1968-02-15

Hon. Walter Gordon (President of the Privy Council):: Mr. Speaker, I should like to table copies, in English and in French of a report to the government of the task force which was set up a year ago to assist the government in examining the structure of Canadian industry with special reference to foreign ownership and control. The government has decided to release the report at this time instead of using it, as originally intended, as the basis for a white paper which would take some months to prepare. Publication of the report now should assist public discussion of this important subject.
The report is being made public as an expression of the views of the members of the task force and not those of the government. The government will undoubtedly find the work done so competently by the task force of great value and assistance as it pursues its own examination of this whole question, but the tabling of the report does not imply that the government concurs in it or has yet taken decisions regarding its specific recommendations. However, the government will be giving serious consideration to the proposals and views of the task force.
It is the intention of the government to refer the report to the standing committee on finance, trade and economic affairs so that witnesses can be called and parliament given the benefit of the views and opinions of the many groups in the country which have an interest in this subject.
Certain of the proposals of the task force deal with subjects which are also under study elsewhere in the government. For instance, the Department of Consumer and Corporate Affairs is considering amendments to the Canada Corporations Act and the Bankruptcy Act, and is examining various aspects of securities regulations. There is also a reference to the Economic Council of Canada on the Combines Act and on patents, copyrights and trade marks.
Finally, on behalf of the government I should like to thank Professor Watkins, the head of the task force, and his colleagues for their services to the public in the preparation of this report. It will prove to be a valuable contribution to greater public consideration of these complex and many sided issues. I beg leave, Mr. Speaker, to table the report of the task force on the structure of Canadian industry.


Mr. Speaker:: Has the minister leave to table this document?


Some hon. Members:: Agreed.


Walter Lockhart Gordon: By leave, Mr. Speaker, I move:
That the report of the task force on the structure of Canadian industry, laid on the table a moment ago, be referred to the standing committee on finance, trade and economic affairs.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Ricjht Hon. I,. B. Pearson (Prime Minister):
I should like to table a letter to me from the premier of Nova Scotia dated February 6, concerning the steel industry in Cape Breton.
Mr. Speaker:: Has the Prime Minister leave to table this letter?


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



PUBLIC ACCOUNTS


[Stage Direction]
On the orders of the day:
Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the Prime Minister rather than raise what I believe is a question of privilege affecting all members of the house, which is especially timely in view of our serious economic situation and the many undertakings given by the government to exercise restraint.

February 15, 1968
Inquiries of the Ministry I wish to ask the Prime Minister or the government house leader to account to the house for the unreasonable delay in calling an organizational meeting of the public accounts committee so this committee can get on with its important work in examining the 1966 report of the Auditor General and scrutinizing government expenditure.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I will be glad to take up this matter with the house leader when he returns this afternoon, with a view to getting this committee to work at once.


Robert Lorne Stanfield: Mr. Speaker, may I ask the Prime Minister to bear in mind that the minister of health and welfare gave an undertaking to the house some time ago that this would be done, but the undertaking has not been proceeded with.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. David Lewis (York South):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. In view of the continuing worsening situation in Viet Nam and the suggestion of U Thant that cessation of bombing for a short while might enable negotiations to take place; and in view of the report of our representative on the control commission on his visit to Hanoi, would the Secretary of State for External Affairs, either personally or with his colleagues, agree to expand, as it were, the area of discussion under the item concerned in the supplementary estimates, so this house may have a debate and a report from him on the situation?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, the government would have no objection to that.


[Stage Direction]
On the orders of the day:
Mr. Real Caouette (Villeneuve):: Mr. Speaker, I should like to put a question to the hon. Minister of Justice.
Are we to believe the news heard yesterday according to which he said in a conference given in English here in Ottawa that all Quebecers speak "lousy French", and just what did the minister mean by this term?
[Mr. Stanfield.l


Mr. Speaker:: Order. The hon. member knows that he may not put a question to the minister concerning a statement made outside the house.


David Réal Caouette: Mr. Speaker, I rise on a point of order.
May I ask the hon. minister if he feels that the French-Canadians in Quebec speak "lousy French"?


Hon.   P.-E. Trudeau@Minister of Justice: 


Mr.   Speaker-Mr. Speaker@: Order. I do not think that the question of the hon. member is in order.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revel-stoke):: Mr. Speaker, my question is for the Minister of Agriculture, but perhaps his parliamentary secretary will be able to give an answer. In order to prevent uncertainty in the development of the dairy industry in Canada, will the Department of Agriculture be issuing a statement regarding its views on the report by Dr. William Mackenzie, prepared for the Department of Forestry and Rural Development and issued yesterday?


Mr. Bruce S. Beer (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, I am sure the hon. member will appreciate that any statement on policy will be made by the Minister of Agriculture in the house.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, may I direct a question to the Acting Minister of Labour and ask him whether the government or the Department of Labour have received a final report from the maritime trustees.


Hon. B. S. Mackasey (Acting Minister of Labour):: To be very sure about this, Mr. Speaker, I will inquire this afternoon and contact the hon. member.


Michael Starr: A supplementary question, Mr. Speaker. Would the minister turn the report over or refer it to the standing committee on
February 15, 1968

labour and employment for consideration, and so the trustees may appear before that committee as witnesses?


Bryce Stuart Mackasey: Mr. Speaker, I will be very pleased to give that information to the hon. member at the same time.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. D. S. Harkness (Calgary North):: Mr. Speaker, I have a question for the minister of defence. What numbers of Canadian forces are or recently have been in the United States territory of Puerto Rico, and what is the purpose of their presence there?


Hon. Leo Cadieux (Minister of National Defence):: So far as numbers are concerned I shall have to check, but the purpose of the exercise is to participate in what are called Maple Leaf-I beg your pardon, Maple Spring-exercises.


Douglas Scott Harkness: A supplementary question, Mr. Speaker. Will the minister inform us what is meant by "Maple Leaf" exercises?


Léo Alphonse Joseph Cadieux: I corrected
myself; I said "Maple Spring".


Douglas Scott Harkness: A further supplementary question, Mr. Speaker. Are Canadian forces carrying out those exercises in the Caribbean on United States territory, instead of on Commonwealth islands, with the idea that their training should be combined with the training of United States forces so that our forces might participate, possibly, with United States forces in Korea, South Viet Nam or elsewhere in the east?


Léo Alphonse Joseph Cadieux: There is no such implication, Mr. Speaker. We are only continuing practises that were staged in the past. As the former minister well knows, they are called war games.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Kamloops):: I wish to ask the President of the Privy Council a question about the report he has just tabled, which I understand is signed by a Mr. Watkins. May I
Inquiries of the Ministry ask the hon. gentleman what is the relationship between the cabinet committee, of which he was the head, and the person or persons who made the report? Also, does the government accept responsibility for the report?


Walter Lockhart Gordon: I think if the hon. gentleman had heard what I said on motions, he would be satisfied on that matter.


Michael Starr: Didn't you do any work?


Edmund Davie Fulton: I cannot accept the implications inherent in what the hon. gentleman has said. I find there is no clarity at all to the matter.


Mr. Speaker:: Order, please.


Edmund Davie Fulton: I would ask the minister if he could say anything about the meetings, for instance, that he had with Mr. Watkins. Was the relationship-


Mr. Speaker:: Order, please. That is a question, I respectfully suggest, which the hon. member should not ask at this time.


Michael Starr: A supplementary question to the President of the Privy Council, Mr. Speaker. Can he tell us whether the special cabinet committee on which he sat did any work at all? Did it hold any meetings?


Walter Lockhart Gordon: Yes, it certainly did.


Mr. Speaker:: Order, please.


Michael Starr: A further supplementary question. In view of the minister's answer that "it certainly did", how can he explain the fact that the cabinet committee does not accept any responsibility for this report?



NANCY GREENE-WINNING OF OLYMPIC GOLD MEDAL

[Stage Direction]
On the orders of the day:
['Order, please. I suggest we have covered enough airports for the moment and should go on to another subject.']
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I am sure all members of this house were very proud when they learned this morning that Miss Nancy Greene of Rossland, British Columbia-


Some hon. Members:: Hear, hear.


Herbert Wilfred Herridge: -of the Kootenay country had won the Olympic gold medal for Canada in the women's giant slalom, and in so doing had clinched the world combined championship. No doubt the right hon. Prime Minister

February 15, 1968
Inquiries of the Ministry would like to give formal expression of the pride and rejoicing of all Canadians in her great achievement.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Mr. Speaker, I have already tried to do that in a telegram I sent to Miss Greene this morning. In it I expressed the pride and joy of the government and my own pride and joy in her achievement. All members of the house and all Canadians share in that pride. That pride is increased by the realization that my hon. friend is associated with this champion, as the member for Kootenay East-

In the light of the minister's announced plan for the expansion of Toronto international airport, could the hon. gentleman assure the house that the needs of the Montreal airport will not be overlooked?


Hon. Paul Hellyer (Minister of Transport):: First of all I should like to thank the hon. member for having given me notice of his question.


An hon. Member:: Why not speak French?


Paul Theodore Hellyer: I have the answer in both languages; the hon. member can take his choice.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Kootenay West, Mr. Speaker. It is perhaps particularly appropriate that the Canadian flag should have been raised today, in celebration of the winning of this first gold medal at the winter Olympic games, on the third anniversary of the day it was first raised in Canada.


Some hon. Members:: Hear, hear.



[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, may I direct my question to the Prime Minister. Can the Prime Minister give the house any details about the reportedly very important mission that is presently being undertaken on behalf of the government by Hon. Lionel Chevrier, the distinguished former high commissioner to the United Kingdom?
The expansion of the Montreal airport is in no way being overlooked; it is getting just as much attention as the Toronto airport. Approximately $5 million will be expended to accommodate Montreal's immediate requirements, including facilities for the handling of jumbo jets. Studies indicate that in the next 20 years expenditures in excess of $150 million will likely be required for airport facilities at Dorval or in the Montreal area. Toronto will require similar expenditures.


Michael Starr: I should like to ask the Minister of Transport whether the government is considering allowing flights by international air lines to proceed on to Toronto, thus making it a truly international airport.


Paul Theodore Hellyer: This is one of the considerations arising in connection with the 20-year plan. It is inevitable that Toronto should have international traffic as well.


Michael Starr: In which of the 20 years will this


Lester Bowles Pearson: Perhaps the Secretary of State for External Affairs will be able to make a short statement on this tomorrow. It is a mission undertaken by a privy councillor to certain French speaking former colonies in Africa, where we are interested in providing external aid and in maintaining and strengthening good relations.
be?


Paul Theodore Hellyer: In one of the earlier years. As a matter of fact the new terminal which is being commenced this year to accommodate the overflow in the Toronto area is essential if there is to be an expansion of international services. It is fundamental to our ability to get on with airstrip development.


[Stage Direction]
MONTREAI___INQUIRY AS TO CONSTRUCTION
[Stage Direction]
On the orders of the day:
Mr. Marcel Prud'homme (Saint-Denis):: Mr. Speaker, I should like to put my question to the Minister of Transport in English if he will allow me.


Hon. W. G. Dinsdale (Brandon-Souris):: Will the minister give similar consideration to Brandon airport, particularly with reference to the new terminal building?


Paul Theodore Hellyer: We have been thinking about that, Mr. Speaker.


Mr. Lloyd R. Crouse (Queens-Lunenburg):: In view of the staggering capital costs and
[Mr. Herridge.)
February 15, 1968

mounting operating expenses of Canada's two major air lines, is the minister planning any meetings between officials of Air Canada and of Canadian Pacific Airlines so they might hold consultations on the sharing of overhaul facilities, crew training and any other improvements which would avoid duplication?


Paul Theodore Hellyer: There have been discussions in connection with some of these areas, and I have no doubt there will be further discussions in the months immediately ahead.


Mr. Jack A. Irvine (London):: Mr. Speaker, I would like to direct a question to the Minister of Transport that is related to one which was asked earlier today. In the studies which are being made with respect to the Toronto international airport will consideration be given to using London airport as an alternative airport for international and long range flights?


Paul Theodore Hellyer: Mr. Speaker, the department has been giving consideration to alternates as part of its long range plans.


Mr. G. L. Chalierion (Esquimalt-Saanich):: As a supplementary question, in view of the statement made by the minister in regard to the airports at Montreal and Toronto would he look into the crowded conditions at Victoria international airport, B.C., and make an announcement before April 4?


Mr. Speaker:: Order, please. I suggest we have covered enough airports for the moment and should go on to another subject.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Robert Lorne Stanfield: I have a question for the Minister of Finance arising out of an undertaking given by him on November 10 and repeated in his mini-budget address on November 30 that the government would initiate discussions with leaders of the labour movement and other main elements of the economy to organize an integrated program of restraint to curb inflation. Will the minister say whether the government has initiated these special discussions?
Inquiries of the Ministry


Hon. Mitchell Sharp (Minister of Finance):: Yes, Mr. Speaker. Preparations for these discussions are proceeding. We have been making a special inquiry into the kinds of restraint which are being practised in other countries, and we intend to bring forward a program along these lines. I hope that in all these matters, involving expenditure and otherwise, support for restraint will be forthcoming from the opposition.


Robert Lorne Stanfield: Did I understand the minister to indicate that as yet there has been no discussion outside the government?


Mitchell William Sharp: Yes, Mr. Speaker. We are preparing for these meetings. We feel it is most important that the discussions should be successful, and we wish them to proceed on a sound basis.


Robert Lorne Stanfield: As a supplementary question, can the minister indicate a date by which these discussions will start?


Mitchell William Sharp: No. I cannot indicate that at the present time, Mr. Speaker, but we will certainly proceed with them just as soon as we feel in a position to put our proposals before both the unions and management. This is a very serious matter, and it is one which I know is of great concern to the hon. gentleman. He has expressed his views on this matter on many occasions and I hope he will understand the most important thing is that they be successful and not be embarked upon before adequate preparations are made.


Robert Lorne Stanfield: Can the minister give us any indication of when this program is likely to be launched?


Mitchell William Sharp: I have answered that question, Mr. Speaker.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs. Would he, despite his other preoccupations, discuss with the chairmen of the external affairs and defence committees a suitable date for his promised appearance with the Minister of National Defence to discuss with those committees recent developments in NATO and NORAD?

February 15, 1968
Inquiries of the Ministry
Hon. Paul Marlin (Secretary of Slate for	GRAIN
External Affairs): I shall be glad to, Mr.	INQUIRY AS TO FINAL PAYMENTS
Speaker.	FOR 1966-67 crops


[Stage Direction]
On the orders of the day:
Hon. Judy V. LaMarsh (Secretary of Stale):: Mr. Speaker, yesterday the hon. member for Middlesex West asked me about a request from the province of Ontario to assist victims of the recent floods in the southwestern part of the province, and I replied that I did not know I had any responsibility. After leaving the chamber yesterday I found a letter had been received from the Ontario minister of municipal affairs, making such a request.
As far as my department is concerned the only agency which might be of some assistance is the Canadian Disaster Relief Fund, for which I have about the same kind of responsibility as I have for the C.B.C., which isn't very much-


Some hon. Members:: Oh, oh.


Julia Verlyn (Judy) LaMarsh: -particularly since this disaster will be a shared responsibility. Because this is an area with which the Prime Minister and I had personal connections in earlier days-


Some hon. Members:: Oh, oh.


Julia Verlyn (Judy) LaMarsh: -I was born there and he used to play baseball there-I have asked the disaster relief fund to look into the matter as early as possible. If my hon. friend wishes to pursue the matter further I suggest he be more direct and go right to the right hon. Prime Minister or to the Minister of Finance.


Mr. W. H. A. Thomas (Middlesex West):: Mr. Speaker, in view of the statement by the Secretary of State in answer to my question yesterday, has the Prime Minister been informed of the Ontario government's request for federal assistance for flood relief in southwestern Ontario? If so, has a favourable decision concerning such relief been reached?


Lester Bowles Pearson: I do not recall receiving any such request, Mr. Speaker, but I shall look for it as soon as I get back to my office in case it came in today.

On the orders of the day:


Mr. C. S. Smallwood (Battle River-Camrose):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce. Has he been in communication with the Canadian Wheat Board today and, if so, has he some very important information to relay to the house regarding final payments for the 1966-67 wheat crop?


Hon. Robert Winters (Minister of Trade and Commerce):: Mr. Speaker, I met with the wheat board this morning, and I can inform the house that the 1966-67 pool accounts for oats and barley were closed on January 31. The final accounts are being prepared at the present time, and it is expected that final payments for these grains will be mailed to producers commencing early in March.
The board has advised me that the 1966-67 pool account for wheat will be closed on February 29. Cheques will be distributed as soon as the necessary accounting and auditing are completed. It should be possible to mail them to producers commencing toward the end of March. I am unable to anticipate the level of these final payments until the accounting is completed by the wheat board. However, the total amount to be distributed will be quite substantial.


[Stage Direction]
On the orders of the day:
Douglas Scott Harkness: Mr. Speaker, I should like to direct this question to the Minister of Energy, Mines and Resources. Did the minister or other members of the government discuss with the United States government the level of Canadian crude oil imports into the United States for the first seven months of this year; and did they agree with the estimated levels which Mr. Udall, the Secretary of the Interior, has announced as 415,000 barrels a day, which is 25,000 barrels a day less than the actual exports from Canada to the United States during the past year?


Hon. Jean-Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, these are figures given out by the Department of the Interior of the United States. I had nothing to do with them. This is their responsibility. I
February 15, 1968



might underline the fact that the figures given yesterday or the day before were for the first seven months only, so one cannot judge the whole year on the basis of seven months only.
May I repeat that I do not intend to indicate the exact figures we have reached with the United States within the framework of the agreement to which I have already referred on many occasions.


Douglas Scott Harkness: I have a supplementary question, Mr. Speaker. The minister perhaps did not catch the first part of my question concerning whether he had discussed, with Mr. Udall or otherwise, the level of these imports for this present year.


Jean-Luc Pepin: I have already said we have, but not in the context of the publication to which my friend is making reference.


Mr. Eldon M. Woolliams (Bow River):: have a further supplementary question, Mr. Speaker. If the minister had a discussion, and if there were Canadian negotiators in the United States, did they agree to reduce the quota in consideration of obtaining permission to build the interprovincial pipe line from Chicago to Canada?


Jean-Luc Pepin: The building of the interprovincial pipe line was within the framework of the agreement to which I referred two or three weeks ago. I shall be glad to send my hon. friend copies of the answers I made at that time.


Eldon Mattison Woolliams: Mr. Speaker, perhaps the minister misunderstood the question. In the agreement or in any negotiations which the government had with the United States did they agree to reduce the quota in consideration for building the interprovincial pipe line to Chicago?


Jean-Luc Pepin: Certainly not.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, this question is directed to the Minister of Transport. I should like to ask the minister whether as a result of the investigation so far conducted into the crash of the
Inquiries of the Ministry Canadian Pacific Airlines jet liner at Vancouver airport it has been determined whether in fact the emergency exits from the central part of the plane were inoperative at the time. If so, what steps is the department taking to ensure that a similar situation will not exist in any future incident of this kind?


Paul Theodore Hellyer: Mr. Speaker, I think it would be better if my hon. friend would agree to wait until I have received a full report, at which time I could cover the whole investigation of the accident at one time.


Thomas Speakman Barnett: Mr. Speaker, I should like to ask the minister when he expects he will be able to give the house a full report on this accident.


Paul Theodore Hellyer: I cannot say for sure, but I will ask that the report be speeded up, and will make a statement just as quickly as possible.



OLD AGE SECURITY


[Stage Direction]
On the orders of the day:
Mrs. Margaret Rideout (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, earlier this week the hon. member for Chapleau asked a question regarding the guaranteed income supplement. I have a reply which is rather lengthy, and I should like permission to table it for printing in Hansard.


Mr. Speaker:: Does the parliamentary secretary have permission?


Some hon. Members:: Agreed.
[Editor's note: The answer above referred to is as follows.]
There are two reasons why the guaranteed supplement was not paid in January 1968 to certain old age security pensioners:
1. The law requires that a new application for the supplement be made each year since the amount of the supplement is based on the income of the pensioner in the preceding year. Accordingly application forms were mailed on January 2, 1968 to pensioners who received a supplement in 1967. In order that payment of the supplement not be interrupted

February 15, 1968
Inquiries of the Ministry pending the receipt and processing of the application for any year, provision is made in the legislation that payment may be continued for up to four months in that year provided the pensioner notified the minister by December 31 of the previous year of his intent to apply for the supplement in the succeeding year.
At the beginning of November 1967 a form to be signed and used for such notification was sent to all recipients of a supplement. In December a follow-up letter was sent to the relatively few persons who had not returned the notice of intent. In those cases where the notice was not received by December 31, 1967, no supplement could be paid in January 1968 unless the new application was received and processed before the January cheques were printed, and no supplement can be paid for subsequent months until the new application is received and processed. Retroactive payment may be made at that time.
2. A large number of persons became old age security pensioners for the first time in January 1968 when the eligible age for the pension was reduced from 68 years to 67 years. On January 2, 1968, such persons were sent an application form for the guaranteed income supplement. If that application was not returned and processed prior to the date on which the January pension cheques were printed, the pensioner could not be paid the supplement for that month. Applications in such cases when received, will be processed and, where he is found eligible for the supplement, the pensioner will be paid same effective January 1968 in a subsequent month.



INDUSTRIAL RELATIONS AND DISPUTES INVESTIGATION ACT


[Stage Direction]
On the orders of the day:
Hon. Marcel Lamberi (Edmonton West):: Mr. Speaker, my question is for the Prime Minister. I am interested in the implication in the remarks he made yesterday to the effect that if the house committee on labour relations holds up Bill C-186, the government will then proceed with it. Is it the government's intention to defy a house order which has committed this bill to the committee?


Lester Bowles Pearson: No, Mr. Speaker.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, my question is directed to the President of the Treasury Board in his capacity as the minister reporting to the house in respect of housing matters. Has the minister been informed that the Montreal rental and housing authority is now receiving over 2,000 complaints a day, which constitutes the greatest housing crisis in the city's history?


Hon. E. J. Benson (Presideni of the Treasury Board):: No, Mr. Speaker, but I shall be pleased to look into the matter.


William Heward Grafftey: No government supporters have brought this matter to the minister's attention? That is interesting. In view of that-


Mr. Speaker:: Order, please.


Edgar John Benson: I did not say that.


William Heward Grafftey: I have a supplementary question, Mr. Speaker. In view of the crisis that is affecting the citizens of the island of Montreal, will the minister announce to the house as soon as possible the federal initiatives which will be taken to relieve the situation?


Edgar John Benson: Mr. Speaker, this year we will have more than 175,000 housing starts, and the federal government will put substantially more funds than ever before into public housing.


Michael Starr: I have a further supplementary question, Mr. Speaker. If the minister would bring forward the resolution on the order paper as the first item of business today we would be prepared to pass it without debate.


Edgar John Benson: Mr. Speaker, I would be very pleased to do that if the house leader will agree.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I should like to put a question to the Acting Minister of Labour. Does he intend to
February 15, 1968

ask the Canada Labour Relations Board to postpone the study of certification applications which could be affected by passage of Bill No. C-186?

Hon. B. S. Mackasey (Acting Minister of
Labour): Mr. Speaker, the Canada Labour Relations Board, a body independent of parliament, has an obligation to carry on its function despite what legislation is contemplated in the house. I do not intend to interfere with that autonomous organization. I am sure the hon. member for Lapointe will be pleased to know that the rights of the C.N.T.U. are fully protected in view of the fact that they have been notified by the board of their opportunity and privilege to intervene in these two applications which are now before the board.


Gilles Grégoire: Mr. Speaker, I wish to put a supplementary question to the minister.
Since he intends to intervene in this field, could he tell us whether the enactment of the legislation now under consideration in committee will be retroactive, if the legislation is passed and in the event of a decision to the contrary on the part of the Canada Labour Relations Board?


Mr. Speaker:: The question as put by the hon. member is hypothetical.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, I should like to address my question to the Minister of Industry. In view of the many representations I have received and which I am sure many other members of the house have received from members of the united steel workers union, can the minister say what further steps the government intends to take to assist the Nova Scotia government in respect of the problems facing the Dosco steel plant?
Hon C. M. Drury (Minister of Industry):
Mr. Speaker, as I believe the house is aware there is an exchange of correspondence on this subject being conducted between the premier of Nova Scotia and the Prime Minister.
Inquiries of the Ministry LABOUR CONDITIONS



INQUIRY AS TO ACTION TO MEET UNEMPLOYMENT SITUATION

[Stage Direction]
On the orders of the day:
Mr. William Skoreyko (Edmonton East):: Mr. Speaker, I should like to direct my question to the Minister of Manpower and Immigration. In view of figures recently released which indicate that there are half a million unemployed in Canada, can the minister tell the house what steps his department is taking to alleviate this very serious problem?


Mr. Speaker:: Order, please. The hon. member is repeating in the same terms the question he asked yesterday. He is asking the minister to make a statement which should be made on motions.


William Skoreyko: Mr. Speaker, I rise on a question of privilege. A matter which deals with the lives of half a million people in Canada is a very serious matter, and I do not intend to be held down by silly house rules.


Some hon. Members:: Oh, oh.


William Skoreyko: I have asked this question twice. What is the government doing about this serious problem?


Mr. Speaker:: Order, please.



RURAL DEVELOPMENT


[Stage Direction]
On the orders of the day:
Mr. Eric Stefanson (Selkirk):: Mr. Speaker, I have a question for the Minister of Forestry and Rural Development. Now that the Minister of Manpower and Immigration has placed a ceiling on capital cost expenditure under the vocational training school program agreements, will he give the assurance that this will not in any way affect the vocational school program covered by the ARDA-FRED comprehensive agreement for the interlake area of Manitoba which was signed in May 1967?


Hon. Maurice Sauve (Minister of Forestry and Rural Development):: Mr. Speaker, I will have to investigate this matter, because I do not know whether or not it affects this program.

February 15, 1968
Inquiries of the Ministry EXTERNAL AFFAIRS



RESTRICTIONS ON SALE OF CANADIAN URANIUM

[Stage Direction]
On the orders of the day:
Mr. David MacDonald (Prince):: Mr. Speaker, this question is addressed to the Secretary of State for External Affairs. Can the minister tell the house whether the government is giving consideration to restricting the sale of Canadian uranium to those countries which are willing to sign the non-proliferation treaty?


Hon. Paul  Marlin@Secretary of State for External Affairs: Mr. Speaker, the policy in the sale of uranium has been previously outlined by the government. Uranium can be sold only for peaceful purposes, and then only with the application of international safeguards.


David Samuel Horne MacDonald: Will the minister now direct himself to the question as to Whether certain countries presently receiving Canadian uranium may be cut off as the result of refusal to sign the nuclear nonproliferation treaty?


Mr.   Marlin@Essex East: Mr. Speaker, I do not think there is any connection between the application of safeguards in respect of uranium for peaceful purposes only and the position any country may take regarding the treaty of non-proliferation. This treaty does not necessarily deal with the supply of fuel, but deals with the undertaking of non-nuclear powers to restrict expansion in the nuclear club by not developing or acquiring nuclear weapons.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I should like to ask the Minister of Justice whether he now has an answer to the question I asked yesterday, regarding an apparent change in procedures for prosecution of individuals found in possession of marijuana.


Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, I missed the question, but I will read it and try to give an answer to the hon. member.


Gilles Grégoire: Mr. Speaker, I should like to put a supplementary question to the Minister of Justice.
I would like to ask him if he always answers in English because his French is lousy.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, my question is prompted by the urgent need for better means of transportation in northwestern Quebec.
I wish to ask the hon. Minister of Transport whether his department is now considering extension of the Chibougamau railway to the iron ore deposits at lake Albanel; could he also tell us whether other studies are now being made elsewhere in Canada?


Mr. Speaker:: I would suggest to the hon. member that he should put his question on the order paper.



AIR CANADA


[Stage Direction]
On the orders of the day:
Mr. L. R. Sherman (Winnipeg Souih):: Mr. Speaker, I have a question for the Minister of Transport which is not related to the series of airport questions asked earlier. This question arises from a communication I received today from my own provincial government. Is the minister in receipt of a telegram from officials of the Manitoba government urgently requesting clarification of his latest talks with Air Canada on the subject of the Winnipeg air base?


Paul Theodore Hellyer: No, Mr. Speaker, not to my knowledge. This may have been received by my office since I have had the opportunity to communicate with my officials.



REPORTED STATEMENT BY AGRICULTURE MINISTER RESPECTING WHEAT BOARD

[Stage Direction]
On the orders of the day:
Mr. Lawrence Watson (Assiniboia):: Mr. Speaker, I have a question for the Prime Minister which is of utmost importance to
February 15, 1968

farmers in western Canada. Has the right hon. gentleman checked whether the Minister of Agriculture was advocating government policy when he said publicly that the Canadian Wheat Board should become an agent of the federal government instead of an agent of the farmers?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, I rise on a question of privilege. Again I would recommend that the hon. gentleman read my speeches with more care.


Michael Starr: No copies are available. You make them off the cuff.


John James Greene: Copies are available in my office if they are required.


Lawrence E. Watson: I should like to ask the Minister of Agriculture whether he is aware of the fact that all the newspapers in the west have reported that he has said this in various places in western Canada. The farmers want to know whether this is a fact.


John James Greene: Let me suggest again, Mr. Speaker, that if the hon. gentleman will read my speech he will see that I suggested a discussion of this topic. I never recommended this policy, nor did I suggest it as government policy.


Mr. Ed. Schreyer (Springfield):: Mr. Speaker, in view of the fact that the Minister of Agriculture suggested to the hon. member for Assiniboia that he should read his speeches more carefully, as he suggested to me, I should like to ask whether he will accept the assurance that we will read his speeches with more care if he will speak with more coherence.



WHEAT-INQUIRY AS TO RENEGOTIATION OF AGREEMENT WITH CHINA

[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I should like to ask the Minister of Trade and Commerce whether China has requested or does the wheat board anticipate renegotiation of the present wheat agreement with that country.


Robert Henry Winters: Mr. Speaker, the present wheat agreement has another year to run. At the end of that time I hope conditions will be favourable for the negotiation of a new contract.
Inquiries of the Ministry


Stanley James Korchinski: I based my question on the report of a statement made by Mr. McNamara. If this should be the case, will the government undertake to see that a greater volume of the grain produced-


Mr. Speaker:: Order, please. The hon. member will recognize that his question is hypothetical.


Stanley James Korchinski: Mr. Speaker, perhaps I could rephrase my question. In view of the fact that China is taking only a bare minimum under the present wheat agreement, will the government undertake to ascertain whether a greater volume can be sold before negotiations are undertaken during this period of depressed prices?


Robert Henry Winters: Mr. Speaker, the premise is not correct. China is taking more than a bare minimum.



BRITISH COLUMBIA-INQUIRY AS TO FEDERAL ASSISTANCE

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker,
I should like to ask the Minister of National Defence, who I understand has seen a telegram directed to the Minister of Labour from the minister without portfolio of the British Columbia government, whether his department has any plans to put into effect emergency action in the Bella Coola valley as the result of a flood which may take place there at any moment.


Léo Alphonse Joseph Cadieux: Yes, Mr. Speaker, I am aware of this telegram sent to the Minister of Labour. There was some delay in this regard; the telegram should have come directly to the department from the attorney general of British Columbia, but we have taken action as requested by the minister without portfolio.



NATIONAL HOUSING ACT


Mr. Pennell:: Mr. Speaker, having regard to a question asked earlier this day I should like to ascertain whether it is agreeable to the house to adopt item No. 64 on the order paper without debate.
This is the resolution in respect of an amendment to the National Housing Act.


Mr. Speaker:: Is that agreed?

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Income Tax Act


Some hon. Members:: Agreed.


Edgar John Benson: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the National Housing Act, 1954, to increase from $13,000 to $18,000 the loan ratios for insured loans to home owners, builders, and co-operative housing associations for the construction of new housing units.
Motion agreed to and the house went into committee, Mr. Batten in the chair.
Resolution reported and concurred in.
Mr. Benson thereupon moved for leave to introduce Bill No. C-202, to amend the National Housing Act, 1954.
Motion agreed to and bill read the first time.
[DOT] (3:20 p.m.)



INCOME TAX ACT

[Stage Direction]
The house in committee on Bill No. C-193, to amend the Income Tax Act-Mr. Sharp-Mr. Batten in the chair.
The Chairman:: Order. House in committee of the whole on Bill No. C-193, to amend the Income Tax Act. Clause 1.
On clause 1-Special table.


Marcel Joseph Aimé Lambert: Mr. Chairman, I spoke on the resolution stage and in the budget debate with regard to the income tax proposals generally of the government. I did not speak on second reading of the bill. I do not know whether it will be the practice of the Chair to allow a general discussion on later clauses of the bill. The first clause is highly innocuous and would not normally call for any comment.
My comments are really more directed to clauses 4 and 5 of the bill. I am wondering how Your Honour proposes to conduct the business. I shall have some remarks to make with regard to the surcharge and to the corporate tax. Perhaps the committee would consider whether more general remarks might be made on clause 1 rather than on clauses 4 and 5. I should like guidance from Your Honour in this regard.


Mitchell William Sharp: Mr. Chairman, it seems to me that clauses 1, 2 and 3 are of a purely technical character and if there are to be remarks of a general nature such as has been suggested by the hon. member for Edmonton West they could quite appropriately be made on
[Mr. Speaker.)
clauses 4 and 5. The first three clauses are merely technical in character.


Herman Maxwell Batten: The usual procedure, of course, is to have the general debate on clause 1, assuming that clause 1 is not just a short title. However, if it is the wish of the committee to have a general debate on the bill under clause 4, there is no reason at all why that should not be done. If the general debate is to be on clauses 4 and 5, or either of these clauses, I would ask members of the committee to confine their remarks in connection with clauses 1, 2 and 3 to those actual clauses.


Marcel Joseph Aimé Lambert: That is fine, Mr. Chairman. I wonder whether I could get a little more clarification in respect of clause 1 than is contained in the explanatory notes. I know the clause has to do with the use of tables on the income tax forms but perhaps the minister, guided by his officials, could tell us briefly what is the real, shall we say, housekeeping change that is being made here.


Mitchell William Sharp: Mr. Chairman, the amendment contained in clause 1 is to the subsection of the act which authorizes a table for individual tax return forms to assist taxpayers in calculating the amount of tax payable. This table combines the federal, provincial and old age security taxes and permits a taxpayer to ascertain the combined tax payable on an amount of taxable income without having to make separate calculations using the rate schedule, the provincial rates, the old age security tax rate and the special 20 per cent tax reduction for small incomes. It is intended that this table on the 1968 forms will include the new 5 per cent surtax. The proposed changes in the wording of the present subsection are necessary so that it will authorize the table planned for 1968.


[Stage Direction]
Clause agreed to.
On clause 2-''Tax otherwise payable under this part."
Mitchell William Sharp: Mr. Chairman, perhaps it would assist the committee if I were to make a short explanation of clause 2. This is a technical amendment to clarify the interrelationship of the subsection which authorizes the construction of a table for use on tax return forms described in connection with clause 1 and the definition of "tax otherwise payable under this part". Only subparagraph (i) in the amendment to paragraph (c) is new. Subparagraph (ii) repeats the present definition of the
February 15, 1968



expression "tax otherwise payable under this part".


[Stage Direction]
Clause agreed to.
On clause 3.
Marcel Joseph Aimé Lambert: Mr. Chairman, is this a loophole-plugging? Did the administration find that there were cases where it could be argued that there was some doubling-up on the averaging provisions in so far as farmers and fishermen are concerned? Just how equitable is the plugging of the loophole?


Mitchell William Sharp: This amendment is not prompted by any cases. During the review of the section to determine how the 5 per cent surtax should be applied, the officials decided that the section was not as tightly drafted as it might have been.


Marcel Joseph Aimé Lambert: In other words, they found a loophole but they plugged it.


[Stage Direction]
Clause agreed to.
On clause 4-Corporations.
Marcel Joseph Aimé Lambert: Mr. Chairman, clause 4 is what might be termed a sleeper clause because its impact was not noticed too much at the time of the budget presentation, the budget debate and the resolution stage. It is purely an acceleration clause in so far as the paying of corporate income tax is concerned. This provision really puts a tight squeeze on corporations, which are now having to pay taxes almost on the same basis as individuals, by monthly instalments, and completely within a very short time after the completion of their taxation year.
[DOT] (3:30 p.m.)
As we know, there was a change made about two years ago, if my memory serves me correctly, whereby corporations were required to pay up the balance of their income taxes within three months of the close of the fiscal year, notwithstanding how complicated were their operations. This change was a device adopted by the minister of finance of the day as a one-shot proposition to net him some $250 million, if I remember rightly, in order to hide what had become a rather disreputable deficit for an administration that had come into power priding itself that they would soon put the fiscal house in order. They alleged it was in disorder. On the other hand, we saw them continue the same practices. Therefore if they adopted them, and they were such saintly people, there must
Income Tax Act
have been legitimacy to the practices which had existed.
In any event, the extra $250 million was gathered in order to gild the lily, a one-shot proposition to help in the attempt to balance the budget. I suspect this is a similar operation because, as we can see from the note, the amendment would require corporations to pay their corporation income taxes over a period which commences two months closer to the beginning of their taxation year than is the case at present. As a matter of fact, if my calculations are correct corporations will only be one month away from paying these taxes one month at a time.
Today, corporations are finding it exceedingly difficult to borrow money. There is no doubt that money is tight and getting tighter. As the result of a move by the government and the Bank of Canada to deal with the balance of payments problem the bank rate has gone up to 7 per cent. This is having a negative effect with regard to the domestic economy. It is in part a legacy of arrangements that were made by the minister's predecessor during a disastrous period of office in which Canada was caught by the interest equalization proposals of the United States. Those proposals were, in effect, retaliation for some rather foolhardy proposals put forward by the present government in 1963 and 1964. The ripples from this disaster will come to shore for many years, and this is one more of those ripples.
Corporations are faced with problems of liquidity and working capital. On the one hand the government is saying, it will make it more expensive for you to operate. After all, it was only this week that the banks again, quite naturally in view of the action by the Bank of Canada, moved their prime rate up to 7 per cent. This action was expected to follow as night follows day. If the bank rate should go to 7J per cent, and there is a suggestion this might happen because the steps the government has taken with regard to the encouragement of foreign investment in Canada are not paying off at the hoped for rate, then one might expect that within the next few days after the event the chartered banks would increase their prime rate. This is the way the economy is tied together at the present time.
After all, the corporations provide the backbone of business activity in this country. I do not have the same views about the word "corporation" as do hon. members to my left. They believe that as soon as two people in

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business form a corporation they become big, bad wolves. The word "corporation" covers any company in a business operation, from two or more people to the largest enterprises. They are all corporations. They all pay their income taxes on the same scale. This new section 50 will require the two-man operation, perhaps a husband and wife, to pay their taxes on the same basis as, say, General Motors of Canada, the Canada Cement Corporation or any other large corporation which in most instances has adequate sources of working capital.
The Income Tax Act is now going to make sure that the majority of the medium-sized and smaller incorporated businesses will be right up against the collar of cash requirements all the time. But somehow they will have to find the cash, notwithstanding the fact their working capital may be tied up in inventory or in receivables. The Income Tax Act says they will have to pay one-twelfth of their estimated taxes each month and will have to clean up the balance within three months of the end of the fiscal year. Individuals are allowed four months in which to pay their taxes but corporations will be allowed only three months. The corporation may happen to be a service station operator and his wife who have incorporated the business, or two men operating a trucking service who have incorporated. This is precisely what they are going to have to do.
I suggest that this provision results from the desire of the government for money. It is not anti-inflationary in any way at all. The purpose of the change is to bring in some money quickly in order to cut down the swollen deficit of this administration. Up until this moment I have not been able to ascertain the additional funds the government will get within the next 18 months or two years as a result of this provision, but I would say it is just as nefarious and perhaps even more pernicious in so far as the Canadian economy is concerned than the 5 per cent surcharge on income tax. I will have something to say about the surcharge on personal income tax when we reach clause 5.
[DOT] (3:40 p.m.)
This is an acceleration of the payment of income tax by incorporated businesses. It is an attempt to siphon off more money. Is this for an anti-inflationary purpose, Mr. Chairman? I suggest to the minister that it is not. Taxation is used for the purpose of combating inflation, to eliminate funds that are chasing

too few goods and services. But would anybody suggest that in this country today there are too few goods or services available? Certainly there are not. If we reduce the demand for goods and services in this country, this will bring about, first of all, unemployment as a result of fewer services and a decline in the production of goods that are produced in Canada for Canadians. This again will lead to further unemployment.
It is all right to impose taxes as a means of combating inflation or inflationary pressure in time of war, when we all know that it is desirable not to produce certain goods and engage in certain services because others have higher priority. But income in the hands of the populace as a whole which is chasing too few or fewer goods and services tends to drive up prices. That is classical economic theory, and we do not need to go into the details of the theory of supply and demand in this debate. In this day and age, however, such theory is not applicable. I suggest that in fact the very converse situation will occur. I am wondering whether this is part and parcel of the minister's expressed intention, on behalf of the government, to bring about a little slackness in certain sectors, a slackness that might be tolerated and even encouraged.
What will be the result of some of these consequences, Mr. Chairman? These consequences flow not only from this acceleration of the payment of corporate income tax, which will make things more difficult for businesses, but also for the surcharge on personal income tax. We realize that the government does face certain problems. There is relatively galloping inflation. For example, there is an increase of 4.5 per cent in the cost of goods and services, according to the consumer price index last month. There may have been a couple of years during the early fifties when higher rates of inflation occurred, and we know what the consequences were of that.
This administration also faces the problem of balance of payments on international account. Recently there was the beginning of a run on the dollar owing to a lack of confidence in the international money market. At that time the government had to take steps to reduce its expenditures, put its own financial house in order and take measures to combat inflation. Since the budget there has been a greater increase of inflationary pressure in that some of the new excise taxes are reflected in the cost of living index. And before long, Mr. Chairman, I suggest to the minister
February 15. 1968

that the income tax surcharge will also result in a further increase in the cost of living. This will be due to demands for higher wages. After all, Mr. Chairman, practically every individual who is paid a salary or a wage today has income tax deducted at source. What he is interested in is his take-home pay. Even when he is being paid $250 a week, if $75 income tax is deducted, and now the minister proposes to deduct a further $5 or $10, this individual will be interested in maintaining the status quo and will consequently seek to recover that extra $5 or $10. He too wants to hedge his future against inflation, which is quite a natural reaction.
The government also needs more funds to meet its program of expenditure. I think we could suggest that in certain areas this program could be cut back, but let us just look at some of the remedies that the government proposes to take. For example, Mr. Chairman, as a result of pressure the government stated that it would cut back on expenditure, and with the greatest of fanfare introduced estimates a week ago totalling $10.3 billion. The government stated that this was but a 3.6 per cent increase over last year. However, when we compare estimates with estimates it is, as the Leader of the Opposition rightly pointed out the other day, an actual increase over last year of about 8 per cent. This, Mr. Chairman, notwithstanding the protestations of the President of the Treasury Board who said: "Oh, well, you are really not comparing the same things. Since we are now using computers we can guarantee fewer supplementary estimates this year."
Even if we make some adjustment and include some of last year's supplementaries with the main estimates, which would make the situation more comparable according to the President of the Treasury Board, the increase amounts to about 6 per cent. In actual fact I suggest this 3.6 per cent figure was a big sell-out. Unfortunately many of the communications media bought it and we saw big black headlines declaring, almost as though a miracle had occurred, that the government was holding itself to an increase in expenditure of 3.6 per cent. Of course, Mr. Chairman, that is nonsense; there will be further supplementary estimates. It is just as though I were saying to my neighbour, Mr. Chairman, that I owe him $100 but this does not take into account the $25 I lost to him last night at poker and other liabilities that I have.
Income Tax Act
We know that there is going to be a further item in connection with the Expo deficit. We are not quarrelling with this at the present time but we do say to the government: Do not tell us that you are going to keep your expenditures within 3.6 per cent of last year's. That was an exercise in misleading the public completely. Then for the government to say that the public service would be limited to an increase of only 5,000 persons a year as against the normal increase of 15,000 a year is to camouflage the matter. The increase has been 15,000 a year only since this administration has been in power. We have had a fantastic increase in the numbers of high-priced jobs in the civil service, but that matter may be gone into on another occasion.
[DOT] (3:50 p.m.)
Yet there is not a penny in all these estimates to take care of civil servants who retired many years ago and who today, as the result of inflationary pressures and increased taxes, are facing truly difficult times. As a matter of fact one might say that this government espouses increases for the rich and decreases for the poor. That has been one part of this government's policy, especially as it applies to the public service.
It was strongly suggested to the government that it should set aside some of its more expensive programs. I shall not go into the arguments which were advanced the other day by the Leader of the Opposition about the implementation of medicare but I endorse those arguments wholeheartedly.
With regard to the wise counsel which the Minister of Finance gave to the provinces and municipalities to cut back their spending and save money, may I say that I agree with the minister and support him in those pressures that he is putting on the provinces and municipalities. Some provinces and municipalities have taken heed of that counsel. Over the years some of them have become very fat and lax, I think, in the matter of watching their expenses.
Now we come to the options which are open to the minister. I have spoken about what I think is the inequity and wrong usage of the income tax surcharge. It may be antiinflationary but certainly it hits every wage earner today who comes within a taxable bracket. Surely the minister could have mitigated inflationary pressures by giving private taxpayers the same consideration he gave the corporations some time ago when there was a

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Income Tax Act
refundable surcharge, assuming that there was a necessity for any increase in personal income tax. I do not think there was any such necessity. I do not think the government needed to increase personal income tax and I do not think it should have entered the corporation income tax field either.
I have previously expressed myself about excise taxes and about the relative luxuries of tobacco and liquor. Only now, having allowed the provinces complete liberty in this field, has the government of Canada seen fit to move into it. The provinces had complete liberty so far as liquor was concerned to increase revenue without resorting to their legislatures. They merely ordered an increase in liquor prices. Those remarks do not apply to tobacco since provinces must take legislative action to impose an additional tax on tobacco. In any event, I think the populace generally is prepared to accept taxes on these two important items and might have accepted more. I am certain that the minister might have looked toward an extension of excise taxes on certain services as a result of which there would have perhaps been greater equity. In any event, I feel that the acceleration of the payment of corporation taxes which the minister has proposed is a retrograde step.
I hope that in the estimates and in the budget for the forthcoming year these matters will be considered. I am not sure that the present minister will deliver that budget; that question is in suspense at present. I think he would prefer not to have to deliver it, because if he does his hopes with regard to something else will go by the board. In any event, I think the provision I have mentioned is a retrograde step, and the next provision of the bill is even more repugnant to me. I believe that these two steps with regard to income tax are not necessary in any way.


Edward Richard Schreyer: Mr. Chairman, at the outset I must say that it is impossible for me to be enthusiastic about this bill for a number of reasons. The first reason is obvious. No one likes higher taxes. Not many, and no doubt this includes the Minister of Finance, can react as philosophically to paying taxes as Oliver Wendell Holmes who said that paying taxes did not bother him since they were simply the way that he helped to pay for civilization.
There are fundamental reasons for condemning this bill which are to be found when we look at the state of our economy and at the

state of our tax laws generally. Unlike the minister, I have no professional expertise in the fields of fiscal and monetary management. I have never really participated in any previous debate having to do with a review of the Canadian economy or the budget, the reason being, as I have said, that I have not the expertise that the minister and such hon. members as those representing Nanaimo-Cowichan-The Islands, Waterloo South and Edmonton West have in this field. They have repeatedly taken part in debates of this kind. Like many Canadians, in the field of economic and fiscal matters I am an amateur in the general and original meaning of the word.
I have followed with keen interest the policies of the government and its attempts to manage the Canadian economy fiscally and monetarily. This bill amends some aspects of our tax laws. I am not enthusiastic about it because it seeks to amend a tax law that has been condemned, after long and painstaking study on the part of the Carter commission, as inequitable. There can be no more damning indictment of a taxation system than is contained in the verdict of that single word "inequitable", a verdict arrived at by the Carter commission. Not only has the government failed to give any clear indication of where it stands relative to the main recommendations of the Carter report but it has also failed to indicate whether it will even bring forward a white paper or a position paper setting forth government thinking in connection with these proposals so that hon. members can begin to understand what the government has in mind by way of tax reforms.
[DOT] (4:00 p.m.)
This is why many of us approach the bill before us with a negative attitude right from the start. We are continuing to use a tax system riddled with loopholes and anomalies brought about by tax deductions and concessions which discriminate against those who earn their income and favour those who acquire it by way of capital gains. In short, our tax laws continue to be basically inequitable. They allow for the deduction of all kinds of expenses incurred by corporations, including not only such necessary items as office equipment, fuel and so on but also such things as luncheon expenses and the cost of hunting lodges. You name it, and it is likely to be deductible somehow. I am sure the minister is aware that the late President Kennedy made a serious attempt to get the United
February 15, 1968

States Congress to agree to tax reforms to cut down expense account living which is becoming a way of life among a certain element in society. If I may speak in the Jeffersonian idiom for just a moment, I should like to say that our present tax law in connection with expense account deductions appeals to the baser instincts of man and cultivates such instincts.
Our present tax law is inequitable because it tends to profit a few people greatly while discriminating against the many. This can be seen simply by looking at the way in which certain elements in our society reacted to the recommendations of the Carter commission. Through their briefs and their tax counsel they got their message over very quickly. They were opposed in essence to what the commission recommended. These people and their spokesmen were articulate, influential and powerful. They have succeeded in petrifying the government into inaction even to the extent that it refuses to give any indication of its attitude toward the basic proposals contained in the report.
The really sad thing is that hundreds of thousands of Canadians, the majority, in fact, who would receive more equitable treatment if our tax laws were reformed were led to believe by reason of these submissions and subsequent publicity in the press and elsewhere that they would somehow suffer a disadvantage ultimately if the principal proposals in the Carter report were accepted. I believe a hoax of epic proportions has been perpetrated on the Canadian people by those who submitted briefs almost completely in opposition to the major recommendations of the commission. The result is that the government has been paralysed by fear.
Throughout the past three years private bills have been brought forward seeking changes in the income tax law to allow for the deduction of expenses by men and women who in the ordinary course of their employment must incur expense in order to acquire special clothing or tools necessary to carry out their work. This is a simple proposition and one which is fair in every respect. My hon. friend from Sudbury has spoken eloquently about the need for bringing about a change in our present tax law which would make this possible. If this law is to be around for a few years yet, and it looks as though it will be, let us at least remove from it the more objectionable of its provisions.
Income Tax Act
Among these must be considered the nondeductibility of the cost of clothing, equipment and tools used by people in the ordinary course of their employment. Up to the present there has been no indication on the part of the government that it is prepared to accept arguments that such expenses should be deductible, and the basic unfairness of the law continues. Deductions in respect of such items as safety boots, hard hats and tools are not allowed, though deductions for entertainment, recreation facilities for clients and so on are allowed. It is hard to imagine how such a situation could be allowed to continue.
Instead of a proposition to remove some of this basic unfairness we have before us now a proposal to levy a miserable 5 per cent surtax on existing income tax. The minister has presumably taken this course because he feels it is an anti-inflationary measure. If it is an anti-inflationary measure it must somehow dampen consumer demands. But when my hon. friend from Nanaimo-Cowichan-The Islands spoke on this subject last November he pointed out that the present inflation syndrome does not have the characteristics of ordinary inflation. The minister said he agreed, and I think both hon. gentlemen are correct. It is not the kind of inflation with which we have been so familiar in the past.
If the bill before us does dampen demand to some extent it will be operating as though we had the kind of inflation which the minister himself has consistently maintained we are not experiencing. Thus it is difficult to see any logical basis for the course the government is taking. There would indeed be some logic attached to it if prices were rising as a result of excessive demand. But it is generally agreed we are not experiencing this kind of inflation. If anything, this is a cost push, a form of inflation with which we have been unfamiliar during the past few years. If anything the tax increase proposed here is ill suited for the purpose of combating it and will simply aggravate the inflationary trend. How can it avoid adding further to the factory cost of goods produced? It will give a further push to the inflationary factors which are at work. Perhaps this bill is simply a way whereby the government can raise revenue, but it has nothing to do with counter-cyclical management of the economy. As I have already tried to say, it will act perversely on the inflation we are facing.
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February 15, 1968
[DOT] (4:10 p.m.)
There are many other major problem areas deriving from the government's policies, equivocation and indecision. Obviously rising costs must have some connection with misdirected fiscal policy and with drifting monetary policy. Since I became a member of the house parliament was persuaded to amend the banking legislation and remove the ceiling on interest rates. We were given some very persuasive reasons for taking that course of action but looking back in retrospect, with hindsight, it is quite clear that the reasons we were given were entirely spurious and it was quite wrong for parliament to take that course of action on the recommendation of the government. The government's advice was wrong. One of the main arguments put forward in favour of removing the ceiling on interest rates was that it would help check the growth of near-banks and other undesirable forms of lending institutions. That seemed like a powerful enough argument, but there were other ways to take care of that problem. In the meantime the cure has been shown to be quite disastrous, with a round of increases in the cost of money to all productive sectors of our economy.
The minister now comes before us with a bill that will have the effect of dampening demand. The government is looking on with equanimity as unemployment passes the 4 per cent mark. This measure will not have a remedial effect in any case because a cost-push inflation requires a different kind of surgery from that which the government seems prepared to undertake. Some of the basic economic problems that tend to aggravate the inflation problem require more major surgery than the government is prepared to undertake.
Quite often we are told about the importance of attracting foreign capital to Canada. Yet in recent weeks we have seen the development of a phenomenon in which Canadian investment capital in the form of mutual funds is flowing southward at a rate which shows a ratio of about three to one in investment by those funds in the United States compard with their investment in Canada.
A few days ago the minister was asked a question in the house about this matter, and the posture he adopted was that this was simply part of the ordinary transaction of business, part of the ordinary movement of capital, and the government contemplated no

special measures with regard to this development. If Canadian investment moneys are flowing across the border at the rate recorded in recent months the question should be asked, is it simply a case of capital seeking a higher return elsewhere? Is that the main reason? Or could it be due to the relative shortage in this country of stock offerings in Canadian enterprises? Is it the practice of Canadian subsidiaries of foreign parent firms to make available significantly large blocks of shares to Canadian investors or Canadian investment funds? When there is an outflow of investment funds to another country it may well be due to the relative non-availability of equity stock in Canada and is not so much a matter of looking for a higher return. It should certainly be within the power of the government to react to this kind of problem and try to do something about it. My colleague from Waterloo South will have something more substantial to say in a little while about the availability of equity stocks in Canada.
The rising cost of housing has been a persistent problem within our economy. The cost has been surging for the past two years and more. All the time the government has been dithering. I use that word deliberately because while we have heard ministerial statement upon ministerial statement we have heard nothing of substance that would come to grips with the essential part of the problem.
Land speculation in urban centres and on the periphery of urban growth centres is a major part of the problem. This is becoming a social evil and not just an economic problem. I realize and admit quite readily that one course of remedial action does not involve federal power but has to do with provincial and municipal powers. Our provincial and municipal authorities should be showing a little more curiosity about how this problem is being dealt with in other places.
I understand that in the state of New Jersey and in other states within the last two or three years a real property assessment law has been devised that seems to go a long way toward dealing with the problem of land speculation which has caused the escalation of land prices in and around urban centres. Since the matter does not involve federal jurisdiction I hesitate to try to describe the nature of the changes that have been made in New Jersey in its real property law whereby
February 15, 1968

there is no incentive whatever for speculators to get into the act. Property taxation is based on land use and productivity to resident users. At the time that such land passes from primary production use, or whatever its use, to commercial development it is taxed retroactively for two or three years. As a result those who own land on the periphery of cities are able to retain it without suffering confiscatory penalties. They hold on to it longer and when it is passed on to commercial developers it is likely that the commercial developer will not hold on to it for one or two years before actually developing it. I believe that such a method of approach, which contains an incentive, would prevent a speculator getting in on the act.
[DOT] (4:20 p.m.)
The other factor which bears directly on the problem of escalating costs in housing construction is one that relates directly to this government. It is indeed a matter of exclusive federal jurisdiction. I am referring to interest rates, the cost of money and the availability of funds for housing. The response of the government over the past months and last few years has been to act as though, while possessing sovereign powers, it cannot find any means to deal with the problem of high cost money and relative nonavailability of mortgage funds.
The National Housing Act interest rate has been increased again in the hope that this will encourage the investment of more money in this field. While on the one hand it may have this effect it also has the effect of pushing up the price to such an extent that housing is simply beyond the reach of the majority of potential home owners. When that point is reached any kind of action that is taken becomes irrational. For the majority of the people in this country who are interested in and need housing the National Housing Act interest rate now is already such that it is of only theoretical concern to them. As we go on from day to day and from week to week we find that the National Housing Act interest rate has increased once again, the bank rate has increased and the prime lending rate has increased.
It is surprising to note the rapidity with which one bank follows another in increasing the prime lending rate. This almost gives one cause to wonder whether it might be of some value to have the anti-combines people look into the operations of the banks when they take concerted action such as this. I realize
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that the anti-combines legislation was never intended to be used in respect of banking operations or at least the operations of the chartered banks. However, it would be more than just an academic exercise for the anticombines people if they were to interest themselves in the operations of our banks and study the way in which it just happens that an increase in the prime lending rate by one bank leads so quickly to a similar increase by the others. In a sense I am rather sad that I allowed myself to be persuaded to go along with the legislation last year which eased the limitations governing the banks in respect of interest rates. Since then there has been a chain reaction of escalation always upward.
There is another matter which I should like to discuss very briefly. It has to do with housing and the problems with regard to residential construction. One of the minister's colleagues, the Minister of Transport, on a number of occasions has advocated the concept of the building of satellite cities. I do not have too much to say in that regard except that I believe this sort of thing will have more and more merit in the years ahead. I do not intend to be offensive to the minister but perhaps the fact that this idea is being proposed by one of his rivals for the leadership may tend to make him somewhat less enthusiastic about it. There has been such pressure on the metropolitan areas in terms of land and land prices that I believe any action which can be undertaken by government to reduce this pressure would be beneficial. For example, the Department of Industry now has a program to encourage the decentralization of industry in this country.


@Deputy Chair(man)? of Committees of the Whole: Order. I regret to interrupt the hon. gentleman but the time allotted to him has now expired.


Edward Richard Schreyer: Mr. Chairman, I could complete my remarks in a few minutes if I might have permission to continue.


Some hon. Members:: Agreed.


@Deputy Chair(man)? of Committees of the Whole: Is it
agreed?


Some hon. Members:: Agreed.


Edward Richard Schreyer: February 15, 1968
Income Tax Act
income. However, there is also an incidental benefit to be derived from it. To the extent that the program is effective and successful in reducing regional disparity in respect of income it should help at least a little to reduce the trend of the population to move to the bigger metropolitan centres. In this way it would help to reduce the pressure in these centres with regard to land prices, cost of housing and so on.
This government, however, is inconsistent, and this is unfortunate. In the past year there has been quite a move-it cannot be called insignificant in degree-of government offices from towns and smaller cities to the larger cities where they are centralized. This really does not help anybody except perhaps those who form the office staffs. For example, a town of moderate size in my area had three government offices of three government departments. Two of these offices have been moved out of that town into the metropolitan area of Winnipeg. One might ask why these offices have been moved. The move has caused inconvenience to the people whom the offices were intended to serve. It has also meant an increase in the cost to the government and the taxpayers in maintaining these offices. The rental per square foot for office space in the bigger cities is two and a half or three times as great. Who is behind this kind of reversed economic move? I doubt that the minister intends such a move to save rent, but the principle is important.
[DOT] (4:30 p.m.)
I object at this time, when everyone is talking about inflationary pressures, the need to cut back on essential public programs and services, and whether or not we are capable of launching and sustaining a national medicare plan, to the determination on the part of the government to build headquarters office space.


@Deputy Chair(man)? of Committees of the Whole: I regret to interrupt the hon. member but I do not consider his remarks to be relevant to the clause under discussion. I understand that we are considering clause 4.


Edward Richard Schreyer: Having regard to your
suggestion, Mr. Chairman, it is my understanding that at the request of the minister we did not make general comments on clause 1 but are making them on this clause. This obviously was the attitude taken by the hon. member for Edmonton West. With your indulgence I should like to conclude by saying that at this time, when we are talking

about the need for economies, it is difficult to understand why we should go ahead with the construction of office buildings in this capital area at a cost of $41 million. Many demands are being made for cut-backs in government programs and services, many of which are expensive but necessary. They are necessary and we must support them, and if economies are to be effected I suggest that the priority should be in respect of government office buildings.
I had intended to make some reference to the efficacy of this cost-push influence and the establishment of a prices review board advocated by my colleagues in past months. I will refrain from doing so at this time, but I should like to point out to the minister that he should prevail on his colleagues in the cabinet to look seriously and closely at the savings of several million dollars which can be made by withdrawing our forces in Europe under the NATO command. I do not wish that comment to be taken as an indication that we are advocating a change in Canada's commitment. At this time, when the United States is lowering its commitment to NATO and Britain is reducing the strength of its armed forces, I think we should have regard to the necessity of maintaining our air squadrons for an indefinite period of time. Tuesday the Canadian Labour Congress presented a brief to the cabinet and yesterday members of the C.N.T.U. made a submission. On one important aspect of policy they were in agreement. They asked the government to cut down favouritism in respect of tax laws. The C.L.C. stated that it has been a long time since a government has shown a propensity to satisfy the wishes of the rich and the powerful equal to that shown by this government. The C.N.T.U. may not have used the same words but the same message was clear. I agree wholeheartedly with both organizations.


Mr. McLean (Charlotte):: Mr. Chairman, I should like to ask the last speaker a question. He mentioned that we do not have ordinary inflation. I agree with him. We do have a price-wage spiral. Is it correct that the major surgery he suggests would be similar to what is taking place in the United Kingdom, that is, a ceiling on wages, prices and profits?


Edward Richard Schreyer: I realize the question is not intended to embarrass me and I will try to answer it. If the government lets things go too far and for too long it may be necessary, in order to cope with a crisis, to impose that type of limitation on prices, wages and
February 15, 1968



profits. However, when such a crisis is building up it seems logical, since we have review processes through collective bargaining, to maintain a price review. If that is not enough, then the next step obviously must be one of limitations.


Allan Marcus Atkinson McLean: The hon. member apparently supports the philosophy of the Carter report. He believes that if a man invests $10,000 and receives $800 interest he should be taxed but if he puts $10,000 into a house he should also be taxed to the extent of $800.1 do not understand that.


Edward Richard Schreyer: The hon. member and I have had some very interesting discussions at lunch-time and I am sure we will have more very soon.


Mr. Monteith:: Mr. Chairman, I should like to ask the minister one or two questions. As pointed out earlier by the hon. member for Edmonton West, the minister's predecessor brought in a one-shot windfall in respect of corporation taxes. At that time final tax payments had to be made within five months. I understand this period has now been decreased to three months but that the actual tax return must still be filed within six months following the end of the fiscal year.


Mitchell William Sharp: That is right.


Jay Waldo Monteith: I assume there are always adjustments when the final tax returns are filed six months after the end of a fiscal year. Is there any indication whether those adjustments are refunds or allowances on the next year's taxes or are extra payments made following the final estimated payment? I may not have made myself clear, but as I understand it the final return must be filed within six months after the end of the fiscal year. There would be adjustments in respect of that return despite the fact that the final payment of tax was supposed to be made four months following the end of the fiscal year. Does the minister have any figures as to how many adjustments might have been made, either additional tax paid or refunds allowed?
[DOT] (4:40 p.m.)


Mitchell William Sharp: Mr. Chairman, I do not think the question of adjustment arises very much in the submission of the final return. It is expected that corporations will make the adjustment in the course of paying the final instalments. The purpose of giving time is so they are not in default when carrying through
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their ordinary accounting practice and filing their returns.


Jay Waldo Monteith: In other words, Mr. Chairman, the minister is indicating that there have been inconsequential adjustments to the final returns that are made six months after the end of the fiscal year?


Mitchell William Sharp: That is right.


Jay Waldo Monteith: Is it expected that with the moving forward of the final payment to three months following the end of the fiscal year there will be more adjustments, or will there still be comparatively few?


Mitchell William Sharp: I think it follows, Mr. Chairman, that there is a greater chance of adjustment. But I think the companies will be able to calculate their tax liability pretty closely and adjust it during the instalment period even though that is now shorter.


Jay Waldo Monteith: I have one further question, Mr. Chairman. Does the minister feel that we have now reached the minimum period at which any final tax payment can be expected or is he looking forward on some other occasion to again moving the date forward?


Mitchell William Sharp: Mr. Chairman, I am not planning to bring forward the date of payment any closer to the end of the fiscal year, but I certainly would not want to give any undertaking that some government would not do it in the future.


Alfred Dryden Hales: Mr. Chairman, in view of the minister's answer I should like to ask him a question. Would the minister give consideration to paying sooner to corporations and individuals money that the government owes them so that they in turn may advance their payments?


Mitchell William Sharp: Mr. Chairman, I think the government of Canada is considered to pay its bills about as rapidly as they are customarily paid in the commercial world.


Michael Starr: Then why are there so many complaints?


Mr. Germa:: Mr. Chairman, Bill No. C-193 is a result of the introduction of the mini-budget by the minister on November 30 last. One of the objects of the mini-budget was stated in the first paragraph of the minister's speech wherein he said:
-first, to restrain the inflationary increases in prices, costs and the cost of living-

February 15, 1968
Income Tax Act
I believe it is a well known tact, one that is accepted by the establishment, that when the economy becomes overheated it needs a little grease. The budget indicated that, as in the past, the way in which an economy is greased is by allowing unemployment to rise. This has been the traditional grease on which our private enterprise economy has functioned for many years. This bill seeks to remove from the consumer certain amounts of money which will, in the minister's words, allow a little slack to take place within the economy. We have interpreted this action, and I believe it is a true interpretation, as being designed to create unemployment and ease the supposed overheating of the economy. The minister has failed to realize that prices can be controlled by other means than reducing consumer income.
Since this statement was made by the minister several matters have been raised in the house. Suggestions have been made to which the minister could have applied his mind. One example is the increase in the price of copper which has taken place since the minister introduced this piece of legislation. It was shown that the profits of the copper corporations, Hudson Bay Mining and Smelting Company Limited, Noranda Copper and International Nickel Company, were such that the four cent increase per pound in the price of copper was not necessarily required at this time. I fail to see what could be more inflationary in our economy than this increase of four cents per pound in the price of copper.
There is also the case of Bell Telephone Company which increased its profits beyond what was allowed. The rate of profit of this company was set by the house but when Bell Telephone went beyond what had been dictated by the house the government saw fit to introduce a lot of doubletalk to justify these excess profits. The government did this instead of taking action and demanding that Bell Telephone return to the consumers the moneys Bell had stolen from them over the past few years. I say "stolen" because it made these excess profits in contravention of what had been laid down by this house. But the government did not see fit to take any action in that regard.
In the last few days we have also seen an example of profiteering in Canada that has no equal. I refer to the profits being made by Canadian drug manufacturers. The government seems unwilling or unable to deal with this profiteering. I believe it is in this area

that inflationary trends are taking place. Excess profits must be curtailed, I believe, as well as taking extra money from Canadian consumers.
The hon. member for Edmonton West, without any provocation from this quarter of the house, at every opportunity levels criticism against this party. He seems to take a delight in misrepresenting our position with respect to certain items of legislation that we propose or wish to have rejected.


Louis Ralph (Bud) Sherman: Mr. Chairman, would the hon. member permit a question? With regard to the matter of misrepresentation, would the hon. member not concede that a moment ago he may have misrepresented the position of Bell Telephone by the ill-considered allegation he made against that company in this chamber?


David Orlikow: He was 100 per cent right.


Louis Ralph (Bud) Sherman: The hon. member has added his voice to that scandalous allegation.


David Orlikow: Mr. Chairman, perhaps I may be permitted to say something since the hon. member for Winnipeg South has brought my name into this matter. I agree completely with every word which the hon. member-


@Deputy Chair(man)? of Committees of the Whole: Order, please. Is the hon. member rising on a question of privilege?


David Orlikow: Yes, I am, Mr. Chairman. I agree 100 per cent with every word the hon. member for Sudbury has said about the unconscionable profits Bell Telephone has made. The record will show-


Mr. Cantelon:: That is not a question of privilege.


Louis Ralph (Bud) Sherman: Mr. Chairman, that is hardly a question of privilege. I asked the hon. member for Sudbury a question.


@Deputy Chair(man)? of Committees of the Whole: Order, please. Will the hon. member state his question of privilege.


David Orlikow: My question of privilege is a very simple one. When I made my interjection I think I was stating the fact.


@Deputy Chair(man)? of Committees of the Whole: The hon. member for Sudbury.


Melville Carlyle Germa: Mr. Chairman, I do not know exactly what the hon. member is alluding to
February 15, 19G8

but my information, and I believe it is correct, is that the Bell Telephone Company has consistently exceeded the allowable profit margin as dictated by this house. If it is not stealing when it goes beyond the dictate of this house I do not know what stealing is. The Bell Telephone Company should have been required to refund that portion of profit which it made above that dictated by parliament. If that is not the case I have been misinformed, but to the best of my knowledge that is the situation. It is not the first time Bell Telephone has done this; it has done it consistently over the past ten years. I believe that every year the Bell Telephone Company has exceeded allowable profits but at no time has this government ever demanded that it return that money. The Bell Telephone Company seems to dictate to the government. It goes ahead and does what it wants and then the government passes legislation so it will be protected.
[DOT] (4:50 p.m.)


Louis Ralph (Bud) Sherman: May I ask the hon. gentleman another question? The point of my question was his use of the term "stealing" which I suggest has a scandalous connotation, especially in the way he used it. If he is talking about exceeding certain minimums, perhaps there might be an academic application of the term he has employed. However, when he talks about stealing by a company that is almost totally Canadian owned and operated and which has functioned for the benefit of the people of this country for many years as a good corporate citizen, then I suggest that term should not be allowed to remain on the record.


Melville Carlyle Germa: Mr. Chairman, the hon. member is splitting hairs. The government has since legalized the position of the Bell Telephone Company but prior to the legalizing of its position it must have been theft because the company did not fall within the four corners of the legislation enacted by this government. The government has retroactively cleared the company of theft. The government has pulled up the protective blanket of legislation around the company. I do not feel I should withdraw that term merely because the position of the Bell Telephone Company has been legalized or because the company happens to have a large proportion of Canadian shareholders. This still does not give the company permission to steal from the rest of the population of Canada. I care not what the nationality of the thief is. If he is a thief I think he should be called that.
Income Tax Act


Mr. Allmand:: Would the hon. member permit a question? Does the hon. member realize that only a few weeks ago in the transport committee several members of his party agreed to the Bell Telephone bill which permitted the company to do many of the things of which he is accusing it? He is accusing the government of being the only party to this approval, but does he realize that two members of his party approved the Bell Telephone bill?


Mr. Peters:: If this is true and you can prove it, we will not pass that bill today.


Melville Carlyle Germa: There was never any intention on the part of members of this party to recognize the excess profits of the Bell Telephone Company. In fact, if you would like to know the party position on the Bell Telephone Company we feel that as a public monopoly it should be grabbed by the government. If there is anyone in the house who does not believe the Bell Telephone Company eventually will have to be nationalized, then he is living in a dream world. This company should have been grabbed long ago. It has exploited the population of Ontario and Quebec, with the permission of the government, to a degree unseen anywhere.


Mr. Bell (Carlelon):: That is utter nonsense.


Melville Carlyle Germa: If you want some more I will give it to you. These are all the free enterprisers talking.


David Orlikow: There is no Bell Telephone in
other provinces.


Melville Carlyle Germa: The telephone companies are government controlled in other provinces but in Ontario and Quebec we have to suffer the Bell Telephone Company which does as it pleases with government protection.


Thomas Miller Bell: This is just total rot.


Melville Carlyle Germa: I did not intend to get into a long discourse on the Bell Telephone Company, but I hope I have made my position and the position of this party clear.


Mr. Byrne:: That is nothing new.


Melville Carlyle Germa: Mr. Chairman, I was talking about-


Mr. Nowlan:: We like to hear about this. Keep on talking. Let us know your true position.

February 15, 1968
Income Tax Act


Melville Carlyle Germa: If you people believe in the free enterprise system, come out and say so. We would like to hear it. What about Ontario Hydro? You are getting the cheapest electricity possible and it is a government owned agency.


John Patrick (Pat) Nowlan: What else does the hon. member want to nationalize besides the Bell Telephone Company? I should like to hear your true position.


Herman Maxwell Batten: Order. Perhaps I could ask the hon. member to proceed with his remarks and to confine those remarks to the clause before the committee.


Melville Carlyle Germa: I shall try to abide by your ruling, Mr. Chairman. These interjections must not go unanswered, of course, because they would leave wrong impressions on the record. I believe they have to be corrected. I will continue in the vein you have suggested, Mr. Chairman.


Louis Ralph (Bud) Sherman: I would rather be stuck with our members than yours.


Melville Carlyle Germa: There are a few unruly people here, Mr. Chairman, who do not like to hear the truth. They know that their system is falling apart at the seams and when someone makes constructive proposals all they can do is jeer.
The hon. member for Edmonton West took some pains to defend the corporate cause. He said corporations were going to be hurt a little by this legislation because they will have to make their final tax payments by the end of the third month after the close of the year instead of the fifth month. This is certainly a hardship. There will be no increase in the amount of money they will have to pay. This is just an updating of the due date.
Let us compare the situation of a corporation with that of the average individual. The average individual who is paid by the week pays his taxes within seven days of receiving his money, so the corporation still has a 60-day advantage over the individual taxpayer. I cannot see that it is any hardship on the corporation merely because it has to meet its taxes by the end of the third month instead of the fifth. When the act provided for a five month lag in the payment of taxes this amounted to the government lending corporations money without interest.
The hon. member for Edmonton West said that these corporations will now have to go

out and borrow operating capital. Certainly they will have to go out and borrow operating capital. Why should they use money which rightly belongs to the citizens of Canada? Why should they be able to use this money interest free? If you believe in the free enterprise system then you have to pay what money is worth. Why should these people be unwilling to pay for the capital they use, just as you and I do when we have to go out and borrow capital to meet our operating needs?
There is no doubt in my mind, Mr. Chairman, and this fact has been documented within the past four years, that the tax system as we know it today is very unjust. I do not believe that merely patching it up with this type of legislation is going to alter the situation. I believe that the morale of the Canadian people is being lowered by the perpetuation of a system which does not bring equity to the people of Canada in their support of the country through the present tax system.
When Mr. Carter was given the job of studying the tax system he had broad terms of reference. I believe he did a very good job. I was sorry that the minister, in his statement on November 30, more or less rejected the Carter commission report on the flimsy ground that the report was written in 1964 and therefore would not necessarily apply to 1969. I am sure that the figures are going to change between 1964 and 1969 but I feel that principles go on forever. If a principle was right in 1964 I feel quite sure it will be right in 1969. If the principles are wrong now, and I believe they are, they are going to be wrong 100 years from now. I believe we have to take steps to correct these inequities so the people of Canada will have faith in this government which, as you are well aware, Mr. Chairman, is losing the support of the people at an alarming rate. I suggest that the government look at some of the objections that have been made to the Carter recommendations. Almost 100 per cent of the objections comes from the elite of the corporate and monopolistic enterprises, the 2 per cent that controls the Canadian economy. If suggested legislation of that kind is bad for them then it must be good for us. After all, I do not think any legislation could be bad for everybody.
[DOT] (5:00 p.m.)
In their submission to the government these companies condemn any kind of social spending. They care not for the humanities.
February 15, 1968

All they want is to maximize their own profits. Industries that are foreign owned show very little concern for the citizens of Canada. Most of the objections that have been made to the revamping of our tax structure should be rejected by the government on the ground that they are put forward by selfish interests that have no concern for Canada or for the citizens within its boundaries.
The person who bears the brunt of taxation change in this country is the wage earner. His sole source of income is easy to tap because his earnings are known to the minister. So far as the minister is concerned, such a person is naked. He cannot take advantage of any legislation to offset part of his income. He is the man whom the minister is more prone to attack; yet he is least able to pay a 5 per cent surcharge in addition to the tax he normally pays.


Herman Maxwell Batten: Order, please. I hesitate to interrupt the hon. member but perhaps I should remind him that the remarks he is now making should be made on clause 5 rather than on clause 4.


Melville Carlyle Germa: Mr. Chairman, at the outset of this debate the minister said he would like to see a general debate on both clause 4 and clause 5. If that was not the correct interpretation of the minister's request I should like further guidance.


Mitchell William Sharp: Mr. Chairman, I should like to confirm that I indicated to the house that I thought a general discussion could take place most appropriately on clauses 4 and 5. As long as these comments are not repeated on clause 5 I do not think any objection should be taken.


Herman Maxwell Batten: May I say that I was in the chair when this agreement was reached. If the committee wishes to have a general debate on a clause other than clause 1 or clause 2, as the case may be, then the Chair would have no objection. However, the Chair does take the view that any comments made by members, even though they may be of a general nature, should relate to clause 4 when clause 4 is before the committee and to clause 5 when clause 5 is being discussed. Perhaps I should invite the hon. member to continue.


Melville Carlyle Germa: Thank you for your indulgence, Mr. Chairman. Clause 4 deals with payment of income tax by corporations and the date of commencement of such payments, so I will confine my remarks to this clause as
Income Tax Act
closely as I can. To my mind corporations have enjoyed a privileged position in our tax structure. They have been treated more like human beings than have human beings themselves. Concessions granted to corporations throughout the years have allowed them to become powerful to the extent that they dominate us economically and apparently politically. More and more legislation seems to be designed to favour those who are in this privileged class and they become more and more privileged.
Let us consider the anomalies within our income tax structure in the development of our natural resources by these corporations. I do not think the minister or any Canadian should be inhibited in his demands for a fair share of the wealth extracted from our natural resources by these corporations. As Canadian citizens we own these resources. There is no doubt in my mind that we should have priority over those who perhaps have their names on a paper. Everything in Canada belongs to the citizens of Canada. Every tree in this country, Mr. Chairman, belongs to you and me collectively. So does every ore body in Canada. It is incumbent upon the minister to extract from corporations that are depleting these resources a fair share of their profit.
It has been shown many times in the past that after mining companies have depleted bodies of ore the taxpayers' money has to be spent on alleviating hardship in the area concerned. Mining companies enjoy a three-year tax holiday. As I said a week or so ago, this law is 40 years old and it is time it was updated to meet the present-day techniques of exploration used by mining companies.
Another anomaly in the tax law of the country is the depletion allowance. The law provides that as the value of an ore body is reduced a mining company can reduce its capital cost by a like amount. However, take the case of the miner who has bought a house in the community. As the value of the ore body is depleted so is the value of this man's home; yet he is not allowed a depletion allowance on his home. This is one area where the minister should have introduced legislation to assist people who take the risk of working and living in a mining community. There is no equity in a system that allows a mining company to depreciate its capital cost at the rate the ore body reduces in value but does not allow home owners to depreciate their properties at the same rate.
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February 15, 1968
[DOT] (5:10 p.ra.)
There are several myths in Canada propagated by the press and various business associations to the effect that too much security will kill initiative. This is interpreted by the minister to mean that we must levy a tax on those we have chosen to be the work horses in the community. If we do not keep them a little hungry and lean they will lose their initiative. If the government were to follow this argument to its logical conclusion it would mean that the government would have to levy a 100 per cent tax on inheritances, since one-fifth of our business leaders inherited their positions. And who are we to say that they have lost their initiative? They still have initiative. Therefore this measure involves a contradiction in principles.


Reginald (Reg) Cantelon: Will the hon. member permit a question? Does he consider that a farm which may have taken a farmer a lifetime of work to acquire should be appropriated by the government through 100 per cent inheritance taxes?


Melville Carlyle Germa: To be clear, Mr. Chairman, I did not propose a 100 per cent inheritance tax. I merely pointed out to the committee that if the argument about incentive were taken to its logical conclusion we would have to introduce a 100 per cent inheritance tax in this country because otherwise we would ruin the incentive of so many people. Surely there is an inconsistency in, on the one hand, keeping the workingman's incentive high by keeping him hungry and, on the other hand, allowing others to live off inheritances. Those who live off inheritances do not have the same inducements as those who have no inheritances. I think the hon. member misinterpreted my intention, as is evident from his question.
The Carter commission made various recommendations to the government and, without being solicited, the mining companies presented some abusive briefs which I believe pushed the government into a corner. The government quickly promised the mining companies that not until 1974 would it consider removing the three-year exemption that the mining companies now enjoy. That shows the degree to which this government is controlled by the corporate elite of this country, that 2 per cent of our population who have the rest of us by the throat.
Had the minister really wanted to do something for Canadians, and I think the Minister

of Finance is the man who can best control the country and best correct many inequities, he would have raised the income tax exemption for our people. The basic exemption of $1,000 for a single person has been in our tax law for goodness knows how many years; it has been there ever since I have been paying taxes. It is completely out of line with present-day needs. I think the exemption for a single man should immediately be raised to $2,000 and for a married man to $4,000, if it is to come anywhere near meeting today's needs.


Herman Maxwell Batten: Order, please. I must advise the hon. member that the time allotted to him has expired.


Allan Marcus Atkinson McLean: Would the hon. member permit a question? He spoke about the mines and what would happen to the miners if they were forced to close down. We know that because the price of gold has not been increased for many years, gold mines all over the country have been closing down. Does the hon. member believe that the minister should advocate an increase in the price of gold in order to keep the gold mines open and thus keep the miners from losing their houses?


Herman Maxwell Batten: Order, please. The hon. member would require unanimous consent of the committee to continue.


An hon. Member:: No.


Herman Maxwell Batten: Shall clause 4 carry?


Mr. Lalulippe:: Mr. Chairman, I would like to say a few words on this bill.
It is not always pleasant, not always satisfactory, to Canadians to see their income tax being raised. But I feel that, in the present system, the way we raise taxes is patently unjust. The little man is still going to pay for everything. There is no end to the little man's taxes. He is taxed on all sorts of things: on production and on consumer buying. He is also taxed by the federal and provincial governments, the municipalities and the school boards, to such an extent that he is left with nothing to live on.
Our citizens find it very hard to make a living, especially the poor and those belonging to the middle class. The middle class is now in the process of disappearing, because it is overtaxed. Here in this house, we are unable to administer. We cannot do anything
February 15, 1968

without raising taxes and the rates of interest to financiers.
When the money lords raise their rates, the Minister of Finance (Mr. Sharp) does not blame them. One would think that he is pleased when the financiers come and raise their rates on capital, stocks and debentures. Everywhere, this is accepted with open arms.
Bonds are renewed, thus increasing capitalization from $500 to $700 million or any other amount, each time raising the interest rate. Now, those gentlemen have done nothing to receive much more than their capital, while the individual has to work and reduce his own capital. The person who lends his capital sees his income and his capital increase as a result of various increases, including interest rates.
I have here, Mr. Chairman, a table which could make the minister and the hon. members understand.
It is a comparative table for the years 1944 to 1967.
The gross national product amounted to some $11,400 million in 1944, while it reached $62 billion in 1967.
Consumption and expenditures amounted to only $10,120 million in 1944, compared to $40 billion in 1967.
During the same period, capitalization and profits increased from $1,280 million to $22 billion. This means, therefore, that capitalization and profits have increased 17-fold from 1944 to 1967, while the gross national product increased five-fold and consumption and expenditures, four-fold.
[DOT] (5:20 p.m.)
Mr. Chairman, I could also mention the number of cheques in circulation; it went from $60 million in 1944 to $600 million in 1967, that is 10 times more.
Increased capitalization reached, in 1967, $18 billion; yet it seems we do not know where to find the necessary income to finance the various departments and the government administration. Indeed, we do not even touch the capitalization. I am not against capitalization but if, under the present system, capitalization has every right, if it can increase its capital, its rate of interest, I feel the people should have a say. It is imperative to do something for the people, to have a look at their income.
For instance, the banks' assets totalled $6 billion in 1944 and $28 billion in 1967, that is five times more. The stock of 800 large companies was worth $7 billion in 1944 and $102 billion in 1967, that is 14 times more. A Royal
Income Tax Act
Bank share sold for $10 in 1944 and $80 in 1967, that is 8 times more; its dividends amounted to 6 per cent or 60c. in 1944 and to $3 or 30 per cent in 1967, that is five times more.
Everything has increased like that in high finance, in the financial system; while personal income keeps decreasing, that of high finance increases continuously and brings in a hundred times more.
In spite of salary increases, strikes, steps to enable the middle class to live a little better, the opposite always happens; taxes go up and so does the cost of living. There is no end to it; there is no stopping it. High finance always gets the most out of it, because the purchasing power of the citizens is diminished through taxes levied by the federal and the provincial governments, in short by all levels of government.
I feel that the minister should open his eyes and take such a situation into account to avoid an increase in taxes. In the present system, he should take them in capitalization, in the profits on capitalization which are hardly taxed.
It is always the little man that is taxed. Our present system is a system of taxes. If it is impossible to change it, at least let us tax the rich and stop taxing those who have nothing. Let us stop taxing those who do not have enough to live on but let us tax those who have too much. By so doing, everybody will be taxed and everything will turn in circles, everything will come to nothing through too much taxes, the little man will disappear, and when the rich is taxed, he will disappear also. In fact, we will all disappear from earth. With our present system, we will all disappear in the near future. Our system is a system of taxes, increases here and there; in short, it is a system which turns in circles and which, finally, settles nothing, balances nothing. It is a complete, anti-social and antihuman imbalance, and the problem cannot be solved.
We offered you a solution on many occasions; we suggested financing public assets at administration costs, but that has always been refused. We proposed many amendments designed to finance public goods at administration costs, which would have accounted for a savings of $3 billion the first year, but they refused to do that, they closed their eyes and ears, saying: That is a Social Credit theory; we will not consider that.

February 15, 1968
Income Tax Act
On the other hand, where does the minister's theory lead us? Where are we going with this complete imbalance, with this outdated system, with this "anti-arithmetic" system? We cannot go forward, we cannot go very far with such a system, and the minister knows that. If he wishes to do something, for want of solutions better than his own, all he has to do is to come and see us, as we could suggest him some. We have often let him know our solutions, but he refuses to consider them, he refuses to apply them. If the present system continues, we shall soon see revolutions, massacres and general discontent, strikes will multiply and we will not be able to settle any problem.
Our economic system is fundamentally wrong and must be reformed. There is no question of destroying everything, breaking everything down, criticizing everything; it is simply a matter of improving what is wrong. We must keep what is good, but what is wrong must be reformed. That is what we have to say and that is what the minister should do, I think, because it seems to me it would be more logical to do that rather than always increase taxes, in short, rather than always taking away the purchasing power of individuals, who do not have enough already, for the people are suffering from a lack of purchasing power. Proof of this assertion is that we have a $18 billion capitalization in
1967,	and we may have one of $22 billion in
1968,	according to statistics. Mr. Chairman, I believe it is abnormal to capitalize all the time and to deprive citizens of their purchasing power.


[Stage Direction]
Clause agreed to.
On clause 5-Temporary surtax.
Jay Waldo Monteith: Before this clause carries I should like to say one or two words about it. The clause has to do with a surcharge on income tax. It imposes an increase in the personal income tax of people who can ill afford any reduction in their incomes.
I understand the minister will be in my constituency on February 24. Of course I would not know the purpose of his visit, but I think he may find some difficulty while he is there in explaining to the people of Perth why he had to impose this increase in the income tax. It is obvious that it goes back some time. On December 6 I pointed out to the house that this government in its first full

year in office had increased expenditures by 4.6 per cent, that in the following year, 1965, there was an increase of 5 per cent, in 1966 an increase of 7.1 per cent, in 1967 an increase of 13.7 per cent and in 1968 an increase of something like 12 per cent.
In connection with the estimates presented to the house the other day an attempt was made to tell the people of Canada that the increase in expenditures amounted to only 3.6 per cent. However, a correct comparison made with the estimates presented a year ago would show the real increase to be approximately 8 per cent. The President of the Treasury Board did say that because of the use of computers more accurate estimates could be made and there would be no need to ask the house to approve supplementary estimates. I suggest, however, that a cushion of some kind has been included in the figures presented to us and that the computers have not in fact done a true job in estimating likely expenditure.
As hon. members know, the cost of living has been increasing at the rate of some 4.5 per cent a year during the last two years. This simply indicates that the average person in Canada is no longer able to meet these vast government commitments which make it impossible for him to lead the kind of life he is entitled to lead here in Canada.
The inflationary trend which is developing under this government has been admitted by the minister. Indeed, he has attempted to do something about it by means of this tax increase. It has certainly failed to make any impact up to now, according to the most recent figures issued by the Dominion Bureau of Statistics. This tax was announced on November 30 and came into effect on January 1, 1968. People have been paying this increase since that date but so far it has done nothing to assist in halting inflation.
[DOT] (5:30 p.m.)
The minister has to do something about this matter. Either he or a possible successor will have to bring down another budget almost immediately. The other day when answering a question the minister said that no budget would be introduced before the Liberal convention is held. I can understand that, because we are not going to be around here too much longer. Nevertheless, we should have a budget introduced prior to that convention. A budget will have to be introduced immediately after the Liberal convention to let the people of Canada know where we are
February 15, 1968



going and how we are going to meet the increased estimates which were tabled at the beginning of this week.
The government has been extravagant in the extreme. This has been shown in the way it has disregarded expenditures. It has been shown in the way it has disregarded the people of Canada by increasing taxes. The government has introduced two budgets a year and with each one has taken another bite out of the cherry. I am sure the people of Canada now realize exactly what the government has been doing and how it has been hoodwinking them by claiming they have had prosperous times. Now the whole thing has come home to roost. It is plainly on the government's doorstep. We certainly deplore the imposition of this additional 5 per cent surtax on the income tax of the average Canadian.


David Réal Caouette: Mr. Chairman, I only want to say a few words on clause 3 of Bill No. C-193 now under study. It is wished to insert the following heading in that clause:
Temporary surcharge
I wonder why the Minister of Finance (Mr. Sharp) is not more straight-forward with the Canadian people. Has the minister ever imposed a temporary surcharge or any temporary tax that he has subsequently abolished? It is clear that, in view of the present financial situation in Canada, the minister will not be able to abolish that surcharge he is asking us to approve.
He knows very well that the average Canadian citizen is unable to pay more taxes than at present. He is already paying too much. Even though it is provided that a person must now be paying $100 in income tax to be subject to that surcharge, anyone paying $100 in income tax cannot afford to pay that additional surcharge, and the minister knows it.
Instead of taking the money he needs where it is to be found, the minister always asks the little man to make a sacrifice and to give more. Clause 5 indicates clearly the attitude of the minister and of the present government.
The people are never promised increased taxes or new surcharges during election campaigns. Ho no. In 1963, or in 1965, both sides of the house, Liberals and Conservatives, accused each other of raising taxes too high. They said "Give us the power, and we will reduce taxes". But each time we changed
Income Tax Act
government, taxes were increased instead of diminished.
We now face again the very same problem. The Canadian worker is asked to pay higher taxes and is told, for example, that it is only a temporary measure. In a few days, we will be studying supplementary estimates which will ask the Canadian taxpayers for more money still, and we will go and get in their pockets what we refuse to get through the financial means at our disposal. Efforts are being made to help the whole world to make interest-free loans to various countries, but here, in Canada, those who are building the country are asked to pay surtaxes.
Mr. Chairman, I think it is time for the Minister of Finance to be a minister of finance and not the "Chief Tax Collector" in Canada. It is time for him to examine our physical possibilities, the present number of unemployed who could increase our national productivity, and the financial possibilities offered by the Bank of Canada, an all-powerful institution in the field of finance.
I see that the hon. member for Bona-venture-


Mr. Bechard:: Mr. Chairman, may I ask the hon. member a question?


David Réal Caouette: Certainly, Mr. Chairman. The parliamentary secretary can ask me ten questions if he wants to.


Albert Béchard: Who, according to the hon. member for Lapointe, would be an ideal minister of finance?


David Réal Caouette: The hon. member for
Lapointe?


Albert Béchard: I am sorry, Mr. Chairman. I meant the hon. member for Villeneuve. How would the hon. member for Villeneuve see an ideal minister of finance?


David Réal Caouette: My ideal minister of finance, Mr. Chairman, would be somebody who would be a good enough accountant to balance our economy and to maintain a monetary system in keeping with the physical conditions of our country. This is the ideal minister of finance we should have in Canada.


Mitchell William Sharp: May I ask the hon. member a question? Do I fulfil the qualifications?

February 15, 1968
Income Tax Act


David Réal Caouette: I think the minister would be able to fulfil the qualifications if he were a good Social Crediter.


Marcel Joseph Aimé Lambert: He and the other members of the Liberal party even voted for Social Credit theory once.


David Réal Caouette: Provinces complain to the federal government that they lack money. The federal government replies to them: we do not have any either. They are penniless in Ottawa, in Quebec, in Alberta, everywhere, in all the provinces. We are governed by a clan of penniless people. It is not surprising to see additional taxes and temporary surcharges.
Mr. Chairman, the problem is entirely financial. Instead of solving it, they are making the little man pay again. Let us exploit him even more, that is this government's answer.
We object to this tax increase, because we consider that the Canadian people, the worker, the miner in my area, and the farmer, pay enough taxes; indeed, they are now paying too many taxes.
Taxes are not what the people need at the present time. If we want to start up the Canadian economy, we must increase the purchasing power, through the distribution of a national dividend. Then, stores can sell the goods they have on their shelves, and manufacturers will see to producing more, to fill those shelves.
There would then be less unemployed in Canada. New industries would crop up, because consumers' needs would be met, at least to a great extent. That is the solution to the present problem. It is not by reducing the consumers' purchasing power that a new impetus will be given to the Canadian economy, but rather by increasing it.
We shall then succeed in striking an economic balance which will enable every Canadian to live decently in a country as rich as ours in natural resources.


@Deputy Chair(man)? of Committees of the Whole: Shall
clause 5 carry? The hon. member for Winnipeg South-the hon. member for Broadview.


Mr. Gilbert:: Mr. Chairman, I am prepared to allow the hon. member for Winnipeg South to proceed if he so wishes. Otherwise I shall proceed.


Louis Ralph (Bud) Sherman: Mr. Chairman, I am prepared to allow the hon. member for Broadview to proceed. I shall proceed later.


John Gilbert: This, Mr. Chairman, indicates the degree of courtesy which prevails among members of this house. The first thing I
Income Tax Act
should like to do is move an amendment to clause 5. The amendment reads as follows:
Delete subclause (b) of clause (1) of clause 104A of Income Tax Act.
While copies of the amendment are being distributed I might explain its purpose. It will be noted that in subsection (l)(b) of section 104A the amount set out is $600. This is the income tax ceiling limitation. The tables presented by the Minister of Finance indicate that the top range of income involved is $50,000. Any person earning over $50,000 would not be subject to additional tax in an amount greater than $600. We in the New Democratic party feel that this is unfair and unwarranted in respect of most Canadians. It will be noted also that the minister has imposed the 5 per cent surcharge on people whose tax is above $100. We do not feel it is fair that there should be a limitation of $600 on the surtax and that persons with incomes over $50,000 should have the advantage of this limitation.
[DOT] (5:50 p.m.)
It may be that the Minister of Finance feels he is in an awkward spot in having to attempt to get Bill C-193 passed at this time prior to the leadership convention on April 5. He may want the Minister of Justice to bring forward his bill containing amendments to the Criminal Code so that that minister would be placed in an equally embarrassing position. He may want the Secretary of State for External Affairs to call for a full debate on the Viet Nam question so that all leadership candidates will be in the same position in respect of criticism. It is my belief that any leadership aspirant who holds the portfolio of finance has literally the kiss of death on him in respect of his chances of success at any leadership convention. There is no doubt that he still has his friends on Bay street who will give him full financial support during his leadership campaign, but he does not have the support of the rank and file members of his own party. He certainly has no support from the average Canadian for the amendments he is proposing in this bill.
It might be said that the minister is the author of his own misfortune because he has made a gross miscalculation as indicated by his mini-budget of last year. He allowed taxes in the amount of $73 million to be repaid with the hope of curbing inflation and high interest rates. That mini-budget of last June was unsuccessful. We then had the minister coming back in November of last year with

February 15. 1968
Income Tax Act
another mini-budget. There certainly is one thing about the Minister of Finance. He does not lack the ability to come forth with minibudgets which prove to be something other than solutions to Canadian monetary problems. It could also be said that the minister is the author of his own misfortune because he has failed to direct the economy. He has placed reliance on so-called economic tools for fiscal and monetary policies. His sole aim has been to adjust the present-day market economics in the hope of achieving price stability and employment. He has also failed miserably in this regard.
It may also be said that he has failed to give any serious consideration to the implementation of the main recommendations of the Carter commission. He has tried to slough these off with the flimsy reason that the Carter commission report related to revenues in 1964 and has no application in 1969. He is also the author of his own misfortune because of the scare he attempted to create in the minds of many Canadians regarding the implementation of medicare. He pulled a $1 billion figure out of a hat and refused to give any indication as to how he arrived at that figure. He ignored the Minister of National Health and Welfare who said a few months previously that the total cost of medicare in Canada would be $680 million, that Canadians now pay $600 million by way of insurance premiums and other payments and the difference would be $80 million. He completely ignored that statement and will probably continue to ignore it even though, with the increased figures given by the Minister of National Health and Welfare, there remains a difference of only $80 million in respect of a total medicare program for Canadians.
The Minister of Finance recognized in his oudget speech on November 30 the two main problems affecting most Canadians today. I refer to inflation and high interest rates. The minister brought forward a traditional remedy by imposing a 5 per cent surtax on Canadian workers, with a base limit of $100 and a ceiling of $600. He has tried to explain this away by saying that out of 6,600,000 workers only 1,300,000 will be affected by the surtax. Surely this indicates how low is the income of many Canadians today. When I came to this house a couple of years ago I was surprised to find that the average annual per capita income in the maritime provinces ranged between $1,300 and $1,600. This lends support to the statement that the basic

income of most Canadians is far below a reasonable level.
The minister is imposing a 10 per cent tax on liquor and tobacco and accelerating by two months the payment of income tax instalments by corporations. He tried to offset the latter action by saying that the refundable tax payments to corporations will be accelerated so they can get their 5 per cent repayments within a shorter period of time than under previous legislation. One wonders why Canadian corporations should be given 5 per cent interest on 5 per cent refundable taxes.
The minister has attempted to fight inflation by bringing forward the proposals I have outlined. When one compares inflation now with the inflation which existed last November one realizes that every measure taken by the government has been ineffective. The cost of living has continued to climb and is continuing to affect most Canadians. May I call it six o'clock, Mr. Chairman?



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: It being six o'clock it is my duty, pursuant to provisional standing order 39A, to inform the house that the following questions will be raised at the time of adjournment:	the hon. member for New
Westminster (Mr. Mather), Health and Welfare-measures to combat problems caused by alcoholism; the hon. member for Moose Jaw-Lake Centre (Mr. Pascoe), Agriculture grants or loans for fairs and exhibitions.
It being six o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions, private bills, public bills. As there are no notices of motions for papers on today's order paper the house will proceed to the consideration of private bills and public bills.



PRIVATE BILLS


[Stage Direction]
The house resumed, from Thursday, February 8, consideration in committee of Bill C-104, respecting the Bell Telephone Company of Canada-Mr. Honey-Mr. Batten in the chair.
February 15. 1968
Herman Maxwell Batten: When the committee rose on Thursday, February 8, old clause No. 7, renumbered new clause 6, with an amendment proposed by the hon. member for York South, was under consideration. The committee will now consider clause 7 of the original bill, renumbered clause 6.
On clause 7 (renumbered clause 6)-Power to operate communication system.
[DOT] (6:00 p.m.)


Mr. Honey:: Mr. Chairman, when the committee rose last week we were considering, as Your Honour has indicated, old clause 7, new clause 6. At that time there was before the committee an amendment proposed by the hon. member for York South. I have had conversations with the hon. member for York South and other hon. members on the other side of the chamber who have considered with me a form of amendment to this clause that would be acceptable to all hon. members.
I make this suggestion now because I think we may be in something of a procedural difficulty in this connection. I suggest that, provided hon. members agree, the amendment proposed last week by the hon. member for York South might be withdrawn, if we are able to do so-I notice that the hon. member for York South is not in his seat-so that we could then proceed with the consideration of the amendment which I understand is agreeable to all hon. members.


Thomas Speakman Barnett: Mr. Chairman, I expect the hon. member for York South to be in the chamber very shortly. He has been attending one of the standing committees all afternoon.
I have just come from that committee. If I understand the suggestion correctly it is that the amendment proposed by the hon. member for York South last week be withdrawn in order that it may be replaced by a new and somewhat modified proposal in respect of the whole clause. On that understanding I think the hon. member for York South would agree to this procedure being followed.


Russell Clayton Honey: That is my understanding, Mr. Chairman. When the hon. member for York South is here and is able to withdraw the amendment I will then be prepared to place before the committee an amendment which I understand is agreeable to all hon. members of the house.


Herman Maxwell Batten: Order, please. It is, of course, irregular for an amendment moved by an hon. member to be withdrawn without the
Private Bills
consent of the member moving the amendment. If, however, the hon. member for Comox-Alberni is prepared to state that it is the wish of the hon. member for York South to withdraw his amendment and the committee is prepared by unanimous consent to accept such a statement, the Chair would have no objection.


Thomas Speakman Barnett: Perhaps we could reach an understanding in this respect, Mr. Chairman. As was suggested, we could leave the matter in abeyance temporarily and let the hon. member for York South formally withdraw his amendment. I thought I should indicate to the committee that my understanding is that he would be quite agreeable to doing that. The hon. member should be here very shortly. Perhaps in the meantime we could consider another aspect of the matter. While we are waiting for the hon. member to take his seat perhaps we could have an informal discussion on the proposed replacement amendment. Then we could clear up the procedural aspect of the matter.


Russell Clayton Honey: Mr. Chairman, I thank the hon. member for Comox-Alberni for his suggestion. I was going to suggest that I place on the record the amendment which I understand has the concurrence of all hon. members in order that the committee might consider it. We might do that on the understanding that when the hon. member for York South is able to take his place in the house and withdraws his amendment we will then have this amendment before the committee for consideration. If I have the concurrence of the committee to do so, I would move, subject to the withdrawal of the amendment of the hon. member for York South:
That all of old clause 7, new clause 6, from and including subclause (4) be deleted and the following substituted therefor:
"(4) For the protection of the subscribers of the company and of the public, any equipment, apparatus, line, circuit or device not provided by the company shall only be attached to, connected or interconnected with, or used in connection with the facilities of the company in conformity with such reasonable requirements as may be prescribed by the company.
(5) Tile Canadian Transport Commission may determine, as questions of fact, whether or not any requirements prescribed by the company under subsection (4) are reasonable and may disallow any such requirements as it considers unreasonable or contrary to the public interest and may require the company to substitute requirements satisfactory to the Canadian Transport Commission in lieu thereof or prescribe other requirements in lieu of any requirements so disallowed.

February 15, 1968
Private Bills
(6) Any person who is affected by any requirements prescribed by the company under subsection
(4)	of this section may apply to the Canadian Transport Commission to determine the reasonableness of such requirement having regard to the public interest and the effect such attachment, connection or interconnection is likely to have on the cost and value of the service to the subscribers.
The decision of the commission is subject to review and appeal pursuant to the Railway Act."


David Lewis: I am sorry, Mr. Chairman. I was attending a parliamentary committee meeting and happened to be questioning the witness. We did not finish until just alter six o'clock. I apologize for being late and perhaps causing some inconvenience to the committee. As I understand it, the sponsor of the bill has indicated the amendment that he is now ready to move. In view of this, with the permission of the committee I shall withdraw the amendment that is on the table and which I moved a week ago.


Herman Maxwell Batten: Does the hon. member have the unanimous consent of the committee to withdraw his amendment?


Some hon. Members:: Agreed.
Amendment (Mr. Lewis) withdrawn.


Herman Maxwell Batten: Would the hon. member for Durham request one of his colleagues to move this amendment.
[DOT] (6:10 p.m.)


Mr. Macaluso:: 
Herbert Wilfred Herridge: Mr. Chairman, this amendment relates to the circumstances I mentioned the last time the bill was under discussion. I realize that to provide efficient service in the field of telephones you have to have a public or private monopoly. The last time the bill was discussed I referred to the fact the British Columbia Telephone Company had failed to recognize the need for service in isolated, rural communities. We had to provide our own service and our own equipment, some of which did not coincide with what the B.C. Telephone Company was using at that time. However, conditions have changed in British Columbia, although we still have the B.C. Telephone Company which is privately owned. In recent years this company has accepted its responsibility to the isolated rural communities to a much greater extent than in the past. In fact, now you only have to communicate with the president of the company and indicate the services that are required. The situation is very much improved over what it was years ago.
I should like the sponsor of the bill to explain the practice in Ontario with regard to the provision of service to isolated, rural communities. Years ago in British Columbia the company was willing to skim the cream off the telephone business and leave the skim milk to the rural telephone companies. My first question of the sponsor is, can he explain to us if these isolated rural communities are receiving service at this time and what the practice of the Bell Telephone Company is in this regard?
I have another matter I should like to mention. We intended to support this bill in the interests of the patrons in Ontario and the employees, or what one might call the general interest. However, this afternoon I was shocked to the very foundations of my being when I heard that this telephone company was guilty of thievery at public expense. We were going to support this bill. When you see the officers of the company you find they look very reasonable, well clad and well fed. They do not look like people who would commit criminal acts. When I heard these charges this afternoon I was really shocked. This is the first time I have heard such a charge made against a company of this type for a good many years, that these responsible looking gentlemen, responsible to this parliament,
February 15, 19G8

are guilty of thievery, roguery and things of that sort.


An hon. Member:: Stealing.


Herbert Wilfred Herridge: Yes, that is right, stealing. This charge really shook some of us. We really cannot support this bill unless the sponsor is willing to give an explanation. We understand that the bill legalizes the roguery and stealing. This is what we were told. How can we honestly support a measure in this house which legalizes criminal acts? We were told these acts had been performed by this company over many years. There may be some misunderstanding, Mr. Chairman. The facts may not be quite as stated. I do hope the sponsor will give a very clear explanation of how this company was allowed to continue stealing over a long period of years. We are now asked to approve a bill that legalizes these criminal acts. I shall look forward to the sponsor's answer.


William Arnold Peters: 
Russell Clayton Honey: Mr. Chairman, I thank the hon. member for Kootenay West and the hon. member for Timiskaming for their remarks on this clause. I shall try to be brief so that I do not take up too much of the time of the committee. I recognize the authority of the hon. member for Kootenay West because he is president, I think, of the Nakusp Telephone Company. It is a company with which I am familiar, I might add, because it serves an area that I visit quite often. It is probably a little more difficult to get in touch with the presidents of some other telephone companies if a line breaks down than it is to get in touch with the president of the Nakusp Telephone Company. He is always readily available to his subscribers. Perhaps it is because they are also his constituents that he wants to give them good service.
I think I am correct in saying that by and large the smaller telephone companies in eastern Canada, so far as their relationships with Bell and the services Bell supplies to them are concerned, at least try to give the sort of service that I am sure is given by the Nakusp Telephone Company and the other small companies in Western Canada to which my hon. friend from Kootenay West referred. They probably try to provide the sort of service that we would reasonably expect from utility companies that are doing their best to serve the public interest.
With regard to the second matter to which the hon. member for Kootenay West referred,
I was unfortunately not in the house this afternoon when the subject of the Bell Telephone Company was brought up. Therefore I do not want to attempt to assess the remarks of hon. members on either side of the house in this regard. I think those remarks were made in the context of the debate that was taking place at that time and I do not think they should be transposed into this debate. Whether that be or whether it not be, not

February 15, 1968
Private Bills
having heard the remarks I do not think I should comment upon them. I believe that by and large hon. members make statements with the conviction of belief and we either accept them or we do not. Certainly I would not want to pass judgment on that. With respect to the comments of the hon. member for Timiskaming I can only repeat that I did not hear the exchange that took place this afternoon and therefore my hon. friend will excuse me from trying to interpret the remarks that were made.
One thing I should like to say is how much I have appreciated the work of the members of the standing committee on this bill, as well as the work of the committee of the whole. There may be other aspects of the bill that other hon. members wish to explore, so for this reason I will leave some time available to them.


Frank Howard: Mr. Chairman, I do not draw the likeness between the hon. member for Kootenay West and the officials of the Bell Telephone Company that the hon. member for Durham drew. I have met officers of the Bell Telephone Company on a number of occasions and generally they were clothed in that dark blue, silky type of raiment that is so common to the modern boardrooms of today. As anyone can see from a casual look at the hon. member for Kootenay West, he has that down to earth, tweedy, pipe-smoking style that indicates there is a vast difference between his approach to world communications and that of the officials of the Bell Telephone Company. Perhaps it is because of his background, because he classifies himself as a gentleman farmer or something of that sort-


Herbert Wilfred Herridge: Peasant farmer.


Frank Howard: I am sorry, peasant farmer- and because of his closeness to the soil and the people that he felt as strongly as he did about the remarks of the hon. member for Notre-Dame-de-Grace on the income tax bill which the hon. member injected into the debate in the form of a question. It really is a rather serious matter.
The hon. member for Durham indicated that he was appreciative, and knowing him I am sure he is, of the work that all members of the committee put into the development of this bill. However, there is still a large degree of concern that should be expressed about the implications behind the question put by the hon. member for Notre-Dame-de-Grace. Perhaps the hon. member's question was directed

to the party to which I belong and was designed to be embarrassing. Indeed, that was obvious.
However, the fact is that in the broader sense the hon. member for Notre-Dame-de-Grace has cast a reflection upon the activities of the members of that particular committee, having indicated that their work on the committee was not of that responsible nature required of members of parliament when they serve on committees. Certainly it has put my own party in a particularly awkward light to have it implied that we, in working on that committee, endorsed a particular attitude taken by the Bell Telephone Company so far as its earnings picture is concerned. The hon. member for Hamilton-West shakes his head, I take it in disagreement with what I am saying.


Joseph Angelo Macaluso: Mr. Chairman, if I may assist the hon. gentlemen, I shook my head not because of disagreement. As chairman of the standing committee perhaps I can assist the hon. member. Since the hon. member for Durham was not present when the comments of the hon. member for Notre-Dame-de-Grace were made, perhaps I could indicate that I completely disagreed with the hon. member for Notre-Dame-de-Grace and I conveyed that disagreement to him. There was no discussion in the committee at any time of the subject of profit, which was brought up by the hon. member for Sudbury. Members of all parties conducted themselves in the committee, as they always do, in the fairest possible way. They brought forward amendments to the bill that were constructive. I just wanted to make that point for the assistance of the committee.


Frank Howard: That is an extremely kind and generous statement.


David Lewis: Truthful, too.


Frank Howard: I did not doubt that it would be otherwise, coming as it did from the hon. member from Hamilton. I say that even though I have had some doubt as to his intentions as chairman of the committee in regard to other bills. However, I will deal with that on another occasion.
The fact that the hon. gentleman has voluntarily made this statement indicates that he too came to a conclusion in regard to the implication behind the remarks of the hon. member for Notre-Dame-de-Grace. Therefore, Mr. Chairman, knowing that the matter had been mentioned to him by one of his colleagues and knowing that the chairman of
February 15. 1968

the committee had read into his remarks the same sort of implication that we read into them, it seems to me all the more important that the hon. member for Notre-Dame-de-Grace should have made himself available during this hour. He knew the Bell Telephone bill would be coming forward and that some offence had been taken at what he said. Undoubtedly he could be absent because of a previous commitment-


Joseph Angelo Macaluso: Could I help the hon. member again?


Frank Howard: Yes, I would be glad if you would.
[DOT] (6:30 p.m.)


Joseph Angelo Macaluso: I advised the hon. member for Notre-Dame-de-Grace of my views before he left. If anyone is to be chastised for his leaving the house; if anyone is to be blamed for his not being here, that person ought to be myself.


Frank Howard: Then the hon. member should take all that is coming to him, because I think the hon. member for Notre-Dame-de-Grace ought to be here. Obviously, he acted on the advice of the hon. member for Hamilton-


Joseph Angelo Macaluso: Hamilton West.


Frank Howard: I am afraid I get lost in Hamilton. As I say, the hon. member obviously acted on the advice given to him by the hon. member for Hamilton West. Usually that advice is sound; in this case it was not sound, with respect. We still do not know what the hon. member for Notre-Dame-de-Grace meant by his question.


Joseph Angelo Macaluso: In heat of debate, Mr. Chairman, we all get a little hot sometimes. No offence was intended.


Frank Howard: The hon. member for Notre-Dame-de-Grace is noted to be an extremely kind and gentle member. He, perhaps more than the Leader of the Opposition, is one of those who keep their cool, as the saying goes.
I doubt whether his statement, which was introduced by way of a question, was introduced as some "in the heat of the moment" statement. The hon. member for Sudbury, who was speaking immediately before the question, also approaches these matters in a gentle and low key manner. There was nothing provocative or evocative about his remarks.
Private Bills


An hon. Member:: You are having a tough time.


Frank Howard: As the hon. member for Timiskaming said, we wonder whether we should proceed with a particular bill when a doubt with respect to it exists. I know that we cannot ask the Chairman to suspend matters until someone can find the hon. member, so that he might clear the air. The only course available to us is to examine this bill in some detail, until the hon. member for Notre-Dame-de-Grace returns to the chamber and in a formal and public way indicates what he meant by his statement.
I am not trying to be difficult, Mr. Chairman but this is a matter of some consequence and difficulty to the members of this party. I submit that the question of the hon. member for Notre-Dame-de-Grace was directed with the specific aim of causing embarrassment. I do not deny him that right, since it is part of the game of politics in the house. Nevertheless the implication, foreseen or unforeseen, that are inherent in his question are too large for us to, sort of, escape them by laughing the matter off as some comment that was made in the heat of debate.


Herbert Wilfred Herridge: Would the sponsor of the bill kindly explain what is intended by the amendment, beginning with clause 4.


Russell Clayton Honey: Clause 4 provides for the protection of subscribers of the company and has to do with what might be called foreign attachments to Bell Telephone equipment. The Bell Telephone Company may require, with respect to these attachments, that they be used in conformity with the regulations of the Bell Telephone Company, as they may be prescribed by the company.
Clause 5 provides that the Canadian Transport Commission may determine as a question of fact whether the requests of the company are reasonable, considering all circumstances. Clause 6 of the amendment provides for a right of appeal for any person who is affected by the regulations prescribed by the company under clause 4 of this amendment. It provides for the right of appeal to the Canadian Transport Commission in order that the reasonableness of the requirements may be determined, and so on. The last sentence provides that the decision of the commission is subject to review and appeal, pursuant to the Railway Act. The rights of review and appeal are fully set out in that act.

February 15, 1968
Private Bills


Herbert Wilfred Herridge: I thank the sponsor for his explanation. What sort of attachments are meant in the clause? What sort of foreign attachments are indicated?


Russell Clayton Honey: I thank the hon. member for Kootenay West for his interest in the matter, because this is of some concern to individuals who like to attach extra, different or extraneous pieces of equipment to the service that is available to them from the Bell Telephone Company. A good example would be an antique type of telephone, which I am sure my hon. friend has seen. Another example is a piece of equipment that is known, I think, as the Ericaphone. It is named after a Swedish engineer, and is of reasonably good design. Any such pieces of equipment might loosely be called foreign or extrinsic to the Bell equipment, and it is with respect to such pieces of equipment that the right of appeal is provided. An application may be made to the Canadian Transport Commission to determine whether Bell's request to the subscriber is reasonable, and to determine whether that request is in the interests of that subscriber or of subscribers generally. That sort of thing is meant by the clause with respect to foreign attachments.


Herman Maxwell Batten: Shall the amendment carry?


Some hon. Members:: Agreed.
Amendment (Mr. Macaluso) agreed to.
Clause as amended agreed to.
On clause 8 (renumbered clause 7)-Power to invest.


William Arnold Peters: Mr. Chairman, I do not intend to do anything in particular about this measure, but I wish to point out that this is the clause that has caused us all a great deal of trouble. Certainly, in its dealings with the Canadian Transport Commission the Bell Telephone Company, as a result of similar wording in the legislation, has had a great deal of difficulty. In brief, this clause will limit the power of the company to invest in other companies. That limitation has brought problems to the Bell Telephone Company and to its subsidiary, Northern Electric.
I think that most people look with sympathy at Bell's problem as it relates to its subsidiary, Northern Electric. Everyone, I think, will agree that Northern Electric has done exceptional work in research and development in order to maintain Bell in a position
IMr. Honey.]
that is envied by other companies across the North American continent. The Canadian Bell company has been able to do things that the United States Bell company has not been able to do, and here I am talking about the various technical systems which are being used in this country. The development of Northern Electric has been helped by the Bell Telephone Company. Northern Electric helps Bell, and Bell helps Northern Electric. They are complementary organizations, so to speak.
One of the problems that faces the government of Canada is the close relationship between Northern Electric and Bell. Since in this country we have private ownership of a public utility and since we have decided that the Canadian Transport Commission shall judge how much the private owner of the public utility shall charge for its services-in short, since there is to be a measure of public control over the public utility-might it not be legitimate to ask Bell to divest itself of Northern Electric? Could not Northern Electric shareholders be given the right to buy all the shares in their company? Surely, it will be only a matter of bookkeeping to establish a separate identity for the company. If the company were independent of Bell there could be no accusation that funds are transferred between the companies or that there is any juggling of any rules or rights.
[DOT] (6:40 p.m.)
On the other hand I believe that much could be gained by Bell if it were to divest itself of a third part, namely the manufacturing end of Northern, which is a large producer of cable and wire and of other facilities on the fringe of telephone operations which are not necessarily part of a telephone complex. It seems to me that this large manufacturing section could be sold to employees, or distributed to shareholders on some basis to which the company would agree. If a stockholder had five shares of Bell it could be decided that he would be given so many shares of Bell, so many shares of Northern, and so many shares in the industrial section of Northern, thus making three separate companies.
While clause 8 may be good for the company it may also add to the problem which hon. members who have read reports of the hearings before the transport commission are aware of, namely that decisions by the board are complicated by the number of companies concerned.
February 15, 1968

I understand that the committee did not go into this matter at any great length, but I raise the problem because I believe it inevitable that some consideration will have to be given to it. As everyone knows, Bell and Northern are a totally integrated operation. Although a financial statement is put out separately for Northern Electric this can be arranged in such a way, and I am not suggesting there is anything dishonest about it, that a greater proportion of expenditures could be made from one pocket than from another, simply because the pockets belong to the same set of shareholders.
In my opinion Bell should seriously consider various methods by which it could divest itself of this type of control, so that its public utility section can be separated from manufacturing and research. If clause 8 as now worded comes into effect Bell's problem will be complicated by any other research it does, or by the acquisition of any other company whose interests do not lie in the telephone field.
If Bell were to buy R.C.A. Victor in order to acquire that company's research facilities, it could end up with a radio and television manufacturing section, and the charge could be made that some of its television production revenue was subsidizing wire which Bell itself uses, R.C.A. Victor then being a totally owned subsidiary of Bell. I do not make an issue of this. I am merely giving advice to the Bell Telephone Company, and saying it will be in trouble with parliament in the future if it does not do something to divest itself of Northern Electric and of any other companies of that type in which it may be interested.


Herman Maxwell Batten: Shall clause 8 carry?


David Lewis: Mr. Chairman, there was an amendment agreed upon in the standing committee that is not before this committee. We certainly will not agree to clause 8, renumbered 7, going through without the amendment agreed upon by the standing committee.


Joseph Angelo Macaluso: Mr. Chairman, the hon. member for York South is correct. There is an amendment to clause 8, as presently in the bill. I move, seconded by the hon. member -but Mr. Chairman, I think that procedurally this does not have to be moved. It is before the committee as amended now.


Herman Maxwell Batten: The original clause 8 of Bill C-104, as examined by the standing committee on transport and communications, was 27053-428
Private Bills
amended by that committee and is now presented to the committee of the whole in an amended form. It is, of course, competent for this committee to decide whether to accept that amendment or not, but it is the clause as amended which is now before this committee.


Thomas Miller Bell: We are talking about the amendments which are in Votes and Proceedings of February 7. These were the amendments that were duly made in the committee.


Herman Maxwell Batten: Did the hon. member ask where the amendments were?


Thomas Miller Bell: No. I just asked if the amendment now, and the previous amendments, are the ones that were shown in Votes and Proceedings of February 7, as being the amendments that came out of the committee.


Herman Maxwell Batten: Yes. The amendment to which the Chair referred, when it referred to clause 8 in the original bill as being amended, is the amendment which is referred to in Votes and Proceedings of Wednesday, February 7.


Some hon. Members:: Question.


Herman Maxwell Batten: Shall clause 8, renumbered clause 7, as amended, carry?


William Warren Allmand: Mr. Chairman, I would like to rise on a question of privilege because I understand that remarks I made this afternoon were brought into this debate, and I would like to explain to the committee. This afternoon when the hon. member for Sudbury was speaking in debate he made some strong remarks about the Bell Telephone Company. It was my understanding at the time that he accused the government of trying to push a bill through parliament in a way that would prompt the accusation that it was trying to foist something on the Canadian public. I rose in the house and asked him if he realized that when the parliamentary committee on transport and communications had passed this bill at its final sitting, the bill received the consent of all members of the committee, including two members of his party.
[DOT] (6:50 p.m.)
I sat down. He answered the question in some way, and then I left. I asked him whether he knew that the bill as it came out of the committee had obtained the consent of all the members of his party-I was referring

February IS, 1968
Income Tax Act
to the bill as a whole. I do not know what was discussed here this afternoon, but that was what I meant when I spoke in that debate.


[Stage Direction]
Clause agreed to.
Clause 9 (renumbered clause 8) agreed to.
On clause 10 (renumbered clause 9)-Director indemnified in suits respecting execution of office
Herbert Wilfred Herridge: Can the sponsor give us any information as to the salaries received by the directors of the Bell Telephone Company for their services?


Russell Clayton Honey: I do not have that information available now, but I would undertake, if it is proper to do so, to get that information for the hon. member and convey it to him.


[Stage Direction]
Clause agreed to.
Clause 11 (renumbered clause 10), clause 12, (renumbered clause 11) and clause 13 (renumbered clause 12) agreed to.
On clause 14-Prospectus
Herman Maxwell Batten: Shall clause 14 in the original bill be deleted?


Some hon. Members:: Agreed.
Clause 15 (renumbered clause 13) and Clause 16 (renumbered clause 14) agreed to.


[Stage Direction]
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the bill be read the third time?


Herbert Wilfred Herridge: Next sitting of the house.


Thomas Speakman Barnett: I wonder whether it might not be convenient, now, to say it was seven o'clock and suspend our sitting.


Some hon. Members:: Agreed.


Russell Clayton Honey: Before Your Honour calls it seven o'clock and before we leave Bill C-104 could I make a suggestion to hon. members -that if there is any question of this bill losing its place on the list of private bills for third reading I would ask the house to agree to give it priority when it comes before us next week.


Mr. Deputy Speaker:: Perhaps I could clear up the hon. member's difficulty by referring him to standing orders 20 and 21. If third reading had been considered in part today,

the bill would then go to the bottom of the list. Since third reading is just beginning, the bill retains its place on the order paper.


Russell Clayton Honey: Thank you.


Mr. Deputy Speaker:: Perhaps the house would agree to resume the business which was interrupted at six o'clock?


Some hon. Members:: Agreed.



INCOME TAX ACT

[Stage Direction]
The house resumed consideration in committee of Bill No. C-193, to amend the Income Tax Act-Mr. Sharp-Mr. Batten in the chair.
At seven o'clock the committee took recess.

AFTER RECESS

The committee resumed at 8 p.m.
@Deputy Chair(man)? of Committees of the Whole: Order. When the committee rose at six o'clock Bill No. C-193 to amend the Income Tax Act was under consideration. During the dinner hour the amendment proposed by the hon. member for Broadview was studied and found to be unacceptable for the following reasons.
If it were adopted the clause would be unintelligible. In this regard I should like to draw the attention of the house to citation 203(1) of Beauchesne's fourth edition. I should also like to draw the attention of hon. members to citation 269 of Beauchesne's fourth edition which reads as follows:
No augmentation of a tax or duty asked by the Crown can be proposed to the committee, nor tax imposed, save upon the motion of a Minister of the Crown; nor would an amendment to extend the imposition of a tax to persons enjoying an exemption therefrom be now permitted.
I would also point out to the committee that the proposed amendment exceeds the limits agreed to in the resolution of December 14, 1967.
Shall clause 5 carry?


John Gilbert: Mr. Chairman, I will accept your ruling and reluctantly proceed with the remarks I wish to make. What strikes me particularly is the limitation of $600. It does not seem fair to the Canadian taxpayers that people earning under $50,000 should be subject to the surtax and that people earning over $50,000 should be relieved of any further payment over $600. I would have thought that perhaps the Minister of Finance would have
February 15, 1968

been inclined to accept this argument, but he probably finds himself in the unfortunate position of representing the establishment, and finding that it is very difficult to appease them.
Prior to the dinner adjournment I had set forth the proposition that the Minister of Finance found himself in the very unhappy situation of approaching the leadership convention, and having to present to the house Bill No. C-193 which contains the amendments to the Income Tax Act. I pointed out that he really is the author of his own misfortune in that he made a gross miscalculation in his mini-budget of June because he failed to direct the economy and placed too much reliance on the so-called economic tools of fiscal and monetary policy.
I also pointed out that the minister had not given any consideration to the recommendations contained in the Carter commission report. I mentioned in particular that he had been highly critical of the medicare scheme which will become law on July 1. Therefore he now finds himself in the position of being much down the line with regard to gaining the leadership of his party. In his November budget he pointed out that the main culprits in causing a serious economic problem were the cost of living, inflation and the high interest rates. I said that he set forth the usual remedies that the Minister of Finance is so capable of, in striking hard at the workingman and treading easily on the corporations of this country.
With regard to the problem of inflation, it is obvious to most Canadians that whatever steps he has taken have not been very successful in coping with the high cost of living. Even though he recognizes the difference between the traditional inflation of too many dollars chasing too few goods, and the type of inflation that we are suffering from now, which is the cost-push inflation, he seems to pay little heed to the necessity of bringing forth any economic measure that would combat the problem. The striking thing is that the type of cost-push inflation from which we are suffering today strikes hardest at the persons in our society who are most unprotected such as our old age pensioners, the veterans, and persons on fixed income who must pay high prices for food, clothing, maintenance, rent and so on. Yet in the mini-budget he brought forward he did nothing for these people.
The second problem is the matter of the high interest rates. I believe I would be safe 27053-4281
Income Tax Act
in saying that we have the highest interest rates in the history of Canada. From reading yesterday's paper it would appear that the chartered banks of Canada have now raised their prime rates to 7 per cent. We all know that the prevailing rate on Central Mortgage and Housing Corporation mortgages under the National Housing Act is 8jj per cent. On conventional mortgages you have an interest rate of 9 or 9J per cent, and it is expected by most Canadians that this interest rate will increase to 10 per cent. That represents the approach taken by this minister regarding high interest rates. When we had the amendments to the Bank Act before us the minister came up with a formula for applying a rate of 11 per cent for a quarterly average on short term Canadian bonds. We studied this in the committee on finance, trade and economic affairs. With the help of members of several parties we changed this drastically. We in the New Democratic party now find that prime interest rates are up to 7 per cent.
[DOT] (8:10 p.m.)
Not long ago I remember somebody suggesting that an individual who purchased a house for $18,000 with a C.M.H.C. mortgage would eventually pay $42,500 on the basis of an interest rate of 8J per cent. With an interest rate of 8| per cent this cost will increase. If things continue as they are, an individual will soon be paying $50,000 for a $18,000 home. This is what the chartered banks, finance and insurance companies want to prevail in Canada.
The government has failed to take into account the high interest rates which add to the cost of homes. The greatest contribution it has made to the solution of this problem is the initiation of a housing conference, and the resolution now before us to increase the ratio of mortgage loans. At the time the budget was presented, certain members of my party indicated that the basic reasoning behind the minister's budget could be related to an increased unemployment situation as a result of a slowing down in the economy. We now find that prediction to be accurate. Unemployment figures have reached almost 500,000, with a tremendous disparity in the maritime provinces, Quebec and on the west coast. Several hon. members predicted that this situation was bound to occur, following the minister's budget.
The Minister of Finance has ignored some very basic principles in respect of inflation and high interest rates. He has ignored the

February 15, 1968
Income Tax Act
plight of those people who are affected by these rates, and the increased cost of living. Yesterday's newspapers noted that the contribution of the Liberal women of Canada took the form of a recommendation in favour of the rejection of a guaranteed annual income and a negative income tax. That was their best contribution. They also suggested that the tone of parliament should be lifted without giving consideration to the economic problems facing the country today.
The Minister of Finance also ignored other tax resources he could tap to meet certain problems with which we are confronted. He has completely ignored the Carter commission report and the application of its recommendation regarding a capital gains tax. When we talk about capital gains we are not talking about the individual who sells a home for something more than he paid for it, because we know the profit he makes will be absorbed by the price he pays to replace that home. We are talking about those individuals who make vast sums of money on the stock exchange or through major transactions. We think, like Mr. Carter, that these people should be taxed heavily.
The Minister of Finance has also ignored the depletion allowances. As a member who has received a tremendous number of briefs from the resource industries of the country, I am fully aware of the fact that 5 per cent of the population controls this country financially, and that the same 5 per cent are not taxed proportionately as high as the other 95 per cent. This 5 per cent screams the loudest about the Carter commission recommendations, whereas the other 95 per cent would welcome them because they feel a reduction in their taxes would result.
The Minister of Finance has also ignored the life insurance companies so far as taxes are concerned, and has given them preferred treatment, to which they are not entitled. If these companies had been taxed in the ordinary way we would be in a position to more than pay for the medicare scheme going into effect on July 1. Having listened to several speeches of members of the Conservative party, I find it very difficult to distinguish between the philosophy, as presented by their spokesmen, and the philosophy of the Minister of Finance. I listened today to the hon. member for Edmonton West speak on behalf of corporations and the time limitations for payment of corporation taxes. It seems to me that he, along with other members of his

party and the Minister of Finance, has totally ignored the economic planning this country needs to solve its economic problems.
For some time we have advocated the establishment of an investment advisory board to direct the economy of the country, and our investments. The minister has totally ignored his opportunity to direct the investment of the savings of Canadians. The most flagrant example we have had in this regard is the minister's failure to act in a positive way in conjunction with the Canada Development Corporation, which would provide an opportunity for Canadians to invest in Canada. The minister has totally ignored the recommendation of this party to establish a review board which would indicate to the Canadian public the government's interest in offsetting high prices. Such a review board could study the situation, just as trade unions do during the complex process of negotiating increases in wages.
[DOT] (8:20 p.m.)
It is very obvious to us why we are in a state of economic plight today. This is the result of a lack of imagination on the part of the Minister of Finance in coping with today's economic problems. He wants to represent the establishment and he fails to use the new and exciting economic tools which are necessary to combat today's problems. It may be necessary to bring forth new measures to combat these problems. We in the New Democratic party feel that the Minister of Finance is not able to bring forth the proper solutions to these problems.


Gilles Grégoire: Mr. Chairman, I would like to deal with clause 5 which provides for a temporary tax.
That beats everything, Mr. Chairman. If I did not know the minister, I would say that he is naive. What a wonderful expression: temporary tax. Temporary but for how many years?
Temporary, Mr. Chairman, that may mean for the next century of confederation.


Mr. Boulanger:: It is temporary in order to increase it later.


Gilles Grégoire: The hon. member for Mer-cier says that it is temporary in order to increase it later.
This is the heading, Mr. Chairman: "Temporary surtax". Some will believe that it will be for a short time only, but I have never
February IS, 1968

seen a tax already levied that was abolished later. No, once it is levied, it is there to stay.
That is so typical of the present government. They call it temporary to mitigate the blow. Taxes are increased by 5 per cent and that will bring in more revenue to the government, of course.
When I look at the government's estimates for the year ending on March 31, 1969, which the minister tabled not too long ago, I notice items which strike me, among others the interests to be paid by the government on the public debt.
Last year, the interest amounted to $1,273 million.


An hon. Member:: That is only temporary.


Gilles Grégoire: And this year, it amounts to $1,406 million, that is an increase of $133 million during one year. The largest increase in government expenses for next year is the interest on the public debt.
I now come to another item, the following one, that is family allowances. It is quite a considerable increase, Mr. Chairman, since the estimates will rise from $614 to $615 million, that is $1 million next year for all the Canadian children compared with a $133 million increase for a few capitalists.
Well, it is precisely to foot that increased interest on the public debt that the government is now compelled to levy a 5 per cent surtax on personal income. If taxes are increased, it is because money is needed, and if more money is needed, it is precisely because the interest on the debt has gone up. I suggest that the yield of the surcharge will be used to try and balance the budget in order to pay the higher interest on the public debt.
When I was elected to this house in 1962, the first thing I did, when I was first given a copy of the blue book, was to look up how much Canada was paying in interest on the public debt. At that time, the interest stood at $780 million. Six years later, it has reached $1,406 million. While the rate of family allowances has not even increased by 8 per cent, the interest on the public debt has almost doubled in the last six years.
We have come to the point where the interest on the public debt is the second highest expenditure of the federal government, amounting to $1,406 million. The two largest expenditures of the federal government are: first, the amount appropriated to national defence, that is $1,800 million; second, the interest on the public debt, in the amount of
Income Tax Act
$1,406 million, which makes a grand total of $3,200 million.
Mr. Chairman, when I look at those astronomical figures representing the amounts spent on national defence and interests on the public debt, I cannot help telling myself that were Quebec independent, it would save a lot of money on such expenditures since it pays yearly $1 billion in taxes for those two items only. The budget of national defence and the interest on the public debt amount to $3,200 million and the share of Quebec in this expenditure, which is about 30 per cent, amounts to $1 billion a year. Should Quebec withdraw from confederation, it would not contribute any more to these expenditures for national defence and it would leave Ottawa to straighten out its war debt.
That means that Quebec would be, overnight, richer by a billion dollars which, at the present time, is collected in income tax and other taxes and spent absolutely uselessly.
Mr. Chairman, I oppose this temporary tax increase because the budget proves this increase in taxes will be used to pay financiers.
The Canadian people will pay 5 per cent more income tax. And why? Because the interest which the federal government will have to pay next year will be increased by $133 million. This increase in income tax will be used to pay the increase in the interest rates. Had it not been for higher rates of interest, the hon. minister would not have been forced to raise the income tax, and he would have $133 million less to pay in interest on the public debt; but as the interest has gone up, he has had to find the amount of $133 million, and that is why income tax has been raised by 5 per cent.
Mr. Chairman, I feel that instead of always digging into the pockets of the low-wage earner for taxes, the hon. minister should revise his system in order to let the little man, the worker, the low-wage earner, keep the money that would enable him to buy Canadian products and benefit a little bit from the wealth of the land.
But the minister prefers to sacrifice the people of Canada to a few financiers who are the only ones to get rich with the new budget and new taxes; these taxes are a tribute to high finance, which has succeeded in obtaining from the minister increases in the interest rates.

February 15, 1968
Income Tax Act
The minister would like to govern the country. Since he is the minister of the Department of Finance, he is perhaps the one most responsible for the increases in the cost of living, the inflation we are having now through the raise in interest rates and the continuous increases in taxes. Now, he would like to govern the country. If the Liberal party puts the leadership of the country into the hands of the minister, I say that the Liberal party will be placing the country in a state of depression and crisis, and I hope the Liberal party will save us from such a catastrophe.
Mr. Chairman, I therefore oppose this raise in taxes, because I realize that it will only be used to pay the higher interest rates demanded by financiers.
[DOT] (8:30 p.m.)


@Deputy Chair(man)? of Committees of the Whole: Shall
clause 5 carry?


Mr. Saltsman:: I have a very straightforward request to make of the minister tonight, and I hope he will accede to it. I should like to ask him why he does not listen to his speech writer. He seems to have an excellent speech writer, and I am referring in particular to the speech given to the luncheon meeting of the Canadian Club at the Royal York Hotel, Toronto, on January 8. There are some excellent statements in that speech, and I should like to quote some of them:
What can be done? I agree entirely with those who deplore the deliberate creation of unemployment as a means of checking inflation.
Yet, Mr. Chairman, this is what seems to be happening. The budget proposals we have before us seem to be designed to create unemployment. If they were not designed to create unemployment, they seem to be having that effect at any rate. Our rate of unemployment has increased substantially over the past few years, and this is happening at a time when the United States economy is experiencing the lowest level of unemployment within the last five or ten years.
It seems difficult to understand why we should inherit inflation from the United States and yet not inherit the full employment situation as well. In the speech to which I have referred, the minister, or his speech writer, went on to say:
It unquestionably involves new techniques and new attitudes on the part of those who wield market power, both labour and management. The traditional instruments of fiscal and monetary 
policy must be employed with courage and skill, but they are no longer sufficient, in my view, to ensure that desirable combination of prosperity and stability which we all seek.
Those are admirable words. I wish the minister had taken some action to back them up.


Mitchell William Sharp: May I ask the hon. gentleman a question? Does he know who did write those words, both what I uttered and what was written?


Max Saltsman: No, I am sorry, I do not know the name of the speech writer, but I would be pleased to learn his name if the minister would care to offer that information.


Mitchell William Sharp: It was the Minister of Finance.


Max Saltsman: In that case, I congratulate the Minister of Finance and simply say to him: Why don't you listen to what you are saying? This was a very good speech, but I think the minister should pay some attention to his words and back them up with some action. This excellent speech writer, whom I admire, then had this to day:
We must work out a Canadian solution.
I heartily agree with that; this is the very thing we must do. I think perhaps the minister should spend more time looking for a Canadian solution instead of going down to the United States and praying for events there to change. We do need a Canadian solution, and we need it desperately. Up until now we have not had measures proposed that will solve the economic problems of this country. Such measures as have been proposed have involved the old fashioned unproductive bromides. We need new measures. The minister talked about new measures, but we have not seen any of them.
We are faced with a need for increasing our social capital. Even the minister will agree that there is a need for medicare. There is a desperate shortage of housing in this country. We need revenues to correct the disparities between individuals and help raise the level of income. With 20 per cent of our population living in poverty we need to redress the difference between the rich and poor sections of this country. For that purpose we need revenues. However we see no real evidence that the minister understands the problem.
It seems to me a proper course of action for the minister would be to suggest a means of increasing productivity and wealth in this nation. If we did this, we could generate the
February IS, 1968

revenues required lor the kind of society to which we aspire in this country. If we look at our productivity, we realize it is 20 per cent to 30 per cent lower than it need be. Even if we did not close the gap of 20 per cent to 30 per cent, but if we simply increased productivity by 10 per cent we would increase our gross national product by $6 billion. If you calculate that 30 per cent of that increase goes in taxes to the various municipal, federal and provincial governments, there would be another $2 billion available to help the people of this country. This represents a far greater amount than the minister hopes to collect from this 5 per cent surtax.
The minister seems to be making the same mistakes as the previous government made.


Jay Waldo Monteith: Oh no, worse.


Max Saltsman: I do not know whether they are any worse, but they are certainly not any better. I should like to quote from the report of the Economic Council of Canada which refers to the year 1960. Someone has said that was a bad year. You are right; it was a bad year. Unfortunately this year is not any better. It does not seem to make any difference in this country which one of the old parties forms the government, we wind up with the same results.
I am quoting from the report of the Economic Council of Canada:
For the year 1960, the economy was capable of producing over 8 per cent more production and income than actually occurred. The increases in the major federal tax revenues stemming from an attainment of potential output, however, would have been considerably greater than the implied rise in output itself. It has been calculated that personal income tax yields at the given rates would have been 12 per cent, and the corporation income tax yields by more than one third. In the aggregate such calculations indicate that at potential output levels in 1960, federal tax yields at the rates then in effect would have been over 18 per cent higher than the actual collections in that year when the economy was operating substantially below capacity.
The present minister should have been aware of the kind of problem created when there is slack in the economy. I should like to put on the record a further quotation from David W. Slater, "Economic Policy and Economic Research in Canada since 1960":
But the high unemployment and extremely disappointing productivity experience in this "five year stretch"-
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The period referred to is between 1958 and 1962.
-still stands out as one of the major failures of Canadian post-war economic performance. Canada's gross national product was at least 8 per cent below potentials during these years. The cumulative five year loss of output would sum to $15 billion, or more, in current prices.
This is a sizeable amount. One would have hoped the present Minister of Finance would have learned from experience when the nation is faced with high levels of unemployment. It is bad enough in the central provinces, but it is much worse in those provinces that seem to suffer most under circumstances of this type. I understand that unemployment levels in the maritimes are somewhere around 11 per cent. This is a catastrophic level for that area. Unfortunately the minister seems prepared only to raise taxes and diminish the gross national product. Then, he moralizes about the need to pay as we go.
[DOT] (8:40 p.m.)
Earlier today my colleague from Springfield referred to the banking policy of the government and indicated that he reluctantly supported the policy because of the persuasiveness of the Minister of Finance, who offered some excellent reasons for removing the ceiling on interest rates charged by banks. I recall his assuring the country that setting the level of interest rates was the direct responsibility of the Minister of Finance and that he accepted that responsibility.
I think that tonight he must answer for that responsibility. I remember voicing my concern at the time, Mr. Chairman. As reported at page 7320 of Hansard for July 7, 1966 I said:
If the bank rate in this situation is freed from restriction or permitted to increase, I have no hesitation in saying that Canada will face the highest interest rates, the highest cost of money, in all history.
I also recall some rather unpleasant noises that came from the government benches at the imputation that such a thing would happen. Then later, as reported at page 7321, I said:
To remove the interest ceiling without proper safeguards is to raise the cost of every single thing in this country. It is to put the cost of money in Canada at a height it has never achieved previously, and one that no one at this point can calculate.
I then went on to say that interest rates of 8 and 9 per cent on commercial lending would be possible through this type of

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approach, and there were hoots and shouts from government benches, incredulous that interest rates could reach 8 or 9 per cent in this country. That was not very long ago, Mr. Chairman. Now interest rates have not only reached that level, but exceeded it.
The minister has a lot to answer for. He poured oil on the troubled waters. As reported at page 7237 of Hansard, he said:
I should like to re-emphasize the determination of the government that the fresh winds of competition shall permeate our system of banking and finance.
Here I should like to recall to the committee the great aplomb with which the minister on that occasion made this announcement to the nation. He continued:
We are determined that the system shall operate in the interests of the greatest number of Canadian consumers and businessmen. We are determined, in particular, that the interests of the small borrower and the small businessmen shall be protected and furthered.
Perhaps the minister will tell us whether this has eventuated.
We believe that the most effective way to achieve these ends is to encourage and to enforce competition. In this view, the government is supported by the royal commission on banking and finance and by the Economic Council of Canada. If there are many competing sources of loan funds and many institutions freely competing for the custom of the consumer, we are convinced that he cannot help but benefit.
I think that the policy of the minister has proven to be a failure. Perhaps no one should blame the Minister of Finance for this because many of us were persuaded at the time that this approach had a good possibility of succeeding. I do not think there was any conspiracy or any malice on the part of the minister when he made that speech. I think he believed at that time that the removal of the interest ceiling would be beneficial.
However, Mr. Chairman, since it has not, I think the minister will have seriously to consider making an admission that his policy has not worked, whatever the reason for it is. Unless he finds other measures to control the rapidly escalating cost of money in this country he will have to reimpose the ceiling on interest rates. I believe that he or one of his officials assured us that it was quite possible that this would be the case if the measure did not work out as anticipated.
I suggest, Mr. Chairman, that the problem that is ailing the economy is not lack of money. Canada has one of the highest rates of saving in the world. I think almost 20 per

cent of our gross national product goes into savings. It is not that we do not save enough but that we misuse the savings that are at our disposal. We simply spend them wastefully. I sometimes think there is no other country in the world so wasteful with capital as this country of ours. Perhaps we have acquired capital too easily and therefore have not had to conserve it or invest it as well as we should.
I should like to put on record the situation that exists in many of the industries in this country that are over capitalized. These industries have used far more capital than necessary. This is a bad state of affairs and cannot and should not be allowed to continue. The minister must give consideration to taking measures that ensure that the capital and savings at our disposal are used in better fashion than has been the case in the past.
I should like to quote from an article that appeared in Time magazine on February 2, 1968 which carried a statement by Robert Fowler, president of the Canadian Pulp and Paper Association, who warned the annual meeting of that association that "growth is fine but an epidemic of elephantiasis could be serious." The article continues:
"It is more than clear that Canadians have made a creditable contribution to their own misfortunes," Fowler told the association. Fowler blamed excessive rivalry between companies eager to get the jump on each other, and between provinces only too happy to offer loans and tax inducements. As a result, he said, "there has been a misuse of public and private capital at a time when capital is scarce. There must be better ways to order our affairs."
I should also like to refer to part of an article written by Ron Grant that appeared in the Gazette on November 8, 1967:
Expansion in the pulp and paper industry has created a situation where companies are reaching into every corner of the world market and sometimes coming up empty-handed. It's no longer a seller's market.
New mills coming onstream in Canada, along with similar expansions in other countries, have resulted in excess capacity, increased depreciation, start-up problems-
One would think, Mr. Chairman, that with all this excess capacity and evidence of competition-and, after all, there should be competition if there is excess capacity-prices should come down. But no, prices are not coming down, and will probably have to go up as manufacturers seek higher mark-ups on their volume of production.
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I should like to quote from the Financial Post for July 17, 1967, which had this to say:
In spite of current softness in the pulp market, there is little indication of a general break in price among B.C. companies. "Most of us think it would be a mistake to reduce prices. It would not get us anywhere," one company's spokesman said.
This comment appeared in the Globe and Mail for August 4, 1967:
Despite excess capacity in newsprint, prices have been firm. A $3-a-ton price increase went into effect July 1. Analysts say it is unlikely that the Industry will retreat from the new price level, even if mill operating rates decline further.
Therefore, Mr. Chairman, this excess capacity has benefited no one. It has not benefited the pulp companies, it has not benefited the public and it certainly has not benefited the nation.
[DOT] (8:50 p.m.)
One of the industries that most glaringly displays a misuse of capital is the oil industry in this country. In Alberta production is rationed out among the various fields, pools and wells. For some years total production was about 45 per cent of capacity but now it has dropped to 37 per cent. At the current rate of production, according to Charles S. Lee, president of the Independent Petroleum Association of Canada, the impact of the Rainbow Lakes discovery could be to reduce this to 25 per cent of capacity. The investment in this industry has been calculated to be somewhere between $7 and $14 billion. We do not know the exact amount because only those in the oil industry can supply the answer. Nevertheless we must again ask how much of this money has been totally wasted? How much of this money, and it is mostly United States capital, have we imported for no good purpose? How much of this money have we brought in simply to pay interest and dividends on unproductive capital? How much better would it have been had the oil industry used the capital it needed, instead of spending the money in this way?
In a recent report by Walter S. Levy, prepared for the Independent Oil Association of Canada, we find this comment:
Nonetheless, there is little doubt but that present relatively low utilization of capacity imposes a heavy cost burden on the Canadian producing industry, which could seriously impinge on exploration incentives if it persists. For Alberta, in particular, production is very much below capacity; the ratio of production to capacity improved from 41 per cent in 1960 to around 47 per cent in 1963 and 1964, but has since declined to under 44 per cent In 1965.
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What are we doing with all this oil exploration? Canada now has almost twice the proven reserves of the United States.


Mr. Bower:: Would the hon. member permit a question? What is the source of his last statement about proven reserves?


Max Saltsman: I shall again read from the report. Referring to Canada it says:
Canada's 1965 ratio of reserves to production of 23 years compares with 12 years in the United States; and
Canada's 1965 ratio of production to productive capacity of 55 per cent compares with 73 per cent in the United States.
In other words, our reserves to production are 23 years, as compared with 12 years in the United States.


John Oates Bower: Would the hon. member kindly talk about this matter in ratios, and not talk about absolute proven reserves?


Max Saltsman: The point I am trying to make is that we have explored and created more reserves than we could possibly use in the foreseeable future. There is all kinds of oil lying around that is not being tapped. The tar sands are hardly being touched for fear of what full production from them might do to upset the entire marketing arrangement in Canada.


An hon. Member:: Nonsense.


Jean-Luc Pepin: If the ratio were to be 12 years, what would the hon. member say?


Max Saltsman: I would not argue with the minister.


Jean-Luc Pepin: Think that one over.


Max Saltsman: If the minister assures me that that is the figure, I shall not quarrel with him.


Jean-Luc Pepin: The hon. member indicated that in the United States the life index figure stood at 12 years and he tried to compare that with the 23 year figure in Canada. That was all right. At the same time he intimated that we are not using our reserves well. I would ask him what he would say if the figure were to be only 12 years.


Max Saltsman: I should say that 23 years is almost twice as much as 12 years.


Jean-Luc Pepin: I suggest the hon. member would say that the period is too short, that we are short of reserves.

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Max Saltsman: I am delighted to see the Minister of Energy, Mines and Resources entering this debate. Perhaps he could say something about potash, because it seems that we are doing with potash exactly what we have done with oil.


Jean-Luc Pepin: The hon. member cannot have it both ways.


Max Saltsman: A news report of February 10 of this year says that we have overloaded potash production, just as we have oil production. In other words we have spent more money on this commodity than needed to be spent; we have brought about all kinds of improvements in production and we have no place to put the potash. It seems to me that the industry has jumped far ahead of its sales and markets, and that constitutes a gross misallocation of capital.
The Carter commission is concerned about this factor. Members of this party have spoken of the inequity of our present tax system. They have pointed out how Carter has called for equity in our system of tax allocation. But he made another point also. He said that our present tax system bonuses many industries in this country that do not need bonusing. Not only do they not need to be bonused, but they are bonused for the wrong kinds of production. Our system is not neutral; it distorts the capital markets of this country and other countries and puts money into production efforts that should not be bonused. The report says that we should return to a more neutral tax system. If we believe, truly, that capital has a way of going where it is required, then let us do something about that belief. Let us stop bonusing our primary resource industries. Carter was talking not only about our tax system of bonusing but of depletion allowances, forgiveness grants and tax holidays.
We started off admirably in this country with programs such as the designated areas program, which were to bring industries into certain areas. Nobody quarrels with the aims of such programs, except where they have had bad effects, as evidenced by the electrical industry. For example, recently R.C.A. announced that it would open a $25 million tube plant in a certain area. The government contributed $5 million to that. The news report in my hand says:
The federal Government put up an estimated $5-million toward the cost of the plant under its area development program .. .
Mr. Drury later saw dozens of automated cradles hanging empty because of a drop in the demand for color T.V.

This plant has a capacity to manufacture 300,000 tubes annually, yet demand in Canada only requires 190,000 tubes annually.
Another news report, dated May 9 of last year, says:
A Sylvania official said:
"We are quite concerned at the situation, since sales are about 50 per cent below expectations."
The official was talking about his own plant. He continues:
"Our plant alone could supply the whole of Canada's market at the moment-and there are still the other two manufacturers."
That statement shows that one plant can supply the entire Canadian market. This being so, we must again ask, can we afford to use capital in the way we now use it? Our capital use is tantamount to capital misuse. In the long run we shall derive few benefits. Instead we shall see chaos, which will not be good for our industry, our consumers or our nation.
There is evidence of severe overcapacity in other industries, and particularly in the heavy electrical equipment industry. A news report of February 13 of this year says:
A recent survey of manufacturers of power transformers and allied equipment showed that some companies have spare capacity as high as 40 per cent for later this year and early next year.
The same situation prevails in companies making furniture and in companies making pipes for pipe lines. It applies to refineries, and I could go on enumerating industries.
I should now like to say to the speech writer who wrote about the need for a new approach to Canada, that he should do something about that new approach. He must realize that we cannot go on as we are, using general fiscal and monetary policies alone to regulate our economy. Desirable though fiscal and monetary policies may be, new instruments of regulation must be found. Perhaps he is thinking of some new instruments; if so, he should tell us about them.
Personally, I think we should establish some form of capital priorities board. I do not know what form such board could take, neither am I unaware of the difficulties in creating such a board. But in the light of the evidence of the misuse we have made of capital, especially imported capital. I think we ought to establish such a board.
[DOT] (9:00 p.m.)
I think the minister should consider whether the tax benefits now conferred on holders of equities should not be given to the holders
February 15, 1968

of government bonds instead. Let us reward those who are contributing their money to public purposes, rather than to private purposes alone. I think this should be considered, especially in the light of the difficulty in financing government expenditure. Public expenditures are valuable and helpful. In the foreseeable future there will be a great deal for public financing. If we are to depart from neutrality in our tax legislation, let us do so in favour of public expenditures rather than private expenditures.
I believe also, as many speakers from this group have said, that we must have a price review board to examine the changes which are taking place in this field and find out what kind of restraint could be exercised by such a board. Unless we can be given some hope that the government is entertaining ideas along these lines it is impossible for anyone to support the entire, useless and damaging measures contained in this bill.


Louis Ralph (Bud) Sherman: I should like to put on record one or two thoughts I have in connection with this clause, and to say a few things about the subject under debate at the present time. I bring to this no professional, fiscal or economic expertise and I bring to it no volume of statistics or documents. I bring merely a sincere and steadfast opposition to clause 5 and everything it stands for, and a sincere and steadfast feeling of sympathy with the thousands of people who write to hon. members of this chamber every week of the year asking for some relief from the effects of the critical cost-price-tax juggernaut under which they are crushed at the present time.
I ask the Minister of Finance where he thinks the ordinary people of Canada will find the money to pay this surtax which he proposes to levy. I ask where he thinks the elderly people will find the money to pay this tax. They are hard put now, to keep body and soul together, to keep off the blasts of winter and buy the drugs necessary for their health and well-being. I ask him about the retired people, those living on fixed incomes who have been seeking relief ever since this government was elected, and who have sought it in vain. They asked for relief and help, and what did they get? They found themselves poorer than ever. It was an exercise in total frustration.
The Leader of the Opposition made reference this week to the fact that a very large
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group of pensioners in this country, those living on federal superannuation payments, is still looking to the government for long overdue assistance. My hon. friend the Leader of the Opposition also drew attention to what he felt was the folly of such government programs as medicare, in the light of the needs which beset many categories of people in this country at the present time. The public service pensioners are only one of the classes who are in need. All pensioners come into this category because all of them need help in coping with the cost of living today.
Who will speak for the widows of this country with children to support, or for all who have limited incomes, limited means of livelihood? When the minister proposes to levy a surtax of this sort, I ask him: Who on the government side has given thought to these classes of people? What about the position of those in the lower income groups? What about the position in which great numbers of wage earners find themselves? Those who are fortunate enough to be in the upper income brackets may be able to pay this surtax without too great difficulty; but these are a minority.
I need not remind anyone of the dire economic stress which a great many Canadian families face today. I am sure the mail of every hon. member is filled with pleas for relief, for some form of escape, for some hope of an improvement in the context of the cost-tax-price squeeze felt by most Canadians, particularly by those in the lower and middle income groups, those on fixed incomes, those on pensions, those who are retired and those who are widows with young children to raise, educate and support.
Who on the government side speaks for these Canadians when the proposal is made to impose an additional financial burden upon them? I do not accept the suggestion which may be made from one corner of this chamber that the socialists speak for them, because members of the N.D.P. have demonstrated in some of their utterances today, if they have not done so before, that they approach this problem only in a doctrinaire manner; their hypothetical panacea for these ills is nothing but a series of superficial arguments based on hoary socialist principles which represent a creed outmoded and outworn, a creed which has never delivered anything by way of progress or constructive prosperity in the marketplace of Canada and which has never, fortunately, had an opportunity to do any

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damage of a major nature-and I trust it will never have a chance to do so in the future.
The N.D.P. makes a great pretence of speaking for Canadians in difficulty but they have never been called upon to deliver; they speak from a protective segment of the political scene. They have never had to deliver in the context of the practical difficulties attached to running a country or a government. The hon. member for Waterloo South said it did not seem to make much difference which of the two major parties were in power so far as the financial difficulties of the people was concerned. We all know he was referring to the Conservative party and the Liberal party. I suggest to him it would make a tremendous difference if his party were in office. And the Canadian people know it; and that is why his party has never been in office. I would ask the same hon. member, and those of his colleagues who have spoken in the same theoretical, hypothetical vein, what about the situation in Great Britain where finally the people seem to have come to their senses with respect to the panacea of socialism? I would ask him, what about the situation in Denmark where the people not only seem to have come to their senses but have articulated that fact by throwing out a socialist government?
[DOT] (9:10 p.m.)
The hon. member for Waterloo South presented a typical, classical socialist argument, but it contained the depth and degree of reasoning, and the strength and substantiality of most socialist arguments, that is to say, it was totally flimsy, and collapsed on examination. That was demonstrated by the fact that he was confused by questions directed to him by the hon. member for Shelburne-Yarmouth-Clare and by the Minister of Energy, Mines and Resources.
That party is not speaking for the people in this country who are in financial difficulty at the present time, and I suggest that the minister through the measure he has introduced is not speaking for them either. I ask who is speaking for people who are in these straits? This is the reason why, without any financial, fiscal or economic expertise I have risen to inject my observations into this debate.
The average wage earner in this country, if he has a family to support, has an extremely difficult time meeting his economic needs. You know that, sir, from your mail, as well as I know it from mine, and as well as anybody in this chamber knows it from his or her mail. With the pressure of taxes, living

costs, food costs, all the costs that go to make up the spectrum of survival and existence, the average wage earner has all he can do to keep his head above water. He is asking for some relief, not for an additional burden or penalty such as that exemplified in the measure the minister has introduced.
The difficulties that I refer to do not even begin to take account of the situation with respect to the elderly, the pensioners and all those on fixed incomes. The average wage earner has a difficult enough time, but this does not begin to take account of the extreme hardships of those in the latter three categories I have mentioned, the elderly, the pensioners, and all those on fixed incomes.
This, sir, is a mean and cruel tax. It is hitting at a segment of society already pressed almost to the breaking point. The critical fiscal and financial situation in which these Canadians to whom I refer find themselves, indeed all Canadians find themselves, is not of their own making. They should not be held to account for it, and should not have to find the way to pave the government's avenue of escape out of it. The critical fiscal and financial situation in which the government finds itself is of its own making.
Some 18 months ago the government established a pattern of 30 per cent wage increases when it intervened in three labour disputes and ordered settlements to be made on that basis. That was only one example of fiscal and financial irresponsibility on the part of the government, but it was one of the most graphic. It has continually come back to haunt the government and to hurt Canadians time and time again in the 18 months since then. You cannot go about making outlandish settlements like that without paying the piper, paying the price somewhere down the line. Who is paying the price? It is the average Canadian wage earner, the pensioner, the Canadian in all those categories to which I have referred. He has to meet his grocery bill, his rent bill, his mortgage bill, pay for his children's education, pay for drugs in an effort to stay alive in this economic situation in which all factors seem to be arranged and arrayed against him.
When wage increases of that outrageous size are implemented, and with the rapidity and in the sequence in which they were implemented, they cannot help but have an effect on the marketplace which will militate against the economic well being of all Canadians. They cannot help but have an effect which takes the form of a situation that
February 15, 1968

ignites a further spiral of costs and prices. These settlements could not help but touch oil a new spiral in costs and prices, and could not help but reflect those in the marketplace.
The small wage earner is the man who has suffered. He has had to pay the penalty, and now he is being penalized again with this so-called temporary surtax on his income tax. What I would like to know from the Minister of Finance tonight is where and when these penalties stop? When does it become possible for a man to be rewarded for ambition and energy, rather than penalized? When does it become possible, realistic and practical for a man to be rewarded for being Canadian, for devoting his life's work and energies to the improvement of the state of society in this country, instead of being continually harassed from a financial point of view and subjected to penalties by a professional socialist undertaking?
I would like to move an amendment to clause 5 of the bill, but I understand, sir, it would be ruled out on technical grounds. Therefore I do not intend to move an amendment at this time, but I set myself firmly on record as being in steadfast opposition to this clause, and I am prepared to vote against it.
What we need in this country are tax incentives, not tax penalties as provided by this clause. Tax incentives are necessary as a means of increasing our productivity from coast to coast, both on an individual and on a collective level. Only if we increase our productivity will we find our way out of the morass into which we have stumbled under the present administration and its inept economic policies, policies which seem destined to lead us into fiscal disaster.
It pains me, on the strength of what I have said in the last few minutes and on the strength of my philosophical commitment as a Conservative, to support any measure put forward by the N.D.P., but I must say that I agree with the sentiments behind the amendment proposed earlier today by the hon. member for Broadview when he suggested the elimination of clause 5(l)(b), the requirement stipulating that $600 would be one of the brackets surrounding the new temporary surtax.
I support the sentiments behind that amendment, because I agree with the hon. member's argument that the prescription in the clause as now worded militates most severely against the small wage earner. Actually it militates against all wage earners, but I had admitted in my earlier statements this
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evening that there are some Canadians to whom the additional surtax would not be so great a financial burden. However, the people with whom I am most concerned are those in the lower and medium income brackets, to whom it would be a great financial burden.
That is why I, despite the philosophical conflict I have to overcome in my own mind, do support the sentiments behind the amendment proposed by the hon. member for Broadview, because he has put his finger on the nub of the difficulty, the nub of the weakness, the flaw and the unfairness of this legislation, namely that it militates most severely against the man who is the backbone of this country, the small and medium sized wage earner, with a home and family that he has to support and children he has to feed and educate. I must say that I found the entire speech of the hon. member for Broadview a refreshing return to sanity, after the remarks made earlier in the afternoon by his colleague, the hon. member for Sudbury.
[DOT] (9:20 p.m.)
Like many other members in this chamber I felt that the remarks of the hon. member for Sudbury represented the most outrageous socialistic polemics I have had heard in this house since I came here. I am given to believe that many members, with much greater seniority in this chamber than I, would argue that it was the most outrageous dissertation of an unsupportable nature in the area of socialism and left wing thinking they have ever heard in the years they have been in the house. So, it was extremely gratifying to me to hear a voice of sanity come from that comer of the chamber in the person of the hon. member for Broadview. I reiterate my support for the sentiments contained in his amendment.
In a final reference to the contribution made from that corner of the chamber I should like to say that the remarks delivered by the hon. member for Sudbury represented to me a dredging up of some of the most hoary old chestnuts of socialism and left wing politics. His party could not get anyone to swallow those chestnuts in the past and will not have any success now. The hon. member for Sudbury no doubt is still convinced that it is practical to peddle them, but I doubt that he will have much success in his attempted sale of such outrageous ideas.
It is admitted that the nation is in a fiscal financial situation which requires financial and economic assistance where the federal purse is concerned. But there are many

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Income Tax Act
sources available from which to obtain the money, without going to the oppressive extreme of levying this kind of unsavoury penalty on the middle and low wage earners of Canada who form the majority of the people of this country. There are two areas of public spending to which members from this and other parties have referred in the debate today. I should like to refer to the speech of the hon. member for Perth and also that of the hon. member for Villeneuve. I would also cite the current example of Hon. Lionel Chevrier, who I understand is on a tour of the French speaking nations of Africa, investigating the extent to which we as a nation might participate in external aid to those countries.
I have no quarrel with any exercise in external aid to any countries in the world of any political or ethnic extraction or persuasion. However, I would simply like to ask the Minister of Finance and his colleagues why we expand our contributory function in areas of this type, when on the other hand in order to raise the necessary money to keep the economy turning we must levy additional penalties on the taxpayers of Canada. This has been my experience every year since I came here a little over two years ago. Surely economic charity should begin here at home in Canada. Before we attempt to expand ourselves too far into these other areas of finance and fiscal support we should think of financial fiscal support and relief for our wage earners and taxpayers in Canada. I see no justification for the kind of spending to which I have just referred, and the kind of public spending which is projected for example for the immediate future in the Ottawa area. I see no justification for this, when we turn around and levy additional taxes and penalties on the hard pressed wage earners, pensioners, widows, elderly and retired persons of this country.
In his remarks earlier today the hon. member for Villeneuve spoke with scorn about the terminology used in clause 5. He referred to the words "temporary surtax" and suggested that they were a sham. In the lifetime of this government there is nothing in the field of taxation that is temporary. This is about as temporary as the location of the national capital here in Ottawa. This is a permanent addition to our tax burden, and there should be no attempt to dissemble that fact before the hard pressed wage earners and taxpayers of this country who will have to supply the money this government has run out of.

I have cited some exercises in the general area of public expenditure which I feel are inadvisable in the light of the steps the government is taking here in the form of this income tax surtax. There are two or three other exercises which could be added. One is the expense of the Royal Commission on the Status of Women, which I find in my part of the country, and in other parts of the country which I have visited, has outraged most people who are knowledgeable about the work of the commission and the amount of money it is costing the taxpayers of Canada. This no doubt is a very worth-while study, but is it as worth-while as the stabilization of the financial life of this country would be?
I suggest that expenditures of this type should be deferred or postponed, at this time when public money is so short that the taxpayers are being asked to make up the deficit, until the time arrives when public money is available as a result of the general productivity of the nation. I suggest that this surtax will have precisely the opposite effect on the economy of this country to that which the Minister of Finance hoped to achieve through its implementation. I suggest that it will force people to cut back on their purchases and participate less in the exercise of oiling the machinery of the economy of this country. They will tend to participate less in the general function of keeping the economy moving, alive, energetic, productive and progressive. I suggest further that the effect of this type of slow-down and cut-back will be so serious that I would not attempt to give a prognosis at this time. I believe the effect of that cutback and slow-down would be serious enough to merit a separate full scale debate in this chamber.
In conclusion, Mr. Chairman, I should like to suggest to the Minister of Finance that he think back to the thirties, when there was a cry from those who were on relief which could be heard across this land. I submit to the Minister of Finance and his colleagues in the government that today across Canada from coast to coast it is not the cry of those who are on relief which can be heard, but the cry of those who seek relief from the oppression of the cost-price-tax squeeze in which they have been caught for the past four years.


Mr. Fawcett:: Mr. Chairman, as a member who represents to a very large degree the type of citizen who it has been suggested has been carrying an unfair tax burden for many years, I feel it is incumbent upon me to take
February 15, 1968

strong exception to this proposal of the Minister of Finance, which would perpetuate and add to the injustices that now prevail in our present tax laws. I should say in passing that I was very happy to hear that the hon. member for Winnipeg South recognizes the voice of sanity in our ranks. It is very evident from the speeches this afternoon that one will not hear a similar voice in the area to our right.
[DOT] (9:30 p.m.)
We have been told that there are two things we can be sure of on this earth; death and taxes.


An hon. Member:: And Liberals.


Norman Edward Fawcett: I would be the first to agree that taxes are necessary. If we accept and expect services we must pay for them, and there is only one way to pay-through taxes. The government has a responsibility to see that taxes are levied on an equitable basis. It is in this respect that the government of today and previous governments have failed miserably. I do not pretend to be an expert on economics or monetary and fiscal policy and, like the hon. member for Winnipeg South, I intend to stay away from a discussion of that side of the coin. Some of my colleagues have done an admirable job in presenting our feelings in respect of economic aspects.
Surely no one will contradict me when I say that governments from the municipal level, up, are trying to high heaven to find additional finances. Municipalities in particular are having a very difficult time to finance their operations. I attended a meeting in a mining municipality in northern Ontario not long ago. The paramount concern of this group of people was that not enough revenue from the mining industry was being returned to the municipality to cover the cost of providing municipal services and educational needs. The only suggestion this group could make was that it should pressure the province into providing more financial assistance.
Who would pay for this increased assistance provided for northern municipalities by Queen's Park? This money must come from the same source, the taxpayers. The taxpayer, as has been suggested by the Carter commission and others, has been overburdened through taxes. We can solve nothing until we establish a new tax base. There is no point in transferring tax imposition from one place to another, because in the long run the taxes come from the same source.
Income Tax Act
I found something else which was of interest when I attended that meeting, namely the minutes of a previous meeting. They had passed a motion opposing the recommendations of the Carter commission dealing with the elimination of withholding tax and depletion allowances regarding mining and oil companies. I can only suggest that the municipality was panicked into taking this stand because of threats on the part of these companies. This is understandable, because these municipalities are totally dependant on the income from the production and primary processing of natural resources or raw materials. I am sure they felt that the adoption of these Carter commission recommendations would result in the destruction of their economies.


Allan Marcus Atkinson McLean: Would the hon. member permit a question?


Norman Edward Fawcett: Certainly.


Allan Marcus Atkinson McLean: Has he read the Carter commission report?


Norman Edward Fawcett: I have read the summary, sir.


Allan Marcus Atkinson McLean: Does he believe the recommendations should be implemented in their entirety?


Norman Edward Fawcett: I know exactly what the hon. member has in mind. If mining companies and insurance companies paid the taxes they should be paying the tax rate for the average individual would be much lower. It would not make much difference to these companies, if these recommendations were implemented.


Allan Marcus Atkinson McLean: Do you believe that all the recommendations of the report should be implemented?


Norman Edward Fawcett: I think perhaps there should be some modification in certain areas, but I do not intend to identify those areas. If Kenneth Carter did anything, he emphasized the fact that too many have been getting a free ride for too long. Unless these recommendations are implemented and unless we develop a new tax base, the greater proportion of taxes will still come from that group of people who are now overly tax burdened.
Let me comment briefly on the remarks of the hon. member for Edmonton West in respect of corporation taxes. There is more than one kind of corporation. We have many small corporations, with as many financial

February 15, 1968
Income Tax Act
difficulties as have the wage earners. These corporations do not wield any great power. There are other corporations, to which I have alluded, which greatly influence our economy. To a great extent they control economic factors. I suspect that some of these corporations hold our governments in the palms of their hands.
It was interesting to note that immediately after the Carter commission recommendations became public our desks were covered with briefs and submissions from members of that 5 per cent of our population who exercise this control. It is time the voice of the other 95 per cent was heard.
We have often heard from members sitting on the front benches across the way about our high standard of living and our affluent society. I am the first to agree that our wage earners are living in nice, modern homes with all, or most, available appliances. They are living quite comfortably. The thing that has escaped the attention of most people is that this affluent society picture is a myth. Even though these people are living in modern homes, and even though they enjoy comfortable lives with a reasonable amount of security, they live from pay day to pay day. I speak with some authority in this regard because I spent most of my lifetime working among these people. I am not being critical of this situation or the people who live in this way; but it is only because of credit buying that they at this time enjoy a reasonably comfortable life. But the fact still remains that their security begins and ends with the pay cheque. If anything happens to the pay cheque, if a person becomes unemployed, the security finishes, the home is lost and, in many cases, a good portion of what is in the home also disappears.
[DOT] (9:40 p.m.)
My colleagues have referred to the discriminatory aspects of tax exemption. They have referred to the need of exemption for tools, clothing, etc., which are a necessity in most cases for these people in their mode of employment. I believe there is another matter to be considered in this respect, namely the question of transportation expenses. In this day and age it is a practical impossibility for any employee to live within a short distance of his place of employment. He is practically forced to live 10, 20, 30 or even 40 miles from where he is employed. This is particularly true of the area from which I come. As a result, transportation costs take a great bite

out of the pay cheque of the employee; yet they cannot under any circumstances claim exemption for transportation expenses.
Another example of this was brought to my attention recently. I refer to the situation of professional fire fighters. I believe this matter comes within the jurisdiction of the emergency measures act. These people are compelled by law to be available to go anywhere within reason in case of emergency. Penalties are involved if they do not go to the place of emergency; and if they do not go, they must have a very good excuse for not going.
However, Mr. Chairman, there is no provision for the transportation of these people. In the case of dire emergency they are sometimes required to travel great distances. In some cases, in order not to violate the law they must have transportation, usually by means of a car, and they must keep up the insurance on the automobile, and so on. I believe this is another very glaring example of where tax exemptions should be provided. While wage earners are having this difficulty, we find there are those who claim exemptions for wining and dining and living high on the hog, so to speak. This is one of the things that very much bothers the average working man.
With regard to the tax holidays for mining corporations, as far as I am concerned I do not think they are necessary; in fact I would class them as an evil. But in addition to this, I think the minister should take a long look to see whether there are not abuses of the exemptions already provided. I suggest this is a matter well worth looking into. It appears to me that some of these exemptions go far beyond what should reasonably be considered as applicable.
As far as depletion allowances are concerned, I think it is a sad commentary on our whole economic process when large companies are granted depletion allowances for depleting expendable resources that, after all, are the heritage of every Canadian citizen.
In conclusion, Mr. Chairman, I should like once again to prevail upon the minister to take a serious look at the tax policy of the government and the effect it is having on the average Canadian citizen. I believe the time is long overdue when we should come up with something entirely different in the way of a tax base. It is high time that the 95 per cent of this nation who suffer from our tax policy were given a little consideration.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I should not like this
February 15, 1968

opportunity to pass without giving the minister the benefit of my advice, which he has never taken in the past. I should also like to refer to some of the minister's statements when he introduced this rather disastrous budget. It may be a little unkind on February 15, 1968, to quote what the minister said on November 30, 1967, as appears at page 4901 of Hansard. Here is our Minister of Finance looking in his clear, crystal ball with regard to the future. He has a somewhat different role than I have. Mine is a rather invidious one. I have never got much satisfaction out of being able to say, "I told you so", because Cassandra was never the go-go girl of the party. However, there is a contrast in the views expressed by the minister and those which I expressed a few days later. This is what the minister said when introducing his budget on November 30:
Looking ahead, in 1968 a somewhat greater increase in production than this year in real terms and a somewhat smaller increase in prices is indicated. This appraisal anticipates a revival in economic activity in the United States and a continuation of growth in production in Europe and Japan, all important markets for us. Consequently, I expect to see a resumption in the growth of our exports. We can certainly expect a continuing increase in the expenditures of Canadian consumers, probably at a greater rate than this year. Housing expenditures can be expected to rise next year. Mortgage funds should be more readily available as a result of the more flexible interest rates on insured mortgages as well as a reduction in the competition for funds and the entry of the banks into the market this year. Already, as hon. members know, there has been a very substantial increase.
Alas-


An hon. Member:: Who said that?


Colin Cameron: Oh, it was a Pollyanna, the Minister of Finance. But perhaps the sun was shining brightly on November 30 and it was not until the middle of February, 1968, that the frost of reality came down.


Mitchell William Sharp: Mr. Chairman, may I ask the hon. member which of these predictions I made has not been fulfilled.


An hon. Member:: All of them.


Colin Cameron: We will just take the last one, to start with:
Mortgage funds should be more readily available as a result of the more flexible interest rates on Insured mortgages-
Income Tax Act
Where are the more flexible interest rates?


Mitchell William Sharp: They certainly are.


Colin Cameron: Really, Mr. Chairman, I wonder that the minister can sit here and have the effrontery to say this, when we have heard of the great number of people in Canada who are desperately in need of housing. These people require mortgage funds, which are not available. Interest rates are continuing to rise. The other day, when I pointed out the effect of the sharp increase in interest rates, the minister considered that it was a matter of so little consequence that he had not even spoken to the banks or suggested to them, apparently, that this was not in accordance with the prognostications he had made at the time we had the revision of the Bank Act.
1 suggest that when he told us there would be a somewhat greater increase in production this year he must have forgotten that in a moment of rashness when he introduced the budget he said there would be a slight decline in production. He told us this was necessary in order that we control inflation. If the minister does not remember that, he had better look at his speech of November 30, when he said he was looking forward to a slight decline in production, regrettably, but because of the economic situation he felt this would take place.
Quite apart from this, Mr. Chairman, I think this bill contains fundamental implications that are much more important than the 5 per cent surtax on income, which we say is merely the revelation of the bankruptcy of this government's policies. This government has several obsessions. One is the necessity of maintaining simultaneously two contradictory and incompatible policies which tie their hands, and have tied their hands steadily for some time. The minister laughs. I can assure him the people of Canada are not laughing. I can assure him, too, that the economists in Canada are not laughing. I am so tired of economists coming to me, as if I were responsible, and saying to me: Is that man Sharp crazy? I say: I do not think so; what is he doing? I have to say I am not a miracle worker, so I cannot unscrew the inscrutable. If the minister thinks the individuals of this nation support him, then I suspect he will find the answer on April 6, because there will be a lot of people telling the delegates to the convention that they have been talking to businessmen who are not in support of the Minister of Finance.
Income Tax Act

February 15, 1968
[DOT] (9:50 p.m.)
There is only one way in which the minister can reach the objective which he told us he wanted to reach, namely to contain inflation and at the same time expand and develop the growth of our economy. However, he will not take it. He turned a deaf ear to the suggestions we made to him about the incompatibility of his policy of maintaining a fixed exchange rate and at the same time maintaining a ceiling on exchange reserves. This is continually causing him trouble.
Now, Mr. Chairman, there is only one way in which we can reduce interest rates. There is only one way in which we can expand the economy and that is by taking action to do so. When the minister is tied to the necessity of maintaining the dollar at 92.5, when he is tied to the necessity of keeping our exchange reserves below a certain ceiling, then he is unable to expand the economy. Instead of that, he contracts it; and he admits himself he is contracting the economy. The steps he took were designed to contract the economy. The words he used, of course, were the euphemistic ones of allowing a little slack to develop in the economy. This is not a phrase, Mr. Chairman, that will appeal to those who are the victims of that slack, because in order to be effective there must be a decline in employment; there must be a contraction of the economy. There must be an increase in interest rates. Of course this reduction is being deliberately pushed at the present time.
Because of the position of this government, Canada's future depends on a continual inflow of capital from outside. In spite of that fact, Mr. Chairman, more and more informed voices are being raised in Canada expressing great anxiety with regard to the out-flow of capital from Canada. On December 8 I quoted from a release by the Dominion Bureau of Statistics. Apparently the minister did not either read my speech or consult the Dominion Bureau of Statistics, so I will just put it on the record again. The quotation is from a current review of the Dominion Bureau of Statistics, which reads as follows:
Canada's current account deficit with the United States in the second quarter of 1967 (excluding gold production available for export which is conventionally attributed to the United States account) was $544 million. Net capital movements between the two countries produced an inflow of $58 million as an influx of $239 million of long term capital was in part offset by an outflow on shortterm account of $181 million.
Now, again and again in recent months we have been hearing the statements of financial
[Mr. Cameron (Nanaimo-Cowichan-The Islands).!
analysts who tell us in effect that we are getting almost nothing in the way of net inflow of capital. It is balanced by the outflows. The minister, however, still persists in going to New York and praying for the stability of United States markets, because he feels that will preserve our economy. He begs them to continue the inflow of capital here which will be offset by what is going out on account of previous inflows. I suggest to the minister that eventually he will have to take some steps to expand the Canadian economy to reverse the trend toward rising unemployment and rising prices, by accepting not my advice but the advice of competent economist after competent economist throughout the country. They say he should seek to return to the floating exchange rate and seek to stem the outflow, to control the inflow of capital from abroad and permit the Canadian economy to develop in the way in which our resources would certainly warrant.
I have wondered, Mr. Chairman, just why the minister took the action he did, because he told us he was going to control inflation. At the same time he told us that he knew quite well the inflation was not the usual, classical, too much money chasing too few goods, and obviously he could not sustain that idea. Nowhere could he point to a shortage of goods. On the other hand, he said it was the cost-push type of inflation. What does he do? He takes the idiotic step, the ineffective step which, if designed to do nothing more than control the classical type of inflation, would be an ineffective one. He puts on his 5 per cent surtax on income, which is a nuisance to a lot of people. This measure according to his own estimate, is only going to bring in $185 million. He increased the tax on liquor and tobacco, which is only going to bring in $95 million. He is going to get corporations to advance their tax payments so he will get them a little sooner than otherwise; but this is a one shot affair.
Then the minister tells us that the total tax yield for 1968-69 will be $9,700 million and expenditures will be $10,300 million, with a deficit of $600 million. In the light of the fact that the other day the President of the Treasury Board uncautiously promised this parliament the government was going to balance the budget next year, I would have thought the minister would have taken more decisive steps if he felt that this type of inflation could be controlled by withdrawing purchasing power from the hands of the people. Instead of that, he does not even withdraw enough
February IS, 1968	COMMONS
money to make any difference. He takes no steps whatever to control the actual excess of inflation at the present time.
I do not know how long ago it is, Mr. Chairman, but it must be about six weeks ago that we asked the minister if he was going to investigate the rise in the prices of copper and nickel. He assured us he was going to look into it. Subsequently, when we have asked him, he has still been looking into it but he has not done anything about it. We have not heard anything from him about the famous guide lines that were going to prevent these unseemly and completely unjustifiable price increases which of course enter into all other costs and add to the inflationary pressures.
He does not do anything on that side. Instead of that, he takes away a bit of purchasing power, but more important still he creates unemployment. No matter what the minister's brave words of November 30 may have been, or his equally rash, brave words tonight, he has made it almost impossible for people in Canada of medium or even fairly sizeable incomes to build houses today.
May I call it ten o'clock, Mr. Chairman?


Mitchell William Sharp: I wonder if there is any possibility we might conclude consideration in the committee this evening?


Some hon. Members:: Agreed.


Some hon. Members:: Ten o'clock.


Herman Maxwell Batten: It being ten o'clock, shall I rise, report progress and ask leave to sit again?
Progress reported.



BUSINESS OF THE HOUSE

Jay Waldo Monteith: Will the house leader tell us what the business will be for tomorrow and Monday under these circumstances?
[DOT] (10:00 p.m.)


Lawrence T. Pennell: Mr. Speaker, it is proposed to call item 57 second reading of Bill No. C-197, an act to amend the Unemployment Insurance Act. I cannot be definite about the business for Monday. I had hoped that the Income Tax Act amendments would have been completed, and we did propose to go on with the supplementary estimates. Having regard to the fact that the bill has not been carried I will be unable to advise the house on Monday's business until tomorrow.
DEBATES	6805
Proceedings on Adjournment Motion PROCEEDINGS ON ADJOURNMENT MOTION
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.



HEALTH AND WELFARE-MEASURES TO COMBAT PROBLEMS CAUSED BY ALCOHOLISM

Mr. Barry Mather (New Westminster):: Mr. Speaker, a few days ago I attempted to raise on the orders of the day the question whether the government was considering doing anything more with regard to the very important health and welfare problem caused by alcoholism in Canada. Mr. Speaker ruled the question out of order, so I have of course availed myself of this evening's late sitting to bring the matter up again. In support of the importance of the matter I hope in a very few minutes to put some facts on the record.
There can be no question at all that alcoholism causes, and has caused for a great many years, grave damage to the health and welfare of individuals, to families and to the state. Also in these days it carries with it modern problems, such as those evidenced by the fact that 50 per cent of fatal automobile collisions are caused by people who have taken alcohol to an extent far beyond the normal. This one instance alone, namely the toll taken by alcoholism in traffic accidents, accounts for hundreds of preventable deaths in Canada every 12 months, thousands of preventable casualties and millions of preventable economic losses.
I have cited this one particular aspect of the toll taken by alcoholism in Canada, but this is only one part of the whole sad story. There are also countless broken homes and marriages both in this city and throughout Canada as a result of alcoholism. We all know this is so. My question is: What is the government, and specifically the Department of National Health and Welfare, doing to help those people, and organizations that are actively engaged in trying to combat this evil?
As some hon. members know, I-and there are other members as well-have for years urged that the federal government and all other governments do something to combat the evils of cigarette addiction. I am pleased to commend the government for having done something to combat smoking. It has not done enough but it has done something to help prevent diseases such as lung cancer, heart trouble, emphysema and so on.
February 15. 1968
6806	COMMONS
Proceedings on Adjournment Motion
But, Mr. Speaker, what is the government doing about the problem of alcohol, a problem that is growing? The latest figures indicate that while the federal government raised revenue in excess of $275 million in the last fiscal year from the sale of alcoholic beverages, it contributed nothing, or nothing material, to any anti-alcoholism or temperance program in Canada. Why not? Surely this is a field in which there is a national problem of health and welfare. This problem has seen the emergence of different organizations at the provincial level and at the semipublic federal level who devote their efforts to solving the problem of alcohol.
For example, the pamphlet which is put out by the Canadian Federation on Alcohol Problems says that the purposes of the federation are to bring about enlightenment and understanding with regard to alcoholic problems and, generally, to do everything possible to improve the lot of those suffering from this cause. The organization is national and has the support of such organizations as the Anglican Church of Canada, the Canadian Baptist Church, the Pentecostal Church, the Presbyterian Church, the Roman Catholic Church, Seventh-Day Adventists and the United Church of Canada. I think that the government should consider augmenting the work that is done by these bodies.
Since the government derives a revenue of approximately $275 million a year from the sale of alcohol and since excessive use of such alcohol brings about disease, social problems, an increase in crime, increasing traffic accidents, and so on, would the government not consider seriously devoting a small part of its annual multimillion dollar revenue to meeting the problem of alcoholics? I suggest that the government consider allocating one half of one per cent of that revenue every year to aid in the work being undertaken by this federation.


Margaret Isabel Rideout: As stated in this house on January 23, 1968, and as reported in Hansard at page 5900, the Department of National Health and Welfare has no specific program on this subject but has assisted provinces in a variety of ways for many years. For the general co-ordination carried out by the Canadian Foundation on Alcoholism, a grant of $15,000 is made annually.
The problems of the alcoholic are indeed matters of real concern to the individual, his


or her family, and to all who come in contact with them. Alcoholism is primarily a personal problem, and must be combated at the personal, family and local level. It has however, a relationship to crime, traffic accidents and to costly health and welfare programs that receive public concern.
In recognizing this situation, the Department of National Health and Welfare is at all times ready to consider requests from provinces for assistance with research or services that seek to diminish or prevent the problems of alcohol. In addition to this provincial interest, the department keeps under continuing review the available statistics and other information on this subject, with a view to formulating whatever co-ordinating effort may seem likely to be effective.



AGRICULTURE-GRANTS OR LOANS FOR FAIRS AND EXHIBITIONS

Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, earlier this week I asked the Minister of Agriculture a question about possible long term government loans to fair boards and exhibition companies, for the construction of multipurpose buildings and facilities which would be suitable for local fairs. Mr. Speaker ruled that the question was not urgent; yet, with due respect, I do consider that question urgent and therefore I bring it up again at this time. I might explain that by "multipurpose buildings" I meant exhibition buildings that could be used for community purposes all year around.
The urgency of the question arises from this. Plans for summer fairs and exhibitions must be made now and if building loans are to be available this year the minister should announce that immediately.
[DOT] (10:10 p.m.)
I wish to put on record why fair boards and exhibition companies have the right to expect loans to be granted. In June, 1965, in answer to my question, the then minister of agriculture, Hon. Harry Hays, stated as reported in Votes and Proceedings of June 4, 1965:
The development of a program of long-term loans to exhibitions for major construction programs is presently under consideration.
On December 14, 1966, the present minister answered a letter I had sent regarding exhibition loans. Here is the last paragraph of his letter:
The Government, as you indicated, has under consideration a program of long-term loans. I am
February 15, 19S8	COMMONS
hopeful that we can move forward on such a plan within a reasonable period. However, you will appreciate that this will take legislative action and as soon as a decision has been reached an announcement will be made.
During consideration of his departmental estimates on March 2, 1966, in answer to a question about these loans, the minister replied as follows, as will be seen from the report in Hansard on page 2077:
When the loan bill is ready it will be presented to the house, but it will show no change in policy. Since I took office there has been no change in policy in regard to long term loans for multipurposes.
Early in May, 1967, the minister is reported to have said, at a meeting in Lethbridge that long term loans to fair boards may soon be a reality. I have the press report here under a Canadian Press dateline. After reading this report I asked the minister for a comment. Here is the reply he gave me in a note sent across the floor:
I explained to them it was in our platform, and in view of the way house business was proceeding I hope the government will see fit to bring it before the house this session or early in the next.
This was in 1967. I believe the minister recently had a meeting in his office with certain officials of the Canadian Association of Exhibitions. Perhaps he will indicate whether any discussion took place at that meeting with regard to the pressing need for long term loans. If he can assure the house that the loans will be available this spring his statement will be welcomed by fair boards and exhibition companies across Canada.
I have spoken of fairs and exhibitions generally but I speak particularly for the Moose Jaw exhibition, the president of which wrote me last year to say:
We have been endeavouring to raise funds to erect a multipurpose building which will be a credit to the community and which could be used the year round.
It is to meet situations such as this that I am asking the minister to make a clear statement of government policy.
DEBATES	6807
Proceedings on Adjournment Motion


Bruce Silas Beer: I wish to thank the hon. member for again bringing forward this important matter. I think the hon. member has not only asked the question but answered it by quoting from the very explicit letter of the minister dated December 14, 1966 when my hon. friend expressed the hope of this government that a program of this type would be brought into being at the earliest possible opportunity.
Perhaps I may review briefly what has happened. We did, of course, have a system of making capital grants to agricultural societies in this country, but this program was discontinued by a former administration of which the hon. member was a supporter. It is probable that if this system had not been discontinued we would still be providing this type of assistance to agricultural societies. It was the intention of a former minister of agriculture to introduce a different type of program, whereby extensive loans would be made available to municipalities for the construction of multipurpose buildings. However, since there was a break in the program, some interruption has resulted.
I should like to refer the hon. member to two quotations, the first of which appears at page 2481 of Hansard. In reply to a question asked by the hon. member for Fraser Valley (Mr. Patterson) the Minister of Agriculture said:
There is no intent to bring it in at this session but subject to the economic and financial dictates of the nation it is hoped we can bring it in during the spring session.
I think that is quite clear. The minister has said it will not be brought in this session. He is hopeful that it may be brought in during the spring session, but certainly it will be brought in at the earliest opportunity.
Motion agreed to and the house adjourned at 10.22 p.m.

Friday, February 16, 1968