other employees realize that because many private pension plans have had tricks played with them-some, indeed, have not been able to pay the pensions they were supposed to pay-what this legislation does is to protect the rights of employees in their own pension plans. That makes it good legislation. Indeed, one of the reasons we have pressed for this legislation and one of the reasons we need it is precisely because the history of pension plans in this country demonstrates the necessity for protection of this kind for the workers.
In this same area of confusion there will be some uncertainty in the minds of workers as to what this legislation does. Many workers will think that once this legislation is in effect they will all have pension plans and that such plans will be protected by law. This, of course, is not the case. All this bill does is to ensure that if an employer who comes under the jurisdiction I have mentioned has established a pension plan, or if hereafter he brings one into being, it must meet the standards set up under this legislation.
It is my hope that in the course of time we may go further and get Canada pension legislation which will make it mandatory that every worker in this country who works for an employer, however that may be described, must have the benefit of a pension plan. As I say, the government seems to have a public relations service available to it for some of its legislation. I hope it will make use of this service in the case of the present legislation and see that our people understand what it provides and to whom it applies.
I have pointed out that this legislation provides protection for the rights of workers in pension plans. I think reference should be made in particular to the dissatisfaction which has been felt by employees of the Canadian Pacific Railway over the way in which their pension plans have been handled through the years. This is a long story and I will not go into any great detail at this time. But I well remember the results of the 1919 strike in Winnipeg. Employees who had been working for the C.P.R. up to that time but who were involved in the general strike in Winnipeg lost all the pension rights they had acquired with the company prior to that time.
For many years retired C.P.R. employees suffered because there was no protection for them at that time. Of course, the C.P.R. would point out that the plan then in effect

DEBATES	March 10, 1967
was a different plan, that it was a non-contributory plan and was not the same as the plan which came into effect in 1937. But even since the bringing into being by the C.P.R. of a contributory pension plan there have been many occasions for dissatisfaction on the part of the employees. Conditions of the plan have been changed from time to time, presumably by a committee, but the men have the feeling the changes have been made by the C.P.R. itself. More recently, after the Canada Pension Plan came into being the C.P.R. employees seem to have had considerable difficulty obtaining adjustments in the relationship between the C.P.R. pension plan and the Canada Pension Plan and putting the two on a basis which would meet the desires and needs of the employees themselves.
Again, there is considerable concern on the part of C.P.R. employees as to what is done with the moneys in the company's pension fund. Canadian Pacific is a company with many holdings including Canadian Pacific Investments and it is generally understood that some of the money in that pension fund is at the disposal of Canadian Pacific Investments regardless of whether or not the employees agree to this use being made of their money.
Recently, as a result of the changes brought about by the introduction of the Canada Pension Plan, the C.P.R. has changed its mind two or three times as to whether its employees must or need not be members of the company's plan. This has created a great deal of uncertainty and the employees have complained about this kind of thing. They seem to have no recourse, however, beyond the complaints they make to the company itself. The way in which the Industrial Relations and Disputes Investigation Act is set up makes it difficult, if not impossible, to get the pension arrangements of the C.P.R. made the subject of collective bargaining.
I could go into more detail but I do not intend to do so. I cite these things merely to indicate that the time has come when in the interests of the employees the state should step in and lay down standards for the pension plans of private employers so that the rights of employees may be protected. As I understand it, that is the principle behind this legislation.
[DOT] (2:30 p.m.)
For a number of years there was a move or at least an attempt to do something in this direction under the aegis of the income tax
March 10, 1967	COMMONS
law. For a number of years plans were regarded as approved if they met certain conditions. But then the time came when some constitutional experts doubted the validity of these income tax arrangements and so the blue book on pension plans, which was the bible a few years ago, was thrown away. Hence, for a number of years we have had the situation that there was no norm or standard that applied to pension plans of workers under federal jurisdiction.
Meantime, of course, we have had new regime with respect to federal-provincial relations. There are more discussions between the federal authority and the provincial authorities regarding all kinds of matters, and so a couple of years ago or more the conference was held to which the parliamentary secretary referred, with the provinces on one side and the federal government on the other.
I for one am pleased that a decision was made to produce a general pattern that both the provinces and the federal government would endeavour to follow in setting up this kind of legislation. We can go into the actual details a little more when we reach some of the clauses of the bill dealing, as they do, with the precise standards to be laid down as well as the standards to be provided by regulation later, but in the meantime I think it is good that we have this kind of legislation before us.
I suppose, Mr. Speaker, that it is looking away into the future to suggest one or two things I have in mind, but I have discovered in my life in parliament that things which one thought might take forever to come about manage to come about if one stays around here long enough. I hope that some day we will see legislation in this field which will not only lay down the conditions that employers must meet if they have pension plans but will require pension plans to be part of a contract of employment. I think the day has come when pension arrangements, both private and public, should be universal so that all people will have the benefit and protection of these arrangements.
The other element which I hope some day will be in legislation of this kind relates to a matter with which we are at long last coming to grips, the problem that pensions have of trying to live throughout their pension period of the fixed pension that they receive at the time or retirement. Many a pension plan which, while the employee is working, seems to him to provide him with a good pension 23033-875J
Provision for Portable Pensions and at the time of retirement seems to provide him with a reasonable amount on which to live, is discovered later, because of the rising cost of living and the rising standard of living, to be of greatly reduced value. In fact, many a person who thought he had a pension good for life, later finds himself in dire circumstances because of these changes that take place.
We have recognized this problem to a slight extent in the provision we have written into the Old Age Security Act and also into the Canada Pension Plan under which, starting in 1968, there can be a slight escalation of pensions in accordance with rises in the cost of living. I regret that the index used for that purpose is the cost of living index rather than the wage index or some index that would measure our productivity much better, but at least the principle has been accepted in these two pieces of legislation that a pension as fixed at the time of retirement does not necessarily have to stay at that level for the balance of one's life.
We are wrestling with this same problem in relation to our own retired employees, our superannuated civil servants. This matter has been referred to the special joint committee on the public service of Canada and because it is before a committee I will not discuss it here. I merely express the hope that the very useful discussions taking place in that committee will result in a recommendation to the house that these people are entitled to an adjustment in their pensions even though they are in retirement. What I am coming to, Mr. Speaker, is that I think the day will come when we have to write that kind of provision into this kind of legislation. We will have to say that all pension plans, if they are going to be registered and meet the conditions laid down by the state, must have built-in provisions for escalation.
History would suggest that the cost of living is going to continue to go up and one hopes that the standard of living will continue to rise. I read a very interesting speech, a copy of which was sent to all of us, made a few days ago by the Minister of Finance (Mr. Sharp), in which he played the role of a prophet or the son of a prophet and made predictions as to what life was going to be like in Canada in the year 2000. He was careful to say that he found it easier to predict what was going to happen in the year 2000 than to predict what would happen next year. However, in that interesting speech he suggested that the average income per family in the year 2000 would probably be about
March 10, 1967

Provision for Portable Pensions $15,000. We also said a few other things such as the part that people would be working an average work week of about 28 hours, and so on.
The point I am making is that it is a fact of history, and I suggest a fact of the future that living costs and living standards will continue to rise, and I do not think we shall have really coped with the problem of pensions until we recognize that fact and build it into our pension legislation. Pensions to be adequate to meet the purposes of the pensions should have in them built-in provisions to allow them to escalate after a person retires, so that he will not only be able to meet the increases in the cost of living that take place afterwards but will also be able to share in the higher standard of living the affluent society achieves in the years after he has concluded his work life. I recognize that it is perhaps a little futuristic to ask for this kind of provision in legislation that does not even require all employers who come under federal labour jurisdiction to have pension plans, but these are things we have got to work toward.
Before going into details when we get into committee of the whole, I want to express our welcome for this legislation. I hope a real effort will be made to let workers who come under federal jurisdiction know what this legislation is all about, what it provides, and the benefits and the protection that it makes available to them. I hope that the standards which will be laid down by regulation will be effective and worthwhile and that it will be made clear where the funds must be put, that companies just cannot transfer them from one fund to another in pursuit of their own affairs but that the pension moneys must be funded in such a way that they are guaranteed.
I also hope the day will come when we write into this kind of legislation the requirement that a pension plan must be provided by an employer who has a certain number of employees, and that pension plans must have built-in escalation provisions so that persons who go on pension will be able to meet the cost of living in their retirement years and also avail themselves of the increased standard of living an affluent society achieves because of their contribution toward it in the years that they were working.
[DOT] (2:40 p.m.)


Mr.   C.-A. Gauthier@Roberval: Mr. Speaker, I should like to say a few words on the


motion for second reading of Bill No. C-221 entitled:
An act respecting pension plans organized and administered for the benefit of persons employed in connection with certain federal works, undertakings and businesses.
First of all, I wish to congratulate the parliamentary secretary to the hon. minister (Mr. Chretien) for having, so to speak, skipped the notice of resolution. I hope he will continue to do so and will henceforth move second reading of bills. It would spare us useless discussions.
I want to be brief and say merely that we accept this bill. It pleases us because we see it as the happy results of federal-provincial conferences. It shows that when governments want to agree, want to discuss intelligently, it is always possible to find a solution to problems with a view to improving the lot of the worker. This is an example of co-operation and we must commend the government of our province for discussing and accepting the proposals contained in a plan for the benefit of provincial and federal employees.
There is also the question of contributions, and I would like to ask the parliamentary secretary-I do not know if this is mentioned in the bill-to tell us if contributions are going to be compulsory or voluntary, and if the employee will be left free to accept or reject this insurance scheme. We are faced at present with group and private insurance schemes, a government pension plan and the latest organized pension plan; if we make this contribution compulsory, we will force the employee to pay two, three, four and even five insurance premiums. Of course, he will derive greater benefits at age 65, but I feel that we must keep in mind the fact that the worker has a family to raise and must live to be 65 years of age before he can take advantage of these benefits. I am under the impression that most of the workers will accept $200, $300, or even $400 when they reach 65 years of age, if they are allowed to keep most of their salary until then in order to provide for the needs of their family.
Mr. Speaker, I note that the list under "included employment" in this plan includes navigation and railways. In this regard, the government will certainly get the support of many railway workers. In the last few years, I have concerned myself with the problems of railway workers as far as insurance is concerned. In my opinion, a program of this type should have been offered to them a long time ago to help them out of the stagnation in which they now find themselves.
March 10, 1967	COMMONS
The prime concern of foreign companies in this country is to take over the dues of railway workers without giving them anything in return. I have mentioned this previously in this house. I have spoken on behalf of those railway workers who were revolted because those plans enabled foreign companies to take away millions and billions of dollars out of their salaries without guaranteeing them anything in return. Even if it were only to compete with those companies' plans, our workers would be happy about that. If that bill does what it intends to do, it will be quite an achievement already.
Now, we hope that all the workers who contribute at the present time to plans set up by foreign companies in Canada will take advantage of what this new plan offers them. I think that participation therein will be voluntary, but contributions will be compulsory. I invite all railroad workers to join that plan. They will be treated more fairly in the future.
That plan is sponsored by the government and it will certainly be supervised by members of the government. I think that if we do not succeed in giving a little more justice to our workers through plans such as this one, an organized pension plan, they will remain a prey to foreign insurance companies and will have to sacrifice their salaries to try to get a little protection.
Mr. Speaker, I do not want to extend the debate any longer, but I want to say just a word about administration. As pointed out by the parliamentary secretary to the minister, the administration will be in the hands of the insurance department and again that is a wise decision. We only hope that this plan will reach its objective and that our workers throughout Canada will benefit from what it has to offer.

Motion agreed to and bill read the second time.



THE ROYAL ASSENT

Mr. Speaker:: I have the honour to inform the house that I have received the following communication:
10 March 1967
Sir,
I have the honour to inform you that the Hon. J. R. Cartwright, M.C., Puisne Judge of the Supreme Court of Canada, acting as Deputy to His Excellency the Administrator of the Government, will proceed to the Senate chamber today,
Provision for Portable Pensions the 10th March, at 5.45 p.m., for the purpose of giving royal assent to certain bills.
I have the honour to be, sir.
Your obedient servant,
A. G. Cherrier
Assistant Secretary to the Governor General.



PENSIONS


Hon. Waller L. Gordon (for the Minister of Finance) moved: that the house go into committee to consider Bill No. C-221, respecting pension plans organized and administered for the benefit of persons employed in connection with certain federal works, undertakings and businesses.
Motion agreed to and the house went into committee, Mr. Richard in the chair.
[DOT] (2:50 p.m.)
On clause 2-Definitions.


Joseph Jacques Jean Chrétien: Mr. Chairman, we have a proposed amendment to this clause. Because of an obvious delay we must change the qualification date from January 1, 1967 to October 1, 1967. The proposed amendment is:
That Bill C-221 be amended by striking out lines 18 and 19 on page 3 thereof and substituting therefor the following:
"(n) 'qualification date' means the 1st day of October, 1967";
I should like to ask the Postmaster General to move that amendment.


Mr. Cote (Longueuil):: I so move, Mr. Chairman.


Mr. Knowles:: Mr. Chairman, I believe the effect of this change is obvious but perhaps the parliamentary secretary would help to make it clear on the record. Usually we talk about effective dates and that sort of thing but in this case we are talking about a qualification date. It is easy to understand why this date must now be October 1, 1967. Is it clear, however, that this legislation will not lock in any pension contributions made prior to October 1, 1967?


Joseph Jacques Jean Chrétien: That is so, yes.


Stanley Howard Knowles: Is it also clear that in respect of all pension plans to which this legislation applies, contributions made after October 1, 1967, will be locked in but only in relation to employees with ten years' service with the same employer and of age 45 or older?
13848	COMMONS
Provision for Portable Pensions


Joseph Jacques Jean Chrétien: Yes. The hon. member has a good understanding of this clause. Contributions will be locked in after that date in respect of employees with ten years or more service who are age 45 or over.


Stanley Howard Knowles: The parliamentary secretary made it clear in his earlier remarks, as I think the bill itself does, that this will not prevent a pension plan from being designed to give even better benefits or protection to employees.


Joseph Jacques Jean Chrétien: No, this bill will not prevent the employees or employers from changing their pension plan if they want to. This is designed only to prevent any lessening in the benefits of plans which qualify under the law. This was possible in the past. We want to protect the employees and to spell out that protection in the law.


Stanley Howard Knowles: Is this legislation generally of a piece with the legislation of those provinces which have already passed similar bills, namely, Ontario, Quebec and Alberta?


Joseph Jacques Jean Chrétien: Yes, according to my understanding it is the same. The only difference is the qualification date of this bill. However, the framework and the wording are almost the same. The result will be equal for employees whether they come under the provincial or federal law.


Stanley Howard Knowles: Will the parliamentary secretary indicate what clause of the bill would be appropriate for a discussion in respect of portability, to which he made reference in his statement? I cannot find that word anywhere in the bill.


Joseph Jacques Jean Chrétien: If the hon. member will read the first paragraph of clause 10 on page 8 I am sure he will realize that portability exists by implication.


Stanley Howard Knowles: Perhaps we should discuss this on clause 10.


Jean-Thomas Richard: Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
On clause 3-"Included employment" defined.
Stanley Howard Knowles: Mr. Chairman, clause 3 is that part of the bill which makes it clear what employees are covered by this legislation. Subclause 1 in particular spells out the

DEBATES	March 10, 1967
kinds of work that are covered and subclause 2 deals with the exception regarding government employees. What is to be the situation in respect of employees of the crown so far as this legislation is concerned?


Joseph Jacques Jean Chrétien: There is a provision in the public service legislation which covers all the employees by the authority of the governor in council. They will be covered by regulation.


Stanley Howard Knowles: In other words, the fact that government employees are not covered by this legislation is not to their disadvantage because the pension protection they have under federal law is even better. Is that right?


Joseph Jacques Jean Chrétien: Yes, I think that is right. Even though they are not covered directly they are covered by other legislation which is even better. In any event, the governor in council has the power to act if necessary.


Thomas Speakman Barnett: Perhaps the parliamentary secretary would clarify the situation a little more in respect of the position of employees of the crown. I think a better understanding should be placed on the record of just how they fit into the picture and what the intention of the government is in relation to them under the authority given to the governor in council.


Joseph Jacques Jean Chrétien: Mr. Chairman, some of these employees are covered by subclause 1, so there is no problem in that regard. Employees of crown corporations will be covered and will be obliged to amend their own pension plans in order to come within the provisions of this legislation. They will then be protected because their pensions will be amended in accordance with this provision. Actually most of the pension plans have such a provision at this time.
[DOT] (3:00 p.m.)


Thomas Speakman Barnett: Mr. Chairman, I had particular reference to subclause 3 (a) which provides as follows:
The governor in council may make regulations excepting from included employment
(a) employment by an agent of Her Majesty in right of Canada:
I interpret that provision to cover a crown corporation as being an agent of Her Majesty. Is it the general intent of the government that employees of crown corporations shall have the same rights as employees of other incorporations under federal jurisdiction, or will this power of the governor in council be used in such a way as to ensure that employees of
March 10, 1967	COMMONS
crown corporations have adequate pension plans?


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman, we want all such employees to be covered completely. They are covered by the Public Service Superannuation Act. The intention of the government is very clear, namely, that we want all these employees to be covered completely. They will now be in a better position than they are under the present law.


Mr. Gauthier:: Mr. Chairman, I should like to ask the parliamentary secretary to the Minister of Finance if the fact of holding an employment mentioned in clause 3 requires the employee to pay a head tax or to contribute to the pension fund. In other words, is he free to choose the pension scheme to which he wants to belong?


Joseph Jacques Jean Chrétien: Mr. Chairman, this legislation does not require employees to choose a pension fund or another. This legislation is designed to protect those who have already contributed to a pension plan. So, when a worker has contributed for a certain number of years and has reached the age of 45 years, from that time on, the employer is required to hold in reserve the pension of the worker until the time he has reached the pensionable age.
To protect the funds set aside by a company for the employee's pension, even if the worker leaves the employment of such an employer, the employer shall build up a reserve under the control of the Superintendent of Insurance so that it will be added to the employee's pension when he retires.
This in no way changes his status as far as a crown corporation or any other civil corporation under federal jurisdiction is concerned.


[Stage Direction]
Clause agreed to.
Clause 4 agreed to.
On clause 5-Agreements, etc., respecting administration.
Stanley Howard Knowles: Mr. Chairman, a few minutes ago the parliamentary secretary and I seemed to agree to defer a discussion on portability to clause 10. I wonder whether there should not be some discussion on this matter under clause 5.


Joseph Jacques Jean Chrétien: As the hon. member wishes, Mr. Chairman.
Provision for Portable Pensions


Stanley Howard Knowles: I think it would be useful to have an explanation of what is intended by virtue of clause 5. It seems to provide for the establishment in Canada of an associaiion of pension commissions. I take it that this means a getting together of federal and provincial bodies that are supervising pensions. I should like to know what relation this has to the guaranteeing of pension portability.
I quite appreciate what the parliamentary secretary said about clause 10 which we shall reach later, namely, that there is an implication that because an employee gains a certain right which is guaranteed to him by law he can therefore move from one job to another and perhaps collect three or four pensions in the course of a lifetime. When we talk about portability, that is one definition of it. But we also have in mind the possibility of an employee going from one job to another and taking with him or having transferred the funds of one pension plan to the funds of another so that he builds up his pension in that way. Can the parliamentary secretary comment on this aspect of the matter?


Joseph Jacques Jean Chrétien: I did not catch the last question, Mr. Chairman, because a page boy asked me another question.


Stanley Howard Knowles: I must commend the parliamentary secretary on his popularity. I said that portability could be achieved by a person building up two or three pension plans in the course of his life. What about the possibility of taking his credits from one employer to another? Is that covered in this bill?


Joseph Jacques Jean Chrétien: I must tell the hon. member that portability is not covered by subclause (a) of clause 5. The hon. member will find that this is dealt with in subclause (c). Under subclause (c), if a man has accumulated pension funds with different employers these funds may be paid into an agency which will deal with the funds the man has accumulated.


Stanley Howard Knowles: I have one more question on this point, Mr. Chairman, and my colleague behind me has some others. If an employee works for a time for an employer who comes under the provisions of this bill because the work is federal in character and then moves to employment that is provincial in character, do the agreements envisaged in this legislation provide for this protection being carried from one area to the other?
13850	COMMONS
Provision for Portable Pensions


Joseph Jacques Jean Chrétien: Yes, Mr. Chairman. There is constant discussion in this respect. This provision has been designed to protect the rights of employees who work under federal or provincial jurisdiction. It does not matter whether an employee works under federal jurisdiction for a time and then works under provincial jurisdiction; he will have the same rights because the provincial and federal laws are the same. He will not lose anything and will receive his pension in the same manner, even if for some period of his life he has worked under the two different jurisdictions. There is no difficulty here, in my view.


Thomas Speakman Barnett: Mr. Chairman, the parliamentary secretary referred to subclause (c) of clause 5, which provides:
The minister, with the approval of the governor in council, may
(c) designate an agency for the purposes, among others, of receiving, holding and disbursing pension benefit credits under this act.
I think it would be useful if the parliamentary secretary could spell out to us in a little more detail just what this agency is going to be. On the face of it, after reading this provision it seems to me it is an agency to be established by the authority of the federal minister. On the other hand, if one reads the earlier subclauses of clause 5, which provide for entering into agreements with the provinces, one is led to ask whether this agency will in fact be jointly operated by the federal and provincial governments and whether it has anything to do with the reference to an association of pension commissions in subclause (a).
In this connection a related question comes to my mind. Could this provision operate, for example, between the federal government and a single provincial government, or is there any requirement in the mind of the federal government that a certain number of provinces have to enact complementary legislation before anything will be done? Can the parliamentary secretary expand upon the nature of this agency and the relationship of its operations between the federal and provincial authorities?
[DOT] (3:10 p.m.)


Joseph Jacques Jean Chrétien: The relationship between the federal and provincial authorities consists in an agreement among the provinces to pass a similar law covering employees. It is clear that there will be constant negotiations between the federal and the provincial governments on these matters because a man may

DEBATES	March 10, 1967
work for several years in British Columbia, later go to Quebec to work, and then start to work for the federal government. In such cases, as stated in subclause (c) the government can:
designate an agency for the purposes, among others, of receiving, holding and disbursing pension benefit credits under this act.
This law will apply to every province. Negotiations will take place and it is understood that there will be constant discussion and collaboration between the provinces and the federal government on that matter. I cannot see any difficulty. I think that the whole range of possibilities has been covered.


Thomas Speakman Barnett: Mr. Chairman, I have followed the explanation of the parliamentary secretary as far as it goes but he has still not given us any elucidation of what is meant by an agency. Is this to be an office set up by a department of the federal government? Is it to be a joint federal-provincial operation with its own secretariate, such as, shall we say, the council of resource ministers, or could it mean that some private trust company will be designated as an agency? Can the parliamentary secretary tell us what this agency will be?


Joseph Jacques Jean Chrétien: I cannot give a definition of the agency because we do not know yet what agency will be chosen. It is possible that if many problems arise a federal agency will be established for that purpose or an agency controlled either by the federal government or the provinces. There is also a possibility that an agency such as a private trust company will be used. We do not know yet. The minister is given the power to designate such an agency but we do not know yet what it will be. The decision will be made in co-operation with the provinces.


Thomas Speakman Barnett: I should like to put one more question to the parliamentary secretary. Reference has been made by my colleague from Winnipeg North Centre to the locking in of benefits of an employee at the age of 45 after ten years of employment. It has already been stated that provision will be made for the transfer of employment under federal jurisdiction to employment in provincial jurisdiction without loss of benefits. Can we have an explanation of what the situation will be of an employee with less than ten years' benefit? I would point out the importance of this question in the construction field where employees may move quite frequently from employment
March 10, 1967	COMMONS
under federal jurisdiction to employment under provincial jurisdiction. Will it be possible under this agency to be designated for contributions covering a shorter period than ten years to be pooled and deposited with the agency so that the pension rights of an individual in that category of employment may accumulate?


Joseph Jacques Jean Chrétien: Under this legislation nothing prevents a man from accumulating his pension. This law applies to employees who are 45 years of age or over and who have worked for a period of ten years. It does not cover those who have worked less than ten years or are less than 45 years of age.


[Stage Direction]
Clause agreed to.
Clauses 6 to 9 inclusive agreed to.
On clause 10-Provisions respecting vesting, locking-in, etc.
Stanley Howard Knowles: Mr. Chairman, I take it that the standards which a plan must meet are simply those set out in clauses 10 and 11. Clause 10 is also the clause to which the parliamentary secretary initially referred us for discussion of the question of portability. He asked me to rely on the implication that is in the bill. I think I understand the implication but I am still worried about a certain case. Let us consider an employee who works for nine years for an employer covered by this legislation, then works another nine years under a different employer covered by this legislation, after which the process is repeated for another nine years under another employer. At the end he will have been employed for 27 years, all of it under employers who are covered by this legislation. Will he be protected by this legislation?


Joseph Jacques Jean Chrétien: In such a case the employee will have the right to collect the money of his pension after nine years of service and he will not be covered further. However, if he leaves the money in the fund and goes to another employment he will be covered.


Stanley Howard Knowles: Do I understand that he will be protected by the legislation if he leaves the money in the fund and that he will get the pension on a deferred basis or on some other basis?


Joseph Jacques Jean Chrétien: He will not be forced to leave the money in the fund but will be able to collect it if he wants to. If he leaves the money in the fund he will be covered after the initial nine years.
Provision for Portable Pensions


Stanley Howard Knowles: So that if he leaves at the end of nine years he will not be forced to leave the money in the fund, but if he does leave it there, is the company required to pay him a pension at a later date?


Joseph Jacques Jean Chrétien: Yes, if it is in the plan. It
will be locked in after ten years.


Stanley Howard Knowles: The parliamentary secretary says "if it is in the plan". May I suggest that one of the deficiencies in the legislation is that the standards it lays down do not go quite far enough.


Joseph Jacques Jean Chrétien: The same problem always arises. We present good legislation and we are quite used to the fact that hon. members opposite find that it does not go far enough.


Stanley Howard Knowles: My hon. friend likes to joke. However, may I come back to the case I outlined? The government says this is good legislation and I agree. If an employee works for nine years for each of three separate employers, all of them covered by this legislation, the parliamentary secretary says that he will get the benefit of the three nine-year periods of employment in terms of a pension only if it is in the plan. There is nothing in the legislation which requires him to get the benefit. He gets the benefit of law only if he is employed for the full ten years.
[DOT] (3:20 p.m.)


Joseph Jacques Jean Chrétien: If you read subclause 2 you will see that an employee is permitted to keep any money that is coming to him and then go to work for an employer for another two or three years. Then he will be covered. There is a possibility he is covered by subclause 2.


Stanley Howard Knowles: Is not the parliamentary secretary only saying that a plan may provide far more than the legislation requires? The requirements of this legislation do not protect an employee who has worked only nine years, even though he may have worked for that period for three successive employers.


Joseph Jacques Jean Chrétien: If he did not take the money with him he would be protected but we cannot force him to leave the money in the pension fund. After ten years the money will be locked in the fund. If he left the money there and went to work for another employer the money would be in the fund. He would be covered by the law a year after that because he would have worked ten years then.


Stanley Howard Knowles: Does the parliamentary
secretary mean that the employee may work
March 10, 1967

Provision for Portable Pensions for nine years and then go to work for another employer for a year or more and then he would have the ten years required under this law? I wish it meant that, but I do not think that is the language.


Joseph Jacques Jean Chrétien: Mr. Chairman, I think I went a bit too far. I mentioned earlier that when a man moved from one industry to another industry he was covered by some plan and he would be protected by the law. However, if he worked for another nine years with another company he would not be protected.


Stanley Howard Knowles: Well, I hope some day we will get this legislation improved in this particular respect.


Thomas Speakman Barnett: I should like to ask one or two questions somewhat related to those asked by the hon. member for Winnipeg North Centre. If I understand the situation correctly as the parliamentary secretary has outlined it, under the standards that are proposed, at the end of ten years an employee's pension rights are locked in the plan. Neither he nor the employing company can unlock them and the employee has a right to that pension. I think I followed him further that the employee who leaves after nine years is given the right to leave his contributions in the fund.


Joseph Jacques Jean Chrétien: Yes. These cases are often covered by the pension plan the company has, to protect the employees. The intention of this law is to protect those who have been working more than ten years. The pension will then be locked in forever. Even if the employees or the employer want to change it, there will be no possibility. This law does not protect those who work less than ten years. Employees in this situation can do what they want by collective bargaining or any other means, but this law will not apply to them. There is nothing to prevent a private pension plan covering them in any way if there is agreement between the employees and employer.


Thomas Speakman Barnett: Under the standards that are set up, if a man left at the end of nine years, to use the period used by the hon. member, an employer would be permitted to say: Here is your share of your contributions up to this point and you have to take it with you; you have no further rights under the plan.


Joseph Jacques Jean Chrétien: You are right.


Thomas Speakman Barnett: May I ask a further question with reference to the agency mentioned in clause 5? This provides a place where the

funds can be put. Suppose an employee was in the situation outlined by the hon. member for Winnipeg North Centre and was employed by a company which had a plan but the company decided it did not want to be bothered with keeping his contributions when he left. Suppose the employee wanted to build up his pension right. Would he be able to take this lump sum and deposit it with the agency so he would have a cumulative pension right?


Joseph Jacques Jean Chrétien: Yes, I think it is the intention of clause 5 to provide for employees a place where they will be able to maintain their right to a pension. The minister will have the power to designate the agency in order to maintain the pension for this employee. Suppose a man worked nine years for a company and when he moved the employer gave him back his money. I think the employee will be able to give the money he has received to that agency. In fact this law covers those who have worked for a period of ten years. If an employee has not worked for ten years he is not covered by the law, and I must admit that.


Thomas Speakman Barnett: Unless the particular plan sets a higher standard than the minimum standard set by law.


[Stage Direction]
Clause agreed to.
On clause 11-Provisions respecting funding and investment of moneys.
Stanley Howard Knowles: Clause 11, Mr. Chairman, amongst other things calls for the funding of all moneys that are in pension plans. Let me put the question I have in mind in precise terms. I referred earlier to the C.P.R. pension fund and to some questions that were asked about where that money has been put. I take it from my reading of clause 11 that this provision cannot be made to apply to any money that is already in the C.P.R. pension fund but that money which is put into it after October 1, 1967, will come under the provisions of clause 11 and will have to be funded in accordance with the regulations to be laid down by the government. Is that correct?


Joseph Jacques Jean Chrétien: I understand that the hon. member is not correct. As I see the law it is that after October 1, 1967, funds adequate to provide for the payment of all pension payments and other benefits required to be paid under the directions of the plan will be covered. I believe, therefore, that moneys in the C.P.R. pension fund right now will be covered by the law in addition to money received after October 1.
March 10, 1967

[DOT] (3:30 p.m.)


Thomas Clement (Tommy) Douglas: That is clause 11 (b), which reads:
-for investment of pension fund moneys in such securities and obligations as are prescribed by the regulations;
Let me use as an example the C.P.R. Does that mean that the superintendent of insurance has authority to examine the securities and obligations that company now has and to recommend changes in their investments in terms of these regulations?


Joseph Jacques Jean Chrétien: Yes. I am given to understand that the superintendent of insurance will have the right to look into the investment of the C.P.R. in relation to the pension plan. If the superintendent is not satisfied with the security of that investment he will make a recommendation and force them to make a change. That is the way we understand the situation. This bill is designed to protect the rights of the employees and the money that they have put into the pension plan, and the superintendent of insurance will have the right to make recommendations if he is not satisfied with the kind of investment that is made.


Thomas Clement (Tommy) Douglas: Since there is this prescription as to what type of securities and obligations may be used for investing pension funds, has the parliamentary secretary any idea what the regulations are likely to stipulate? It seems to me that this is very important. We are passing legislation giving wide discretionary power to the governor in council to make regulations which will stipulate what type of securities and obligations pension funds may invest in. Is it the intention of the government that those regulations should definitely state that an employer cannot invest his pension funds in securities of the company owned by the employer? In the case of the C.P.R. the illustration is not likely to be applicable, but an employer could use pension funds to purchase debentures of his own company and if that company went bankrupt those debentures would be valueless, in which case the pension fund would be virtually non-existent.


Joseph Jacques Jean Chrétien: I cannot say exactly what the regulations will be, Mr. Chairman, but I think the same standard will apply to these investments as applies to investments of life insurance companies in Canada. There are regulations governing investments of life insurance companies so as to protect the holders of life insurance policies, and identical or similar 23033-8761
Provision for Portable Pensions regulations will be drafted to protect pension funds.


Thomas Clement (Tommy) Douglas: I should like to urge that when the government is drafting these regulations serious consideration be given to stipulating in the regulations that an employer may not use the pension funds to invest in securities of his own company. In other words, an employer cannot take pension funds in return for an I.O.U. and use the money for his own company's industrial expansion. He may do so in perfectly good faith, but it seems to me that an employee is entitled to much greater protection than that. This would be particularly true of an employer who owns a relatively small company.


Joseph Jacques Jean Chrétien: I will transmit the views of the hon. member to the minister, but he may be assured that the government will make itself responsible to ensure that investment of these funds will be protected. Certainly the situation described by the hon. member will receive consideration and everything will be done to protect funds. As I understand the point made by the hon. member, he is suggesting it is possible that an employer might invest in his own company and that such investment might not be a secure one, and I can assure him the regulations will provide for such a situation. I can tell him the matter will be studied very carefully.


Thomas Speakman Barnett: Mr. Chairman, I should like to ask a question related to this problem. Is it possible under this legislation for a company to handle, entirely as a matter of internal management, the investment of pension funds, or will it be required to turn over such moneys to a pension trust administration which will be independent of the operating management of the company?


Joseph Jacques Jean Chrétien: No, Mr. Chairman. The law is designed to permit companies to do what they want in the matter of investments, though the investments will be under the supervision of the superintendent of insurance. Therefore, if an investment is not adjudged to be a good one by the superintendent of insurance he will not permit it but will force employers to invest their moneys elsewhere. So there is no problem at all. There will be supervision and the money will be invested in safe securities.


Mr. Pugh:: I should like to raise one further matter, Mr. Chairman. Would the parliamentary secretary care to indicate what are the regulations now in effect with respect to trust
13854	COMMONS
Provision for Portable Pensions funds and pension plans, particularly pension plans? Is there any federal legislation-I think the matter would be cleared up if there were-which could be used as a guide line here?


Joseph Jacques Jean Chrétien: Mr. Chairman, I did not mention investments by pension plans; I mentioned life insurance companies. There are regulations in respect of life insurance company investments but there is no federal legislation that I know of at the present time in respect of pension plans. To a certain extent pension plans now will be protected under the terms of this bill.


David Vaughan Pugh: Is the hon. member prepared to say that the same regulations which apply to life insurance companies will apply to pension plans and that the regulations will be no more restrictive or no more free as they relate to this form of investment?


Joseph Jacques Jean Chrétien: The regulations will be almost the same as those in respect of life insurance company investments. I am afraid I cannot give any further clarification.


David Vaughan Pugh: In other words, the existing regulations in respect of investments by life insurance companies may well become the guide lines in respect of private investment under the plan?


Joseph Jacques Jean Chrétien: They may be a guide line but they will in no way be mandatory. The pension plan can invest its funds in any way it wants.


[Stage Direction]
Clause agreed to.
Clauses 12 and 13 agreed to.
On clause 14-Notice of objection.
Thomas Speakman Barnett: Mr. Chairman, I have a question which arises from the terms of clause 14 in that part of the bill headed "Objections and Appeals". The clause has to do with objections which may be made by an employer to actions of the superintendent in regard to recognition or non-recognition of a plan or the revoking of registration. The question I should like to ask the parliamentary secretary is, what provision is made to enable a member of a plan to raise any objection to the manner in which the plan has been operating? I would refer to clause 11 (c) which sets out the terms and conditions of the plan along with an explanation of the rights of members, and so on. Can the parliamentary secretary tell us how an individual member of a group plan who has reason for dissatisfaction can

DEBATES	March 10. 1967
take action to protect his rights when he believes they are being contravened?
[DOT] (3:40 p.m.)


Joseph Jacques Jean Chrétien: I think such cases should be brought to the attention of the superintendent of insurance. If something has been done which is not lawful he will be glad to investigate the situation and force the employer concerned to make the necessary changes. This is the duty of the superintendent of insurance and up to now, as far as I know, no one has complained about the way in which he conducts his investigations. I am sure he will be ready to act if there is a well-founded complaint by any employee.


Thomas Speakman Barnett: The parliamentary secretary is suggesting that if an individual member of a plan feels dissatisfied the course of action open to him is to address a communication directly to the superintendent of insurance asking for an investigation.


Joseph Jacques Jean Chrétien: That is what I mean.


[Stage Direction]
Clause agreed to.
Clauses 15 to 20 inclusive agreed to.
On clause 21-Regulations.
Stanley Howard Knowles: Can the parliamentary secretary tell us by what date the regulations tinder this act will be promulgated? Perhaps I could put the question in a somewhat different form. Will they be available to those concerned some time in advance of October 1, 1967?


Joseph Jacques Jean Chrétien: Oh, yes. I think these regulations will be ready within a month. Certainly they will be distributed to all those who are concerned before October 1. They will be ready in a month or perhaps two months from now.


Stanley Howard Knowles: I am glad to hear that. I am sure the parliamentary secretary will not mind if I smile when he says "Oh, yes" so easily. After all, the former minister of finance announced on December 18, 1964, that we would have this legislation before us shortly.


Joseph Jacques Jean Chrétien: This legislation has been on the order paper for a long time but there were some problems, as the hon. member knows. We have such a good legislative program that it is difficult to establish priorities.
March 10. 1967


Stanley Howard Knowles: That is not the way I heard it.


[Stage Direction]
Clause agreed to.
Clause 22 agreed to.
Clause 1 agreed to.
Title agreed to.
Bill reported.
The Acting Speaker (Mr. Richard):: When shall the said bill be read the third time?


Stanley Howard Knowles: By leave, now.


Mitchell William Sharp: the third reading of the bill.
Motion agreed to and bill read the third time and passed.



BANK OF CANADA ACT


[Stage Direction]
The house resumed, from Thursday, March 9, consideration in committee of Bill No. C-190, to amend the Bank of Canada Act- Mr. Sharp-Mr. Richard in the chair.
On clause 1.
Howard Earl Johnston: Mr. Chairman, I recall that I was the last person recognized yesterday before a question of privilege was raised. I appreciate the opportunity of saying at this time what I was unable to say yesterday.
I should like to refer to three things in this bill which please me in a way. One thing the bill does is spell out once again very clearly the responsibility of the federal government for regulating the monetary policy of the nation. This is something which needs to be reiterated throughout this country at all levels of government. We have been going through a period of tight money and are still doing so. It is too often assumed that situations of this kind come about accidentally. It is not sufficiently realized that a direction can be given which will result in tight money at times and that another direction can be given which will ease the money supply. Every time we enter a period of tight money we pay for it. We pay for it years later in terms of development which has been unrealized, particularly in the public field, in the hospitals and schools which were not built because of the tight money situation.
Decisions made at the federal level extend to the provinces. Often I have met people in British Columbia who wonder why development has been slowed down and why the province does not do something to speed it
Bank of Canada Act
up. One cannot repeat too often that monetary policy is a jealously guarded preserve of the federal authority. One thing this bill does is to make this proposition very clear. Now we cannot even foist the blame upon the governor of the Bank of Canada. It has become obvious that he acts under the direction of the federal minister of finance. So it is clear that it is the government's duty to formulate monetary policy.
[DOT] (3:50 p.m.)
In this connection I quote from a maritime publication rather than from a British Columbia publication. I refer to the Fundy Fisherman of May 25, 1966, which carried an editorial dealing with the whole question of monetary policy and tight money. It said:
The government's duty is to govern-not to abdicate the power of government to the power of money.
The government's duty is to make certain that money is available for essential services, for housing, hospitals, schools, wharves, bridges, highways, etc.
The government's duty is to make certain that the productive industries of the land have the money and credit to expand to provide employment and to provide goods for trade. The products of the mine, the farm, the forest, and the sea, provide the wealth of Canadians, and the employment for Canadians as they pass through the several stages to consumption.
I think this quotation points up the idea I have in mind and that is put forward so clearly in this bill.
The other point in the bill about which I have waited some time to speak is the reference to the International Monetary Fund and the fact that the Bank of Canada is the agency through which we have contact with the International Monetary Fund. I recall the bill that was introduced almost a year ago when a decision was made to increase the Canadian contribution to the International Monetary Fund. I recall sitting in the house on the afternoon that bill was suddenly introduced with no advance warning to this party. The Conservative spokesman, the hon. member for Edmonton West, said that his party had nothing to contribute on the bill and the N.D.P. spokesman, the hon. member for Bumaby-Coquitlam, said that his party had nothing to say on it either. As it happened, I was the only Social Credit member in the chamber, and I am afraid I was struck speechless at the thought that the parties which like to consider themselves the major opposition parties had nothing to say about a bill as significant as one to increase the Canadian contribution to the International Monetary Fund. And so

March 10, 1967
Bank of Canada Act
the bill went through all stages that afternoon in record time.
Later I checked the speeches made in the house in 1946 and 1947 by Social Credit members at the time that the Bretton Woods agreement was under discussion and the International Monetary Fund was being established. They made very interesting reading because many things said at that time have since proven to be prophetic. The International Monetary Fund has not been the cure-all for the international problems of the world. From abroad we hear a great deal about the need to reform the International Monetary Fund. An article some months ago in the Economist by Norman Macrae was critical of the International Monetary Fund and of the role it plays, along with other lending agencies, in providing assistance to underdeveloped countries.
The greatest problem of assistance to underdeveloped countries is always the one of the interest rate on the money that is lent to them, and the fact that by the time they have used the funds lent to them they are poorer than ever because they have to meet the interest payments, and because of the restrictions originally placed on aid. Certainly the International Monetary Fund is involved in this.
Even stranger was the recent report in the Toronto Globe and Mail regarding the United Arab Republic being behind in its payments to the International Monetary Fund. I quote the article:
The United Arab Republic has not paid an $8 million debt overdue to the International Monetary-Fund, a spokesman for the 103-nation organization said yesterday.
The matter is under discussion with the government of President Gamal Abdel Nasser, the spokesman said.
He refused to speculate on whether the lack of payment was due to a shortage of Egyption funds or other reasons, or to discuss further details of the debt. In all, it is understood the U.A.R. owes more than $100 million in the fund.
Yet we know, Mr. Chairman, that the United Arab Republic has for some years been carrying on a miserable little war in another country in the Arabian peninsula, a war which has been accelerating lately and has taken on an ominous aspect in the means of conducting it. I have sat in this house week after week expecting hon. members particularly from the New Democratic Party, who so often rise to their feet on the question of Viet Nam, to ask something about this particularly miserable little war where one country is clearly involved in the internal 
problems of another, but they have said nothing about it.
It was with some concern a week or so ago that I read an article in the Globe and Mail which suggested that the International Monetary Fund is in effect assisting in the financing of this war.
We Canadians are part of that fund, and we seem to adopt two postures toward it. When our government feels it is time to initiate a policy of tight money we are told that we float like a chip on the sea of international finance, that money is tight all around and that we can really do little about it except go along with the situation as it is. But at other times we take great pride in being a member of the "Big Ten", as they are called, and from that one would assume we had some international financial power in today's world.
I agree most heartily with the remarks made yesterday by the hon member for Nanaimo-Cowichan-The Islands, made very briefly in his usual gentle manner, suggesting that the International Monetary Fund through its Canadian representative could provide us with a little more information as to what is actually going on in the monetary and financial field. We know that there is much speculation and that plans are under foot to initiate new methods of coping with the shortage of liquidity in today's world. These plans can affect this country greatly. We know there is a major conflict between countries which would like to return to the gold standard and those that would like to break farther away from it. There are completely opposite directions in which this country can go in that regard.
I think too that most Canadians are becoming increasingly disturbed by the suggestion that an increase in the price of gold is inevitable, that in effect a devaluation of the American dollar is inevitable, and that the methods being suggested to cope with the problems will not be sufficient or will not be sufficiently attractive to prevent a return to the older method of financing in the international field. This comes at a time when Canada's gold industry is almost at its last gasp. I am sure most hon. members have received information on their desks during the last few weeks regarding this industry and the low state to which it has fallen. This comes also at a time when the entire western world is increasingly dependent upon the gold of South Africa, and it happens just at a time when South Africa is becoming more and more isolated from the rest of the world, at a
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time when a scheme is actively under way to involve the United Nations in the disruption of that country.
In view of all this I found it strange some months ago that hon. members could pass a bill dealing directly with the International Monetary Fund and have nothing to say about it. I find it strange now that hon. members are prepared to pass a bill dealing indirectly with the International Monetary Fund and have so little to say about it.
[DOT] (4:00 p.m.)
If it is true, as the hon. member for Nanaimo-Cowichan-The Islands says, that the Department of Finance, the government or the Bank of Canada has a stable of brilliant young economists who are working in the field of international finance, I would hope they would tell us what sort of direction we can expect this country to take in this regard.
Finally, a feature about this bill which pleases me is the removal of any restrictions on the material from which money can be made in this country. I find this a delightful part of the bill. Up until now the Bank of Canada has been limited to the buying and selling of gold, silver, nickel, copper, bronze and a few other well known metallic materials, but it seems that this bill would give the bank the power to use almost anything else it might wish to use, to coin money. I would hope that this would allow the Bank of Canada to move into materials which are exotic and valueless in themselves, so that the Canadian people might become convinced at last that there is no intrinsic value in the material itself which goes into money.
I am afraid that the committee on finance, trade and economic affairs was led partly astray by the representations made by the Canadian Bankers Association, which persisted in talking about money as a commodity, in the hope that we would all finally decide that it was a commodity, so that if there is an increase in prices of materials such as nickel, copper, or wheat-which has not gone up yet, but might-it would be only natural to assume that the price of money would have to go up as well. I think this is a dangerous over-simplification of the whole idea of money and one which needs constantly to be challenged.
Money is a means of exchange; it is not in itself a commodity. It has one purpose; that is, it is a means of distribution for the production of which we are now capable. This is the great problem which faces the world today. It does not have the liquidity to move
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the production of which it is capable and therefore must turn to war, defence spending, moon shots, supersonic flights and a host of other things to dispose of the surplus production, rather than see that it is used for the benefit of the people for whom it should be used.


Mitchell William Sharp: Mr. Chairman, may I ask the hon. gentleman a question. I listened with great interest to his speech. I was not clear as to just what would be his policy concerning the very serious dilemma faced by the world today in the study of international liquidity. When he talked about the dilemma there was much with which I agree, but I was not sure which choice he thought we should make.


Howard Earl Johnston: I appreciate the question. I believe this is the first time the minister has addressed a question to me, and I do not know whether I should accept it as a compliment. I realize that the responsibility for this decision at the present time is his, not mine. I would hope however that he would make a decision on the side of using the credit of people, in the sense of using the worth of the human being as the measure, and not the value of a metal such as gold. I think any move toward the gold standard is a mistake. This is something which Social Crediters always have feared and have disapproved of. We believe a move in the other direction is the one which should be taken.
At the International Labour Conference at Geneva it was obvious to me the major problem is that over and over again in today's world the rich get richer and the poor get poorer. It is that dilemma which must be tackled. I would hope the minister would be of the same mind as this party is.


Edmund Davie Fulton: Mr. Chairman, I do not intend to make any general remarks with regard to Bill No. C-190 at this stage, since the bill has been discussed in detail before the standing committee on finance, trade and economic affairs. I do wish however to make two suggestions to the minister, one procedural and the other general. The procedural suggestion is that in respect of one section of this bill the subject matter thereof should be referred back to the standing committee on finance, trade and economic affairs for further consideration to enable the committee to hear representations and then report back to the house. At the same time I think a certain portion of Bill No. C-222, the proposed act

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respecting banks and banking, should be referred to the committee for the same purpose and in the same way.
The portions I have in mind deal with the fixing of the cash reserves which the chartered banks are required to maintain with the Bank of Canada. Therefore the portion of Bill No. C-190 which I suggest should be referred back to the committee is subclause 5 of clause 9. This subclause is found starting at page 5 of the bill. This is a subclause which gives the Bank of Canada power to fix the percentage of the deposit liabilities in the chartered banks payable in Canadian currency which the banks are required by subsection 3 of section 72 of the Bank Act to maintain as average secondary reserve during any month.
The reason I suggest that this portion of Bill No. C-190, together with the subject matter of clause 72 of Bill No. C-222, be referred back to the committee is that an important misunderstanding has arisen in the course of the committee's consideration of these related provisions. This important misunderstanding can be summarized as follows. The proposed new law-I am speaking now of both bills read together-as initially introduced in this house and then referred to the standing committee provides for a new method of maintaining or controlling the reserves which the chartered banks are required to maintain with the Bank of Canada. Hitherto those reserves had to be maintained at a certain percentage of the deposits with the chartered banks.
Previously the percentage required to be maintained with the Bank of Canada had to be calculated monthly. Under the new legislation it is proposed that the percentage of the actual amount to be maintained as cash reserves be calculated twice monthly, and that a severe penalty be imposed upon the chartered banks if they do not maintain the correct percentage with the Bank of Canada. If these things must be calculated twice monthly and an adjustment made on that basis, it will be appreciated that this involves a more delicate and perhaps more difficult operation than if the requirements were a monthly event. In other words, it imposes a greater burden and an appreciably greater difficulty than the monthly averaging system.
[DOT] (4:10 p.m.)
We had considerable discussion about this matter in the standing committee and I urged upon the minister and the governor of the

Bank of Canada that, first, they should consider maintaining the monthly averaging system and, second, if they did not accept that point of view or submission, instead of putting the bank in the position where an error in calculation in the twice monthly averaging system would subject them to severe penalty, they should allow the banks to adjust for the second period or each subsequent period for any deficiency of a previous period. That provision in operation would have the effect of keeping the averaging correct in the overall situation for each month, which is highly desirable, without subjecting the banks to penalties.
I do not know whether the officials or the minister would accept either of those points of view, because before the matter was concluded and before it was necessary to bring it to a head and obtain a decision the minister had an amendment introduced to the committee affecting the whole of clause 72 of Bill C-222, and the new clause was accepted at the time of its introduction.
It was explained by Mr. Elderkin, who had just retired as inspector general of banks and had undertaken to appear before the committee to explain the results of the amendments as they were introduced. I will read his evidence as given to the committee in a moment, but I want to summarize it now because I want the committee to appreciate its importance.
He said that the Bank of Canada had decided it was not necessary to put the banks on a twice monthly averaging system and that they should maintain a monthly averaging system. He also suggested that the Bank of Canada would be given the power to move to a twice monthly averaging system if the exigencies of monetary conditions demanded that, and that the twice monthly averaging requirements laid down by the Bank of Canada could be abandoned and the banks could be allowed to revert to the monthly averaging system without the necessity of further legislation.


Mr. Clermont:: Would the hon. member permit a question?


Edmund Davie Fulton: Perhaps I may be allowed to conclude my observations, at which time I will be pleased to deal with the questions.
At this point I think I should read the evidence given by Mr. Elderkin as found in the Minutes of Proceedings and Evidence of the standing committee on finance, trade and economic affairs, volume 48 at pagp 3323. The
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amendment introduced by the government had been placed before the committee and Mr. Elderkin gave this explanation:
We have a very important amendment here and I think I should bring it particularly to the attention of the committee. In clause 72, as it appears in the bill, subclause 1 provided for a cash reserve based on a split month; in other words a period during the first fifteen days of the month and then a period of the remaining days in the month. The Bank of Canada, after further consideration of this, decided that they would prefer to go back to what is the present practice, namely, to have the cash reserve based on the period of the full month; but they wish to reserve the right to place it on a twice monthly averaging period if, at some time in the future, monetary conditions appear to require it and, therefore, your first amendment to subclause 1 brings it back to the average of the month instead of the average of the two periods. Then there is a new subclause 3 which gives the Bank of Canada the power to require a twice monthly averaging if a month's notice is given and published in the Canada Gazette, and mailed to all the banks. It also provides that at any time after such advice has been given, the Bank of Canada may withdraw the requirement. That is, as I say, quite an important administrative difference and I thought I would like to explain to you the effect of the four amendments to clause 72.
I am sure everyone will appreciate that this is an important administrative difference. The government introduced to the standing committee an amendment to its own proposed bill which had the effect, as explained by Mr. Elderkin-and it is consistent with the wording of the amendment now before the committee-of continuing in any event for a year, the monthly averaging system as the general practice. It provided a stand-by power in a "notwithstanding" subclause that the Bank of Canada, if it felt conditions warranted it, could require the banks to go on a twice monthly averaging system. In other words, the position was entirely reversed as compared to the result which would have followed the initial draft of the legislation. The initial draft put them automatically and permanently on a twice monthly averaging system, with no provision for returning to the monthly system.
The new amendment continues the monthly system, with the provision that the Bank of Canada may put them on a twice monthly system if it feels such procedure advisable, but might also withdraw and revert to a monthly system, I assume, when monetary conditions have returned to normal. Speaking for myself, and I am sure for other members of the committee, on the basis of that explanation as to that important difference we accepted the amendment as meeting our objections, therefore rendering it unnecessary to
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force the point we previously had under discussion.
I am advised that the banks similarly felt that the situation was clarified and entirely acceptable. Therefore they felt they need not continue or make further representation in respect of this clause. It went through on that basis, with a minimum of discussion as to the amendment itself, to the satisfaction of the banks as interested parties, and members of the committee who feel this requirement was unduly onerous.
The fact has been drawn to our attention that the governor of the Bank of Canada wrote a letter which was received by chartered banks on March 2, putting an entirely different interpretation on this amendment to clause 72, and expressing an entirely different intention as to how they would operate this cash reserve averaging system. The letter makes it clear that it is the intention of the governor of the Bank of Canada to operate this in a way opposite to the way which was explained by Mr. Elderkin.
Perhaps at this point I should read the letter which I am advised was addressed by Mr. Rasminsky to all chartered banks. This information is contained in a telegram from the chairman and president of the Royal Bank of Canada to the chairman of our standing committee. In this telegram, Mr. McLaughlin quotes the letter from the governor of the Bank of Canada to chartered banks as follows:
You will no doubt know that the House of Commons committee on finance, trade and economic affairs accepted a government amendment to the proposed Bank Act dealing with the twice monthly averaging period.
[DOT] (4:20 p.m.)
I am attaching hereto a copy of the relevant section as it appears in the bill reported to parliament.
The letter from Mr. Rasminsky continues:
In asking the government to introduce this amendment I had two considerations in mind, (1) that it would be desirable to complete the transition to the new method of calculating cash reserves-
In the copy before me there then appear the letters "I.M.E." I do not know what that means. However, the letter continues:
the 12 per cent to 4 per cent formula before introducing the twice monthly averaging period_
My understanding of that portion of the letter is that it would be desirable to complete the transition to the new method of calculating cash reserves from the 12 per cent to 4

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per cent formula before introducing a twice monthly averaging period. The letter continues:
-and (2) that in the event, which I consider extremely unlikely, that the twice monthly averaging period presented unexpectedly serious problems, it would be desirable to be able to revert to the monthly averaging period without having to seek new legislation.
The letter then continues, and this is the important part:
To avoid any misunderstanding, I am writing now to inform you that it is my intention to go to a twice monthly averaging period 12 months after the new act comes into force.
That is the end of the letter as quoted in the Telex from the president of the Royal Bank of Canada. The Telex to the chairman of the committee from Mr. McLaughlin continues as follows, and it is important to have this on the record also:
While this is within the letter of the section as amended you-
That is the chairman of the committee.
__will no doubt recall that when the subject was
introduced before your committee by the former inspector general of banks it was proposed as a stand-by power which would be used by the Bank of Canada in unusual circumstances and not as a normal method of operation.
That is to say, in accordance with the extract from Mr. Elderkin's evidence which I read a few moments ago, Mr. McLaughlin is pointing out that when the amendment was introduced in the committee it was represented by Mr. Elderkin that the twice monthly averaging provision, which was contained in a "notwithstanding" clause, was regarded and would be used as a stand-by power only to be brought into operation if monetary conditions changed and the exigencies of a particular circumstance required it, but that the normal practice would be to have a monthly averaging period as had been the case for many years past. The telegram from Mr. McLaughlin continues:
As the action which the governor now proposes is so contrary to the spirit of the section if there is another opportunity to do so we would like to have representatives of the banks appear before your committee again to review the matter.
In other words, all this particular telegram suggests is that the committee should be reconvened and an opportunity given to the representatives of the banks to discuss the clause as amended in the committee and to discuss the statement of intention by the governor of the Bank of Canada as outlined in the letter to the chartered banks from which I have just quoted.

I must say that it seems to me in all seriousness that the request of the bank is justified, reasonable and should be acceded to, because it is clear from a reading of the wording of the amendment and from a reading of the evidence given by Mr. Elderkin that it was represented very clearly to the committee, I am sure in perfectly good faith, and was therefore represented to the banks, that so far as the averaging system was concerned in connection with the maintenance of cash reserves, it would continue as a matter of routine on a monthly basis, and all that was being asked for were stand-by powers to put it on a twice monthly basis if an emergency situation justified it, and it would revert to a monthly basis after the emergency situation which had given rise to that requirement had passed.
I think the banks are told by the Governor of the Bank of Canada in the letter I have quoted that precisely the reverse is the situation, that it is his intention after a year to require that the banks go on the twice monthly system, that that will become the rule for the future and that only occasionally-he does not even say he will do it occasionally, but one assumes that it is a power that will rarely be used-will it be put on a monthly system. So the situation is entirely the reverse of the understanding given in the committee.
I for one would certainly have pressed the point I made in the earlier proceedings of the committee before the amendment was introduced, and would have suggested an amendment in the committee, had we been given to understand at the time the amendment was before us that it would operate and was intended to operate in the way in which the Governor of the Bank of Canada now says. I am quite sure the representatives of the banks who were then before the committee would have asked for and would have been allowed the opportunity to present their point of view and their objections to the proposed methods of operation and the reasons therefor.
Whether or not I be right in my impression and suggestion as to how this situation should operate-and I think I am; the minister may think the other way-under our method of proceeding we should not come to conclusions and enact legislation without the opportunity for discussion, and understanding all its effects and intent. It may be that even after such discussion the view I represent will not prevail, but at least we will have had a full opportunity of placing the case before the
March 10, 1967

minister, and hearing the minister's case, as to why it is desired to operate in this way. We have not had that opportunity to the present time because discussion was forestalled by the explanation given when the amendment was introduced.
As to the method of procedure, I appreciate that it would be unacceptable to the government, because of the timetable and the timing situation that now faces us, to refer the bill back to the committee because we have to get it through the house. I have strong criticism of the government in this connection because it is their responsibility; but this is the situation we are in and the welfare of the banking system and financial institutions of this country require that we now reach a decision. So I am not suggesting that the bill be referred back, or even that the clause be referred back to the committee. I am suggesting that the subject matter of the relevant section in the Bank of Canada Act and the relevant section in the Bank Act be referred to the committee for consideration, so they may hear representations and may then again report to the house.
This would not take the bill or any portion thereof out of the jurisdiction of this committee of the whole. It could be proceeded with without delay. The only other objection I can see the minister making-and he referred to it this morning-is that it would be difficult for hon. members to sit in committee of the whole on the bill, if they were sitting in the standing committee considering the subject matter of these two sections as I have suggested. But I think that difficulty can be resolved very simply. It should not take us very long to complete our reconsideration and the hearing of evidence on these two very isolated sections. The principle is clear. I would think we could dispose of this matter in two sittings. The committee might well sit at eleven o'clock in the morning one day and eleven o'clock in the morning another day when the house does not meet until 2.30 in the afternoon.
I am quite sure that even with the greatest optimism the minister does not think he will get his legislation through the house in less than two days. Therefore we will not have prejudiced the consideration of the legislation in committee of the whole. We would have completed our reconsideration of the subject matter of these two sections in the standing committee and could then report back to the house and incorporate that report in the overall consideration of the bill, without prejudice
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to the progress of this legislation through committee of the whole and third reading in the house.
[DOT] (4:30 p.m.)
I therefore urge the minister very strongly to introduce without delay on Monday morning a motion having the effect of referring the subject matters of these two clauses back to the standing committee on finance, trade and economic affairs.
When the minister replies to my suggestions I would also like him to deal with the effect of the amended section 72 in the Bank Act and the related clause in the Bank of Canada Act, and to tell us which statement of intention represents government policy. I do not wish to embarrass the officials, they are both excellent men with excellent records of service to parliament and to the country. But the fact is that they have given diametrically opposite explanations of the way in which this section will work. Perhaps the minister can reconcile them. He is even more ingenious than I give him credit for, but perhaps in giving his explanation he will remove some of the real concern that I have.
I think I have taken enough time of the committee at this stage, and I would appreciate it if the minister would deal with the matter now.


Mitchell William Sharp: Mr. Chairman, two separate questions have been raised by the hon. member for Kamloops. One of them relates to clause 9 (5) of the bill that is now before us, the clause which deals with secondary reserves. Then he has raised a question quite legitimately I believe in connection with clause 72 of the bill that will amend the Bank Act, the clause which deals with the determination of cash balances.
I submit in the first place that these two matters are not sufficiently closely related to have to be considered together. Later I will explain why clause 9 (5) is in its present form and the purpose of that subclause. But first let me deal with the obvious conflict between the testimony given by Mr. Elderkin and the letter written by the governor of the Bank of Canada to the general manager of each of the chartered banks. This matter was brought to my attention just the other day; I had not been aware of this conflict previously. There is no doubt that there is a genuine conflict of presentation. The governor of the Bank of Canada in proposing this change in the determination of cash reserves had originally proposed, and this had been included in Bill

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C-222 as it went to the committee, a twice monthly averaging period. When that clause was discussed with the governor of the bank when he first appeared before the committee no questions were raised. At that time the proposal was for twice monthly averaging.


Edmund Davie Fulton: May I offer what I think is a correction? I raised this matter with the governor of the Bank of Canada at the first opportunity. As the minister will remember, he appeared before the committee once and then had to go abroad for a trip. I did not raise it with him on his first appearance but I would like it to be quite clear that I raised it at the first opportunity in the committee.


Mitchell William Sharp: I accept that explanation. I am not trying to score points here; I am simply trying to clarify the situation as it appears to me. The governor of the Bank of Canada then suggested to me that because of the particular problems involved in making the transition from the present method of determining cash reserves to the proposed method, the bank would be willing to accept an option which would enable it to revert for any period to monthly averaging if, for some reason not foreseen by the bank, this should prove to be desirable. If the option were to be available, the bank would propose to retain monthly averaging during the transition period when the minimum cash ratio is being shifted from a uniform 8 per cent rate to the split rates of 4 and 12 per cent provided in the new act, and, as the hon. member for Kamloops has pointed out, the banks have been so informed.
The particular form of the amendment that is now before the committee, and that was before the standing committee of the house, was determined by technical considerations of legal drafting relating to the retention of monthly averaging in the transition period. When Mr. Elderkin appeared before the committee on February 15, 1967 I regret to say that, perhaps because he misunderstood the position of the bank, he misrepresented the purpose of the amendment. In writing to the general managers of the chartered banks the governor of the Bank of Canada put forward the purpose of the amendment as he had proposed it. Therefore I can only say to the hon. member for Kamloops that Mr. Elderkin did misunderstand the purpose of the amendment and regrets very much that he misled the committee as to the way in which the Bank of Canada intended to use this clause. There was never any misunderstanding in the mind of the Bank of Canada about it. I would

like to join with the hon. member for Kamloops in paying tribute to Mr. Elderkin because this is the only mistake that he made in his long appearance before the committee.


Edmund Davie Fulton: I agree.


Mitchell William Sharp: He is aware of this and he is not quite sure how the misunderstanding arose.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Will the minister permit a question?
I presume he has seen the full text of Mr. Rasminsky's letter to the banks. I presume that the letter specified, as is set out in the clause, the number of months in which the twice monthly average is to apply. Is that correct?


Mitchell William Sharp: Yes. Perhaps I might put the letter on the record so that the committee will understand the situation fully. I have here only a copy of it. I am not quite sure of the dates on which it was transmitted to the various general managers, but it has been sent to the general manager of each of the chartered banks. It reads as follows:
You will no doubt know that the House of Commons committee on finance, trade and economic affairs accepted a government amendment to the proposed Bank Act dealing with the twice monthly averaging period. I am attaching hereto a copy of the relevant section as it appears in the bill reported to parliament.
In asking the government to introduce this amendment I had two considerations in mind: (1) that it would be desirable to complete the transition to the new method of calculating cash reserves, i.e. the 12 per cent-4 per cent formula, before introducing the twice monthly averaging period, and (2) that in the event, which I consider extremely unlikely, that the twice monthly averaging period presented unexpectedly serious problems, it would be desirable to be able to revert to the monthly averaging period without having to seek new legislation.
[DOT] (4:40 p.m.)
To avoid any misunderstanding, I am writing now to inform you that it is my intention to go to a twice monthly averaging period twelve months after the new act comes into force.
Now, as the committee will see, that represents a very different position from the position set before the house committee by Mr. Elderkin.


Colin Cameron: But it is a requirement that the Bank of Canada shall specify in advance and give each chartered bank written notice of its action specifying the month for which it will be effective.
March 10, 1967


Mr, Sharp:: I am sure my hon. friend will agree with this, when I say this is not law as yet, and all the governor of the Bank of Canada has done has been, for the convenience of managers, to say that if this does become law this is the way in which he intends to operate. When this bill does become law, then of course he will comply with the requirements of its terms. This is simply a statement of his intention so that the managers of the chartered banks will be aware of it in plenty of time.


Colin Cameron: The minister says "aware in plenty of time", but are they aware of whether it is going to be a permanent, continually ranging innovation or whether there is a specific period that the bill calls for?


Mitchell William Sharp: I can assure the hon. member that the governor of the bank will certainly comply with the bill when it becomes law. He is talking about the intention of the government in introducing the amendment, and he is talking about the committee having accepted this proposal. He said, "to avoid any misunderstanding", and he had in mind I believe Mr. Elderkin's explanation to the committee, which must have confused the bankers. He set before them his intention when this bill becomes law and he will of course comply exactly with its requirements.


Colin Cameron: I do not wish to attack the governor or Mr. Elderkin, but it does seem to me Mr. Elderkin's explanation was more in consonance with the bill than the governor's letter. While he has given the banks notice of the date on which he is going to impose this, he has not told them for how many months he is proposing it. It seems to me if he were going to give them a warning he should have given them a warning about the whole of his actions.


Mitchell William Sharp: That may be so, Mr. Chairman, but I am sure Mr. Rasminsky did not want to anticipate, any more than he has now. I believe his purpose was to clear up the misunderstanding that arose from Mr. Elderkin's statement in which the contrary, in a sense, was suggested by Mr. Elderkin. I am sure that is the purpose the governor had in writing, because he begins his third paragraph with the words, "to avoid any misunderstanding".
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Edmund Davie Fulton: I appreciate the minister's explanation and I accept without any reservation that the conflict between the testimony of the two officials was entirely inadvertent. I certainly agree that was the only mistake Mr. Elderkin made in his presentation during the consideration of a long, complicated piece of legislation, and many complicated amendments. I have no criticism to offer on that score. However, I think the minister will appreciate, and I certainly appreciate his frankness in admitting it, that the effect of the interpretation or explanation given by Mr. Elderkin was to disarm those who are interested in this matter, from a contrary point of view, that is to say the banks on the one hand who do not want to be placed on a twice monthly averaging system, and the members of the committee on the other who feel that no sufficient case was made for placing the banks on a twice monthly averaging system.
We were in a position where an amendment was introduced into the committee which was entirely consistent with Mr. Elderkin's explanation because the first subclause provided that the bank shall maintain a cash reserve, and the second subparagraph reads:
Notwithstanding subsection (1), upon the coming into force of this act, the cash reserve percentage shall be-
Then, there is a reference to 8 per cent of one thing and 8 per cent of something else. If you go right down to subclause (2), you will find no reference to a twice monthly basis. It is not until you get to subclause 3 that you find the following:
Notwithstanding subsection 1, the cash reserve to be maintained by the bank pursuant to subsection 1 in any month following the twelfth month after the coming into force of this act shall, if so required by the Bank of Canada, be not less on the average during each of the two separate periods comprised of the first fifteen days of that month and the remaining days of that month-
It is not until you get to subclause 3 that you find this "notwithstanding" provision. It is therefore consistent with Mr. Elderkin's explanation that what is being taken here, as it were, are stand-by powers to bring in a twice monthly system if the exigencies of the monetary system require it, but normally it will be on a monthly basis. I am not saying the section does not permit the operation outlined in the letter of intent from the governor of the Bank of Canada. It does, although in my submission it is more consistent with Mr. Elderkin's explanation than it is with the method of operation intended to be followed

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by the governor. However, I am not basing my case at the moment on that. .
What I am saying is that because, when the committee accepted the amendment, discussion was thereby terminated, that was done on the basis of Mr. Elderkin's explanation and because at least a substantial number of the members of the committee were in agreement with that explanation. They felt that this was the proper way to operate. In the light of that situation, there was no further discussion on the effect of the section now set out by Mr. Rasminsky.
So, I come back to my point. I wish the minister had said that Mr. Rasminsky was going to modify his intention because I think that would be the better way. The minister has implied, if he has not said directly, that the method of operation outlined by the governor of the Bank of Canada in his letter is authorized, if you like, by the section as amended, and that this is the course that will be followed. In other words, I take it from what the minister said there was no question of modifying the expression of intent contained in Mr. Rasminsky's letter. Therefore, sir, we are in a position, with the purest of motives if you like, where the members of the committee were misled on the basis of a misunderstanding introduced in their minds when the amendement was accepted without further discussion.
Therefore, sir, I press the minister again to relieve the effect of that innocently caused misunderstanding, but nevertheless a misunderstanding, and to place us back in the position where we should have been had we had a clear interpretation, namely in a position to discuss the amendment on its merits and hear representations from those concerned on the effect of the amendment. This can be done quite simply by referring the subject matter of the two portions of the two bills back to the committee.
If the minister thinks we do not need to refer this portion of Bill No. C-190, I would not press that point. I think at least we should get assurance that the subject matter of clause 72 of Bill No. C-222 will be referred back to the standing committee. Then, we could let the matter go on the basis of a misunderstanding. It seems to me then that the banks, who after all have a responsibility and a very important role to play in the country, as well as the members of the committee, will feel that their consent to an important, and in a literal sense radical change,

was obtained on the basis of a misunderstanding, if the minister does not consent to this course.
[DOT] (4:50 p.m.)
When the fact of the innocent misinterpretation was drawn to the minister's attention, instead of following the course which would put the parties back where they were before the minister put himself into the position of being accused of taking advantage of that misunderstanding. I know the minister would not want to do that, and therefore I hope that he will accept my proposal for a reference back.


Mitchell William Sharp: Mr. Chairman, may I complete this discussion briefly. The form of the amendment that was placed before the committee by Mr. Elderkin was determined by technical considerations of legal drafting relating to the retention of the monthly averaging in the transitional period when the minimum cash reserve was switching from the present 8 per cent to the split rates of 4 and 12 per cent. That was the intention, and that is why one precedes the other.
I am sure the hon. member for Kamloops would agree that the government would not have placed before the house in the first instance a bill which gave no alternative at all, but simply required a twice monthly averaging, if the government had intended this to be only a stand-by provision. That was the first proposal made by the government.
On the substance of the matter, Mr. Chairman, may I say that this question has been very thoroughly discussed with the bankers by the Bank of Canada. The bankers do not like it. There is no testimony they are going to give, if I may say so, that is going to change their dislike for it.
I believe-and I hope the committee will agree with me-that this is a desirable improvement in the control of monetary policy. Indeed, it may come as some surprise to the committee-though perhaps not-to know that in the United Kingdom cash reserves are determined daily and in New York weekly. It is because of this long monthly averaging period that there is some unpredictability as to the effects of the actions of the Bank of Canada upon the money market. One cannot tell at which stage of the averaging period any particular bank is, with the result that the other banks do not know what effect may be exercised upon monetary conditions by the attempt of that bank to restore its average position either up or down.
March 10, 1967

In fact, Mr. Chairman, the averaging period is too long for the purpose of giving adequate control and predictability to monetary policy, and so I do urge upon the committee that we should not receive further evidence.
May I return for a moment to the original point that I was making, which was to suggest that we can discuss the merits of subclause 5 of clause 9 without any relation to the cash reserves required under the Bank Act. In conclusion, I say only this, that I think the hon. member for Kamloops had every justification in raising the matter. It was a case of some misunderstanding, where the committee was led to believe that the clause was for a purpose other than that which was intended.


Edmund Davie Fulton: Mr. Chairman, I do not intend to discuss the merits here; I will do that when we get to the relevant clauses. However, I do intend to press my point that the proper course would be to refer the subject matter of these clauses back to the committee. Unfortunately I cannot make a motion to this effect at this stage; again I suppose I will have to wait until we reach the specific clauses.
However, in pressing my point I feel bound to express a degree of sharpness of criticism of the minister which hitherto I had carefully avoided. I wanted to see, when we had exposed the fact of the misunderstanding, whether the minister would adopt what I think is a reasonable course. I regret that he has not adopted that course, and I must say that in giving an apparent reason for that refusal the minister has exhibited an arbitrariness of attitude which I find amazing and quite inconsonant with the spirit whch should be shown in considering this type of important legislation.
In effect, Mr. Chairman, what the minister said was that because he had discussed the matter with his officials and because he was satisfied that what was contained in this new clause was a good innovation, it was not necessary to hear further representations, or even desirable to hear further representations. Therefore, the hon. gentleman did not think it would be proper to call these witnesses back before the committee, even though a misunderstanding had been created by the evidence which had been given by one of his officials, on the basis of which the clause was accepted. In other words the minister is saying: "My mind is closed. Don't bother me with the facts, my mind is made up. I don't want to hear any more representations. I do not even want the members of the

Criminal Code Amendment committee to hear the other point of view because it might influence their decision".
Why on earth should we as members of parliament not take advantage of what the committees system was designed for, namely the hearing of the evidence of experts as to important legislation having far reaching and permanent effects? Notwithstanding the responsibilities and the prestige of the Minister of Finance, I suggest to him that he would do well to bear in mind that there are other experts in the field besides the minister and his own officials.


Mitchell William Sharp: One of them is speaking now. I would be very happy to listen to any representation he would care to make.


Edmund Davie Fulton: That is of course, Mr. Chairman, an absurd and almost arrogant attitude to take. I do not pose as an expert. I have not even had the benefit of hearing the evidence of these expert witnesses.


Colin Cameron: Mr. Chairman, I rise on a point of order. The hon. member for Kamloops is discussing a provision of an entirely different bill. I would not have interrupted him had I not strongly disagreed with the report he has given of what happened in the committee. The representatives of the chartered banks did discuss this matter at great length. Whether or not the hon. member was there I do not know, but they certainly discussed before the committee the whole question of bimonthly averaging. Even the representative of the Royal Bank of Canada discussed this question when he was on the stand, though quite unconvincingly as far as I am concerned.


Jean-Thomas Richard: Order. It being five o'clock it is my duty to rise, report progress and request leave to sit again at the next sitting of the house.
Progress reported.


The Acting Speaker (Mr. Richard):: It being five o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely public bills, private bills.
[DOT] (5:00 p.m.)



CRIMINAL CODE AMENDMENT


Mr. Robert Stanbury (York-Scarborough) moved: the second reading of Bill No. C-45 to amend the Criminal Code (wire tapping, electronic eavesdropping, etc.).
March 10. 1967

13868	COMMONS
Criminal Code Amendment


Mr. S. Perry Ryan (Spadina):: Mr. Speaker, while the hon. member for Kootenay West (Mr. Herridge) stated on February 24 last that the question of wire tapping was the concern of a number of people as far back as 1924, when many modern devices had not been invented, still it remained for the hon. member for Brant-Haldimand (Mr. Pennell), who is now our Solicitor General, to initiate some concrete proposals with respect to the subject. He originally introduced Bill C-103 in 1964, and we saw it again on the order paper as Bill C-72 in 1965. This is essentially the same bill as the hon. member for Winnipeg North (Mr. Orlikow) introduced as Bill C-33 in this session.
Bill C-33, as you know, Mr. Speaker, was debated during private members' hour just two weeks ago. The bill we presently have at hand, No. C-45, introduced by the hon. member for York-Scarborough (Mr. Stanbury), is essentially the same bill as the original one introduced by the Solicitor General, save that it does incorporate some very definite improvements. It covers all private communications that are intercepted by, I presume, any mechancial or electronic, or possibly even natural device or instrument, whereas Bill C-33 dealt only with wilful interception, by means of an instrument, of any telephone or telegraph communications.
Personally I like Bill C-45 very much better and am all in favour of the principle that its sponsor seeks to have adopted. But I do not think the sponsor himself really anticipates that his bill will be passed in its present form, as there are many legal and technical niceties to be taken care of and considered before a really workable statute can be enacted by parliament.
[DOT] (5:20 p.m.)
I feel that a further amendment should be made to the Criminal Code to define the words "private communication" and to define the words "intended receiver" in particular. It seems to me that the ordinary meaning of these words should be explained and in some measure perhaps both enlarged and restricted. For instance, a secondary sender in certain circumstances might be an intended receiver and yet have no business recording a private communication.
I agree with the hon. member for Durham (Mr. Honey) who spoke in the debate on Bill No. C-33 on February 24 last, when he said that a judge of a superior court of criminal jurisdiction should not be the only judicial officer to whom an application could be made

DEBATES	March 10. 1967
under the proposed new section 429A of the Criminal Code. I feel definitely that law enforcement officers and others entitled to make applications such as are proposed should not have to travel unnecessary miles, put in the required time and pay the necessary expenses to wait upon a superior court judge.
I believe a better amendment to the Criminal Code would be one which would provide the following words at the commencement of proposed section 429A: a judge of a superior court of criminal jurisdiction or of a court of criminal jurisdiction".
A court of criminal jurisdiction is already defined in this way under the interpretation section of the Criminal Code, which is section 2(10) thereof:
(a)	a court of general or quarter sessions of the peace, when presided over by a superior court judge or a county or district court judge, or in the cities of Montreal and Quebec, by a municipal judge of the city, as the case may be, or a judge of the sessions of the peace,
(b)	a magistrate or judge acting under Part XVI, and
(c)	in the province of New Brunswick, the county court;
I believe that the inclusion of the words "court of criminal jurisdiction" would improve the proposed amendment. I know from practice in the province of Ontario, as does the hon. member for Durham, that it would be far more practical to make an application, along the lines proposed, to a county court judge.
I should like to point out to members of the house that a search warrant can be obtained by any peace officer on application to a lowly justice of the peace. A search warrant allows an invasion of a person's privacy which is equally as devastating or perhaps more devastating than a wire tap.
In looking further at the proposed addition of section 429A to the Criminal Code I feel that although the right of all individuals to private communication should not be interfered with lightly, the requirement that an applicant must produce to the judge "reasonable grounds to believe that evidence of an indictable offence punishable by imprisonment of ten years or more may be obtained by the interception and so on" does not sufficiently cover the field of the more serious crimes. Personally I do not feel that the wording "ten years" is the right wording there. I would reduce the period to five years.
In England the test is any serious crime which would likely bring three years imprisonment. I would suggest that in Canada the
March 10, 1967	COMMONS
ten year provision should be reduced to at least five years, so that then the section could be employed to obtain evidence in relation to such criminal activities as unlawful military drilling, unlawful possession of bombs, grenades or explosive weapons, the carrying of offensive weapons for dangerous purposes, the breach of trust by a public officer, prison breaks and fraudulent stock market transactions.
Mr. Speaker, I could not possibly disagree with the principle of this bill. In fact I whole-heatedly support the general principle. I should like to see this bill evolve and become law, as I believe would most hon. members in this house, but I want to see the best possible bill after most thorough consideration. I hope that the discussion on this and similar bills will be considered by the Royal Commission on Security, which likely will be dealing with this whole problem when it delves into the entire question of security in Canada.
I do not think it would be wise for the government to finalize a bill to deal with wire tapping and electronic eavesdropping until such time as the report of the Royal Commission on Security has been tabled. On the other hand, I hope this report will not be delayed too long because all our communications and every individual in this modern era in effect are threatened by a modern electronic sword of Damocles. Wire tapping and electronic eavesdropping certainly should be controlled and the public should be informed concerning just what can and cannot be done by the authorities and others in the field. It is imperative also that regulations as to the use of a telephone by prisoners in police stations, jails and other places of incarceration should be made, understood and enforced. If lines are bugged, should the regulations be posted in all institutions? Similarly, should fair warning also be given in such institutions that letters are likely to be opened and inspected?
A couple of weeks ago the hon. member from Durham advised the house that there is no authority in Canada to open letters. There is no authority under the Post Office Act of Canada, but under the regulations of the Penitentiary Act, there is a discretionary power vested in those who are in charge of federal institutions to open incoming and outgoing mail. Therefore, there are many problems in connection with an enactment of this kind to be considered.
Should there be some exceptions in Bill C-45, in addition to the exception concerning
Criminal Code Amendment a judicial order? Should the general prohibition be further qualified by some stipulation in favour of jails and police stations? What about people who listen in on party lines? Is there a danger that they might run afoul of a measure such as this? Is the old time country sport of listening in to be rewarded in the future by a jail sentence? I submit that this would be a harsh law in this country, even at this late date. There still are many party lines in use throughout the countryside. I am sure that prosecution of a person who listened in on a party line would create quite a problem, if initiated under a statute such as this.
[DOT] (5:30 p.m.)
Possibly there should be an exception in favour of those who listen in on party lines, or perhaps the penalty should not be so severe in such cases. Should there be an exception in respect of wartime threat or should there be special measures drafted only upon the outbreak of war?
What about our customs and excise officers? Should there be an exception in their favour? In England the customs and excise officers simply apply to the secretary of state and get permission to open letters and, I understand, to go somewhat further in the tactics they employ, which involve interventions in individual privacy. What about our own security service, the R.C.MP.? Should they or should they not have some special powers set out in an enactment of this kind?
Mr. Speaker, I am advised that the Department of Justice has received a number of recommendations on wire tapping and electronic eavesdropping. The deputy attorney general of British Columbia has forwarded a resolution of the Vancouver city council in favour of a Criminal Code amendment to restrain wire tapping.
By resolution dated October 26, 1964, the council of the corporation of the city of Toronto indicated that it is
-categorically opposed to the unrestricted use, whether in the process of law enforcement or otherwise, of any kind of mechanical or electronic device for intercepting or overhearing words spoken in conversation by one person to another and not intended to be heard by the person using such device-
They expressed the belief that
-the use of such devices is an offence against an individual's right to privacy, and as such should be forbidden under all circumstances except where a superior court .iudge otherwise orders for the purposes of criminal investigation in extreme cases.
13870	COMMONS
Criminal Code Amendment
The Bell Telephone Company of Canada, by letter dated February 14, 1966, has urged, in effect, that the government sponsor legislation in relation to wire tapping and has offered its co-operation in studying the subject. Also, the Canadian Association of Chiefs of Police, at their 1965 annual meeting, proposed that
-in the interests of the crime victim, or *the potential crime victim, that we require federal legislation to authorize the police to tap, oversee or superintend telephone messages and or telephone conversation to get evidence, information or intent of criminal activity, by order of a justice and that it be an offence to tap or supervise telephone conversation unless such order has been obtained.
It may be of interest to note also that the national conference on the prevention of crime, consisting of members of the bench, bar and university faculties, came to the following conclusion in regard to wire tapping and the use of electronic devices, as expressed in the final release from the conference dated June 3, 1965:
There was a general feeling that the law should control the use of wire tapping and concern was expressed at the implications which technological advances in electronic eavesdropping may involve so far as the citizen's right of privacy is concerned. A wide measure of support was exhibited among the conference participants for the control by legislation of wire tapping, it being felt that specified procedures should be worked out whereby the courts could govern the resort to wire tapping by law enforcement agencies and that this should only be permitted in the detection of certain types of crimes.
The matter of wire tapping was also considered at the conference of attorneys general on organized crime held in Ottawa on January 6 and 7, 1966.
The attorney general of Saskatchewan advised that legislation in relation to wire tapping has already been prepared in that province and that the government intends to proceed with the legislation at this present session of the legislature. He left open, however, the possibility of federal legislation as a preferable solution.
A number of provinces expressed themselves as being in favour of wire tapping legislation, these being Quebec, New Brunswick, Manitoba, Prince Edward Island, Alberta and Newfoundland. Two provinces expressed doubt about the proposal. Nova Scotia doubted its desirability and questioned also whether the matter might not preferably be left to provincial legislation.
The attorney general of British Columbia emphasized that wire tapping is only one part

DEBATES	March 10, 1967
of a larger problem, that of the use of electronic techniques generally, and suggested that the real need is for a broader study of the various new and sophisticated techniques of surveillance that have been developed in recent years, and for means of resolving the difficulties surrounding the admissibility of such information in evidence. A number of provinces emphasized the importance, in any event, of providing stringent safeguards in any legislation.
Some of the questions that receive attention in Bills C-33 and C-45 were the subject of a study in the United Kingdom by the committee of privy councillors appointed to inquire into the interception of communications. Three privy councillors were appointed, commonly known as the "Birkett committee"-
-to consider and report upon the exercise by the Secretary of State of the executive power to intercept communications and, in particular, under what authority, to what extent and for what purposes this power has been exercised and to what use information so obtained has been put; and to recommend whether, how and subject to what safeguards, this power should be exercised and in what circumstances information obtained by such means should be properly used or disclosed-
The committee reported in October, 1957. The main conclusions of their report are set out in paragraph 8, which reads as follows:
We set out our conclusions and recommendations at length in the pages that follow. The gist of our report may be thus summarized:-
(1) The origin of the power to intercept communications can only be surmised, but the power has been exercised from very early times; and has been recognized-


Mr. Speaker:: Order, please. I must advise the hon. member that his time has expired.


Herbert Wilfred Herridge: Mr. Speaker, I rise to say a few words at this time because I am very much interested in the principles of this and other related bills dealing with this very important question. Let me congratulate the youthful and handsome member on the government side for his interest and his concern in and his introduction of this bill. Let me also refer him to Bill No. C-273 which I introduced in the house. A reading of that bill might broaden his knowledge of the difficult problems surrounding this subject.
Some reference was made to my first knowledge of wire tapping. I gained my first knowledge of this matter in 1920 when the Western Federation of Miners of Silverton and Sandon were on strike. They discovered that the mine manager had the wires tapped
March 10. 1967	COMMONS
between these two villages, some 30 miles apart, and was listening to the conversations of the union executives. Two men I knew well contacted two miners who came from Cape Breton, and from that point on the conversations were all carried out in Gaelic. The mine managers were completely confused and the strike was successful.
[DOT] (5:40 p.m.)
My second contact with wire tapping was in connection with the tapping of wires that were intended to relay advance information with respect to race track meets, and things of that sort, by persons interested in betting professionally. I have been interested in this subject for a long time, but my interest has been heightened recently by the tapping of the executive meeting place of the Pulp and Paper Workers of Canada. No doubt hon. members have read about this in the newspapers and have followed the course of this investigation. As soon as this matter was made public the premier of British Columbia appointed a commission of inquiry and Mr. Justice Sargent was appointed to undertake this work. After a considerable number of meetings, which were reported in some detail in the press, Mr. Justice Sargent said he intended to play the tapes that had been authorized to be taken by Mr. Pat O'Neal, former secretary of the B.C. Federation of Labour, so they could be reported by the press and recorded by the C.B.C.
It happened that these tapes were of an executive meeting, but after the executive meeting was over there was recorded on the tapes private conversations with regard to the men's intentions in connection with the building of a house, purchase of property, and things of that sort. They protested very vigorously against the action that was contemplated in respect of the tapes and appealed to Mr. Justice J. O. Wilson of the Supreme Court of British Columbia against this practice. Mr. Justice Wilson listened to the appeal and his judgment was in favour of the union, namely that it was improper and unfair to play tapes in public of an executive meeting of a union, or other conversations carried on at the time the executive members were meeting in this hotel. He disallowed the inquiry on those grounds. Shortly afterwards the attorney general of British Columbia reconstituted the commission of inquiry, and Mr. Justice Sargent is carrying it on.
The president of the union has refused to answer certain questions on the basis that our
Criminal Code Amendment Solicitor General (Mr. Pennell) instructed Mr. Justice Sargent that no questions were to be asked of Mr. Pat O'Neal with respect to his associations with the R.C.M.P. as an undercover agent prior to the incident surrounding the bugging of the hotel. Mr. Orville Braaten, who is now president of the union, refused to answer questions on that basis, and the union has again appealed to a justice of the supreme court for a decision on this matter. That appeal is now proceeding. In this connection I wish to quote from the Vancouver Sun of February 24, page 7. This article is headed, "Lawyer Attacks Bugging Probe. Supreme Court Hearing Set for Six-Point Assault," and says:
A six-point legal assault on the royal commission on invasion of privacy will be launched Monday in B.C. Supreme Court by the lawyer representing jailed union leader Orville Braaten.
I might say that this union leader who refused to answer certain questions, based on a former decision, was led from the court in handcuffs and taken in that way to the jail. Anyone would think he was a Hoffa, or something of that sort, instead of a very responsible citizen who is a member of the N.D.P. and has run as an N.D.P. candidate. Anyway, Mr. Speaker, that is the treatment he received. This article continues:
Mary Southin, lawyer for the president of the Pulp and Paper Workers of Canada, gave notice of her intention in Supreme Court on Thursday.
I have been in repeated contact with the executive officers of the union since this hearing was undertaken. The article continues:
Commissioner R. A. Sargent committed Braaten for contempt after he refused Wednesday to answer certain questions about a dispute between his union and the rival International Brotherhood of Pulp, Sulphite and Paper Mill Workers.
The 48-year old union leader was to appear today at the inquiry to be asked if he wishes to purge his contempt.
In a scheduled court appearance Monday, Miss Southin will seek a declaration that section 11 of the Public Inquiries Act is ultra vires of the legislature of B.C.
I read the Public Inquiries Act in the statutes of British Columbia and am of the same opinion as Miss Southin, namely that it is ultra vires of the provincial jurisdiction. The articles goes on to say:
This section was used by the government to authorize the Sargent commission to delve into the bugging of the PPWC convention by a private detective hired by international organizer Pat O'Neal.
She will also ask for a declaration that the order in council passed January 3, 1967, recommending
March 10, 1967

Criminal Code Amendment
Sargent be appointed commissioner under the Public Inquiries Act, is not authorized under the act.
Miss Southin also seeks a declaration restraining Sargent from inquiring into why members of the PPWC left the international to form the Canadian union, and whether their leaving "was justified morally, philosophically or legally."
She will also seek injunctions restraining Sargent from acting as commissioner, from committing any person to jail for contempt, from making any inquiry or finding in connection with the union rift.
If Braaten does not purge his contempt today, Miss Southin will also ask Monday for a writ of habeas corpus hearing for him. She will also seek to have bail set in his case.
She was given leave Wednesday night by Mr. Justice Peter Seaton to bypass the usual six clear days required for service of any action against the attorney general.
That action is proceeding at the present time. I wish to deal with the stir this has caused in the legislature of British Columbia, because I am one of those who is convinced that the only way this matter can be properly dealt with is by an amendment to the Criminal Code of Canada. I am inclined to agree with the opinion of the Solicitor General that we should not act hastily in this regard and should do everything we can to make sure that we enact the type of legislation that is required to cover this whole field. We should wait for the findings of the Royal Commission on Security, which is sitting at the present time, before reaching any conclusion in this respect. Legislation may be introduced in the meantime, but I think that before we finally adopt legislation that is intended to cover all aspects of this question we should give careful consideration to all that is involved in it.
I should like to read from an article which appeared in the Vancouver Sun of February 24. It is headed, "Abandon Bugging Inquiry, Opposition Chiefs Demand", and says:
The leaders of B.C.'s two opposition parties launched new attacks on the royal commission on eavesdropping Thursday night, demanding immediate suspension of the probe and introduction of laws to protect individual privacy.
Both N.D.P. opposition leader Robert Strachan and Liberal leader Ray Perrault said in statements issued outside the legislature that the inquiry is unnecessary because there is already ample evidence that electronic bugging is widespread.
Perrault charged that the commission was politically motivated.
And Strachan, who claimed the probe is off the track, anyway, said the Social Credit government is pressing on with the inquiry "for strange purposes of an unknown nature."


"No royal commission is needed to show that electronic devices are being used to invade the privacy of the individual," said Perrault, adding:
"A look at page 122 of the city of Vancouver telephone directory (yellow pages) and page 86 of the Victoria telephone directory shows that no royal commission is needed to prove that government licensed and bonded detective agencies are using devices for 'listening and recording' and for detecting 'telephone taps and room bugs.' "
Perrault was referring to display advertisements in the phone books.
Among the several ads is one which offers midget telephone tape recording and secret electronic equipment.
The Liberal leader said the probe was politically motivated because when a private bill on privacy was introduced in the legislature in 1965 no action was taken.
Again last year, when bugging devices were found to be in use in the Victoria police station, nothing was done, he said.
Perrault said the government showed no interest in invasion of privavy until last fall, when two unions became involved.
[DOT] (5:50 p.m.)
The irresistible conclusion is that this Social Credit government became vitally concerned when they saw that a political advantage might be derived.
The Liberal leader said the inquiry should be suspended.
But, if the government insists on continuing the probe, it should suspend the licences of private detectives who are advertising the use of bugging devices until the commission has ended its inquiry.
The detectives should also be called before the commission.
Strachan said "the commission has gone off the the rails" and is really engaged in trying the people involved in an inter-union dispute.
And the result is that the man who was hurt in the bugging incident is now behind bars.
"This is ridiculous and must be stopped. It does not deserve the confidence of his government which established it nor of anyone else.
Any action less than the termination of the commission can only be viewed a sa continued effort by the Social Credit government to use Her Majesty's prerogative in a royal commission for some strange purposes of an unknown nature."
Strachan said that if there are inter-union problems that require investigating, they should be referred immediately to the select standing committee on labour at the current session of the legislature.
I agree with the criticisms of the leader of the opposition in the provincial legislature, Mr. Strachan, and I agree with the criticisms voiced by Mr. Perrault dealing with this matter, although I am still of the opinion that the only way in which it can be dealt with effectively is through an amendment to our Criminal Code.
March 10, 1967

This whole question has been the cause of a great deal of concern among the labour movement in British Columbia, regardless of which side of the engagement they were on. They feel it has been to the detriment of the trade union movement, rather than to find out the facts related to any particular set of circumstances. I do trust that the government is giving this matter very serious consideration and that the legislation will be prepared and introduced at the first possible opportunity.


George James McIlraith: May I call it six o'clock, Mr. Speaker? There is a request to revert to motions for the purpose of permitting the Minister of National Revenue to table the final supplementary estimates, and for the purpose of permitting the Minister of Finance to make a short announcement.


Mr. Speaker:: By unanimous consent the hour appointed for the consideration of private members business is now completed.



SUPPLEMENTARY ESTIMATES (G) 1966-67

[Stage Direction]
A message from His Excellency the Administrator transmitting supplementary estimates (G) for the financial year ending March 31, 1967 was presented by Hon. E. J. Benson, (Minister of National Revenue and President of the Treasury Board), and read by Mr. Speaker to the house.
Mr. Benson moved: that the message of His Excellency together with the estimates presented this day be referred to the committee of supply.


Stanley Howard Knowles: Mr. Speaker, before you put the question may I ask the minister to tell us when he expects to table the main estimates for the forthcoming year?


Edgar John Benson: On Monday next, Mr. Speaker.


Mr. Speaker:: Is it the pleasure of the house to adopt the said motion?


[Stage Direction]
Motion agreed to.


Mitchell William Sharp: Mr. Speaker, I wish to make a brief announcement of government policy to precede giving notice of the introduction of a bill.
Royal Assent
In December when introducing the supplementary budget I said that in a few months time we would be in a much better position to appraise the economic outlook for 1967. I went on to state as an example that we would not hesitate to bring before parliament at short notice a measure to end the refundable tax on business profits.
The information reaching us in recent weeks has led the government to believe that although general business prospects are favourable, last year's very rapid rate of increase in business capital expenditure is not likely to continue this year. Consequently we feel this refundable tax, the purpose of which was to apply a temporary restraint on business capital spending, is no longer appropriate.
I shall therefore be giving formal notice on Monday of the introduction of a bill to amend Part II D of the Income Tax Act to terminate the period over which this tax is payable at the end of this month, rather than at the end of October. I shall of course be making a detailed statement on the matter when that short and simple bill comes up for second reading, which I hope will be within a few days.



BUSINESS OF THE HOUSE

George James McIlraith: Mr. Speaker, on Monday we propose to submit to the house for its consideration the following items on today's order paper: item 63; then, 74, if the necessary evidence is printed and distributed as I expect it will be; then items 134, 136, 137 and 119.
[DOT]	(6:00 p.m.)



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy to His Excellency the Administrator, desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate chamber.
[DOT]	(6:10 p.m.)
And being returned:
Mr. Speaker informed the house that the Deputy to His Excellency the Administrator had been pleased to give, in Her Majesty's name, the Royal Assent to the following bills:
An Act to amend the Small Businesses Loans Act.
An Act to incorporate The North West Life Assurance Company of Canada.
[Stage Direction]
March 10. 1967
Royal Assent
An Act to provide for the payment of a retiring annuity to the Governor General of Canada.
An Act to provide for the establishment of a Canadian Film Development Corporation.
An Act to provide for the revision of certain salaries fixed by statute.	...
An Act to provide general incentives to industry for the expansion of scientific research and development in Canada and to effect certain related amendments to the Income Tax Act.
An Act to amend the Fund for Rural Economic Development Act.
An Act to amend the Excise Tax Act and the Old Age Security Act.
It being 17 minutes after six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, March 13, 1967