1967-12-12

Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, I am pleased to inform hon. members that the Canadian Wheat Board, following prolonged negotiations in Canton, has succeeded in concluding a sales contract with mainland China to provide for the export of two million long tons, 5 per cent more or less, of wheat to be shipped from January through October, 1968.
This contract is under the provisions of the third long term agreement with China and consists of No. 1, 2 and 3 northern wheat and a small quantity of Durum wheat.
Assuming that the full tolerance is taken, the sale amounts to 78.4 million bushels. Including the contract covered by this announcement, total sales under the third long term agreement amount to 4.7 million tons or approximately 177 million bushels.
The long term agreement provides for a minimum of 4J and a maximum of 7J million tons over the three year period commencing August 1, 1966, with the amounts for each year to be negotiated separately. As in the previous contracts, payment terms for sales under the long term agreement are 25 per cent cash when each vessel is loaded, and the balance of 75 per cent in 18 months, with interest. The deferred payment provision is made possible by a guarantee to the Canadian Wheat Board by the government of Canada.
I know all hon. members will join with me in extending to the wheat board our warmest congratulations on their good work in reaching agreement on a matter which is of such importance to the Canadian economy.


Hon. Alvin Hamilton (Qu'Appelle):: Mr. Speaker, I think I can speak on behalf of all members of the house when I say that we welcome the long term agreement made with the People's Republic of China. The interesting point about this agreement is that China is taking more than the minimum amounts of 27053-3351
wheat and thus maintaining its intention which was declared as far back as 1961.
However, I think I should point out two things to the minister. One is that the Chinese are very astute and able bargainers, and undoubtedly the length of time taken over these negotiations indicates that they are determined that any faux pas made by this government and by other governments in connection with the wheat price would work to the advantage of the Chinese. Through lack of foresight on this government's part we agreed to a GATT arrangement with respect to grains that will not take effect until July 1, 1968. We were no longer protected by the international wheat agreement which, so far as price guarantees were concerned, died on August 1, 1967. The wheat farmers of the world were without the protection of a floor or ceiling price. The price of wheat, owing to the actions of merchants on the Chicago and Kansas City exchanges, dropped to around 23 cents and 24 cents per bushel.
[DOT] (2:40 p.m.)
As is their right, the Chinese have taken full advantage of this drop in price. At the same time it must be pointed out loudly and clearly that the western wheat farmers will place the blame for this drop in price squarely on the shoulders of the government.
My second point, to which I referred partially yesterday, is that no nation has been more considerate to Canada in these long term agreements than China has been. In 1961 we asked the Chinese if they would not consider setting up a trade office in Canada to facilitate the exchange of business relationships between our private business sector and their crown corporations or government selling agencies. The Chinese agreed to do that, and I did not find out until 1964 why the pledge which our government had given to the Chinese was not fulfilled. I conveyed my intelligence about this matter to the then minister of trade and commerce but to this day a pledge that was given by one government in Canada has not been carried out by a subsequent government. That is why so long as this government persists in failing to carry out something that is very necessary to keep intact the good will between our two nations, I intend to continue to bring this

December 12, 1967
Wheat sale to China
point up. It is only a small matter, but if we do as we promised we shall show the Chinese people that we accept them in the world of nations where we trade with them regardless of their politics, their religion or their colour. I think it is very important to make this kind of gesture, and I hope the Minister of Trade and Commerce will move on this matter as quickly as possible and that he will not procrastinate any longer.


Mr. Ed. Schreyer (Springfield):: Mr. Speaker, the announcement of the Minister of Trade and Commerce will be welcome in western Canada, and since his announcement has implications for the entire Canadian economy it will be welcome across the country. It is particularly welcome at a time of growing despondency in western Canada. Our farmers were worried that wheat exports would not be increased. Over many months grain has been building up at terminal positions. Since that grain, which was ready for export, has not been moved, the effect of the build up has been felt all the way back to the country elevators. As a result the wheat producers of western Canada have become increasingly dissatisfied and disillusioned.
Some aspects of the transaction which the minister has announced to the house are not clear to me. I am not clear about the details as to price and as to the grades of wheat that are in the main to be accepted by the Chinese pursuant to the latest agreement. I thought, as did many people, that, under the terms of the master agreement we might face considerable difficulty in exporting wheat to the Chinese, since in this year's crop we had an oversupply of high grades of wheat and an undersupply, considering the demands of the market, of low grades of wheat. I take for granted that these problems have been resolved in the transaction which the minister has referred to.
In conclusion I wish to endorse the closing remarks of the hon. member for Qu'Appelle, in which he pointed out, as he has done on several previous occasions, that the continuation of Canadian wheat sales to China, which are crucial, have a lot to do with government policy concerning whether or not China should be allowed to establish a trading office in this country.


Mr. Real Caoueite (Villeneuve):: Mr. Speaker, the announcement by the Minister of Trade and Commerce (Mr. Winters) that the Canadian Wheat Board has concluded a deal with China which undertakes to purchase 2

million tons of wheat before July 1968 will surely bring comfort to the farmers of western Canada who were somewhat concerned over the situation of wheat production, particularly the sale of such wheat on the world markets.
Just as the previous speaker, I would have liked the minister to tell us the price which China will pay to Canada. Are we selling this wheat under cost price or are we making some profit on this sale? The minister refrained from any comment on the price we will receive or on the financial arrangement resulting from this agreement with China.
In any event, we must export our wheat. We are one of the greatest wheat producers in the world and we must surely export, but under the best possible conditions, so that the whole population will benefit from the deal, more	particularly the	western wheat
producers.


Mr. Howard Johnston (Okanagan-Revel-stoke):: I am sure we in this party join with others	in welcoming	this important
announcement of additional grain sales to China. I too would endorse the remarks of the hon. member for Qu'Appelle in which he indicated some of the subtleties involved in this trade. We know China is one of the markets which is left more open to us than many because of the reluctance of the United States to engage directly in trade with this nation.
I am a little surprised, though, that the hon. member for Qu'Appelle should leave the impression that Canada is a nation which trades without regard to politics, at a time when we are a party to a series of sanctions directed against Rhodesia. As we welcome this trade with China we should recall that our world wide attitude toward trade is not quite as open or as simple as the hon. gentleman suggested.



NORTHERN AFFAIRS


Hon. Arthur Laing (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I wish to announce a new, major step in northern development. About 18 months ago we announced to hon. members the northern grants program to develop mineral resources. This program assisted Canadian companies operating in the territories by way of grants toward exploration costs.
December 12, 19G7

Indications of oil deposits in the Arctic have been known for many years. Geologists have long recognized the potential of the area. The presence of thousands of feet of sediments combined with occurrences of oil sands and other indications of hydrocarbons have produced optimistic assessments. The prospect of major pools of oil in this region will now be tested by a Canadian company.
Using the provision of the northern grants program a new Canadian company, Panarctic Oils Limited, will invest not less than $20 million on a three year oil exploration program in the Arctic islands. Panarctic is a consortium which includes leading Canadian oil and mining companies.
The government of Canada has joined the consortium. Industry and government have co-operated in a unique relationship to undertake the exploration necessary to develop the potential of a special and unusual region.
[DOT] (2:50 p.m.)
The participating companies will invest $11 million and the government $9 million over a three year period. In return for this participation of 45 per cent of the exploration costs the people of Canada, through the government, will hold 45 per cent of the common shares and 45 per cent of the preference shares the company will issue. The government's share has been budgeted for within the existing five year program for northern development.
Should the program be extended and the exploration investment be raised to $30 million or more, the government retains the option of extending its interest pro rata. In addition, special provisions in the agreements empower the government to control the transfer of shares and therefore the degree of Canadian ownership and control.
I have a list of the 20 participants and if I may, Mr. Speaker, I would ask leave that they be inserted in the records.


Mr. Nielsen:: At this point?


Mr. Deputy Speaker:: Does the house give permission to have this list inserted in the record?


Some hon. Members:: Agreed.


Arthur Laing: And may I ask leave to table two copies of the agreements?


Mr. Deputy Speaker:: Does the minister have leave to table the said documents?


Some hon. Members:: Agreed.
Northern Affairs
[Editor's note: The list of company names above referred to is as follows:]
Canadian Pacific Oil and Gas Ltd.
Cominco Limited
Bankeno Mines Limited
Thor Exploration Company Ltd.
Canadian Nickel Company Ltd.
Noranda Mines Limited Bow Valley Industries Ltd.
Bocadel Oil Corporation
Dome Petroleum Limited
Dome Mines Limited
Campbell Red Lake Mines Limited
Sigma Mines (Quebec) Limited
Canadian Gridoil Limited
Conick Petroleums Ltd.
Scenic Oils Limited Anticline Petroleums Ltd.
Excel Petroleums Ltd.
Eagle Ridge Petroleum Ltd.
Eric Connelly
Canadian Industrial Gas & Oil Ltd.


Arthur Laing: The companies will acquire stock in Panarctic concurrently with the government. On the basis of stock ownership as of December 1 the company was 56 per cent owned by Canadians; with government participation it is now 76 per cent.
The company will have interests in approximately 44 million acres of oil land through a series of agreements with the original permit holders. As a result some 60 small companies, the majority of which are Canadian, will see their interests explored under Canadian auspices. Without Panarctic many of these interests might have been lost to their Canadian owners because of their inability to finance exploration. Panarctic will control just over 63 per cent of the Arctic lands regarded as potential oil and gas bearing acreage.
Panarctic's interest in this vast acreage varies under the agreement between 50 per cent and 90 per cent. If the full $30 million program should be completed the non-resident interest in these Canadian oil lands will be less than 20 per cent.
It is gratifying, Mr. Speaker, to tell the house that this great Canadian resource potential will be assessed by Canadians and that the majority ownership will rest with Canadians. This is a unique project. It brings together a large number of interests in the private sector on the one hand and the government on the other, under one organization capable of effecting the economies so necessary in the north. Here we have a new development approach in this special region of the country, with optimistic prospects for building the economy of our northern lands.

December 12, 1967
Northern Affairs
This is a risk venture. There is no certainty oil will be found. It is certain no oil will be found unless exploration is carried out. This announcement signals the beginning of search, not certain success. I am sure the house will agree with me that the possibilities are so attractive that this venture is wholly justified.
The discovery of oil would be of immense benefits. It could conceivably change Canada's role ultimately from that of a net importer of oil to that of a net exporter, with all the consequent benefits to our balance of payments position and our economic well being generally. In that happy event new oil reserves would represent a welcome addition to the reserves of the western world in the light of the increasing demand for oil.
Marketing of any new oil found in Canada would of course take place within the framework of co-operation which has characterized our relationships with our major trading partners in this and other areas. If this venture is successful, all of Canada will be enriched.


Some hon. Members:: Hear, hear.


Francis Alvin George Hamilton: Mr. Speaker, during the last three or four years those of us who sit on this side of the house have not had too many opportunities to say good words about what the government has done, but this is one such occasion. To make my point very loud and clear I would like to remind all hon. members of the house that the fundamental function of the federal government is to provide the Canadian economic base on which our federal, provincial and municipal governments can afford the services that our people want.
The announcement we have heard from the minister today is a classic example of the type of thing that should be done by this government, and should have been done by it over the last four years. To put the matter into perspective-and I hope all Canadians hear this-it is now estimated, as the result of several studies, that the energy demands of the world will increase over four times by the end of the century, in other words in less than 33 years. To meet that fourfold increase in demand it is estimated that the share of oil and gas will climb from 50 per cent of the current consumption to 55 per cent of the increased consumption.
This means we have to make tremendous efforts in all oil bearing regions of the world to prove the reserves available to meet this
[Mr. Laing.l
fantastically growing demand. At the present time, for example, it is estimated that to maintain a proper balance to meet currently known demands our reserves should be a certain proportion of our known demands. Using very round figures, we have to go out in the world at the present time and multiply our oil reserves by five times to provide that correct balance between reserves and demand. In the case of natural gas we will have to go out and prove up reserves 15 times over the presently known reserves to meet the demand by the end of the century.
This statement by the minister is the first indication I have seen of an effort on the part of this government to play its part in proving these reserves. The previous government did much in that regard by accepting the fact that to meet this great demand for energy it had to have some form of inventory of our resources. Without listing the programs on which we embarked I could give just a few examples to indicate the coherent approach we took after we had won the control of the resources at the bottom of the sea under international law in 1958.
These examples include a polar continental shelf exploration program which is still going on, the extension of hydrographic surveys, the setting up of an oceanography institute, and the oil and gas regulations which were put through in 1959 which dealt with the handling of these reserves in our northern areas and at the bottom of the sea off our coasts. This type of coherent program is the forerunner of the type of program the minister has just announced, because the philosophy is the same.
I should like to point out for the minister's personal benefit something I am sure he knows. In making an announcement such as he has made he is acting in conformity with a wealth of precedent in Canada. I do not want to go back as far as the C.P.R. but starting in the year 1911 there was a man on our treasury benches who had brought into this house a roads to resources program which passed this house but was turned down by the Senate. It was the same minister from Alberta, Mr. Lougheed, who brought in the program for exploration of the Arctic islands. The minister today is acting in conformity with this historic precedent.
I should like to say just a word or two about the agreement itself. With our geography and the economics being what they are, I do not think we have any choice but to accept the fact that in the northern area, particularly the Arctic islands and the land
December 12, 1967

off the shores at the bottom of the sea, the government must take the lead. In this particular proposal we have the device of the government of Canada sharing in the equity because of the risk being taken. This precedent is now being followed by nearly all the provinces. Now that the federal government has gone into this device, it corrects what I think was wrong with the exploration program or the northern grants program announced some time ago in the house. Now with the taxpayer's money going into one of these projects he has some chance of seeing his money coming back. He knows that in this type of proposal he will see it coming back manyfold.
The second point I should like to make about the agreement deals with the question of public participation. The minister in his statement pointed out that the government would have control over the transfer of shares. I wish to remind the minister that we have in effect at the present time in the oil and gas regulations dealing with the Yukon Territory, the Northwest Territories and the continental shelf a regulation which says that if any company moves to ownership in the production of wealth in this area, that company must be formed as a Canadian company and must put its shares as a public company on the stock exchanges of this country. This is the way the Canadian people will be able to participate in the ownership of these resources. Under that regulation the government and any other private company will be allowed to buy the shares if they offer enough money on the open market. This regulation is absolutely fundamental to the ownership of wealth by Canadians in a positive as opposed to a negative way.
[DOT] (3:00 p.m.)
Having made these two points I hope private enterprise, which is running this company, will operate it on sound business procedures. I am sure they will. I have in my possession a list of the companies, and I know their reputation for being hard fisted. I am sure they will watch every economic point in the development procedure. I hope these people will read my statement and get clear in their minds the fact that good practice requires the use of the tender system when they are looking for transportation to do these things in the north, so that ultimately the common carriers in Canada will be given a chance to participate in this work.
Finally, Mr. Speaker, I should like to make a point I am not too happy to make but feel
Northern Affairs
that I should. Some time ago one of our members, the hon. member for Yukon, asked this question in the house:
Has the government engaged in discussions with private oil exploration and/or drilling companies with a view to participating in the establishment of a crown corporation for the purpose of channelling public and private investment funds into exploration of the Arctic archipelago?
This question was answered on November 13. The question and the answer appear at page 4174 of Hansard for that date. The answer was "No". Here we have an example of government deviousness that we are trying to do away with in this house if we are to restore confidence in government.


Mr. Depuiy Speaker:: Order, please. I must remind the hon. member for Qu'Appelle of standing order 15 (2a). There is no need for me to read it, but perhaps I should say that statements on motions are supposed to be brief, as are replies by the spokesmen for each party. Perhaps the hon. member has concluded his remarks.


Mr. Frank Howard (Skeena):: Mr. Speaker, I hope my remarks will fall within your proscription and not be unduly lengthy. At the outset I should like to say that as interesting as the statement was it is not particularly newsworthy or new, in that almost all the comments the minister has made appeared in a newspaper yesterday in an article by Jock Osier of the Financial Times news service emanating from Toronto. I do not care whether information of this sort comes to us by way of statements on motions or by way of press releases outside the house, but something of this sort which could have a bearing on the position of those who want to speculate on the market should be kept confidential until such time as the government discloses it in a proper way. I am not sure whether this will have any influence, but prior information of this sort could work to the disadvantage of the desires of the government.
It has long been our contention that the government has a particular role to play in the development and exploitation of the resources of this nation. The minister called this project unique, but I think it might more appropriately be described as one which recognizes the sound thinking and policies emanating from this party to which I belong over the years. I hope the government will not look upon this as unique in the sense that it will be the only one of its kind in the history of Canada, because there is ample

December 12, 1967
Northern Affairs
opportunity in other fields of activity for government participation of a similar nature.
Industry when left to itself operates primarily on the basis of the need for profit and its responsibility to shareholders. Any benefit which accrues to the nation and its people or the employees from the operations of such a company is secondary to this first need. It is the government's role to protect the rights of the people in respect of their position in the economy. The 45 per cent ownership figure mentioned by the minister suggests that action can be taken to control the movement of shares so this company can operate in a way to protect and enhance the position of Canadians.
There is one factor in respect of the number of directors of the board, not mentioned by the minister, which is of some concern. Perhaps at a later date he will let us know what this means in terms of who shall be members of the board. As the minister knows, in the development of the north we must concern ourselves not only with jobs for individuals but with social aspects and the total economy. I am sure the minister is aware of this, in view of statements he has made on numerous occasions.
In this regard we cannot relate the development of the north only to industries involved in extraction of resources, or industries which exist for the purpose of taking raw materials for export out of the area or out of the nation, which is even worse. We must concentrate on secondary manufacturing and processing industries which will process the raw materials into finished products in order that the maximum benefit will accrue to the nation and to the area. We have passed the stage when we should continue to export raw materials at a certain price and import finished products made from those materials at five or six times that price. When we do this we in effect export jobs and hinder our position in respect of the balance of payments.
Perhaps I might conclude by making a reference to a speech the minister made at a banquet on June 16 at the-


Mr. Deputy Speaker:: Order, please. I must remind the hon. member for Skeena that his remarks should deal with the minister's statement. Of course there is no need for me to remind the hon. member of standing order 15 (2a) and the necessity to make replies as brief as possible.


Mr, Howard:: The minister's speech contained the concept of development and exportation of products to which I refer. I wanted to point out that the minister made another speech in this regard in which he pointed out that in order to maintain the rising standard of living of the Japanese people we must continue to export our raw materials and import finished products. In my opinion this is absolutely contrary to the interests of the Canadian people. I oppose any development whereby we, through this consortium or through private companies, export raw materials in order to support the rising standard of living of another nation to our own detriment. Surely this could not reflect our Canadian pride in respect of our own economy and natural resources.


David Réal Caouette: Mr. Speaker, the measure announced by the Minister of Indian Affairs and Northern Development (Mr. Laing) is a step forward taken by the government.
The minister announced that instead of substituting itself to private enterprise, the government is taking measures to assist it, which is a commendable aim. Besides, this is what our party has always maintained, that is, a government exists, not in order to substitute itself to private enterprise but to help the latter to develop the natural resources of a country like ours. The minister's statement makes clear that the government is about to foster the economic activity of Canada.
The minister actually stated for instance, and I quote:

The participating companies will invest $11 million and the government $9 million over a three year period.

This means that 20 private companies are taking the risk the minister referred to at the end of his announcement when he said:

This is a risk venture and I would say that the future of this country belongs to those who are not afraid to take risks. It is my belief that it would be a good move on the part of the government to interest different companies of this kind to unite their efforts in the development of our national resources.

Mr. Speaker, that policy is clearly a Canadian policy, truly progressive and
December 12, 1967	COMMONS
progressist, because 56 per cent of the shares of Panarctic Oils Limited will be held by Canadians, and through the participation of the government, the company will be Canadian-owned in a proportion of 76 per cent.
Mr. Speaker, we are pleased with this decision which goes squarely against socialist principles; for instance, socialists would start by nationalizing the 20 companies mentioned here, and then proceed with the development of our natural resources.
Mr. Speaker, this initiative on the part of the government to encourage companies to invest through its active participation, to my mind, constitutes an example to be followed in the future when decisions are taken in other spheres of the Canadian economic activity.
[DOT] (3:10 p.m.)


Mr. Beri Leboe (Cariboo):: I shall be very brief, Mr. Speaker. First of all I wish to thank the minister for sending us a copy of the statement so we had an opportunity to look at it.
I have some reservations in connection with the proposal made by the minister. First of all, due to the situation in which Canada finds itself today in connection with the spending of money, the amount of money to be expended in this connection should be a consideration in deciding whether to go ahead with the plan outlined by the minister. Also, I think this proposal encourages what the municipalities call ribbon development.
In other words I believe we are being premature in what we are proposing to do. If we are to develop the north country I think it should be on the basis of a gradual development. If this were done I think the proven oil policies of the provinces would be sufficient to carry out the development and exploration. In that way development would occur in a very, very logical manner, rather than the situation under a policy that is superficially imposed, which I believe will be the case with this one. Therefore I believe we would be wise to take a close look at what we are doing in the way of precedent in connection with the whole question of development of the north country.



HOUSING


[Stage Direction]
On the orders of the day:
Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I would like to
DEBATES	5311
Inquiries of the Ministry seek some information from the right hon. Prime Minister. In view of the proposals put before the conference with the provinces yesterday envisaging an expanded housing program, and in view of the apparent indication that less federal money will be available for housing next year than this year, can the Prime Minister indicate to the house when additional money might be available for this purpose?


Righi Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, perhaps it would be well to await the conclusion of the conference before I or the minister 'attempt to make a report. As a matter of fact I should be at the conference now. I can assure my hon. friend that the proposals we have put forward do plan in advance, and it is as well to do this, for additional expenditures in the field of housing. Indeed in the forthcoming year, notwithstanding certain financial difficulties, we hope to make available more money in many important respects, for public housing and matters of that kind, than we spent last year.


Robert Lorne Stanfield: A supplementary question, Mr. Speaker. Can the Prime Minister give the house some indication of the annual cost of implementing the proposals regarding housing made at the federal-provincial conference?


Lester Bowles Pearson: I think we had better wait to see how the provinces react to certain proposals we have made which will require legislative change. When the conference is over we will be able to make a report covering this point.


Robert Lorne Stanfield: Mr. Speaker, it might be helpful if we had some idea of the financial order of the proposals being made to the provinces.


Lester Bowles Pearson: It will certainly take a great deal of money from all levels of government to deal with the housing problems that face this country.


Robert Lorne Stanfield: Mr. Speaker, without
appearing to be persistent, I wonder whether the Prime Minister can indicate to the house in round figures the amount of money required for this program.


Lester Bowles Pearson: Mr. Speaker, I think last year it was something around $900 million, which gives an indication of the order of magnitude.
December 12, 19S7

Inquiries of the Ministry


Robert Lorne Stanfield: With your indulgence, Mr. Speaker, I would ask the Prime Minister whether the government has made a financial assessment of the amount of money involved in the proposals put before the federal-provincial conference.


Lester Bowles Pearson: The amount of money
involved will depend upon the reaction of the provinces to the proposals put forward.


David Réal Caouette: Mr. Speaker, I wish to ask the Prime Minister a supplementary question.
During that conference, did several provinces inform the government of their proposed intention to deal with the problem of housing themselves, saying for instance that this matter came under provincial jurisdiction? Did other provinces besides Quebec suggest that the government should withdraw from those agreements and leave them the responsibility in the field of housing?


Lester Bowles Pearson: Mr. Speaker, even those
provinces which feel they could exclusively deal with housing problems are just as anxious to receive federal financial assistance.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. David Lewis (York South):: Mr. Speaker, I should like to ask the right hon. Prime Minister a question regarding the situation in Cyprus. In view of the fact that the security council is due shortly to discuss extending the authority of the United Nations forces on the island and the Secretary General's request that the matter be dealt with as one of urgency, would the right hon. gentleman inform the house whether Canada has proposed or intends to propose that the United Nations force on Cyprus be increased and that it be provided with more effective means to keep the peace than it has had until now?


Lester Bowles Pearson: Mr. Speaker, there are discussions going on at the present time, as my hon. friend knows because he has referred to them in previous questions, regarding the extension of the mandate for the United Nations force in Cyprus. There are two opinions about the strength of the force if the mandate is extended. One is that the present force will

be strong enough to carry out the new mandate, and there is another opinion that perhaps the force should be enlarged. No agreement has yet been reached because the matter has not come before the security council.
Our own view, Mr. Speaker, is that if the mandate is to be extended it should be extended for a rather shorter period of time than was previously found desirable, so that during that shorter period of time we can see how the arrangements are being carried out that are being discussed now with the government of Cyprus and to which the other two governments have agreed. If the arrangements are carried out successfully, then the chances for peace on the island will be greatly improved.


David Lewis: May I ask a supplementary question. I am sure the Prime Minister could state better than I that peace keeping is of value if it is the start of peace making. Will the Prime Minister inform the house whether Canada alone or in association with other members of the security council has been preparing some proposals for lasting peace on that island?


Lester Bowles Pearson: Yes, Mr. Speaker. As my hon. friend knows, the minimum proposals to deal with the present dangerous situation are now before the three governments concerned. This should be a foundation, I would hope, for the long range proposals which will be required and which we are considering with our friends.


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, I should like to ask the Prime Minister if he could advise the house whether any progress has been made toward the establishment of a satisfactory formula for financing peace keeping operations in Cyprus.


Lester Bowles Pearson: Well, a formula has been established, Mr. Speaker, but whether it is satisfactory enough is a matter of opinion. Some participants in the force are paying a greater share of the expenses than others. There are certain members of the United Nations that are not participating in any way, shape or form. This should be in every respect, including the financial, a collective United Nations organization with expenses fairly shared among all the countries.


Alexander Bell Patterson: May I ask a supplementary question. In view of the fact that Canada is paying the full cost of keeping its contingent
December 12, 1967	COMMONS
in Cyprus, I wonder if the government is considering making the continuation of Canada's participation conditional upon an adequate sharing of the financial burden by other nations.


Lester Bowles Pearson: We are not, as I understand it, paying all the expenses of our contingent, but we are certainly paying a high proportion of them. I do not think it would be wise, in the situation of emergency in which we have been and which may continue, to make our contribution to this force contingent upon an absolutely satisfactory allocation of expenses.


Mr. Donald Maclnnis (Cape Breton South):: I should like to ask the Prime Minister a supplementary question. Will he indicate what nation or nations are contributing to the cost of maintaining Canadian troops in Cyprus?


Lester Bowles Pearson: I will be glad to get that detailed information. I will get a list of all the members of the United Nations who are contributing to the United Nations operation in Cyprus.



VIET NAM-POSSIBLE EXPANSION OF ACTIVITIES OF CONTROL COMMISSION

[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbili (Oxford):: I have a question for the Prime Minister, Mr. Speaker. Is the government engaged in discussions with the government of the United States and other governments with regard to modifying and expanding the activities of the international control commission in Viet Nam and the possible extension of its area of activity to Laos and Cambodia?


Lester Bowles Pearson: No, Mr. Speaker. The international control commissions, as my hon. friend knows, now have jurisdiction in Cambodia and Laos. A suggestion was made by the Cambodian government some time ago that the Cambodian commission should be asked to take on additional responsibilities along the borders between Cambodia and Viet Nam. The Canadian members of the commission, and I hope the other members of the commission, would be in a position to take on those responsibilities shortly.


Wallace Bickford (Wally) Nesbitt: May I ask a supplementary question. Are any discussions going on at the moment with the United States government?
I ask the question in view of the fact that an
DEBATES	5313
Inquiries of the Ministry announcement was made only this morning by the state department that it is the desire of the United States government to extend the activities of the commission, and an announcement by the Canadian Broadcasting Corporation that the Secretary of State for External Affairs was discussing this matter with the United States secretary of state.


Lester Bowles Pearson: I will have to take that question as notice in order to ascertain if there have been discussions in the last 24 hours. There may have been some discussions in Brussels, a report of which I have not seen.



POLLUTION


[Stage Direction]
On the orders of the day:
Mr. R. K. Andras (Port Arthur):: I should like to direct a question to the Minister of Finance relating to my question last Thursday and his reply thereto. Is he now in a position to make a definite announcement with regard to the extension of the existing special income tax provision encouraging industrial installation of equipment controlling water pollution? Is there any decision yet with regard to similar action in connection with air and soil pollution?


Hon. Mitchell Sharp (Minister of Finance):: The government has decided, Mr. Speaker, that the special and accelerated rate of capital cost allowances on water pollution equipment will be extended until January 1, 1970. This additional two years will give the government time to gain experience under the proposed Canada water act.
As to the second part of the question, the government has not reached a decision. Perhaps I could illustrate the nature of the difficulty by putting this position before the house. If a mining company, for example, decided it was going to instal a natural gas furnace rather than a furnace that burns coal, would this be an air pollution improvement device? It is considerations of this kind that have led the government to believe that the treatment for tax purposes of other forms of pollution control should be the subject of further intensive study.


Hon. Michael Starr (Ontario):: In view of the importance of this matter and its continuance in the future, will the government not reconsider its position, and rather than offering this incentive on an ad hoc basis put
December 12, 1967

Inquiries of the Ministry it on a permanent basis so there would be continued federal participation?


Mitchell William Sharp: Mr. Speaker, the government is not at all certain that this is the best way to promote the establishment of water pollution control, and that is why the tax incentive has been extended only for two years. Indeed, the extension for two years will have the effect of accelerating improvement, because of course this kind of provision may eventually run out. The problem is very complex, and it is the government's view that we should examine our experience under the Canada water act before we reach a final decision as to whether this kind of special incentive should be continued indefinitely.



WHEAT-INQUIRY AS TO PROMOTION OF FURTHER SALES

[Stage Direction]
On the orders of the day:
Hon. George Hees (Northumberland):: I
should like to address a question to the Minister of Trade and Commerce. In view of the recent announcement of a record world harvest of grain during the past crop year, and in particular Russia's increase to 40 million tons during the past 12 months, will the minister outline what the wheat board considers to be Canada's prospects for selling wheat in world markets during next year?


Robert Henry Winters: Yes, Mr. Speaker. I thank the hon. member for giving me notice of his question. Actually the over-all production was down only a little this year. The international wheat council estimates that world wheat production in the current year is down slightly from the 1966-67 record. However, because production is more evenly distributed than in the previous year, the wheat council estimates that world wheat trade will decline 4 million tons from the 1966-67 level of 56 million tons.
As I have stated before, this is a tougher competitive year than we have been enjoying. While we cannot contemplate an export total as good as that of the last two years, wheat shipments are picking up as is evidenced by my announcement of a few minutes ago, and as importing countries use up their own crops.


Mr. R. R. Southam (Moose Mounlain):: Mr. Speaker, I have a supplementary question for the Minister of Trade and Commerce. With respect to the minister's announcement


to the house today that the terms of a further sale of wheat to mainland China have been completed, can he indicate when wheat sold under this new contract will begin to move into the market, and into what price range does this sale of wheat fall?


Robert Henry Winters: I will start moving into the Chinese market in January and continue through October. As to the price range, it has not been the practice to reveal such information because of the adverse effect it might have on world trade in wheat, which we all want to further.


Mr. George Muir (Lisgar):: Mr. Speaker, I have a further supplementary question for the minister. Can he tell us whether there is any stipulation in the agreement with regard to the percentage of the various wheat grades which the Chinese will accept during the life of the agreement?


Robert Henry Winters: Yes, there is, Mr. Speaker. The percentages roughly are No. 1 northern, a maximum of 20 per cent; No. 3 Manitoba northern, a minimum of 25 per cent; No. 2 Manitoba northern constitutes most of the balance except for a small amount of No. 3 amber Durum to which I referred in my statement.


David Réal Caouette: Mr. Speaker, I wish to put a supplementary question to the Minister of Trade and Commerce.
The minister stated at noon that 25 per cent of the purchase price of Canadian wheat by China would be paid in cash and the remaining 75 per cent will be paid within 18 months and bear interest. Is the minister in a position to say what interest rate will be demanded from China?


Robert Henry Winters: It is related to the current bank interest rate. But, as I said before, it has not been the practice to divulge these commercial details; therefore I think I should refrain from doing so.


Mr. Ron Basford (Vancouver-Burrard):: have a supplementary question, Mr. Speaker. Would the minister tell us whether all the wheat involved in this sale will move to China through the port of Vancouver?


Robert Henry Winters: Not all of it, Mr. Speaker, but for some of us in other parts of the country there will be a disappointingly high amount.
December 12, 1967



DOMINION-PROVINCIAL CONFERENCE DOCUMENTS AT TOURISM CONFERENCE IN ENGLISH ONLY

[Stage Direction]
On the orders of the day:
Hon. Martial Asselin (Charlevoix):: Mr. Speaker, my question is addressed to the Minister of Trade and Commerce.
The minister of tourism of the province of Quebec stated yesterday that he refused to attend the conference on tourism because the preliminary documentation sent to the provinces was written only in the English language. I should like to know whether the minister can explain to the house why this preliminary documentation supplied by his department and sent to the provinces was written in only one of the two official languages of the country.


Robert Henry Winters: I am unaware of that point, Mr. Speaker. The province of Quebec is very ably represented by Mr. Prevost, the assistant deputy minister. I might say that I was very pleased and impressed by the spirit of harmony which prevailed.


Martial Asselin: A supplementary question, Mr. Speaker.
Does the minister know that the documents preliminary to that conference were sent to the province of Quebec in English only?


Robert Henry Winters: No, Mr. Speaker, I was unaware of that point but I will look into it to find out the reason, if that was the case.


Martial Asselin: I have another supplementary question, Mr. Speaker.
Since the hon. minister is not aware of that, would it be possible for the documents coming out of his department to be written in both official languages, in order to meet the requirements of some provinces?


Robert Henry Winters: I think it is only right and proper. It is a fair request, and I will see it is done.

Inquiries of the Ministry TRANSPORT



PRINCE EDWARD ISLAND CAUSEWAY-REQUEST FOR RECONSIDERATION

[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I have a question for the right hon. Prime Minister. Has he received telegrams from the mayor of Charlottetown and the Prince Edward Island command of the Royal Canadian Legion urging that the government reconsider the decision announced by the President of the Treasury Board last Thursday and proceed as promised with the construction of the Northumberland crossing? If so, has a favourable reply been sent to these very concerned people?
High! Hon. L. B. Pearson (Prime Minister):
Mr. Speaker, the telegrams arrived at my office this morning but I have not yet had time to reply to them.



REQUEST THAT PARLIAMENTARY COMMITTEE MEET IN ATLANTIC PROVINCES

[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, I should like to direct my question to the chairman of the committee on transport and communications, the hon. member for Hamilton West. Can he indicate whether, since his return to Ottawa, he has had any consultations or communications with the Minister of Transport with regard to the proposed visit of the committee to the Atlantic provinces, and can he report what progress has been made in this regard?


Mr. Joseph Macaluso (Hamilion West):: Mr. Speaker, on my return yesterday I met with the Minister of Transport regarding the tour by the committee of the Atlantic provinces. As to the time, the agenda and other arrangements, these have not yet been finalized. I will be meeting with the minister again tomorrow and I will then be able to call the steering committee together to make a further report and discuss the procedures with them.


Robert Carman Coates: I have a supplementary question, Mr. Speaker. Can the hon. member indicate whether he was informed of the minister's intention concerning the reference to the committee of the special study on transportation in the Atlantic provinces?


Joseph Angelo Macaluso: Mr. Speaker, this will also be discussed with the minister at that time.
December 12, 1967

Inquiries of the Ministry PUBLIC SERVICE



REPRESENTATIONS AS TO SALARY INCREASES FOR SCIENTIFIC PERSONNEL

[Stage Direction]
On the orders of the day:
Hon. E. J. Benson (Minister of National Revenue and President of the Treasury Board):: Mr. Speaker, I should like to answer a question put last Friday by the hon. member for Winnipeg North. At the outset of my answer I should like to draw attention to the fact that a number of employee organizations are now working very hard to gain and hold members among various groups of public servants in an effort to win bargaining rights under the provisions of the Public Service Staff Relations Act.
As of October 1, 1965, a new service-wide research scientist class was introduced, replacing a number of former departmental classes. The employees concerned received salary increases averaging 9.2 per cent as of July 1, 1965. Since that time their average salary has risen from $10,810 to $12,653, an increase of 17 per cent.
I am pleased to be able to tell the house that there is no evidence that research scientists are leaving the public service in significant numbers. The turnover rate of less than 5 per cent, which has taken place in the past 18 months, is regarded as acceptable.


Mr. David Orlikow (Winnipeg North):: have a supplementary question, Mr. Speaker. In view of the strong protests made by the professional institute and their charge that commitments made to them have not been kept and that the decision made by the treasury board has been unilateral, would the minister be prepared to meet with representatives of the professional institute to discuss the objections they have raised?


Edgar John Benson: First I should like to assure the hon. member that any commitments made by this government have been kept-


Mr. Knowles:: Oh?


Edgar John Benson: -in this regard. I should also like to tell the hon. member that we are entering into collective bargaining and we will be meeting with the various employee groups as their contracts come up for negotiation.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, I should like to direct my question

to the Minister of Industry. In view of the fact that Canadian and United States officials are now meeting to discuss the Canada-United States auto pact, can the minister assure the house that every effort will be made to guarantee that Canadian citizens will be able to buy cars made in Canada at the same price as they are sold to United States citizens?


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, I do not know that I can give any such assurance in view of the fact that, as I think the house is well aware, the federal parliament has no jurisdiction over retail prices.


Alfred Dryden Hales: I have a supplementary question, Mr. Speaker. Would the minister be in a position to say whether or not the officials will be discussing the inclusion in the new agreement of replacement auto parts?


Charles Mills (Bud) Drury: I cannot give any assurances as to what will be included under future arrangements. The matter of current model replacement parts has been under discussion on both sides of the border for some time, and this problem will be examined during the course of the review.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Edward Richard Schreyer: Mr. Speaker, my question is directed to the Postmaster General and it arises out of a Canadian Press report that last night and again this morning residents of a certain Manitoba town have physically prevented the putting into effect of the Postmaster General's order for the transfer of the postmastership and post office in this town. Is it the intention of the minister to call on law enforcement officers in order to enforce his order?


Mr. Deputy Speaker:: Order, please. I do not think this is the type of question that should be asked at this time.


Edward Richard Schreyer: On a point of order, Mr. Speaker, I wish to point out that the situation has a potential for violence. I should like to know from the Postmaster General what action he intends to take to deal with the situation in that town.


Hon. Jean-Pierre Cote (Postmaster General):: Mr. Speaker, I can assure the hon.
December 12, 1967	COMMONS
member that there was no violence at all at Libau, the post office to which he is referring at present.
In reply to his first question, I may say that, on some earlier occasions, the Post Office Department had to require the help of the police to transfer a post office from one location to another, but I do not think this is necessary in the case of Libau.


Edward Richard Schreyer: A supplementary question, Mr. Speaker. Could the Postmaster General say whether his ministerial order was made on the advice of the district postal director in Winnipeg or whether it was made as a result of his political advisers at the headquarters level?


Mr. Cole (Longueuil):: Mr. Speaker, we never hire a postmaster without consulting the district directors. We are now trying, at Libau, to guarantee some stability to the post office location. Indeed, in the last four years the store in which the post office is now located has been sold three times, and in those four years we had to change the postmaster three times.


Edward Richard Schreyer: Mr. Speaker, the minister-


Mr. Deputy Speaker:: Order, please. The hon. member is debating the question.



CRIMINAL CODE


[Stage Direction]
On the orders of the day:
Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, the hon. member for New Westminster (Mr. Mather) asked yesterday, before I got to the house, when the government expected to introduce its bill on driving under the influence of alcohol. I should like to repeat that the government undertook to introduce that bill during the current session.
I trust that, with the co-operation of the members, it will be before Christmas.


Mr. Georges Valade (Sainle-Marie):: Mr. Speaker, I should like to direct a question to the hon. Minister of Justice.
Does the minister intend to move, before the Christmas adjournment, his amendment to the Criminal Code dealing specifically with lotteries?
DEBATES	5317
Inquiries of the Ministry


Mr. Trudeau:: Mr. Speaker, the answer is the same as the one I gave to the question concerning impaired driving; it is part and parcel of the same omnibus bill of amendments to the Criminal Code. In fact, I hope that it will be introduced before Christmas.



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Mr. J. M. Forrestall (Halifax):: Mr. Speaker, my question is for the Minister of Defence Production. I wish to thank him for the information he gave earlier this afternoon and to ask him in connection with the tenders which closed today for the four new d.d.h.'s whether he can give some indication to the house of how long it may take his department to analyse these complicated contract tenders?


Charles Mills (Bud) Drury: Mr. Speaker, these are quite complicated submissions for tender and they are in two forms. They have just been received and we shall proceed as expeditiously as possible, with the Department of National Defence, to complete the analysis. I should not like to estimate a deadline for the completion of this work, particularly since the advent of the Christmas holiday will interrupt it.


Mr. Robert McCleave (Halifax):: A supplementary question, Mr. Speaker. May I ask the Minister of National Defence to take into account the proposals that were advanced by the Halifax city council when the department makes its decision to award contracts?


Charles Mills (Bud) Drury: Mr. Speaker, I think we shall take into account all relevant considerations.



SHIPBUILDING


[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Pictou):: Mr. Speaker, my question is directed to the Minister of Fisheries. In view of the great concern that has been shown by some since the Minister of National Revenue announced cuts in the subsidies for the construction of fishing trawlers, and in view of the representations which have been made by fishing companies and by those operating shipyards,
December 12, 1967

Inquiries of the Ministry would the minister use his influence with the Minister of Finance in order that the 50 per cent cut in subsidies might be restored?


Hon.   H.-J. Robichaud@Minisier of Fisheries: Mr. Speaker, I wish to advise the hon. member that to this day I have received no such representations. Furthermore, I think the hon. member is well aware that during the current year the federal government will pay in subsidies under the ship construction program over $24 million to shipyards with respect to steel vessels, and the Department of Fisheries will pay close to $6.5 million to shipyards with respect to the construction of wooden vessels.


Howard Russell MacEwan: A supplementary question, Mr. Speaker. In view of the remarks that the minister made not long ago in a shipyard in my constituency and the remarks of the president of that company which appeared in the Halifax Chronicle-Herald two days ago, will the minister go to the Minister of Finance and ask whether the amount that was cut can be restored?


Mr. Robichaud:: Mr. Speaker, I have
received no such representation from the parties the hon. member referred to.


Howard Russell MacEwan: The minister should read the Halifax Chronicle-Herald.


Some hon. Members:: Oh, oh.


Hédard-J. Robichaud: It is not always exact in its reports.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I do not know to whom I should address my question. I intended to address it to the Prime Minister but he is not here. Perhaps I ought to address it to the acting minister of national defence or to the acting prime minister, or, perhaps I might address it to the parliamentary secretary to the Secretary of State for External Affairs.


Mr. Deputy Speaker:: Order, please. I suggest to the hon. member for Greenwood that he should ask his question immediately.


Francis Andrew Brewin: I am about to do that, Mr. Speaker. Was the Minister of National Defence stating the policy of the government when he said in Brussels the other day that Canada should be thinking of abandoning


her nuclear air role in NATO for a support role? Is the Canadian government seeking, as the minister indicated in his remarks, the agreement of Canada's NATO allies to a political decision which would modify Canada's role in the Atlantic alliance before the forces goals for five years are approved?


Mr. Deputy Speaker:: I think that question ought to be addressed to the Prime Minister when he is in the chamber.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. H. R. Ballard (Calgary South):: Mr. Speaker, I wish to address my question to the Acting Prime Minister. In view of the straightforward statement this afternoon by the President of the Treasury Board that the government always lives up to its commitments-


Stanley Howard Knowles: He qualified that.


Harold Raymond Ballard: -I wish to ask the Acting Prime Minister if superannuated civil servants and retired members of the public service can look forward with some hope to an increase in their pensions, as has been promised by the government on several occasions?


Edgar John Benson: Mr. Speaker, I wish to answer
that question. The government did not make a commitment in this regard. I simply stated that it was my own feeling that what the hon. member suggests should happen.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. G. L. Chatterton (Esquimalt-Saanich):: Mr. Speaker, my question is for the Minister of Veterans Affairs. Would the minister refer the Woods report, after tabling it, to the various veterans organizations as requested by some of them?


Hon. Roger Teillel (Minister of Veterans Affairs):: Mr. Speaker, I shall decide that when I have the report. I am afraid I cannot answer the question in the affirmative at this time.
December 12, 1967


George Louis Chatterton: A supplementary question, Mr. Speaker. Will the minister say whether he will refer this report to the standing committee on veterans affairs?


Roger-Joseph Teillet: I have already answered that. Until I have the report before me and have had a chance to look at it, it will be impossible for me to answer the hon. member's question one way or another.


George Louis Chatterton: A further supplementary question, Mr. Speaker. Am I to take it from the minister's reply that whether he will refer the report to the committee depends on the nature of the report?



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. R. W. Pritlie (Burnaby-Richmond):: Mr. Speaker, since the Prime Minister is at the housing conference and since I have waited for some time to ask my question, perhaps I might be allowed to put it on the record. Was the Prime Minister invited to sign the declaration on population which was signed by 30 heads of government, including those of the United Kingdom and the United States? Also, was Canada represented at the ceremony at the United Nations yesterday when this declaration was presented to the Secretary General?


Robert Henry Winters: I shall take that question as notice, Mr. Speaker.
[DOT] (3:50 p.m.)



BUDGETARY PROPOSALS


[Stage Direction]
The house resumed, from Monday, December 11, consideration of the motion of Hon. Mitchell Sharp (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr.   Fernand-E. Leblanc@Laurier: Mr. Speaker, on October 11, 1967, I had the honour to participate in the debate which had been resumed on the budget presented on the 1st of June and to make my own comments.
I mentioned, among other things, that the spectre of inflation was more and more threatening in this country and that the fight
The Budget-Mr. F. E. Leblanc started by this government should be intensified and should get the support and cooperation of every level of government, in short, of the whole community and of every citizen.
I also mentioned that the government, on account of the urgency of the situation, could be compelled to take drastic steps if conditions did not improve. Among those measures, I mentioned the possibility of levying a special and temporary tax.
At this stage, Mr. Speaker, I will pause to say that strangely enough, that speech was not mentioned a single time in the information media-except, as far as I know, in the November 1967 issue of La Revue du transport routier du Quebec

while the bills on money and postage stamps were loudly publicized throughout the country, due to the opposition members.
At this time, I think it would be advisable and wise to stop and ask ourselves whether this country has not reached the saturation point in its fiscal and tax system.
I find my answer in an article published in the Ottawa Citizen on the 6th of December 1967. I quote:

Certainly our income tax levels are lower than those of most other western nations. But income tax levels are only a fragment of the total picture.
The yardstick we are concerned with is total taxation at all levels of government. The basis for international comparison is the percentage of gross national product-the total value of goods and services produced in the country in a year- that is absorbed by governments.
One of the most recent compilations, for the 1964 taxation year, looks like this:
Total taxes as
Country	percent of GNP
France	37.6
Sweden	36.6
West Germany	34.9
Norway	34.3
United Kingdom	29.4
Belgium	28.8
Denmark	28.1
Canada	27.3
U.S.	27.1
[Translation1
You will notice with me that Canada ranks eighth on this list.
Since we precede by 0.2 per cent our main competitor and supplier, the United States, we must surely continue to ask ourselves, and this seriously, whether our country has not reached the saturation point as far as taxes and taxation are concerned?

December 12, 1967

The Budget-Mr. F. E. Leblanc


Martial Asselin: May I ask the
hon. member a question? If he really believes that the Canadian people has reached a saturation point concerning tax increases, should he not denounce his government for these increases that the Minister of Finance (Mr. Sharp) imposed as a result of his last budget?


Mr. Leblanc (Laurier):: If the hon. member will let me finish my speech, he will see that my argument takes his question into account.
The special and temporary tax which I mentioned in my speech of October 11 last has now been proposed by the Minister of Finance and has been set at 5 per cent of the amount of the basic tax assessed on an individual in excess of $100. This surtax will take effect on January 1 and would remain until we have completed the transition to a slower rate of growth of expenditures or until economic and financial conditions call for a change in our fiscal policy.
Knowing the honesty and intellectual integrity of the Minister of Finance, I am satisfied that this tax will really be temporary, and I am sure that the minister is willing to give his word to all Canadian taxpayers that this is a temporary measure which will last only as long as the needs remain and which will be withdrawn as soon as the above-mentioned conditions are restored.
I note with pleasure that this surtax does not apply to small wage-earners until the following annual income has been reached: $2,500 for an unmarried taxpayer, $3,500 for married people without any dependent and $4,000 for a married taxpayer with two children entitled to family allowances.
If you look at the tables showing how the 5 per cent surtax applies, you will realize also that the taxpayer whose annual income does not exceed $10,000 will not have to pay a huge amount in additional tax.
In fact, an unmarried taxpayer will pay about 17 cents a week, a married man without children, 14 cents and a married taxpayer with two children entitled to family allowances, about 12 cents. Therefore, the main burden of the surtax will be borne by the taxpayers whose income exceeds $10,000. The maximum amount payable by that category of taxpayers will be $600.
In my speech of October 11 last, I said this:
At the present time, those who earn less than $5,000 pay too much tax compared to the other taxpayers, and the Minister of Finance should make the required adjustment.
[Mr. Leblanc (Laurier) .1
Still, the full burden should not be placed on the shoulders of those citizens who earn from $5,000 to $10,000, thereby creating another injustice while wanting to remedy the first error.
I am gratified to find that in this 5 per cent surtax at least, the principle laid down in my speech has been observed and I hope that in the tax reform being considered by the Minister of Finance, the experts who advised him will continue along the same lines so as to maintain this principle of equity for all taxpayers, a principle based on a scale which is better balanced with the revenue.
It goes without saying that a tax increase is never popular. The Minister of Finance surely did not take his personal interest into consideration when he presented his budget on November 30. He and his colleague, the Minister of National Revenue and President of the Treasury Board (Mr. Benson) are showing an exemplary courage and a rare strength of character in the present circumstances by asking the people to tighten their belt still more and to enter a period of austerity.
The past has shown that tax increases and austerity programs are not wise measures from the political point of view in Canada, because they are always very unpopular.
[DOT] (4:00 p.m.)
However, the intellectual development of our population which is the result of better schooling and an improved system of education in my opinion makes it possible for Canadians to understand better today that these measures were necessary to check the disastrous consequences of inflation. All of us in this house must stop being demagogues and explain to the people that these measures will stop the inflationary rise in prices and in the cost of living, which endanger our economic stability. At the same time, we must stop making too many demands on the capital market and, instead, pay for our social security programs.
According to a recent Gallup poll, the federal government is bluntly blamed for the present high cost of living. More than 6 adult Canadians out of 10, that is 65 per cent, believe that Ottawa could have done more to stop the price spiral. It is in Quebec that you find the largest number of dissatisfied citizens in this regard, that is 70 per cent. In western Canada, it is 68 per cent, while in Ontario, this percentage decreases to 60 per cent. Here is the question which was asked:
Do you think that the government could have done more to stop the rising cost of living? Or do you think that this rise is due to other factors over which the government has no control?
December 12, 1967

This poll must open our eyes and lead us to wonder whether the federal government is actually the only one responsible for inflation, in brief whether it is the only one to spend large sums of money in Canada.
It is a fact that our expenditures have increased by 92 per cent between 1957 and 1967, but this is about the same percentage of our gross national product as 10 years ago, and a little below that of 5 years ago. During that period, we have lowered our taxation rate in favour of the provinces, while the expenditures of provincial and municipal governments have increased at a faster rate than federal expenditures. In fact, they have increased from 11.1 to 18.6 per cent of our gross national product, while federal expenditures have remained at a fairly constant level during this period, that is 16.4 in 195667 and 16.8 in 1967.
Of course, there is no question of blaming the provinces and the municipalities for this, because they have been facing increasing responsibilities with the years. It is just a matter of setting out the facts in order to enlighten the people as to those actually responsible for inflation.
We should not forget, either, the important and ever-growing role of the trade unions with respect to wages increases, and consequently, production costs and price increases. Surely there is a need for greater restraints in regard to increases in prices, wages and other sources of cash income, such as rents, dividends and interests.
Another factor which has also contributed to inflation is related to the large corporations. During the last years, we have seen that profits of Canadian corporations were definitely too high. Today, we realize that this situation is improving, but I think this inflationary factor should be neither denied nor ignored.
In addition, we have seen land and real estate speculators often realizing exorbitant profits, and I am sure that such feverish speculation has definitely helped to bring about the inflation problem we are experiencing today.
Finally, we should add perhaps that Canada is quite sensitive to the reactions of the world markets and especially to the reactions of the American market. It has been shown, beyond the shadow of a doubt, that the inflationary period is not a phenomenon particular to Canada but that, on the contrary, several countries, at the present time, feel that calamity more severely than we do and,
The Budget-Mr. F. E. Leblanc for instance, I simply have to mention England.
Now, Mr. Speaker, I come to the conclusion that the rise in the cost of living is due, for a major part, to factors over which the government has no control.
The Minister of Finance has devoted a special paragraph to his program of fiscal reform as a result of the Carter report. He tells us that, due to the representations of the Canadian people with regard to that report, the government considers that our taxation system should undergo considerable reform which should take into account the needs of the country but should not interfere with the progress and proper development of the Canadian economy. Our present system is not completely and absolutely bad and it is impossible to reject it all, although it has often been patched up haphazardly over the years at the whim of successive ministers of finance. It is high time it was completely reviewed and the required solutions were applied, in keeping, to a certain extent, with the recommendations of the Carter commission.
I wish to take this opportunity to protest a third time in the house against the capital gains tax, for all the reasons given in my two earlier speeches, but I will refrain from stating them again, so as not to extend this debate unduly.
When the white paper on tax reform is drafted, I hope the minister will take into consideration all the protests made against the capital gains tax and that, in addition, he will consider the possibilities I have already mentioned in the house, in order to encourage Canadian investors to contribute more to the development of our natural resources, that is to increase from 20 to 50 per cent the exemption on dividends paid by Canadian companies; to raise tax exemptions on research costs, to raise tax exemptions for companies developing natural resources and particularly in the case of Canadian companies; to allow companies to deduct from taxable income double the costs incurred by them for the education of their active or unemployed workers; to allow the head of a family to deduct from his income the money spent on the education of his children; to take the necessary measures so that the Minister of National Revenue will completely abandon the field of succession duties or tax on donations so as to enable the provinces to legislate exclusively in these areas; to take a more realistic attitude and raise the statutory

December 12, 1967
The Budget-Mr. Starr exemption on charitable gifts and medical expenses from $100 to $200.
Naturally, I leave it up to the fertile imagination of the minister and his experts to find the other formulas required to stimulate the Canadian economy suffering at the present time from a temporary trouble which might prove disastrous if it becomes chronic.
I am convinced that the Liberal government will find early remedies and that all Canadians, whatever their racial origin, will be able to face with equanimity a higher standard of living in a geographic, political and economic unity with social and cultural diversity.


Michael Starr: Mr. Speaker, in taking part in this debate on the budget or, as the Minister of Finance (Mr. Sharp) has dubbed it, the financial message, I want to congratulate him on his performance in setting new records. I must say that they are very outstanding records indeed. I doubt that in the near future or for a long time to come any minister of finance will be able to match the outstanding records he has been able to achieve in such a short time. We here who are closest to the affairs of government, and Canadians generally, have come to know him as the minister who has set records.
We have come to know him as the minister who has the highest interest rates in the history of this country, who has the highest cost of living in the history of this country, who has the highest expenditures in the history of this country, who has the highest prices, who brought about the highest taxation, who brought about the highest inflation, who has had the highest budgets, who has introduced more budgets than anybody else in such a comparatively short time, and who has made a mess of housing in this country. Mr. Speaker, what has Canada done to deserve all this?


Some hon. Members:: Hear, hear.


Michael Starr: In my opinion this budget is an example of sloppy financing. It is not even a budget because the minister himself has termed it a financial message. It is just a taxation measure tacked on to taxation measures that we already have before us. We did not even have a white paper preceding it. Under this government budgets have become casual things, brought in on a haphazard, hit-or-miss basis. All that Canadians have

learned from this exercise is that the government is fiscally unfit. What we are asking it for is a return to fiscal fitness.
[DOT] (4:10 p.m.)
We are asking that he let us have expenditures related to need and bearing some relation to objectives. Let us know what the objectives are, let us have priorities, and let us have some order in government expenditures. The Leader of the Opposition (Mr. Stanfield) has made the point that the government has so tied its hands by uncontrolled and unco-ordinated expenditures that it now has no room for the essential needs of this country.
In these days of bilingualism I should like to refer to Lafontaine's fable about the grasshopper and the ant. This government has been the grasshopper. All summer long it has played about. The members of the government brought in a June budget full of sunshine and light; they gave no thought to the cold winds of December. But like the grasshopper in the fable they come knocking at the taxpayers' door in December begging for a handout.
New taxes are being levied for one simple reason and one simple purpose, to meet the bills which the government has run up and cannot pay because it can no longer borrow owing to the lack of confidence. This is the only reason for this financial message and the additional taxes imposed on the people of this country. The government has lost the confidence of those people from whom it has borrowed money in the past. These people have now dictated to the government that it must impose additional taxation on the people in order to restore their confidence in the government so that it can go to the market again. I would not be surprised if they dictated the terms of the taxation and the areas of taxation because only the small taxpayer is feeling the impact of the taxes contained in this financial message.
The Minister of Finance indicated that the government would be cutting back on housing by slowing down direct lending. This will produce a disastrous effect on construction and on the ability of Canadians to acquire housing. They have removed one dollar of the subsidy on hogs and lambs. It had to be done; their extravagance left them no choice. But why should Ontario and Quebec farmers pay for the wild-eyed schemes of the government? They cut $480,000 from the estimate for the Company of Young Canadians for next year. Mr. Speaker, why wait until the
December 12, 1967

economy is against the wall? Why did the minister not impress upon his colleagues the facts of life long before now, long before the cold days of December? Why did he wait until December to tell them what he should have told them in June of this year?
The Leader of the Opposition in his remarks last week shot down in flames the spurious claims of future savings by this government. For the first time in a democratic world and in a democratic form of government the people and parliament have been told what is going to happen in the next fiscal year. Of course this is not the first time the Liberal party has offered a pie in the sky, Mr. Speaker, but I believe it is the first time they have tried to cut it while it was still in the sky. The government finds itself moving in an increasingly restricted area. I am greatly disturbed by the indications. I know that the municipalities all across Canada will be disturbed that there is no program of assistance for them. The majority of our population is now living in the cities. When one looks at this budget one concludes that the government is completely unaware of this fact.
At this time I should like to refresh the minister's memory with a reference to the submission of the Canadian Federation of Mayors and Municipalities on November 6. The mayors fully supported the reference in the report of the Economic Council of Canada as follows:
-there has long been widespread concern about the mounting deficiencies of our cities and the heavy backlogs of essential improvements.
Shortages and inadequacy of urban housing, traffic and transport problems, air and water pollution, the confused jumble of conflicting land uses, decaying neighbourhoods and monotonous suburbs, urban poverty and social disturbance, steadily rising property tax burdens and the frustrations of municipal administration-
One of the most serious of those frustrations is the financial strait-jacket in which the municipalities find themselves. The problems enumerated which affect municipalities also affect 70 per cent of our population living in urban areas. Yet this government seems completely unaware of the urban problems inasmuch as there is no provision in this budget to deal with these matters. Instead of moving to produce results in the field of housing and urban renewal and deal with some of the other problems the government is slowing down its already lethargic pace in these fields.
It is my intention, Mr. Speaker, to be as constructive as possible in dealing with the
The Budget-Mr. Starr present chaotic situation in which we find ourselves because, after all, as Canadians we are embroiled in this chaotic condition brought about by the government. We must face up to it and try to do the best we can under these circumstances. Even the minister will admit that the fact that the government has to come along now and ask for money within six months of a full budget which was followed by a reassuring statement in October, just two months ago, is an indication of uncertainty on its part. I say, Mr. Speaker, that Canadians generally are fed up with paying through the nose for the extravagance of this government.


Some hon. Members:: Hear, hear.


Michael Starr: All across the country people cannot afford to buy homes. If they could afford to buy them, there are not enough to meet the demand. If they do buy them the price of everything necessary to maintain a home is sky high. If they do not buy a home they must rent and rentals are sky high. They can go into a high-rise apartment and pay a high-rise rent. If they have anything left the minister takes it away in the form of taxes. The government is spending $11 billion this year and Canadians right across this country are asking: What are we getting for it? The government has reduced the defence forces, but now we find that the reduced forces cost more than the expanded forces.
[DOT] (4:20 p.m.)
The minister said that he was cutting down by increasing expenditures by 4.5 per cent. This is the way he has been cutting down all along. The government has been following a policy of inconsistency. In April, 1965, they reduced taxes by 10 per cent. In March, 1966, they increased taxes, and in December, 1966, they increased the old age security and sales tax. In June, 1967, they took the tax off tranquilizers and in December, 1967, they are increasing taxes again. They have not yet put the tax back on tranquilizers. We are now living in a high cost, high tax and high spending economy because of the government's inability to deal with the situation.
The minister has lost control of inflationary tendencies in the country because he cannot control inflation in his own government's spending. The government is in trouble because of their own lack of restraint. They have once more had to increase taxes because of their inability to meet their obligations.

December 12, 1967
The Budget-Mr. Starr
The Minister of Finance is now in a position where he has been forced to increase taxes at a time when unemployment has risen and there is a softening in the economy. Lay-offs have been spreading across the country. We in the opposition have brought this to the attention of the government and have inquired as to what action they are prepared to take to soften the blow of unemployment and provide other jobs. Prosperity in this country is being siphoned off, and some who have never reached prosperity have had their situation worsened by the heavy indirect taxation caused by inflation.
The problem we must deal with is that of rising costs and prices. The governor of the Bank of Canada has warned us about this, as has the Minister of Finance. Everyone is concerned except the minister's colleagues.
Housing is an integral part of this nation's economic and social health. Nothing is more indicative of the government's inefficiency than the way in which they have created havoc in respect of housing. Again this year we are going to be 25,000 houses short of the number Canadians need. The government is making available in 1967, through direct lending and limited dividend housing, close to $500 million. According to those who know, this will provide about 35,000 homes at $15,000 each. However, we need approximately 200,000 homes per year to take care of our population needs. Inflation has hit hard at the housing market by placing the price of homes beyond the reach of most Canadians. The house builders association stated in Toronto on November 30 that the cost of an average new home in metro Toronto has jumped in the past 18 months to $30,000 from $24,000. Surely in view of this the minister must realize that not many Canadians today can afford homes in that price bracket. What are they supposed to do?
The government has made mortgage money somewhat more available through high interest rates, but I cannot emphasize too strongly that this is a device to help those who are better off. Most Canadians cannot afford to buy, rent or borrow at present prices. There is no question that up until the current year the government has been using housing as an instrument to slow down the economy. In the past few months they have begun to realize they have gone too far, but it may be too late now for action to have beneficial effects in the present winter months. These are the months we should worry about, in addition to the long range 
attitude the government should take in respect of this very important matter.
The minister knows, I am sure, that there were 30,000 fewer jobs in construction as of October this year than there were a year ago. He must also know that the number of building permits for dwellings issued up to the end of August totalled 111,360. This is an improvement over last year but it is still far from encouraging in view of the tremendous backlog of housing demand and need which the government has allowed to grow because of its inactivity in this field.
Let me also point out that industrial production is not picking up as it should. In the first nine months of this year it was only up 2.7 per cent over last year. As a measure of economic growth this is not very encouraging. When the Minister of Finance presented his financial message to the people of this country the other day he showed that this government has lost touch with reality. He made the incredible statement that his policies had brought about a recovery in housing. It is true there has been a slight increase in housing activity and in private borrowing, but surely the minister must know what has happened to prices. Does he not realize what housing costs are at this time? Is he not aware that a new home in Canada is out of the reach of 75 per cent of Canadians? Has he not read the statements of the home builders association in this regard and is he not even aware of the report submitted to his own government and tabled by the Minister of Labour (Mr. Nicholson) predicting only 160,000 housing starts next year? In spite of all this the minister in his financial message gave a very clear indication that one area in which he intends to cut back, is this very sensitive and needed area of social capital represented by housing. To do this at this time is nothing short of a social injustice of the worst sort.
There is one other point I must make in relation to the minister's budget statement. He is not being above board with the Canadian people when he predicates his expenditures for next year without taking medicare and the Expo deficit into account. Surely the minister cannot leave out whatever does not appeal to him. If he does so, what sort of fiscal jockeying is this? The minister knows that medicare is now part of the law of the land. The Prime Minister has said in the house over and over again that medicare is to be brought in as provided by the legislation. The question now is whether this is or is not government policy. If it is then the
December 12, 1967

minister knows full well that his figure of $10.3 billion is nothing but a joke.


Mitchell William Sharp: May I ask the hon. gentleman a question? Does he know which provinces are coming in and, if so, perhaps he will inform me?


Georges-J. Valade: The minister should inform us.
[DOT] (4:30 p.m.)


Michael Starr: It is certainly very interesting to have the Minister of Finance asking me for information as to which provinces are prepared to enter the medicare program. It is strange to be asked this question when this government has announced with a great deal of publicity its intention to bring in medicare and has said that the provinces are waiting for it. The government said that the whole country was waiting for it and insisted on introducing the legislation. Yet now the Minister of Finance asks if the provinces have indicated to me whether they are prepared to join the program.


Mitchell William Sharp: I asked the question, Mr. Speaker, simply because the hon. gentleman seems to assume that everyone should know and I therefore assumed that he must know. I do not yet know what the position of the provinces may be.


Michael Starr: If the Minister of Finance does not know he had better find out soon-


Mitchell William Sharp: We will in due course.


Michael Starr: -because the law says that medicare will come into effect on July 1, 1968.


Mitchell William Sharp: No, it does not.


Michael Starr: So the minister has only about seven months in which to find out. This points up the manner in which this government is running the affairs of the country and the relationship it has with the provinces. The government boasts about co-operative federalism, but this points up that they have failed in this area also.
The Minister of Finance has said that medicare will add $500 million; yet I am told that his colleague the Minister of National Revenue (Mr. Benson), when appearing on television just the other day, said it would cost only about $80 million.


Mitchell William Sharp: No, he did not. And I did not say that, Mr. Speaker. I said we would have to raise $500 million in order to pay our share, namely, half, and the Minister of
The Budget-Mr. Starr National Revenue agreed with this. The Minister of National Health and Welfare (Mr. MacEachen) agreed too.


Michael Starr: If my information is wrong I certainly do not wish to accuse the minister of making that statement, but I am told that the Minister of National Revenue said on television that it would cost only $80 million. So instead of $10.3 billion the expenditures of the Minister of Finance next year will be closer to $11 billion. And what about Expo? The minister says he is going to write that off.


Mitchell William Sharp: Mr. Speaker, I am sure the hon. gentleman wants to understand the situation. We have already raised the money for Expo; the only question is how it will be accounted for. I really feel the hon. gentleman is trying to misrepresent the very valid reasons why I excepted these two matters.


Michael Starr: This is the first information I have received that the money has been provided for. As an ordinary Canadian and member of parliament I have been led to believe that we had to consider the Expo deficit in next year's budget.


Mitchell William Sharp: Yes, but just so there is some clarification here I would point out to the hon. gentleman that the money has been raised and spent. The question is, how is it to be accounted for, how much in respect of the Quebec government and how much in respect of the federal government? Until we have settled Expo accounts we wiU not know what the amount is. Moreover, we do not have to worry about this money; the money has all been raised and spent. It is simply a matter of accounting. Therefore this does not affect my cash figures.


Michael Starr: Evidently financial provision was not complete in all its aspects because during this debate we have had to elicit more definite and detailed information from the minister, as has just been demonstrated. It is enlightening to know that Canadians will not have to pay the deficit for Expo because, as the minister says, the money has been raised and it is just a matter of bookkeeping. I am sure that Canadians as a whole will now be pleased to pay the 5 per cent surtax in view of the fact they do not have to pay anything for Expo.
This government has to stop clowning around. It has to be honest with parliament and the people in giving information as to where we are going. It is about time the

December 12, 1967
The Budget-Mr. Starr government got down to the business of running the country. I believe that the minister and the government have shown a regrettable inability to manage the fiscal affairs of this nation. So far as the Minister of Finance and his colleagues in the government are concerned it has been a case of stop and go, chop and change.
In 1962-63 the government collected $1.7 billion in income tax. In 1966-67 the government is collecting more than double that amount from the individual taxpayer. As of Thursday, November 30, the amount was even higher. The government is collecting $350 this year in personal income tax from every person employed in Canada. In sales and luxury taxes it is collecting a further $45 this year from every employed person in Canada. It is collecting a further $60 per year from every employed person in Canada in cigarette, beer and liquor taxes. As the hon. member for Perth (Mr. Monteith), who made such a worth-while contribution when speaking on behalf of the official opposition, asked the other night: Where does it all stop?
This government is saying to Canadians: You will drink less and smoke less. You will accept an inferior standard of housing. You will pay more for necessities or do without. You will do without luxuries and accept austerity. This is in order that the government can go on with its high spending policies. On November 28 the Winnipeg Free Press had this to say:
This request- for increased taxes.
-is a naked confession of the government's repeated budgetary blunders. There would be no need for new taxes in November if Mr. Sharp had not totally misconstrued the nation's prospects in June.
It is not the minister's confession which is naked; it is the taxpayer after he gets the bill. The government's deficits have grown more and more unwieldy, without corresponding benefits. The Prime Minister (Mr. Pearson) was quoted in the Edmonton Journal of December 16, 1963, four years ago, as saying:
We accept deficit financing providing it does what it was intended to do-put people to work.
Now we are getting deficit financing without putting people to work. In October, for example, unemployment throughout the economy was 59,000 higher than a year earlier. In manufacturing there 66,000 fewer jobs than a year earlier. In construction there were 29,000 fewer jobs than a year

earlier. In November unemployment was 51,000 above last year. The seasonally adjusted rate is 4.3 per cent compared with 3.7 per cent last year.
But I do not think the Minister of Finance should be too severely blamed for all this. After all, he is in a high-stepping crowd in the cabinet and I am sure that, try as he might, he cannot control them. I refer, for example, to the President of the Privy Council (Mr. Gordon), his colleague who dreams about big, bad American bankers under his bed. Then there is the former minister of defence who is now in transport, and the Secretary of State for External Affairs (Mr. Martin). They are both big spenders. There is the Registrar General (Mr. Turner) who is in the throes of creating a new department. He is a big spender.
In view of all this, how can the Minister of Finance, a former deputy minister, control boys like those I have enumerated? And I have enumerated just a few. It cannot be done, Mr. Speaker. This is a government of big spenders. Then, of course, there is the right hon. Prime Minister, with his Company of Young Canadians and the war on poverty. All these things cost money. The poor Minister of Finance runs up and down wringing his hands and saying, no doubt: Please, fellows, not again. This must happen at every cabinet meeting. If the Minister of Finance goes to Treasury Board he really has to plead. But these fellows-
[DOT] (4:40 p.m.)


The Acting Speaker (Mr. Rinfrel):: Order. I regret to interrupt the hon. member for Ontario but the time allotted to him has expired.


Some hon. Members:: Continue.


The Acting Speaker (Mr. Rinfrel):: Is there unanimous consent to permit the hon. member to continue?


Some hon. Members:: Agreed.


Michael Starr: The Minister of Finance pleads with these colleaguess of his who are such big spenders. They pay no attention to him and do you know why, Mr. Speaker? They do not have to pay any attention because they do not have to pay for these things themselves. The taxpayers of Canada pay for them. In the past five years the government has raised its budgetary expenditures from $6.8 billion to $10.3 billion. They have had total deficits of $1.8 billion. This has taken place in an expanding economy. I say frankly that the
December 12, 1967

government has created inflation. I pointed out to the Minister of Finance when I asked him a question that Canadian 50-cent pieces minted this year are now selling over the counters of responsible and respectable stores at $3 to Canadians. I venture to say there are more 50-cent pieces in the United States that are going to be sold to Canadians at fabulous prices, perhaps $4 or $5. This government creates inflation.


Mitchell William Sharp: Is the hon. gentleman suggesting that we raise the price of silver?


Michael Starr: I am not suggesting that at all.


Mitchell William Sharp: Oh, come, come.


Michael Starr: Surely the minister must agree that every Canadian has a right to pay only 50 cents for a 50-cent piece?
The Budget-Mr. Drury The government's inability to follow a sustained pattern has been most destructive of confidence in this country. Evidently the Minister of Finance does not know where to turn. Obviously he has no control over events or over his colleagues. It is for this reason that there can be no confidence in the government. It does not know where it is going from one day to the next.


Mr. Roxburgh:: Mr. Speaker-


The Acting Speaker (Mr. Rinfret):: If the
hon. member wishes to ask a question he should do so from his own seat.


Michael Starr: Does the hon. member want to ask me about the Rhodesian tobacco that is being shipped into Canada from South Africa?


Mitchell William Sharp: They can have two quarters which have exactly the same value.


Michael Starr: This is the arrogant attitude of this government. They are not considering the taxpayers of this country when they answer in this way.


Mitchell William Sharp: 
Michael Starr: I say to the minister that the government did not invent inflation; inflation did not start by itself. This government created inflation in this country.


Mitchell William Sharp: We created it in the United States and in Britain too?


Michael Starr: Inflation in the United States is not as great as it is in Canada. The cost of living index in the United States has not gone up as high as it has in Canada. Expert economists say definitely that if the cost of living index rises over 2.5 per cent in one year there is cause for alarm.


Mitchell William Sharp: Yes, I have said that too.


Michael Starr: How much has ours gone up in the past year?


Mitchell William Sharp: More than that.


Michael Starr: You're darned right, it has gone up more than that. This is the kind of mess into which the government has gotten the country. The people of this country cannot get essential housing. The prices are out of reach or housing is non-existent. Prices have gone sky high. The government cannot make up its mind about anything, Mr. Speaker.
as it was when the bill was debated in the house I voted for the principle of medicare. I am definitely against the universality of medicare. I think medicare should be available on July 1, 1968 to those Canadians who want to take advantage of it. It should have been available on July 1, 1967.


Charles Mills (Bud) Drury: December 12, 1967
The Budget-Mr. Drury will also serve to provide a background to the important new arrangement which I propose to outline this afternoon.
As hon. members will recall, one of the first programs which the Department of Industry introduced shortly after its formation was the automotive program. This program, as all hon. members know, is designed to promote growth, efficiency and employment opportunities in a most important sector of the Canadian economy. Following this my department then focused on the need to encourage and substantially increase research development and activity in Canadian industry, with the purpose of developing a technological base from which new projects and processes for world-wide markets can be developed. As a result we introduced the program for the advancement of industrial technology and also the industrial research institute program which puts universities in a position to supply research and development services to Canadian industry.
At the same time the new Industrial Research and Development Incentives Act, passed by parliament, came into effect. As members will recollect, this act, imposed upon previous measures for this purpose, makes the incentives more widely available. These three measures, I believe, go a long way toward assisting industry upgrade and expand its technological activities.
I should also mention that the Department of Industry has assumed responsibility for the shipbuilding subsidy program. This is being reintroduced on a new basis whereby the efficiency of this industry will be progressively improved. A further most impoitant program which my department has introduced, and about which I spoke this morning at the federal-provincial conference on housing is the BEAM program. This program, whose purpose is to increase the production, manufacture and use of building materials, equipment and accessories, should contribute significantly, if it continues to enjoy the support which it already has received, to a reduction in the cost of housing. [DOT] (4:50 p.m.)
Sound industrial design is an increasingly essential factor in improving productivity. In this area the Department of Industry has initiated a comprehensive program including design promotion, research and product development, design education, and design information.
Finally, the adjustment assistance program which provides loans and remissions of duty

on production machinery to automotive parts producers is an important element in assisting this industry to become more efficient in order to compete on a North American basis.
Although this is not an exhaustive list, I believe it gives hon. members an over-all view of the kind of activities in which the Department of Industry is engaged. As I stated in the standing committee of the house when the estimates of the Department of Industry were examined last June, the improvement of the productivity of a major sector of our economy is a very exciting challenge. No one can dispute the difficulties of obtaining immediate and measurable results, and yet it is a task which must succeed. My department has accepted this challenge.
At this stage I should like to make a statement on a new measure which has been formulated by my department and to which I made reference earlier.


Mr. Barnett:: Before the minister proceeds with his statement, would he mind answering a couple of questions arising from what he has already said? The first one arises out of my curiosity with regard to the derivation of the name of the B.E.A.M. program. It was not explained in the background papers of the conference.
My second question is with regard to the minister's reference to the shipbuilding subsidy program. Was he simply referring to the phased-out subsidy program which was announced some time ago by the former minister of transport, or is he announcing what is in effect a new program which will be a substitute for the one I mentioned?


Charles Mills (Bud) Drury: December 12, 1967
The Budget-Mr. Drury never been made anywhere and, therefore, it is impossible to develop a statistical base for applying the 10 per cent rule. When such situations arise at present, decisions as to what rate of duty will apply must be derived from strictly formal interpretations of the law rather than giving effect to what was the probable intention of earlier legislators.
The third advantage for machinery producers is that remission of duty can be granted in respect of production parts classed under tariff item 42700-1 which are not available in Canada. While the governor in council has authority under section 273 (L) of the Customs Act to establish temporary tariff items to permit entry of production components at a free or reduced rate, the new item will provide increased flexibility in dealing with machinery components on a case by case basis. This flexibility is expected to stimulate machinery manufacturing by encouraging specialization and assisting producers to compete more effectively.
[DOT] (5:00 p.m.)
While the major objective of the new item is to assist the development of efficient Canadian industry, the proposal has important additional advantages. This change in the machinery tariff was of great value in enabling Canada to pay for tariff concessions offered by our major trading partners in the Kennedy round. Moreover, it constitutes a major simplification in tariff administration with correspondingly greater certainty for both producers and users of machinery.
Negotiation of the machinery proposal was difficult and protracted since removing the formal class or kind distinction required that goods under tariff items being replaced which were classified as "not made" would carry higher statutory rates. In practice the effective rates would be reduced by virtue of the operations of the new remission system.
Trading partners agreed to our proposal in the end on the understanding that an overall reduction of duty would result because remission would be granted on imports of machinery not available from production in Canada. However, they insisted that in order to treat the machinery proposal as a tariff concession by Canada there be some guarantee that it would, in fact, lead to a reduction in total duties collected on the machinery involved.
As a consequence, Canada gave an undertaking that the average annual incidence of m.f.n. duty under 42700-1 would not exceed 9
[Mr. Drury.1
per cent. This undertaking is tantamount to saying that at least 40 per cent, by value, of future m.f.n. imports under 42700-1 will consist of machinery not available from production in Canada and consequently duty will not be collected on them.
I would emphasize that this undertaking does not involve any risk for Canada. Even though domestic machinery production _ is growing, a large volume of our total machinery requirements will continue to be imported and, as at present, the largest portion of such imports will comprise machinery which is not available in Canada. During recent years, about 60 per cent of the machinery imports which will be covered under 42700-1 were ruled as being of a class or kind not made in Canada. In 1966, the figure was closer to 65 per cent and this pattern is expected to remain relatively stable. Accordingly, we anticipate no difficulty whatever in meeting our commitment on	average
incidence.
Another important advantage	of the
machinery tariff proposal is that it will eliminate the use of distinctions in the customs tariff between machinery of a "class or kind made in Canada" and "not made" in respect of a major portion of our imports and thereby remove a long-standing source of appeals and litigation with corresponding problems for Canadian industry and for customs administration as well.
The pui'pose of such "class or kind" distinctions in existing machinery tariff items, as stated at the time the most important of them were introduced, was to provide for reduced rates on production machinery not directly competitive with machinery produced in Canada. Also, various statements made by ministers at that time indicate that the words "class or kind" were to be subject to practical rather than legalistic interpretation. This was the basis of customs interpretation applied until about 1950.
By that time the difference between the rates of duty for "made" and "not made" items, which had steadily widened over the years, had become a strong incentive for importers to seek ways to bring their goods within the definition of a "class or kind not made in Canada". The annual volume of imports was also increasing rapidly. Accordingly, increased tariff litigation resulted.
In broad terms, the precedents established by litigation have resulted in a gradual movement away from applying the "class or
December 12, 1967

kind" concept on the basis of practical judgment toward narrow interpretations based on explicit legal determinations. The ever-present possibility of further litigation tended to create uncertainty for machinery producers regarding those categories of machines which they could expect would be protected by the "made in Canada" rates. Similarly, importers would not be certain in respect of the duration of an existing "not made in Canada" rate.
Because of these uncertainties, as well as the costs and delays involved in litigation, both machinery producers and users have made representations over the years that a more practical approach to the original objective of the "class or kind" provisions should be developed. In fact, some of the suggestions have been quite similar to the present machinery tariff program.
While discussing the unsatisfactory aspects of "class or kind" distinctions in respect of machinery, I should also point out that trading partners have frequently objected to them as well. The reason is that low rates of duty on "not made" goods are inherently unstable and can move to protective "made in Canada" levels by administrative action without further negotiation. Thus trading partners contend they have no assurance of continued access to the Canadian market at the low rates. Indeed, they had come to the view prior to the Kennedy round that they would not regard as concessions any tariff reductions which carried a "not made in Canada" qualification.
The procedure for dealing with applications for remissions of duty on machinery is straightforward. Importers who find that their machinery requirements are not available from production in Canada may apply to the Minister of Industry for a remission of duty, either before or after actual importation takes place. These requests will be referred to a machinery and equipment advisory board, established by the governor in council pursuant to the Department of Industry Act, composed of a chairman with a broad experience in commercial policy and the deputy ministers of finance, national revenue, trade and commerce, and industry. The purpose of this board will be to advise the Minister of Industry regarding the eligibility of machinery for remission of duty in accordance with the provisions of item 427001. The Minister of Industry will, in turn, advise the governor in council who will have final authority in granting remission.
The Budget-Mr. Drury
The machinery and equipment advisory board will proceed on a practical basis rather than the present legalistic and formal approach. Its findings will be based on facts of the case and on practical considerations. In evaluating applications, the board will be assisted by the specialized branches of the Department of Industry which will carry out the factual and analytic back-up work.
In considering applications for remission, the advisory board will have regard for two basic tests. First, it will want to know whether the machinery being imported is available from production in Canada and, second, it will wish to satisfy itself that it is in the public interest to recommend that a remission of duty be granted. The criterion of availability in Canada is to be understood as follows: Machinery is to be deemed available in Canada if at least one manufacturer has proven capability to manufacture machinery which, in so far as its range of physical qualities, operational characteristics and efficiency are concerned, is reasonably equivalent to the machinery for which relief of duty is being sought.
e (5:10 p.m.)
Proven capability may be deemed as existing in Canada if: (a) the full range of technical and physical capabilities necessary for the production of the machinery for which remission is sought exists within the normal operational framework of at least one manufacturer; and (b) such facilities have in fact produced machinery which, in the judgment of the Board, has demonstrated a production competence reasonably equivalent to that required to produce the machinery for which remission is sought.
The criterion of public interest will be applied, in its broadest sense, in relation to the main objective of the machinery proposal, namely, that of encouraging the development of efficient Canadian industry. It is understood that in the main importations of machinery contribute to the maintenance, improvement and expansion of efficient industrial activity in Canada. In the typical case, therefore, remission of duty would be regarded as being in the public interest in cases where such machinery is not available from production in Canada. Such remission should assist manufacturers to be more competitive by reducing their capital costs. There may be instances, however, where the machinery and equipment advisory board finds final authority in granting remission.

December 12, 1967
The Budget-Mr. Drury firm are clearly inconsistent with the development of efficient Canadian industry. In such exceptional instances, the board may advise the minister that remission is not in the public interest.
Provision is being made for appeals from the findings of the machinery and equipment advisory board in respect of applications for remission of duty under tariff item 42700-1.
Appeals will be referred to a review board composed of three members from outside of government. Such a board will be established by the governor in council pursuant to the Department of Industry Act to deal with cases as and when they arise. The chairman would be selected because of the disinterested vantage point which his experience and position in the community would enable him to take, and the two other members may be drawn from those sectors of industry that are important users and manufacturers of machinery. The review board, like the advisory board, will be expected to take a practical rather than a legalistic view of cases coming before it.
When the machinery and equipment review board is of the opinion that remission should be granted in any case on which the advisory board had recommended to the contrary, the Minister of Industry would normally accept the review board's findings and recommend remission to the governor in council.
In any case where the review board supports an appeal that relief of duty should not have been granted, the advisory board will be guided by the review board's findings in respect of future applications for remission on the machinery in question. However, such an opinion could not be regarded as a firm precedent, since the facts about availability of machinery from production in Canada will be constantly changing.
At this point, I would like to comment on the market for machinery, and the characteristics of Canada's machinery industry.
The predominant feature of much of the industrial machinery and equipment market is that competition is international and severe. No industrial country can hope to produce its total machinery requirements. The range of products is too diverse and manufacturers in various countries have developed specialized products with which it is uneconomic to compete. In 1964, for example, the United States imported industrial machinery amounting to $900 million; U.K.- $1,015 billion; West Germany-$1 billion;

Japan-$595 million. All these figures are expressed in United States dollars.
Since competition tends to be international in character, it is important for a nation's machinery industry, particularly in an economy of Canada's size, to aim at manufacturing an increasingly selective range of machinery designed and priced to be competitive in both domestic and export markets. This achievement would help to offset, in our balance of trade, necessary imports of other machinery which cannot be manufactured domestically on an economic basis.
The basic characteristics of the Canadian machinery industry are that it is largely foreign owned, produces a wide range of products in relatively small volume, and is oriented toward the domestic market which has been protected by a relatively high tariff. In many cases, therefore, little product development is carried on, and economics of scale and specialization have not been achieved to any significant degree.
The fact that the Canadian machinery industry is largely foreign owned is at once its principal strength and weakness. The industry's diversity, know-how, and steady expansion since world war II are largely due to the initiative of foreign corporations which established subsidiaries to exploit the advantages arising from proximity to the market, a modest but long-standing tradition of excellence in the metal working industry, competitive wage scales, and tariff protection. However, the resulting orientation of production of parent designed machines toward the domestic market-since markets outside Canada have been largely supplied by the parent corporations or their other subsidiaries-has limited Canada's machinery exports, reduced opportunities for volume production, and discouraged the development of machines of unique design and performance. There are exceptions, of course, in respect of the extent of design and production engineering being carried on in Canada. These are principally in the field of heavy equipment for use in the resource and primary materials industries, as well as in harnessing electric power.
Part of the machinery industry is, I should add, Canadian owned. While the companies are modest in size, they have demonstrated a great deal of initiative both in design and marketing in the domestic and export market. Some of their achievements are quite remarkable.
December 12, 1967	COMMONS DEBATES
The Acling Speaker (Mr. Tardif): Order. I regret to interrupt the minister but the time allotted to him has expired. Does the house give the minister unanimous consent to continue?


Some hon. Members:: Agreed.


Mr. Rapp:: Not for too long.


Charles Mills (Bud) Drury: I thank hon. members. I shall drone on for about a minute and a half longer.


George Harris Hees: Drone away, as long as you remain non-controversial.


Charles Mills (Bud) Drury: It is noteworthy also that many of the important contributions to design in these cases have been made by citizens who have immigrated to Canada.
If the development of the machinery industry is to be sustained, it must keep pace with advancing technology in a market which is becoming increasingly international in character. The overriding interest of machinery users in obtaining the most advanced capital equipment is compelling machinery builders in every country to take a critical look at both their manufacturing methods and their products to determine what improvements and research and development are required.
Fortunately, there are encouraging signs that Canadian machinery producers appreciate the necessity for adjusting to these circumstances, and are making various arrangements with their parent corporations to do so. These include moves toward greater specialization, broadening sales policies to include export markets, and expanding design engineering activity. Evidence of these trends to date includes the improved export performance of the industry in recent years, the decisions made by some parent corporations to assign responsibility to Canadian subsidiaries for the manufacture of particular products for international markets, and the industry's increasing participation in the Department of Industry's program for the advancement of industrial technology.
There is good reason for optimism about the future of the Canadian machinery industry. The requirements of our manufacturing and service industries for machinery in the general categories classifiable under tariff item 42700-1 are now about one and a quarter billion dollars per annum. The machinery producers' share of this market has been growing steadily and now amounts to almost
The Budget-Mr. Sherman half of the total. Further, some of these producers have shown that they can supply specialized products in world markets which are competitive both in respect of design and price. The Kennedy round will provide greatly improved opportunity for expansion along these lines.
[DOT] (5:20 p.m.)
I believe that the Canadian machinery industry should be able to cope with the competitive conditions which lie ahead and grow steadily provided, of course, it continues to display imagination and initiative, together with a willingness to adjust. I am confident that the machinery program will impart a strong thrust in the direction of higher productivity in the machinery industry, reduced costs in industry generally, and a better performance of the economy as a whole.


Mr. L. R. Sherman (Winnipeg South):: Mr. Speaker, at this stage it is not my intention to try to make a major contribution to the budget debate. By this I mean a major contribution covering the whole spectrum of financial and fiscal problems confronting the country, which have been discussed by the minister the other evening and during the debate which has taken place over the past five or six days. At the same time, if my contribution is not major from the point of view of the spectrum it covers I hope it will not be unimportant because there is one specific and particular aspect of fiscal policy and financial affairs to which I want to devote myself and which I think demands some attention, requires some interrogation, and deserves some answers and illumination.
The basic message of the Conservative party with respect to the fiscal and financial affairs of the country, with respect to the economic crisis in which we are currently trapped and with respect to the minister's budget speech, has been clearly and carefully enunciated by the leader of this party and various other hon. members, including the hon. member for Perth (Mr. Monteith), the hon. member for Kamloops (Mr. Fulton), the hon. member for Ontario (Mr. Starr), and several other hon. members who are highly qualified to discourse on this subject at some length and who have made important and compelling contributions to the debate. Anything I could add in the areas with which they have concerned themselves would probably be nothing more than an exercise in gilding the lily. So, Mr. Speaker, as I suggested a moment ago I am not going to
December 12, 1967

The Budget-Mr. Sherman attempt to cover the broad range and spectrum of fiscal and financial ills. The speakers to whom I have referred have done so in an eloquent and illuminating fashion. However, I do wish to place myself on record as agreeing with and subscribing to the general view of my party so far as the budget is concerned and so far as the financial and fiscal affairs of the nation are concerned.
At the present time there is a motion picture playing in movie houses in various Canadian cities. It is called "The Flim-Flam Man". I think its title can be applied most significantly, carefully and meaningfully to the Minister of Finance (Mr. Sharp) and his colleague the Minister of National Revenue (Mr. Benson). The budget exercise of the past week must indeed be regarded as an exercise in flim-flam. If there is any flim-flam man operating in the nation at large at present it is the Minister of Finance, and if there is anyone assisting him in that exercise it is the Minister of National Revenue, for never in the life of this parliament, which now spans almost two years, have we seen such an exercise in flim-flam as the so-called budget that these two ministers have attempted to foist on this national legislature and on this nation.
The government's so-called savings program, as announced by the two ministers to whom I have referred, is certainly an exercise in flim-flam, double-talk and hypocrisy. No Canadian who has any experience or connection with the business and industrial community, any connection with the corner grocery store, any connection with the fundamental function of bringing up a family and running a household, is going to be fooled by the kind of semantics offered to this house when the budget was introduced and later offered by the Minister of National Revenue when he rose to attempt to defend, rationalize and explain what he described as a serious commitment to savings and to cut-backs in public expenditures.
As I have said, sir, there is really one specific area about which I want to talk, although there are a number to which I would like to devote some attention. Like other Canadians, those who live in my constituency, Winnipeg South, are still waiting for answers to questions dealing with the fiscal and financial area. They are still waiting for answers to legitimate, reasonable, sensible requests that have been advanced by this side of the house during the course of the past two years but which have so far fallen on deaf ears.

I speak of such requests as our suggestion for elimination of the 11 per cent sales tax on building materials, a tax which militates most severely against construction in cities like my own, Winnipeg. I speak of our request for some action in the area of the cost of living, the cost-price squeeze and the cost-price spiral which now hold hundreds of thousands, yes, millions of Canadian taxpayers, home owners and housewives in thrall, indeed in slavery. I speak of our request for some kind of relief, some kind of escape from the oppression currently being suffered by pensioners, in all categories, including superannuated civil servants, senior citizens and war veterans. The whole community of pensioners is a community in thrall, in slavery, existing in extreme difficulty if not absolutely suffering at the present time as a consequence of the run-away influences and pressures in this country, about which the government has done nothing during the two year life of this parliament.
We have also advanced a legitimate request for action in the area of income tax relief for small home owners in so far as the real estate taxes on their houses and properties are concerned. We have made the legitimate suggestion that real estate taxes on owner occupied homes should be deductible from taxable income for income tax purposes, at least up to a certain level of deduction.
These are among some of the suggestions we have made to prime the economy and restore the faith of the people in the financial affairs of this country, to inspire and generate the populace to a new pride in the jobs, professions and undertakings they carry out for Canada, and to create a new excitement about Canada. We have made these suggestions during the various budget debates in the two year life of this parliament and in the throne speech debates at the opening of both sessions of this parliament.
These are subjects to which I could devote the full time allotted to me under the rules during this debate but they are being covered by other speakers. All I want to do at this time with respect to such items is to mention them and again place on the record the fact that we on this side of the chamber, and I am personally speaking for my own constituency, urgently request the government to take a look at these items, among others. Let members of the government examine their books, hearts and consciences to see whether or not some of the difficulties, some of the enslavement in which Canadians
December 12, 1967

are currently trapped can be relieved if not totally removed by bold action, by improvisation, by experimentation, by leadership along the lines of the proposals we have made.
[DOT] (5:30 p.m.)
In moving from that section of my remarks to the nub of the speech I should like to make I reiterate again that we urge the government to remove the 11 per cent sales tax on building materials and to adopt and experiment with some of the suggestions which have come from this side of the house with regard to the cost of living. We urge the government to take action to remove the chains from the pensioners of this country in all categories. We urge the government to take a look at the substantial investment the small home owner has in this country and grant him some relief from income tax along the line of the realty tax deduction to which I referred a moment ago.
Having said that I wish to come to the specific item I should like to present to the Minister of Finance at this time, that is, the issue of the new 1967-68 series of Canada savings bonds. It seems to me that the whole history in respect of this bond issue is symptomatic of the manner in which this Liberal administration has mismanaged national financial affairs in Canada today.
The original idea in respect of Canada savings bonds was to develop and establish the savings habit on the part of ordinary Canadians. The original philosophy was that there should be an incentive to exercise thrift and good management among the average taxpayers, among ordinary Canadians like those who sit in this house and those at home who sent us here. At the time the savings bonds program was introduced in Canada there were relatively few vehicles available to the public which offered a secure savings medium that was convertible to cash on demand. There were not very many avenues to which an average wage earner could turn in order to find a good solid investment. Moreover, there were not many investments of this type which were immediately convertible to cash on demand in times of need. Therefore the savings bond vehicle filled a void in the life of the average Canadian in the context of his financial life. Philosophically it provided a valuable assist to the legislators and leaders of this country who, while devoting their attention to preparing more serious political issues, wished to encourage good, sound financial and monetary habits as much as they possibly could.
The Budget-Mr. Sherman
The philosophy of encouraging thrift and good management on the part of Canadians on every main street in every town and village was a highly laudable one. This, however, no longer is the case. There are now a great many institutions, vehicles and avenues through which the average Canadian can obtain every benefit which originally was available to him only through the savings bonds. Institutions such as trust companies, insurance companies, mortgage dealers, financial houses and mutual funds offer untold opportunities for the small Canadian to make an investment which will provide him a good rate of return and offer him immediate convertibility into cash if and when needed.
As I say, there are today many vehicles and avenues of this type because, as no one in this chamber would deny, times have changed. Times have changed financially, fiscally and socially. They have changed as much in this area as they have in any other area of Canadian life or in any other sector of the Canadian community. With the change of times apparently there has also come a change in government thinking in respect of savings bonds. As an illustration of this point one need look no further than the fact that whereas once the maximum amount an individual could hold in Canada savings bonds, war bonds, or whatever they were called in the original concept, was $5,000 the maximum has now been raised to $50,000.
There are not very many average wage earners in this country who have $50,000 to invest in Canada savings bonds or in any other investment. I doubt that this point would be seriously challenged in this chamber. So from this provision in respect of this series of bonds one can only draw the very obvious inference that the government no longer is seriously concerned about the original philosophy behind Canada savings bonds. What the government is now planning to do by means of Canada savings bonds is raise money to bail it out of trouble.
There are probably many Canadians who could invest $5,000 in Canada savings bonds and a few who might be able to stretch it to $10,000, but how many ordinary Canadians can invest $50,000? The only people who can invest $50,000 are the wealthy Canadians, the affluent investors, the capital money lenders, the people who deal in loans, bonds, investments and securities day in and day out every week. These people know the market, know the business and have the kind of money to invest in projects of this type.
December 12, 1967

The Budget-Mr. Sherman There is nothing wrong in changing the philosophy in respect of Canada savings bonds or in getting away from the philosophy of encouraging the average Canadian to invest by this method. There is nothing wrong with raising the ceiling to $50,000 with the intention of making these bonds available not only to the average Canadian but to the big money men, except the motive behind it. What is wrong with it is not the actual mathematical exercise itself but rather the motive behind it, that is, the motive or objective with regard to the 1967-68 series of Canada savings bonds of raising money for the federal treasury. The purpose is not to encourage the savings habit, as it once was, but to raise money for the federal treasury. That being the case, I suggest to every member of this house and to every person in this country that we have come to a sad day in the evolution of savings bond philosophy.
[DOT] (5:40 p.m.)
The question arises automatically and instinctively, is this a sensible way for the government to raise money? The answer to that question is emphatically, unequivocally and unarguably no. It is not a sensible way for the government to raise money. It is a very expensive way for the government to raise money. Why does the government not go into the capital money markets to raise money, as has always been its traditional and acceptable practice? Let me tell you why. The government cannot get money in the capital money markets because there is no confidence in the government, particularly in respect of its bonds.
What has the government done under the guise of giving small Canadian investors and average Canadian home owners the opportunity to get in on the new series of savings bonds which pay pretty substantial rates of interest? This government has gone to the 20 million or 19,999,000 Canadians of average means and decided through this savings bond issue to bilk them of every dollar they can in order to bail themselves out of trouble. In so doing they have undertaken the most expensive exercise in money raising it would be possible for any government in Canada to undertake at this time. The corollary to the first question I asked-is this a sensible way to raise money-must be, is this the only way the government can raise money? Obviously the answer, sadly, reluctantly and regrettably, is yes. Otherwise the Minister of Finance would not undertake such a tortuously expensive method of raising money.


If the government had the confidence of the capital money markets and the people who deal in those markets and could get its money in the normal way, there would have been no flamboyant savings bond issue such as this series which pays an average yield of 5.48 per cent interest to maturity, with the bonds doubling in value if held for 13 years.
If this is the only way the government can raise money to bail itself out of trouble then, as I suggest, the government cannot command the confidence of the regular markets where it would normally go to raise the money it needed.
If what I suggest is so and I believe it to be so, the government should have the moral courage to tell us that this is the situation. Canadians have the stamina to take it and to face an economic crisis, but they like to know what the facts are. We have had enough of what I referred to earlier this afternoon as flim-flam. We want to know what the situation is. We will pull in our belts and fight this crisis as other nations have fought other crises in other times.
This is a hopeless exercise in hypocrisy, and I am referring to the government and the minister involved shirking their responsibility and asking us to stick our heads in the sand. The government is confusing us with overture, appeal and embellishment. What I have in mind is the advertising campaigns which were conducted in respect of the 196768 series of Canada savings bonds. We are being led down the garden path. The government is deluding us into thinking that everything is right and good and that in fact we can afford to issue a series of bonds with extremely attractive interest rates and extremely impractical results. If the Minister of Finance asks me why I think this is such an expensive way to raise money for the federal treasury I will consider it a privilege and a pleasure to tell him why.


An hon. Member:: He hasn't.


Louis Ralph (Bud) Sherman: This is the most expensive exercise possible in which the minister could indulge because of the cost connected with the issuing of a series of bonds of this type. I refer particularly to the commissions which are paid on these new bonds. We must also consider the extremely expensive cost of advertising, including full page advertisements in national, local and regional newspapers. These advertisements have even appeared in the weekly newspapers in this country from coast to coast. This is extremely costly. We must also consider the cost of
December 12, 1967

direct mail campaigns which include the distribution of pamphlets such as the one I hold in my hand. Various other advertising media have also been used to promote this bond issue. Of course this is salesmanship, and no one challenges the necessity for salesmanship. However, salesmanship for an unnecessary exercise is unnecessary.
^ In this case the exercise, as I suggested, stems and derives from motives and objectives which are wrong and involve an additional expense to this country which we at this time in our current economic and financial crisis can ill afford. There is an additional cost which I have not yet enunciated relating to the new issue of savings bonds. I refer to the new interest on the turnover versus the old interest. The new interest is to average 5.48 per cent if the bonds are held to maturity. As I suggested, the bonds will double in value if they are held for 13 years. The additional interest, the tremendous advertising costs and the commissions and the bank charges levied in the case of each new bond represent a staggering expense in respect of an exercise developed on the basis of incorrect reasoning; a wrong philosophy regarding savings bonds and an attempt to reach the average Canadian on the streets of this country in every town and village in order to pull the government out of the fiscal difficulty in which it now finds itself.
There is also the question of the risk involved in such a bond issue, and I hope the minister has considered the extreme hazard he shoulders in this regard. What would happen if, for example, the people of Canada should become more worried than they are and create a sudden run for cash in exchange for bonds? These bonds are negotiable at any time. What sort of predicament would the government find itself in then and what sort of financial state would Canada be m? Added to the mistaken philosophy, the disastrous concept, the wrong reason for undertaking this exercise to obtain capital in this risky way, and the exorbitant cost, is this additional risk which is an element in itself that increases the cost. I am sure, the result will be extremely disastrous for the people of Canada. For these reasons, Mr. Speaker, I go on record as condemning this exercise undertaken by the Minister of Finance and the government as an unwise and most expensive one for the nation at this time.
[DOT] (5:50 p.m.)


Alexander Bell Patterson: Mr. Speaker, I find myself in the position of 27053-337$

The Budget-Mr. Patterson having to condense what I have to say into about seven or eight minutes.


An hon. Member:: Good.


Alexander Bell Patterson: Someone said, "Good". I thought that would be the response. I will have to leave out the bouquets and perhaps some of the criticisms. I wish to make a few comments, however, with regard to the budget that has been introduced. Various factors, allegedly beyond the control of the government, have been blamed for the situation facing the country at the present time. But I think it is evident that the policies pursued by the government and its disregard of the effects of its borrowing and spending practices have been largely responsible for the problems that face us at this time.
The minister has now introduced a budget which calls for increased taxes and reduced borrowings. I should like to refer first of all to the proposal in regard to tax increases. Under the present system there are only two sources of money with which to pay government expenses, namely, taxes and borrowings. Just a few days ago my colleague the hon. member for Red Deer (Mr. Thompson) spoke about the tax increases and said, as recorded on page 5155 of Hansard:
Taking these costs-
The costs of government.
an<i applying them to the net national income of the Canadian people we find that 57 cents out of every dollar that is earned by Canadians is taken back by governments at one level or another. If we include the net cost of government, that cost which is financed through taxes and not through other sources of income, we find that nearly 50 per cent of every dollar that is earned by Canadians is taken back by government in the form of taxes to pay for the cost of government.
This indicates very clearly the extent to which the taxation structure of Canada is draining the resources of our people. We must consider the effect of rising costs occasioned by tax increases on the take-home pay of Canadians. Our workers are beginning to think that about all they have to do now is sign their cheques and send them to the government. The other evening I was listening to Professor Reuben Bellan, professor of political science at the Manitoba university, who pointed out that the tax increases are liable to increase the demands of workers for increased wages and this process will be carried on to the point where it affects the unemployment picture. Therefore we must consider the entire tax structure as it affects the cost of living. It has now reached the
December 12, 19G7

The Budget-Mr. Patterson point where it will be a case of diminishing returns if the tax load is increased any more.
However, we find that the government has conflicting policies. We discovered this in respect of the housing situation. The government stressed the importance of housing for our people, gave incentive bonuses for construction and then turned around and imposed the 11 per cent sales tax and cut off the bonuses. This was responsible for the raising of mortgage rates. So we find that in many ways the policies of the government are directly affecting the cost of living, and it now finds it must increase taxes in order to try to solve the problem.
An article that appeared in the Globe and Mail of November 16 last had as its heading, "Can Economy Take Tax Rise? Experts Wonder." The article pointed out that the need for higher taxes to bail Ottawa out of its financial troubles is generally accepted. The article then raised the question of whether the economy will stand a further tax hike.
I believe this is something that we and the government should take into consideration. We believe it will not be effective in solving the problems of inflation. In fact, an article which appeared in the Monetary Times of November, 1967, stated that a tax increase does nothing directly to contain the sort of inflation in which we find ourselves at the present time but instead it risks intensifying it.
We must consider the effect these measures will have on the employment picture. As has been stated, it seems that the government is embarking upon a plan to reduce employment. This will, of course, affect the welfare of Canadians all across the country. It has been said that the government is restricting its expenditures. We concur in the policy of the government with regard to curtailing the cost of government. This has been a source of great concern to the Canadian people for many years. I believe the time has come when this aspect of the problem must be seriously considered.
However, I believe that in outlining the ways in which this is to be effected the minister struck at some very vital areas which I believe should not have been included in the curtailing of expenditures. The question of superannuated civil servants has been raised. As a member of the committee set up to study this problem I, as well as every other member, was shocked to hear the statement that no increase in pensions will be forthcoming.

It has been said that we must reduce borrowings in order to take the pressure off the private capital market. I call attention to the fact that we have means by which this can be accomplished, but the government has acted very slowly. Even though it has moved slightly in this field, we believe that the Bank of Canada should be used to finance at least part of the government's expenditures in order that pressure may be taken off the private capital market, thereby releasing more money for the development of this country.
I would mention the reduction in the lending programs of the government. Here I point out that the government is dealing with very critical situations, for instance, national housing. I intended to deal at some length with this matter, Mr. Speaker, but time does not permit. I believe it is catastrophic that the government should reduce its contributions to the residential home construction program. There are several other factors in this regard but I do not have time to deal with them as my time has almost expired. I simply say that in the absence of adequate and effective monetary and fiscal policies designed to enable Canadians to provide for their immediate needs, they must mortgage their future to provide for the present.
The other evening I viewed the hon. member for Perth (Mr. Monteith) on television. He said he doubted that the government would ever be upset because members to his extreme left would see to it that they were not in the house when votes were taken or they would lend their support to the government. I call attention to the fact that if all the members of his party had been present the other evening there would have been more than enough members to upset the government and put an end to the policies that are now in operation. Therefore I repudiate the implication that we must take the responsibility in this connection and I suggest to the hon. member for Perth that he should take a look at his own party.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Tardif):: Order. It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at the time of adjournment tonight are as follows: The hon. member for Trois-Rivieres (Mr. Mongrain),
December 12, 1967	COMMONS
Weights and Measures-inquiry concerning the adoption of the metric system; the hon. member for Essex West (Mr. Gray), Parliament Hill-inquiry as to maintenance of centennial flame; the hon. member for Queens (Mr. Macquarrie), Privileges and Elections- election act to committee.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Hon. Mitchell Sharp (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. B. S. Mackasey (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, on Friday the Leader of the Opposition (Mr. Stanfield) felt it necessary to attack me and describe me as the official hatchet man of the caucus and of the Liberal machine. This in itself does not particularly concern me, although I might add at the outset of my remarks this language is hardly the type of language that one would have expected from the Leader of the Opposition, who was supposed to introduce a new level of debate into the house. What does concern me, however, is the inference that I would use the cause of national unity as a part of political, partisan tactics.
If the Leader of the Opposition were in the house this evening, and I have adopted the usual courtesy of informing the hon. member that I was about to speak, I could assure him that I share his view about the necessity for caution when we are discussing issues that separate this country today. At the outset of my remarks, I want to assure the house that it is not my intention tonight to retaliate for what I consider to be an unfair and unwarranted reflection on my conduct as a member of the House of Commons. However I would not want the hon. member, if he were here this evening, to interpret the remarks I am about to make as an apology. Since reviewing my speech on Thursday night I am more convinced than ever before that no apology is indicated. I can only conclude, after rereading my
DEBATES	5339
The Budget-Mr. Mackasey remarks, that the hon. gentleman over-reacted to what he presumed I was about to say, rather than to anything which does appear in Hansard. Certainly the newspaper accounts of the furore indicate that the members of the press gallery were also puzzled as to what upset the hon. gentleman. The Montreal Star, in its issue of last Saturday, stated the following:
The normally cool and aloof Mr. Stanfield slashed into Mr. Mackasey with fangs suddenly bared. He ended up cutting himself.
Coming out of his parliamentary pensiveness for the first time, the new Conservative leader blew his cool on an imagined slight by Mr. Mackasey. Observers today are still wondering what he was angry about.
I want to assure the house and members of the opposition that had I implied that the Leader of the Opposition endorsed the Estates General, or had I said he endorsed their views or their findings, then I could understand the angry and rather violent reaction. If he drew from my remarks that I intended to accuse him or imply that he endorsed separatism, then I can assure him that this was not my intention. The Leader of the Opposition may be surprised to know that in the five years I have been participating in these debates, sometimes rather vigorously I will admit, I have never found it necessary to make my point by attacking the personality, language, religion, personal life or private life of any member of the House of Commons.
On the contrary, Mr. Speaker, I have tried, with some modest success, to be an instrument for national unity in this house and to bring about a better understanding of the problems of national unity amongst the members of the House of Commons. It is my intention to dwell on that subject in a few moments. Had time permitted me the other evening-and hon. members will recall I was cut off by the vote-I had intended to speak about the Estates General. I had intended to point out that I had supported the original concept of the Estates General, the idea of bringing together leaders from all the leading organizations existing in the French speaking communities in the province of Quebec, and outside of Quebec. I had encouraged friends in my riding to attend the recent meeting. I encouraged them in the naive belief that these friends, true representatives of my community, were believers in confederation as an instrument which, while not perfect had, as Claude Ryan recently points out in the Le Devoir, permitted complete freedom of religion, language and
December 12, 1967

The Budget-Mr. Mackasey assembly to all French speaking people in Quebec since 1867.
[DOT] (8:10 p.m.)
I have as much right as the Leader of the Opposition to express an opinion in this house as to whether or not the Estates General acted in a serious manner in prejudging the issues. I presume they were assembled to discuss the issues in a democratic manner. To refuse to fly the Canadian flag did not seem to me a few weeks ago, nor does it seem to me now, an indication that serious men discussing a serious subject were doing so in an objective manner. This is essentially what I was about to say the other evening had time permitted. I repeat, I had no intention of implying by using the word "endorse" that the official opposition and its leader were endorsing the separatist conclusions of the Estates General. Certainly there were serious people present at the meeting, serious people not only from Quebec but from other communities outside Quebec, and it is regrettable that these serious people were not permitted to advance their arguments for confederation because of the atmosphere which prevailed at that meeting.
I might point out to the hon. gentleman if he were here tonight that as long ago as in 1964 I said in the house, and I gladly repeat now, that under the democratic system which prevails in our country Canadians have the right to endorse any philosophy they wish. They can support the cause of the Liberals, the Conservatives, the New Democrats, the Creditistes, the Social Crediters, or even separatism or communism. The presence in the House of Commons of the hon. member for Lapointe (Mr. Gregoire) who has decided to adopt the philosophy of separatism is proof of this. I happen to believe that this is the right and privilege of the hon. member under the constitution of this country.
A close look at the remarks of the Leader of the Opposition as they appear at page 5066 of Hansard, as compared with mine which appear at page 5191, will indicate, as the Montreal Daily Star has already pointed out, that I made no attempt to twist the words of the hon. gentleman for political advantage.


Mr. Nasserden:: Mr. Speaker-


Bryce Stuart Mackasey: Mr. Speaker, I should like to ask the hon. member for Rosthern (Mr. Nasserden) to grant me the privilege of completing my remarks, because they happen to be particularly important to me in view of

the fact that I consider the implication of the Leader of the Opposition as a reflection on my integrity, and I have no intention of engaging in partisan debate with the hon. gentleman at the present time.
There is no particular reason why the Leader of the Opposition should be aware of my presence in the House of Commons, nor is there any particular reason for him to be aware of the sentiments that I have expressed in and out of the house on the cause of national unity. But if he were in his seat this evening I would draw his attention to my remarks as they appear at page 2946 of Hansard of October 10, 1967, two months and a day ago. I mention this because my remarks were made about the party which he leads and about their recent Montmorency conference.


Edward Nasserden: Nonsense.


Bryce Stuart Mackasey: The hon. member should not show his prejudice on a subject as important as this, and he should take the advice given by the Leader of the Opposition the other night, that we should not play petty politics with an isssue this serious. Since I agree with what he said, this is precisely what I am trying to do this evening to convince the house this was not my intention when I spoke previously. On that occasion I said the following:
When at the recent Montmorency conference the Conservatives accepted in principle the theory that two nations exist in Canada, at least in the cultural sense. I welcomed this. I welcomed it because it represented to me the existence of many enlightened people in that party who were willing to stand up and indicate their willingness to endorse the necessary changes in attitude that must come before true unity in this country becomes a reality.
I went further, Mr. Speaker, and I think the following extract from my remarks made on that day have particular significance because again they were made as a tribute to the party opposite. I said this:
Certainly it took more courage on the part of members representing constituencies in the west or in the maritimes to openly endorse this concept than on my part or the part of other members who represent ridings in the province of Quebec.
I submit that these are hardly the words of a petty partisan politician who would use the cause of national unity for political reasons.
I suggest, at the risk of upsetting the hon. gentleman were he here this evening-and I say this in true humility-that I have no lesson to take from him or anyone else in the
December 12, 1967

house when it comes to discussing the question of national unity in Canada. The Minister of Finance, as well as the hon. member for Victoria, B.C. (Mr. Groos), made that point quite adequately when they took part in the debate on Friday.
I do not know what the Leader of the Opposition was saying about national unity in 1962, 1963 and 1964, and I do not know what legislation he was passing in Nova Scotia to help the minorities in that province, but I do know what I was saying both in and out of the house. It might be of interest to the hon. gentleman to know that during that period of time I had the opportunity to visit the excellent universities in his province and in the other maritime provinces. Certainly when I went to Nova Scotia I was well received there, and so was my message that tolerance and understanding should exist if Canada is to continue. The intention then, as it is today, was to point out to the country the fair and equitable treatment which I have received in the province of Quebec as one of the English speaking minority who was born in that beautiful province.
Time does not permit me to review all the speeches, or even a few of them, that I have made in the house on this subject, but I am sure the hon. gentleman, if he would take the trouble to look up my maiden speech made in the house in 1962, just a few days after I became a member of the House of Commons, would realize that five years ago I had no hesitation in speaking on this subject or in pointing to my own constituency as a perfect example and blueprint of what Canada in the future should be.
In 1963 I made some observations which may be of interest to the house, since they refer to the B and B commission, and which are set out at page 313 of Hansard of May 27, 1963. Before reading what I said, however, I might remind members of the house that four years ago bombs were exploding in the province of Quebec, and that, apart from Senator Lamontagne and myself, there were not too many people in the province of Quebec speaking against separatism or for the cause of federalism in that province. This is what I said at the time:
Rather than wait for the full implementation of the royal commission report, I think steps can be taken immediately to further the cause of bilingualism, at least in our senior civil service departments. I do not subscribe to the theory that all must be rectified by 1967. Certainly there is no magic date when all these differences of opinion must disappear. But I do think that confederation should at least mark the date of stocktaking, when
The Budget-Mr. Mackasey we can look back with pride to some improvement in the question of bilingualism and bicultural-ism. I think, Mr. Speaker, that every Canadian is duty bound to acquaint himself a little more with French Canada. Prominent Canadians found to their delight many years ago that a deep knowledge of French Canada, its culture, its language and its traditions is an exciting and fulfilling experience.
Further in that speech, referring to the constitution and to the royal commission, I said the following:
I remain one of the optimists as far as the future of confederation is concerned.
I should have said "constitution" instead of "confederation". Then I went on to say:
[DOT] (8:20 p.m.)
However, I believe confederation must be reviewed and its contents more clearly defined. It is important for us to remember that the terms of confederation will mean very little if there is not a desire to make them work, motivated by mutual respect and understanding. The desire for equality of opportunity, equality of language, must be earnestly desired by all Canadians and for all Canadians.
And these words, Mr. Speaker, were spoken three or four years ago. I continued:
It is not by isolation that Quebec will fulfil its destiny. It is not by retiring from confederation that Quebecers will realize the fulfilment of their economic dreams. The eventual and logical development of Quebec to the full richness of which Quebec is capable must come from within confederation. ... If, on the other hand, the commission on biculturalism is given an opportunity to function, if its report is analysed with an open mind, if the differences separating French Canada and English Canada are acted upon, then I feel Canada will eventually reach the greatness predicted for it by Sir Wilfrid Laurier.
The hon. gentleman referred to me as the official hatchet man of the caucus and of the Liberal party. That does not bother me particularly. I do not know whether that is a compliment or an insult; it would depend, I suppose, on the definition of hatchet man. I would confess to him if he were here this evening, again hoping not to upset this hon. gentleman, who upsets very easily I am afraid, that the Liberal caucus in recent months has been preoccupied with important matters, with budget considerations and with the cuts which the Minister of National Revenue spoke so eloquently about the other night.


Mr. Nowlan:: What about the survey,
Bryce?


Bryce Stuart Mackasey: It has been preoccupied with the C.B.C., with the international service and with all those other matters that
December 12, 1967

The Budget-Mr. Mackasey usually take up the time of the caucuses of both sides of the house.
Frankly, and I wish to say this in as nonpartisan way as possible, the impact that the hon. gentleman has made on the house so far has not been so impressive that the caucus has felt that any extraordinary tactics are called for to offset that effectiveness.


Mr. Fulton:: How clever that is. The time will come when the hon. member will wish he had not said that.


Bryce Stuart Mackasey: I can assure the hon. gentleman that if that time should come, character assassination will not be indulged in by this party. There are hon. members in the opposition who have felt, perhaps, that I deserve a better label than that of a hatchet man. In 1964, after a speech that I made in the house-and frankly I do not recall whether two of my good friends in the opposition who have been making remarks were in the house in 1964-after a speech, incidentally, in which the term "English separatist" was first coined and after a speech in which I defended the right of anyone to be a separatist, provided he did not resort to violence in fighting for his cause, the hon. member for Queens (Mr. Macquarrie) made certain observations, and they appear at page 9479 of Hansard. For the benefit of my hon. friend who is taking notes, I will repeat that: They appear at page 9479 of Hansard. These are the words of one who is highly respected in this house. That hon. member's opinion, I understand, is highly valued and sought by the Leader of the Opposition. The hon. member for Queens said these words on that occasion-and this is his language: If it is flowery I ask hon. members to remember that we all have our own peculiar style.
Mr. Chairman, I should like to begin by congratulating the hon. member for Verdun on his wise, reasoned, reasonable, very sound and very eloquent remarks which he has addressed to a profoundly important subject.
The subject, if I may remind the house, was national unity.
In the manner of his delivery he demonstrated that he is indeed gifted, as are most Irish folk, with great felicity of phrase and it was a pleasure to hear him.


Some hon. Members:: Oh, oh.


Bryce Stuart Mackasey: My good Irish friend across the way has the same charm. He does not use it as often as I try to use mine; that is our only difference. I continue:
I remember his leader, the Prime Minister,-

He was referring to the present Prime Minister.
-saying some months ago, when the hon. member for Three Rivers spoke eloquently in French on a similar subject,-
That hon. member was Mr. Balcer, as the house may recall.
-that the voice of moderation and reason must be heard in this house and in this country both in English and in French.
The hon. member for Queens continued:
I think today, Mr. Chairman, we have heard in English a most sound and valuable discourse on the subject to which we all must give our very best not only of attention but of effort.
Speaking on a serious note, Mr. Speaker, I should like to think that those words that were spoken by the hon. member for Queens over three years ago are still applicable to me today. If I ever thought that it was necessary for me to use the subject of national unity for political partisan purposes-and I hope that hon. members of the opposition will believe that I speak seriously-I should prefer not to be a member of the House of Commons.
I might also draw to the attention of hon. members of the opposition, and to the hon. member who is not here, the words that were spoken on my behalf by an honoured and respected member of the opposition, a former whip who now sits in the Ontario Legislature, the former member for Grey-Bruce, Mr. Winkler, who gave little quarter in debate and asked for none. He said, as reported on page 9497 of Hansard:
I am thinking also this evening of the words expressed by the hon. member for Verdun.... I think the hon. member for Verdun did a very commendable job this evening in presenting a sane, fundamental argument with regard to the problem that is before us. He did not over-emphasize it; he did not underscore it. He did not make it a sensational thing, he just brought the seriousness of it to the attention of the house. I feel that perhaps, in so far as this problem is concerned, this is the approach that we should take. I say again that I am pleased the hon. member for Verdun made that contribution this evening.


Mr. Churchill:: That is a funny one.


Bryce Stuart Mackasey: These are not words about national unity that were spoken yesterday, last week or three months ago. The remarks which I have quoted were made in the house three years ago.
I do not intend to quote the remarks of more members of the opposition, though it is tempting indeed to quote the present right
December 12, 1967

hon. member for Prince Albert (Mr. Diefen-baker), who felt no inhibition in congratulating me in this house for my contributions in debate. He is a member of the House of Commons, a House of Commons man, and he has often pointed out how mild is the language that we use in this house as compared with that used in what he refers to as the Mother of Parliaments.
In conclusion, Mr. Speaker, I must point out something that has gone relatively unnoticed in the remarks that the hon. gentleman made on Friday. As I said at the beginning of my remarks, if the hon. gentleman seriously presumed from my remarks of Thursday evening that I was trying to attack him with the smear of separatism, that was not my intention. I say this and give my word as an hon. gentleman.
What puzzles me is his reference to the alleged fact that I made, not one attack on him, but two. The only other time I have mentioned the hon. gentleman has been during a debate on a supply motion, and if I recall that debate, the hon. gentleman seemed to be enjoying the mood of the house. I might ask him to look at the appropriate pages of Hansard. One can often tell the mood of the house by the humour of the interjections, including those of the hon. member for Winnipeg South Centre (Mr. Churchill). I did not at that time intend to attack the hon. gentleman, nor did I attack him. If the hon. member feels, after reviewing the references that I made to him during the supply motion debate, which he seemed to enjoy, that my remarks constituted an attack on him, then I suggest it is time that he got acquainted with the level of debate in the House of Commons.
[DOT] (8:30 p.m.)
There cannot be two sets of rules in this house, one for the hon. member and another for the rest of us. In conclusion I would say-and it is not too often that I pay tribute to my good friends in the far corner-that if any have been subject to my aggressiveness-call it that for want of a better word____
in the House of Commons, it has been the New Democratic party and its spokesman; and I may say that in all the years I have been here I have made them my special target, possibly because my philosophy is much closer to theirs than it is to the philosophy of hon. members directly opposite. But never once have they accused me of resorting to a personal attack as members of what I refer
The Budget-Mr. Hees
to as a gallant little band of misguided socialists.


Stanley Howard Knowles: You are getting into hot water, now.


Bryce Stuart Mackasey: Perhaps the Leader of the Opposition needs to develop a sense of humour, and this no doubt will come out in time. But just in case he was being serious in referring to me as a hatchet man, let me tell him that from my observations during the five years I have been here, with very few exceptions members are not destroyed in the House of Commons: They destroy themselves.


George Harris Hees: We
are being presented at this time with what the Minister of Finance (Mr. Sharp) called an anti-inflationary budget. The hon. gentleman has told us that the economy has become "overheated" and must be "cooled off." You and I, Mr. Speaker, know that, in layman's language, this phrase simply means that the government has decided deliberately to create unemployment by withdrawing purchasing power from the taxpayers of this country, through the imposition of a 5 per cent extra tax on personal incomes.
Eighteen months ago the government introduced another anti-inflationary budget. At that time it imposed a 5 per cent refundable corporation tax. This was a fair anti-inflationary measure; it took 5 per cent of the profits which industry had accumulated during the year and, because the government felt there was a great deal to be feared from the spending of too much money in Canada at that time, it set aside the revenue derived from this tax, put it on ice, and promised to pay it back to the corporations within three years at a time when it considered that inflation did not pose a threat to the economy.
As I say, this was a fair anti-inflationary measure, and we know that the treasury will begin to pay back this tax to the corporations next June.
Today, however, in this so-called anti-inflationary budget, we are seeing the imposition of another 5 per cent tax, but this time it represents an increase in personal income tax levied on the people of this country-and it is no refundable tax; it will not be set aside, kept on ice, and paid back to the people when inflation is no longer a threat. No, this money will be spent by this government just as fast as it is paid in to the government's coffers. This tax is not anti-inflationary. On the contrary I intend to show that it is very much an inflationary tax. And it is a tax

December 12, 1967
The Budget-Mr. Hees
which is being demanded by this government because this administration has overspent drastically during the last four years; it finds itself today in a desperate financial situation, and this burden is being imposed on the Canadian people because hon. gentlemen opposite do not want to be forced to go to the bond market once again in the very near future. This money is being taken from the Canadian people in order to pay for government overspending. The tax we are considering is no more an anti-inflationary measure than I am. It is a measure to helieve the Minister of Finance and his colleagues, because they are under serious financial stress.
This tax is an inflationary tax. You and I know perfectly well, Mr. Speaker, that from this point on as soon as the unions begin to make their demands to the corporations for which they work, the amount of this tax will be included in their claims, in addition to anything else they expect to receive. As a result, this tax increase will be added to the cost of production, like any other cost, and passed on to the consumer, and it will raise prices to that extent. This 5 per cent tax is an inflationary measure, and this budget is not an anti-inflationary budget; it is an inflationary budget.
The government tells us we are being taxed because we have been overspending. Let us examine just what the government itself has been doing in this regard. What has been its record in connection with the spending of the taxpayers' money? In the last budget which the Conservative government presented, the budget of 1962-63, the country, through its government, spent $6,570 million. In the budget presented for the present fiscal year, 1967-68, we shall spend at least $9,646 million. Thus, in the four years during which this government has been in office, government expenditure has been increased by more than $3,000 million, or 47 per cent. And to show that they have not lost any of their skill in overspending, figures for the first seven months of the year, the latest period for which information is available, show that the increase in government expenditure amounts to 15 per cent. This illustrates the extent to which a government which is lecturing us on overspending is itself overspending, and thereby has created a situation, from which it hopes to extricate itself by the tax measures imposed on the people, as set out in the budget of a few days ago.
The government claims, through its Minister of Finance, that it intends to do a great deal in the way of cutting expenditure. We
[Mr. Hees.l
were told it intends to set an example by cutting down expenditures, both in the present budget for 1967-68, which does not expire until March 31 of next year, and in next year's budget as well.
[DOT] (8:40 p.m.)
On November 2 of this year, Mr. Speaker, as noted on page 3775 of Hansard, I asked the Minister of Finance (Mr. Sharp) the following question:
I have a question for the Minister of Finance. In view of the minister's letter to the provincial treasurers, tabled in this house yesterday, in which he said-
I quoted the words in his own letter.
"We in the federal government have already re-assessed the spending programs and the lending operations of government departments and agencies-*"
Note these words, Mr. Speaker.
"-for the balance of the current fiscal year and for next year."
Then I went on to ask:
Will the minister advise the house when he intends to announce the reductions in expenditures for the present fiscal year which are to result from the re-assessment he has made?
The Minister of Finance replied as follows:
As I have said on a number of occasions, it is my intention to do so shortly.
In other words at that time, Mr. Speaker, he said that shortly he would outline not only the expenditures which they intended to cut in the budget of 1968-69 but also in the present budget of 1967-68.
Two weeks later I asked him in this house when he intended to make this announcement, and again he said he would do so shortly. Then, Mr. Speaker, we had him deliver his now famous budget message and I, like all other members, sat in this house and listened to hear him specify the cuts which he intended to make in the present budget, the cuts which he had said in this house he intended to make and that he would outline in the house for members to hear. I listened to that budget and, as we all know, he did not mention one single cut he intended to make.
The next day in the House of Commons I asked the minister whether, in view of the fact that he had assured us he would make this announcement and give us this information, he would give it to us then. His reply was that his colleague, the Minister of National Revenue (Mr. Benson), who is also the President of the Treasury Board, would
December 12, 1967

be outlining these cuts in detail when he made his speech in the budget debate.
So, Mr. Speaker, we listened with great interest to the speech which the President of the Treasury Board made in this house a few days ago. I listened to it. All members listened to it. Did we hear that minister mention one single reduction which he intended to make in the present year's budget, as had been promised to us by the Minister of Finance? No, Mr. Speaker, we did not. He did not mention the budget of 1967-68.
I have his speech here in my hand, because I could not believe my ears. I thought I must have missed something. I read his speech, page by page, line by line. There was not a single mention of anything in his speech dealing with the budget of 1967-68, the budget in the expenditures of which the Minister of Finance had assured the provincial treasurers, and had assured this house that he intended to make substantial reductions.
Mr. Speaker, this government is developing the same kind of thing from which President Johnson is suffering in the United States. It is beginning to suffer from a credibility gap. We are getting to a point where we cannot believe the word of ministers who stand up and state one thing and obviously do not mean what they say.
I had a similar experience a few days ago with the Minister of Manpower and Immigration (Mr. Marchand). I asked him a question regarding a speech he had made in Toronto to the Liberal association in Spadina riding, in which he was reported as saying that the reason the manpower training program had been held up was because of lack of action on the part of the provincial governments. I asked him, in view of what he had said in that speech, just which provincial governments had held up this program, and in what way? In a very haughty manner he stood up and said he had announced this in detail a few days previously in the house. I did not hear him on that previous occasion, and so I phoned his office. I asked them to send me a copy of the issue of Hansard, marking the statement in the speech which he had told me he had made in the house, so that I could check it. His office sent me the issue of Hansard. They marked the page very carefully but, Mr. Speaker, there was not one word dealing with what the minister told me he had said in this house-not one word; and this was his own department which sent me Hansard, and his officials had done the marking.
The Budget-Mr. Hees
We are getting to a point where we are not only getting rotten government from this government but we are getting statements we cannot believe, because they say things that are not true. These two ministers have told me definitely on various occasions that certain things were so, and on checking I have found they were not so.
There is a definite credibility gap developing on the part of this government, and that is a very serious thing indeed. Always up to now-and I have been in this house for 17 years, during which time I have sat opposite governments and I have been a member of governments-I have always been able to believe what ministers of the crown said on the floor of this house to members of parliament. Now we are getting to a point where we cannot believe what members of this government say. It is one thing to get inefficient, rotten government, but it is another thing to have this house misled, and I believe it has been deliberately misled by the two ministers I have spoken about this evening.
The President of the Treasury Board made a great many claims about what he considered to be great savings that he would be making in the 1968-69 budget, the budget which will be brought down next spring. Mr. Speaker, when you have been around here for a while, particularly if you have been a member of government and know the procedure that goes on every year when ministers submit their estimates to Treasury Board, you can understand what a farcical, ludicrous and fantastically amusing statement this public relations document I hold in my hand is, one which was probably produced by the public relations firm hired by the Department of Finance to function at public expense.
Anybody who has been a minister in a government knows perfectly well that every department every year-and this has gone on ever since parliaments began, and I am sure will go on as long as parliaments exist- brings before Treasury Board a list of everything-and I mean everything-that the departmental ministers would like to do for the good of the country, the good of the people of Canada. And these things are good things. A lot of them cost a great deal of money, but in the mind of a department and of the minister in charge of it they are good things and desirable things.
But, Mr. Speaker, they can only be introduced as part of a system of priorities. It is the job of the Treasury Board to decide what those priorities are. Every year any minister

December 12, 1967
The Budget-Mr. Hees
who has ever gone before Treasury Board has had ten, twenty, thirty, forty or fifty millions of dollars worth of possible expenditures lopped from his estimates, simply because the Minister of Finance, and through him the President of the Treasury Board, have decided that the government cannot afford to do these things at that time.
Every minister knows that a cabinet meets well before the budget is prepared. They decide what can be the total expenditure allowed, in view of the financial situation of the country at that time. The Minister of Finance then allots a certain over-all figure to each department, and they cut their coats according to the cloth available. Any good minister of finance cuts his series of coats to the cloth that is available to the government. That has always been done.
I would say, certainly while I have been here, that under Mr. Abbott, Mr. Harris, Mr. Fleming and Mr. Nowlan-those four ministers of finance anyway, and I am sure the ones before them-made the kind of cuts this government is making in the 1968-69 estimates, or cuts very close to them. But the reason these seem so fantastic to this government is obviously that the presidents of the Treasury Board in the past four years have simply not been able to bring themselves to cut expenditures down to what the country could afford to pay at that time. They have not been able to say, "Certainly they are things that are very desirable, but they must wait until we have the money to pay for them." As a matter of fact, Mr. Speaker, these Treasury Board ministers, these finance ministers seem to me to be very much the same sort of people as that very charming character, the girl who played the part of Ado Annie in the famous musical "Oklahoma," and sang the charming song entitled "I'm just a Girl Who Can't Say No." That is what they are; they are Ado Annies; they can't say no. The first time they are forced to say no they become so excited about it that they obtain a public relations firm to write a great speech saying that what they are doing is something new, whereas it is only something which has been done by every conscientious finance minister who ever held office in this country.
[DOT] (8:50 p.m.)
Now, Mr. Speaker, let us have a look at the part this government has played in creating the inflation we are being taxed for today. As anyone in business knows, late in 1964 there appeared in this country a very

marked shortage of skilled workers. That shortage of skilled workers became more acute because this government did not have the foresight to enlarge sufficiently the facilities we introduced in 1961-62. These facilities are to train additional skilled workers to enable our factories, as we move into the automation period, to have the skilled workers they require to keep the factories producing. This government also did not, by means of immigration, bring in additional skilled workers to fill the gap. For that reason we were short of skilled workers. Therefore our factories could not produce up to the demand for goods which the affluent society required, and prices started to rise abnormally.
Mr. Speaker, you and I know that inflation is caused when too much money chases too few goods. There are two ways to cure inflation. The first is to reduce the amount of money available to chase the too few goods, but the positive way is to increase the supply of goods available for the money to chase. I am sure you, Mr. Speaker, because you are a very knowledgeable gentleman and I, would expect this government to adopt the negative method they have adopted. They reduced the amount of money available to buy the goods. They imposed a tight money policy upon this country. This tight money policy made it impossible for producers to enlarge their plant and purchase more equipment, whether they are on the farm, in a factory, in a store or wherever it might be. They could not buy the additional machinery and expand their plant so that they would be in a position to keep up with the demand for their goods. So, once again, prices began to rise abnormally.
Inflation began to take hold in a very serious way in this country. Because this government would not increase the training facilities sufficiently and would not bring in sufficient people through the immigration stream to fill the need for skilled workers, they imposed a tight money policy and inflation steadily increased in this country.
Then we move along to June of 1966. We find that the government stepped in with regard to three labour disputes, and imposed its will. The three labour disputes of which I speak are the wildcat strike of the dock workers of Montreal, and the threatened strikes on the seaway and in the C.B.C. The government intervened and imposed a 30 per cent wage increase in each case. This accomplished two things:	First, these wage
increases greatly affected all wage settlements that were made later. It is a well known fact that, at the time, the railway
December 12, 1967



workers were in the process of negotiation, and were ready to sign an agreement involving a 19 per cent wage increase. However, when they heard of the 30 per cent increase which the government had given the dock workers, they decided that 19 per cent was not enough. Eventually as you and I know, Mr. Speaker, they were awarded a 24 per cent increase.
Second, because of the government's intervention in the case of the dock workers' strike, by dealing with those who were engaged in an illegal work stoppage they made a wildcat strike legal. This government did not impose any penalty on the members of the union for going out on a wildcat strike. In fact they awarded them a 30 per cent wage increase. Therefore in addition to causing wage demands to be greatly accelerated, which has resulted in the fact that this year, for instance, wage increases in this country have averaged 8.7 per cent compared to 4.4 per cent in the United States- and you cannot compete with your greatest competitor if your wage increases are double his-this government, by stepping in and dealing with a wildcat strike and thereby making it legal, has greatly weakened the influence of good labour leaders who conscientiously try to stop their union members going out on a wildcat strike, or asking for wage increases which are not justified by increased productivity. Once again by these actions this government has increased inflation.
One of the costs of production is the cost of money. If the people of the country have confidence in the government, then the government is able to borrow money at reasonable rates of interest; if not, the rate goes up. The people of this country have lost confidence in the ability of this government to handle its financial affairs. They also know that probably every few months the government will find it necessary to go to the bond market again to ask for more money. So, because of the lack of confidence they have in the government, and because of the fact that the people of Canada know the government will come more and more frequently to the market for money, they have held off time and again, in the knowledge that if they hold off they will receive a higher rate of interest on the money they lend. This is what has caused the cost of money to rise to such a high degree that in this country we have at the moment the highest rate of interest in history, and bonds are at their lowest prices in 40 years. Since interest rates, and hence
The Budget-Mr. Hees
costs, steadily rise, inflation continues to rise also.
So we see that this government, which is taxing the people of Canada for inflation, is largely to blame for that inflation and, for the following reasons: First, they neglected to expand the manpower training facilities sufficiently to provide enough skilled workers so that our producers would be able to expand their production to meet the demand. Second, they imposed a tight money policy on the country, which has made it impossible for producers to expand their plant and equipment sufficiently to meet the increased demand for their products. Third, by intervening in labour disputes, and imposing 30 per cent wage settlements, they set an example which caused wages in Canada to increase at a rate of 8.7 per cent during the past year, compared to 4.4 per cent in the United States. Fourth, by rewarding a union which was out on a wildcat strike with a 30 per cent wage increase, they have undermined the influence of conscientious union leaders who attempt to restrain their members from going out on a wildcat strike, or demanding increases in wages which are not justified by increased productivity. The fifth reason that the government is to blame for this inflation is that by increasing government expenditures nearly 50 per cent during the past four years, and creating excessive demands on the bond market, they have caused the cost of borrowing to reach the highest level in history.
[DOT] (9:00 p.m.)
You and I know, Mr. Speaker, that prosperity depends on the ability of a country to sell its goods in competition at home and on the export market. If costs rise abnormally, then selling prices will also rise abnormally. I have outlined in detail what this government has done to make costs rise and therefore to make selling prices rise.
As we know, the Kennedy round of tariff negotiations will come into effect on January 1 next. For that reason, competition here in Canada will become very much more difficult in the months ahead. Competition will also become more difficult because of the devaluation of the pound in Great Britain. Because of that devaluation, Canadian goods will be 15 per cent more expensive on the British market and British goods will be 15 per cent less expensive in Canada. These will be very important factors in our trading patterns in months ahead.
December 12, 1967

The Budget-Mr. J. R. Tremblay
Unemployment in this country in the past 12 months has already increased by 20 per cent, and by some 14 per cent during the last tour weeks for which figures are available. Freight carloadings, which represent a very accurate measure of the prosperity of a country, are down 6 per cent during the past 12 months. If we do not increase productivity very materially and very soon, and if we do not keep taxes from rising, and if this government does not control its spending, we will face exactly the same situation which caused the economic crisis in Great Britain a few weeks ago.
This government at this time appears to be singularly incapable of meeting the demands made upon it to do two things, to give leadership, and to solve problems which are becoming-


The Acting Speaker (Mr. Tardif):: Order, please. I regret to inform the hon. member that his allotted time has now expired.


George Harris Hees: I expect that within a minute or two I can conclude my remarks.


An hon. Member:: Let's give him two minutes.


The Acting Speaker (Mr. Tardif):: Does the house give its unanimous consent to the hon. member's request?


Some hon. Members:: Agreed.


George Harris Hees: I thank you very much, Mr. Speaker, and hon. members of the house, for the courtesy of allowing me an additional two minutes to conclude my remarks.
Let us have a look at the future. What do we see? We see another increase in taxes in the spring to pay for medicare. Based upon the record of this government we will have an additional increase in taxes to cover the cost of this government indulging in increased spending. If taxes are increased they will be passed on to the people in the way of increased prices of goods. This is inevitable because labour demands higher wages to offset tax increases. We all know that commodity or corporation taxes are immediately passed on to the people in the form of higher prices. In the future we can see nothing but a very difficult situation developing.
Now is the time when all Canadians are looking to the government to give leadership in order to maintain economic health, productivity and employment. We do not seem
[Mr. Hees.}
to be obtaining this. All I can say in conclusion is that this government has become a tremendous disappointment to this country. All one can say for this government is that it has at least become a great social asset. Just before the Christmas holiday, we all gather together at this time in celebration of this festive season.
At the various gatherings which take place during this time one has only to mention this government to get people laughing. Those who do not laugh burst out crying. In any event one can get action in this way.
Let me suggest to the government that it should use the opportunity to provide leadership to meet the needs of these difficult times. If the government cannot do this it should get out of the way to allow some others to take over who can provide this leadership.


Mr.   Jacques-R. Tremblay@Richelieu-Vercheres: Mr. Speaker, I thank you very much for this opportunity to express my views on this matter. I am very grateful to those who are responsible for allowing me to sit in this house, and make my modest attempt to enumerate some points. I shall first set out my views regarding the wisdom of our fine Minister of Finance (Mr. Sharp). Following that I shall make some observations about the speeches of hon. members opposite; and finally I shall offer a few comments about the crucial matter of constitutional affairs.

Mr. Speaker, I should like to call the attention of the house to the negative criticism aimed at the constructive and honest labour of the Minister of Finance (Mr. Sharp).
It is not necessary to be a veteran in politics to realize that the remarks of my colleagues opposite are filled with superficial arguments, and I suggest that such remarks which sometimes unduly waste the time of the house constitute a perfect sample of political electioneering.
The Leader of the Opposition (Mr. Stanfield) even tried to project his image to the Canadian people with statements that have likely missed their mark. Last Thursday, he tried to impress his own gallery, that is 46 hon. members, or half his manpower and, between us, Mr. Speaker, it was not very gallant.
The hon. member for Colchester-Hants will not bear a grudge if I remind him of the calm, affable but firmly determined
December 12, 1967

tone of voice in which the Minister of Finance stated his case.
Those wise positions taken by the great accountant of the government have naturally carried back my hon. colleague to a quite recent past, when he was responsible for the budget of a province which, by the way, I find more attractive, especially since the arrival of my hon. friend in this house.
He may have relived some tense moments he had already experienced, and this is the reason for the weakness of his arguments and his ability to elude questions, in order to cheer up his partisans a little.
His financial critic had to resort to traditional expressions, to hackneyed phrases of political gatherings in order to give an appearance of justification to a non-confidence motion that he would not have submitted to the house had he entertained the least doubt about being able to defeat the government.
Mr. Speaker, the Canadian people no longer fall for that type of game. They are concerned with adopting a mature attitude and assuming their responsibilities, in stride with their government, to reach a common objective: a balanced national budget in the context of a progressive and deflationary economy.
My colleague for York South (Mr. Lewis), whose office is one of the best equipped in Toronto, took it upon himself, in a speech made last Wednesday, to request the cancellation of our defence programs. I quote his words, as they appear on page 5126 of Hansard for December 6, 1967:
[DOT] (9:10 p.m.)

I suggest, as my leader suggested on November 20 in this house-
This is the hon. member for York South (Mr. Lewis) who is speaking, of course.
-that we should postpone the construction of the two support ships and drop the purchase of the CF-5 aircraft. If all these things were cut out we would avoid unnecessary expenditures in the large amount of $500 to $000 million. I do not wish to go into the details of this now, because there will be other opportunities to do that.
and so on.

Once again, the serious nature of such a suggestion may be rightly questioned, as my hon. friend is well aware of what those cuts may entail; indeed, he knows it very well, if only through his affinities with labour
The Budget-Mr. J. R. Tremblay unions. He knows the tragic consequences for thousands of Canadian families that may ensue from the postponement of those defence production programs. Only in my riding, the result would be disastrous for at least 3,000 workers, not including the subsequent slow-down of our regional economy. As it happens, the same effects would be felt in the constituency of Levis.
Now, let us multiply those consequences by the actual number of naval yards in our country, and we will realize the shocking number of workers who would be made jobless through such an irresponsible action. I suggest that this attitude of the hon. member for York South concerning the welfare of the workers of our shipyards and aircraft plants denotes a lack of concern for the working classes.
Mr. Speaker, I do not want to draw a psychological parallel between the hon. member for York South and the leader of the sovereignty movement in Quebec, who also referred to national defence but in other words, of course, and with a lot of television publicity. In fact, a complete crew of C.B.C. technicians and reporters all last week followed in Seven Islands, in the riding of Saguenay, this idol with clay feet who described as a "damn foolishness" the maintenance of military personnel who, as he said, "drag around Europe".
Moreover, Mr. Speaker, his favourite expression, when referring to the members of the armed forces, is:	"Social welfare in
uniform".
Mr. Speaker, I take advantage of this intervention to rise before the Canadian people in order to protest against such a flagrant lack of respect toward those who have served and who now serve in the Canadian armed forces. I protest indignantly against this attitude on behalf of the families of those who gave their lives to defend our civilization and on behalf of the thousands of workers who make a living by working in aircraft plants, in defence production plants and in shipyards all over the country.
Let us be serious and let us learn to be opportunists without endangering the livelihood of our citizens and without insulting the Canadian people. Drastic measures which are applied equitably, such as the ones advocated by the hon. Minister of Finance, are acceptable in view of what is at stake.
In my humble opinion, after having read everything I could on the subject, I notice that only demagogues and politicians who
5350	COMMONS
The Budget-Mr. J. R. Tremblay subsist on "electoralism" manage to throw discredit on the fiscal policy presented in the house.
It goes without saying that Canadians as a whole are fully aware of an inflationary trend which is caused, as everyone knows, by an excessive increase in expenditures compared with the increase in productivity and revenues. This inevitable cycle is the price we have to pay for a prosperity which is sometimes self-suggestive and which prompts us too often-if I may jest about that-to put a grand piano and velvet drapes in a log cabin. The American giant which casts its shadow over us can probably afford luxuries which we have to do without.
Mr. Speaker, which one of us can accuse the other of being directly responsible for this rather alarming situation, in view of our high standard of living. I humbly submit that the present circumstances must incite us to choose rather than endure those disciplinary measures, and here is what the Minister of National Revenue and President of the Treasury Board said.
My remarks are in a vein similar to that of a large company which must from time to time review its administrative policies and its fiscal activities. This review of priorities and the adjustment of expenditures are made from a budgetary angle which invites us to live within our revenue. Radical decisions are called for to ensure continued progress. We must seize the opportunities which we have in the future and invest more in these, while cutting things which appear less important.
Mr. Speaker, we should greet the words of the minister in a spirit of elementary philosophy and practical sense.
A short review of the achievements of the government reveals a remarkable improvement in the Canadian living standard: the national pension plan, the old age assistance program, additional pension for old age security, student allowances, increased aid to the universities, manpower mobility, manpower retraining, subsidies to stimulate industry, water pollution control and countless other measures to improve the standard of living of Canadian citizens and to give them the second highest standard of living in the world.
Practical measures of national import such as the Canadian flag, the Centennial, Expo '67, Man and his World that has revealed to the whole world the capacity of our people, of a strong and dynamic nation.
Mr. Speaker, in such a brief analysis in the context of a fiscal adjustment, there is, naturally, a place for emotional considerations,

DEBATES	December 12, 1967
but reason argues for objectivity, practical sense and moderation and that is what I am striving for when I think of the recommendations of the report on bilingualism and biculturalism in Canada.
[DOT] (9:20 p.m.)
Recently, the hon. Minister of Manpower and Immigration (Mr. Marchand) stated that:
The independence of peoples prevails over the independence of states.
This is a resounding statement which describes perfectly the present reality. If a man like the Minister of Manpower and Immigration-"a prolific honourable man", as he was described by the hon. member for Kootenay West (Mr. Herridge)-if this French Canadian, who has devoted twenty years of his life to promote the welfare of Quebec workers, is able to be optimistic with respect to the application of these recommendations of the royal commission on bilingualism and biculturalism-frankly, they are worth much more than those of the separatists and the "sovereignists"-I do not hesitate in saying that, as a Canadian citizen, I want to flourish and prosper with my family and my fellow Canadians in a bicultural and, above all, an economically sound Canada.
The premier of Quebec himself, when he was leader of the opposition, congratulated the federal government about its decision to set up the Laurendeau-Dunton commission. Today, he is in authority and he states that this report might bring about agreements with Ottawa. The same day the Secretary of State for External Affairs (Mr. Martin) said that this report would be discussed at the federal-provincial conference in January 1968. What more concrete plan could we ask for to work toward the unification of Canada?
Mr. Speaker, the constitutional climate is improving, needless to say. We are seeing at last the first rays of hope which are the antithesis to the pessimistic utterances of those who want to give Quebec to the United States at any cost, because it is well known that the gist of their separation or sovereignty thesis is to advocate the isolation of a province while serving an ultimatum on the rest of the country.
I do not think, Mr. Speaker, that Canadians look to that formula to achieve the unity of the nation. Fortunately for this house, the Laurendeau-Dunton report was tabled only after the election of the new leader of the loyal opposition. Now, we know, alas, how
December 12, 1967

the hon. member for Prince Albert (Mr. Dief-enbaker) feels about the subject. On the contrary, and this is all to his credit, the hon. member for Colchester-Hants, his successor expressed very positive opinions, as did also the hon. members for Burnaby-Coquitlam and Villeneuve (Messrs. Douglas and Caouette). With regard to the hon. representative for Fraser Valley (Mr. Patterson), he expressed his assent, while making a few reservations, when the report was tabled. Those almost unanimous feelings, justify the hope that serenity will reign at the meetings on the orientation to be given the destiny of our country.
My most sincere wish is that the Lauren-deau-Dunton report will make English speaking Canadians aware of the Quebec fact, how it wants to become resolutely integrated with its language, its culture and its economy, to the rest of Canada, and take an active part in our national decision-making bodies.
Yes, I am an optimist. As a Canadian from Quebec, I am used to concessions, on the cultural level; I am willing to make that ultimate attempt. I will do my utmost with my limited means to help the cause of Canada, but I am convinced that the great task now rests on the good will and the courage of my English speaking fellow citizens.
Are bilingualism and biculturalism Canada's last chance? I should hope not, Mr. Speaker, because if that constitutional question is not reasonably and equitably settled, our Quebec will be taken over by you know who and, eventually, the giant who holds that $10 billion mortgage in our country will only have to cross the border to recover his property, or else.
Mr. Speaker, those perspectives will never materialize, I hope, and I should like to conclude my remarks by stating my confidence in our parliament, our government, our Canadian people and the courageous people in my riding who conscientiously toil in progressive industries within a favourable and beneficial economic framework from which they do not want to be divorced. Therefore, I am repaying them today this loyalty with which they have chosen to honour me.


Malcolm MacInnis: It is regrettable, Mr. Speaker, that the remarks that I have to make this evening cannot be made for the ears for which I intended them. The Prime Minister (Mr. Pearson) has shown a deep concern about the
The Budget-Mr. D. Maclnnis economic plight of Cape Breton, as has the Minister of National Health and Welfare (Mr. MacEachen). The minister of mines, too, has shown some concern, and I should like to put my remarks before all those ministers, as well as all government members. I should like to put my remarks before the Minister of Finance (Mr. Sharp), who is also absent; the Minister of Forestry and Rural Development (Mr. Sauve), who is absent as well. My remarks this evening are directed to these absent ministers. In fact, I regret very much the fact that government benches are so empty there are only three ministers present out of the 26.


An hon. Member:: How many are over there?


Mr. Turner:: I rise on a point of order, Mr. Speaker. I believe most ministers mentioned by the hon. member for Cape Breton South have been in this chamber on several occasions during the afternoon and evening. If the hon. member is going on a counting spree, he should count the three members on the front benches of the opposition.


Malcolm MacInnis: I thank the minister for drawing this to my attention. I should like him to understand this point: It is the cabinet that is responsible for the administration of this country.


An hon. Member:: Why don't you let them do it in peace?


Stanley Howard Knowles: You mean they are dead?


Malcolm MacInnis: It is to
the members of the cabinet who are absent this evening that I wish to direct an appeal on behalf of the economy of Cape Breton. It has been pointed out to me that I made a mistake and there are four ministers present.
I must apologize.
I should like to make some reference to the Minister of Finance who, when he was presenting his budget, adopted as his own the words of a former minister of finance who was a minister away back in 1868. He adopted these words, as recorded on page 856 of Hansard for June 1:
Now, sir, I would not wish it to be supposed that, in calling attention to these indications of the future prosperity of the country. I am desirous that we should rush into undue expenditure. On the contrary, I say that we ought to be most careful in our outlay, and consider well every shilling we expend.
5352	COMMONS
The Budget-Mr. D. Maclnnis
He goes on to say:
I trust that whatever government may be in power, the people will demand at its hands a thrifty and economical administration of public affairs.
I claim that we who now occupy these benches have shown a desire to follow that course.
We will give him "E" for effort and desire, but the results are lacking. The government, and especially the Minister of Finance, have so botched the financial affairs of this country that only last week the minister had the audacity to say in the house that the economists in this country are a confused lot. These are the words of the Minister of Finance-that he considers all economists in this country are confused. What has this government done? Waste, waste, waste.


Mr. Stafford:: Will you cite the page number, please?


Mr. Maclnnis (Cape Breion South):: There is no reason why I should do the hon. member's research for him, especially if he does not have the interest to follow the statements of his own Minister of Finance. Why should I draw his attention to what has been said?
[DOT] (9:30 p.m.)


An hon. Member:: Give us the page. The hon. member probably cannot find it.


Malcolm MacInnis: It is
page 5038. Let us see whether hon. members can find it, and let us hope that in the future they will pay attention to what the Minister of Finance says. He said that economists in this country are a confused lot. What has the government been doing? In the past two weeks it has deliberately wasted seven or eight days of the valuable time of the house, and yet they have told us that to waste time is to waste money. They have wasted time debating an issue which had already been settled and over which those who opposed the government point of view had absolutely no control. The government was in complete control of the situation, and for seven or eight days they wasted time and money debating a matter which had already been settled by the house.
It is difficult for me to appeal to the government, most members of which are not present and are not paying any attention to matters which should be given priority. They have not given priority to those matters which deserve it, and yet the Minister of Finance has the audacity to say that economists in this country are a confused lot and that this country is in good hands while he fumbles and bumbles around. This is the

DEBATES	December 12, 1967
second Minister of Finance in this government who is fumbling and bumbling around. They got rid of the last one. He brought in a budget, and what did he do with time and money? We wasted day after day and week after week, but finally we got rid of the budget he brought in and eventually got rid of the minister himself. I have heard appeals from this side of the house asking the government to put their shoulders to the wheel and to smarten up. The first thing they should do for this country is to get rid of the present Minister of Finance whose egotism leads him to state that no one knows anything about finances but himself.
When I started to speak, Mr. Speaker, I said I wanted to make a special appeal to the Minister of Finance, the Minister of Trade and Commerce and the Minister of Forestry and Rural Development. I chose these three ministers because I have it from good authority that in the government the Prime Minister, and certainly the Minister of National Health and Welfare, are both very concerned about the economic plight suffered by Cape Bretoners.


An hon. Member:: Nonsense.


Donald MacInnis: The remark that was just made from across the floor is an indication of what hon. members on the other side of the house think about the people in Nova Scotia, and the plight they face. I think the hon. member should rise and apologize, not to me because I can take it, but certainly to the people of Cape Breton. First and foremost he should apologize to the Prime Minister and to the Minister of National Health and Welfare, who have shown the same concern for people in that province as I and other members on this side of the house have shown.
Why did I choose to direct my remarks to the Minister of Finance, the Minister of Trade and Commerce and the Minister of Forestry and Rural Development, as well as to those ministers who are not here this evening? I also regret the absence of the Minister of Industry (Mr. Drury) because I should like to get to the bottom of certain statements which he made in the house not long ago in answer to a question with regard to the Sydney steel problem. He said at that time-and hon. members can look it up for themselves this time-that it would be ridiculous and silly for the government to plan a phasing out of the Sydney steel operation. At the same time the Minister of Forestry and Rural Development, when
December 12, 1867

he was out in Banff, spoke of government plans to phase out the Sydney steel operation. I ask the ministers who are present here tonight to convince their cabinet colleagues of the necessity for an absolute assurance that in the negotiations with the provincial government they will pay close attention to the plight of the Sydney steel industry. I also ask them to distinguish between Dominion Coal and Dosco, because at the time of the establishment of the Cape Breton Development Corporation the Prime Minister advised the house and the people of Nova Scotia, inadvertently I admit, that the Cape Breton Development Corporation would take upon itself the problem of dealing with the Sydney steel problem. When the matter was finally sorted out a denial of the previous statement was made. However, at that particular time the impression was left that the Cape Breton Development Corporation would look after this particular problem.
I should also like to ask the government to deal with Dominion Coal and the Sydney steel plant as two separate problems, regardless of the fact that Sydney is located within a 20 mile radius of Dosco. It was decided last spring that these two matters would be treated separately and would be looked upon as altogether separate questions. I trust the government will keep them separated and will deal with the Sydney steel problem as a separate problem entirely. I am sure this would be the approach, were Sydney located a couple of hundred miles away from the coal area. In any case these are two separate problems and I ask the government to consider them as such.
Not too long ago the people of Cape Breton demonstrated their concern in a manner which cannot be considered as simply one of crowd gathering, when in that area over 20,000 people organized what was called "the march of concern". The people who organized this march deserve to be congratulated. The behaviour of the crowd was excellent. Courtesy was shown throughout to the guest speakers, including the cabinet minister from Cape Breton.
I ask the government to show consideration for the people who are faced with this problem. I would further ask it to review the remarks made at that time by the federal representative, the Minister of National Health and Welfare, who said: "We are searching desperately for a way to assist". On other occasions the minister remarked that this assistance may be extended through the Cape Breton Development Corporation.

The Budget-Mr. D. Maclnnis
Although I do not wish to anticipate the results of the negotiations between the government of Nova Scotia and the federal government, I trust they will be successful. I understand that before Premier Smith returns to the province he will discuss this matter with the Prime Minister, and it is to be hoped that the federal government will wish to grant assistance and, if necessary, place Sydney steel under the protection of the Cape Breton Development Corporation, thus enabling them to continue this industry.
Why should the industry be continued? There are many reasons, and I do not propose to take the time of the house tonight to elaborate on them. However, I should like the members of the government to compare the appeals and the statements made by the Minister of National Health and Welfare on behalf of the federal government, when he said that the government is searching desperately for a way to help and that assistance would be forthcoming through the Cape Breton Development Corporation, with the remarks made by the leader of the Liberal party in Nova Scotia during the recent legislative meeting there. The leader of the Liberal party in Nova Scotia had many criticisms, to offer at that time, and he left the impression, which I hope will be ignored by the federal government, that the Nova Scotia government has been taken in by Dosco. He listed a number of savings which Dosco has made as a result of the takeover of the company by the Nova Scotia government. He tried to impress upon the people of Nova Scotia that the action of the government of that province has resulted in savings for Dosco. He has completely missed the point. I trust that no one in the federal cabinet will consider that Mr. Regan, the leader of the Liberal party in Nova Scotia, knows anything about this problem. He has failed to recognize the fact that this was an emergency situation and that there would be many steel workers walking the streets of Cape Breton during the closing down of the Dosco steel operation.
[DOT] (9:40 p.m.)
As I said, in listing the savings with respect to Dosco and in listing other figures, he failed miserably to mention that the takeover by the government of Nova Scotia has saved the federal government considerable sums of money with respect to unemployment insurance. He overlooked that. Instead he chose to talk about patronage.
December 12, 1967

The Budget-Mr. D. Maclnnis Here is a matter that is vital to the economy of Nova Scotia, Cape Breton and Canada.
It has been said before that if something is good for Canada, it is good for Nova Scotia; and if it is good for Nova Scotia, it is bound to be good for Canada. Yet the minister talked of patronage. He failed to note that this same government of Nova Scotia has recommended, for high office with the Cape Breton Development Corporation, a former president of the Nova Scotia Liberal Association. That is an obvious indication that the government of Nova Scotia is concerned only with the development and carrying on of that corporation. The minister failed to mention the fact that the former president of the Liberal association in Nova Scotia, Mr. Regan, had been recommended to the board of the Cape Breton Development Corporation.
I could list many reasons why this government should go all out in completely renovating the Sydney steel operation, in order to make it a viable industry. In that renovation the federal government in co-operation with the government of Nova Scotia, should make money available to that industry. It is not fair to expect the provincial government alone to carry this load. The fact that the government of Nova Scotia has moved so quickly in this matter and has avoided the complete shut down of the plant is an indication of its concern for the welfare of the people of this industry and of Cape Breton.
Some false impressions have been left about the aid which has been given to Cape Breton. Granted, without the subventions paid on coal over the last 38 years, our coal could not have reached its markets. Without federal aid the coal industry no doubt would have been dead long ago. Certain important steps have been taken by the Cape Breton Development Corporation, and it is hoped that there will be a future for our coal. This depends of course, on whether the necessary financial assistance is available.
I regret that a false impression has been created with respect to aid to Cape Breton. I think, judging from the representations that I have heard in this house, that members of the N.D.P. support the complete take-over by this government of the Sydney steel operation.


An hon. Member:: Hear, hear.


Malcolm MacInnis: Yet, for some strange reason, some members of this house are trying to leave the impression


that Cape Breton depends entirely on government handouts. To illustrate what I mean, let me draw the attention of the house to a question that the hon. member for Waterloo South (Mr. Saltsman) not long ago placed on the order paper. He wanted to know what forms of subsidy or subvention were paid in Cape Breton; he also wanted to know something about the Cape Breton national park, the roads to resources, including the Cabot trail, unemployment insurance for fishermen, fishing industry subsidies generally, construction or reconstruction of docks, harbours, breakwaters and dredges, assistance to industries in designated areas and, as well, he wanted to know something generally about coal and steel. I do not propose to go over the entire list. An answer was supplied to him, in which coal subventions were listed at $121 million. I have already said that over the last 38 years the assistance we received with respect to coal amounted to about $200 million. The answer to the question said, nevertheless, that total coal subventions were $121 million. A further $1,300,000 was paid in assistance toward the use of coal in the steel industry. That brings the total amount of assistance with respect to coal, according to the answer, to about $122 million.
Payments to the province with respect to development legislation, roads to resources and so on and so forth, added up to about $150 million. That was the figure that was spent in Cape Breton.
The impression that some might gain from such answers is totally false. Cape Breton does not depend on government assistance to any greater extent than any other parts of Canada depend on government assistance. Cape Bretoners are getting only what they are rightfully entitled to. But they only get it after making strong representations to the government with respect to those matters that were mentioned in the hon. members question.
Those in other areas of the country are able to get government help without making the strong representations that the representatives for Cape Breton have to make in the house. I could mention the art centre that is being built in Ottawa. While it was a hole in the ground, the building estimate rose from $19 million to between $38 million and $39 million. The people of Cape Breton ask for what any Canadian citizen is entitled to ask. On the other hand the art centre will not provide work. It is an amusement centre, and before it is finished I dare say that the government will have spent $50 million on it.
December 12, 1967

What about the $10 million that this government so generously allotted to establishing a film industry in this country. Look around you at the spending that has been going on. I appeal to you, gentlemen, to listen to me. I speak for a worthy cause. Make available to us the funds to renovate completely the Sydney steel operation, and let it stay in business.
My arguments get stronger as I go on, Mr. Speaker. I shall now refer to the building of the St. Lawrence seaway. That seaway was put into operation at the insistence of the government. It was put into operation over the protests of some in the maritimes, because the maritimes have port facilities.
Examine what the seaway has accomplished, Mr. Speaker. Something like $550 million was spent on seaway construction. Why was that money spent? After examining the remarks of members in this house, remarks which were made when the seaway was being promoted, I conclude that the seaway was not developed, primarily, for navigation purposes. I want it to be clearly understood that I do not wish to detract from any assistance that may be given to industries in other parts of the country. I conclude, Mr. Speaker, that the seaway was built, that the $550 million was spent, in order to subsidize that part of the country which is between Montreal and the lakehead.
A snow job was done with regard to many people at that time. The western farmer, because of the seaway, was to get 6 cents more per bushel for his wheat. I wonder what those members who are interested in western farm problems have to say about that? Can they say whether western farmers received that extra 6 cents per bushel as a result of the seaway having been built? The answer is obvious, I think. Every day we hear about the problems of the western farmer. Western farmers have difficulty in shipping their wheat, yet not once, so far as I am aware, has the question of ships been raised. Nor have I heard that in any way ships have been the cause of any delays. I never heard anything about the St. Lawrence seaway improving the situation. All I heard about was the same problem they had faced prior to this $550 million subsidy-lack of the box cars required to get grain as far as the seaway. So here we see a $550 million subsidy to assist this region.
[DOT] (9:50 p.m.)
As I have said before, navigation was not the prime reason for building the seaway. I
The Budget-Mr. D. Maclnnis think the prime reason was to provide hydro power for Ontario, with possibly some power kickback to the province of Quebec, though Quebec apparently had plans for its own development. The idea that navigation was the reason for spending $550 million, the idea that this would assist western farmers, is down the drain. As a matter of fact the subsidy has returned nothing in this area; it has been a white elephant; the tolls realized on the seaway today do not even pay the interest on the money required to build it, and this situation will get worse because the Americans are developing ports along their east coast which will increasingly attract shipping away from the St. Lawrence.
When people talk about handouts to Cape Breton, let them look at the handout in connection with the seaway. As a matter of fact I do not regard it as a handout because I realize that although there were many objections raised to the project, in the considered opinion of the house, it was felt to be good for Canada-and being good for Canada it was also good for Nova Scotia. Today there is an opportunity to do something for Nova Scotia which will prove to be good in the long run for Canada.


Some hon. Members:: Hear, hear.


Malcolm MacInnis: I trust that when the Prime Minister (Mr. Pearson) is negotiating with Premier Smith he will adopt a generous attitude and provide the necessary funds to revitalize the Sydney steel industry.
It is very interesting to study the background of the building of the St. Lawrence seaway. I believe it was Senator Lodge of Massachusetts who said that the United States steel interests would all move out to the Atlantic coast. However, representations were made by the steel operators of Duluth, Indiana and Michigan to the effect that the United States government should participate in building the seaway in order that they might get cheaper ore from Canada and continue to produce steel in those areas. This is despite the fact that some United States senators were advocating moving the steel industry to the Atlantic coast.
It is also very interesting to bear in mind the argument put forward in favour of the building of the seaway by the late Right Hon. C. D. Howe, who had this to say in the United States: "We had to provide a St. Lawrence seaway, otherwise the steel industry
December 12, 1967

The Budget-Mr. D. Mciclnnis would move to the Atlantic coast." I emphasize this as a reason why the government is more or less obliged to come to the aid of the Sydney steel operation. So, what we have now is a $550 million subsidy provided for the area between Montreal and the lakehead, and one of the reasons put forward to justify it was to allow the operation of the steel industry in this country to remain in its traditional centres and keep it away from the Atlantic area. This is another good reason- and it was put forward by a former Liberal-why the government should be quick to come to the aid of the Sydney steel industry.
If Liberal members wish to do a little research they will find that one of the arguments put forward in favour of the subsidy was that the seaway would allow us to diversify the ship building industry, as carried on in Halifax, and move it to the lakehead.
One of the arguments put forward by the minister of transport at that time was that the seaway would permit the diversification of the shipbuilding industry. So the seaway was built for three or four different reasons. Again I emphasize that one of them was to prevent the steel operation going to the east coast. Another reason was to allow shipbuilding, which had been carried on almost exclusively on the east coast, to be carried on at the lakehead if and when shipbuilders decided to do so.
This is what has happened. The seaway has made it possible for the steel industry to continue to expand, to the detriment of the industry which had long been established at Sydney. At the same time, the seaway made it possible to diversify an industry which has its natural centre on the east coast, and move it to the lakehead.
I repeat, I am putting forward reasons why it is absolutely necessary that the federal government should respond generously at this time to the needs of Cape Breton. I am glad to see that the Minister of National Health and Welfare (Mr. MacEachen) is back in his place, because this is a subject which is of great concern to him and I am sure he will place all the arguments on behalf of the Sydney steel industry before his colleagues in the cabinet. It is my hope he will be able to convince the Minister of Finance (Mr. Sharp), the Minister of Trade and Commerce (Mr. Winters), who should be backing him up 100 per cent, and the Minister of Forestry and Rural Development (Mr. Sauve).
The subsidy which I have mentioned has acted to the detriment of the east coast. Let us turn now to other subsidies which have

been granted in a number of directions. I repeat that although coal has received assistance to the tune of $200 million over a period of 38 years, aid has been given to the uranium industry, which is an infant compared to the coal industry. Assistance was given to the uranium industry when it landed in trouble, to the tune of $150 million, over a much shorter period of time. I would call attention also to the assistance given to the gold mining industry under the emergency gold mining legislation. Since 1948 we have assisted the gold mining industry to the extent of some $231 million, not counting a possible further $15 million before the end of the present fiscal year. This represents assistance to the extent of $246 million.
Again, I have no objection to the assistance given to the industries I have mentioned, especially since it has been given because of the economic plight in which the people living in the mining areas would face if the work upon which they depend were lost to them. A similar situation faces the people in Sydney today.
May I call it ten o'clock?


Mr. Deputy Speaker:: Perhaps I should advise the hon. member at this point that his time has expired.


Stanley Howard Knowles: Then may I call it ten o'clock, Mr. Speaker?



BUSINESS OF THE HOUSE

Michael Starr: May I ask the leader of the house whether, since the budget debate will end tomorrow, he can give us some idea what we shall be considering on Thursday and Friday-and, possibly, what he thinks should be considered before we rise for the Christmas recess?


Mr. MacEachen:: After the budget debate I hope to call the budget resolutions and then the committee stage of the broadcasting bill and the divorce bill.


Michael Starr: In that order?


Allan Joseph MacEachen: Yes, that is the plan at the moment. If there is any change I shall be glad to advise the house.
[DOT] (10:00 p.m.)



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.
December 12, 1967

Heath Nelson Macquarrie: Mr. Speaker, the other day I asked a question of the house leader, a question I have asked on more than one occasion. This had reference to the referral to the standing committee on privileges and elections of the Canada Elections Act. This is a procedure which normally follows a general election and, over the years, has proven to be a very useful one.
I may say I was not very pleased with the minister's answer, which at best was inadequate, and at worst was possibly arrogant and a bit discourteous. He said to me that the Prime Minister (Mr. Pearson) had in fact answered the question which, by implication, suggested I had not been listening. Actually the Prime Minister's reply dealt with another matter, namely the referral of the report on the commission on election expenses. When I pointed out to the minister that he had not heard me correctly he casually, and a bit discourteously, said he had heard me correctly. If he heard me correctly he answered me incorrectly; he can have it either way.
This is a most important matter. The machinery whereby the electors elect their government is not a matter lacking in consequence in any well ordered political society. It is an important, a vital matter. The public must have the best opportunity to exercise their franchise, to vote properly, to have the best devices whereby they may register fully their points of view.
The elections act stands today without substantial review and without careful study by this committee. We have had three elections without a revision of it. Many problems have come up. Many submissions have come from citizens pointing out matters which they think are important.
We were led to believe in the speech from the throne that there would be a referral to committee of the report on election expenses. On May 8 we were told that when the study was completed the government would put forward proposals. These we have not yet seen. Away back in 1963, on December 20 of that year, the privileges and elections committee brought in a report to this house which contained a paragraph saying the committee recommended that it be empowered to study the Canada Elections Act at the earliest possible date next session, with a view to affording the committee an opportunity for exhaustive and constructive examination and study of that act. That was in 1963;
DEBATES	5357
Proceedings on Adjournment Motion but that call for an early opportunity has gone unheeded.
We are in a uniquely difficult situation as a result of the Representation Act, whereby there are new returning officers and new districts. Surely we do not want to add to their difficulty by having the elections act amended at the last moment.
It is always imprudent to have the election machinery rusty, but in a situation where you have a minority government, where there could be an appeal to the people at any moment, it is a shocking situation of neglect. We do not know what might happen, but if you look over the history of this government in recent years and see how accident prone it has been, we can see the only accident it has not suffered is a major defeat in this house; and by this I mean something more substantial than on the postal resolution. If such a defeat came we would not have an up to date Canada Elections Act.
Many problems arose in November, 1965. Thousands of our students found that the regulations did not provide them with a chance to vote. Civil servants abroad have constantly requested some machinery whereby they may register their franchise. This has been brought before the committee time and time again. I would hope there would be an opportunity for the committee to recommend, and for the house to adopt, a broader provision, covering not just civil servants and external affairs officers but providing for an absentee vote that would give an opportunity for Canadians abroad, in a general category, to exercise their franchise.
For years we have talked about a permanent list whereby long election campaigns could be shortened. This is the kind of thing to which we should be applying ourselves. I think it is disgraceful; it is neglectful, it is imprudent; it is unwise. If I were the Secretary of State I would say that the fact that nothing has been done about this is an indication of rotten management. We find that the committee has not been constituted. No chairman has been designated. Some of us are becoming weary of calling the government to task in this regard. We would hope that in this area at least they would discard the languid approach and regard the election machinery as something pretty important to a responsible government. I would hope that the step of having referred to the committee for study more than the matter of the age of voting might be taken forthwith.
December 12, 1967

Proceedings on Adjournment Motion


Allan Joseph MacEachen: Mr. Speaker, I wish to begin by assuring my hon. friend that in answering his question recently there was no intention on my part to be discourteous. This is the last thing I would inflict upon him, above any member of the house, and I am sure he is aware of that.
As my hon. friend knows, we have sent at least one resolution affecting the voting age to this committee. The government expects to send the report on election expenses to this committee before the end of this session, and I hope at an early date. With regard to the elections act, I agree with the hon. member that it is desirable that this act be considered by the committee at the earliest possible date. It may not be possible to have a committee study of the elections act at this session, but certainly it will be considered very early in the next session.
PARLIAMENT HILI^-INQUIRY AS TO MAINTENANCE OF CENTENNIAL FLAME


Mr. H. E. Gray (Essex West):: Mr. Speaker, on November 29 on the orders of the day I asked the Prime Minister whether the government would keep the centennial flame burning after the end of the year as a symbol of Canadian unity. When Mr. Speaker ruled that he did not consider the question to be sufficiently urgent to be answered during the question period I immediately gave notice that I wished to raise it on an adjournment debate. This is the first convenient time this could be done.
I asked my question on November 29 by way of expressing my view that the flame should not be snuffed out permanently on December 31. I felt, and subsequent events proved that I was correct, that this view was shared by most of the members of this house and by millions of other Canadians as well.
I think I should indicate at this time, for the record at least, that I had the privilege of raising this question in the house on the orders of the day perhaps a week before a similar question was put by a member of one of the opposition parties. His question was also not accepted by Mr. Speaker at that time. I do not think I would be giving away any secrets if I said that, joined particularly by other members on this side of the house, I continued my efforts through direct contacts with the Prime Minister and the Minister of Public Works (Mr. Mcllraith) to have the government's original decision not to continue the flame reversed.
[Mr. MacquarrieJ
Therefore, I was pleased to note the information in the answer given to the hon. member for Kootenay West (Mr. Herridge) yesterday by the Prime Minister, that the flame would be continued. After all, there are as yet all too few monuments which stand as tangible symbols of Canada as a nation and which are accepted as such by the public at large. The flame has proven to be one of these. Although it was intended only as a symbol of centennial year, the flame immediately became looked upon by the public at large as something more-as a symbol of Canada as a nation.
[DOT] (10:10 p.m.)
If any proof of this is required, it has been provided by the way it has drawn almost every visitor to the hill, from the first day it was ignited by the Prime Minister almost a year ago. Further proof has been provided by the public protest when it appeared the flame would be extinguished as of December 31 of this year. To have extinguished this flame at that time could very likely have been interpreted, though wrongly interpreted, by some elements of the press and public as symbolizing in a negative way, again quite wrongly, the fate of our country. However, if this flame continues to burn it can and will be a tangible gesture demonstrating our faith as representatives of the people of this country in the continuing existence of a united Canada from sea to sea.
The Prime Minister has now said that the flame will continue, but I think there are two further points to be made at this time. A press report today suggests that the flame may be moved away from parliament hill to another point in Ottawa. I think this would be the wrong thing to do. The symbolic effect would not be the same if the flame continued to burn at some location other than parliament hill; at another site. Is there a better place than parliament hill for such a flame? After all, it is a place for the coming together of the people of this country as Canadians; it is the focal point of their aspirations and hopes, as Canadians. The parliament buildings provide a fitting background for the flame which could not be found at any other place in Ottawa.
The second point I wish to make is that I have heard that private interests have indicated their interest in providing the cost of continuing the flame. While I understand the good intentions behind such an offer, in my opinion it would be more appropriate if this flame were maintained, not by special
December 12, 1967	COMMONS
interests, but by the Canadian people. Some may raise a question about the cost of having the flame continued, but there would be in any event the sizeable cost of dismantling the mechanism for the flame and repaving the roadway. I am confident that the cost would be very small in comparison to other expenditures that are being made, and if we wanted to I am sure we could come up with ways of tightening up on some of these other expenditures to make up the amounts required. But I am sure the cost at most would be small compared with the symbolic benefits.
When the mayor of Montreal spoke at the closing of Expo he said in effect: Expo is gone, but long live man and his world. The new decision of the government about the flame will enable the Prime Minister to say on December 31: The flame of the centennial will be gone, but this flame at the same time will live on as a memento of centennial year; but, more important, it will be a symbol of Canadian unity and our faith in the Canada of tomorrow.


Hon. G. J. Mcllrailh (Minister of Public Works):: Mr. Speaker, I am delighted to hear the hon. member speak as he has spoken. I am sure that hon. members will feel that the centennial celebrations have somehow created a new pride and faith in the hearts of Canadians. It seems to me that this centennial flame has become a symbol of this pride and faith in Canadianism.
A decision has been made to continue the flame in perpetuity. The question will ultimately have to be decided as to what if anything should be done to improve the layout of the plaza surrounding it. It has been placed on a walk adjacent to a road that was not designed to accommodate the traffic pattern on the hill today. It may be found that
DEBATES	5359
Proceedings on Adjournment Motion the surrounding area should be improved. The actual flame structure was designed for use for only one year. Parts of this will have to be replaced and may involve redesign and the use of different materials. At no time has there been any question that the cost of maintenance of the flame was of such magnitude that it should be discontinued for this reason. That has never been put forward or suggested by anyone.
The question which must be decided is related to the best way to preserve this symbol, which has become well known throughout our centennial celebrations, and how to preserve it during the new century which we are entering. We may at some later time take a decision as to its possible relocation. If you examine its location carefully you will see that at some future time this may have to be reconsidered.
Let me give an illustration of what I have in mind. It has been suggested that when the new museum is designed for location in the central part of the city the landscaping could be such that this centennial flame could be placed at its entrance to great advantage.
All I am trying to indicate is that at the start of a new century in Canada's history it is not wise, perhaps, to make a final decision as to the precise site of a flame of the importance of this one. In any event, the decision is that it will be left exactly where it is for the time being, and these other questions will have to be decided later. I believe that news should be pleasing to all hon. members. As a matter of fact, I am surprised by what has gone out in the news in the last days and weeks. It has got a little out of hand. However, Mr. Speaker, I do not propose to go into this aspect of the matter tonight.
Motion agreed to and the house adjourned at 10.19 p.m.
5361

Wednesday, December 13, 1967