1967-06-13

Mr. Speaker:: Yesterday questions were asked about the presence of television cameras in the galleries. Further discussions are now to take place among the house leaders, and pending the outcome of those discussions the cameras have been removed.



COMMITTEES OF THE HOUSE

[Stage Direction]
First report of the standing committee on transport and communication, in both French and English-Mr. Macaluso.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.]

Mr.   Palrick-T. Asselin@Richmond-Wolfe: That the first report of the standing committee on industry, research and energy development, presented to the house on Thursday, June 8, 1967, be concurred in.


[Stage Direction]
Motion agreed to.

Mr. A. J. P. Cameron (High Park) moved:: That the first report of the special joint committee of the Senate and of the House of Commons on divorce presented to the house on Thursday, June 8, 1967, be concurred in.


[Stage Direction]
Motion agreed to.

Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, following the imposition by the United States government of export licence restrictions on nickel materials intended for destinations other than Canada, nickel scrap, nickel alloy scrap, and other
nickel bearing scrap materials, including residues and dross and secondary ingot made from these scrap materials, have been added to the export control list for Canada affecting shipments to destinations other than the United States, under order in council P.C. 1967/1183 of June 13, 1967.
This action is necessary to prevent diversion through the Canadian market of materials now restricted for offshore shipment from the United States.



FISHERIES


Hon.   H.-J. Robichaud@Minister of Fisheries: Mr. Speaker, I ask for permission to table copies of an exchange of correspondence between Hon. R. G. Williston, minister of lands, forests and water resources of British Columbia and myself concerning the log drive on the Stellako river.


Mr. Speaker:: Has the minister leave to table these documents?


Some hon. Members:: Agreed.
[DOT] {2:40 p.m.)



FINANCIAL ADMINISTRATION ACT


Mr. R. N. Thompson (Red Deer) moved: for leave to introduce Bill No. C-130, to amend the Financial Administration Act (parliamentary commissioner for administration).


Some hon. Members:: Explain.


Robert Norman Thompson: Mr. Speaker, this bill is necessitated by the fact the government has failed to deal effectively with the recommendation of the special committee to set up the office of ombudsman. Actually this bill extends the duties of an office already in existence, that of the Auditor General. This office, which is already organized to deal with such matters, has no authority for certain functions and duties which by his own admission the Auditor General has already assumed because of the nature of his office. This bill would therefore set up an ombudsman for administrative matters. The bill is related to Bill No. C-36 but is complementary to it in

June 13, 1967
Inquiries of the Ministry the setting up of a special ombudsman for administrative affairs.
Motion agreed to and bill read the first time.



CANADIAN BILL OF RIGHTS


Robert Norman Thompson: for
leave to introduce Bill No. C-131, to amend the Canadian Bill of Rights.


Some hon. Members:: Explain.


Robert Norman Thompson: Mr. Speaker, this bill makes specific provision in the Canadian Bill of Rights to eliminate discrimination by reason of belonging to a particular profession or trade or by reason of one's education in respect of the basic rights or freedoms recognized by the Canadian Bill of Rights. It provides also for the right of a Canadian citizen to appear in person before courts and tribunals, and the right to handle his own case. Furthermore, if a decision is rendered in his favour he should be reimbursed for the costs therein involved.
Motion agreed to and bill read the first time.



CRIMINAL CODE


Mr.   Fernand-E. Leblanc@Laurier: for leave to introduce Bill No. C-132, to amend the Criminal Code (Off-track betting).


Some hon. Members:: Explain.


Mr. Leblanc (Laurier):: Mr. Speaker, this bill has three main objects:
1.	To legalize off-track betting which now exists illegally and is controlled by the underworld. Provincial governments could either control betting entirely or hand over its control to private enterprise subject to strict citizenry.
2.	To provide provincial coffers with money which could be used for education or other ends related to the well-being of youth and citizenry.
3.	To facilitate federal-provincial fiscal relations at coming conferences by decreasing the needs of the provinces. ..
Motion agreed to and bill read the first time.
[Mr. Thompson.)



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I direct my question to the Minister of Labour and ask him whether it is correct that he has received a telegram from Leonard McLaughlin of the S.I.U. threatening a strike of the 15,000 S.I.U. seamen on the great lakes. If so, what has been his reply and what action, if any does the government intend to take in this regard?


Hon. J. R. Nicholson (Minister of Labour):: Mr. Speaker, having just returned from the I.L.O. conference in Geneva, I will have to take the question as notice.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question I should like to direct to the Prime Minister. My question is, what is the position of the government with respect to the very unusual suggestion coming from the Soviet union that the question of whether Israel is guilty of aggression be referred to the general assembly of the United Nations?


Right Hon. L. B. Pearson (Prime Minister):: Well, Mr. Speaker, that will be a matter to be considered by the security council, I take it, in the terms of a resolution being submitted to it. Our delegate, acting on instructions from the government, will make the position of the government known when the time comes to vote on the resolution. We should like to hear the views and the remarks of others before a final decision is taken, which will depend to some extent on the debate and the terms of the resolution. Meanwhile I can say that if the resolution is merely in terms which denounce Israel as an aggressor in this particular matter within the meaning of the charter, we would not support that resolution.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, in the absence of the house leader I should like to direct my question to the acting house
June 13, 19G7

leader or the Prime Minister and ask whether it is the intention soon to refer something to the Indian affairs committee so the committee can conduct the business it was prevented from conducting last session.


Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, I will discuss this matter with the house leader as soon as he returns, which I believe will be later this evening.



NATURAL GAS


[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, my question is directed to the minister of energy and resources. Would the minister inform the house when he expects the federal power commission to reach a decision on the application of Trans-Canada Pipe Lines for the construction of the United States portion of the proposed pipe line?


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, I can only repeat what I said before, that this is still a secret. There are rumours from Washington that the federal power commission is about to make a decision, but it is still only a rumour.



MR. JUSTICE LANDREVILLE REQUEST FOR STATEMENT ON POSSIBLE PAYMENT OF PENSION

[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: Mr. Speaker, I should like to rephrase yesterday's question to the Prime Minister. Will the government immediately clearly indicate its intention that under no circumstances will a judges pension be paid to L. A. Landreville?


Lester Bowles Pearson: That matter has already been answered in the house by the Minister of Justice, Mr. Speaker.


Robert Jardine McCleave: Ten o'clock, Mr. Speaker. FISHERIES



INQUIRY AS TO ESTABLISHMENT OF GEOGRAPHICAL CO-ORDINATES

[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I should like to ask a question of the right hon. Prime Minister, arising out of an
Inquiries of the Ministry answer given to me yesterday by the Minister of Fisheries in relation to base line co-ordinates under the Territorial Sea and Fishing Zones Act. In view of the fact that it appears likely the Secretary of State for External Affairs will be preoccupied for some time, would the Prime Minister be prepared to consider transferring official responsibility for the negotiation of base line co-ordinates to the Minister of Fisheries?


Lester Bowles Pearson: Mr. Speaker, the Secretary of State for External Affairs is as interested in this matter as he has always been. It is also being pressed vigorously by the Minister of Fisheries, who is concerned with the problem and working with the Secretary of State for External Affairs to find a conclusion as early as we possibly can.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. William Dean Howe (Hamilton South):: Mr. Speaker, I have a question for the Minister of National Health and Welfare but in his absence I will direct it to the Minister of Agriculture.
In view of the fact that Canada was represented at a symposium in Washington held by the national research council and the national academy of sciences at the request of the food and drug administration, where it was decided that antibiotics added to livestock feed result in the emergence of drug resistant bacteria, is the government planning to investigate this matter further?


Mr. Speaker:: Order. I suggest to the hon. member that his question might be placed on the order paper.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I am not sure the Prime Minister can give an answer to this question at once as the matter just came to my attention as I came into the house. I should like to ask him whether Canada is now looking after the interests of Britain in Egypt as the result of the severance of relations; and can he advise the house as to the

June 13, 1967
Inquiries of the Ministry position of four British cargo ships presently marooned in Great Bitter lake in the Suez canal? The company which owns them claims that this places these ships in great jeopardy.


Lester Bowles Pearson: As far as the latter part of the question is concerned, Mr. Speaker, I do not know anything about these four British ships. We will make inquiries, but perhaps the British government would know more about their ships than we do.
So far as the first part of the question is concerned, we have been looking after the interests of Great Britain in the United Arab Republic for a good many months, and there is no reason that we should not continue to do so, as far as I am aware.


John George Diefenbaker: Will the Prime Minister have an inquiry made in this regard, in view of the fact the British government is unable to obtain this information?


Lester Bowles Pearson: I would be glad to make an inquiry into this matter, though I would think the owners of the ships or the British government would know where the ships actually are. We will be glad to make inquiries.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, my question is directed to the Minister of Industry. Is he aware of the Canadian Press item today which indicates that 300 or 400 more men received layoff notices at the Sydney plant? If so, what steps does he consider can be taken to assist in solving this most serious matter along the lines I suggested the other day, to which the Prime Minister agreed? I suggested an investigation could be carried out in co-operation with the Nova Scotia provincial government.


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, we are carrying out the investigation agreed to by the Prime Minister.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I have a question I should like to address to the Minister of Manpower and

Immigration. I have his letter denying landed immigrant status to a Greek shepherd, and I should like to ask the minister whether Moses, who looked after sheep for 40 years, or King David, who was also a shepherd, would have been admitted to Canada under the present regulations.


Some hon. Members:: oh, oh.


Mr. Speaker:: Order. I am wondering
whether the Prime Minister wishes to reply to the hypothetical question.


Ralph Bronson Cowan: Nothing hypothetical. A Greek has been refused landed immigrant status.


Lester Bowles Pearson: My hon. friend will never get into the promised land by asking that kind of question.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Does the answer of the Prime Minister indicate that the hon. gentleman is about to go to the other place?


Lester Bowles Pearson: It would not be a bad idea.


Ralph Bronson Cowan: I do not expect to see the cabinet where I am going-up there.


Some hon. Members:: Oh, oh.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Reid Scott (Danforth):: I wish to address a question to the Prime Minister in connection with housing. Some time ago the right hon. gentleman said he was considering the creation of a full time ministry of housing and urban affairs. In view of the continuing housing shortage I wonder whether a decision has been made to set up such a department. If so, is the Prime Minister in a position to announce it?


Lester Bowles Pearson: No, Mr. Speaker; no decision has been made. This does not mean we are less concerned about housing difficulties than we were. All efforts are being made, and I am glad to say the situation is more encouraging than it was a few weeks ago.


Mr. A. D. Hales (Wellington South):: supplementary question to the Minister of Labour who is responsible for housing. Is the
June 13, 1967

minister giving consideration to extending the loans on existing housing?


John Robert (Jack) Nicholson: The matter is under constant study. If a decision to make any changes is reached it will be announced in due course.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. J. R. Keays (Gaspe):: I wish to direct a question to the Minister of Labour and inquire whether in considering amendments to the unemployment insurance regulations now before the cabinet for approval any consideration has been given to amending the legislation as it applies to forestry workers.


Mr. Speaker:: Order. The question is obviously out of order.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mrs. Grace Maclnnis (Vancouver-Kings-way):: I wish to direct a question to the Prime Minister in the absence of the Secretary of State for External Affairs. In view of the fact that great numbers of Arab refugees are now in refugee camps or wandering unwanted from place to place, will Canada, as a contribution to a peace settlement in the Middle East, offer to receive a generous number of these Arab refugees?


Lester Bowles Pearson: This agonizing and continuing problem, which is likely to become an even more serious problem in the future, has been receiving attention in the United Nations over the years, as the hon. member knows, without much success. The problem is now greater than ever and it will require more attention and much more action on the part of the United Nations. Just as Canada has played her part, I think, in previous efforts to deal with this situation, we shall certainly play our part in any new and more effective effort which may be made.
[DOT] (3:00 p.m.)

The house in committee of supply, Mr. Dubd in the chair.
Supply-Defence Production


[Stage Direction]
1. Departmental administration and (a) the care, maintenance and custody of standby defence plants, buildings, machine tools and production tooling; (b) grants to municipalities in lieu of taxes on crown owned defence plants operated by private contractors and (c) the repair of office equipment for all government departments, $25,669,000.
The Acting Chairman (Mr. Dube):: House again in committee of supply, estimates of the Department of Defence Production for the fiscal year ending March 31, 1968. Vote No. 1 will be found at page 66 of the blue book. The details thereof are listed at page 67. Shall this item carry?


Charles Mills (Bud) Drury: Mr. Chairman, in respect to the Department of Defence Production I would like to refer briefly to both the department's traditional responsibility in the field of defence procurement and the additional undertakings that are being assumed in the purchasing and supply field for the civil departments of the government. I propose to deal initially with the Department of Defence Production, and when consideration of that is completed to tackle separately, and I hope in order, the emergency measures organization and, if we have time following that, the National Research Council.
The Department of Defence Production is responsible for the procurement of goods and services for the Department of National Defence, and also for ensuring that the necessary production capability is available to support our defence production program and related activities.
In addition, as I mentioned last year in my statement on the departmental estimates, the department is continuing to implement the recommendations of the royal commission on government organization which relate to departmental purchasing and supply responsibilities. In this connection as I indicated last year, the government, has approved the establishment within the department of a central purchasing agency to serve all departments and agencies of the federal government other than the commercially oriented crown corporations. The government has also approved the establishment of the basis for an integrated supply service.
Although it would not be appropriate to review all the procurement programs of the department at this time, I would like to draw the committee's attention to several areas of activity.
June 13, 1967

Supply-Defence Production
In shipbuilding a study of government procurement policies resulted in the adoption by the government of the principle that national competition should be sought whenever the nature and operational circumstances of the requirement so permitted. Procedures have now been introduced to let shipbuilding work competitively. Results of this policy have been successful.
A contract has been awarded to the Saint John Shipbuilding and Dry Dock Company Limited for the construction of two operational support ships for the Royal Canadian Navy. This is the largest shipbuilding contract ever placed in Canada, and these two ships will increase the fleet's anti-submarine warfare potential by keeping our destroyers at sea for a longer period than is now possible.
The modernization and refit of seven destroyer escorts of the St. Laurent class was completed in the fall of 1966. Work on the modernization of the first of seven vessels of the Restigouche class is being undertaken by H.M.C. Dockyard, Halifax. The six following vessels will be modernized by commercial shipyards selected through competitive tenders. The work on the first of these ships is scheduled to commence in January, 1968.
Production contracts for new and advanced sonar systems for these ships are in progress. New data processing methods for anti-submarine warfare are being developed which will result in a significant improvement in the ships' capabilities, and new communications systems are to be installed using a unique method of switching to permit common use of antennae, thus reducing deck clutter. Studies are under way to establish a method of electronically monitoring all the ships' systems in order to improve maintenance procedures.
The first of the three Oberon class submarines being procured from the British ministry of defence, the Ojibwa, was delivered in September, 1965 and the second submarine, the Onondaga, which was lauched the same month is scheduled for delivery in mid-1967. The Okanagan is scheduled for delivery in mid-1968.
Four vessels are being constructed for the Department of Energy, Mines and Resources in support of their hydrographic, oceanographic and linographic research programs in international, Canadian coastal and great lakes waters. Under this program contracts were awarded late in 1965 for two tidal and current survey vessels, with completion scheduled for August and October, 1967. Contracts for two other research vessels were awarded

in 1966 with completion scheduled for August, 1967 and May, 1968.
A contract for a naval research establishment vessel required to provide an oceangoing research facility for acoustic, antisubmarine warfare, hydrographic and oceanographic research was awarded in November, 1966, as a result of competitive tenders. Completion of the vessel is scheduled for early 1969.
In the field of communications, consultants are completing a comprehensive study of the design of a modern communication system for the Department of National Defence. In addition a wide range of equipments is being purchased to provide communications for the operational elements of our forces.
In the aircraft field, in addition to the production of the 115 CF-5 aircraft for the Canadian armed forces, significant programs include the de Havilland Buffalo aircraft. Progress on our own military order for 15 of these aircraft is satisfactory, and 12 aircraft have been sold commercially in the export market. Current and prospective sales of the de Havilland twin engine Otter aircraft, which features the Canadian designed and manufactured PT6 turboprop engine, justify our initial confidence in and financial support of these two programs.

The first of seven Falcon Dassault transport aircraft was accepted in Paris several weeks ago. The Canadian industry must prepare plans for the electronic systems that it will have to install; it will also furnish the seven aircraft.
Ten Bell tactical transport helicopters are also being purchased for the Canadian armed forces.

Export sales of the Canadian designed and produced Black Brant research rockets are being made by Bristol Canada whose facilities are able to offer quick delivery to potential customers.
Modernization programs, including the fitment of new avionic equipment, are being carried out on such aricraft as the CS2F Tracker, Argus and Neptune anti-submarine warfare aeroplanes and CHSS-2 Sea King helicopters. My departmental officers are also collaborating with the aerospace industry and other nations in a number of interesting development projects with good market potential. For example, the CL84 vertical and short
June 13, 1967	COMMONS
take off and landing dynavert is now being evaluated by the United States.
While we may tend to emphasize the development and production of new aircraft, there are also contracts placed, totalling some $70 million annually, for the repair of aerospace equipment, with 40 to 50 contractors from coast to coast in Canada.
The Department of Defence Production is also continuing to procure various types of conventional weapons and ammunition to meet the training requirements of the Canadian defence forces. To the extent feasible these requirements are produced in Canada.
The recent development of the anti-submarine projectile which has now been introduced into the Canadian navy has resulted in substantial sales of this item to Britain and to the Netherlands. Canadian development of the Dance lightweight launcher is on schedule. This development is being supported under the Canada-United States defence development and production sharing program. Already an initial production order has been received as a result of development work.
Negotiations have also been completed for the procurement of 800 military type jeeps to replace similar vehicles bought during the Korean conflict. Delivery was obtained on the majority of the 150 aircraft refuelling trucks previously ordered for support of the air service at home and abroad. Action is now under way to purchase Lynx command and reconnaissance vehicles, self propelled 155 mm. Jiowitzers, and Ram trucks to replace the present M37 cargo trucks.

The complexity of military equipment required to meet the most modest and limited defensive roles is continously increasing. This expansion in technical sophistication arises from the necessity to achieve greater flexibility of application and, by increased automation, to raise the efficiency of employment of military manpower. These factors contribute substantially to the steady rise in the cost of developing and producing modern defence equipment, which has been evident in the past few years and which is expected to continue in the future.
In common with our allies we seek to achieve maximum cost effectiveness in the application of our necessary defence budgets. This means that every defence procurement contemplated must be considered not only in the sense of military necessity but also in regard to many interrelated economic factors. We must strive to obtain the best equipment for the lowest cost while at the same time considering the importance of the procurement to the maintenance of an essential minimum Canadian industrial defence base and the extent to which it may contribute to our over-all national economic growth.
Our allies are generally faced with the same considerations and it is becoming increasingly apparent that in many cases our mutual interests are best served by co-operative development and production. By such means the cost reduction advantages attendant on larger scale production can be realized. At the same time the development investment and risk can be shared and the participating nations afforded the opportunity to specialize in fields of technology appropriate to their resources and interests. The number of such co-operative projects is steadily increasing, involving not only the smaller nations but also the larger powers who in spite of their extensive industrial resources are finding it progressively more uneconomical to justify independent development and production. The difficulties inherent in putting together multi-national defence equipment programs are very great, but expertise is being developed in Canada which is being put to good use.
It would not be practical to review all such projects in which Canada is involved at present or likely to be in the future. I would, however, like to refer to two typical projects now in being. First in the aricraft field, where production of 115 CF-5 aircraft for the Canadian armed forces is proceeding on
June 13, 1967

Supply-Defence Production schedule, the government of the Netherlands has now confirmed its desire to participate in the Canadian production of the CF-5 tactical ground support fighter. The Netherlands air force is in the process of placing orders for 105 aircraft and associated spares, which will have the effect of almost doubling the production requirement over the next four years. This arrangement offers potential savings to both governments in production costs and the lifetime maintenance expenses for the aircraft. Expanded navigation and other facilities are being added by the Netherlands thus further increasing the flexibility and effectiveness of this aircraft in certain roles. Both the Canadian and Netherlands aerospace industries will be co-operating in the manufacture of the many components and subassemblies required, and this association offers the opportunity to develop advantageous longer term industrial trading relations.
Second, in the area of battlefield surveillance systems Canada, Britain and Germany have co-operated in the development in Canada of the CL-89 reconnaissance drone. The three countries shared the cost of this successful development on an equal basis and are currently planning production to start later this year to meet their joint requirements. By sharing the cost and the risk the three countries will thus be able to acquire essential advanced defensive equipment for a minimum investment.
The department will continue to explore and develop all such opportunities for cooperation wherever it appears in the best interests of Canada and of our allies.
As a step toward the implementation of the recommendations of the royal commission on government organization, a thorough evaluation of defence acquisition methods and techniques indicated early in 1966 the possibility of a significant improvement in departmental management of major defence procurement projects. Accordingly it was decided to establish a program of single office project management within which a single officer would be assigned appropriate authority and responsibility for managing all aspects of the implementation phase of selected procurement projects. The primary responsibility of these project managers will be to maintain the time, cost and performance objectives established by the funding authorities.
The project managers head small offices composed essentially of planning, engineering and contractual capabilities which enable them to arrive at optimum trade-off decisions by logical and systematic evaluation of cost

versus effectiveness. Where such decisions are beyond their authority the project managers present alternative solutions directly to senior management for policy decisions.
Responsibility for establishing this new program within the department has been assigned to the project management branch. It is responsible for the establishment of project offices for acquisitions which have a high cost and/for priority; involve organizational complexity or technical risk; require extensive interdepartmental or international co-ordination; or have potentially difficult industrial or economic aspects. Examples of projects which fall within this area of activity are the CF-5 aircraft, the CL-89 surveillance drone and the periscopter short range elevated viewing device.
Before closing my statement I would like to refer to the present status of departmental activities relating to the implementation of those recommendations of the royal commission on government organization which relate to the responsibilities of the Department of Defence Production.
As regards the consolidation of all purchasing for federal departments and agencies other than the commercially oriented crown corporations, I am pleased to report that a consolidation plan and schedule has been established and to date a total of 16 agencies and departments have had their purchasing functions taken over in whole or part. In addition it is planned to consolidate the purchasing activities of the Departments of Fisheries, Transport and National Revenue before the end of 1967. It is also planned to transfer the purchasing functions now remaining with the Departments of Indian Affairs and Northern Development, Public Works and Manpower and Immigration to the Department of Defence Production early next year.
The Canadian government supply service is comprised of No. 1 supply centre in Ottawa, warehouses in Toronto and Montreal, 16 regional purchasing offices in Canada, Britain and western Europe, and seven headquarters branches. These seven branches perform many diverse functions related to materiel management within the federal government.
The operational elements of the C.G.S.S. are concerned with regional purchasing, the repair and maintenance of office machines, No. 1 supply centre, which is the prototype C.G.S.S. supply centre, and warehouses in Montreal and Toronto. At the present stage of
June 13, 19S7	COMMONS
supply consolidation the Department of Defence Production has assumed responsibility for stationery, paper, furniture and a few other minor commodities for all government departments. During the 1966-67 fiscal year No. 1 supply centre issued 445,000 line items of these commodities having a value of $10,218,000, and C.G.S.S. regional purchasing offices arranged for the purchase of materiel and services valued at over $102 million.
The technical services branches of the C.G.S.S. provide the technical support and functional d:rection required by the operational elements oof the supply service. In addition these branches provide civil government departments with advice and service in the functional areas of cataloguing, traffic management. quality assurance and specifications and standards.
The cataloguing branch up to March 31, 1967 had identified and catalogued approximately 50,000 line items, of which 56 per cent were new items and 44 per cent were either common with existing catalogued items or disposable, thus providing an opportunity for a reduction in inventory as supply consolidation proceeds. This branch also produced purchase descriptions for 4,600 fast moving items to allow more efficient and competitive procurement. It further assisted Canadian industry by providing identification and sourcing data to facil'tate bidding on NATO contracts for certain technical equipment requirements.
[DOT] (3:20 p.m.)
The traffic management branch has negotiated for federal government employees special hotel rates with an estimated saving of $150,000 a year. The introduction of an analysis of the freight content of contracts is expected to result in a cost reduction of nearly $200,000 annually. A new method of acquiring in-transit insurance on a governmental group basis for household goods removals will reflect a decrease in insurance cost at an annual rate of approximately $390,000.
During 1966 the Canadian government supply service made progress in developing the organizational structure, management plans and operating systems required for the consolidation of civil government supply activities in the capital region. These important preliminary activities will permit the C.G.S.S. to develop plans for the gradual assumption of certain supply activities now being carried out individually by numerous departments and agencies across the country.
DEBATES	1457
Supply-Defence Production
In 1966 the Departments of National Defence and Defence Production agreed to a set of principles on which an integrated federal materials management system will be based. The primary objective of the integrated system is to provide the government of Canada with a wide system for the procurement and supply of material and associated support services at minimum cost. My officers are cooperating with their counterparts in D.N.D. to bring about the achievement of this objective. A major activity of the C.G.S.S. during the current fiscal year is the consolidation of civil government supply facilities in the capital region. There are some 150 warehouses and substores being operated by civil government departments in the capital region. It is planned to consolidate these stores into No. 1 supply centre.
Mr. Chairman, I commend these estimates to the consideration of the committee.


Mr. Harkness:: Mr. Chairman, I should like to thank the minister for having shed some light on the activities of his department. However, most of what he said was with regard to the procurement of certain military equipment or the plans in connection therewith, and I think most of us in the house are very considerably befogged as to just what is the situation in the Department of Defence Production, how it is organized at the present time, the activities it carries on and how those activities are apportioned within the department.
I note from the estimates that there has been a considerable increase in staff. This increase has amounted to something better than 400. I presume the increase in staff has been to take care of the function of purchasing on behalf of all government departments, which it was planned this department would take over. The minister in his remarks noted that there are 16 agencies for which the department is now purchasing. He also said there are a number of others in regard to which the department will be carrying out the purchasing.
I hope the minister will be able to tell us to what extent the department has taken on the purchasing function for all government departments as planned, in other words how many departments do not have their purchasing carried out by this department. Also, is it planned that all departments will eventually have their purchasing carried out by the Department of Defence Production? I am in very considerable doubt as to the extent to which this policy, which I think was announced two years ago, of the department
June 13, 1967

Supply-Defence Production becoming the purchasing agency for all departments has actually been implemented. When the minister says 16 agencies I do not know whether that means 16 departments, branches of departments, crown corporations, or exactly what it does mean. Therefore I hope the minister will elucidate further on this question and tell us exactly what is the situation.
I think it would also be helpful, though probably it cannot be done at this time, if the minister would issue a chart showing the present organization of the department and the functions carried out by each of the branches or parts of the department. At the present time, in view of the numerous changes that have been carried out, I personally-although I was fairly familiar with this department at one time-do not know what the situation is, how the department is organized and how it carries on these various functions.
I believe we should also know what proportion of the activities of the department are devoted to its original purpose, the purpose for which it was set up, that is defence production, supply and purchase and associated activities. What proportion of the activities of the department is really concerned with this new function which has been undertaken, that of being the general purchasing agency for all government departments or a certain proportion of them? At the present moment I do not think anybody in the house has any idea of the division of work as between the personnel of the department and its general resources vis-a-vis the two chief functions for which the department is responsible.
I should like some information on another matter. What is the situation of the Department of Defence Production vis-a-vis the Department of Industry? I have an idea that a good deal of the administrative work for the Department of Industry is carried on by the Department of Defence Production, but I do not know whether this is actually the case. I should like the minister to give us some information in this respect and tell us what is the relationship between these two departments. To what extent does the Department of Defence Production carry on administrative work for the Department of Industry?
I note in looking at the estimates that the Canadian Commercial Corporation has disappeared except for a bookkeeping entry, as far as I can make out. Apparently the work formerly carried out by the Canadian Commercial Corporation is all being done by departmental personnel. There is no item left
[Mr. Harkness.I

for personnel and administrative costs in connection with the Canadian Commercial Corporation. The only item left is a payment by the Canadian Commercial Corporation to the Department of Defence Production for administrative services. It would appear that for all practical purposes the Canadian Commercial Corporation has disappeared. All the work it carried out is now being done directly by the Department of Defence Production.
I wonder what is the purpose of keeping this corporation in existence as far as the estimates book is concerned, and showing this one entry of a payment by the corporation to the department. In other words, we vote so much money to the Canadian Commercial Corporation, and that money is then turned over to the department to cover administrative and other costs for work formerly carried out by the Canadian Commercial Corporation. Perhaps the minister could explain why this item is still in the estimates, and why the name of the Canadian Commercial Corporation is still maintained when it would appear that its functions have been taken over by the personnel of the Department of Defence Production.
I also note that the provision for the care, maintenance and custody of stand-by defence plants, buildings, machine tools and production tooling is down to a little more than half what it was before. I wonder how many stand-by defence plants and what tools, etc., are still left. I should like to know where those plants which are left are located and what is the purpose of retaining them at the present time, in view of the fact that the majority of the plants, tools, equipment and so on have been disposed of, as far as I can see.
Those are some of the general questions which a cursory examination of the estimates has brought to my mind and to which I hope the minister will be able to supply answers.
[DOT] (3:30 p.m.)
In the remarks he made under the general heading of government procurement policies he dealt first with the shipbuilding program and stated that shipbuilding contracts have been put on a competitive basis. I wonder whether this so-called competitive basis on which the shipbuilding contracts have been placed actually works. This is not the impression we have, particularly judging from the history so far as we know it, of the refitting of H.M.C.S. Bonaventure. I believe it has been alleged that the original tender was let
June 13, 1967

on a competitive basis. The cost of the refitting is now considerably more than double what the original tender called for. To say that shipbuilding contracts are let on a competitive basis is I think, a travesty. First a contract is let on a competitive basis and then it is increased until the original cost is doubled. Although it may be said that a contract is let on a competitive basis, what it really comes down to is a cost plus basis in view of all the money which is expended above the initial tender. This again is a matter on which we need some explanation, particularly with regard to the refitting of the Bonaventure about which I think many people may have quite a number of questions. Perhaps some of my colleagues would like to ask more specific questions on that matter.
With regard to aircraft, the minister spoke at some length about the CF-5. All he said was that the program was going ahead satisfactorily. This is, of course, a nice, pleasant, general statement such as we have heard in this house on many occasions, and very frequently it does not mean too much. I should like to know when deliveries of the CF-5's are to start. The program was announced, I believe, nearly 18 months ago and production was to have started well over a year ago. Therefore one begins to wonder when deliveries of this aircraft will commence.
Another question I should like to put to the minister is, what proportion of the total cost of these aircraft will cover work done in Canada and what proportion of the cost will cover parts of engines or frames imported from the United States? In considering the value of producing an aircraft such as the CF-5 or any other aircraft in Canada, it is quite material for members of the house to have an idea of how much of the total cost which the taxpayer pays for these aircraft covers imports into the country and how much covers labour and goods which are Canadian in their origin.
The minister said something about an antisubmarine projectile of which there had been sales to the United Kingdom and other countries. I do not know whether he was referring to a projectile for aircraft use or for use by destroyers or other ships. Perhaps the minister could give us some information on this matter. I should also like to know where in Canada these anti-submarine projectiles are being produced and who is the contractor for them.
With regard to the general question of defence production sharing, as it is called, we
Supply-Defence Production would also be interested to know what have been the total sales of defence equipment to other countries and what have been the total imports of defence equipment from other countries, particularly to and from the United States. Putting defence production on a reasonably shared basis has been an awkward and thorny question over the years. During the period when I was minister of defence we were constantly working on the problem, in conjunction of course with the Department of Defence Production, in order to try to persuade our allies in NATO to adopt more common programs with regard to equipment of all kinds. It was always an uphill struggle and it was always difficult. In fact it proved to be impossible to get unanimous agreement on a single article that I can think of because every country was anxious to produce as much of its own defence equipment as it possibly could. However, a considerable amount of progress was made. The extent to which we do sell defence equipment to other countries is one of the measures of the success of the efforts which were made through the years toward this end. However, as I say, I would like to know what the general picture is in that regard so far as the operations of the past years are concerned and particularly whether we have a debit or a credit in foreign exchange payments as a result of this type of activity.
I would like to say something about a number of other matters such as Canadian Arsenals and in particular the emergency measures organization. However, as I understoood the minister's remarks he hopes to deal with each of these subjects in turn. Therefore I will defer my remarks on these other subjects until we have disposed of the general discussion on item 1 of the estimates of the Department of Defence Production.


Thomas Speakman Barnett: Mr. Chairman, the minister's opening remarks can really be divided into two parts, first, a report to the house on the traditional role of the Department of Defence Production in procuring for the armed forces of Canada and, second, the transformation of the department into a procurement agency for government departments generally. My own feeling with respect to the second part is that his remarks were in the nature of an interim or progress report. While the process of transition, to which the hon. member for Calgary North referred, may have been going on for some time it has not yet reached the point where we could expect much more from the minister than he gave us in his opening statement. Second, I believe it has not yet reached
June 13, 1967

Supply-Defence Production the point where members of the house generally are in a position to judge fully the success or otherwise of the developments that have been taking place in this direction. In any event, I think we all recognize that the department as a whole is largely concerned with what one might term the internal housekeeping operations of the federal government. In my view this lends itself much more readily to the kind of consideration that could be given by a standing committee of the house where various officials of the department could be heard in greater detail. This would be true, of course, unless there were particular policies that required full debate in this chamber.
[DOT] (3:40 p.m.)
I should like to suggest, therefore, that possibly by the time the departmental estimates are considered next year we may very well have reached a point where it would be worth while for the estimates to go before a committee so that the developments that have been taking place within the department could be reviewed in some depth. I make this suggestion with two purposes in mind. The first would be to give members of the house who are most interested and concerned a well-rounded picture of what is occurring. Second, this procedure would enable members to form judgments that would be based on detailed information. So far as the work of the average member is concerned, Mr. Chairman, I suggest that, apart from that kind of approach, the questions involved in internal housekeeping come to us largely as the result of rather accidental situations that may develop in conjunction with other aspects of our general work as members.
There is a question in connection with central purchasing and distribution which will have to be discussed at some point and on which we should have detailed information when such information can be properly made available. We should be informed about whether the trend toward central purchasing and distribution of government supplies is in actuality creating more efficiency and economy, whether this procedure has the kind of flexibility that is necessary to meet efficiently the requirements of operating departments. There is, of course, the danger of simply creating another area of bureaucracy, as a result of which the people working in the field in the various departments may find it much more difficult to go ahead with the tasks they are required to perform. This is one of the dangers in having another agency


through which they have to go in order to get their supplies. This matter can only be assessed when we have had an opportunity of reviewing the whole operations of the department in some depth in a standing committee. At some appropriate stage such a committee may wish to ask members of the various operating departments of government their opinion of the arrangement of having purchases made through a central agency of government.
So far as the minister's report to the committee is concerned, I think he indicated that progress has been made in the general direction that we all agreed we should go at the time the program was announced. There is little more that one can usefully add by way of general observations at this point in the development of this program under the minister's department. I hope the minister will give us some indication whether he agrees or disagrees with my suggestion that in a year's time it may be desirable from his point of view and the point of view of members generally that the kind of review I have proposed be made.


Robert Norman Thompson: Mr. Chairman, I wish to bring to the attention of the committee some of the points that have been mentioned already by the hon. member for Calgary North. I believe that he touched only briefly on a major development in the Department of Defence Production. I am referring to the staff increase in departmental administration. As the hon. member for Cargary North mentioned, the increase in staff for 1967-68 over previous years is 412. Most of the increase is in the higher salary brackets. There has been an increase of four, from 16 to 20, in the senior officer level within the $14,000 to $16,000 bracket. At the executive level there has been an increase of five in the salary range of $10,000 to $12,000. However, the real increase appears under the administration and foreign services section where there is an increase of 69 in the senior officers. There is an increase from zero to 69 in one year. In the second salary category under administration and foreign services there is an increase of 506 in the $14,000 to $16,000 bracket.
I realize that in some of the brackets a little farther down there has been a decrease in administrative staff. However, as I have noted there is a total net increase in personnel of 412 and for the most part the increase is at the senior level. There has been a tremendous increase in the total cost of administrative personnel. The increased cost in
June 13, 1967

1965-66 over the previous year was something over $4 million and the increase in 1966-67 over the preceding year is over $5 million. The total increase in two years amounts to more than $9 million or 66 per cent.
Having in mind that the department is taking over the responsibility of purchasing supplies for many government departments, some of this increase is justified. However, the increase is so large that it seems to me the minister should give the committee a detailed explanation of the reason for the tremendous increase which has taken place in the last year. The estimates show that the expenditures for this calendar year are going to be far in excess of the normal productivity growth of the country.
While the government is engaged in slowing down many other areas, particularly the private sector and local government areas in the country, the costs of government at the federal level are going ahead at a rate three to five times the normal increase in productivity of the country. In the light of these circumstances, I think the minister should give the committee a detailed explanation of the necessity for this tremendous growth in the administrative costs of the department.


Jean-Eudes Dubé: Shall vote No. 1 carry?


Douglas Scott Harkness: No, Mr. Chairman, we have posed a considerable number of questions to the minister which I believe he should answer before the vote carries.
[DOT] (3:50 p.m.)


Charles Mills (Bud) Drury: The first problem relates to the increase in the number of personnel, and this question was raised by both the hon. member for Calgary North and the hon. member for Red Deer. As the hon. member for Calgary North assumed, the largest part of this increase relates to the establishment of the new operation which I described, namely, the establishment of a new Canadian government supply service involving both purchasing and also warehousing and distribution of supplies for government departments other than the Department of National Defence, which of course will continue to perform its own warehousing and distribution functions. Part of the increase in salaries is accounted for by the increased levels of salaries which have been accorded to the whole of the government service. I do not think I need discuss this particular aspect at all.

Supply-Defence Production
The hon. member for Red Deer made some mention of the fact that there seemed to be a number of senior positions involved. I should explain to him that what we are endeavouring to establish here is a very efficient and large supply service, including warehousing, which calls for skilled managers who are familiar with the most recent techniques and have had training in such techniques in warehousing and distribution. The result of having both a consolidated service and skilful people engaged in operating it will, I hope, be that the occasions on which the government finds itself with overstocking or being left with obsolete or obsolescent stocks on its hands will decline quite materially. In my view it is well worth the investment of getting good people to manage this operation in order to achieve the savings that will follow.
The hon. member for Calgary North wanted to know which government departments and agencies have been taken over. I mentioned that there were some 16. Starting in March, 1964 and running through January, 1967. I had reference to the Civil Defence College; public printing and stationery; public works in Ottawa, Toronto and Montreal; the former department of northern affairs and national resources in relation to the western Arctic and Mackenzie regions only; the department of citizenship and immigration; the R.C.M.P. in respect of vehicles; national flags, all departments; the Department of National Health and Welfare in respect of prosthetic devices or services; the Department of Veterans Affairs; the Secretary of State so far as museums are concerned, northern affairs and national resources, national parks and historic sites; Secretary of State, national gallery and civil service commission; the remainder of the Department of National Health and Welfare in July of last year; the Secretary of State, public archives and national library; the Secretary of State, chief electoral officer, last December; and the Department of Trade and Commerce in its entirety in January of this year.
I think I mentioned in my opening remarks that during the course of this year we hope to take over in their entirety the responsibilities for purchasing and supply for the Department of Fisheries, the Department of National Revenue, the balance of the Department of Public Works, the balance of the Department of Transport, and Indian affairs and northern development. I am advised that this represents an assumption to date of responsibility for purchasing and supply of materials and
1462	COMMONS
Supply-Defence Production services to the value of some $65 million per year.
There still remain to be taken over-I hope the hon. member for Calgary North will not want me to enumerate them-purchasing and supply representing an additional $100 million per year. This gives the order of magnitude of what has been assumed and what still remains to be done. This is a five year program, of which three years still remain to be achieved.


Douglas Scott Harkness: Mr. Chairman, may I at this stage ask the minister whether the plan is to take over purchasing for all departments and to have it completed by the end of the five year period, or will certain departments or parts of certain departments continue to do their own purchasing and let their own contracts? I am thinking particularly of the P.F.R.A. organization in the Department of Agriculture, which I think is in a much better position to let contracts for the dams and other things it builds than would be the Department of Defence Production.
This is a specialized type of business, and the only people fully qualified to conduct it in any government department, so far as I am aware, are those in the P.F.R.A. organization.
I would hope there might be some exceptions made in respect of organizations of this kind which have specialized knowledge regarding the letting of contracts for the type of business and activities that they carry on. For this department to take over these functions from them would, I think, be wasteful, expensive and would not produce as good results.


Charles Mills (Bud) Drury: Mr. Chairman, I can assure the hon. member that the object of this particular operation is to establish a more efficient, less wasteful and more productive result. If the effect of taking over P.F.R.A. would be to produce the result indicated by the hon. gentleman. we should not, would not and will not do it. The purpose of trying this consolidation is to achieve economies. It is not intended to assume purchasing and supply responsibility for either specialized materials or services which are not common to more than one department and which the current department holding this responsibility can probably do more efficiently than a centralized service. We are proceeding with the departments having the greatest volume of common materials and services, leaving the rather more unique ones until later. No final decision has been taken on what will eventually be included in the over-all plan and what will be left to

DEBATES	June 13, 1967
continue operation as the hon. gentleman suggests.


Douglas Scott Harkness: I have another question specifically on this point. Has the Department of Defence Production now taken over the purchase of automobiles and other automotive equipment for all departments or are there some departments who still purchase their own? I noted the minister said that the purchase of vehicles for the R.C.M.P. had been taken over. Are these vehicles now purchased on a wholesale basis more or less directly from the manufacturers, which has been the case for a number of years so far as the Department of National Defence is concerned, or are they being purchased locally, as has been the case heretofore with most of the other departments.


Charles Mills (Bud) Drury: In respect of the departments having the largest fleets of motor vehicles, we have now proceeded to take these over. There are still some departments that have requirements for and purchase relatively few vehicles which have not yet been taken over.
[DOT] (4:00 p.m.)


Robert Norman Thompson: I have two further questions for the minister. Having regard again to the question of the increase in personnel, I can well understand the increase at the level of executive, scientific and professional people, but with regard to the second section under administrative and foreign service, will the minister explain to the committee what is meant by foreign service personnel so far as his department is concerned? Let me also direct his attention to the fact that the greatest increase in personnel has occurred in this particular branch. Not only is there a net increase this year of 163 but the breakdown shows that 830 of the personnel shown on this year's establishment earn over $10,000 per year, that is, from $10,000 to $18,000, and only 313 earn under $10,000. Will the minister explain to the committee why this particular set-up is as it is and why there has been such an increase at the senior level of this department?


Charles Mills (Bud) Drury: Mr. Chairman, in respect of the first question let me say that the category of administrative and foreign service is a general classification in the public service. It is a fact that we have abroad some officers of the government supply service who are charged with purchasing and supply in cities outside Canada, notably Washington, Bonn, Paris and Rome, to cite a few. They are classified as
June 13, 1967	COMMONS
officers entitled to draw foreign service allowances just as those in the general category of
administrative and foreign service officers.
Having regard to the second question about the proportion of senior people compared with those at lower salaries, it would be a little difficult to justify this in the house without going into a detailed examination of the duties and responsibilities of each individual concerned. I think the hon. member for Red Deer is probably aware that establishments proposed by government departments are submitted to a group under the supervision of the Treasury Board which does this for all departments of government service. It is this group's responsibility to examine in great detail the proposals for establishment put forward by each and every department to make sure they are on a comparable basis and that the numbers and rank of the people called for are required.
I can assure the hon. gentleman that this has in fact been done in relation to the establishment outlined here. I did indicate that I thought it was important in terms of cost efficiency to be prepared to engage the services of people having a considerable degree of training and skill in the techniques of purchasing, warehousing, accounting and distribution. In the long run an investment of this character will more than pay off in savings as a result of avoiding mistakes in inventory and in purchasing, as well as through efficient transportation arrangements with regard to freight and other transportation costs.


Robert Norman Thompson: Perhaps I could ask a related question. In the minister's opinion, does the taking over by his department of the purchasing responsibilities of 16 government departments mean that there has been a corresponding decrease in the staff of those other departments?


Charles Mills (Bud) Drury: There has not been a corresponding decrease as yet. In order to take over both the purchasing and warehousing of supplies it is necessary to set up a coherent establishment which can function on an integrated or as a whole basis. This means that in the initial stages there will be more people engaged in the total operation than at the beginning or, indeed, at the end. There is a period of overlap.
Perhaps I should point out also that in some instances there will be individuals in government departments currently performing a dual function, one administrative and the other purchasing, or half purchasing and
DEBATES	1463
Supply-Defence Production half administrative. One half of that responsibility will remain in the department hither to doing the purchasing and the other will move. This cannot result in the transfer of one complete individual but it will mean a reshuffle in the whole department and a decrease in administrative personnel to correspond with the increase in supply services. The over-all manpower to be used under the consolidated system will be substantially less than the number presently required in individual departments for purchasing.


Thomas Speakman Barnett: Mr. Chairman, I wish to ask a question along the same lines. My question was partially answered by the minister in his reply to the question of the hon. member for Red Deer, although I must confess I could not quite follow the minister. I assume that at least in some departments there must have been people whose responsibility was primarily purchasing. In the consolidation of personnel which has taken place what shift of personnel has there been? What has happened to the people who were purchasing for the Department of Public Works, for example, when their services in that department became redundant? I expected the minister to say they had been drawing from the experience and talent of other departments in order to build up a purchasing function in his own department. From what he has just said to the hon. member for Red Deer that does not seem to have happened. I would expect some shift in the personnel concurrent with the development of this function in the minister's department. Can he add anything further to what he has already said on this point?


Charles Mills (Bud) Drury: Mr. Chairman, that assumption by the hon. member is entirely correct. I was not talking in terms of bodies, so to speak, but rather establishment positions, to which I assume the hon. member for Red Deer addressed himself. When the purchasing function is transferred from a department to the Department of Defence Production there will be an increase in the number shown for the establishment of the Department of Defence Production. For instance, there might be an increase of eight, which would correspond to a reduction of eight or more if they were all full-time purchasing people shown in the establishment of the department from which the transfer is being made.
When one thinks in terms of people, obviously the Canadian government supply service is looking for people who are skilled and talented and any who are will be transferred from one department to the other. I think the
1464	COMMONS
Supply-Defence Production hon. member for Red Deer was addressing himself to these establishment figures. In most cases what has been just assumed, namely that bodies will be transferred from one department to the Department of Defence Production, is correct.
The hon. member for Calgary North was wondering about the Canadian Commercial Corporation which exists merely in name, and asked whether we should not abolish even the name. A couple of years ago when this question arose during one of our committee meetings I provided an explanation which I will be glad to repeat in brief form.
The Canadian Commercial Corporation acts for the most part as the agent in Canada for foreign governments. They would prefer to have as their agents in Canada a corporation rather than the government of Canada itself or a department of the government of Canada. This has been our experience. By keeping alive the name and the form of the Canadian Commercial Corporation it is possible to meet this desire without any additional cost to the people of Canada, and because it is a convenience I suggest it makes us more effective when it comes to selling. The corporation has no great staff, as once it had. The functions of contract letting and contract supervision are all discharged by the Department of Defence Production. The name of the corporation is used as party to a contract and immediately, in turn, the corporation enters into a back to back contract with the Department of Defence Production or the supply service as the case may be.
[DOT] (4:10 p.m.)


Douglas Scott Harkness: Apparently the Canadian Commercial Corporation has become what might be called a convenient legal fiction which enables the department to operate with greater ease in its dealings with foreign countries. I take it that the amount of $2,058,000 which we are asked to vote for the administration and operation of this corporation is the estimated cost of the personnel in the Department of Defence Production who are engaged in these activities formerly carried on by the Canadian Commercial Corporation?


Charles Mills (Bud) Drury: Yes. The entry arises out of a recommendation of the Auditor General that a careful record be kept by the Department of Defence Production of all the time spent by the officials in the department on Canadian Commercial Corporation work and that this should be charged against the corporation. The officials of the department are doing

DEBATES	June 13. 1967
work which they would be doing anyhow, but this arrangement does enable the committee to get some idea, if you like, of the value of the effort that this corporation represents.


Douglas Scott Harkness: Can the minister tell us what this work consists of at the present time? Is the corporation chiefly concerned with making contracts in connection with the NATO brigade and the air division in Europe-formerly it was with France and Germany-or is it chiefly concerned with contracts for the manufacture and supply of defence equipment purchased by countries abroad? I have in mind the projected purchase by the Netherlands government of the CF-5 aircraft.


Charles Mills (Bud) Drury: It is principally in the latter category, namely, the placement of procurement orders in Canada from foreign governments or their agencies.


Douglas Scott Harkness: Does it still carry on some work for the Canadian government in connection with contracts for the supply of goods and quarters for the NATO brigade and the air division?


Charles Mills (Bud) Drury: The contracting for quarters for the NATO air division and the Canadian ground forces brigade is done by Defence Construction Limited. There may be some smaller contracts made in the name of the Canadian Commercial Corporation in Germany in respect of Canadian armed forces there, but the bulk of these contracts is handled through normal defence production channels.
The hon. member for Calgary North asked about delivery of the CF-5. I am advised that the first test aircraft will be delivered in November or December of this year. The production program remains on schedule and should be completed in mid-1969. The hon. member also asked about the Canadian content of these machines and he wanted this information in relation to the larger question, namely, how much of this work for which the taxpayers are putting up their money does, or perhaps should, remain in Canada. I hope he will bear in mind the production sharing agreement we have with the United States which provides that there shall be a rough balance maintained in procurement programs as between north and south. So in respect of any particular piece of equipment the significance of whether it is 100 per cent manufactured in Canada or largely manufactured outside Canada does not arise, certainly not in relation to the balance of payments.
June 13, 1967	COMMONS
It is true that content is significant in terms *of maintaining basic manufacturing capabilities in Canada but the quantitative elements are of no great significance. On the other hand, the qualitative elements are significant, as I think the hon. member would agree. In respect of the CF-5 I am advised that the Canadian content will be about 60 per cent by value, the balance being United States content. This particular program happens to be in itself almost self-balancing. But even if it were not, I suggest that in terms of quantity it is not too significant whether it balances or not.


Douglas Scott Harkness: I might point out, however, that it would become of undoubted significance if a considerable number of these planes were sold to other countries. The amount of Canadian content would then become very much more important than if it were only a case of defence production here balancing that of the United States, a concept to which I referred in general terms when I spoke earlier. To the extent that we sell any of this equipment to third countries, this becomes a much more significant matter from the point of view of foreign exchange.


Charles Mills (Bud) Drury: I agree that it then becomes more significant. Clearly Canada does better when there is a high percentage of Canadian content in items which are sent to countries other than the United States. With respect to this production sharing agreement, the hon. gentleman wanted some figures on the progress made under the heading of trade in defence equipment. For all the details I would refer the hon. gentleman to the annual report of the Department of Defence Production for 1966. I will summarize the information here by telling him that, as at the end of the first quarter of 1967, under the joint procurement program between Canada and the United States, Canada had purchased from the United States some $1,384 million worth of goods and the United States had purchased from Canada, in the same categories and under the same head, $1,573 million worth of goods, a difference of roughly $200 million.
[DOT] (4:20 p.m.)
Unfortunately I do not have here cumulative totals for any particular period in respect of overseas trade in defence equipment, but in 1962 there was an excess of exports over imports of some $17 million. In 1963 the excess was some $36 million, in 1964 an excess of some $16 million, in 1965 also an excess of some $16 million, and in 1966 an excess
DEBATES	1465
Supply-Defence Production of $48 million. Because there are no formal procurement sharing arrangements with overseas countries I do not know where to start to reach a cumulative total, but I would hope the hon. gentleman would agree that we are demonstrating some activity in this particular field.
The hon. member for Calgary North also asked about the Bonaventure and questioned whether the competitive approach to shipbuilding and ship repair really made any sense when, in the event, it was found that the total cost of repair, if not of new construction, vastly exceeded the amount of the competitive tender. The hon. gentleman has been in the business and understands the difference between a bid on known work and the additions that arise when a ship is in dry-dock, is opened up and the engineers have an opportunity to examine the interior mechanisms of the ship and make rather more accurate decisions as to the full nature of repairs and all work that has to be done which, of course, is quite impossible when the ship is in its closed or non-open condition.
In the case of the Bonaventure the contract was competed for under two headings. The first was a call for a firm price bid on the known, specified overhaul repair and modification work. Everything that could be specified and drafted in advance was particularized and firm price bids called on it.
On the best advice we could get from the Department of National Defence as to the likely volume in man hours of repair work, based on past experience and on what they had heard elsewhere and so on, an assumption was made, if I remember correctly in this case, that approximately 200,000 man hours might be required for the Bonaventure. The shipbuilding companies bidding on the repairing were invited to bid man hour and overhead rates on additional, unspecified work, assuming that this would be in the neighbourhood of 200,000 additional man hours. There was no guarantee that it would be exactly
200,000	man hours or that it would not be less or that it would not be more.
In relation to the additional overhaul work no one can know this until you get the ship open and look at it. We did this, and by analysing and combining the two, the firm price bid and the man hour rates and overhead rates on additional unspecified work, I think an opportunity was provided to the contractors to engage in real price competition. This was done. But what does tend to mislead people is that the firm price bid gets
June 13, 1967

Supply-Defence Production projected into the public mind as the estimated cost of the overhaul when, in fact, it is merely the firm price bid for a part of the work, the major part but not the whole of it by any manner of means. This has resulted in a number of parliamentary questions and a whole series of answers.
To demonstrate what I have been saying, the Davie Shipbuilding company bid a price of $4.9 million for the firm price element. The Davie Company submitted the second lowest firm price bid and the lowest hourly rates, and since the contract was awarded there has been some $3 million worth of work arising from later examination of the ship and its equipment. Against a firm price bid of $4.9 million, unpriced work amounting to $3.2 million has already come up. To assume that one was going to incur a total cost for overhaul of the Bonaventure of $4.9 million would have been unrealistic. Indeed, provision was made in the estimates for a sum of $9.7 million for overhaul and repair of the Bonaventure, including government furnished equipment.


Douglas Scott Harkness: What year's estimate was that?


Charles Mills (Bud) Drury: This estimate was the one we were given just before going out to tender, which would be about a year ago.


Mr. Bell (Saint John-Albert):: That was the revised one. That was the second estimate after the contract was awarded.


Charles Mills (Bud) Drury: No. This was not the estimate after the contract was awarded. This was the estimate of the cost before we went to tender. When one discovers precisely what repair work has to be done another estimate is made, probably a series of them. As new work comes up, in effect another budget has to be prepared and only when the work is completed can one determine the final cost.


Douglas Scott Harkness: Can the minister tell us the estimated final cost of refitting the Bonaventure and when it is now expected the refit will be completed?


Charles Mills (Bud) Drury: The total cost of overhaul and refit, including the cost of government furnished new equipment, is now estimated to be $11,770,000, and our latest estimate of time for completion is September 1 of this year.
[DOT] (4:30 p.m.)


Mr. Pugh:: The minister says that the total cost will be over $11 million. He also mentioned new equipment. Is this a new type of equipment or is it replacement equipment and how much of the total does it involve?


Charles Mills (Bud) Drury: The new equipment to which I have referred is not replacement equipment. It is new original equipment in a variety of fields such as communications, aircraft handling and I think fuel handling. It is all new equipment; it is not merely replacement of worn-out parts. In the estimate of $11.7 million the value of the new equipment would be something in the order of $2 million.


Thomas Miller Bell: Mr. Chairman, am I right in understanding that the $11.7 million to which the minister has referred includes the original tender for $4.9 million?


Charles Mills (Bud) Drury: That is correct, Mr. Chairman.


Thomas Miller Bell: In his statement the minister referred to the contract awarded to the Saint John Shipbuilding
Company for the twin naval ships. In our community we are interested in this and are pleased that the contract was awarded to our local yard. Has the minister any readily available information concerning the progress of this contract, when work may begin, how many men will be employed, when the naval overseers will move in, and so on?


Charles Mills (Bud) Drury: Mr. Chairman, I am advised that work on these ships has already started. It is expected that the vessels will be delivered in June, 1969 and November, 1969.


David Vaughan Pugh: Mr. Chairman, I have a query in respect of the general production of arms in Canada which are sold outside Canada other than through the Department of Defence Production. Does the government have its finger in the pie in respect of all arms produced in Canada, aircraft and otherwise, sold outside the country? Do we have a measure of control in this regard and are such sales included in our balance of trade? Is any part of the production sold other than through the government taken into account in respect of our balance of trade with various countries with regard to defence production? I think the minister will understand what I am getting at. Does the government control all arms produced in Canada which are sold outside Canada? Does the government enter into the picture in respect of the sale of arms produced by private firms-when I use the term "arms" I am making a distinction between commercial and other production-for shipment out of the country?


Charles Mills (Bud) Drury: The government does not enter into the picture in respect of all contracts either for the production or sale of arms in
June 13, 1967	COMMONS
Canada. There are some corporations in Canada which produce quite largely for the domestic market, particularly the sporting market, both arms and ammunition. These corporations also export. Exports of arms and ammunition are subject to the issue of export control permits. The inssuance of these permits is administered by the Department of Trade and Commerce. As a consequence I have no detailed knowledge concerning the volume of exports for which permits have been granted. I do know, however, that private firms are free not only to manufacture but also to export arms and ammunition from Canada.


David Vaughan Pugh: The minister used the term "sporting" and also mentioned arms and ammunition. The average person on the street speaks of arms and ammunition in the sporting sense. I should like to stick strictly to the matter of the production of war equipment. I am wondering whether or not the minister has complete control over that operation. Surely there must be some figures in the Department of Trade and Commerce in respect of arms-here I am using the term not in the sporting sense-produced in Canada and surely there must be some control by the minister's department. Is this taken into consideration in speaking of the balance between Canada and the United States in respect of defence production? Does the minister understand what I am getting at?


Charles Mills (Bud) Drury: Mr. Chairman, I am not too sure what the hon. member is getting at but I will try to answer his question. The production of arms in Canada is not subject to government regulation. If the hon. member wished to manufacture a tank, for instance, for any purpose at all he would be at full liberty to do so. He could do it so far as I know without obtaining a permit from anyone. If, however, he wishes to export that tank from Canada he must secure a permit from the Department of Trade and Commerce. I am not sure whether the hon. gentleman was trying to suggest that in some way the Department of Defence Production should have control over all arms produced in Canada. I do feel that we have a fairly complete knowledge concerning the production of arms and components of military equipment in Canada, but as the federal government we do not have control over such production.


Mr. Herridge:: This is a very interesting
discussion-
DEBATES	1467
Supply-Defence Production


David Vaughan Pugh: Mr. Chairman, perhaps the hon. member would permit me to follow up my point. The minister has said that they have a fairly complete knowledge of what goes on in respect of the production of arms. In cases where we do export privately-when I use the term "privately" I mean in the commercial sense where an export permit is obtained, for instance, for export to the United States-is this taken into account when in arriving at the balance of defence production between the two countries?


Charles Mills (Bud) Drury: Mr. Chairman, when the
Remington Arms Company in Canada, for example, which manufacturers a variety of sporting rifles, shotguns and so on, exports sporting equipment to users or purchasers in the United States, that does not enter into the figures I have quoted in answer to a question by the hon. member for Calgary North concerning the production sharing arrangement. In so far as armaments and military equipment exported from Canada to the United States for the account of the department of defence in the United States are concerned, these are included in the totals I have mentioned. Does that answer the question?


David Vaughan Pugh: I believe it does. Your department would have complete detailed knowledge concerning the production of all war equipment, whether it is produced through the Department of Defence Production or through a commercial firm, which is sold to the United States or to any other country. I quite agree with the minister that there cannot be any check in respect of the sporting arms aspect, nor do I see any necessity that this should be brought into the picture with reference to the general question of the balance. The minister is now saying, however, that all armaments produced in Canada, whether through the Department of Defence Production or by private commercial firms, which are sold outside the country-and we will again use the example of the United States-form part of the balance of defence production in each country. Is that correct?
[DOT] (4:40 p.m.)


Charles Mills (Bud) Drury: That is correct, Mr. Chairman. I hope the hon. gentleman would not suggest that as a department we have detailed knowledge of every single transaction. Perhaps I should describe it a little better as statistical knowledge obtained from a variety of sources. There are some prime contractors in the United States for the production, say, of aircraft for the department of defence of that
1488	COMMONS
Supply-Defence Production country. These aircraft are made up of a very large number of systems and components of those systems. The prime contractor in the Umted States may well subcontract to a systems subcontractor for part of that aeroplane and he is turn may subcontract components to a Canadian firm for manufacture.
It is unlikely that my department would know of this, and they are not required to know it, unless the firm in question came to us and let us have that information. However, it would be known to the United States defence department, which receives a statistical analysis from the prime contractors of the United States content and source of all the components. The particular item which I mentioned would show up in the United States statistical lists as being sourced in Canada.
We would have, equally, from the Dominion Bureau of Statistics information which would disclose, without saying what firm it was or in respect of what contract, the export of a class of components which would fit into this category. By marrying these two sets of information periodically we achieve the figures I have given to the hon. member for Calgary North. But as I say, our control is statistical rather than in detail and physical.


David Vaughan Pugh: Mr. Chairman, I should like to follow that through. The minister pointed out that whatever might be the breakdown given by the prime contractor in the United States we can arrive at similar figures here through the Dominion Bureau of Statistics. This information is available in the United States, and obviously the information the minister's department receives is available to the Canadian government. I ask the minister: Do you regularly trade off this information as between governments so that the total can be taken into account?


Charles Mills (Bud) Drury: Mr. Chairman, I am not sure what the hon. member means when he asks, "Do you regularly trade off the information". Every quarter there is a meeting between the Canadian group concerned with the statistical picture and the American group concerned, and they reconcile the figures. In an ideal system no doubt the figures would be exactly the same. There tend to be discrepancies, as there are on all these international accounts, and reconciliations have to be made. This is done quarterly either by a Canadian group going from Ottawa to Washington or an American group coming to Ottawa.


David Vaughan Pugh: I thank the minister. That is the
information I wanted.
DEBATES	June 13, 1967


Herbert Wilfred Herridge: Mr. Chairman, I am very surprised to hear that the manufacture of arms and war materials does not come within the jurisdiction of one government department. I presume, from listening to the minister's replies to the questions asked by the hon. member for Okanagan Boundary, that we will have to defer our remarks on the question of the private production and sale of arms for the Minister of Trade and Commerce.
I wish to direct a question to the minister. I presume that the minister's department is responsible for the defence production agreement between Canada and the United States for the sale of $300 million worth of these materials a year. Has the minister's department been made aware of the fact that there is a good deal of concern among some people in Canada with respect to the terms of that agreement and its effect, in that they are opposed to the war in Viet Nam and are afraid that the Americans will either use some of this material in that war or it will be used to replace material produced in the United States which is sent directly by them to Viet Nam? Perhaps the minister would enlighten us in this respect. Are we tied by this agreement? Is it possible for the Canadian government, if it wishes, to terminate the agreement?


Charles Mills (Bud) Drury: Mr. Chairman, one can answer that question very quickly. All agreements can be abrogated. But I would point out to the hon. gentleman that this agreement resulted from what I think was a very intelligent economic decision regarding defence production in Canada. Some years ago it was recognized that military weapons systems change and we must provide for such change. One must look at these as systems rather than individual weapons, because the day of the simple sabre, the simple lance and the single shot revolver is gone.


Herbert Wilfred Herridge: I realize that.


Charles Mills (Bud) Drury: One of the items-the hon. gentleman may find this difficult to believe- which accounts for quite a significant proportion of total military equipment expense is computers.


Herbert Wilfred Herridge: If the minister says so, I have no hesitation in believing him.


Charles Mills (Bud) Drury: This indicates the extent to which there is a commonality between military equipment and items of civilian use.

June 13, 1967

Virtually all the electronic controls, and they are becoming more and more widespread now, have both a civilian and a military application. In many cases, if not the whole system at least significant components are the same for both civil and military use. This means that defence production, which classically perhaps could be limited to a few arsenals producing specialized military equipment such as guns, tanks, certain electronic equipment and the like, was unique to the military, but it is no longer unique. Indeed, to furnish the equipment for a modern military force requires the output of virtually all our manufacturing concerns-I emphasize, all of them, particularly the more sophisticated- and requires the output of some manufacturing concerns which we do not have in Canada and which, because of the small domestic volume of Canadian demand, it would not make economic sense for us to have in Canada.
So the decision was taken to endeavour, where military weapons systems were concerned, to specialize in Canada in the production of either elements of systems or systems themselves in which we could have and could expect to have a proficiency and an efficiency to manufacture economically, not only for ourselves but also for export. In this way it was considered that we would have a large enough unit of the market, which means a large enough unit of production, that the process of the particular manufacturer would be economic in current industrial terms. If we are to specialize our production for a limited number of items for our own forces, we must import the balance of our needs.
a (4:50 p.m.)
This is the case because to produce within Canada the whole range of systems would beggar the country with uneconomic production. We would then not only have to import but also to export. Agreement was reached between the secretary of defence and myself that we would endeavour to maintain a rough balance between the two countries in relation to exports and imports. Indeed, no tariffs are charged on military equipment moving north or south. Military equipment for the department of defence entering the United States is free of the restrictions of the "Buy America" act, and Canadian contractors have the right to bid with United States contractors on a competitive basis but they must be competitive and economically efficient if they are going to succeed. In the reverse sense the same is true for items sought by the Canadian 27053-94
Supply-Defence Production armed forces. They also are sought on a bid basis.
By integrating the whole of North American production in this way we have been able to achieve very substantial economies in respect of equipment for the armed forces of both countries. Indeed, in this particular field the production sharing agreement is somewhat akin to the automotive agreement with the United States. There is the same relief from both the invisible and the tangible barriers to trade. In philosophical terms the North American market is regarded as a single unit and production is for the whole of the North American market rather than for separate parts of it.


Mr. Lambert:: Mr. Chairman, it had not been my intention to speak about the defence sharing agreement except with reference to the information that was given to the hon. member for Okanagan Boundary. I would say first of all that I find it rather difficult to believe that the officials of the minister's department are a mere passive organism in this regard. I think this belittles the efforts of the Air Industries Association of Canada which I am sure keeps the minister and his officials more than up to date regarding the activity or inactivity of the air industry. For years efforts have been made by the Department of Defence Production to maintain in one form or another a viable aircraft and related industries in Canada. Therefore to say merely that the department must rely on statistics which they cull from sundry anonymous reports of the Dominion Bureau of Statistics is as difficult, for me to believe as it must be for a good number of members in the house. I am sure that my colleague, the hon. member for Calgary North, does not believe it either.
I am sure I could name some officials in the minister's department who would have at their fingertips information on just how much defence sharing production is done by Canadian firms on behalf of prime contractors in the United States. I think, for instance, that it is one of the legitimate activities of the aircraft division of the minister's department to gather information regarding the degree of the utilization of the industry in Canada. Otherwise the minister's job of rationalizing the defence contracts coming from the Canadian government would be too difficult.
Perhaps this might be taken as a criticism that I might make of the minister's answer to my colleague, the hon. member for Okanagan
1470	COMMONS
Supply-Defence Production Boundary. I do not know what the hon. member for Kootenay West will say in this further regard. Sometimes he asks tongue-in-cheek questions. I am referring to the defence sharing agreement. From time to time we read editorials, often on behalf of organizations dealing primarily with Viet Nam, that Canada should immediately stop the export to the United States of anything that could be considered as war material destined for Viet Nam because the possible end use makes it unreasonable, unjust and frankly immoral in their eyes.
I believe it is dangerously naive to think that defence production sharing can be considered in isolation and, in fact, that pure military policy can be considered in isolation from economic factors and an economic policy. After all, we do know that if under these circumstances Canada were brash enough and foolish enough to advise the United States government that the defence sharing agreement was at an end, it would be a long time after peace is settled in Viet Nam and elsewhere in the world before we could get another agreement with that country. Canada as a whole derives many benefits from these agreements, as does civilian industry. In addition, let us remember the oil agreements and other similar agreements we have with the United States which I think would come to a rather abrupt demise because if we see fit to abrogate unilaterally our defence sharing agreement it would not hurt anybody in the United States to abrogate the oil marketing agreement. After all, one has to travel on both sides of the street. I think the minister was right when he said that a number of other factors had to be taken into account and simply to say "cut it off, we will deal with Viet Nam and the end use of these materials in complete isolation" is incredibly naive.
In saying this I do not want to imply that I like the situation in Viet Nam. No one does. As a matter of fact I think that those people who dislike war more than anybody else may well be those who have experienced it. On the other hand, we know that the United States is involved in a very difficult situation, and having embarked on a certain course it must do its best to see the situation through to whatever may be the best solution that can be devised by man. But men's motives are often devious and their solution may be far from satisfactory to all of the idealists in the world. I do not hear the same representations being made with regard to the unpleasant situation last week and its solution. It seems to me that the doves of Viet Nam were among the hawks

DEBATES	June 13, 1967
of the Middle East. However, this is an aside. It is difficult to rationalize the differing attitudes taken by the same people.
To come back to the point I was making, I think the minister could improve the answer he has given us. I think he could take us into his confidence and let us know just what is going on in the aircraft industry.


Mr. Davis:: Mr. Chairman, I would like to say a few words about the rationalization of our shipbuilding industry and ask the minister a few questions. Personally I am all in favour of our shipbuilding industry becoming more competitve. Perhaps, as same people have said, we could do with fewer shipbuilding yards. Perhaps we could do with eight or nine yards instead of the 12 or 13 we have. I therefore go along with the government's present policy which is being followed by the Department of Industry of buying ships on behalf of the federal government on an entirely competitive basis and calling for national tenders.
About two years ago the minister announced a program of phasing out and away from the old practice of allocation. I believe that the allocation of very large contracts, sometimes running into tens of millions of dollars, to individual yards was an unfortunate practice. To get away from that, the decision was made first to bid on a regional basis and then increasingly to bid on a national basis. This is having a substantial effect on the yards on the west coast.
[DOT] (5:00 p.m.)


Mr. Lamberi:: May I ask the hon. member a question?


John (Jack) Davis: I listened with some interest to the hon. member and I shall be glad to elaborate if he can ask me some questions at the end of my speech.
On the west coast we have, of course, lost contracts, at least in the eyes of the management of the three yards there, that might otherwise have gone to our shipyards in Victoria and in the Vancouver area. The yards on the west coast have been and are being protected to some degree. There was a schedule for allocation of contracts prepared two years ago and I believe it was communicated in some detail to the industry. The schedule indicated that whereas the industry on the west coast had been sure of getting between 25 per cent and 30 per cent of all federal government work, the amount of government work it was assured of getting would decline. The figures ran something like this
June 13, 1967	COMMONS
and on a declining scale: 1965, 25 per cent; 1966, 24 per cent; 1967, 18 per cent; 1968, 16 per cent; 1969, 15 per cent; 1970, 10 per cent.
Now, this was to be the result of the specific allocation of work to regions by the federal government, and it indicates a declining amount for the yards on the west coast. They will have to compete amongst themselves for the assured percentage. This does not necessarily indicate the total amount of work these yards will get from the federal government because they are all free to bid on tenders called for on a national basis. So far the yards on the west coast have not been very successful in bidding on a national basis. They have come close to winning contracts for federal work and they have certainly been successful in the private, commercial area.
For instance, Yarrows in Victoria recently won two contracts totalling $4 million for fishing vessels for the Atlantic Sugar Refining Company which will operate on the Atlantic coast. There is, therefore, some hope that our yards on the west coast can be competitive not only in getting work in respect of vessels which will be used in the Pacific theatre but perhaps occasionally also in the Atlantic area as well.
As is certainly well known to most of us in British Columbia, our costs in the main are higher. Wage rates have varied but there has always been a substantial differential in wage rates between the yards in British Columbia and the yards on the St. Lawrence and in the maritimes. The differential has been about a dollar an hour. This differential seems to persist as the unions on both our coasts negotiate with management from time to time. There is also another item of cost which is essentially in the area of materials. Freight rates are against us, so to speak, and certainly freight costs on steel and components, machinery and equipment, are additional items of cost which result in higher bids from west coast yards than bids received from yards in the Quebec area.
I am concerned at this moment because of the situation which now exists in the largest single yard, Burrard Dry Dock, located in my own constituency. Within the last two weeks there has been a lay off of some 300 men and Burrard's work force has gone down from 800 to approximately 500. I am told that this lower level of employment will continue for some months. However, I know there is a large federal contract amounting to $9 million for a research vessel which has been won by that yard and that work is going to begin on it this fall.
27053-94J
DEBATES	1471
Supply-Defence Production
So far as I can see from the program which I have been able to obtain both from the industry and from the department, there are very few substantial federal government contracts in prospect. This $9 million contract is one. It was allocated to the west coast region and it happens that the yard in my constituency won the contract in competition with two other yards on the west coast.
As I said at the outset, I am all for competition. I think that in modern circumstances, especially circumstances short of all-out war, perhaps we could do with fewer shipbuilding yards, at least big yards. A number of smaller ones are springing up on the west coast which are building log barges, tugs and other small craft. We could do without a dozen or 13 large yards and perhaps get by with eight or nine. From the taxpayers' point of view we must get value for our money and national competition for tenders on a national basis is certainly desirable. However, I should like to think that during the transition period, the period of adjustment from government allocation of contracts to individual yards to a situation in which there is all-out competition, the phasing out would be conducted over a period of time as, for example, is the case in the automobile industry. I would hope that the five-year phase-out from 1965 to 1970 which I outlined earlier could be stretched out, either that or several substantial contracts could be included in the declining period so that the letdown would be more even and the phasing out would permit a greater opportunity for readjustment.
In addition, I should like to think that the Department of Industry and the Department of Defence Production would take a very active part in helping the industry to adjust itself to these new and more competitive conditions. A task force, a sort of joint committee of government and industry, was set up about a year ago. I gather that its terms of reference, at least as I read them, were broad enough but I would plead with the minister that he make this task force more effective. In fact, it needs people in top positions from the government side, and they should take a real interest not only in the best practices and the most efficient processes and construction methods in this country but in other countries. This task force should communicate information to the management of the various yards across Canada and perhaps even publish a report at the end of its study or several interim reports.
June 13, 1967

Supply-Defence Production
Right after the war I was very much impressed with the teams of experts from the United Kingdom who went to the United States in particular and took back information which was published in respect of certain industries. This information helped those industries pull up their socks. We need a similar exercise in the shipbuilding industry in this country, which has had a limited market.
I have no doubt a number of yards are inefficient by national standards, let alone international standards. We could certainly become more competitive in this way.
I should like to not only urge the minister to give a little more muscle to this working committee but also to let us know whether there is any possibility of us being able to sell ships on any scale to the United States. In other words, in the sum total of our defence production sharing arrangements with the United States is it possible that we, particularly in our lower wage rate areas, may eventually become more efficient and be able to sell ships to the government of the United States or, on a long-term competitive basis, to commercial interests in the United States as well? If this were the prospect, if we could at least hope to compete in the continental market as distinct from the limited Canadian market, I think our yards on the west coast would have a genuine opportunity of not only surviving but looking forward to a period of expansion.
Finally, I should like to point out that the harbour in Vancouver, if it is not already, will be the busiest harbour in Canada. A busy harbour requires a shipbuilding industry, at least a ship repairing industry. It needs modern drydock facilities that will handle some of the largest vessels afloat. It needs an active ship outfitting industry which can look after repair jobs as the occasion demands. I should like to ask the minister whether he has given any consideration to the viability of the port of Vancouver in terms of the allocation of government contracts as distinct from giving the taxpayer the best possible value for his dollar in respect of ship procurements for this country.
[DOT] (5:10 p.m.)


Marcel Joseph Aimé Lambert: In light of the hon. member's outright condemnation of the allocation program formerly carried out by the maritime commission, would the hon. member not agree that if it had not been for that allocation program there would be no shipbuilding industry on the Pacific coast today able to compete with some of the other yards?


John (Jack) Davis: I am not at all sure of that. During the war years, for example, the need for ships was so great that work had to be allocated to the facilities which existed at the time. Work had to be allocated to the facilities on the west coast almost regardless of cost in order to produce an adequate supply of naval and support vessels.
However, surely after all these years our industry has matured to the point where it can be reasonably competitive. I note, for instance, that the provincial government of British Columbia is now buying competitively. It has just bought a ferry built on the east coast as distinct from buying a new one built in the yards in British Columbia. Speaking personally-and I think I am reflecting the views of many people using the ferries in British Columbia-I would prefer them to be low in cost as well as efficient. I do not believe that the allocation principle, while it might be justified in an emergency, can be applied over the long run because it leads to all sorts of other abuses.


Marcel Joseph Aimé Lambert: But does the hon. member still not believe that the 17-year period between 1943 and 1965 is supposed to be the period of potential extinction of the shipbuilding industry?


John (Jack) Davis: We have built a great many vessels of different types on the west coast. The biggest boom at the moment, one which is causing the incorporation of a number of new, relatively small shipbuilding yards, has resulted from building of log barges and various other vessels, including tugboats, which cannot be sailed through the Panama canal or across the ocean, for example. The situation is governed by the requirements peculiar to the area, and these vessels can be supplied by local yeards and supplied quite efficiently relative to prices quoted in other areas. We will have an industry. But I would plead with the minister for a substantial industry, one capable not only of building small vessels but also of building and repairing large vessels as well.


Robert Jardine McCleave: Mr. Chairman, I have just a few comments and perhaps I can put them in the form of two questions to the minister because I have no wish to prolong the debate.
My first question is: Is consideration being given to the cost involved in settling officers and men and their families when tenders for refits are drawn up? Let me put this in practical terms by giving an example. When an aircraft carrier is sent up river for a refit a
June 13, 1987	COMMONS
large number of officers and men have to be settled for that particular period of time at a point not too far distant. I wonder whether consideration has been given to this factor in assessing the over-all cost of such an operation.
My second question is: Will it be government policy in building the four new warships for what was formerly the Royal Canadian Navy to choose one lead yard to build the first two vessels and to put out to tender to other yards the building of the other two vessels?


Charles Mills (Bud) Drury: First of all, Mr. Chairman, in relation to the points made by the hon. member for Coast-Capilano may I say I am glad to hear that he approves of the revision of our ship construction policy. I think it has been successful both in reducing costs to the federal government and also in infusing a measure of pretty critical self-analysis among shipbuilding firms as well, perhaps in the form of a rather more planned approach in the future than has been the case in the past.
The hon. member also suggested that the period of rundown now set at five years might be extended to ease the problem of adjustment. This, in principle, has much to commend it, but I have yet to receive any concrete evidence that programs of adjustment are under way which would require a longer period to complete. I have every hope that the successes of the west coast yards in bidding on commercial work for ships which normally sail the Atlantic and their near successes to being the lowest bidder on government work will continue, and that far from enjoying merely the assured volume of work they will in fact gain a larger percentage.
The hon. member suggested that the department might take steps to make the task force that is looking into the problem of the shipbuilding industry and trying to produce solutions more effective. I suppose that any operation, task force or group can be made more effective, and it should be our continuous duty to take what steps we can take to make this task force more effective. Any suggestions about incorporating in their spectrum of consideration some knowledge of practices outside of Canada, if this is not already in hand, I agree should be implemented.
The hon. member asked about the possibility of exports of ships built in Canada to the United States. In this respect we face two barriers. One is the relative cost of ship construction in Canada. The other problem is
DEBATES	1473
Supply-Defence Production United States maritime law which has rather restrictive rules about the ownership and origin of vessels flying the United States flag or under United States registry. As has been said, I think this is a barrier beyond our control, one which is much more difficult to overcome than merely being able to build more cheaply and competitively than some of the yards in the United States. However, this is clearly a matter that we should look into in regard to small vessels, if we can achieve expertise in building such vessels, for the United States department of defence which does not impose the same restrictions as those to which commercial ship owners are subject in respect of the origin of construction of vessels.
The hon. gentleman also asked whether the department, in devising a shipbuilding policy, had taken into account the necessity for the port of Vancouver to have economic viability. He suggested that part of such economic viability of the port would be adequate repair and overhaul facilities. If I recollect correctly, there is now on the west coast a large government-owned drydock, though it is not in Vancouver itself but fairly close, in Victoria. I understand this drydock will continue in operation, though this is a responsibility of a department other than my own. There seems every likelihood on the basis of the current outlook of there being within Vancouver harbour itself a substantial and viable ship repairing and, indeed, shipbuilding industry. Perhaps it would help to qualify Vancouver as an attractive port if it had the capacity to build the largest and most sophisticated ships in the world, but at the present time and as far as one can see in the future Vancouver does and likely will continue to enjoy a healthy shipbuilding industry. The hon. member well knows that it is our intention to attempt to make this industry even more healthy.
[DOT] (5:20 p.m.)
The hon. member for Halifax asked two questions which I neglected to note. In relation to the new destroyer escorts, as the hon. gentleman perhaps knows, there has been a call for tenders for the new vessels in batches of two or for a total of four. This type of tender call was arrived at following a great deal of consideration by the government and after discussion with the industry. We were faced with the choice of awarding the contracts on the basis of one ship per shipyard, four ships to one shipyard, or perhaps a lead yard for one ship, and a batch of three ships.
1474	COMMONS
Supply-Defence Production Faced with this difficulty the department engaged one of the leading firms of marine architects in the world, namely, Gibbs and Cox, to look at our problem and the shipbuilding industry in Canada. Gibbs and Cox recommended the two and two system as being the most economical for the taxpayers and the most reasonable from the point of view of the builder. The recommendation was accordingly followed.
Obviously the task of building the first ship in the lead yard is a more complicated and sophisticated assignment than the task of building the follow-up ships. With the assistance of Gibbs and Cox an assessment or evaluation of the major Canadian shipyards was made. Some were classified as competent, having all the necessary facilities to perform the function of a lead yard, while others were classified as having the capacity, the ability and the equipment of a follow-up yard. There were a limited number of invitations sought from different tenderers. These tenders have been received and are in the process of being evaluated. This is done in conjunction with the Department of National Defence. It is difficult, lengthy and time-consuming process and it will not be until the fall, with the present schedule, that the results of this analysis and comparison will be known.


Robert Jardine McCleave: That answers the second question. My first question was whether consideration was being given to the costs involved in settling officers, men and their families when refitting of the aircraft carrier takes place some distance from its home base, in this case Halifax. To a lesser extent the same question might be asked in relation to other vessels which are moved to river yards at other places remote from Halifax.


Charles Mills (Bud) Drury: In assessing competitive tenders for this type of work account is not taken of the cost, whatever it may be, to the Department of National Defence of finding temporary accommodation for men and officers who have to be looked after at the location where the ship is being repaired, for certain periods of time. However, as the tenders are being considered by the Department of Defence Production with the Department of National Defence it is reasonable to assume that before a decision regarding an award is made the direct costs in relation to personnel are considered. These costs are carried by the Department of National Defence, not by this department. If they are very much higher in one case than in another, such as to upset the

DEBATES	June 13. 1967
price advantage shown in shipyard proposals, we would hear about them.
As I pointed out, the Department of National Defence has to pay the whole bill for permanent or temporary accommodation as well as its cost in relation to the D.D.P. contract, and this can be expected to be taken into account. This cost is not examined as such by the Department of Defence Production.


Robert Jardine McCleave: All I can ask at this stage is that when the final costs are arrived at in respect of the Bonaventure the two departments will get together to see whether this was the wisest policy to have followed in this case.


Charles Mills (Bud) Drury: I shall be glad to see that a review is made to determine whether this was the wisest policy.


Douglas Scott Harkness: At the outset I asked the minister what proportion of the resources, human or otherwise, of his department was now devoted to defence production functions and what proportion to the new function of general purchasing agent for other departments of government. I also asked to what extent this department provides administrative support for the Department of Industry.


Charles Mills (Bud) Drury: I did not answer that question. The division of work of a purchasing agent who is buying for the Department of National Defence and for a civil department has not been worked out. We do not know what the division is in respect of the effort required to purchase the same article on that basis, but the classical role of the Department of Defence Production is to purchase for the Department of National Defence. What the proportion of time spent in this regard is I do not know. I could give the hon. gentleman some figures about the total purchases on civil account as against the total purchases on military account. One could assume that this might represent a proportion of effort, although this may tend to be misleading because it does not take a million times as much effort to buy an aircraft as it does to buy a pair of socks.
[DOT] (5:30 p.m.)
Perhaps it would be helpful to give the numbers in each of the branches. Last year the Department of Defence Production contracted on behalf of the Department of National Defence for goods and services to the value of some $710 million and, as I mentioned earlier, on behalf of civil departments
June 13, 1367

in the amount of some $10 million. This gives the ratio of the work in connection with purchasing for civilian as opposed to military requirements. The warehousing and supply functions which we are in the process of establishing and taking over from other departments are being carried out for purposes unrelated to the requirements of the Department of National Defence. All this effort is entirely on the civilian side.
As to the numbers of people employed in connection with these various functions, in the finance branch there are 332 and in the purchasing service, including the purchase of transport, 1,185. The purchasing service includes both civilian and national defence functions. The operations branches include both project management for national defence and the international programs staff who are largely engaged in promoting the sales of the output of industry which the hon. member for Edmonton West mentioned. The number is up to 214. In the supply services branches, whose efforts are devoted to the civil side rather than to the military side, the number is 732. In the deputy minister's office, the office of the departmental secretary and the personnel branch, employees number 132. I am not sure whether this provides the hon. member with the information he is seeking.
I have to make a correction. When I said that in 1966-67 purchases on civil account amounted to $10 million I should have said $100 million.


Douglas Scott Harkness: I do not think that reply is really related to the point I was trying to make. I was concerned about the extent to which this department has now become a civilian purchasing department rather than a defence production department with all that this involves. The minister indicated that the increase in the number of personnel employed by something like 12 per cent was made necessary by increased civilian purchasing functions. A comparison of the volume of contracts handled would indicate that there has not, in fact, been any saving made at all. The increase in staff would simply take care of the increase in the volume handled.
I am sure there are a large number of people now engaged in civil purchasing activities who were formerly engaged in similar work in the field of defence production. I was trying to determine the extent to which this department is becoming a general civil purchasing agency for all the other government departments rather than remaining primarily a defence purchasing and supply department.
Supply-Defence Production I understand the difficulty of trying to apportion these things. What I really wanted was a general answer along those lines, an indication of whether or not in the future this department will be primarily concerned with general purchasing on behalf of all government departments or whether it will be primarily concerned with defence purchases and so forth.


Thomas Speakman Barnett: I should like to raise one or two questions with the minister in respect of the awarding of small defence production contracts. I will say at once that my interest in this matter arises out of the discontent of some people in my constituency who operate under the name of Waikiki Holdings Limited. I have in my hand a telegram I received from this company under date of May 31 expressing dissatisfaction with the present situation. I may say that prior to that date they had been in touch with the minister and I had also made some inquiries of the department in an endeavour to straighten out this matter and obtain some information on it. However, from the tone of the telegram these efforts obviously did not work out. To illustrate my point I should probably put the text of the telegram before the committee. It reads as follows:
As a local company contributing hundreds of thousands of dollars to the economy of the Comox Valley we strongly resent and protest the method of tendering, qualifying and awarding of the catering contract for H.M.C.S. Quadra 1967. We are in the food business and are absolutely capable of handling a catering contract such as H.M.C.S. Quadra. We requested the opportunity to bid on the contract. However, industrial sourcing section of D.D.P. did not have the courtesy to extend us an opportunity to even submit a tender and inferred we were not able to qualify. The contract was awarded to an outside catering company. We consider this attitude extremely biased as we have the financial resources and the manpower to handle much larger contracts than the one in question.
I am not asking the minister to go into details with regard to all the statements made in this telegram because I am sure he does not have all of them in front of him now. What does cause me concern, apart from the fact that naturally I would have liked this contract to go to a local firm, is the whole question of how smaller firms can go about getting into the picture as far as these smaller contracts are concerned.
If I understand the situation correctly, on the basis of information given to me by the minister's department a system of listing is in effect. I gather that once a firm qualifies and is listed it is then notified of all calls for tenders in the area of its interests. I believe
June 13, 1987


information and satisfaction could the minister give a clear picture of the situation regarding opportunities to bid on these contracts?


Charles Mills (Bud) Drury: Mr. Chairman, I think I cam safely say that anyone who is interested in tendering on government contracts may do so if he demonstrates his interest and is qualified. The question the hon. member for Comox-Alberni has been raising is with respect to the technique, the procedure for qualifying. In some cases in respect of smaller contracts the total volume is such that an elaborate process of qualifying tenderers would not be worth the cost. The savings or losses that might arise out of failure to adequately qualify tenderers would not be worth the effort put into a thorough examination.
In larger contracts the process of qualifying does produce dividends in both tangible and intangible form. The case to which the hon. gentleman has been referring relates to catering in British Columbia. If a contract is in excess of $10,000 a group of individuals visits the firm which is seeking to qualify and they make not only a statistical but also a physical examination. We have found that this can be done more economically from Ottawa in respect of the limited number of catering operations we have rather than trying to organize to do it locally. This is the reason why a decision on qualification was reported to the hon. member as emanating from Ottawa. I hope this answers that question.
The problem in the case of the firm in Comox is one of dissatisfaction with the high standards of qualification which have been set. I think the hon. member will agree that the higher the standards can be set and still achieve efficient price competition, the more effective will be the service to the government department or agency seeking the service and the lower the net cost will be to the taxpayer. I would hope the hon. member would support our efforts not only to raise the standards but to keep them as high as possible. But obviously this is going to produce cases of dissatisfaction on the part of those applying to operate with lower than the best standards and who consequently are not qualified by the department.


Thomas Speakman Barnett: In this instance I do not know who was awarded the contract but I have been informed that in previous years the contract was awarded to a catering firm with headquarters in Toronto. The firm then sent
June 13, 1957	COMMONS
one or two people to the area, recruited local help and carried on in that fashion.
I suppose one might argue that the people who came to the area might have managerial capacities that were not available locally, but I do not think it necessarily follows that it would be a more efficient and more economically run operation or that the standards would be higher than if the operation had been carried out by people with an interest in a local business who want to develop that business. I know that in part this is a question of how does one prove one can do a job until one has already done it. As I say, I do not ask the minister to make a decision as to the merits or demerits of this individual case. But I have had some opportunity of observing quite large corporate operations and I can say they are not always necessarily the most efficient. Anyone who has closely watched what goes on in a corporate operation where the ownership is divorced from the area of management is quite aware of the kind of waste and inefficiency that can often prevail.
[DOT] (5:50 p.m.)
The firm from whom I received the telegram is in the process of developing. It is argued that because of the existence of the nearby major armed forces base at Comox they are in a position to recruit very experienced ex-messing personnel who have worked at Comox and are available for this type of work. From what the minister tells me, I understand that the assessment of this situation would be difficult to make in Ottawa in the case of an operation of this size.
After all, the field of catering has many aspects which are outside the operations of the federal government or the Department of Defence Production. The department has considered, in order to achieve the necessary standards in relation to a contract such as the one for H.M.C.S. Quadra, that this kind of decision should not be made at the regional level. One hears many things which one can mentally compare without having a statistical basis for the comparison. I live in an area where much catering is done for logging camps. Generally they have a higher standard of catering than there is, reputedly, at any of the armed forces messes in Canada. From what I have heard over the years and from my experience in enjoying the bounty of the armed forces catering services I believe this is true. Is the minister really convinced that the present policy of having the making of these decisions centralized in Ottawa is beneficial and necessary?
DEBATES	1477
Supply-Defence Production


Charles Mills (Bud) Drury: In view of the remarks of the hon. gentleman I am not convinced and I shall be glad to have another look at the matter.


Mr. Pascoe:: Mr. Chairman, I have a few brief questions which I should like to ask following the questions asked by the hon. member for Calgary North. As the minister is aware, of course, the department regularly issues a long list of contracts awarded for various purposes. It is very seldom that one sees the name of a Saskatchewan supplier on such lists. In the last list I received I believe there were contracts awarded to businesses in every province except the province of Saskatchewan. On many occasions I have been asked why the list does not include the names of Saskatchewan suppliers. Is there an established list of suppliers and how can a Saskatchewan firm get its name on that list? Further, are departmental contracts of any size publicized in all parts of Canada so that any supplier has an opportunity to make a bid?


Charles Mills (Bud) Drury: Mr. Chairman, to answer the second question first I should like to say that an endeavour is made to publicize on a national scale all large prime contracts in an effort to attract the maximum amount of competitive tendering.


James Ernest Pascoe: How are they publicized?


Charles Mills (Bud) Drury: They are publicized in a variety of ways, the most effective of which probably is newspaper advertising. In respect of the list of suppliers, I might say that the hon. member will recognize that in terms of military equipment there certainly are relatively few suppliers in the province of Saskatchewan. One would not expect to find in the province of Saskatchewan very many suppliers of the type of equipment which would be included in the total of some $710 million worth of material and material ordered by the Department of National Defence. This has not been the form of economic development of the province of Saskatchewan to date. The province has prospered rather more through the production of cereals than it has either in manufacturing or in the production of other primary resources.
Within the past few years, however, there has been an increasing emphasis on the production of minerals, particularly potash and, as a consequence, fertilizer. As a result of these mining operations there is a growth in
June 13, 1967

Supply-Defence Production ancillary manufacturing industries. Consequently one might expect more and more, as manufacturing industries grow in Saskatchewan, to see the quantum of successful bids for the kind of things which the Department of Defence Production acquires for the Department of National Defence increase in Saskatchewan.


Mr. Groos:: Mr. Chairman, I see it is one minute before six o'clock and my remarks may take two minutes. I am interested in the way in which the government's policy of nation-wide competitive bidding with regard to ship-building contracts is actually working out in practice. It was my understanding that for the first time all government shipbuilding requirements would be ascertained for a considerable period of time in advance and that this information would be released to the industry so that for the first time they would be in a position to see ahead and bid closely on contracts when their yards need the work. Such a policy would result in an even flow of work for the yards. This would be good for the industry and would also bring about price savings for the country.
However, to give the west coast shipbuilding industry time to adjust it was decided that certain vessels would be allocated for competitive bidding among the west coast yards alone. In addition, all west coast yards were to be allowed to bid competitively on all government shipbuilding requirements. I would be interested in knowing how this is actually working out in practice. I should like to know whether the west coast yards are submitting bids on the majority of calls for nation-wide tendering and how close they are coming to winning these contracts. Are they winning any at all? Generally speaking, how is the program working out?
My concern in respect of the shipbuilding industry is that the west coast yards should not find themselves, as a result of the government's program, limited to simple types of shipbuilding such as barges, tugs and similar vessels. I am particularly concerned that on the west coast there should be the ability to build highly technical ships as exemplified by modern naval vessels such as destroyer escorts. I would not wish the west coast to lose out completely on the destroyer escort contracts which will be coming forward shortly.
[DOT] (6:00 p.m.)
The labour force required takes a long time to put together. We have the force there now and I would not like to see it dissipated if perchance we were to lose out on all four


contracts which will shortly be open to competitive tender. Would the minister not agree it is desirable that on the west coast there should be such a capability and, if so, will he not look into the possibility of including in the group of ships that will be allocated for competitive bidding among the west coast yards one of the four projected destroyer escorts?


The Acting Chairman (Mr. Honey):: Shall
vote 1 carry?


Douglas Scott Harkness: No, Mr. Chairman. It is six o'clock and I think we should go into private members' hour.


Russell Clayton Honey: Order. It being six o'clock, it is my duty to leave the chair in order that the house may proceed to the consideration of private members' business.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the following matters will be considered at the time of adjournment this evening:	The hon. member for Vancouver-
Kingsway (Mrs. Maclnnis), National Defence -Vancouver-request for use of land for park purposes; the hon. member for Sherbrooke (Mr. Allard), Trade-request for restrictions on textile imports from Japan and other Asian countries; the hon. member for Halifax (Mr. McCleave), Judge's Pension- position of government re L. H. Landreville.


Mr. Rosaire Gendron (Riviere-du-Loup-Temiscouaia):: Mr. Speaker, may I ask leave to revert to routine proceedings, for the purpose of presenting a report dealing with the procedure of the standing committee on housing, urban development and public works?


Mr. Speaker:: Has the hon. member leave to revert to motions for the purpose he has indicated?


Some hon. Members:: Agreed.
June 13, 1967


[Stage Direction]
First report of the standing committee on housing, urban development and public works-Mr. Gendron.
[Note: Text of the foregoing report appears in today's Votes and Proceedings.]
Mr. Speaker:: Order. It being six o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely, private bills, public bills.



PRIVATE BILLS


[Stage Direction]
The house resumed, from Thursday, June 1 consideration of the motion of Mr. Deachman (for Mr. Basford) for the second reading of Bill No. C-113, to incorporate Commercial Solids Pipe Line Company.
Thomas Speakman Barnett: June 13, 1967
Private Bills
[DOT] (6:10 p.m.)
The question which immediately comes to my mind is that if this company had a specific plan to construct a 12-inch main line from a point near Calgary in the province of Alberta through various mountain ranges to the coast at or near the port of Vancouver, this would be a major project and our approach to it would be quite different. If the bill then received second reading in the house and went before a committee for study, the committee would have something into which it could put its teeth. In such a case the committee could endeavour to make a rational examination of the project on the basis of its feasibility, the existing state of technical knowledge of the best method of transferring sulphur in this form, and the impact which the proposed pipe line system, whereby sulphur would be transferred from the gas fields of Alberta to a seaport outlet, would have on the existing railway lines and their potential capacity to transport the product in modern bunker cars.
I think all of us recognize the massive capital investment which has been made in our existing railway system. Certainly those of us from British Columbia are well aware of the high cost of engineering and construction of railway lines through that part of Canada, and all of us recognize it is quite an important consideration to the economic health of this country that the railways operate in a manner that is economically healthy. These are some of the factors which I think a committee of the house could intelligently weigh if the company had come before us with a definite proposal to construct a specific line.
However, this is not what we have in the bill. Although we can certainly accept without question the statement made by the sponsor of the bill that the company intends to undertake the project which he outlined in some detail, there is no such assurance contained in the bill. All we have here are broad, general provisions which will give this company the right to discard the proposal completely and to decide, for instance, that it will build a pipe line from Calgary to Hudson Bay and ship the sulphur to Hudson Bay for transmission through the port of Churchill.
We have listened to many discussions in the house concerning the virtue of building up the volume of shipping through the port of Churchill and the Hudson Bay route. Many of us, even though we may not come from that part of the country, recognize that this would be a very desirable development. But I submit

it is not desirable for parliament to give a blank cheque to a company such as this one.
Members such as the hon. member for Vancouver Quadra and the sponsor of the bill, the hon. member for Vancouver-Burrard, who represent the main coastal seaport of Vancouver, should perhaps demonstrate a more direct concern by investigating whether or not the company's proposal will benefit the development of the port of Vancouver. What is proposed in this bill will certainly not achieve this. I have been present at committee meetings when the publicly owned railway company has had to come before parliament with a specific project before being allowed to extend their railway lines to any extent. The vice president of Canadian National Railways in charge of engineering and development has had to place before the committee full details concerning the economics of the specific section of railway line to be built. This is not the approach of this company. We are presented with vague, all-embracing clauses in the bill on the basis of which we have to make a decision. We can set up these companies by the dozen if we choose. Indeed, parliament has done so over a period of years. Then, as was said the other day in connection with another bill, we rely upon the National Energy Board, with its rather vague terms of reference, to make other necessary decisions.
I am not certain whether the pipe line proposed under the bill would be under the jurisdiction of the National Energy Board or of the new Canadian Transportation Commission. However, I feel that transportation facilities should be regarded as a public utility and that a much more desirable approach would be to develop at least the main arteries of our national transportation system as a public utility under public ownership and control. But even apart from that consideration I feel it is not a good policy, from any point of view that may be held in this parliament, to give blanket approval to the incorporation of companies which would empower them to do what is sought under the bill now before us. I think we should say to the sponsors of this bill: If the Shell Oil Company and the related interests associated with this bill have a specific need to move sulphur from point A to point B, and if you can demonstrate to parliament that this can be an efficient and economic operation, one that will not operate to the detriment of existing transportation facilities, then parliament might be prepared to consider your proposal on its merits.
June 13, 1967

[DOT] (6:20 p.m.)
I must say it is a bit surprising to me that so many members have been prepared for so many years to go along with this haphazard approach to the development of transmission of gas and oil by pipe line in this country. Now, when we are considering a new and revolutionary form of transportation, one which in some ways has more far reaching implications in the general field of transportation than did the construction of gas and oil pipe lines, we should take a good, hard look at the proposal. I submit that before we are prepared to entertain a specific proposal for the incorporation of a company to construct a pipe line for the transmission of solids we should have before us the results of a much broader study of this whole field than has heretofore been undertaken by parliament or the government of Canada.
The hon. member for Edmonton West referred to the fact that some research is being done in this field in Alberta under the auspices of the Alberta Research Council. As I recall, he stated that the research is related to the proposal placed before us. The hon. member may know more about the operations of the Alberta Research Council than I do but from the little bit of reading I have done about its work and from discussions I have had on one or two occasions with people in Alberta, the research undertaken by this council has been confined almost entirely to the possibility of transporting goods by pipe line in what is referred to as capsule form. However, the proposal put forward by the hon. member for Vancouver Quadra-


Mr. Speaker:: I am sorry to interrupt the hon. member but I have to advise him his time has expired.


Thomas Speakman Barnett: If I may finish my sentence, I simply say that the proposal put forward by the hon. member for Vancouver Quadra is related to another form of transmission of solids, namely, in the form of slurry.


Frank Howard: The bill
before us, Mr. Speaker, is something in the nature of an iceberg in that one-tenth of it is on the surface and is obvious and nine tenths is unknown or is the subject of speculation. There are two aspects of the bill with which I should like to deal. The first concerns the venture into the bill of transportation by Commercial Solids Pipe Line Company and the change that this may bring about in the transportation industry as well as the economic effects that may flow therefrom. Then
Private Bills
there is the matter of the ownership of the company itself. As we all know, the Pear-son-Gordon duet on foreign ownership has been mentioned far and wide across the country. Reference has been made to foreign ownership on television by the President of the Privy Council (Mr. Gordon) in his capacity as an author, a royal commissioner and a cabinet minister. We have dealt with this aspect in the house on previous bills. It may sound a bit like repetition but I think it is such an important aspect in our consideration of this company and its ownership that it bears repetition.
The philosophy enunciated by the Prime Minister (Mr. Pearson) to a nation-wide television audience supported entirely the position taken by the President of the Privy Council over the years, and it applies directly to the bill before us. This philosophy, I understand, advocates the repatriation of the ownership of our industry. It may be it is not possible to bring about repatriation overnight because the consequences which might flow from such action could be rather terrible if we ran into the threatened retaliation which our so-called friends to the south are not adverse to using whenever it suits their purpose. I believe the government has recognized the necessity of phasing the return of ownership of Canadian industry to Canadian hands. I believe an indication of that recognition can be seen in the Mercantile Bank situation in that Mercantile was given a period of time to comply with the law. Just a few days ago the United Investment Life Insurance Company had read into Hansard by the sponsor of its bill a commitment that it would phase out foreign ownership of the company it was seeking to have incorporated within a period of ten years. Perhaps the thought that should be uppermost in our minds at the moment is how we can get Commercial Solids Pipe Line Company into the hands of Canadians.
It seems much more difficult to do here than it has been in the case of companies which are controlled in the United States. Whether or not our difficulties are greater or less when companies are owned in other countries is more than I can say at the moment. As a preface to my remarks I should like to read from Hansard for June 1, page 852, where the hon. member for Vancouver Quadra (Mr. Deachman) was dealing with the ownership of this company. He is reported as having said:
With regard to Shell Canada Limited, which will be the principal shareholder of the new company, 17.5 per cent of the voting power is in the hands of

June 13, 1967
Private Bills
the public, and these shares are traded on the stock exchanges in Canada. The remaining 82.5 per cent is held by another Canadian company called Shell Investments Limited, the head office of which is also in Toronto.
Looking at the matter from that point, it appears as if Commercial Solids Pipe Line Company is going to be a Canadian owned company because 82.5 per cent of the shares are owned by a Canadian company and 17.5 per cent of the shares are in the hands of the general public. The hon. member for Vancouver Quadra went on to say:
Shell Investments is in turn wholly owned by a Netherlands company situated at the Hague and, finally, the ownership of the company is divided as to 60 per cent in the hands of the Royal Dutch Petroleum Company at the Hague, and as to 40 per cent in the hands of the Shell Transport and Trading Company in London, England.
e (6:30 p.m.)
I have not worked out the intricacies of this to see who owns what, but I think it is fairly clear that Commercial Solids Pipe Line Company is owned or will be owned by the Royal Dutch Petroleum Company and Shell Transport and Trading Company, one company at The Hague in the Netherlands and the other in London, England. Therefore I think this is a situation we should seek to alter.
If I recall correctly, Mr. Speaker, the oil industry in Canada in one form or another is owned 100 per cent by foreign companies. There was one Canadian company, called if I am not mistaken Canadian Oils, which held out but finally went under a few years ago, giving over our entire oil industry in Canada to the hands of foreign companies controlled by people who are not Canadian citizens, who do not even live in this country and who give political allegiances, if these transcend profit ones, to other nations. There are in any event companies who look at their Canadian interests after they have concerned themselves with their major investments in other parts of the world.
I should like to see a declaration made by someone within this lineage of corporate ownership related by the hon. member for Vancouver Quadra, and made before the standing committee, that it is the intention of the company to divest itself over a reasonable period of time of its foreign ownership aspects, so that this company would become in fact a Canadian owned company, and thus at least emotionally identified with Canadian interests in the first instance.
Presumably the whole objective of the company, at least as I read the speech of the hon. member for Vancouver Quadra, is to operate

at some time in the future a solids pipe line within Canada. This does not exempt them from the prospect of exporting by solids pipe line, because other commodities are exported by pipe line; but I think it would be far better if this company were a Canadian company and recognized that the declaration of the Prime Minister (Mr. Pearson) carries some weight. I also think this parliament gave some expression to that declaration.
Perhaps this is a matter that could be dealt with in greater detail at the committee stage. I simply put the suggestion on the record now. At the appropriate time-perhaps at the committee stage so as to give the company fair warning in advance-I for one, and I know there are other members of the house of this view, should like to see the company come forward and declare that within a certain period of time, which I submit should not be an unreasonable one such as 50 years-ten years seems to be the period that has arbitrarily been decided on-the company will divest itself of its foreign ownership aspect and thus permit it truly to become a Canadian-owned company.
During the course of the last session, though it may have been during a private discussion on this bill, I gained the impression that the bill was introduced with the object of enabling the company to conduct research into the transmission of solids by pipe line. The sponsor of the bill relied on the fact that research is one of the activities of the company because he talked of the prospect of transmitting sulphur. As reported at page 852 of Hansard he said:
As sulphur has not so far been transported in solid form by pipe line on a commercial scale, research still has to be done before the company can be certain that this 750 mile pipe line from Alberta to the west coast is feasible. Since to a large extent the exact location of the route will be dependant on the outcome of the research and development program which is presently taking place and which will continue after incorporation of this company, no specific route can be designated, at this time. The company's confidence, however, can be measured by the large sums of money it has already spent and will spend in the next two years, if this bill is passed, in developing this research to maturity.
At the commencement of the remarks of the sponsor of the bill, after he had got through marrying the hon. member for Vancouver-Burrard (Mr. Basford), in his first sentence related to the bill he said:
This bill deals with a company that wishes to operate a commercial solids pipe line.
Then as reported at page 852 he went on to deal with the cost aspect and the $50 million
June 13, 19S7

that it is estimated sulphur transmission alone will cost, the manner in which this would be financed, and so on.
If this is to be a research venture, Mr. Speaker, then I do not see the necessity for incorporating the company. As the hon. member for Edmonton West (Mr. Lambert) pointed out in some detail, there are already a couple of solids pipe line research groups in existence, groups which have received public aid and in which there is a great deal of interest by Canadian National, Canadian Pacific and certain oil companies.
And well there might be interest by the Canadian National Railways in this aspect, Mr. Speaker, which gives me more concern than this particular company becoming a research operation. Because if we are now to embark, as I think we are, upon a project to replace the current transportation system with something of this kind, then we are likely to throw completely out of kilter the economy of a large part of this nation. For instance, the building of a line in my own constituency for the transmission of solids involving, for argument's sake, wood chips for a pulp mill may in itself be an economic move, but would cut into the financial and economic position of the Canadian National Railways Company and would undoubtedly injure and curtail its activities.
At the moment, Mr. Speaker, we are moving a tremendous amount of grain by railway. If research proves that it is feasible to move grain by pipe line, then this could practically destroy the Canadian National Railways and the Canadian Pacific Railway as far as freight carriage of that commodity is concerned. Once we do this and impinge upon their income prospects by removing from them some of the products they now carry, we cut into the prospects of either one of these companies operating on any sort of economic basis.
I could mention other commodities. For example the sponsor of the bill mentioned coal having been moved in slurry form. Potash comes to mind as a commodity for potential movement by pipe line. Many more commodities and materials might be added to this list of potential materials for movement by pipe lines, and I would not like to see us embark upon a program of giving a carte blanche right to a foreign company to build and operate a solids pipe line anywhere in Canada for the movement of materials in Canada or for export. This would cause a great deal of disruption to our public transportation systems and to our economy.
Private Bills
[DOT] (6:40 p.m.)
I am not opposed to change. In fact, I welcome change as well as anybody, but I like to see that change or alteration in our economic structure come about in such a way that dislocation is orderly, so that the working force which depends to such a great extent upon our current transportation method is not found out of existence and in the unemployment lines, simply to meet the convenience of Royal Dutch Petroleum or the Shell Investment Company, or for that matter whoever is behind this company. I do not want to see change or alteration come about in such a way as to pull the economic rug out from under any other communities in this country which depend to a great extent on our current transportation systems for their livelihood.
The research aspect of this whole proposal should be of concern to the public of Canada and this parliament. After all, this is the public's business with which we are dealing, rather than the affair of a few people named in clause 1 of the bill, or those who may become the shareholders or directors in the future. We have gone far beyond the stage when we could consider a bill such as this and its impact on our economy as a private matter to be dealt with only to meet the convenience of its promoters. This bill, perhaps more so than any other legislation placed before this parliament in some time, has an aura of public importance about it. It should perhaps be treated by parliament as a public bill, because its importance demands that parliament consider not only the foreign aspect of it but the public welfare, in light of the complete disruption that may result to many communities, workers and areas of our economy. If this is a gamble, and I am not so sure that it is, it should be considered seriously in that light. I suggest it is not as much of a gamble as one might think. The hon. member for Vancouver Quadra (Mr. Deachman) in his opening remarks pointed out that the confidence of this company could be measured by the amount it has spent and will spend in the next few years. I see that you are rising, Mr. Speaker, and I assume that my time has expired.


Mr. Speaker:: The hon. member's time has expired.


Mr. Arnold Pelers (Timiskaming):: Mr. Speaker, when this bill came before us on the last occasion we had an opportunity of discussing some of our objections with officials of the company. It was interesting to note

June 13, 1967
Private Bills
that they were in agreement in respect of one contention I had, namely that this was an exceptionally important bill which would have as great an effect on the transportation facilities in our country as a third transcontinental railroad. Anyone who considers the prospect of a third railroad across Canada must realize immediately how the construction of this line would affect the transportation facilities existing in this nation.
It has been agreed by a great many individuals with knowledge in this field that this should not only be of interest to members of the opposition but also to members of the government. When this bill goes to the committee there should be some indication on the part of government members and other opposition members that they realize the implications involved in the creation of a totally new company to move solids by pipe line. The other day when we were talking about rainmaking equipment, considerable interest was expressed about the technical feasibility. I am sure there are many members who have not really thought about this particular bill and are not aware of the fact that it is within the technical knowledge of many companies to move many types of commodities by pipe line. Many basic commodities in capsule forms can be moved through pipe lines. This would eliminate the need for large commodity handling facilities.
When discussing this proposal with officials of the company, it was pointed out that they were well aware that the sulphur they intended to move would have to be put into slurry form, and that after it was transported to its destination the sulphur would have to be taken out of the slurry vehicle. It was not known whether the same quantity of sulphur put in could be taken out at the destination point. The suggestion was made that certain types of oil could be used as the vehicle, because sulphur is found originally in that oil. They felt that perhaps the proportion of the sulphur in the slurry could be increased to 90 per cent, but there still would be some difficulty in removing that sulphur from the slurry and some uncertainty as to the type of facility required.
If I lived in the area of the transmission destination, for example in the Richmond area of Vancouver, I would be very skeptical about having that type of facility located there in order to take this sulphur from the slurry, particularly if it involved a method similar to that used for removing the sulphur from the oil in the refinery. The disagreeable smell which often exists in Ottawa, when the

wind is blowing from Gatineau Pointe, I suggest is mild to what might be the smell at the terminal point of one of these solids pipe line. However, I suppose it is up to members who live in such an area to decide whether the location of the terminal there would be advantageous. Perhaps they are not interested in that aspect.
The fact is, Mr. Speaker, that it is technically easy to move these commodities by pipe line. I am sure that not only sulphur could be moved from sources in Saskatchewan, but also the potash that is produced there. This potash could be moved to markets on the west coast by putting it into slurry form, through the use of water or some other vehicle. In this manner it could be moved over the mountains to Vancouver at a rate cheaper than the railway companies are able to offer.
[DOT] (6:50 p.m.)
Every time I ride on the railway I am reminded of the lack of interest the railway companies show in my comfort and in the comfort of others travelling on the trains. I might therefore be expected to say that I have not much interest in railway affairs. However, if we look at the role the railways play in the movement of commodities we are bound to realize it is an important one and that there will probably always be commodities more suited to travel by rail than by pipe line.


An hon. Member:: Including human beings.


William Arnold Peters: Yes. I am not sure I am prepared to travel through the mountains in a capsule propelled through a pipe line. It might come to that in the future but I am not sure I am prepared for it. Bad as they may be, trains are preferable to capsule travel.
The problem facing the government is not a technical one. In Britain the movement of coal by pipe line has proved feasible, and technical difficulties in the way of the movement of sulphur and oil are in sight of solutions. As the use of these methods develops however it is likely that many basic commodities in this country could be moved quickly and economically by pipe line.
This competition would obviously have an adverse effect upon the position of the railroads; they might even be threatened with extinction. But if there were no railroads, what would happen in the case of those many commodities which it would still be necessary to move by rail? Suppose a decision was made to keep the railways going, in any case.
June 13, 1967

Would not the cost to the shipper and to the
public be extremely high? With these things in mind, I believe the government must show some interest in pipe lines as a form of transportation. If the government would assure us that it was willing to carry out research to determine the end result of successful pipe line operations of the kind which are contemplated in the bill before us, then I think we would be prepared to send this measure to a committee where further discussion could take place.
The committee to which this bill would normally be sent is, in my submission, not competent to make a decision on the questions of principle I have raised. This is because it lacks the necessary information, the necessary research data. Then again, I believe many of its members would not be interested in reaching a decision in connection with the broader policy matters I have outlined.
I am aware that the transportation commissioners will have some control over this situation as a result of a section in the new act which brings solids pipe lines within their jurisdiction. But the examination of the relationship between pipe lines and the transportation system and other types of transportation in Canada cannot be undertaken by the committee, and will have to be undertaken by the government itself outside the committee. I am of the opinion that the government will have to reach a policy decision about the development of solids pipe lines. If the company wishes to do the necessary research into the feasibility of carrying certain commodities between specific points, this could be considered by the committee. But it seems to me that when we are confronted by an entirely new form of transportation the government itself should be interested in ascertaining what the end result will be before allowing a company to establish a monopoly in handling a particular commodity.
I do not think it would be difficult for the transport commissioners to arrive at equitable rates as between this form of transport and others under their jurisdiction. But this would not solve the broader problem to which I have referred. Many of the major products of the prairie provinces can now be moved by pipe line. Before too long it will probably be possible to move wheat by this method.
What would be the result? It might well be possible to transport grain more economically and at the same time to remove much of the dissatisfaction which has existed over the years in connection with the handling of this commodity at port terminals. Many of the

Supply-Defence Production bottlenecks which now occur in the railway yards of Vancouver could be removed. As I say, our main consideration should be the effect this would have on the operation of the railways. I agree with previous speakers that it is important there should be as much Canadian control over pipe line transportation as possible.


Mr. Speaker:: Order. The hour appointed for the consideration of private members business having expired, the house will revert to the business which was interrupted at six o'clock.

The house in committee of supply, Mr. Dube in the chair.


Jean-Eudes Dubé: Order. The house again in committee of supply. Estimates of the Department of Defence Production, vote No. 1. It being seven o'clock, the committee stands suspended until 8 p.m. pursuant to standing order.
At seven o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
The Acting Chairman (Mr. Legauli):: House again in committee of supply, estimates of the Department of Defence Production, vote No. 1.


Douglas Scott Harkness: Mr. Chairman, before the committee recessed I had asked the minister several questions which I thought he was about to answer, but he has not done so yet. The first was with regard to the extent which this department is providing support for the Department of Industry. What prompted me to inquire about this is an item on page 239 of the blue book in the estimates of the Department of Industry under the heading "Approximate value of major services not included in these estimates." The specific item is "Advisory and administrative services (Department of Defence Production), $1,150,000." Is this an accurate account of the amount of support, both administrative and otherwise, that this department provides for the Department of Industry?
Again this comes back to the point I made earlier. There is considerable doubt on the

June 13/ 1967

Supply-Defence Production part of most of us as to just what this department is doing and how it ties in with the Department of Industry; and when we look at the estimates of the two departments we wonder if we are getting a true picture of the amount of money going into each one. It is quite understandable that with the two departments being under the same minister and in certain fields pursuing to some extent somewhat similar functions, there should be a considerable amount of tie-in and overlapping. What has the minister to say in this regard?


Charles Mills (Bud) Drury: Mr. Chairman, the division of support effort as between the Department of Industry and the Department of Defence Production, when to a large extent these two departments have common support staffs, is of necessity rather arbitrary. Whether the figure is precise or not, whether it is fair or not, is difficult to prove absolutely, one way or another. It is an estimate made by the two departments concerned and concurred in by the Treasury Board.
Perhaps some of this difficulty will be resolved in the not too distant future when, as a consequence of rearrangement of office accommodation in Ottawa, the two departments will become separate, each having its own administrative support services. It will then be quite clear what is the actual cost to each in respect of each. But for this year the services are common, the quarters are common, and I think the hon. gentleman would agree that any figure set down here, provided it reflects the total costs of the two departments, is necessarily a somewhat arbitrary division between the two departments.


David Walter Groos: Mr. Chairman, before the hon. member for Calgary North rose I thought the minister was about to answer the questions I asked him just before six o'clock.


Charles Mills (Bud) Drury: Mr. Chairman, the hon. member who has just spoken asked me what general progress there had been in the matter of increasing the economic usefulness of the shipyards on the west coast as a consequence of the new program in respect of government shipbuilding activities which was initiated about two years ago. The answer in general terms is that I think this is proving reasonably successful.
It will be remembered that representations were made at that time that, because the then current costs of shipbuilding on the west coast were higher than elsewhere in Canada,
[Mr. Harkness.i
the translation of government procurement from a system of allocation by a government commission to one of full and free national price competition would not allow an appropriate or reasonable period for the west coast shipyards to rearrange themselves on a rather more competitive basis with what were reported to be lower costs in east coast and St. Lawrence river shipyards.
[DOT] (8:10 p.m.)
As a consequence, it was agreed that in respect of national competitive contracts there would be an allocation of a specific total tonnage year by year over a five year period as a minimum assured volume of business for the west coast yards regardless of national price competition. Because of the assured business, it was hoped that it would be easier for the west coast shipyards to adjust to a policy of full national competition. Over the course of the past two years we have observed, in respect of government shipbuilding contracts on the west coast as well as on the east coast and the St. Lawrence yards, that the west coast yards, although they have not been the lowest bidders, on occasion have been the second or third lowest bidder. This indicates an ability at least to operate in the same ball park.
In so far as non-government work is concerned, in respect of a national competition for fishing trawlers for a firm based in Halifax and in respect of ships to be used in the east coast fishing trade, a shipyard on the west coast turned out to be the lowest bidder. I hope therefore that west coast shipyards will become as effectively competitive as east coast shipyards.
The hon. member also asked me about the possibility of one of the new destroyer escorts being allocated to the west coast, regardless of price competition. He probably is not aware that we retained the services of one of the leading firms of naval architects to look at the ship construction industry in Canada. Our particular problem was to produce at the most reasonable cost to the taxpayer four new destroyer escorts. We asked them for their advice with regard to what would be the most satisfactory and advantageous way to put these out to price competition. Their recommendation, in the interest of the shipyards, of the user department and of the taxpayer, was that two ships should go to a yard qualified to do the work of lead yard operations, and that two ships should go to a yard qualified to do the follow-up work for the remaining two ships.
June 13, 1967

As a consequence, this spring invitations to tender were given to the yards judged to be qualified to do lead yard work. They were invited to tender on two ships, including the requirement for the first ship. The remaining yards were invited to tender on the two follow-up ships. It was the view of the consultants, a view which I must say my department shares, that any attempt to have a scheme whereby one lead ship was followed by three others in a package, or one ship each for four yards would result in a very considerable increase in total cost to the buyer of the four ships.


David Walter Groos: Mr. Chairman, I appreciate the minister's remarks and I thank him for his explanation. I was not aware of the division which had taken place to the effect that two ships were to be given to a lead yard which qualified, and that two others were to be given to a yard in a follow-up program. I should like to ask him whether any of the three west coast yards were considered to be among those which qualified for initial lead work or follow-up work. I ask the following question, because I have never heard this suggested before. I do not suppose he intends to suggest now that so far as qualifications are concerned the west coast yards are any worse off than any yards anywhere in Canada.


Charles Mills (Bud) Drury: Mr. Chairman, I am guided largely by the advice of the consultants. One yard on the west coast is qualified as having the capability to do the lead yard work. The three major yards on the west coast have qualified for follow-up work.


David Walter Groos: Mr. Chairman, may I ask the minister one more question. Can he tell me whether, in accordance with the government's program, the work for the Department of Transport passes through his department and then goes to nation-wide competitive tender


Charles Mills (Bud) Drury: Not yet, Mr. Chairman. It is my hope, when we are better organized to handle the volume of ship construction work in which the department is currently engaged, that the Department of Transport which now is doing its own ship procurement would transfer these activities to the Department of Defence Production.


[Stage Direction]
Item agreed to.
5. Payments, subject to the approval of the treasury board, for capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, by crown plants
Supply-Defence Production operated under lease or other management arrangement or by crown companies under the direction of the Minister of Defence Production, $200,000.
Douglas Scott Harkness: I have one question, Mr. Chairman. I note that previously this vote provided for the following:
-plant modernization, and in connection with the establishment of production capacity and qualified sources-
I do not know what that means, but it has disappeared. Last year the amount in this vote was $8 million. Does this mean that the department has ceased to provide the funds to industry for these purposes, or is this just a temporary thing for which we might find something in the estimates for next year?


Charles Mills (Bud) Drury: No, Mr. Chairman. This particular item now is carried by the Department of Industry. The item now appears at page 241 in the estimates of the Department of Industry. Vote 20 of the Department of Industry is the equivalent of vote 5 here. In fact vote 20 is limited to defence manufacturers. I was thinking of vote 5, at the top of the page, which is not limited to capital payments.
[DOT] (8:20 p.m.)


Douglas Scott Harkness: Mr. Chairman, will this also apply to equipment? I notice that under vote 5 there is an item for equipment, whereas the vote in respect of capital assistance-that is, for modernization-to prospective manufacturers has been transferred to vote No. 20 of the Department of Industry. The equipment apparently still remains in the Department of Defence Production. Is it intended that this will also be transferred?


Charles Mills (Bud) Drury: The item for the modernization of equipment in defence plants is continued under this vote and in a slightly higher amount than last year.


[Stage Direction]
Item agreed to.
Emergency measures organization-
20. Administration and operation, $3,229,300.
Douglas Scott Harkness: Mr. Chairman, I was wondering whether the minister would say something about the Emergency Measures Organization which is covered by this vote. There are a few remarks I should like to make on it. It seems to me that the Emergency Measures Organization is languishing; at least, I have seen and heard very little about it during the last year or two. It would appear that there is not very much energy or drive being put into the Emergency Measures Organization program. We used to have an annual meeting of dominion and provincial
June 13. 1967

Supply-Defence Production representatives with regard to emergency measures matters. I have not heard of any of these meetings being held for some time. In fact, if my memory is correct, only one has been held in the last four years.
I found these extremely useful meetings. They did a great deal to maintain interest and to ensure that the same sort of measures and programs were being put into effect throughout Canada. I do not know whether this part of the program has been terminated. I do not know when the last of these meetings was held and when the next one is to be held. In the circumstances we would like these questions answered.
Also, Mr. Chairman, there used to be at least one annual exercise a year more or less on a national basis, as well as a number on a regional basis. I have heard of no exercises along these lines having taken place. There may have been some regional exercises carried out, and I hope this has been the case. I know there have been some in Alberta, at least on a regional basis if not on a provincial basis. I do not know whether there have been any others. It so happens that Alberta, which is the province I come from, has been more active and energetic than any other province in regard to the activities of the Emergency Measures Organization. I do not think there have been any national exercises carried out.
It seems to me that if the Emergency Measures Organization is to be kept in a reasonable degree of efficiency, exercises are essential in order to maintain their expertise in these various matters and to test their operational efficiency. Thus they would be in a position to make improvements in the whole Emergency Measures Organization setup.
I also ask, what has happened as far as the warning system is concerned? This used to be carried on to a great extent by the army; nuclear detonation reporting centres were maintained by the army outside all the larger cities and other stations were maintained by provincial officials, and so forth. The army having withdrawn from this activity, I wonder what the state of efficiency is, as far as the warning system is concerned.
Equally important in this regard is the state of the communications set-up, which was also operated to a large extent by the army. Who is now operating the Emergency Measures Organization communications set-up, and is it geared to meet an emergency if one should occur? I know that in the last three or four years there has been a general feeling, not

only in Canada but in other parts of the world, that there has been an easing of tensions between eastern and western blocs of nations, and perhaps, naturally, there was less interest in the Emergency Measures Organization and its functions generally than was the case a few years ago. However, Mr. Chairman, as long as the threat of nuclear attack exists-and I think everyone will admit that threat does still exist-I think it is essential for the protection of the population of Canada that an efficient Emergency Measures Organization be kept in operation. I have been more and more concerned that this is not being done and that this organization generally has been allowed to die, or at least languish. The various programs that were being actively carried on seem to be no longer in operation at all, or they are not being pursued very actively.
Another program about which to my knowledge we have heard absolutely nothing, in the last two or three years is the shelter program. The last time I heard about this program was when I asked the minister a question about it in the house two or three years ago. At that time, as I recall, he said that a survey of all public buildings, federal and provincial, which had previously been initiated was still being maintained and he expected it to be completed fairly soon. The minister said this survey would give us information with regard to what types of shelter and what degree of shelter existed. I have heard nothing of this program for some considerable time. I wonder what the situation is in this regard. I ask the minister whether the survey has been completed; and if it has been completed, what use is being made of the information being collected? This program was quite extensive and cost the Canadian taxpayer a considerable amount of money. I hope that some use is being made of the information secured by the survey.
I said, Mr. Chairman, that I intended to make only a few brief remarks. I hope the minister will be able to tell us what the situation is and what it has been during the last two or three years with regard to the Emergency Measures Organization.


Charles Mills (Bud) Drury: Mr. Chairman, in the interests of trying to get this item through tonight, and the estimates of the National Research Council, I did not volunteer a statement on this subject. But if the committee is interested, and the hon. member for Calgary North has indicated such an interest, I will make a short statement on the Emergency Measures
June 13, 1967

Supply-Defence Production survey and the capability for detecting radiation fallout are so important.
The federal government, through its emergency medical stockpile program, has accumulated over $21 million worth of medical supplies and equipment at various locations in the country. All equipment and supplies are packaged into operational units, and arrangements are being made for the responsible provincial organizations to take charge of these supplies.
The Canadian forces, in addition to their responsibilities for warning, continue to develop their capability to direct and conduct rescue operations, should this prove to be necessary.
The public education program of Canada E.M.O. has been oriented toward having readily available a wide range of information so that should a demand arise, it would be able to respond to that demand. I do not believe that it is necessary, or even desirable, in the present state of international tension to keep vivid in the minds of the public the importance of survival preparations.
These are a few of many activities which are directed to the first national objective.
The second national objective, which is directed toward the maintenance of government under nuclear war conditions, also shows continuing progress. In addition to a complex of protected facilities outside the Ottawa area, there are in existence in six provinces protected headquarters from which components of the provincial and federal governments would operate. The remaining four provinces, Newfoundland, Prince Edward Island, New Brunswick and Saskatchewan, have interim facilities available. During the next four or five years it is our intention to develop longer term facilities for those provinces, as well as continuing to improve the emergency facilities already provided in the other provinces.
Below the provincial level, Canada E.M.O. has been working closely with their provincial counterparts to provide protected facilities from which municipal governments would be able to operate. I am told by the provinces that there are approximately 130 of these headquarters in existence and operational.
This network of emergency government headquarters, from federal down to municipal levels, is tied together by a comprehensive communications system.

Much remains to be done in this general area, but as each year passes additional elements are added and improvements continue to take place.
In working toward our third national objective-the effective management of surviving resources-much of the work is carried out by the responsible federal department, co-ordinated as necessary by the Emergency Measures Organization. Emergency plans are in existence and are under constant review, to manage supplies of all kinds; to continue the productive capacity of our agricultural and fishing industries; and to operate the communications and transportation industries. Work is continuing in the areas of emergency manpower planning, control of accommodation and engineering, and construction resources.
Needless to say, although most of the work in these areas is under the direction of the federal government, the achievements to date would not have taken place had we not received the co-operation of the appropriate provincial departments, and of many hundreds of officials from business and industry.
Mr. Chairman, hon. members should note that seven or eight years ago very few of these measures or activities were in existence. Today they are. Many of them were started by the previous government. And this, I think, bears out the observation I made earlier, that is to say, that with relatively modest annual expenditures a great deal can be done to improve our nation's capability to survive.
At this point I would like to pay tribute to some 150,000 volunteers who, over the years, have contributed significantly to the organization at the local level. Additionally I would like to express the thanks of the government to many thousands of federal, provincial and municipal employees who have accepted the responsibility for emergency planning as a functional extension of their peacetime responsibilities. This is the key to effective civil emergency planning. This ensures that we do not duplicate our efforts and that we make the best use of our existing resources to build up an effective emergency preparedness program.
The true function of the Emergency Measures Organization, be it at the federal, provincial or municipal level, is to co-ordinate emergency planning and to assist existing departments of government in developing their existing capability to meet emergency situations. It has never been the intention of this government, nor of past governments, to have
June 13, 1967

the Emergency Measures Organization usurp or replace the functional responsibility of governments or their departments at the time of an emergency, be it in peacetime or during a war emergency.
Mr. Chairman, I would like now to deal briefly with the estimates of the Emergency Measures Organization. Your agreement is being sought for an appropriation of $10,659,500. This amount is approximately $400,000 less than last year's appropriation, and is the result of a more effective system of program planning.
Vote 20 covers the administration and operation of the Canada Emergency Measures Organization, which is comprised of a headquarters in Ottawa, ten regional offices, the Canadian Emergency Measures College and an office at NATO headquarters. The total authorized staff is modest, standing at 180 persons. In addition to covering the salaries of the staff, this vote provides for the continuation of the national fallout protection survey, various research and study projects, the operation of the college at Arnprior, and the public education program.
[DOT] (8:40 p.m.)
Vote 25 covers the expenditures to be made for rebuilding the Canadian Emergency Measures College at Arnprior, the construction of a regional headquarters in Prince Edward Island and pre-engineering work in New Brunswick, the continued development of zone emergency headquarters in the provinces, and the purchase of further radiation detection instruments.
Vote 30 provides for our financial assistance program to the provinces. This program underwrites up to 75 per cent of the expenditures made by the provinces and municipalities in the development of their emergency preparedness program I recommend to hon. members, Mr. Chairman, the favourable consideration of these Emergency Measures Organization programs.


Douglas Scott Harkness: The minister has just read what was undoubtedly intended to be an encouraging outline of the situation, so far as the Emergency Measures Organization is concerned. However, on the basis of my own knowledge and on the basis of what he did not say, I do not believe there is any doubt that the Emergency Measures Organization is not nearly as effective at the present time as it was four years ago. To begin with, the minister said that the army had an efficient reporting system. I take it from this what he

Supply-Defence Production means is that the army is still manning the general communications system which would report nuclear contamination and fallout or the fall of an actual nuclear bomb anywhere in the country. I do not believe the minister will deny that the military nuclear detonation reporting centres, and so forth, have been washed out and taken out of operation. So far as I can see, all the military authorities will be able to do will be to man the communications. Who is going to actually report the presence of fallout to these people to begin with, or the fall of nuclear bombs, if the worst came to the worst, I do not know.
In any event, this essential part of the emergency measures set-up has now disappeared, and so far as I know there has been nothing comparable established to take its place, nothing that would be nearly as effective. The minister mentioned the six protected provincial headquarters which are in operation. However all of these six provincial headquarters were either under construction or had been completed four years ago. I take it therefore that in the intervening four years nothing has been done to provide the other four which the minister now mentions will be completed in the course of time. It would seem to me once more, as I said at the beginning, this whole program has not been pushed forward with anything like the drive or energy which characterized it some years ago.
The minister mentioned also the medical supplies which were stored. I understand that a certain portion of these medical supplies have been withdrawn and sent to Viet Nam and other places in the form of aid. I think some were sent to Chile a year or two ago. I wonder if the minister would have anything to say about that?


Charles Mills (Bud) Drury: I do not believe I was making specific reference to the nuclear detonation reporting system when I spoke of a system of improved communications. It is a fact that in the past four years regional headquarters, which were not then operational, have become fully operational and equipped with an adequate system of communications, both between regional headquarters themselves and headquarters directly. We have also substantially improved our communications between four of the regional headquarters and their counterparts in the United States. This represents a step-up not only in cost but more importantly in the effectiveness of communication.
June 13, 1967

Supply-Defence Production
The system for reporting nuclear detonation has been reviewed and revised. The system with which the hon. member was no doubt familiar at an earlier period is now being replaced by a system of reporting from existing army stations or ground force stations in Canada, to be supplemented by aerial reconnaissance and aerial reporting. I am told that this, over the long run, is a more efficient approach than was the earlier system of a series of interconnected nuclear reporting stations.
In so far as medical supplies are concerned, there is of course the necessity of medical supplies held as an emergency reserve being turned over periodically, with greater frequency for some items than others. It would be reasonable to assume that out of the medical stockpile held for emergency purposes, the Department of National Health and Welfare would feed medical supplies which should be turned over to a variety of units of consumption, to be replaced with new stock. Although this hardly comes under the heading of rotation of stock, there was dispatched to Viet Nam a 200 bed hospital, complete. The beds obviously do not deteriorate in storage, nor perhaps do the mattresses, although some of the medical supplies would. These 200 bed hospitals from the emergency stockpile is being replaced in that stockpile by the Department of National Health and Welfare. I suggest that perhaps this is a very good use of our reserve stockpile, to be able to meet at short notice urgent demands as they occur.


Herbert Wilfred Herridge: First of all, Mr. Chairman, I want to thank the minister for the answer he gave to the question I asked this afternoon. It was a very painstaking answer and was quite complete from my point of view. I do want to say this is the first time I have heard the minister responsible for the Emergency Measures Organization read a statement to the house that gave some indication of the policy and the purposes of the organization at the present time. I remember that when the organization was first established there was considerable enthusiasm. There was a great deal of organization at the national and local level. You will remember, Mr. Chairman, that there was a program to have a shelter in everyone's backyard in Canada. I know one firm in the west which was incorporated to supply these shelters, which people thought they required at the time. This firm has since gone bankrupt and the market did not last very long. There was this burst of enthusiasm, which could be understood because of conditions which existed at that time.

Then there was a sort of apathy which crept in. I have talked to a great many men who have been interested in civil defence and the Emergency Measures Organization who gradually, through the years, lost their enthusiasm. It was for this reason I was glad to hear the minister read the statement he did, which gave an outline of the policy and purposes of the organization at the present time.
I want to ask one or two questions. First of all, what is the policy of the Emergency Measures Organization with respect to any peacetime disaster? In talking to people I have found they were more interested in an organization if it had a twin value, if it were a war measures organization and could be used in case of disaster in any particular district. Perhaps the minister would tell us what is being done in this direction.
[DOT] (8:50 p.m.)
Second, with respect to peacetime disasters, what co-operation is there with the armed forces to assist? We are all human, and at the present time there is in my district the fear that many communities may be flooded by the rising waters of the Columbia. At the moment these people are interested in the Emergency Measures Organization in so far as it will co-operate with the civilian population in meeting a particular and local problem in conjunction with the reserve army and other personnel. Can the minister explain in a little more detail the role that the Emergency Measures Organization can fulfil in meeting local peacetime disasters, whether floods, forest fires or other unforeseen disasters.
Would he also explain what form of agreement is reached with the provinces in respect to the administration of this organization within the provinces? I have noticed quite a diversity of approach on the part of various groups in this regard. Perhaps the minister could briefly outline the agreement with the provincial governments in respect to the administration of the Emergency Measures Organization. I understand that a grant is made to the provinces for this purpose, but what check is made by the federal authorities to see that the money that is granted to the provinces is spent efficiently and properly, for the purpose for which it is designed?
Another comment I wish to make is this. Although the minister mentioned public relations, the dissemination of information, and that sort of thing, I think things can be improved. This improvement depends on the locality in which the organization is based.
June 13. 1967

Some local papers are very good in this respect, and give news items about the organization's activities, or any particular local development,-what they are intending to do, and so on. On the other hand, in other areas the organization is almost overlooked.
I would suggest that the public is entitled to all the information it can get about the purposes of the organization in emergency situations, its function in peacetime and the contribution that it can make to the area in this regard. I find that a great many young men whose primary interest is in the purposes of the organization are also interested in working with the organization in order to meet any peacetime disasters or local emergencies which may arise. If the minister would deal with these points when he speaks later, I should be very pleased indeed.


Mr. Brand:: Mr. Chairman, the minister mentioned a moment ago the turning over of hospital supplies, and I agree with his remarks. I think this is a very worth-while idea. He then went on to mention that one of these portable hospitals which had been made up by the Emergency Measures Organization staff had been sent to Viet Nam. This is probably one of the finest portable hospitals in the world and I think the staff deserve a lot of credit.
However, is the minister aware that in the December 1966 issue of the magazine put out by the external aid office in Ottawa on international developments it was pointed out that the Canadian government is sending ten of these pre-packaged hospitals to Viet Nam? According to this magazine they were to be shipped out at the rate of one per month, so since December I presume that six have been sent to Viet Nam, rather than just one. Only recently, I believe last month, the external aid office announced that it would be sending another ten of these 200 bed hospitals to Viet Nam which will operate under Dr. Alje Vennema who is in charge of the Canadian program of rehabilitation in Viet Nam. This would make a total of 20 hospitals.
As I say, I think this idea is very worth while. Since the minister seems to be sending these hospitals freely, and perhaps is not aware of it, I should like to make a pitch for a few of them, if I may. A few months ago in this house I suggested that it was time that some members of the medical profession took part actively and voluntarily in giving aid to foreign countries such as Viet Nam, and perhaps South America and the Caribbean the

Supply-Defence Production idea being based on the method now being used in the United States and presently carried on in Viet Nam by civilian doctors, who go there on a rotational basis spending 60 days in Viet Nam.
These doctors come from right across the United States and I believe that at the present time there are 34 surgeons and medical men operating in Viet Nam helping civilian casualties in that country. Their services are given purely voluntarily. Perhaps this fits in with the plea recently made by the director general of external aid before the external affairs committee the other day, when he said he would like to see some voluntary work instead of just money going into this type of external aid. This is exactly what I have proposed, Mr. Chairman, and I was presumptuous enough to suggest at the time that the minister be good enough to release a few more of these 200 bed pre-packaged hospitals for this purpose.
The minister pointed out, and I agree, that it would be a good idea to rotate pre-packaged stocks of drugs available in the country. It seems to me, however, we had better rotate them a little more, because according to Dr. Vennema there is a great shortage of medical supplies even in the Canadian facility in South Viet Nam. The amount of money spent by the Canadian government there at the present time is about $2 million, and although I understand that the Chile situation was a special one, perhaps we could keep in mind that the hospitals, supported by our government and our people in South Viet Nam might use some of these rotation supplies to help ease the critical shortage, particularly of drugs and bandages.
I should like the minister to give serious consideration to my proposal, which has already received a lot of favourable support among members of the medical profession who have expressed their willingness to operate such a venture. The Canadian Medical Association, though it feels that our medical resources are perhaps a bit thin to send too many supplies to Viet Nam, is looking with a great deal of interest at this proposal and has already met with members of the government concerning such a program in South America and the Caribbean. This type of hospital, which can be transported in one of our large aircraft or sent by ship, could easily be set up in any available area, and with this sort of Canadian ingenuity I think the staff of the organization certainly deserve credit for designing this type of hospital. They are ideal for these units. Volunteer doctors could go to
June 13. 1967

Supply-Defence Production these areas to work as ancillary units to the medical facilities in the locality.
This proposal, Mr. Chairman, is not treading on the toes of the type of program that the government already has under way, which is more in the line of rehabilitation and training in Viet Nam under Dr. Vennema's care. However, it would mean that instead of bringing children who have been badly burned and badly maimed to Canada for care, as was once suggested, they could receive proper surgery and medical treatment from some of the skilled surgeons and medical men who are practising in Canada today. I would at least like to hear a faint word of encouragement from the minister for what I consider a very vital and important matter, one which I am sure can do a great deal toward improving Canada's image in the world today.
* (9:00 p.m.)


Charles Mills (Bud) Drury: Perhaps I may respond to the questions asked by the hon. member for Kootenay West and also say a word or two about the representation made by the hon. member for Saskatoon. The hon. member for Kootenay West asked what the Emergency Measures Organization does in respect to peacetime disasters. I tried to indicate in my general remarks that the role of the Emergency Measures Organization was one of coordinating and planning. Provided the various agencies of government have prepared adequate plans to cope with emergencies, there is really nothing for the E.M.O. to do. Its job is to ensure that adequate plans and preparations are made by the various levels of government and agencies responsible for carrying out particular functions. It is not the object of the E.M.O. to usurp or replace emergency operations of governments or agencies in Canada.
Let us consider as an example a flood threat in the Columbia river valley. There is a provincial government agency whose task it is to report on the threat of superabundant water as a result of surveys, meteorological reports and so forth. It is the job of a provincial government department to ensure that road communications in the Columbia river valley are in good condition at all times, including times of flood. It is the job of another department of the government to ensure that there is an adequate supply of water and electricity for municipalities in ordinary times and during disasters.
The role of the Emergency Measures Organization is to keep after these government departments to make sure they have adequate

plans and are making the necessary plans in the event that an anticipated disaster, in this case a flood, should occur. I am glad to say that the Emergency Measures Organization has met at the federal and provincial level and has received co-operation from all provincial governments and from the armed forces of Canada, which also have to make plans to cope with disasters which call for their assistance. They have such plans and are ready to implement them.
The initiative in seeking such assistance rests with the municipality which finds itself faced with a disaster with which it cannot deal. It then will call upon the province, and if the province finds it is faced with a disaster which is beyond its resources to cope with, it calls upon the federal government. Fortunately we are in the position to respond to such requests effectively and quickly.
The hon. gentleman also wondered how the Emergency Measures Organization was administered in the provinces. I think I gave a general indication of the role of this organization at the provincial level. Its role is to make plans to meet emergencies and to ensure that all agencies which would discharge these plans have in fact knowledge of the plans, have accepted them and made the necessary preparations. This is the role of the organization. It is not an executive agency but merely a planning and co-ordinating agency. That is the specific background.
Having regard to the representations of the hon. member for Saskatoon, I fully support the external aid programs of the government of Canada, although I am not responsible for their administration. In fact, they are quite irrelevant to the estimates we are discussing tonight. I wholeheartedly support the use, on a replacement basis, of our medical stockpile including the very efficient 200 bed dismantle-able and transportable hospitals, and I think the designers deserve a great deal of credit. I am pleased to note that the learned doctor shares that view.
As the hon. member pointed out, there have been shipments made of some ten of these hospitals to South Viet Nam, and more are to follow. I will refer his representation regarding doctors volunteering and serving in South Viet Nam to my colleague, the Minister of National Health and Welfare, under whose province perhaps this more particularly falls.
I read Hansard in respect of the discussion which took place before the dinner recess and I may have misled the house. The hon. member for Moose Jaw-Lake Centre, following a
June 13, 1967

statement made by myself to the effect that we endeavour to publicize on a national scale all large prime contracts, asked how they are publicized. I said that they are publicized in a variety of ways, and indicated that the most effective way was probably by newspaper advertisements. I may have conveyed the impression that the government of Canada publicizes prime contracts through paid newspaper advertisements. That is not the case. We do not pay for such newspaper advertisements. Releases are made of the details of these contracts on both a regional and local basis for distribution to newspapers in the hopes they will publish the details and enable potential contractors to have knowledge of them.


Douglas Scott Harkness: Mr. Chairman, in connection with the provision of our drug and mobile hospitals from our stockpile, either to Viet Nam or other places where they can be used,
I should like to make it clear that I have no objection, provided the stocks are replaced. The minister previously said that one hospital had been sent. He now indicates that ten have been sent and more are to follow, but there is no provision in these estimates for the replacement of those hospitals or the stocks of drugs that have been provided. That is the point I made when I originally referred to this matter of mobile hospitals and drug stocks which have been piled for emergency measures use. It is fine to send them as part of our foreign aid, but as far as I can make out there has been no provision made for replacement, contrary to what the minister has said. There are no funds provided for their replacement.


Charles Mills (Bud) Drury: Mr. Chairman, the initial cost of the drugs and these hospitals appeared in the estimates of the Department of National Health and Welfare, not in the estimates covering the Emergency Measures Organization, the estimates we are dealing with tonight. By the same token, the cost of replacing the hospitals and the drugs shipped to South Viet Nam would not appear in these estimates. Their replacement cost could be financed in one of two ways, either through an item in the estimates of the Department of National Health and Welfare, representing the cost of replacement, or by an item in the estimates of external aid covering the replacement cost. I am not sure which way this is being done or which way it is proposed to be done.

Supply-Defence Production e (9:10 p.m.)


Douglas Scott Harkness: Can the minister assure us that an item will appear in one place or another? I know there is no such item in the estimates of the Department of External Affairs, because we dealt with those estimates in committee last Thursday. I have not looked at the estimates for the Department of National Health and Welfare but I understood the minister to say there is no such item there. Can he assure us that there will be a supplementary estimate to cover the replacement of these supplies which have been shipped away?


Charles Mills (Bud) Drury: I have been assured that these will be replaced, and as a consequence the appropriate financial provision will have to be made. I will check with my colleague the Minister of National Health and Welfare to find out how the replacement is to be financed.


Douglas Scott Harkness: Is it to be done this year?


Charles Mills (Bud) Drury: I am not sure as to the precise time table, whether the items shipped will be replaced in one fiscal year or not. Again, I will ask my colleague.


Douglas Scott Harkness: I submit this is another example of a lackadaisical approach to the emergency measures program which has characterised this government during the last four years. These medical supplies and mobile hospitals were stockpiled for a specific purpose and are being used for another purpose. Apparently they have not been replaced, and the minister does not know whether they will be replaced this year, next year or, indeed, I suggest, at all. This is not good enough. If the necessity exists for this stockpile-and both this government and the previous government were of the opinion that it does-then it should be maintained until it can be shown that there is no longer a need for it. I do not think the minister is advancing that contention this evening.


Charles Mills (Bud) Drury: Not at all.


Douglas Scott Harkness: I would say the same with regard to the provision of protective headquarters for the provinces under a program which was projected four years ago. Nothing has been done since, except that the government has completed the six headquarters which were under construction-in fact, I believe one or two of those had been completed by the time they took office.
149S	COMMONS
Supply-Defence Production
Once more, the whole matter has been soft-pedalled and very little more has been done about it. When I spoke earlier, I asked the minister what national exercises had been held to test the efficiency of the organization and ascertain any weaknesses. The minister has not answered that question. I do not think any such exercises have been held. I also asked him what had happened about the dominion-provincial conferences which used to be yearly events. I do not think more than one of these has been held during the last four years.


Charles Mills (Bud) Drury: The most recent federal-provincial conference was in June of 1965 and the most recent national exercise was in October of 1966. The hon. member should appreciate that in respect of supplies the role of the Emergency Measures Organisation is one of planning and co-ordination. The responsibility, in departmental terms, for maintaining the stockpile rests with the department charged with the particular work. It is not, in jurisdictional terms, the task of the Emergency Measures Organization to procure or operate the stockpile; it is the responsibility of the department, and one assumes that when a senior and responsible department gives an assurance that the stockpile will be replaced, it will be done.
I do not think it is fair for the hon. member to suggest that nobody knows whether it will ever be replaced. This is to impugn, quite unfairly I think, the sense of responsibility of those in charge of a large and responsible government department. The hon. member says with respect to regional headquarters that one or two may have been completed four years ago and that since then nothing has been done except to complete two. This is something of a distortion. I did make reference to the provision of an adequate communications systems connecting these headquarters, something which, I may say, did not exist four years ago. The previous government may have had great plans for doing these things but in fact they were not carried out. Now they have been. Further, I indicated that this year a regional headquarters was being constructed in Prince Edward Island. It really is not satisfactory for the hon. member to say nothing has been done. Either I am wasting my time talking or he is trying to controvert what I say.
I think some hon. members feel that not sufficient publicity has been given during the last couple of years to the activities of the Emergency Measures Organization. I myself

DEBATES	June 13, 1967
feel strongly that an endeavour to maintain at a high level interest in an organization whose functions in peacetime are relatively undramatic is doomed to failure, and that attempts to raise public interest in such an organization during peacetime will only result in a substantial let-down. We have had some examples of efforts to build up the activities of the Emergency Measures Organization to a pitch which could not be sustained, and I think it would be a mistake to repeat those errors.


Douglas Scott Harkness: The minister is quite wrong in the statement he made that the emergency measures headquarters in the provinces did not have communications five years ago. Permanent headquarters were in the course of construction, but there were temporary headquarters in each of the provinces and they were provided with communications. At least one exercise on a national scale was held each year in addition to a number of regional exercises and these confirmed that the communications system was working satisfactorily. All that has happened since is that the communications apparatus has been moved from the temporary headquarters to the permanent headquarters. I am surprised that the minister should try to give an erroneous impression about what existed four years ago in comparison with what exists at the present time.
[DOT] (9:20 p.m.)
The minister talks about the Department of National Health and Welfare being a responsible department, and suggests that if this department makes it known that the medical supplies and mobile hospitals which have been sent abroad are to be replaced, we must accept it that this will be the case. I would like to ask the minister whether the cabinet committee on emergency measures still exists on which sit ministers representative of these various departments? When I was in charge of emergency measures this was the situation. When the cabinet committee came to a decision with regard to a matter of this kind, the provision of replacements for any equipment disposed of or sent overseas,-although I do not think such was actually done at that time-, that decision was recommended to the cabinet and, if approved, became a cabinet decision, and action was taken. I wonder if this system still exists, or is it up to each department to do as much as it wants with regard to emergency measures, or to do as little as it wants?
June 13, 1967


Charles Mills (Bud) Drury: The hon. gentleman, as a privy councillor, would not expect me to indicate the actions taken by cabinet committees and by the cabinet. There are both departmental decisions and government decisions, and the decision to replace the hospital equipment shipped out of the country is a governmental decision. Perhaps the hon. member will not want me to go further than that.


Douglas Scott Harkness: I was not asking the minister to tell me any cabinet decisions or anything else along that line. I was simply asking him if the cabinet committee on emergency measures, which was set up during the time we were in office, is still in operation. We announced the establishment of it, there was nothing secret about it. Is it still in operation?


Charles Mills (Bud) Drury: Yes, Mr. Chairman.


[Stage Direction]
Item agreed to.
The following items were agreed to:
25. Construction or acquisition of buildings, works, land and equipment, including authority to make recoverable advances not exceeding in the aggregate the amounts of the shares of the governments of the provinces of the costs of joint programs, $2,230,200.
30. Grants to provinces and municipalities for civil defence and related purposes and authority to make recoverable advances in accordance with terms and conditions approved by the treasury board, $5,200,000.
On item 40:
C-Crown companies-
Canadian Arsenals Limited-
40. Administration and operation, $1.
Alfred Dryden Hales: Mr. Chairman, could the minister explain the $1 estimate for Canadian Arsenals Limited?


Charles Mills (Bud) Drury: Mr. Chairman, for a number of years Canadian Arsenals has been operating in a situation in which the revenues realized by the crown corporation were inadequate to cover its total expenses. As a consequence every year an appropriation has been made to cover this deficit. It is clearly understood that when deficits occur there will be an appropriation to cover them. We hope that in the current fiscal year the administration and operation of Canadian Arsenals will be in balance, that there will be neither a deficit nor a profit. This $1 item is merely to indicate that there is accepted a responsibility to meet the deficit of this particular crown corporation. The fact that the net cost of administration and operation has been reduced from $446,000 to $1 means that as a consequence of the reorganization of Canadian Arsenals we do not anticipate an operating deficit this year.
Supply-Defence Production


Alfred Dryden Hales: 
Charles Mills (Bud) Drury: Mr. Chairman, the cost as provided in the initial appropriation last year was $446,000 as shown in item 40 on page 66, and also on page 72 of the blue book. A supplementary estimate was required last year to increase this vote to cover the costs we incurred in respect of the closing down, through sale, of the Val Rose plant at Valcartier. The items involved were a profit of $232,000 in respect to the head office, in the Dominion Arsenals division at Val Rose a deficit of $184,000, in the small arms division at Long Branch a deficit of $1,163, and in the Val-leyfield division a deficit of $670,000. This works out at a deficit of $623,000, which is represented by the item shown in the estimate at the beginning of the year and in a supplementary estimate.
In this case any sum in addition to the $1 provided in these estimates, required to cover a deficit greater than $1, will have to be sought from parliament by means of a supplementary estimate. This is not a blank cheque on which Canadian Arsenals can draw. All the moneys required for covering a deficit must be explicitly appropriated by parliament.


Alfred Dryden Hales: Would the minister give us some idea as to the policy of the department and the future operations of Canadian Arsenals Limited? I understand there are four plants in operation. Is it the intention to get rid of some more of them? So far as I am concerned it is a real white elephant and is a drain on the taxpayers' pocket. What is the policy of the department in this regard? Are we going to get rid of Canadian Arsenals or is it going to continue operating at a deficit?


Charles Mills (Bud) Drury: The policy in relation to
Canadian Arsenals is that if we can be successful in respect of armaments and ammunition manufacture in seeing established appropriate and adequate private enterprise capacity, then Canadian Arsenals will not be in that field.
In respect of operations concerning the manufacturing of small arms and ammunition and explosives, where we are unsuccessful in getting private enterprise to undertake this
June 13, 19G7

Supply-Defence Production on its own, Canadian Arsenals Limited will continue to provide facilities so that they will be available. We have been successful in interesting a commercial enterprise to take over the explosives plant which is outside of Montreal, at Valleyfield, and because along with this plant the corporation undertook the responsibility of maintaining the necessary capacity for the production of explosives should these be needed by the federal government, this no longer represents an operation of Canadian Arsenals.
Similarly, arrangements were made with an entrepreneur to take over the small arms ammunition plant at Valcartier. In return for taking it over he has given an engagement to maintain in that plant the necessary level of small arms ammunition manufacturing capacity sufficient to meet emergency needs of the government of Canada; so this no longer is at the charge of the government of Canada. There do remain two further operations, one at Long Branch in Toronto for the production of light automatic guns and small arms, and a shell filling division at St. Paul l'Ermite. We have not yet been successful in interesting private enterprise in taking over either of these operations. As a consequence Canadian Arsenals Limited will continue to operate them. I am glad to say, however, in so far as the operations of these two and the head office are concerned, that we have budgeted in such a way that it will not represent an operating deficit to the cost of the taxpayer.
[DOT] (9:30 p.m.)


[Stage Direction]
Item agreed to.
45. Construction, improvements and equipment, $461,400.
Item agreed to.
Canadian commercial corporation-
50. Administration and operation, $2,058,000.
Norman Platt Lambert: Mr. Chairman, in respect of the Canadian Commercial Corporation the minister will recall that two years ago, when he appeared before the defence committee, there was rather an extensive discussion about this corporation. At that time there was, shall we say, an administrative change that was being made in the corporation. Could the minister outline to us briefly just what is the administrative set up in respect of the Canadian Commercial Corporation at the present time. Are the officers entirely persons who are members of another branch of the public service of Canada, and is there an actual president of this crown corporation?

There was a president at that time. It is my information that this man has left the service. Could the minister give us more information in this regard and tell us whether this now is sort of an incorporated branch of the public service of Canada.


Charles Mills (Bud) Drury: Mr. Chairman, the discussion to which the hon. gentleman referred took place in the committee some time ago. The Canadian Commercial Corporation now has a president and a board of directors, all of whom are officials of the public service of Canada. None of these persons receives any additional emolument as a result of being either the president or an officer of the corporation. The operation of the corporation is performed entirely by officials who already have been appointed to the public service in another capacity and who occupy another position in the establishment.
As was pointed out earlier, the department is required to keep a costed accounting of the services provided by these officials in the public service on behalf of the Canadian Commercial Corporation. This charge then is made by the Department of Defence Production on the corporation and the amount is then voted by parliament in an appropriation. This amount then in turn is used to offset expenses of the Department of Defence Production.
The president, who had no other duties in the public service other than president of the corporation, resigned in the fall of 1965. He has been replaced, as indicated, by a president who is an official in the public service and who receive no additional remuneration.


Marcel Joseph Aimé Lambert: All the officers of the corporation are persons who also are in the Department of Defence Production.


Charles Mills (Bud) Drury: Yes.


Marcel Joseph Aimé Lambert: In other words, so far as this is concerned this is the incorporation of a branch of the public service and the legal entity, shall we say, is for commercial dealings. In this way, rather than dealing with the government, the persons who wish to deal with the Department of Defence Production are dealing with the Canadian Commercial Corporation, a legal entity which really is a branch of the public service of Canada.


Alfred Dryden Hales: Mr. Chairman, the Canadian Commercial Corporation I believe is another one of those white elephants which we could lead out to pasture and let the Department of Defence Production do the work it is doing in
June 13, 1967

any event. Apparently the Department of Defence Production is doing most of the work. An amount of $2 million is being charged for the services rendered. I should like to know what the income is from the Canadian Commercial Corporation. Then we might arrive at the net cost of operating the department. We are told nothing here. It says, "Details page 72". Then on that page we find the same thing. I should like to know what the net operating costs of this corporation are.


Charles Mills (Bud) Drury: Well, Mr. Chairman, unfortunately the hon. member was not here a little earlier when it was pointed out that the Canadian Commercial Corporation, as the hon. member for Edmonton West has just indicated, is a legal entity, or perhaps more properly expressed, a legal fiction. It exists in name only. There are a number of foreign governments and agencies of foreign governments which are authorized to enter into contracts with other foreign corporations. They are not, however, authorized by their governments to enter into contracts with foreign governments.
This means for instance that the procurement service of the German army is under its statute allowed to enter into procurement contracts with foreign corporations, but if it should wish to enter into a contract with a foreign government it must proceed through the German foreign office, the Canadian foreign office and the Department of Defence Production. The process of procurement is vastly simplified if the German army procurement service is able to deal directly with the authorized entity in Canada and not have to proceed through the process on a formal government to government basis. This is the reason for the continued existence of the Canadian Commercial Corporation.
In practice what happens is that the foreign purchaser executes a contract with the Canadian Commercial Corporation. This is a contract between the crown corporation and the foreign purchaser. The same officials who have negotiated this contract immediately have the Department of Defence Production execute a contract in identical terms to the contract executed with the Canadian Commercial Corporation. They then proceed to act on that contract in terms of procurement, exactly as if it had been a contract entered into in the first place with the foreign government or agency.
This makes it easier for us to sell abroad the output of Canadian equipment manufacturers. Rather than being a white elephant,

Supply-National Research Council this is an institution which costs the taxpayers nothing, but which is very helpful in our promotion campaigns.


Alfred Dryden Hales: The minister has not yet answered my question. There must be certain tasks credited to this corporation and I suggest they would offset this amount of money which is being charged to the corporation. I should like to know the net operating cost of this corporation.


Charles Mills (Bud) Drury: Mr. Chairman, in respect of the corporation there is some holdover of funds or deposits held by the corporation, the interest on which amount is something in the order of $100,000 a year. Apart from this, the income in terms of service charges or surcharges is purely nominal and really quite meaningless. If one were to abolish the corporation, presumably the interest on the income would be transferred to some other government account and the interest would continue to be earned there. There would disappear a revenue of an amount of some four thousand dollars a year assorted petty service charges. There would also disappear something in the order of $2,000 in the year for losses, or there would be a net difference of about $2,000 applied against what has been estimated as the total cost for the time and effort spent on the promotional work in respect of the Canadian Commercial Corporation, in the amount of $2 million.
[DOT] (9:40 p.m.)


[Stage Direction]
Item agreed to.
Russell Clayton Honey: This concludes the estimates of the Department of Defence Production. The committee will now consider vote No. 1 of the National Research Council. This item may be found on page 364 of the blue book, and the details at page 365.



NATIONAL RESEARCH COUNCIL OF CANADA INCLUDING THE MEDICAL RESEARCH COUNCIL

[Stage Direction]
1. Administration, operation and maintenance, $40,693,000.
Mr. Rynard:: Mr. Chairman, I should like to make a few comments on this item. I notice that the gestures of the minister tell me to keep it short, but I think that anybody following what the minister has said in the house tonight will realize he has been keeping it long. I should first like to congratulate the minister on being head of the National Research Council, because I think it is one of the most important departments of the federal government. The progress of this country
June 13, 1967

Supply-National Research Council will depend a great deal upon how the National Research Council is operated.
Employment and prosperity go hand in hand in a country, and they depend entirely upon the expansion of our manufacturers. I think if you look over the record of the last 10 years, Mr. Chairman, you will find that there has been a steady increase in employment in the manufacturing field. The manufacturing industries alone employ 1,-
500,000	people. Wages account for a large part of the nation's purchasing power. This illustrates the necessity of research and competitiveness in the manufacturing field if we hope to increase our sales and economic growth.
How are we doing this? The minister has followed in the paths of the previous government which made incentives available back in 1960. That government allowed not only write-offs against tax, but a write-off of 50 per cent in respect of new work that was undertaken. This government thought that program was so good that they replaced it with the Industrial Research and Development Act, which does the same thing but also allows a cash grant of 25 per cent where research has been undertaken. I congratulate the government for undertaking this program. I do not believe it is enough, but it is a step in the right direction.
We must admit that research in Canada has been very slow in developing. Perhaps the greatest research development in this country has been in the pulp and paper and chemical industries. I hope the minister will bear this fact in mind when considering tariffs in respect of the chemical industry, because this industry has done very well in Canada. The minister said he will have to protect some industries, and I hope this will be one of them.
The primary industries, in which we have for so long been engaged in Canada, require a minimum amount of research. A great deal of the raw materials and the semi-processed materials have been shipped out of this country to be processed in other countries and shipped back to us. The reason for this is obvious. We do not have the know-how to manufacture these articles and be competitive in so doing.
There is another factor to be considered in this respect. There are operating in Canada many subsidiary firms of American industries. I do not know whether people realize that most of the research in connection with these industries is carried out in the United States. The subsidiary firms operating in this
[Mr. Rynard.l
country have paid for this research. I think we have to go one step further in pointing out how essential the research is. We have educated in this country many scientists who have crossed the border to the south. I was looking at the figures the other day and found that in 1964 over 4,000 professional and technical people crossed the border to the south. Many of them carried on research in the United States for the parent companies which have subsidiaries in Canada. It costs us upwards of $30,000 to educate each of these professional and technical people. When they work in research for the American parent company, the subsidiary operating in Canada pays part of the cost of that research. I would point out that the figures indicate that in respect of research over $300 million are spent by American subsidiaries operating in Canada.
We will always be hewers of wood and drawers of water unless we can stop this brain drain and carry out in Canada the necessary research to produce the goods to sell not only to Canadians but in the markets of the world. This is very essential, and this is why I say the minister is not spending enough on research. He is looking pretty grave at the moment, but according to the figures he gave in a speech he made in Paris, the amount spent on research should be 2 per cent or better of the gross national product. If you look at the figures of the amount of money spent on research in Canada today, you will see that $45 million is spent on science and engineering, and $20.5 million on medical research. If the minister wants to carry out an effective policy in this respect, let him implement the recommendations of the Gundy report, which asked that $56 million be spent on medical research. The minister is allowing only $20.5 million.
In respect of research in business and industry there is an item for $5,700,000. We are spending one tenth per capita of the amount the United States are spending. We cannot all at once make the same grants to research as are made in the United States, but if we were spending the proper amount of money on research, according to the minister's own figures given in the speech in Paris we would be spending $1,210 million, if my figures are correct, because our gross national product is $60 billion. This means we should be spending on research $1,200 million, and we are spending only $71 million. This is not good enough for the Canadian people.
June 13, 19G7	COMMONS
I would point out to the minister, and he knows it as well as I do, that the rich get richer and the poor get poorer in the scientific field. The United States are able to attract qualified people from this country because they can pay higher salaries than we are able to pay. I ask the committee to consider the asset we could have in this respect. It costs us $30,000 to educate a man at engineering college. If he remained in this country, he would pay income tax; he would buy goods and services in Canada; he would create employment. If he goes to the United States, what does it cost this country? It costs us millions of dollars, because he will be an asset to the United States not only in the work he carries out there but in the discoveries he might make.
[DOT] (9:50 p.m.)
This brings another thought to my mind, namely that a successful industry today needs raw materials. We have a great deal of raw mater als, and in this respect we are richer than any other nation in the world. However, we need scientifically trained people and we need capital, of which we do not have too much. We need modern equipment and a highly technical know-how, not only so that we can manufacture new goods and sell them in the markets of the world, but also so that we can successfully compete by manufacturing articles of better quality than those which are sold by other countries.
The minister made a statement, for which I congratulate him. He said that we should not rely on other countries to do our research work. I compliment him for making that statement but I would also urge him, if he sincerely believes in what he said, to step up the research program.
The minister stated that the best way to create incentive, to foster research and developments in addition to a sk lful imposition of taxes and so forth, is to maintain an effective patent system and to protect it. I wonder how this will apply to the drug industry in Canada. Does he believe it will apply in the same way? Did he so advise the minister in the other department?-because this is a very important matter. I believe we should stimulate research in every way that we can.
I should like to draw the minister's attention to the fact that Canada deserves the best. He knows that we are not doing what we should do in research, and he has given us the figures to prove it. We are spending only $70 million when we should be spending $1,000 27053-96
DEBATES	1501
Supply-National Research Council million. The more money we spend on research, the better we will be able not only to process our raw materials but to process our manufactured materials to be sold in the markets of the world. The more money we put into research the better we will be able to fight the brain drain and to create greater employment in Canada. This is the challenge which faces the minister responsible for research.
I will not dwell on matters relating to the medical field because my time is nearly up and I am sure the minister would like to make some remarks.


Mr. Orlikow:: Mr. Chairman, I wish to begin by expressing not only amazement but concern about the fact that we have begun only now to discuss the estimates of the National Research Council, which 1 consider to be one of the most important agencies of the federal government, an agency on which in my opinion depends to a large extent the future welfare of this country. It has been well said by people who are greater experts in this matter than I am that in this day and age a country needs not only trained manpower and resources, which we have in great quantities, but that in order to prosper it needs technical know-how. If there is one thing of which we have been short in this country in recent years it is technical knowhow.
The amount of money which is being spent on research in Canada is pathetic when compared with the amount spent by other industrial nations. It has been estimated that for every $1 per capita that we spend for scientific research, Great Britain spends $3 and the United States spends between $10 and $15. That being the case, although the estimates for the National Research Council are substantially higher this year, when we compare the amount which it is proposed we spend on N.R.C. next year with the amounts which have been asked for by the people who know best, that is the scientists in various fields, we should hang our heads in shame.
I am not suggesting for one moment that this government, or any other government, could meet in one year all the requests which the scientific disciplines have made on the government of Canada in recent years. However, if one considers, for example the requests, not only those that have come out of thin air but requests based on a hard-headed examination of what is needed and what can be done in the field of medical research-and the most recent one was prepared by Mr. COMMONS DEBATES
June 13, 1967
Business of the House
Gundy, working with a group of most competent researchers in the field of medical research in Canada-he really wonders whether the government has begun to realize what is required.
Within the past week we saw the publication of a report entitled "Physics in Canada, Survey and Outlook" prepared by a study group of the Canadian Association of Physicists. I do not have the time to put on record some of their findings, nor did I have the time to read the report in any detail, but I understand that the situation with regard to research in the field of physics is just as bad as it is in the field of medical research according to the Gundy report.
Therefore I find it amazing that the minister should permit these estimates to be discussed tonight without first making an opening statement. I think he did a disservice to the house.
Item stands
Resolutions adopted in committee of supply this day reported and concurred in.
[DOT] (10:00 p.m.)



NATIONAL RESEARCH COUNCIL


Charles Mills (Bud) Drury: Mr. Speaker, unfortunately our discussion of the estimates of the National Research Council was terminated by the clock. I did not have an opportunity to reply to the many members' questions or to make comments, so with the leave of the house I should like to table now the 50th annual report of the National Research Council for 1966-67 in English and in French.


Some hon. Members:: Agreed.



BUSINESS OF THE HOUSE

Mr. MacLean (Oueens):: Mr. Speaker, I should like to ask the house leader if the schedule of business which was previously announced for tomorrow will be proceeded with in the same order, or are there any changes?


Mr. MacEachen:: No, Mr. Speaker, there is no change in the business for tomorrow, except that I would mention to hon. members I should like to call item 27 to refer certain reports to the committee on veterans affairs. This would be done at the request of committee members, so I will call this item first tomorrow on the understanding it would be passed without debate.
[Mr. Orlikow.l


Mr. Knowles:: Why not do it now?


Some hon. Members:: Agreed.


Marcel Joseph Aimé Lambert: Ten o'clock.



VETERANS AFFAIRS


Allan Joseph MacEachen: That the annual report of the Department of Veterans Affairs, the Canadian Pension Commission and the War Veterans Allowance Board for the fiscal year ended March 31, 1966, be referred to the standing committee on veterans affairs.


[Stage Direction]
Motion agreed to.

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.

Winona Grace MacInnis: Mr. Speaker, on May 31 I asked the government concerning recent representations made by the city of Vancouver requesting the Department of National Defence to permit the city of Vancouver the use of Jericho for park and recreational purposes. This is a very long standing request from the city of Vancouver, but it has been made again in very specific terms. The city of Vancouver is asking the federal government to grant the use of the land north of Fourth avenue, the defence lands known as Jericho, to the city for park and recreational purposes at a nominal rent of a dollar per year for a period of 99 years, with perpetual renewal.
I should like to make certain points which are very clearly and specifically made in this excellent brief from the city council. First of all, Jericho national defence lands break an almost continuous waterfront park system stretching from Stanley park to the north of the Fraser. Jericho national defence lands are one of the few consolidated areas still available to the city for the major park Vancouver needs in that area. In considering this, I must say that the provincial government has promised the release of its two waterlots which are adjacent to Jericho national defence lands if Ottawa will release Jericho. In other words,
June 13, 1967	COMMONS
we have a promise from the provincial government that they will make possible the continuation of this Marine Drive and parkland area-I mean the land adjacent to Marine Drive, for a continuous park area in a belt around Vancouver.
Then, in the fourth place, the city makes it quite clear it has been grateful for the use of the national defence lands at Kitsilano. It has not let them lie fallow. This is where the centennial museum and planetarium are being established. My reason for mentioning this is that it is an indication of the good intentions of the city to use Jericho national defence lands if the city can get them. We need all the beaches we can develop because we regard them as invaluable, since they provide wholesome pleasure for our people and the tourists who come in. Our beaches have public access and are tremendously valuable not only to our own citizens but to others. Many cities have to pay princely sums to get such water frontage, and Vancouver would take the beach now if the Jericho lands were released.
This afternoon reference was made in the house to the Old Testament figure of Moses. Tonight I would appeal to the federal government and particularly to the Department of National Defence to blow its trumpet so that the red tape walls of Jericho will come tumbling down, and set Vancouver free to make yet another lovely park available to its own citizens and to the thousands of tourists who throng our parks and beaches. I hope the minister will be able to let Vancouver have this which we need so badly. We know how to use parks and to share them with people from all across Canada as well as from other countries who come in ever greater numbers.
I hope the minister will make it possible for us to get Jericho beach and the two big water lots adjacent to it.


Hon. Leo Cadieux (Associate Minister of National Defence):: Mr. Speaker, this is not the first time I have heard about Jericho beach, but it is the most eloquent plea for its release that I have heard. Unfortunately, I cannot right now release this valuable property, as it was described by the hon. member. We also realize that it is a very valuable asset.
We have received a brief presented by the city of Vancouver. This was passed to our property people for study and report. As a matter of fact, we have hired a consultant 27053-96J
DEBATES	1503
Proceedings on Adjournment Motion of our own and we expect the consultant's report to be presented within six weeks or thereabouts. Then of course the report will have to be referred to the government for decision.
I believe the hon. member referred to the fact that this matter has been hanging on for a long time. We realize that and want to do something about it, but the question is very involved and we want to have all the facts and to study the question in depth. I can assure the hon. member that this question is very much in our minds. We are doing something in order eventually to solve the problem, and I hope to the satisfaction of everyone concerned, including of course the hon. member.



TRADE-TEXTILES-REQUEST FOR RESTRICTIONS ON IMPORTS

Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, I should like to call the attention of the Minister of Finance (Mr. Sharp) and the government to the steady increase of foreign textile imports, to the stifling problems they cause Canadian industries and to the harmful effects they have on our working class.
Further to the questions I had put on the order paper of the house last year and to which the hon. Minister of Finance had to reply, we know that the Pearson government allows 83 countries to export textile products to Canada.
Thus, in 1963, total imports of foreign textile products reached a value of $486,350,000; in 1964, $559,795,000; in 1965, $581,880,000; in 1966, more than $600 million and this increase is rising further in 1967. In the last three years, imports of foreign textile products have increased on the whole by more than 25 per cent. This is an unacceptable situation, Mr. Speaker, and the present government is to be severely blamed for failing to reasonably protect our Canadian textile industries and for systematically refusing, in spite of my numerous interventions in this house, to adopt measures and to enter into more sensible and less irresponsible negotiations.
I am sorely disappointed at the apathy of the ministers and Liberal members from Quebec in view of such serious problems which affect thousands of our workers. Indeed, textile factories are to be found not only in Sherbrooke, where there are twelve, but also in Shawinigan, Grand'Mere, Joliette,
1504	COMMONS
Proceedings on Adjournment Motion Trois-Rivieres, Magog, Granby, Drummond-ville, Montmorency, Sorel, Cowansville, La-chute and Montreal.
[DOT] (10:10 p.m.)
What concern is expressed by the members and ministers from those areas in view of the steps taken by the government to participate in the Kennedy round? It is high time that these gentlemen leave their ivory tower and abandon their partisan self-satisfaction, while their overly liberal ministers make ready to cut duties on imports of foreign textiles by 50 per cent and quietly do away with our antidumping regulations.
The Minister of Finance and the Minister of Trade and Commerce (Mr. Winters) should intervene immediately, so that the Japanese may stop cheating on their voluntary quotas and limit their exports to materials made of artificial and synthetic fibres. Canadian textile companies and workers unions want very much the Canadian government to impose general restrictions on imports from Japan and other Asian countries and to insist on a lower import quota than the present one.
It should not be necessary to point out that Japan, in particular, does not care what inconvenience it causes our Canadian textile industries by increasing dangerously the number of items not covered by its voluntary quotas, by raising its quotas each year, and by shamelessly copying our lines and types of products.
Our Canadian textile industries have been ingenious and aggressive up until now, but they cannot perform a miracle, and they show less and less profit. That is why the government must act immediately.
Last week-end, the hon. Minister of Finance spent two days relaxing in the eastern townships. Instead of limiting himself to general and innocuous statements on television in Sherbrooke, he should have taken advantage of his stay to visit the industries and meet the representatives of Dominion Textile and the union leaders.
He would have learned that the situation is serious, that imports are growing constantly and that the federal government should institute forthwith a royal commission of inquiry on the Canadian textile industry like the Turgeon commission of 1936.
The 1936 inquiry was requested by the city of Sherbrooke and it examined many subjects, among which the development of the textile industry in Canada, the change in the structure of the world textile trade, Canada's customs tariff and its application in recent

DEBATES	June 13, 1967
years; prices and production, investments, profits, costs, salaries and bonuses, business associations, combines and monopolies, salaries, employment and industrial relations and on the importance of the inquiry and the responsibilities of the protected industry.
Therefore, Mr. Speaker, I shall conclude by urging the government, the Minister of Finance and Receiver General (Mr. Sharp) and the Minister of Trade and Commerce (Mr. W.nters) to take immediate action so that our Canadian textile industry does not find itself in stagnation; I urge the Canadian government to take without delay the necessary action to restrict textile imports which stifle and paralyse our industry, which take jobs away from our Canadian workers, particularly in our twenty Quebec towns that live off the textile industry and in the riding of Sherbrooke, which has 12 textile mills employing 40.4 per cent of that riding's workers.


Mr. Jean-Charles Cantin (Parliamentary Secretary to Minister of Trade and Commerce):: Mr. Speaker, the subject raised by the hon. member for Sherbrooke (Mr. Allard) comes under the jurisdiction of the Minister of Finance and 1 had the opportunity earlier of informing the hon. member that the Minister of Finance was unfortunately out of town today. I took note of the remarks made by the hon. member for Sherbrooke and I can assure him immediately that his concern about the textile products is shared not only by the Minister of Finance but also by the whole cabinet and all the hon. members on this side of the house.
However, I know that there is perhaps a difference between the speech made by the hon. member for Sherbrooke and the responsibility which rests with the government at the present time in a field which is of interest to all countries, because the hon. member for Sherbrooke should know that every country is interested in the textile industry because of its production.
Anyway, I take due note of his remarks and I shall pass them onto the Minister of Finance and Receiver General who will be able to give even better answer in due time.



MR. JUSTICE LANDREVTLLE-REQUEST FOR STATEMENT ON POSSIBLE PAYMENT OF PENSION

Robert Jardine McCleave: Mr. Speaker, a question has been raised by the resignation of Mr. Justice Leo A. Landreville as of June 30 immediately before a Senate
June 13, 1967

committee was to hear an address based on the findings of a parliamentary committee of the Senate and the House of Commons.
In my opinion, the findings of that committee made him guilty beyond any reasonable doubt in the mind of any reasonable thinking person of the allegations with which he was originally charged before various commissions, before a court and before the committee, and my opinion is that admission of that guilt was made when he resigned before the Senate could come to grips with the case.
What happened? That afternoon, various questions were asked in parliament. The record of one of them appears in Hansard of June 8 at page 1283. I quote from Hansard of that day. In reply to the Leader of the Opposition (Mr. Diefenbaker) the Minister of Justice (Mr. Trudeau) said:
I can only say that as far as I know there is no question of bounty.
The record continues:


John George Diefenbaker: Then let us get a comment from the minister. Will Justice Landreville receive a pension? Is that a commentary?


Mr. Trudeau:: Mr. Speaker, I understand this
question. I think it is very much the type of matter to which the government might well give some consideration.
That, I interject parenthetically, was a fine start for a new minister in the House of Commons.
Then, the matter being raised a second time the next day as reported at page 1343-


Stanley Howard Knowles: Mr. Speaker, may I direct a supplementary question to the Minister of Justice? Will the minister assure the house that no retired judge's pension will be awarded to Mr. Landreville without the matter first being brought to the attention of parliament?


Pierre Elliott Trudeau: Mr. Speaker, I see no reason why I should give that assurance.
Later, the hon. member for Winnipeg North Centre asked:
May I direct a further supplementary question to the one I asked of the Minister of Justice in the light of the answer he gave me a few minutes ago. Has the question of a retired judge's pension for Mr. Landreville already been settled?
To this question, the minister answered, no.
Hence my question, and hence my indignation, which is probably becoming rapidly obvious, that after a catalogue of sins which I shall shortly relate a man should come before the government of Canada, having made, or preparing to make, some nefarious deal, nearing the twilight of a career which has proved nothing but dishonourable, at least for the last ten years, and seek a pension of $18,300 a
Proceedings on Adjournment Motion year. There is one gentleman in the House of Commons who has probably served three times as long as the former judge served, and under our pension set-up he would receive $3,000, $4,000 or $5,000. c (10:20 p.m.)
When a man who has served ten years, always under the twilight of dishonour, should come before us with that sort of request, well, Mr. Speaker, my indignation does boil over, but not to the point that I cannot stop it at the moment to ask one question of my hon. friend the Minister of Justice. I would ask him this, whether there is a resignation under foot without any deals, with no promise of a pension being considered for L. A. Landreville of Sudbury, with no provisional pension promised, and with the government firmly bent on providing no pension under any circumstances?
If the Minister of Justice says yes to that at the moment, or no to that at the moment, then I will proceed accordingly. If he can assure me that no pension is promised to this miscreant judge under any circumstances I will sit down and he will hear no more from me. But if he cannot rise at this moment and say it is not promised under any circumstances, then I will not only pursue the matter now but I will pursue it on any other occasion I can; and I can assure you, Mr. Speaker, and the government, that there will be many other members of this house, and not alone on this side, who will pursue it also.
Does the minister promise that? He sits silent.
In his career on the bench, which roughly, oddly enough, coincided with my career in parliament, Landreville did these things:
1.	He committed perjury before a parliamentary committee, before commissions and before various courts of Canada.
2.	He treated a commission of the highest court in the land, that is the committee of parliament, as a group of bumpkins who could be beguiled by loud protestations and long words.
3.	He was guilty of trying to put undue and unseemly pressure on the Liberal candidate in the Sudbury by-election to secure a pension.
4.	He was guilty of conduct unbecoming a judge when the R.C.M.P. came around to ask him what he was doing with regard to certain dealings with NONG stock.
5.	He was guilty of lack of candour and honesty in dealing with any authority and,
June 13, 1967

Proceedings on Adjournment Motion Mr. Speaker, he never volunteered information until that information, or the hint of it, first came out and he knew he was caught in some sort of a dead end.
Now, there is a question here as to whether under the discretional provisions of the Judges Act any government should be allowed to give him a pension. I say, sir, that there is no question of discretion involved here at all, that he was guilty by any admission he might have made, by resignation before the guillotine fell on him in parliament.


Mr. Speaker:: Order, please. The hon. member's time has expired.


Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, the hon. member for Halifax (Mr. McCleave) asked me two questions. I am sorry I cannot read my own writing but I think I remember what the hon. member was saying. The first question was whether there was any deal, with provision to a pension, or something of that order. The answer is no. Neither the government nor myself made any deal with Mr. Justice Landreville regarding pension. The second question was whether the government was firmly bent on giving any such pension, and the answer is no. The government is not firmly bent on giving any pension.
Beyond those two simple answers, Mr. Speaker, if I have a moment I might comment on some other aspects of the hon. member's statement. He took offence at the fact that I said I would not give an undertaking to parliament that I would necessarily consult with it on this question, and I heard the hon. member for Winnipeg North Centre (Mr. Knowles) say "shame" when the answer was quoted as being no. There is nothing under the law of parliament or of the land that would make me give such an undertaking to parliament. Hon. members know the law pertaining to judges and to judges' pensions. They can read it.
There are cases where the government by order in council can give a pension. I have no intention of intimating that this is a case where the government would give a pension,
but the answer I gave was perfectly proper
because I stand by the letter of the law.


Stanley Howard Knowles: There is a question of parliamentary morality.


Pierre Elliott Trudeau: On the question of parliamentary morality, sir, I think the shoe is on the other foot. I am a little distressed that the hon. member for Halifax (Mr. McCleave) should have made such an accusation about Mr. Justice Landreville committing perjury.


Robert Jardine McCleave: He did.


Pierre Elliott Trudeau: Sir, this is gratuitous affirmation by the hon. member.


Robert Jardine McCleave: It is not. He did.


Pierre Elliott Trudeau: As the hon. member knows,
Justice Landreville has been found guilty of no crime under the laws of this country. In the view of the parliamentary committee and of the commissioner, hon. Mr. Justice Hand, he has been found guilty of conduct, not on the bench but as a private person, guilty of conduct unbecoming a judge, that is to say, in meeting the high standards which we demand, and I think rightly so, of judges in this land. But he has been found guilty of no crime, and I personally do not subscribe to the kind of persecution upon which some members of the opposition seem to be bent since we got Justice Landreville's resignation.
Surely this is what we were hoping for. Surely hon. members were not looking forward with glee to the procedure of a joint parliamentary address. Surely if Mr. Justice Landreville resigned this should be the end of the matter, once the government has accepted the resignation. I do not share at all the kind of thinking which is behind the question asked by the hon. member of the opposition.


Mr. Speaker:: Order. The time allotted to the minister has expired.
Motion agreed to and the house adjourned at 10.30 p.m.
TThe following items were passed in Committee of Supply this day:]



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
1,	5, 20, 25, 30, 40, 45, 50.
[Stage Direction]
Wednesday, June 14, 19G7