1968-03-21

Hon. Maurice Sauve (Minister of Forestry and Rural Development):: Mr. Speaker, I would like to table the annual report of the Rural Development Branch for 1966-67.



APPROVAL OF INTERNATIONAL GRAINS ARRANGEMENT 1967

[Stage Direction]
On the order:	Government notices of
motions:
March 19, 1968-Hon. Jean Marchand (for the Minister of Trade and Commerce)-The following proposed motion:-That the Houses of Parliament do approve the Wheat Trade Convention and the Food Aid Convention comprising the International Grains Arrangement 1967 scheduled to take effect July 1, 1968.
Mr. Speaker:: Pursuant to section 2 of standing order 21 this government notice of motion is transferred to and ordered for consideration under government orders.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a question for the Minister of Finance. Can the minister now answer my question of yesterday as to the amount of the current bond issue which was taken up by the Bank of Canada?


Hon. Mitchell Sharp (Minister of Finance):: Mr. Speaker, I cannot answer as to the actual disposition of the bonds because the books have not yet been closed, but the Bank of Canada had agreed to acquire a minimum of $85 million of these issues, open as to maturity.



INCREASE IN INTEREST RATES ON GOVERNMENT BONDS

[Stage Direction]
On the orders of the day:
Mr. Roland Godin (Portneuf):: Mr. Speaker, I should like to put a question to the hon. Minister of Finance.
This morning, a newspaper carried an article on the new Canada government bond issue for $175 million at rates of interest varying between 5| per cent and 7.30 per cent.
Further on in the article, we are told that the new bonds are authorized under an act of the parliament of Canada. Can the hon. Minister of Finance tell us what act this is, when it was passed-


Mr. Speaker:: Order. I suggest to the hon. member that it is out of order to put a question requiring an interpretation of an act.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquiilam):: Mr. Speaker, may I ask the right hon. Prime Minister a question. Having regard to the statement of the Minister of Finance that prior to July 1 he is prepared to undertake discussions with the provinces regarding the implementation of medicare, I ask the Prime Minister whether the commitment he gave to the house on February 12, that medicare would commence on July 1 of this year, is binding upon the Liberal government irrespective of who may head the administration.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, there has been no change in that commitment.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question, Mr. Speaker. Is it possible for a minister to remain in the cabinet when he is advocating policies which are diametrically opposed to the policy enunciated by the Prime Minister?


Mr. Speaker:: Order, please.

March 21, 1968
Inquiries of the Ministry


Lester Bowles Pearson: It is also possible for the minister's remarks to be misinterpreted, and they were-


Mr. Speaker:: Order, please.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I would ask the Minister of Justice whether in view of police statements made in the last couple of days regarding the explosive degree to which marijuana is being used in this country, consideration is being given by the government to bringing in legislation to increase the minimum penalty so there will be some deterrent to this very serious offence which is affecting the people of Canada in all the provinces.


Hon.   P.-E. Trudeau@Minister of Justice: No, Mr. Speaker, such consideration is not being given, but action is being taken now by the courts to increase the deterrent. Whereas previously the courts had very often taken the view that on the first offence possession would be met with a suspended sentence, now the inclination of the courts is to give a prison sentence and sometimes impose a very heavy fine in addition, precisely in order to increase that deterrent.


John George Diefenbaker: Was a suggestion made to the courts that the giving of suspended sentences was not in the interests of the administration of justice, and did that come from the Department of Justice?


Mr. Trudeau:: On the contrary, Mr. Speaker, the Department of Justice has taken the position that if the courts requested a recommendation, the department would not ordinarily suggest a suspended sentence but would ask the courts to consider the position which was stated by the court of appeal in British Columbia, that is the position I have just stated, that a first offence would not automatically be met with a suspended sentence.


Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I would like to ask the Minister of Justice whether it is the intention of his department to establish a study of the marijuana problem, in the light of changing social conditions and the harsh sentences that

have been imposed recently on high school and college students.


Pierre Elliott Trudeau: Mr. Speaker, I answered part of that question earlier, but I must say that the whole problem of drug addiction and of the rehabilitation of the offenders interests me greatly. I feel that quite often it would be more advisable to treat drug addicts than to send them to prison, but that matter is under consideration.


John George Diefenbaker: Treat them with what?



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. H. W. Danforth (Kent (Onl.)):: Mr. Speaker, I should like to direct my question to the Minister of Agriculture. Can the minister inform the house whether the government has instigated any type of survey or any other action to ascertain to what degree increasing imports of processed fruits and vegetables will curtail Canadian farm contracts this year?


Hon. J. J. Greene (Minister of Agriculture):: Mr. Speaker, last Thursday, in answer to a question put to me by the hon. member for Okanagan Boundary with respect to the importation of Australian canned fruits, I indicated that this matter has been under study by an interdepartmental committee. A report has been received from that committee, which is presently under consideration. As any determination or resolution from the study of that report would involve government policy, any decision that is taken will be announced in the proper manner.


Harold Warren Danforth: I have a supplementary question, Mr. Speaker. May I ask the minister whether this investigation is being expanded to cover imports from other countries such as canned or processed fruits which we get into this country from Australia.


John James Greene: So far as I know to date, the specific study to which I referred was limited to Australian canned peaches, as this was the complaint which was brought to our department by the peach growers and peach can-ners who have specifically complained about Australian imports.
March 21, 1968


Mr. H. W. Herridge (Kootenay West):: wish to address a supplementary question to the minister because this matter is of urgent importance to some 5,000 fruit growers in British Columbia. I know several members of the cabinet have received telegrams recently in connection with it. In view of the possible early prorogation of parliament they are very anxious that remedial action be taken. Can the minister inform the house what is going to be done in the near future about this question?


John James Greene: I concur in the hon. gentleman's statement as to the urgency of consideration, and I appreciate that the matter is a serious one to the fruit growers, particularly those in the Okanagan valley. I can assure the hon. member that I will do everything possible to hasten the resolution of this problem.


Mr. George Muir (Lisgar):: I have a supplementary question, Mr. Speaker. I should like to ask the minister if he has looked into the importation of vegetable oils, as he said he would do last week?


John James Greene: Mr. Speaker, I do not have a report on that specific question at the moment. I believe I had it here the other day but somehow did not get an opportunity to report to the hon. member. I will undertake to have that report in his office this afternoon.



POTATOES-ASSISTANCE TO IMPROVE RETURNS TO GROWERS

[Stage Direction]
On the orders of the day:
Hon. J. A. MacLean (Queens):: I should like to ask the Minister of Agriculture, in the light of the resolution passed by the Canadian Horticultural Council within the last three weeks and the representations from other interested bodies, whether he is in a position to announce any action which will improve the market and the returns to the producers of Canadian potatoes.


John James Greene: Mr. Speaker, I have had such representations from the potato industry generally, and there is at present under consideration a program for helping the potato growers who are extremely hard pressed by reason of low prices this year. If such a program is determined upon it will be announced in the proper manner.


John Angus MacLean: Mr. Speaker, I should like to address a related question to
Inquiries of the Ministry the Minister of Consumer and Corporate Affairs. Is his department looking into what appears to be a very inefficient and extremely costly distribution system for unprocessed potatoes and other vegetables, under which less than one third of the price paid by consumers in Ottawa and other cities at the present time is getting through to the primary producer?


Hon. John N. Turner (Minister of Consumer and Corporate Affairs):: Mr. Speaker, I will have to look into this matter. I imagine that a good deal of the jurisdiction lies with the marketing boards as well.


Mr. Ed. Schreyer (Springfield):: Mr. Speaker, I have a supplementary question I should like to put to the Minister of Agriculture. Inasmuch as the minister has stated that he is keeping continuing watch on the imports of potatoes into western Canada, has the minister now made a decision whether he will accede to the request for the imposition of a value for duty?


John James Greene: Mr. Speaker, up to now the decision has been not to place a value for duty on potatoes in the western region owing to the fact that such action would entail retaliatory action by the United States which might very seriously impair the position of other segments of agriculture, and certainly the position of the potato growers in Prince Edward Island and New Brunswick. However, in view of the serious situation created by these prices other action is being contemplated which, if it is determined upon, I believe will be in the best interests of and of great help to the western potato growers as well as those in eastern Canada.


Edward Richard Schreyer: A further supplementary question, Mr. Speaker. Without being argumentative and challenging the minister's decision, may I simply ask whether his department has made any calculation whether the importation of United States potatoes is at a price level that constitutes dumping?


John James Greene: Mr. Speaker, the advice I have is that while United States potatoes are entering Canada, and western Canada in particular, under such circumstances as to constitute an unfair competition in the economic sense, it is not dumping technically according to the definition of that term as laid down in the current GATT agreements.


Mr. W. H. Jorgenson (Provencher):: Mr. Speaker, I have a supplementary question.

March 21, 1968
Inquiries of the Ministry Has the minister been advised by the United States government that retaliatory action would be taken?


John James Greene: Mr. Speaker, we have been looking into this matter very carefully. We visited Washington on several occasions to try to help the western potato growers in their very difficult position. The best information we could get and the most complete conclusion that we could arrive at was that if in fact unilateral action were taken by Canada in placing a value for duty on these imports, retaliatory action would be taken-that is to say, if we were not able to reach a bilateral agreement with the United States regarding a value for duty imposition.



REPORTED LARGE SCALE COUNTERFEITING OF PRODUCTS

[Stage Direction]
On the orders of the day:
Mr. L. M. Brand (Saskatoon):: I have a question for the Minister of National Health and Welfare. I wonder if the minister has been made aware of a serious situation which could endanger the health and safety of the public, which has now come to light. Is the minister aware that counterfeiters of drug products have recently commenced large scale operations in Canada?


Hon. Allan J. MacEachen (Minister of National Health and Welfare):: No, Mr. Speaker, and I should like to have details to substantiate the claim.


Mr. Speaker:: Order, please. I suggest that this could be done by direct communication between the minister and the hon. member who has raised the matter.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Reid Scott (Danforih):: I should like to direct a question to the President of the Treasury Board in his capacity as the minister who speaks for Central Mortgage and Housing Corporation. Before the house adjourns, in two or three weeks, and in view of the continuing spiral in rents which is taking place in Canada, I wonder if the minister would bring the house up to date with some sort of statement on the success he is having in co-ordinating the activities of his

department and those of the provinces with a view to expediting the construction of rental accommodation.


Mr. Speaker:: Well, perhaps the minister might want to indicate whether such a statement could be made, but certainly he could not make such a statement just now.


Hon. E. J. Benson (President of the Treasury Board):: First of all, Mr. Speaker, if the house adjourns in two or three weeks I probably will not be President of the Treasury Board by that time. Quite aside from that, I had the pleasure of meeting with the ministers responsible for housing in the Atlantic provinces yesterday with a view to moving toward the objective to which my hon. friend referred. We had a very pleasant and very useful meeting. At this time I should like also to again assure the hon. member that this year there will be more houses built than ever before in Canadian history, including more rental housing units.


Reid Scott: In view of the fact that the houses being built under N.H.A. are acknowledged by all parties to be beyond the monetary capacity of 85 per cent of our people, will the minister concentrate in his statement on the low rental housing problem in this country?


Edgar John Benson: On the contrary, this year N.H.A. is concentrating its money in public housing.


Mr. Speaker:: Order, please.



DIVORCE


[Stage Direction]
On the orders of the day:
Hon. R. A. Bell (Carlefon):: Mr. Speaker, may I ask the Minister of Justice whether a meeting of chief justices on the subject of divorce rules has taken place, what progress has been made, and whether he is able to forecast when the new legislation may be proclaimed.


Hon.   P.-E. Trudeau@Minister of Justice: Mr. Speaker, I have also been given notice of this question by the hon. member for Halifax, and I have an answer I should like to give.
First of all with regard to the chief justices' meeting, a meeting was held last week of chief justices from all across Canada. Considerable progress was made. It is the intention
March 21, 1968	COMMONS
of the government to have the Divorce Act proclaimed and in force as soon as this can be done. However, in any event this cannot be before May 2 in view of section 27 of the act. There are a number of matters that have to be dealt with, including the ironing out of these rules and the establishment of exchequer courts where required. These matters are well in hand and we are very optimistic that we will be able to proclaim the act as soon as possible.


Mr. Bell (Carlelon):: Is the minister indicating that the government expects to be able to proclaim the act on May 2?


Pierre Elliott Trudeau: I am indicating that this is the date we are aiming for. I cannot, of course, promise that it will be absolutely fulfilled on that date. The law is out of our hands now, and it really depends on whether the chief justices can work out rules to ensure sufficient uniformity within that time. As I say, we are quite optimistic about it.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and
Victoria): My question is for the Prime Minister. Some days ago I asked what the government proposes to do about the large scale lay-off of dock workers at the port of North Sydney. I also asked him to make a statement on government policy indicating what will be done to assist those who will be affected. May I ask if he or the Minister of Manpower and Immigration is in a position to make a statement now? The reason I am raising this matter is that we may be leaving here shortly, and who knows if we shall return.
Lester Bowles Pearson: I might be able to make that statement, or perhaps the minister concerned will make it tomorrow. I think we shall be here tomorrow, Mr. Speaker.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
John George Diefenbaker: Thirteen days ago I asked the Prime Minister about representations made to the
DEBATES	7879
Inquiries of the Ministry United States relative to the cessation of bombing. I also placed before him the suggestion that to give support, sinew and muscle to the government's views, this house might consider a resolution respecting the cessation of bombing.
Can the Prime Minister now say whether the government has given these suggestions consideration? Also, when replying, will he say what if any advance has been made in achieving that objective as the result of representations to the Department of State of the United States?


Lester Bowles Pearson: As to the latter part of the question, I cannot say that any advance has been made in recent weeks in bringing about the cessation of bombing of the north. So far as a resolution of the house is concerned, I have given serious consideration to its possibility and, indeed, its desirability. It seems to me that if a resolution were to be of value it ought to be carried virtually unanimously by the house. It seems to me also, from the parliamentary discussions that have taken place on this matter in this last week or two, that a resolution of an effective kind would not get such unanimity; and if there were division on the type of resolution put forward I should think more harm than good would be done.


John George Diefenbaker: A supplementary question, Mr. Speaker. Is the Prime Minister suggesting that he does not think the country as a whole agrees with the stand taken by his government?


Lester Bowles Pearson: No, Mr. Speaker, but I suggest the right hon. gentleman should read some of the discussions that took place in the house in the external affairs debate.


Thomas Clement (Tommy) Douglas: supplementary question, Mr. Speaker. Would the Prime Minister consider the possibility of having either the house leader or the parliamentary committee on external affairs draft a resolution that would win almost unanimous acceptance?


Lester Bowles Pearson: I would be glad to take that up with the house leader and he will probably get in touch with the other house leaders. If that could be done in an effective way I should be very much in favour of it; but I would not be in favour of a resolution which would underline division rather than unity in the house.

March 21, 1968
Inquiries of the Ministry HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. P. B. Rynard (Simcoe East):: I wish to address a question to the Minister of National Health and Welfare. If the medical care plan is universally applied to the provinces, that will be the source of medical care services. Now my question is, will the federal government pay the premium for Indians in the provinces on premium health care services?


Allan Joseph MacEachen: Mr. Speaker, may I take that question as notice.


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct my question to the Prime Minister. In view of the interesting interpretation made by last night's C.B.C. news with respect to the Prime Minister's reference yesterday to the period between now and April 25, can he indicate to the house the significance of his using that date, April 25?


Lester Bowles Pearson: The significance of using that date, Mr. Speaker, is that I must be very tired, because I meant April 23.


Thomas Clement (Tommy) Douglas: Would the Prime Minister be prepared to take the house into his confidence and indicate whether his successor will take office prior to April 23, when parliament reassembles, or afterward?


Lester Bowles Pearson: I will be glad to take the house into my confidence, Mr. Speaker. It will depend entirely on who the successor is.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: One hon. member on this side who might be the successor might like to take over the day after the convention; another one might want two or three weeks to get ready.


Stanley Howard Knowles: Some of them would never be ready.


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. Following his recent [Mr. Pearson.)
advice to various farm organizations to unite and speak with one voice, has he since changed his mind because, as a member of the cabinet, he supports Bill C-186, which if passed would fragment unions rather than unite them.


Mr. Speaker:: Order, please. The question is clearly argumentative.


John James Greene: Mr. Speaker, I don't agree with the premise of that question.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: have a question for the Minister of National Health and Welfare. In view of growing problems affecting our native Canadians and the long delay in dealing with them, would the minister in his capacity as house leader assure hon. members that the committee on Indian affairs will be reconstituted at an early date so these problems can be dealt with expeditiously?


Allan Joseph MacEachen: The question of the reconstitution of the committee is really one for the minister directly concerned with Indian affairs.


Walter Gilbert Dinsdale: Would the hon. gentleman discuss this matter with his colleague the minister of Indian affairs and make a specific announcement at the time he makes his statement with respect to the reduction in Indian health services?


Allan Joseph MacEachen: I have already discussed the matter with him.



FINANCE


[Stage Direction]
On the orders of the day:
Mr.  M. W. Marlin@Timmins: I have a question for the Minister of Finance arising out of an answer he gave yesterday. Having regard to the growing concern and confusion in the gold mining industry, could the minister inform the house whether a tentative date has been fixed for a decision as to the disposal of gold purchased from Canadian gold producers?
March 21. 1968	COMMONS


Mitchell William Sharp: I regret I cannot clarify the situation immediately; it is still being examined, and I doubt whether a final decision will be made until after the meeting in Stockholm, when this subject, among others will be discussed.


Thomas Clement (Tommy) Douglas: Has the minister yet decided who will represent Canada at that meeting?


Mitchell William Sharp: No decision has yet been taken.



INCREASE IN INTEREST RATES ON GOVERNMENT BONDS

[Stage Direction]
On the orders of the day:
Mr. Henri Lalulippe (Complon-Fronlenac):: Mr. Speaker, yesterday I put a question to the hon. Minister of Finance. I should like to put it to him again today, because I do not think that he understood it.
In the last few days the Minister of Finance announced an increase in the interest rate on government bonds which the government is unable to redeem at maturity. This rise in the interest rate varies between 2 and 2J per cent and I should like to know whether this increase is included in the blue book containing the estimates for 1968.


Mr. Speaker:: I remember that the question was asked by the hon. member, but I do not know whether it was thought in order at the time. However, if the hon. minister is willing to reply at this time, I have no objection.


Mitchell William Sharp: An attempt was made in the estimates which were tabled to forecast the requirements of the government in connection with the payment of interest.


Henry P. Latulippe: Mr. Speaker, I rise on a question of privilege.
Yesterday, in answer to my question, the minister said that there was no substance in my statement, but I have here assertions in support of the statement I made yesterday.
As the minister told me that my figures were wrong and without substance, I would like to come back to the question I asked him-


Mr. Speaker:: Order. I point out to the hon. member that if there is a misunderstanding between himself and the minister with regard to the interpretation of certain figures, that is
DEBATES	7881
Inquiries of the Ministry not sufficient grounds for a question of privilege. It would be simpler for the hon. member to put a supplementary question.


Henry P. Latulippe: In that case I shall put a supplementary question to the minister.
I said yesterday that the interest rate was to be increased from 2 to 2i per cent, because those bonds for $175 million were at 4J per cent and they are bought back at 7J per cent-


Mr. Speaker:: Order. The hon. member should ask his question, if he has one.


Henry P. Latulippe: 
Mr. Speaker:: I repeat what I suggested a moment ago. This is an argument between the minister and the hon. member. I do not think the question is really in order.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: I wish to address a question to the Minister of Manpower and Immigration. I first put this question to him some days ago in view of charges which had been made by recently arrived immigrants that the information given to them by immigration offices outside this country was false, and that they had not found the situation here the same as that which had been described to them. Has an investigation been made of these charges, and is the minister prepared to make a statement either agreeing with them or refuting them?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, the question is not all that simple because in all our immigration offices we give out general information on Canada, on matters such as the average wages, the average temperature and the average rents. An immigrant can easily and quite honestly misinterpret the information given to him, and that gives rise to misunderstandings such as the ones brought to our attention. However, I think that Canadian immigration agents have always, and not just in the last year or two, informed immigrants as well as they could.

March 21, 1968
Inquiries of the Ministry Unfortunately, one cannot always avoid certain misunderstandings such as those reported to the house by the hon. member.


Michael Starr: In view of the fact that not one but quite a number of immigrants have made the same charge in connection with information given them by the immigration officers, does the minister not think an investigation should be undertaken as a basis for directing these officers not to give out false information?


Jean Marchand: Mr. Speaker, continuing investigations are made. We keep in touch daily with our officials and we give them information about Canada.
Our immigration policy is well known. It is impossible to give precise information on a day to day basis to every immigrant, and that has always been the case. Misunderstandings such as those mentioned by the hon. member are unavoidable, but we try to prevent them as much as possible.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Lawrence  Walson@Assiniboia: I should like to direct my question to the Minister of Agriculture and ask him whether, in the interests of western farmers, he will use his influence to permit them to make more effective use of their aircraft for spraying purposes by having an alteration made in the regulation which at present limits them to a 25-mile radius based on their home farms. I refer to air navigation order series VII, section 3(4).


Mr. Speaker:: This is not a question which could normally be accepted at this time, but in view of the fact that there may be a recess some time soon it might be allowed.


John James Greene: This matter does not come specifically under the control of my department but I shall be pleased to take it up with the Minister of Transport, who I think is likely to be particularly sensitive to any requests made of him these days.



PENITENTIARIES


[Stage Direction]
On the orders of the day:
Mr. J. R. Keays (Gaspe):: Mr. Speaker, I have a question for the Solicitor General with reference to a query posed by the hon. member for Saint-Hyacinthe-Bagot on March 15, concerning statements that instructions had been given to the authorities of federal penitentiaries in the province of Quebec not to purchase meat stamped "Quebec Approved." Has the minister any information on this subject?


Hon. L. T. Pennell (Solicitor General):: Mr. Speaker, following the question by the hon. member for Saint-Hyacinthe-Bagot I instructed the officials of my department to pursue the matter further with the officials of the Department of Agriculture, and I expect a report very shortly.


James Russell Keays: Mr. Speaker, it appears that the Minister of Agriculture may be in a position to answer the question I put to the Solicitor General. Is the minister in a position to answer it?


John James Greene: Mr. Speaker, the question of the relative standards set by the province of Quebec in their meat grading regulations and those set by the federal department is now being considered by our meat grading section, and a report will be given to the Solicitor General in this regard very shortly.


James Russell Keays: Then may I ask the minister whether instructions have been issued to the authorities of the federal penitentiaries in Quebec as suggested?


John James Greene: Well, Mr. Speaker, the general instructions are that in all federal institutions, to the best of my knowledge and certainly in the penitentiary section, it is customary to buy only Canada graded products, so the inmates can be assured that their food is of this high quality. At present we are investigating the relative Canada and Quebec standards in this regard. Generally speaking Canada grade standards are in order as we know they are the best.


James Russell Keays: May I ask the minister whether this is a new development in the province of Quebec?
March 21, 1968



CONSUMER AFFAIRS


[Stage Direction]
On the orders of the day:
Mrs. Grace Maclnnis (Vancouver-Kingsway):: Mr. Speaker, I wish to direct a question to the Minister of Consumer and Corporate Affairs. In view of the fact that two Ontario dairies are going to raise the price of milk by 2 cents a quart, and in view of the importance of milk in the diet of Canadians, what action does the minister propose to take to protect the consumer in this matter?


John Napier Turner: Mr. Speaker, if I may I think I should remind the hon. member that the government of Canada has no constitutional authority to impose pervasive controls over the prices of goods and services except in a national emergency. At the federal level we rely, as I have said on many occasions in this house, on the forces of competition. If there is any evidence to the effect that prices are being artificially maintained, then the director of investigation and research can be expected to make a statutory inquiry.


Winona Grace MacInnis: As
a supplementary inquiry, will the minister consult with his colleague the Minister of Agriculture to find out what percentage of this increase is going to go to the dairy farmers?


Michael Starr: As a supplementary question, Mr. Speaker, can the minister tell us in a few words what precisely is the function of his department?


Mr. Speaker:: Order, please. I suggest that might take more than a few words, and that it should not be done at this time.


Thomas Clement (Tommy) Douglas: As
a further supplementary question may I ask the minister, in view of the fact that one of the functions of his department as set out in the act is to investigate price increases and to provide publicity with respect to its findings, is his department looking into this increase in the price of milk, and will a report be made in the event that an investigation is carried on?


John Napier Turner: It is the statutory function of the director of investigation and research under the Combines Investigation Act to scrutinize all price movements that come to his attention, and I think he can be expected to fulfil his statutory duty.
Inquiries of the Ministry


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I would just like to ask the minister how much worse things must get before there is a national emergency.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. G. L. Challerlon (Esquimali-Saanich):: Mr. Speaker, I wish to direct a question to the President of the Treasury Board. Is the minister or the government considering an increase in the interest rates applicable to loans for student and public housing?


Edgar John Benson: Not to my knowledge, Mr. Speaker.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. R. D. McLelland (Roselown-Biggar):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. Could he inform the house whether the Department of Agriculture has made any inquiries into the alleged shortage of chemicals to control wild oats, such as avadex-


Some hon. Members:: Oh, oh.


Ronald David McLelland: - and, if so, is the department taking any steps to improve the situation, such as authorizing research into new chemicals to be licensed and made available to the farmers?


John James Greene: Mr. Speaker, the members of this government are far too mature to be concerned with wild oats, but I will be very pleased to look into this particular question.


Edward Richard Schreyer: Mr. Speaker, my question is directed to the mature Minister of Agriculture. When he was reported last week end as having said that when NATO was dropped Canada would have more money to devote to foreign aid, was he giving government policy?


Mr. Speaker:: Order. A question, as the hon. member knows, cannot be asked in that form.

March 21. 1968
Inquiries of the Ministry RURAL DEVELOPMENT



ARDA-ACTION ON REPORT RESPECTING NORTHERN NOVA SCOTIA

[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Piclou):: Mr. Speaker, I wish to direct a question to the Minister of Forestry and Rural Development. In view of the fact that the minister is in the mood for tabling reports today, would he now make available to interested parties the ARDA task force report on the nine northern counties in Nova Scotia?


Maurice Sauvé: Yes, Mr. Speaker. We have arranged to have a summary of the report printed and as soon as it is ready it will be distributed to the members.



FORESTRY


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I would like to change the focus of questions and direct mine also to the Minister of Forestry so as to give the mature Minister of Agriculture a rest. My question arises out of a statement made by the chief forester of MacMillan-Bloedel Ltd., one of Canada's leading producers of forest products. Does the minister share the concern expressed by that chief forester concerning the possible shortfall within the next few years in the available supply of merchantable softwoods to meet market requirements and, if so, can he advise the house whether the government has in view-


Mr. Speaker:: Order, please. I suggest to the hon. member that this question is not in order. He is asking the minister if he shares the concern of an official or of an individual, and in view of this the question is not in order.


Thomas Speakman Barnett: Might I at least pose what I consider the operative part of my question and ask the minister whether the government has in mind any new initiatives to increase the productivity of our forest lands.


Mr. Speaker:: Order. The type of statement the hon. member is asking for should really be made at the time of motions.



SKIING-SPONSORSHIP OF EVENT BY TOBACCO COMPANY

[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I wish to direct a question to the Minister of National Health and Welfare. I have in mind the fact that his department gives public funds to cigarette disease education, and also contributes funds to encourage skiing in Canada. Under these circumstances is he aware that a major skiing organization this month has accepted sponsorship of a major skiing event by a cigarette corporation and, if so-


Mr. Speaker:: Order. Perhaps this is the type of question that might be considered at the time of adjournment, either this evening or next week.



COLUMBIA RIVER-REPORTED INCREASE IN COSTS

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, in view of the unavoidable and understandable absence of the Secretary of State for External Affairs I wish to direct a question to his parliamentary secretary. In view of the minister's continued, almost hypnotic interest in the costs of construction on the Columbia, has the government of British Columbia informed the minister to date of those costs?


Mr. Gerard Pelletier (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I shall take note of this question and bring it to the minister's attention.

The house in committee of supply, Mr. Tar-dif in the chair.


@Deputy Chair(man)? of Committees of the Whole: Order. House again in committee of supply. When the committee rose on Wednesday, March 20, item 6c of the Department of Defence Production was under consideration.



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
6c. Reimbursement of the Defence Production Revolving Fund established by section 16(1) of the Defence Production Act for losses sustained in the operation of the crown-owned magnesium foundry at Haley, Ontario, prior to its sale in December, 1967, $480,000.
March 21, 1968
Some hon. Members:: Carried.


William Arnold Peters: Mr. Chairman, as a result of inquiries I made since last night I am concerned about the closing of the Haley operation as a crown corporation and the other arrangements which followed. I am surprised and disappointed that the hon. member for Swift Current-Maple Creek is not with us today because he raised a very important question in relation to this matter.
After looking at the act I am convinced that the minister was correct when he suggested that he had the right to make the arrangement he did but I am wondering whether the arrangement was appropriate. I drew the inference last night that there is a similarity between this operation and other crown corporations which could be sold in the same manner if the government so desired. I have never been satisfied about the method of sale engaged in by the war assets corporation, later the Crown Assets Disposal Corporation, in that it seems to be a wholesale operation. I realize it is difficult to retail an entire plant of this type. However, when certain of my constituents have wanted to purchase a jeep, a land rover or a Bren gun carrier to be used in a tourist operation they were informed they would be put on the list provided they could prove financial responsibility and were told that the equipment would be sold in blocks of perhaps 50 units. It does not seem to be in our interest to offer blocks of 50 Bren gun carriers, 20 Sherman tanks or other lots of equipment in this way. I suggest that the difficulties resulting from that type of sale are greater than the difficulties involved in selling single units at a reasonable price. While I agree that the minister has a right to make the arrangement he did, I am not sure we should operate on that basis.
The hon. member for Renfrew North made some very interesting observations and was obviously pleased that this plant was continuing in operation. I agree that it should continue to operate. But it seems to be strange that the corporation should sell this plant to a private operator and expect that operator to carry on the operation successfully without the advantages that a crown corporation would have, particularly when we realize that when the company was operated by the corporation it was unsuccessful.
From my own experience I can say that it is very difficult to establish an industry in
Supply-Defence Production either Renfrew North or Renfrew South and it has been very difficult to keep the industries going that were established there on a wartime basis. Most of these plants connected with the aircraft industry have been in difficulty ever since they changed over to peacetime production. It seems to me that a crown corporation would have a better chance of success because the government could direct certain purchase orders to that corporation. Purchases from private industries by the government must be done on a tender basis, or this reason I fail to understand the enthusiasm of the hon. member for Renfrew North in relation to the plant being turned over to a private operator on the basis of a very short term guarantee.
The minister was quite frank regarding land values and the potential in this area. We are all convinced that federal assistance will have to be given to maintain employment and the standard of living in this section of the country. While the minister has some responsibility in relation to the assistance provided in that area he is not involved as Minister of Defence Production in all the assistance programs. This area has a surplus of labour. We have been able to train highly skilled labour in specific areas of production who are capable of doing work such as is done in operations like de Havilland and in other areas where the Department of Defence Production has established operations with government subsidies to produce instruments and other things for the Department of National Defence.
It would have been wise for the hon. member for Renfrew North to have considered this whole operation in terms of a government contribution to the area to help maintain the labour force there. Surely a crown corporation could adapt to the changing circumstances if a private operator can do so in this area. The new company is required to operate for two years and it will be operating in exactly the same field and with the same facilities as the Haley operation.
It has been suggested that the plant and the machinery are quite old and that the operation is antiquated. Apparently the plant cannot be modified in order to perform some other function than that for which it was designed. If this is the case it would seem to me that the hon. member is very shortsighted in not looking at what has developed in other areas and realizing that this type of operation must have assistance and must have government orders.

March 21, 1968
Supply-Defence Production [DOT] (3:30 p.m.)
Let me refer to an operation in my area as an example of what I have in mind. There has been a large foundry in my area for some time. It was developed some 25 years ago under the aegis of the British government. A young engineer was sent out from England to look after the Wabi iron works. He was sent out on the basis of either making the plant a paying proposition in two years or closing it down. He came out, looked at the foundry and decided it could be made a paying proposition. Through some managerial arrangement he eventually became the owner of the plant and it developed into one of the largest foundries in Ontario.
The aging of the plant and other considerations led him to decide to sell it and he did so to Canada Foundries (Wabi) Limited. For 25 years the plant operated in the foundry business on a full time basis. Very seldom was there a lay-off at the plant. If there was a lay-off it was always occasioned by a changeover in the operations of the plant. Continuous employment was provided for the people working at the plant. When it was sold this year Canada Foundries took into consideration their over-all operation and decided that they had to lay off people somewhere. Where did they lay them off? They were laid off at the Wabi plant at New Liskeard. For the first time in the operation of the plant most of the employees were laid off on a short term basis which stretched beyond what was anticipated in the initial stages. There is now some doubt about the efficiency and continued operation of the plant.
I also draw to the attention of the hon. member for Renfrew North the fact that we had in New Liskeard a pea-canning factory. Northern Ontario, particularly the clay belt of Timiskaming, produces the best peas in the world. Our peas have been exhibited at the Toronto Exhibition, the Royal Winter Fair and the World Exhibition in Chicago. We took top honours for the production of peas and therefore I can safely say that we grow the best peas in the world.
That plant had very good sales in the limited field in which it operated and this came to the attention of Canada Packers because of competition. Canada Packers bought the plant and within two years shut it down. They did not close it down because the plant was necessarily antiquated, although they said it was. They did not close it down because of its limited production which was serving a need. It was not closed down because we did not

have the best product on the North American continent but simply because the plant did not fit into their trading pattern. It did not fit into their corporate practice.
I suggest that the hon. member for Renfrew North is very shortsighted if he does not consider what has happened in other areas and does not realize that private industry is in no way capable of taking advantage of dealing with the Department of Defence Production to the extent that a crown corporation can. We have an obligation to the people of Renfrew North. We established a crown corporation plant in the town of Haley. It is true that the plant is not right in the town but the town of Haley exists only because of Haley Industries. It is situated on a railway and is a small community. Its only purpose is as a shopping facility for those employed at Haley Industries and local farmers.
The employment picture of the people who live there and have been trained there has been presented to us. It appears that most of the employees can be considered permanent and have served with the company for some time. It seems to me that we have an obligation to keep the plant in operation.
The minister is also in charge of the area development plan. He is the minister responsible for the development of secondary industry in areas where such industry has not been provided. It seems to me that a changeover from a government operated plant to one operated by private enterprise is a step backward, not a step forward. I challenge the minister to rise and say that anyone has challenged the deficits which Haley Industries has had over the years. It was not aware that it had been a crown corporation.


Mr. Drury:: It was not.


William Arnold Peters: That is a debatable point because I am of the opinion that it had the same kind of relationship enjoyed by crown corporations. As I understand the definition applied to Polymer, for example, would apply in much the same way to Haley Industries. However, that does not matter to my argument. I may be wrong semantically.
I make this argument not to the minister but to the hon. member for Renfrew North. The crown took this step because of necessity, not because of any desire to become involved in the establishment of plants. I am fully aware that if there are to be new plants in northern Ontario or Renfrew North they will have to be sponsored by the crown and receive assistance from the crown.
March 21. 1968

One of the problems in this regard is the very thing that the minister said caused the demise of this plant, namely, our grave inability to supply entrepreneurial acumen. I have heard people in northern Ontario talk about what they would do if they had $1 million to invest. There are in my part of northern Ontario hundreds of millions of dollars which could be invested. They play the stock market every day with that kind of money. The town next to the one from which I come at one time during the depression had less than 2,000 inhabitants but 13 millionaires. So the people of Haileybury could probably put up an immense amount of capital to build plants provided personnel were available to decide what types of industry were best suited to the area and to operate them.
In my opinion this is what is wrong with the area development program. We do not know what we have to sell and we would not know how to run the business even if we could sell the product. We therefore follow the old practice of establishing industries in major cities where there are closer and more extensive markets, and the small plants in the hinterland fall by the wayside. If this plant served a purpose for the Department of Defence Production, that purpose is probably as useful today as it was in the initial stages.
Under the National Research Council there are a large number of projects which will be brought to fruition if plants and trained people are available. I remember listening not long ago to the national research people talking about this very problem. They said they had developed a particular process that they thought was a "first" in the world. They looked around for people to operate in the field but had to get American companies to operate the project because no Canadian company would do so.
[DOT] (3:40 p.m.)
There are still free enterprisers in the government. There are free enterprisers in the minister's department, because I am certain that the whole operation of the area development program is carried out on a free enterprise basis. We are giving assistance in this field. But I am sure there are also other people who are shocked at the fact that so much interest is shown in closing down crown corporations when the obvious need for them has disappeared. Everyone can remember when the Polymer corporation went around asking various rubber companies to take over their operation. I understand that Polymer was offered to the Firestone company for $1 after

Supply-Defence Production the war. If we had 100 Polymer corporations the Minister of Finance would now have less difficulty in balancing the budget because this corporation is making an unusually large profit. Its operations have been of advantage to Canada because the company developed a totally new process for making synthetic rubber which is being used in many countries and is of great potential value to us.
I am not too familiar with mouldings and castings, nor do I understand why the Haley plant found it necessary to tie itself to the production of a particular aircraft engine. But I do think that the Department of National Defence should decide that a certain amount of business should be directed to this plant, and I suggest that if this is not done now the Bartaco company will not be successful.
It seems to me that the hon. member representing that area should forget about his desire and the desire of the department to establish a free enterprise operation and should think in terms of the development of an industry in his area which will have the effect of bringing about secondary industries around the primary development. Obviously castings must be used on something and for something, and they create a demand for raw materials. A plant which would use the raw materials available in the area is sufficient justification for its existence. If the whole machinery of the Department of Defence Production cannot be directed toward developing this plant to meet the current needs of the department, then I think the department has failed to justify its usefulness.
I do not know whether it was ever intended that the Department of Defence Production should enter into manufacturing. I am aware of the buying potential of the department, not only for the Department of National Defence but for all departments of the government. However, the Department of Defence Production has never really looked at industrial development in Canada in terms of the distribution of the Canadian potential and Canadian needs. We have purchasing needs in Canada, and I do not think that the sole responsibility of the Department of Defence Production is to do the purchasing. Its responsibility lies also in the distribution of the purchasing all across the country. So far as the part of northern Ontario which I represent is concerned, I suggest that the Department of Defence Production makes no purchases at all from primary producers there. None of the paper which the department purchases comes from primary producers but
March 21, 1968

Supply-Defence Production rather is purchased from agents of paper companies after it leaves the pulp and paper mills. Even that primary product is not purchased by the department for the needs of the government.
I am very surprised at the attitude of the hon. member for Renfrew North in agreeing to the closing down of the plant. When the plant closes down at the end of the contract two years from now, as no doubt it will, it will likely be integrated into the over-all operation of Bartaco and its principals and there will be no further need for the development of these castings. The money they have made will go into the amalgamation of the whole operation and little consideration will be given to the people in north Renfrew who will be laid off.
I think the hon. member's attitude is very shortsighted and is limited to taking advantage of the present opportunity. I suggest to him that he reconsider his attitude and become more concerned with the development of a number of plants in the area with the assistance of the government. I am very familiar with the difficulties several of these plants are facing and the fact that the low wages of the people in this area are the only thing that has made it possible for a large number of the plants in Renfrew to stay in operation in towns such as Arnprior, Pembroke and adjacent communities. Were it not for the fact that the wages of these people are 40 or 50 cents below the provincial level these plants would not be able to stay in operation. I suggest that the subsidization of these plants by the workers is not the correct method of keeping the plants in production.
It would be my wish, and perhaps the wish of other members of the house, that this matter be referred for study to a standing committee of the house. I do not disagree with the minister's policy in this respect but I doubt that this is the kind of operation in which the government should be involved. I have not had the opportunity to ascertain why this plant was started 40 years ago but I surmise that it operated for a number of years under the Department of Defence Production for the purpose of manufacturing specific commodities.
I am familiar to a certain extent with the difficulties in the production of aircraft faced by Sperry of Ottawa and a number of other plants in the Ottawa area. I am aware of the fact that these companies were subsidized to some degree and that they have continued to receive subsidies since they have ceased
[Mr. Peters.)
major production of aircraft. I am also aware of the operations of the de Havilland company and the fact that the company's operation in Toronto was developed for the purpose of building the Avro Arrow. When that program was scrapped, we not only lost an industry but we lost the potential ability to develop an aircraft industry. In my opinion we had a sufficient number of engineers in Canada. For a number of years I was in the ferry squadron in the air force. We had types of aircraft which were flown by the United States and British air forces and I had an opportunity to see the inside and the outside of those planes. I am of the opinion that no other plane flying at that time could have outclassed the Avro Arrow. We brought the best people from England and we were able to encourage them to come here and build the basis for an aircraft industry which should have put Canada in the forefront.
We are all familiar with the story of Avro Arrow in which both fact and fancy are involved. There is no point in going over it. The fact is that we lost an industry and the potential for an aircraft industry.
The same is true of the shipbuilding industry. It is interesting to note-


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


Barry Mather: Mr. Chairman, the consideration of the estimates of this department gives us an opportunity to comment on the expenditure of very large sums of money. How significant some of these sums of money are was very well summarized in the leading editorial of this morning's Globe and Mail in which it was pointed out that the four new destroyers the department has on its drawing boards will cost some $200 million or, as the paper says, about $50 million more than the Minister of Finance hopes to raise by the recent 3 per cent surtax on personal and corporation income taxes. This is certainly a very significant sum of money, particularly in the light of the urging by the same government which proposes to spend it that Canadians use restraint in their own spending. Can you imagine the reaction of the working people of Canada, the pensioners or, for that matter, the business people, when they learn that the government which is asking them to "cool it" proposes to spend some $200 million on what I believe to be questionable vessels of war?
March 21. 1968

[DOT] (3:50 p.m.)
I say "questionable vessels" because as is reported these ships were first conceived four years ago. They were to be part of the new integrated defence equipment program. These vessels were to be the first surface to air missile equipped destroyers to meet our NATO requirements. They were designed four years ago and apparently will be in operation four years hence. In the meanwhile we have not really redefined our NATO responsibilities.
This is a curious situation, Mr. Chairman. As I understand it, these boats were to have cost $20 million each. They are now estimated to cost $50 million each. If I may quote the Globe and Mail again, it says in the editorial:
In what strange unreal world does the government live, where It can preach restraint to us and proceed, almost casually, with a huge and open-ended expenditure on what the judgment of Canadians-if it could be totalled up-would almost certainly decide was an unnecessary and even undesirable project?
I think that is a very good question, a $200 million question. There is another aspect of the Department of Defence Production in which I am sure many Canadians are interested. I refer to our defence production sharing agreement with the United States. My colleague, the hon. member for Greenwood, recently made what I thought was an excellent presentation of his views regarding the position of Canada in supplying war materials to be used in Viet Nam. As he said, the original agreement to share defence production with the United States was of some benefit to Canada. It gave Canadian firms a share in the production of military equipment used by the United States.
Certainly it was natural for Canada to enter into this type of agreement with a close ally. However, Canada is not and cannot be an ally of the United States in Viet Nam. As my colleague suggested, it is time Canada had a new look at that agreement. It may be necessary for us to assert control over the export of war materials which no doubt will be used in Viet Nam. We have, of course, already limited the export of Canadian war materials to another NATO ally, Portugal, because we feared they would be used against African states rather than for NATO purposes.
There is one other aspect of defence production contracts which I should like to mention. A while ago the Financial Post contained an article in which it was stated:
Continued high Viet Nam war spending by the U.S. will keep up the big flow of contracts and orders to Canadian companies for both military and civilian goods.
Supply-Defence Production
Of course, some plants in the United States are so busy with war production that they have to give civilian production to other plants. The Financial Post article continues:
The question is this ... is additional Viet Nam related production in Canadian plants more than offset by the adverse effects of war spending on the Canadian economy as a whole?
In so far as inflation is concerned, Viet Nam was responsible for one-third of the rise in consumer prices in the United States last year. Certainly the effect of this has carried over into our own country. It seems to me that Canada's relationship to United States defence contracts is something like that of the man who warms his hands at the fire of a neighbour. It is very comfortable at times but, as is well known, as well as having a capacity to warm fire also has the capacity to burn and scorch. I think we should be very much aware of this capacity. It is surely not exhibiting friendship for the United States for us to go along with the policy on Viet Nam of the present United States administration, a policy that is costing billions of dollars and thousands of lives. In my view this policy also leaves the United States open to possible weakness to attack from other sources.
I believe that the defence production sharing agreement with the United States gives Canada the opportunity to express her opposition, and I am sure that opposition exists in many Canadian households, to being considered an ally of the United States in a dangerous, hopeless and very costly mistake. In conclusion, Mr. Chairman, I invite the minister to comment on the remarks I have made, particularly those involving the quotations from the Globe and Mail and the Financial Post.


Edward Richard Schreyer: I will try to be brief, Mr. Chairman, but there are certain aspects of the operations of this department to which I feel I must make reference before the vote carries. I wonder whether the minister would care to deny the charge that in its operations the Department of Defence Production shows a very strong regional bias? Last year I put a question on the order paper inquiring as to what proportion of defence production contracts had been allocated to firms in the four western provinces of Canada. The reply indicated that the four western provinces, which have 25 per cent of the population of the country, received only 8 per cent of the total value of contracts let by the department.
March 21. 1988

Supply-Defence Production
Of course the minister may have a very facile reply to that charge. He may say it so happens that most of the industries set up for the production of goods such as weapons systems, and so on, happen to be located in other parts of the country. The fact is, however, that I am referring to the total value of contracts let by the department, not just for weapons systems but also for ordinary, less sophisticated parts, supplies, clothing, food and so on. It seems to me there is no point in overlooking the fact that for years now, out of $700 million or $800 million per year of prime contracts let by the Department of Defence Production an inordinately small proportion has been placed in western Canada.
Some of the contracts, of course, are let under the bid system, so the answer will be that firms in eastern Canada are bidding lower prices. This answer would not cover the whole point because many of the contracts let by the department are on a cost plus basis and some are on the basis of a bid with a clear stipulation for adjustment for unforeseen expenses. However, I believe it is clear the Department of Defence Production is allocating to the four western provinces, containing 25 per cent of the population, contracts representing only 8 per cent of the total value of contracts let by the department. The situation may vary from year to year, but I challenge the minister to show that it varies greatly.
[DOT] (4:00 p.m.)
I think it is a mixed blessing for a regional economy to have to depend on defence production industries, because they have undesirable side effects. Defence production industries do bring considerable employment and, through the multiplier effect, considerable indirect employment to a community. Many industries grow out of defence production which can transfer their operations to non-military production. Industries high in research and development content grow up around defence production industries and certainly that does no harm to any regional economy. However, as I said, there are certain undesirable side effects in that regions of the country that depend heavily on defence production industries have, to use a colloquial expression, a tiger by the tail.
In the course of the past two or three months most hon. members have received a pamphlet containing reprints from the Financial Post which indicate that the war in Viet Nam is doing wonders for Canadian business

and the Canadian economy. This is particularly the case in those regions of the country that are heavily dependent on defence production industries. Since 1963-64 there has been virtually a 100 per cent increase in the amount of defence production exports to the United States. According to the pamphlet the minister is quoted as saying that defence production contracts in 1966 resulted in full time employment of between 13,000 and 15,000 Canadians, and that an additional 110,000 persons are estimated to be affected indirectly as a result of contracts to ship that materiel to the United States.
Without getting into the philosophical ramifications of the war in Viet Nam, Mr. Chairman, I know all hon. members hope and pray that very soon it will be ended. However, I should like to ask the minister what contingency plans his department and the government are making to take care of those employees who will be directly and immediately affected by the cessation of hostilities in Viet Nam and thereby faced with a prospective loss of employment. Plants producing such materiel are geared to full and overtime production. But when the war is over they will be working at less than full production, either on a part shift basis or on a slow shift basis. Some will be on the verge of closure. Although we all hope and pray the war will soon be over, there are thousands of people who are depending on the war for their livelihood and I should like to ask what contingency plans exist to meet the decrease in production on the termination of the war. I suspect that not very much is being done about the matter.
Some continue to express great enthusiasm over the fact that our defence production sales to the United States have been surging upward so dramatically in the past two years. I am not questioning the defence production sharing agreement between Canada and the United States. The country to the south has been our ally over the decades. At one time Franklin Roosevelt referred to that country as the arsenal of democracy, and that is still my view.
During the first few years of the life of the defence production sharing agreement both countries benefited mutually. However, we now find ourselves in a situation where we must not only look at the direct economic benefits but also at the moral and philosophical implications of the war. We have got ourselves into a hopeless position. Rather than take the time of the committee at this
March 21. 1968

stage to berate the minister for something about which I concede there is very little of a tangible nature he can do at the moment to correct, I do accuse him and his colleagues of complacency if they are not now actively engaged in the drawing up of contingency plans so that people who are adversely affected by the cessation of hostilities in Viet Nam will be quickly accommodated with alternative employment.
I am sure the minister is aware that when former President Dwight Eisenhower made his farewell address to the nation, I believe in late 1960 or early 1961, surprisingly enough for an old professional soldier he took the opportunity to warn his fellow citizens about the very real danger that was poised to strike at the heart of democracy in the United States. He was referring to the danger created by the large and growing military-industrial complex, as he put it, in the United States. This complex, was getting so powerful that not only representatives in the state legislatures but some of the congressmen who represented areas of the nation heavily dependent upon defence production of munitions and armaments were being influenced to the point that they could hardly take a position other than one of support for more and more defence and armaments production.
I realize that it is not considered to be good taste to refer in this chamber to public personages in other countries, certainly not if one feels compelled to make critical comments about them. Therefore I will not mention any names. However, I think hon. members will agree with me when I say that many of the elected representatives in the United States do take a stance with respect to defence and foreign policy that might be roughly described as hawkish. It should also be noted that in most cases these same people represent areas of the United States that are heavily dependent upon the production of armaments and munitions.
When I was at the NATO conference in Brussels last fall I had occasion to get to know a distinguished United States congressman with flowing white hair who took such a hawkish position on most of the major issues then being discussed that even his colleagues were somewhat dismayed. I did not regard it as a coincidence that he happened to represent a particular region of one state which, if it had had one more defence production industry added to those already there, would have likely sunk into the Atlantic ocean.
Supply-Defence Production [DOT] (4:10 p.m.)
Our defence production industry is much smaller, but we must resolve to plan our economy so that no region of this country will ever need to turn to defence production to give its inhabitants a livelihood. Western Canada, with its relatively abundant natural resources and fertile soil, does not much need industries which depend on armament production, though I suspect that other areas of the country which are not so lucky depend on armament production to give their inhabitants employment.
I hope that no minister of the crown will continue to wax enthusiastic, as some ministers have in the past 12 months, about increased arms exports to the United States resulting from the Viet Nam war. We are selling arms to the United States because of an agreement we feel bound to adhere to. Let us hope, for everybody's sake, that the war will soon end. If it does not, I suggest we ought to consider the desirability of terminating the export to the United States of materiel that is used directly in Viet Nam.
For the past two years, because I have been confused about the United States' role in Viet Nam I have not criticized United States' actions. I wondered how that country's determination to resist aggression could be balanced against the killing of innocent bystanders. Despite motives which I do not question, the war in Viet Nam by degrees has become genocide. This has been unintentional, but even intended actions often bring strange results. I am sure that when United States military advisers were sent to Viet Nam a few years ago they were sent to help the South Vietnamese resist aggression. By degrees the war has escalated and now it has become an exercise in genocide.
In Canada we say to the United States: Stop the bombing, do this and do that. While we continue to sell vital war materials to the United States-and this is germane to this discussion-we are in a poor position to criticize. As a matter of fact, I question our right to criticize United States actions. I agree with the United States senator who said yesterday in a public statement, while discussing positions that could be taken about the Viet Nam war, that Canada cannot criticize because she is benefiting directly from war material sales.
Yesterday the hon. members for Swift Current-Maple Creek and Rosthern spoke about the sale of the crown owned magnesium foundry at Haley, Ontario. I have not time to say
March 21. 1968

Supply-Defence Production everything I should like to about that transaction but I understand from the remarks of the hon. member for Renfrew North that the industry in question is essential for the economic well-being of his region. When he accused members of the Conservative party, the hon. members for Swift Current-Maple Creek and Rosthern in particular, of speaking against the interests of his district he was being silly. No one on this side of the chamber suggested that the industry should be closed down. We question the prudence and business judgment shown by the crown in disposing of this foundry to a privately owned company.
Though the terms of sale are somewhat cloudy, one gathers that this crown owned industry had accounts receivable of about $250,000 and inventory of about the same amount. For those assets the private company paid what? It is difficult to come to a concrete conclusion from the minister's words but I suspect the plant was sold for the nominal sum of $1. Though the terms are not clear it appears that in return for the inventory and accounts receivable the new owners had to pledge that the plant would be kept in operation for two years.
Significantly, the sale conditions do not prevent the purchaser from selling the foundry to a second party which in turn may sell it to a third party. I suspect that to the purchasing company this transaction represented a capital gain, one of those finagling little deals. I see no other reason for their getting involved in an industry the crown was anxious to get rid of. There is some onus on the minister to be more explicit than he was yesterday when he tried to answer questions asked by the hon. members for Swift Current-Maple Creek and Rosthern.
When the industry in question started losing money five years ago, surely the Department of Defence Production must have known that some day soon the plant would have to be closed down or sold. Why was there no contingency planning in 1963, 1964 or 1965? Why were plant operations allowed to go blithely along? Then, because the hon. member representing the area became concerned, as well he should, certain representations were made. The crown then enters into a deal with this private company on strange, almost incomprehensible terms of sale. The company takes possession and it has to keep the plant operating for two years but it need not remain as owner. I agree with my hon. friend from Timiskaming that the region of
[Mr. Schreyer.J

Renfrew North would have been much better served had the crown been kept in the picture, had the plant been kept operational by the crown or the crown had been responsible for transforming the operation into an operation of a different type.
[DOT] (4:20 p.m.)
There is one other aspect. The crown made this sale on generous terms. Can the minister tell us whether the company which purchased this foundry will be applying to the Department of Industry for grants under AIDA and PAIT? If such grants are made it seems to me the benevolence of the crown will have been compounded in favour of a group of entrepreneurs who 1 suspect went into this venture for the sake of capital gain. The people of Renfrew North deserve something better than to be left at the mercy of private monopolies such as this.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I have for a long time felt it was time somebody in Canada attempted to take the self-applied wool from our eyes in connection with the whole question of defence production and expenditures. It is unfortunate that human beings appear to need comforting myths by which to live even though those myths lead in the end to their own destruction. In Canada we are loath to accept the real facts of our position in the world today when it comes to military expenditures.
I have watched two wars in my lifetime and taken part in one. I am observing now, as everybody else is doing, the progress of another war which has been condemned on all sides both in the United States and in the rest of the world. Yet we seem unable to draw lessons for our own policies in this regard from the harsh facts of modern warfare. It is estimated that the United States is spending some $30 billion to prosecute the war in Viet Nam. I suggest that in this context Canada and countries with similar resources can have no part to play and that we should not delude ourselves into thinking there might be a quiet, conventional war in which Canada could play a significant part.
As my hon. friend from Springfield pointed out, the war in Viet Nam started out on the assumption that it was to be a brushfire war, a police action to stem the tide of communist revolution in Viet Nam. But things rapidly got out of hand and the conflict developed into a major war. I suspect that all wars
March 21. 1968

which are allowed to break out in the future will become major wars. There was a war in the Middle East recently which was not allowed to develop beyond a local conflict but it was more by luck than good guidance that the great powers were not involved in those hostilities which could have spread to the entire world.
I doubt whether there is anyone here who can tell me what particular advantage by way of defence Canada has received as a result of the defence expenditures which I have noted for the last 15 years since I first came to the House of Commons-sums running from $1J billion to $14 billion a year during that period. I have been waiting for some minister of defence to tell me convincingly that these expenditures have resulted in any greater safety for the Canadian people than would have been the case had we made them on other things in our economy or on helping people in underdeveloped countries. No one has been able to come up with a case for these expenditures. We are always told, usually in vague terms, about the dangers which confront us but we are never told how the measures Canada takes will contribute to warding off those dangers. The latest folly is the pretence that there is a threat of armed bombers attacking Canada.


Charles Mills (Bud) Drury: The hon. gentleman says he doubts whether anyone can give him a satisfactory answer to his question concerning the validity in terms of national security of expenditures made on defence. I think that is quite true. He will certainly have difficulty in getting an answer from me. But he will be provided with an opportunity later under item 16, when the estimates of the Department of National Defence are being considered, to put his question directly to the Minister of National Defence.


Colin Cameron: I gather the minister is suggesting that my remarks are inappropriate at this point. I would remind him that we are discussing the estimates of the Department of Defence Production which is tied in very closely with defence expenditure in general. So it seems to me the subject I have raised could be discussed on the estimates of either department.


An hon. Member:: Or on both.


Colin Cameron: Or on both, yes, though I would not presume to do that.
Supply-Defence Production
As the minister has admitted, no one is able to tell us with any conviction that we have gained any significant protection as a result of the expenditures we have made over the years. Why should we imagine there would be a reasonable argument in support of the policy we have been following? We have only to look at the quantities of material involved in a modern war to realize that Canada could play no part of any consequence in such an area.
I have been concerned about the attitude of a number of young men in our armed forces who feel ill at ease about the role in which they are cast, people who have a nagging suspicion that they are merely wasting their time and wasting the country's resources for no visible purpose. This is having a demoralizing effect on many of them. I have come across this attitude repeatedly in speaking to young men in the armed forces serving in various ranks. Perhaps they have a clearer picture of the situation than other Canadians have; they realize they have no part to play in the area of modern war.
[DOT] (4:30 p.m.)
What are we defending ourselves against? The only thing we have to fear is the use of modern weapons of offence and those weapons, we have been repeatedly told, are not susceptible to defence action. I have heard of no way by which an attack by intercontinental guided missiles can be repulsed. The only possibility, and I submit it is only a bare possibility, is by having what was described by the inimitable Mr. Dulles as a massive deterrent. It may be true that the massive deterrent the United States has been building up has warded off an attack by these sophisticated modern weapons, although I somewhat doubt that. But even if that is the case it merely supports my argument that there is no role for Canada to play because any contribution we can make cannot add to the massive deterrent force now amassed by the United States.
To pretend we can contribute in any way whatever, let alone any significant way, is self-delusion. I suspect it is based on two things, one being the wishes of interested parties in Canada who seek gain from the expenditures we make on defence, and the other being that some people refuse to accept the fact, although they have been told it over and over again, that there is no defence. To me it is a tragedy that the Canadian people, in possession of such a vast quantity of
March 21, 1968

Supply-Defence Production resources, with such tremendous capacities, are content to waste their efforts on this sort of expenditure rather than really entering into the field that is demanding so much in the modern world, the development of the underdeveloped countries of the world.
I have a very clear recollection of the day in this house when it looked as though we were coming to the end of things. I refer, of course, to the confrontation over Cuba. I have been interested to note in all my reading of the discussions on the matter that no one goes farther back than the situation that obtained after Fidel Castro succeeded in seizing power in Cuba. No one goes farther back in history where there are another few links in the chain of cause and effect which finally led us that day in the House of Commons to sit here wondering whether we were facing the end of all things. If people would go farther back they would find something else that Canada and other prosperous parts of the world should not be very proud of, namely, that for decades we had known that the Cuban people were suffering under one of the most brutal dictatorships in the history of the world. They were living in poverty, in misery and in fear, and we did nothing about it. As a consequence the chain of events led finally to the confrontation between the two great powers in the world.
I suggest that if we are interested in our own defence we should be bending all our efforts to coping with all the potential Cubas that exist throughout the world which may at any time produce the chain of cause and effect that will lead us to the brink of disaster. I can think of no more honourable, no more decisive and significant role for Canada at this time than to say to the rest of the world that we are not interested in this fatal game of military expenditures and military defiance because we know we can play no real role in it. We should say that we want to free our hands to undertake the task that lies ahead of all of us in the more affluent parts of the world, which is to remove to the best of our ability the causes of future disruption of peace in the world by removing the poverty and misery underlying those causes. But if we are going to go on playing, which is all we are doing-posturing, playing and pretending-that we in Canada can play any sort of role whatsoever in the military sense we are not going to have the resources, the energies and the time to engage in the real peace keeping operation of trying to build up the

submerged areas of the world to the level of affluence that we enjoy on this continent.
I cannot think of anything that would enhance the prestige of Canada and Canadians more than if tomorrow Canada were to announce to the world: This is the end, we are going to spend no more on useless military expenditures; we are taking steps within our own country to develop our own economy and labour force whereby we can make a massive contribution to world development. Canadians would then have reason to be proud of the role Canada was playing in the world. I have little reason to be proud of a people who through vanity, through pride, call it what you will, want to go on pretending and posturing that they cut some ice in the military world of today. Who wants to? Who wants to play in this evil game? I think that sensible people, responsible people, would be happy to see Canada withdraw from it, and throughout the world there would be other peoples and other nations who would draw a breath of relief that finally in one part of the world the light of common sense was prevailing and the follies of the past were finally being put behind us.


Thomas Speakman Barnett: Mr. Chairman, against the kind of background established by the speeches of the hon. member for Springfield and the hon. member for Nanaimo-Cowichan-The Islands I would like to take a few minutes of the committee's time to pinpoint the impact of some of the things they have been saying upon a particular area of Canada and the people of that area.
The hon. member for Springfield, said it was fortunate that in not too many places in western Canada were the people basically dependent upon the defence program and the establishments that exist because we have a Department of Defence Production and supply what some people once would have called our war machine and which some of us in this chamber have heard described as our peace machine. I happen to have a community of that kind in my constituency and whenever I listen to discussion of the estimates of a department like the Department of Defence Production I immediately think of these constituents who are in a very vulnerable position.
I do not know whether it is ironic or a hopeful sign that the Minister of Defence Production has another hat. He is also known as the Minister of Industry. There are many of
March 21. 1968

us who are hopeful that some day he will be able to discard one of his hats and devote his entire energy to the Department of Industry. I am not restricting this observation merely to the present incumbent of this office but rather have in mine a future organization of the departments of the government of Canada which I would like to see take place. Nevertheless I feel that the remarks made by the hon. members for Springfield and Nanaimo-Cowichan-The Islands have clearly set out the fact that the minister's dual functions are so intertwined that they cannot really be separated. While one may hope that one area of his responsibility will be phased out and that the other will increase, nevertheless at this moment we are dealing with the estimates for the current fiscal year and therefore have to be concerned primarily with the present situation.
The concern I have expressed about the situation in which these constituents of mine find themselves is not wholly mine but is widely shared by many of the residents of the area. I would like to refer to a brief circulated by the Courtenay-Comox chamber of commerce around the end of last year in which some attention is focused on the situation in which the ordinary citizens, business people and professional people in that area find themselves. The brief points out the following:
[DOT] (4:40 p.m.)
Over the last ten years in the Comox valley we have seen a gradual decline in the number of wage earners in the logging and woods industries until today this payroll is estimated to be less than 500.
I might interpolate here and say that during an earlier era the basic industry in the area was coal mining but apparently what has been happening in Cape Breton happened there. One of the economic bases of this community has been non-existent now for quite a number of years. Logging and other forest production industries were available and perhaps in some measure eased the blow when coal mining ceased to a greater extent than the blow in Cape Breton is being eased. I point out to the minister that the decline in the number of wage earners arises in part from changing technology in the forest industry. This means that more logs can be produced with fewer people. The brief then continues:
Farming has shown a steady decline in employment opportunities and many of the small farmers have to supplement their income with other employment.
7895
Supply-Defence Production
I do not see the Minister of Agriculture here so I can do nothing but ask the Minister of Defence Production to make note of that for his colleague's benefit. The brief then states:
Against this there has been a steady increase in the number of wage earners who are directly dependent on the Canadian Forces Base, Comox, for their income.
A great deal of the money that the minister supervises has been spent in this area, as I am sure the minister will agree. Farther on in the brief it is pointed out:
In summary we have reached a situation where an estimated amount of between 60 per cent and 70 per cent of the total income in the area is directly dependent on the Department of National Defence base at Comox. This places our economy in a very vulnerable position should there be any change in D.N.D. policies in the future which might lead to retrenchment and a cut-back in defence spending. At the moment there is no alternative or additional source of payroll income in sight for this area and it is considered that urgent action is necessary to remedy this deficiency and to attract more sources of employment to the Comox Valley.
The brief then goes on to detail the efforts made over the past 15 years or so by the local body to stimulate other industrial development in the area. I will not go into that in detail. However, in responding to this brief and the covering letter I said to the people of the Comox-Courtenay chamber of commerce:
While I do not know of any current planning of the government in the defence field which is likely to alter in a major way the functioning of Canadian Forces Base Comox on its current scale, I have long been concerned about the increasing vulnerability of the economy of your area to any change which would eliminate or reduce the present establishment, on top of which I am sure there are none of us who do not hope for a state of affairs in the world where that kind of an stab-lishment will become redundant.
I might say for the benefit of the minister and the committee that what I had in mind when I used that last phrase was redundant as far as the thinking of the government of Canada is concerned.
The hon. member for Nanaimo-Cowichan-The Islands very ably developed the idea that basically our defence effort is a redundant operation at the present time. I share this view and I have made that clear on more than one occasion when I have addressed audiences in the area. In other words, the plain fact of the matter is that the spending of the number of millions of dollars supervised by the Minister of Defence Production
March 21, 1968

Supply-Defence Production represents a wasteful expenditure of Canadian taxpayers' money, to say nothing of any other considerations regarding the future of the world. Be that as it may, I do not believe that a view has so far been held by the Minister of National Defence or the Minister of Defence Production who is responsible for the spending of some of this money. From any indication we have had, even from some of the more hopeful of the aspirants to the office of the Prime Minister, it is not likely that there will be any basic change in policy on the part of the Canadian government as long as the party across the way remains in office.
The Minister of Defence Production should be reminded that he has another hat. We welcomed the establishment of the Department of Industry. I am sure the minister knows the terms of reference which set him up as the Minister of Industry much better than most members of the committee. Section 7 sets out some of the responsibilities and along others it states that he should promote the establishment, growth, efficiency and improvement of manufacturing industries in Canada, and develop and carry out such programs and projects as may be appropriate. He is concerned with spending money as Minister of Defence Production but I would urge upon him that he be even more concerned about fulfilling his other role and that he should not lose sight of the fact that his operations and those of his colleague, the Minister of National Defence, have placed whole segments of the Canadian population in a very vulnerable economic position.
Even in the minister's new role as Minister of Industry there has been no real assurance from anything that has happened so far that the federal government has taken any real initiative to ensure that an alternative economic base for this community is being developed to counterbalance the vulnerable situation in which the community finds itself because it is dependent on the defence establishment. This is true of other places where the people are more directly dependent on the defence manufacturing field.
Even though the minister is sitting here at the moment as the Minister of Defence Production I should like to point out that I recognize his other role. I have made inquiries of the area development agency of the Department of Industry and have been assured of the willingness of that agency to co-operate with the local people if they wish to set up an industry commissioner. I was
[Mr. BarnettJ
told that the appropriate officer of the department, a man who has spent some time in British Columbia, will do everything he can.
As the minister knows, we have had recent discussions about the question of designated areas, but this area does not fall within that particular classification. Therefore, except for a little advice and counselling in his role as Minister of Industry, the minister, as far as I can ascertain, has not really done very much to bring forward policies with any meaningful weight in relation to the provisions of the act for the purpose of developing and carrying out such programs and projects as may be appropriate. I suggest to him that he should not lose sight of this.
The minister quite properly suggested to the hon. member for Nanaimo-Cowichan-The Islands that we might be dealing with defence department estimates later. I agree that if I have questions to ask in relation to changes, if any, to be made in respect of this establishment they should properly be directed to the Minister of National Defence. I do not mind saying that I have discussed these matters on occasion with the minister and I am not asking him to answer at this time any of my questions relating to possible changes in the actual establishment.
[DOT] (4:50 p.m.)
Bearing in mind statements of the kind just made by the hon. members for Springfield and Nanaimo-Cowichan-The Islands, the minister should be prepared, even when appearing before us as Minister of Defence Production, to give some indication of what he really thinks about the relative importance of the two roles he is playing in the context of the operation of the government of Canada. The minister should be willing to give us answers of some kind about where we are going and what kind of leadership the government of Canada intends to give in order to deal with the changed focus in the economic situation that would occur if the war in Viet Nam were to stop tomorrow. He should be prepared to tell us the situation that would be likely to arise in a relatively small community such as I have been speaking about, if his colleague the Minister of National Defence recommended, and the recommendation was accepted by the government, that the Comox forces base should be closed next month.
These are real and important questions in the context of the world situation and the total economy of the country and its industrial health. They are also of very direct and
March 21, 1968	COMMONS
immediate importance to the people whose lives, interests, savings, homes and businesses have become wrapped up in certain communities because of the requirements resulting from policies followed by the government. This question is deserving of full consideration by the minister. The house is entitled to know where we are heading in the wide policy fields, and also what will be the immediate impact upon communities affected by these policies, whether they be manufacturing areas or communities which are dependent upon establishments of the Department of National Defence.


William Arnold Peters: Mr. Chairman, the minister has not answered any of the questions that have been asked and I should like to put a couple more to him before he does answer. The questions raised with respect to the Haley plant are serious enough in themselves, but I should like to have some more information on the matter. How many plants other than Haley Industries are there in this category? How many of them have been operated by management consultants, and why does the minister consider that there is a great difference between what is technically a crown corporation and a crown operated and owned industry? Also, how many plants of this nature that were used for war purposes-they may not be so used now-had government sponsored management during their period of operation under the Department of Defence Production?


Charles Mills (Bud) Drury: Mr. Chairman, a number of questions have been asked to which I shall try to give brief answers. The allegation was made that the cost of the d.d.h.'s had risen overnight. The evidence cited in support of this argument was an editorial which appeared in the current issue of a Toronto newspaper. I am sorry that the hon. gentleman who derived this information from the newspaper was not in the house when the question of costs was under discussion. At that time it was made clear that a number of figures had been bandied about in respect of naval construction which represented only parts of the total contract, that this had led to misunderstandings in the past and it was my intention to see that whenever questions relating to costs or estimates of costs for naval construction were asked the full cost would be provided on each occasion in addition to the costs asked for.
The hon. member for Springfield suggested that a regional bias was evident on the part 27053-4971
DEBATES	7897
Supply-Defence Production of the Department of Defence Production and this bias was given effect to by the use of cost plus contracts or contracts with adjustments for unforeseen circumstances. I suggest that cost plus contracts or contracts carrying-and I am not too clear what the hon. member meant by this-clauses for adjustment due to unforeseen circumstances, are rather unusual. I cannot think of one in which we are currently engaged.
It is the practice and policy of the department to seek to purchase by way of tender, based on the specifications and stated delivery times, and to award the contract to the lowest tenderer capable of meeting the terms of the tender. This in itself will serve to distribute in quite an automatic way the majority of contracts to those areas where most production is carried out. It is quite obvious that if a very small fraction of the total Canadian production is performed in a given area of Canada a correspondingly small number of contracts will emanate from the Department of Defence Production to that particular area.
In respect of the prairies, I think it is well known that the density of manufacturing there is much lower in relation to the population of the area than it is in other parts of Canada, notably Ontario, Quebec, the man-times and British Columbia. I might tell the hon. gentlemen, however, that the policy of consolidation of purchases and awarding the contract to the lowest tenderer, rather than making individual purchases locally, has resulted in the department being able to fulfil in quite a substantial way one of the main functions for which it was set up, namely, the acquisition of goods and services for the government of Canada at the lowest economical price.
As a consequence of the consolidation of fine paper requirements and seeking tenders for these in bulk, in the past year in respect of one kind of paper only, namely, No. 7 bond, a saving of $500,000 was achieved compared with previous purchasing practices, where this item was purchased on a frequent, repetitive and small quantity basis. By introducing a national credit card system for personnel in civilian departments to obtain gasoline, oil and minor repairs to government vehicles, annual savings estimated at $158,000 a year have been achieved. By introducing government-wide rates for newspaper advertising, annual savings of about $200,000 have been brought about.
March 21, 1968

Supply-Defence Production [DOT] (5:00 p.m.)
We are now continuing this consolidation operation in respect of advertising in other media and we hope to be able to reflect corresponding savings in this field. As members will recollect from a discussion we had last year on defence production estimates, through the policy of consolidating government needs for motor vehicles into a single purchase contract and by seeking tenders directly from the manufacturer, the department realized savings of between $100 and $400 per vehicle purchased.
I will not continue to give the many more examples of what I think the hon. gentleman has described as a bias in favour of certain areas in Canada, but I would say that the policy has had the result of concentrating purchasing in those areas where most of the production takes place. But while this concentration may have brought about some changes from previous practice I would point out that it has had the beneficial effect of effecting substantial savings in dollars to the taxpayers of Canada and that, I may say, is what I conceive my role as Minister of Defence Production to be.


William Arnold Peters: I am sure the committee would be interested in having from the minister at this point an indication of the degree of purchasing on behalf of departments in relation to their requirements. Is his department purchasing 10 per cent, 50 per cent or most of the requirements for all government agencies? Perhaps he would also indicate how much of the purchasing is made in relation to defence.


Charles Mills (Bud) Drury: As recommended by the Glas-sco commission, purchasing for all departments is being consolidated on an orderly and progressive basis under the Department of Defence Production. We have been taking over departments in their entirety one at a time. If my memory serves me right, we are about half way through this process now. In another year and a half or two years' time I would hope the Department of Defence Production will be doing all the purchasing on a consolidated basis for all the departments and agencies of the government, with the exception of certain specialized purchasing related particularly to high technology, scientific disciplines, and research activities in which the researchers are much closer, both in terms of physical location, and certainly in terms of

intercommunication, with the source of supply, than a larger generalized department would be.
We are making satisfactory progress. In addition, there are some fields where we have taken over department by department and consolidated our policy in respect of certain commodities purchased for all government departments. Motor cars are one example, newspaper advertising is another, and stationery is still another. So in a sense we are going ahead in two directions and on two fronts, and this is being converted, I hope, into a coherent, integrated operation.
The hon. member for Springfield also asked what contingency plans were being made to look after people who would be unemployed as a consequence of a shrinkage of the consumption of materials produced in Canada now being used to support the war effort in Viet Nam. Let me say right away that I share fully his hope that this unfortunate conflict can be brought to a conclusion at the earliest possible moment and, along with my colleagues in the government, spare no effort to bring this about.
In so far as those who are engaged now in production related to current warlike operations are concerned, we have been consciously, so far as this is possible in a free enterprise society, endeavouring to see that no one firm becomes solely dependent on the production of articles of military use and military equipment for the armed forces. This is true whether the firm is producing solely for Canadian consumption or is producing also for other countries such as the United States, European countries, and others. We do what we can to produce a diversification from military equipment into appropriate related civilian lines so that, should the demand for military items of any kind and for any reason fall off, there will be an alternative to which to turn people's efforts from a base which we hope will be reasonably soundly established.
Perhaps I could cite some examples. Cana-dair, the firm manufacturing military aircraft such as the CF-5, both for Canada and for the Netherlands, has been encouraged by us to do research and development and even prototype construction work on aircraft which have a purely civilian role, the principal one of which would be for water bombing against forest fires. They are also concerned with research and development of vertical take-off aircraft, also for civilian purposes. This we endeavour to bring about in all those firms
March 21, 1968

with which we have contact, which are currently engaged in the production of items for the various departments of defence, Canadian and foreign.
I may say that from the point of view of the necessity for a substantial readjustment I think we in Canada are fortunate in one way in that the kinds of military equipment or components of military equipment on which Canadian firms have been concentrating are largely of a quasi-civilian character. An example of this is the doppler navigation system, a system of aerial navigation which was developed in Canada and is being manufactured here. It is essential for military operations and military aircraft. At the same time it is rapidly becoming very important in civil aircraft. So if for one reason or another the demand for doppler navigation equipment in military aircraft dries up, there will be an alternative civilian demand to be catered to which will continue to provide economic activities to these firms.
[DOT] (5:10 p.m.)
We are conscious of the possibility and, we hope, the probability, that military operations with their consequent loss of life and material in Viet Nam will cease and have envisaged the circumstances of the changeover. We are working toward making it as reasonable and as easy as possible.
As I mentioned to the hon. member for Nanaimo-Cowichan-The Islands, I am sure the Minister of National Defence will read his remarks in Hansard and when the defence estimates are being considered it will not be necessary for him to repeat them. I leave it to my colleague the Minister of National Defence to make an adequate response.


Edward Richard Schreyer: Will the minister permit a question?


Charles Mills (Bud) Drury: The hon. member for Comox-Alberni also asked about transitional arrangements in respect of communities which are wholly dependent on military activity in Canada. He wanted to know what would happen if this military activity ceased. This is a possibility which is clearly present in the mind of the government when looking at the disposition of military bases across Canada. In instances where these do have to be phased out, it is recognized that consideration has to be given to easing the dislocation caused by such phasing out. I think the hon. gentleman will be aware of discussions taking place in this house concerning the possibility
Supply-Defence Production of phasing out a base in Prince Edward Island. Intense efforts are being made by my colleague the Minister of National Defence to make this change in military operations, this change in military needs, with as little difficulty and a minimal amount of dislocation to the people in the region as possible. I am sure he will continue to do this. I, for my part, through the Department of Industry and the Department of Defence Production, will provide him with such assistance and such advice as I can.


Edward Richard Schreyer: Will the minister permit one question? Would the minister care to use his powers of articulation to refute my charge that the Department of Defence Production, in its allocation of prime contracts, shows a strong regional bias which adversely affects the western provinces?


Charles Mills (Bud) Drury: I am sorry, but the hon. gentleman was not in the house when I did refute it. Perhaps if he looks at Hansard he will see the answer.


William Arnold Peters: I should still like to deal with the specifics of vote 6c. I presume we are dealing with the phasing out of one particular plant. The sums of $480,000 and $740,000 are both allocated to the Haley plant. I should like to know how many plants which were operated on a wartime basis are still in operation or are being utilized on a federal managerial basis.


Charles Mills (Bud) Drury: I am told, Mr. Chairman, that at the end of the war there were approximately 104. Over the years these have been disposed of gradually and only a few remain. I am told there is an engine repair and overhaul plant at Downsview currently operated by de Havilland aircraft. When I say "operated" I mean it is a crown owned property which de Havilland is leasing from the government and operating for its own purposes. In that sense it is not a crown managed operation at all.
In the city of Edmonton there is a hangar which is leased to Northwest Industries Limited to do repair and overhaul work. In the city of La Salle, Quebec, there is a naval test laboratory which is owned by the government and operated by Peacock Brothers Limited on a management or operations contract. They are merely operators on behalf of the crown, as this is a crown owned laboratory. In addition, there is a 7,000 ton press in Trenton, Nova Scotia, which was secured to handle the very large forgings required for our naval
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Supply-Defence Production engines. This is currently being operated under a lease arrangement with the main steel operation in Trenton which is Dosco.


Mr. Saltsman:: I should like to direct a question to the minister.


Charles Mills (Bud) Drury: If the hon. gentleman will permit an interruption, there is one other operation which I forgot, and which Canadian Arsenals owned. This is an establishment for the manufacture of cartridge cases at Louise Basin in Quebec. It is currently being operated by a contractor which is the same firm that purchased the arsenal at Valcartier, Val-cartier Industries Limited. We are now in the process of selling the Louise Basin facility to Valcartier Industries, so that it will be operated, again without loss to the crown, but with the continuing maintenance there of a cartridge case producing facility.


Max Saltsman: Mr. Chairman, I was interested in the minister's statement that his department was giving considerable attention to the problem of changing from wartime products to peacetime products and that they had been looking at the various factors. Can we take it from this statement that the transition from the production of war material to peacetime products can be made easily and without serious disruption?


Charles Mills (Bud) Drury: Easy, Mr. Chairman, is a relative term. Whether something is easy, whether dislocation is major or minor, whether it is easy or difficult, depends a lot on where you sit. If you were a man who had been gainfully employed in a job for a great many years and it suddenly disappeared, then it would be very difficult for you as an individual. However, if there is only one such instance in a year in the country, then that could hardly be regarded as a national problem. Such a transition would be easy for the government of Canada, indeed even easy for the opposition, but it would be very difficult indeed for that one man. I was endeavouring to say that the problem of transition is not a major one and we are seized of the importance of it. We are continuously taking steps to facilitate this transition on the day that we hope will come.
[DOT] (5:20 p.m.)
I mentioned to the hon. member for Timis-kaming the sale to Valcartier Industries Limited of Canadian Arsenals ammunitions producing plant at Valcartier. As a consequence of this, the crown has been able to secure the continuance in being of an ammunition producing facility to meet the needs 
DEBATES	March 21. 1968
of the Department of National Defence. At the same time, by introducing an entrepreneurial management with other interests, the plant and machinery at Valcartier are being used not only for the production of small arms ammunition on a limited scale, which is all we need now, but for the manufacture of another range of both plastic and metal items. As a result, when the day arrives that small arms ammunition is no longer required, the plant at Valcartier and its employees will already be well launched into the production of civilian goods.


Max Saltsman: The importance of the minister's statement at this time, Mr. Chairman, is simply this. A great deal of fear has been created in the public mind about the war materials that are being produced in this country in connection with the war in Viet Nam. For the sake of the record and for the knowledge of the Canadian public, the minister's statement today is of considerable importance. Regardless of the earlier part of his oration which, if he will excuse the allusion, sounded very much like a statement from the minister of external affairs-


Charles Mills (Bud) Drury: From the N.D.P.


Max Saltsman: -I think the implication of what he said is that Canada should get out of the production of war materials and that the transition from war to civilian production could be made reasonably successfully and without major disruption.


William Arnold Peters: Mr. Chairman, I was pleased to hear about the plants disposed of by the department. We will all be happy when the transfer from wartime operations is completed. I was also pleased to hear that the department had changed its role in terms of defence production. While I presume the department still buys material for the army, it has adopted the Glassco recommendation of bulk purchasing. I assume that this involves a distributive system, which will create new problems. For example, when you buy paper in bulk you have to store it, and I can envisage storage problems for the department.
I have one final question for the minister. If I had any further questions I would ask them of the parliamentary secretary who has sat silent throughout. Has the department considered changing its name to a more suitable one in keeping with its purchasing policies which were recommended by the Glassco commission? If I and my colleagues had anything to do with it defence costs would come
March 21. 1968

down; therefore that particular function of the department would eventually disappear. At the same time, its purchasing activities are going to increase. Would it be in keeping with the minister's avowed N.D.P. philosophy to change the name of the Department of Defence Production to something more appropriate?


Charles Mills (Bud) Drury: Mr. Chairman, it is our intention to do so in about one year's time. It will require legislative enactment and the matter does not seem to be terribly urgent. Although progress is being made on the matter I would be glad to receive suggestions for a new name, though not now.


Winona Grace MacInnis: Mr. Chairman, I cannot let the estimates of this department go through without making a brief but none the less strong protest about the way defence contracts have increased so tremendously during the last year. I am afraid that the minister's talk of phasing out military production is not too convincing in view of the number of defence contracts entered into last year. Indeed, instead of military production being phased out it has been going the other way. We have been building up an intricate network of defence production that will be very hard to undo or to turn to civilian use. I am worried about this because it means we must devote a great part of Canadian industry, resources and manpower to the production of war materials for military needs at a time when civilian needs are increasing.
Because it puts the case much better and more succinctly than I could I should like to quote an editorial that appeared in this morning's Globe and Mail. It commences as follows:
It came out almost incidentally. Michael Forestall (P.C. Halifax) was talking about cost control during the Commons debate on supplementary spending estimates for the defence production department, and mentioned a figure of $20 million a ship for four new destroyers the department has on its drawing board.
Not $20 million, corrected defence production minister C. M. Drury, by now it was "a lot closer to $50 million", and maybe more. The ships would be built over four years and changes in naval warfare might dictate design changes at increased cost-
Designed four years ago for service four years hence and dubious service at that. We have yet to redefine our NATO commitments, we can have no certainty that any of our U.N. roles will require such vessels: and if there is one thing most Canadians feel they could do without, it is a ship that fires surface to air missiles. At what?
Supply-Defence Production
But four of them will cost us $200 million. There goes $50 million more than will be raised by finance minister Mitchell Sharp's 3 per cent surtax on personal and corporate income taxes for the 1968-69 fiscal year, there goes nearly double the $105 million aid Canada sent to Indian last year- our biggest foreign aid item.
In what strange unreal world does the government live, where it can preach restraint to us and proceed, almost casually, with a huge and open-ended expenditure on what the judgment of Canadians-if it could be totalled up-would almost certainly decide was an unnecessary and even undesirable project?
I think the Globe and Mail has hit the nail on the head. From what I have heard during the last two days it seems we are living in a strange and unreal world. The minister is hoping that we can phase out military needs in order to meet other needs. Certainly the needs of the people of this country are tremendous. They require new housing. There is the problem of pollution control in its various phases. There are requirements for education and training from one coast to the other. There are pension problems both civil and military. The elderly need a pension increase and medicare expenses are coming along. This is why it is so unreal to spend such tremendous sums on defence production. Against what and against whom will these weapons be used?
[DOT] (5:30 p.m.)
Our country faces real and growing needs and it is high time we got down to reality and came down to earth. The people of this country are being taxed for services they hope they will receive. Yet much of their money is being spent for what? Battleships, tanks and so on. If we put our full weight behind the United Nations we should not need those items as they were once needed in the past.
I will not take up the time of the committee further except to say that in my view, and I am sure I speak for most Canadians, we have started down a long and dangerous road. I do not want to be told that I have neglected to ask on behalf of my area for any armament contracts that are going. If military expenditures are to be incurred by the government I hope that Vancouver will be given its share.


Charles Mills (Bud) Drury: You just want your share.


Winona Grace MacInnis: I
would much rather see armament production stopped. Instead of concentrating on defence production I would prefer to see the government concentrating on civilian production. Just in case some hon. members find my re-
March 21, 1968

Supply-Defence Production marks amusing, just in case they think I am in cloud cuckoo-cuckoo land, I ask them to note what is happening to the south where civilian needs have been badly neglected and police forces have had to be increased to contain the violence that has been created through misery and social injustice. We need not have that state of affairs in Canada and that is why I urge the minister to do away with one part of his job. He should concentrate on the Department of Industry. Instead of wearing his two hats I would prefer to see him wearing only one, the hat of the Department of Industry. One hat would suit him, and I think most Canadians agree with me.
The Assisianl Deputy Chairman: Shall vote 6c carry?


[Stage Direction]
Item agreed to.
(The following items were agreed to:)
7c. Payment of the obligations of the Crown-owned magnesium foundry at Haley, Ontario, outstanding as of September 30, 1967, $740,000.
8c. Reimbursement of the Defence Production Revolving Fund established by Section 16(1) of the Defence Production Act for losses sustained in the 1966-67 fiscal year in the disposition of strategic materials, $77,287.
@Deputy Chair(man)? of Committees of the Whole: Shall vote 9c carry?
9c. Reimbursement of the Supply Service Revolving Fund established by Loans, Investments and Advances Vote L18e, Appropriation Act No. 4, 1966, for the supply of certain goods and services to federal government departments and agencies for the value of stores which have become obsolete or unserviceable, $7,253.


William Arnold Peters: I presume that vote 9c has to do with the revolving fund which is applicable to government purchases for other than national defence requirements. I should like to see some sort of supervisory machinery set up over such government purchasing procedures. Over the years I have heard stories of salesmen going to Department of Defence Production offices, offering their wares and being granted interviews if what they had to sell was important to the department. The salesmen also used all sort of sales gimmicks, and no one can blame them for that. At the same time, even though the Auditor General or the public accounts committee might examine at the appropriate time some of the purchases which the government has made, some sort of supervisory set-up ought to be created to deal with government purchases. Since government purchases represent the big end of government operations I think that a formal supervisory set-up of the kind I have mentioned ought to be brought into being.
[Mrs. Maclnnis (Vancouver-Kingsway) .1
I commend the government for implementing some Glassco commission recommendations much more rapidly than has been realized by some. The minister ought to bring this fact to the attention of all concerned much more forcefully than he has done.
I welcome the minister's remarks about administrative procedures and I wish to bring to his attention some problems in connection with purchasing which have arisen in various ridings. For instance, in certain ridings where the government purchased automobiles the dealers who were not successful in tendering were very upset and told their member of their dissatisfaction. On the other hand, dealers who were successful in tendering soon found that the service commitments of their contracts meant that they had to spend more in servicing government cars than they would have spent in servicing the general public's cars. In other words, the dealers are damned if they win and damned if they don't. I think there is an obligation on the part of the department to make certain that automobile manufacturers stand behind their dealers. Often the manufacturers dodge their responsibilities and the dealer winds up making nothing or next to nothing.
When a dealer sells a standard Chevrolet, he makes a mark-up of $700, $400 of which is earmarked for service for engines, rear ends or other servicing needs that may arise. Usually the manufacturer stands behind his product but I have been told that some manufacturers have blackmailed local dealers into doing certain work without compensation. Originally the dealer arranged with the manufacturer to be compensated for the work. Actually the dealer got a kickback from the manufacturer for servicing the car, but I have been told that General Motors has stopped giving this kickback to its dealers. I have received many letters and I have heard many opinions expressed about whether General Motors is or is not in some way reimbursing its dealers for work being done.
I do not ask the minister to comment. I merely wish to say that since all these dealings affect the government in some way it would be a good idea to institute some kind of machinery to supervise purchasing procedures, and here I am thinking of what the Glassco commission recommended. Within the minister's department that supervisory body could control purchases, and where difficulties in connection with purchases arose the supervisory body could bring them to the
March 21, 1968

minister's attention. As purchasing requirements within a department become more complicated and as more items with which the minister is not familiar are purchased, the services of a supervisory body would be invaluable. It would not be to his disadvantage and it might well be to the advantage of the country if such a supervisory agency were established in the department to act as a watchdog. Its work might even involve supervision of the way in which supplies are used by other departments of government.
[DOT] (5:40 p.m.)
The agency might come to the conclusion, for instance, that there was an unusually high consumption of certain material for which there did not appear to be a great and continuing demand. The building up of stocks can lead to such situations as arose when the defence department found itself in possession of enormous supplies, surplus to requirement, of overpants for females in military service. The supervisory agency I have in mind could check the demand for such items when it was felt the quantity demanded was excessive, and instigate investigations which I am sure would eliminate unnecessary waste.
I am glad the minister has been able to go as far as he has done in connection with the Glassco recommendations. I think he should look carefully at the recommendation to set up machinery for continued supervision during the period of purchasing rather than wait for the Auditor General to find out what went wrong-obviously an exercise in hindsight.


Max Saltsman: I should like to direct another question to the minister. In view of the evidence given before the drug committee that his department is able to purchase drugs at great savings, has the minister ever been approached by provincial governments to act on their behalf in purchasing drugs for hospitals? If he were so approached, would he consider making such purchases for hospitals in Canada?


Charles Mills (Bud) Drury: We have never at any stage been approached with this request from the provinces.


Max Saltsman: What would be the position of the department if such requests were made?


Charles Mills (Bud) Drury: We would be glad to co-operate, Mr. Chairman.


[Stage Direction]
Item agreed to.
Supply-Industry
The following item was agreed to:
10c. Reimbursement of the Queen's Printer's Advance Account for the value of stores which have become obsolete or unserviceable, $996.
@Deputy Chair(man)? of Committees of the Whole: This concludes the supplementary estimates of the Department of Defence Production. The committee will now consider the supplementary estimates of the Department of Industry.


William Arnold Peters: It was my understanding that the minister would be away and that we had agreed these estimates would stand while he was absent.


Charles Mills (Bud) Drury: I did not know I was going to be away.


William Arnold Peters: Pardon me. I thought we were on the estimates of the Department of Energy, Mines and Resources.



DEPARTMENT OF INDUSTRY

[Stage Direction]
lc. Departmental Administration, including grants as detailed in the Estimates, $1.
Item agreed to.
25c. Amount to be credited to the Area Development Account established by sub-section 1 of section 5 of the Area Development Incentives Act and to authorize, notwithstanding section 30 of the Financial Administration Act, an increase to $275,000,000 in the total amount of commitments in the current and subsequent fiscal years for development grants under the said Act, $11,000,000.
Mr. Laprise:: Mr. Chairman, I should like to say a few words with regard to item 25c which deals with designated areas.
A few days ago, on the orders of the day, I asked the hon. minister whether he had received requests from public bodies of the Abitibi area to the effect that this part of the Quebec province should be designated as a low-employment area in order that the industries which are prepared to settle there might benefit thereby.
Every year, the hon. minister publishes a report on the activities of his department. In the 1965-66 report, the role of the Department of Industry is defined as follows:
The duty of the Department of Industry is to encourage and facilitate the efficient development of secondary industry in Canada.
In my opinion, Mr. Chairman, this is quite a commendable purpose which should be carried out. I think that the incentive given by the department made it possible for many industries to settle and create new jobs in areas which otherwise would have registered

March 21, 1968
Supply-Industry
a high concentration of unemployed, which would have affected them adversely. I wonder whether, in the country as a whole, some areas have not been at a disadvantage due to the system used by the department to designate those areas.
I should like to continue with the description of the role of the department.
In more precise economic terms, the department seeks to attain a dual objective: to raise the level of productivity and to make it possible for our industries to compete on the domestic and foreign markets. Furthermore, its purpose is to prepare and implement programs intended to create new job opportunities and to raise incomes through the industrial development of the areas of Canada which have been designated because of chronic unemployment, underemployment or low incomes.
One or two days ago, in answer to the hon. member for Trois-Rivieres (Mr. Mongrain), the minister stated that the areas were not designated by the Department of Industry but rather by the Department of Manpower and Immigration, according to the level of unemployment prevailing in those areas. The minister is basing himself on the report of the Department of Manpower and Immigration in giving assistance to the industries wishing to settle in those areas.
[DOT] (5:50 p.m.)
I fully understand the situation. However, I wonder whether this procedure is fair to all the areas, for in the region in which I am interested, that of Abitibi, there are between 400 and 500 men who have to travel to the province of Ontario to work in lumber camps, sawing wood or transporting it to mills where it is converted and prepared for the market.
These men must travel over a hundred miles to come back to their homes during the weekend, which increases their expenses considerably. Moreover, they cannot be considered as unemployed. In fact, they are not unemployed but must earn a living in an area located in a neighbouring province and designated as an economically depressed area.
Therefore, I think that, in so doing, an injustice is committed against northwestern Quebec, for as far as I know, two lumber processing industries at least would be interested in coming to a northwestern Quebec town, namely La Sarre; but being unable to get any aid under the Designated Areas Act, they will probably settle down in the neighbouring province, where they will be entitled to the subsidies granted in designated areas.
I agree with the hon. minister and the hon. member for Cochrane (Mr. Habel) that northern Ontario can supply raw materials to this lumber industry. But, I should like to point to

the hon. minister that northwestern Quebec can also supply many species of wood to those processing industries.
Last Sunday, I had the opportunity of visiting the new road that was cut out of the forest, north of La Sarre, towards James Bay and the sea. I know that the La Sarre Chamber of Commerce, led by most enthusiastic and enterprising men, decided last year without waiting for support or help from the Quebec government, to build that road so that the area's resources, that is timber, mines, tourism, etc. could be developed.
As I said, last Sunday I was present at the official opening of a section of that road. I could see for myself the vastness and the beauty of the forests which border the Wawagosic and Harricana rivers and all the other streams which run through that wooded area in northern Quebec.
The reports submitted by the engineer, Michel Tisse, and by others, indicate that there are huge expanses of forests which are waiting to be developed. I would say that that whole area of the forest in northwestern Quebec has more than 100 years of growth and that the wood is ready to be cut down. Consequently, I feel that we should not postpone exploiting those natural resources. Moreover, the establishment of new industries would reduce unemployment in northwestern Quebec.
Unemployment is very high in the Abitibi area; there was unemployment last fall, there will be this spring, and even next summer. A great number of workers are not entitled to unemployment insurance benefits, and when they report to the welfare service, they are told: Move somewhere else where you can find work. By so doing, they are indirectly invited to expatriate themselves, to head for other areas, indeed other provinces, to seek work which they could get on the spot, at home.
Industry in that area is not very diversified. There is the forest, the mines and a little agriculture. We do not have much potential for industries, compared to great centres, because for some industries, raw materials would have to be imported, processed and then, re-exported. It is something practically impossible and uneconomic. But, on the other hand, we can process our wood products and export them later.
I ask the minister whether those areas could not be determined in some other way, because I feel that situation is peculiar to our
March 21. 1968


@Deputy Chair(man)? of Committees of the Whole: Order.


Gérard Laprise: Mr. Chairman, I have com-leted my remarks.


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


William Arnold Peters: Six o'clock.


@Deputy Chair(man)? of Committees of the Whole: It being six o'clock shall I rise, report progress, and request leave to sit again later this day?


Some hon. Members:: Agreed.
Resolutions adopted in committee of supply this day reported and concurred in.
[DOT] (6:00 p.m.)
MESSAGE FROM THE SENATE Mr. Deputy Speaker: I have the honour to inform the house that a message has been received from the Senate informing this house that the Senate have passed Bill No. C-208, an act to amend the Income Tax Act, without amendment.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at ten o'clock tonight are as follows: The hon. member for Halifax (Mr. McCleave), Incomes Tax Act-inquiry as to examination and approval by the Minister of Justice; the

March 21. 1968
Private Bills
hon. member for Lac-Saint-Jean (Mr. Si-mard), Winter Works-Desbiens, Que.-inquiry as to work project; the hon. member for Kootenay West (Mr. Herridge), Power -Columbia River-reported increase in costs.
It being six o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely private bills, notices of motions papers, public bills.



PRIVATE BILLS


[Stage Direction]
The house in committee on Bill No. S-25, respecting London and Midland General Insurance Company-Mr. Lind-Mr. Batten in the chair.
On clause 1.-Change of name.
Mr. Lind:: Mr. Chairman, the sole purpose of this bill is to change the name of this company from London Midland General Insurance Company to Avco General Insurance Company. There are two reasons for the desired change. This company is a member of the Avco group of companies, and the Avco corporation is the parent company of the entire group. Last year there was a company in the United Kingdom which used the names "London" and "Midland" as the main names of that company. It went into bankruptcy and there have been some inquiries as a result. The company has been asked whether there was any connection between these two companies. There is no connection between these two companies whatsoever, but this is the reason for this change.
Let me point out to hon. members that Avco Holding Corporation of Canada is not the sole owner of the London and Midland General Insurance Company. Approximately 50,000 shares are held by Canadian citizens. I hope that hon. members will see lit to allow this change of name, which is all that is being sought.


William Arnold Peters: Mr. Chairman, I agree with the sponsor of this bill that all that is being asked is a change of name. I do not agree that that is all this bill may do. The name of this company would indicate that its operations or offices are located in the main insurance area of Canada. The hon. member sponsoring the bill is also from the province of Ontario. This would give reason for assuming that this is an Ontario company, not a company of English origin. This is the sort of difficulty we have in
[Mr. Deputy Speaker.!
Canada when companies use names that do not indicate explicitly the location of the company. This bill does not do much to clarify the situation, unless one is familiar with the background of the company.
The change of name is not the significant part of this whole matter. The former president of the privy council recently received a report from a tax force that was set up to decide what influence foreign ownership had on our industry. It contained a great deal of information about the ownership of insurance companies and other financial institutions. It has been our contention for some time that the ownership of insurance companies is of vital importance to the Canadian economy. The fact that many of them are owned by foreign companies raises a question regarding the use of profits in the best interests of this nation. This matter has been the subject of a number of discussions and editorials. Many of these federally incorporated insurance companies engage in the same practice as totally owned subsidiary-


Herman Maxwell Batten: Order. Before the hon. member progresses too far along the line he is now taking I should point out to him that the bill before the committee is a very simple one dealing with a change of name. It does not permit the hon. member to make general remarks about the operations of insurance companies.


William Arnold Peters: I agree, Mr. Chairman, that this is a very simple bill, but it is my understanding that this type of an amendment does open up the subject matter of the incorporation of the company, having regard to chapter 48 of the Statutes of Canada, 1957-


Herman Maxwell Batten: Order, please. I should advise the hon. member that under the rules of this house an amending bill does not open up the original act for general discussion. Only the clause which is being amended is before the committee.


Mr. Mackasey:: Tom will help you.


William Arnold Peters: I accept your ruling, Mr. Chairman. However, I must suggest that this company seeking a change in name was the subject of discussions in the committee on banking and commerce of the other place. There is a relationship between the change of name and the ownership of this company as indicated by the discussion which took place in that committee. The superintendent of
March 21, 1968

insurance at that time had this to say as recorded on page 79 of the proceedings of that committee:
[DOT] (6:10 p.ra.)
-the purpose of this bill is very simple.
It is merely to change the name of the London and Midland General Insurance Company to Avco General Insurance Company, and, In French, L'Avco, Compagnie d'Assurance Gendrale. That is the sole purpose of the bill.
May I say that the existing company, the London and Midland General Insurance Company, is a federally Incorporated company, having been formed by special act of parliament in 1948. It is registered with our department. It is owned by the Avco group of companies, the parent company being in the United States. There is a holding company in Canada that holds a group of companies engaged in the business of acceptance, lending and insurance. All companies in the group are using the name Avco as part of their name, to identify the family of corporations. This is the purpose in seeking this authority.
I suggest that the company referred to as the London and Midland General Insurance Company is not the same company that we incorporated. Therefore the change in name of the company carries with it a change in ownership under this bill and is pertinent in our discussion. While it may be true that it is a change in name to allow for a correction of the situation indicated by the sponsor of the bill, in other words, a duplication of name that has caused the company regrettable inconvenience over a period of time, I understand from the evidence given before the committee of the other place that the reason the company wants to change its name is that the company itself has changed. The bill changes the London and Midland General Insurance Company, a company incorporated in England, to a company owned by the Avco group in the United States which has in its portfolio a large number of companies.
I suggest that in this instance the change in name implies also a change in ownership. By changing the name of the company we will be effecting a transfer of ownership to the Avco group which is a holding company for a number of insurance companies. The questioning in the committee of the other place continued in this way. Senator Pearson asked:
How many subsidiary companies are affected in Canada?
In other words, the members of that committee were not inquiring about the name of the company but about its ownership. Mr. Humphrys answered in this way:
This change will affect only this one insurance company. They have a number of other companies in the group but they are not our concern.
Private Bills
Senator Pearson: They have the name?


Mr.   Humphrys@: Many of them have the word Avco in the name.


Herman Maxwell Batten: Some representatives of the company are here, namely, Mr. H. P. Paterno, president of Avco Delta Corporation Canada Limited, and president of the London and Midland General Insurance Company; Mr. C. J. Connell, group vicepresident, Avco Delta Corporation of Canada Limited, and vice-president, London and Midland General Insurance Company; and Mr. K. R. Kirkpatrick, vice-president and general manager, London and Midland General Insurance Company; and Mr. David F. Alexandor, parliamentary agent.
The chairman of the committee then suggested that with the brief explanation given by the superintendent of insurance the committee might be ready to report the bill without amendment. Mr. Alexandor, the parliamentary agent, then said:
Mr. Chairman, all I would like to say is that the primary reason for the request to this honourable Senate for the change of name is to make the name Avco part of a corporate name of this insurance company, in line with six other companies in the same group. There is one other point. There is a company by the name London and Midland Insurance Company, in the United Kingdom, which went bankrupt recently. There is no relationship between the British company and this group, but it caused considerable embarrassment to this company, which had to contact 6,000 Canadian representatives and many policyholders as well.
I would also add that there are a number of companies in Canada with the word "London" included in the name. Those are basically the three major reasons for the change requested.
I suggest that in this case the change of name also carries with it a change in ownership. This company is being added to a group of companies under the name Avco. Therefore the problem is opened up of the ownership of the company. This is not only a change in name because implied in this change is also a change in ownership. I suggest that the bill therefore raises the whole problem of ownership and the question of Canadian content in the ownership of the company. As the name changes, so will the ownership of the company change and it will be a subsidiary of the Avco group of companies. On many occasions we have raised the problem of ownership.


Herman Maxwell Batten: Order, please. I must again say to the hon. member that the bill before the committee is indeed a very simple one. From the information which the Chair can derive from the bill before the committee, it has nothing to do with ownership and deals only with a change of name. I am going to ask hon. members to confine their remarks to the two particular clauses in the bill.

March 21, 1968
Private Bills


William Arnold Peters: Mr. Chairman, we shall certainly co-operate with the Chair and concentrate on the name of this company, which limits the discussion and makes it more difficult. Avco is the name of a company established in the United States as a holding company for a number of insurance companies. I presume the name is made up of the initials of the original participants in the company. The name Avco is, of course, not a word at all. I doubt that we should allow this change of name, for the reasons I have given. The name does not appear in italics and really cannot be called a word. There is a great deal of difference between the word "London" which is a noun, and "Avco" which is a word made up of four initials. I wonder whether it is proper for us to allow a company to use a name that really does not have any significance at all. The French translation of the name sounds much better than the English version.
[DOT] (6:20 p.m.)
I would have thought it would have been better if the name had been changed to one more in keeping with their activities, namely, the selling of insurance in Canada, because there are a number of other insurance companies involved which might have found it better for this company to have called itself the Delta General Insurance Company or might have found it wiser for the company to have used its whole name. Is the sponsor in a position to say - why this company is not named the Avco Delta insurance company? In view of its ownership this would be a more realistic name. The company is owned by Avco Delta Corporation of Canada Limited, and it would seem to me that since the president of this company was also president of the London and Midland General Insurance Company it would be more realistic to identify it under this name.
I suggest that the company should be named the Avco Delta Corporation of Canada Limited and that that name should appear in the bill rather than the name proposed, Avco General Insurance Company. It may be that the name I have suggested would be more difficult to translate and it may also be that the name proposed in the bill has more meaning in French, because L'Avco, Compagnie d'Assurance Generale sounds nice. It might not sound as well if we added to the name the word "Delta", and it might well be that this word has some significance in French while the word "L'Avco" may have a different connotation in the French language than it does in English. But I think most hon.
[The Chairman.]
members will agree that "L'Avco" really does not mean anything at all. All it is is a grouping of letters. I think that the change of name does not make the designation of this company any clearer. If we want to clarify the meaning of the name by adding the word "Delta" this might be an appropriate thing to do.
It seems to me that the letters a,v,c,o do not make up a name. Perhaps this word might have some significance if it were but between brackets. What we would do in that case would be to patent a new name. The sponsor may see fit to withdraw the word "Avco" and just call the company "General Insurance Company", which would not mean anything at all because most insurance companies deal with general insurance. On the other hand, it might be wise to take "Avco" out and put in "Delta". I think this might have some significance. I also wonder whether it would not be possible to call the company Avco Delta London and Midland Insurance Company because this name could easily be identified by people who previously had insurance policies with the London and Midland General Insurance Company. The extra words would then be included in brackets as is the case with many other companies which have changed their names, such as National Branch (1956) Limited. The date in the name stands for the date of the incorporation of the company and the legal profession sees some significance in its inclusion.


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


Thomas Speakman Barnett: Mr. Chairman-


Some hon. Members:: Filibuster.


Thomas Speakman Barnett: I am not sure what that moan from over there means but in any event I am sure hon. members are familiar with the rather well worn saying that a rose by any other name would smell as sweet. Perhaps you could permit me to remind the committee that the same could also be said to apply in reverse to skunk cabbage. There is another quotation which has to do with names. I am no authority on such matters but I think the following phrase was authored by a man named Shakespeare who said "what's in a name", or words to that effect.
This bill has a fairly accurate explanatory note which explains the sole purpose of the
March 21. 1968

bill, namely, to change the name of the company to Avco General Insurance Company, in French L'Avco, Compagnie d'Assurance Generale, from the London and Midland General Insurance Company. I have been looking at the evidence which was given in the other place when this bill was considered on November 22, 1967. On the basis of that evidence perhaps a reasonable case could be made for the desirability of changing the name.
Despite what my colleague, the hon. member for Timiskaming, said about the rather meaningless grouping of letters which make up the name, it would be interesting if the sponsor of the bill could inform the committee on the meaning of the word "Avco" and how it came into being. As I understand the evidence there is some virtue in the proposed change of name in that at least it serves to clarify the real position of this company as a member of the so-called group of Avco corporations. Perhaps it would serve to identify it as being what the sponsor has stated, namely, an appendix to a company located outside Canada. To that extent at least I find myself favourably disposed to the proposition set out in the bill. It makes it clear that this is a company associated with Avco Delta Corporation of Canada Limited, and through it with a group of companies in the United States. It does also-and this is where I think the bill has some import beyond the mere change of name-signify the fact that at some point or other a company originally started by a group of Canadians in the city of London was bought out by the Avco holding corporation in the United States.
In changing the name of the company we are in effect recognizing in retrospect something that may have happened a number of years ago which is not made quite clear in the evidence I have read nor in what was said by the sponsor of the bill earlier. If my assumptions are correct, in that sense this bill could properly be considered to be a sort of requiem to a one-time Canadian company. I suppose one could say "may it rest in peace" except, as we all realize, it has every intention, according to the evidence given by the superintendent of insurance of continuing to operate as a very active participant in the general insurance field in Canada.
[DOT] (6:30 p.m.)
To this extent at least, Mr. Chairman, I have no quarrel with the proposal that the name be changed. In fact perhaps this is
Private Bills
something that should have been done a long time ago. On the other hand, unfortunately, I realize that the terms of the bill do confine us to a rather narrow area of debate. The very fact that even at this late date we are being asked to sanction this proposed change of name, indirectly at least, does call upon us to give our blessing to something which has taken place, namely the transfer to foreign control of ownership of a Canadian corporation. I realize the rides do not permit, as you reminded us, sir, to expand upon that fact in detail. However, I believe that this change of name symbolizes this very situation which has been pointed out in certain other discussions with reference to applications that have come before us from various insurance companies.
One of the reasons given for desiring this change of name is the similarity of this name to that of a firm which apparently went into bankruptcy, and which had its origin in the United Kingdom. Apparently this was the cause of some embarrassment. Here again, we are dealing ex post facto with a situation which presumably most people have now forgotten. If I had been a patron of this particular company I might have been concerned about that matter at the time, but quite frankly it is something of which I was unaware until this bill came before the house.
Another reason advanced by the parliamentary agent for desiring the change of name is that there have been a number of companies in Canada in the insurance field with the word "London" included in the name. I have been looking at a list of insurance companies registered to do business in Canada, and I feel that perhaps this point has some foundation. The list I have before me is a supplement to the Canada Gazette for January 27, 1968. The list contains the names of insurance companies registered to do business in Canada under the Canadian and British Insurance Companies Act and the Foreign Insurance Companies Act. We do have the Liverpool and London and Globe Insurance Company Limited; the word "London" appears in that name. Apparently this company is registered to do business in the field of fire, accident, aircraft, automobile, boiler, earthquake, explosion, forgery, guarantee, limited hail, inland transportation, personal property, plate glass, sprinkler leakage, theft, wind storm and additional classes of insurance. Then, we have the London and Edinburgh Insurance Company Limited, William N.

March 21, 1968
Private Bills
Johnston, chief agent, Montreal, which limits itself to accident and automobile insurance.
We have the London and Lancashire Guarantee and Accident Company of Canada, which deals in fire, accident, aircraft, automobile, boiler-


Herman Maxwell Batten: Order. The Chair fails to see the relevance of the remarks now being made by the hon. member for Comox-Alberni respecting the very simple bill before the committee. There is no need for the Chair to quote to the hon. member the rule regarding relevancy in committee. I hope that he will co-operate with the Chair in trying to complete the work of the committee.


William Arnold Peters: I rise on a point of order, Mr. Chairman. The hon. member was talking about the name this company had, and the choice of the new name which we are being asked to approve. I submit that a discussion of the two names would be quite in order.


Thomas Speakman Barnett: Well, Mr. Chairman, I seek some guidance from you. I was dealing with one of the arguments that has been advanced by the applicant company in respect of its desire to have the name changed from London insurance company to another name. This desire arose partly because a number of companies operating in Canada used this name. I was in effect underlining that argument. I seek guidance as to whether it was this aspect of my remarks to which objection was taken, or whether you were suggesting that a reference to the different types of insurance in which these companies engaged breached the rule of relevancy.


Herman Maxwell Batten: The hon. member is an experienced parliamentarian, and he knows that the Chair is not going to argue with him. The Chair does suggest that the question before the committee is a simple one and expects hon. members to confine their remarks to the question before the committee.


Thomas Speakman Barnett: I certainly know the rules well enough to realize that the Chair is not going to argue with a member. I also know the rules well enough to realize that it is not normally expected a member will argue with the Chair, although from time to time we are permitted to make certain representations. However I will attempt to follow your suggestion to the best of my ability. If I do stray from the point, I know you will call it to my attention, Mr. Chairman.

As I said at the outset of this portion of my remarks, I was making reference to the argument advanced by the applicant company through its parliamentary agent, that the name London and Midland General Insurance Company, under which they are operating, is duplicated by quite a number of other companies operating in the same field of general insurance. I referred to a list of companies, and gave the source of that list. I was going to indicate that not only was there duplication of name but also duplication in the nature of the operations of these companies. I had made reference to the existence of the London and Edinburgh Insurance Company Limited. Then, there is the London and Lancashire Guarantee and Accident Company of Canada.
[DOT] (6:40 p.m.)
Now we come, somewhere at midpoint in this list of companies with the name "London" in their title, to the London and Midland General Insurance Company, Keith R. Kirkpatrick, manager, London, Ontario. Then we have the London and Scottish Assurance Corporation, Limited; the London Assurance, E. A. W. Paterson, chief agent, Toronto; the London-Canada Insurance Company, H. Douglas Coo, president and managing director, Toronto; the London Life Insurance Company, R. H. Reid, president and managing director, London, Ontario. So apparently there are two companies operating in London, Ontario with "London" in the name of the companies at the present time. At this point we move to a slightly different set of alphabetical letters and come to the Loyal Protective Life Insurance Company and the Lumbermen's Mutual Casualty Company, terminating the list of companies in which the name "London" is used by existing incorporations in Canada.
To that extent, Mr. Chairman, one cannot argue that the desire of this company for a more distinctive name is not well founded. In my view that consideration is more important than the temporary situation of embarrassment that was created prior to the going into bankruptcy of London and Midland Insurance Company in the United Kingdom-that is, unless the Avco group, the owners of the London and Midland General Insurance Company of Canada, are fearful that some of the other companies operating under the name "London" are likely to follow the sad course that led to the going into bankruptcy of the London and Midland Company that was operating in the United Kingdom.
March 21, 1968

It seems to me there is some legitimacy in the desire to change their name on the score of duplication. As I have said, there may be some validity in the suggestion that they should be clearly identified for what they are-a foreign owned company controlled by some sort of holding corporation in the United States.
I think these are considerations properly of concern to this committee, though I sometimes wonder when it comes to a question of changing a name. In recent times we have had quite a few bills before us to change names. Many of these were concerned only with adding a French language name to the official name of existing corporation. The proposal in this bill does both these things, and presumably we will not require another bill requesting authority for a name in Canada's other official language.
I remember the time when a lot of small loans companies were asking to change their names to those having a more salubrious sound. Beneficial Finance Corporation is one that comes to mind. I think it is clear that the company named in this bill has no motive of that kind in seeking to have its name changed.
As the hon. member for Timiskaming pointed out, the name itself is a very unintelligible grouping of words.


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


Mr. Germa:: Mr. Chairman, on first inspection this bill appears to be a simple one, unworthy of more than two or three minutes consideration. However, it is deceptive in that it does more than change the name of a company. It is in fact losing a company, so that in future we will not be able to identify this company by a known and a given name, that of London and Midland Insurance Company.
Each of us has a name, Mr. Chairman, and we have a name for a reason. If I did not have a name you would not know who was standing here. You might think that I was Sir Arnold Peters from Timiskaming. But you know in fact I am not, because I have another name. This is how we know one another. Therefore more importance should be placed on the names of people and companies, so that they can be clearly identified. This reminds me of a song that is quite high on the hit parade titled "People Have No Faces". It tells of a person who goes to a town where
Private Bills
everyone has the same face and name, and he does not know one person from another.
I think we are sailing into dangerous waters by granting names to various companies without considering the confusion that this may cause among the general population. Recently I was informed by an insurance company with which I have a policy that the company had changed its name. I forget the company's original name, but the new one is Zurich Life Insurance Corporation. I do not know whether the new name appeared in a bill that went through the house, but as the Chairman knows I have not been here long and it could have been before my time.
At the time the company notified me that I was no longer insured with, I believe it was Continental, but was now a victim of the Zurich Life Insurance Company, they sent me all sorts of stamps and stickers to paste over the old name on my policy, so that I would not become confused when I had to refer to them. However, despite their attempt to try to straighten me out, there was some confusion. When you multiply my confusion by that of another 150,000 policyholders who had done business with Continental, it becomes easy to believe that a lot of these people are not sure whether Zurich is a legal entity, or even whether they are insured.
The same situation prevails in connection with this bill. A company, which had a rather formidable and identifiable name, has now turned to abbreviation, following what seems to be a trend in government circles. For example the Department of National Defence is abbreviated to D.N.D.


Bryce Stuart Mackasey: 


Melville Carlyle Germa: Yes, everyone knows the N.D.P. is the socialist party. These initials are identified with the New Democratic party. We are quite proud of that, and if it makes it easier for hon. members, we do not mind being identified as the N.D.P. As long as you know who we are and what we stand for, then we are in business. Certainly there is no confusion in Canada about what the N.D.P. stands for.
[DOT] (6:50 p.m.)


Bryce Stuart Mackasey: What does it stand for?


William Arnold Peters: We shall be pleased to answer that.


Melville Carlyle Germa: The hon. member for Verdun knows what the N.D.P. stands for, having at one time been addicted to our ideals. I do not know why he changed his outlook.

March 21, 1968
Private Bills


Bryce Stuart Mackasey: He grew up and matured.


Melville Carlyle Germa: I suspect the hon. member's reasons for changing, and one day I will tell him of my suspicions. I believe we are one of the foremost political parties in Canada.


An hon. Member:: That's what you say.


Melville Carlyle Germa: I am saying that because it happens to be-


Herman Maxwell Batten: Order, please. I hope the hon. member will keep within the confines of this bill. I ask him again to pay attention to the narrow limits that are laid down in the bill, and to confine his remarks thereto.


Melville Carlyle Germa: Thank you, Mr. Chairman, I shall so confine my remarks.
I was talking about identifying various organizations. As the hon. member for Comox-Alberni said, because so many companies have the word "London" appended to their names-London and Scottish, London and Midland, and so on-this company wants to change its name to Avco General Insurance Company. I do not know whether it will be better off, since I am told the word "Avco" appears in the names of at least six Canadian companies, and that seven companies which include that word in their names operate in the United States.
Though this company seeks to remove the word "London" from its name I doubt whether the name change will accomplish anything. Never having dealt with them, I am not in a position to say. I was also wondering about the significance of remarks by the bill's sponsor, that 50,000 company shareholders live in Canada. That has nothing to do with the company's name, but I wonder if he was trying to say that the change of name will make the company Canadian owned. I hope that was not the intention of his remarks, because the Senate committee report says clearly that this company is a subsidiary of a United States parent which has "Avco" in its name.
We should scrutinize this bill more carefully than some members seem to have done. The Senate committee says the company is changing its name to protect its reputation, and to get away from a similar name that has been associated with a company that went bankrupt. Whether that is the real reason for the change we cannot say. The reasons why entities and persons in society sometimes change their names are not always clear. When a person wants to change his name, either to

escape from the law or for some other reason, he goes before the courts and they decide whether the change can be made. The ordinary person bears his father name. My name is that of my father.


An hon. Member:: What is it?


Melville Carlyle Germa: It is on the list of members, if the hon. member cares to look at it. I am the member for Sudbury. You see, already there is an identification problem: He did not know who I was. My name is not written on my forehead the way an insurance company's name is written on its door. This insurance company seems to want to escape from some stigma associated with a name; yet I doubt if the change will accomplish very much.


William Arnold Peters: Can the sponsor of the bill tell us why this company, formerly known as La Progressive Compagnie d'Assurances du Canada or, Progressive Insurance Company of Canada, changed its name to London and Midland General Insurance Company. It was incorporated under its original name in 1947, and in 1957 it adopted the second name. They change their name about every ten years -they are one year late this time, but maybe that is our fault and not theirs. Why did they change their name the first time?


Herman Maxwell Batten: Shall clause 1 carry?


[Stage Direction]
Clause agreed to.
On clause 2-Coming into force.
William Arnold Peters: Why shall this act come into force on the ninetieth day following the day on which this act is assented to, Mr. Chairman? Could the sponsor of the bill answer that? I do not see why these changes are to be made. We have allowed the company to transfer debts and so on. Why is it necessary to have this 90-day delay?


Bryce Stuart Mackasey: It has to do with the printing of the policies.


Herman Maxwell Batten: Shall clause 2 carry?


William Arnold Peters: Evidently the sponsor of the bill will not explain. I just point out that here we have run into one of the difficulties we often encounter in this type of legislation.


[Stage Direction]
Clause agreed to.
Preamble agreed to.
Title agreed to.
Herman Maxwell Batten: Shall I report the bill?


Some hon. Members:: Agreed.
March 21, 1968


Mr. Deputy Speaker:: Mr. Badanai reports that committee of the whole has considered a certain bill and have directed him to report it, with amendment to the title of the French version. When shall the report be received?


Some hon. Members:: Now.


Mr. Deputy Speaker:: Mr. Lind, seconded by Mr. Neveu, moves that the amendment to the title of the French version of Bill S-25 be now concurred in. Is it the pleasure of the house to adopt the said motion.


Some hon. Members:: Agreed.


William Arnold Peters: On division.
Bill reported.


Mr. Deputy Speaker:: When shall the said bill be read a third time?


Some hon. Members:: Now.


William Arnold Peters: Next sitting of the house.


Mr. Deputy Speaker:: At the next sitting of the house.


Thomas Speakman Barnett: Seven o'clock.


Mr. Deputy Speaker:: The hour set aside for the consideration of private members business having expired, the house will now resume the business interrupted at six o'clock.

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


Herman Maxwell Batten: It being seven o'clock I do now leave the chair.
At seven o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
DEPARTMENT OF INDUSTRY 25c. Amount to be credited to the area development account established by subsection 1 of section 5 of the Area Development Incentives Act and to authorise, notwithstanding section 39 of the Financial Administration Act, an increase to $275,000,000 in the total amount of commitments in the current and subsequent fiscal years for development grants under the said act, $11,000,000.
@Deputy Chair(man)? of Committees of the Whole: Shall item 25c carry?
Supply-Industry


Max Saltsman: I thought the item before us, 25 c, would provide an appropriate occasion for considering some of the problems which have arisen in connection with the designated area program. What the program really underlines is the inadequacy of the entire Department of Industry and the failure of that department to live up to the high hopes which were held for it.
When I say this, I also want to indicate that I have been much impressed by the staff of the department. In many ways the department has some of the best personnel of any government department. I have on many occasions had the opportunity of consulting them on various questions which have arisen in connection with our local industries and on all those occasions I have found them only too anxious to be of help-and they have been helpful-and to do their best to assist.
The failures as I see them do not stem from any unwillingness on the part of the staff to be helpful but from the fact that frequently, I suspect, they are hamstrung by government policies originating outside the department, including tariff policies designed to protect certain of our large industries. For instance, an attempt to bring in certain kinds of raw or semi-finished material for additional processing in Canada ran into a wall. In these circumstances it is difficult for small companies to get off the ground, as it were. In one case we had an opportunity to assist a small company which needed raw material from the United States. The companies which were able to make this material in Canada did not wish to do so, certainly not in the quantities desired. Yet they behaved like dogs in the manger and stopped the material coming in by using the argument that some day they might choose to make this material, and therefore they needed protection.
The department has been hesitant and cautious in its operations. Too much so, in my opinion. The program began with one set of criteria and then another was introduced. Neither has proved adequate. It seems to me the department is confused about its objectives. I would have thought the Department of Industry would have been primarily interested in the growth of secondary manufacturing in Canada. Unfortunately this has not apparently been the case, despite the fact that our growth in this area has certainly not been adequate in terms of our resources or potential. We have fallen behind other countries in

March 21, 1968
Supply-Industry
our productivity, until at the present time I believe we are in thirteenth or fourteenth place on the list of industrialized nations as far as per capita productivity growth is concerned. Our industrial efficiency has, I feel, been sacrificed for the sake of limiting unemployment in some areas. No one argues against the great need to limit unemployment whenever possible. It is deplorable, and it must be lessened wherever it exists. The question, however, is: Can one correct this situation through a program such as the designated area program? I think the answer must be, no.
Consider the areas which have the highest levels of unemployment, areas which do not have much potential for growth. We can see that the designated area program has not been of great assistance to them. It seems the program has been most successful in introducing industry into areas close to industrial centres. One has the feeling that industries have simply been persuaded by bonuses into locating in areas where they might well have gone anyway.
One of the central problems with which the department should be dealing is the slow rate of increase in productivity. The record in Canada is not good. One recent study indicated that in Canada there was probably 29 per cent more capital invested per worker in secondary manufacturing industry than in the United States, yet despite this our productivity was some 30 per cent lower than productivity south of the border.
I do not think the blame for this can be attributed to labour. I think the responsibility for productivity is a responsibility of management. Even the responsibility of management is limited to a certain extent by the fact that in this country we have an unfortunate, dinky toy industrial structure, modelled on that of the United States, a structure which is inefficient by American standards because of the small size of the domestic market. Yet despite this limitation it contains almost as many competing firms as does the vastly larger United States market.
[DOT] (8:10 p.m.)
There is a need for rationalization of our industries. People in the department are aware of the problem; it is not news to them. They have written on the subject and made speeches on it. They have pointed out the problems in our furniture industry. I understand a study is taking place at present, but I

can find nothing that has been done in the rationalization program.
The minister may reply that a type of rationalization has taken place under the Canada-United States auto agreement. I would agree with him that it is a type of rationalization, but I hope it is the last of this type of rationalization that we will see. Because of the long runs that are necessary, almost continental runs, because of the wide range of lines and choices in automobiles required by the public, when the agreement was made we may not have been in a discretionary position regarding rationalization of the automobile industry; but had we taken action years ago in anticipation of the developing problem, something might have been done. We might have done what European countries did. They developed specialities. They developed particular automobiles suitable for their climate. They exported those to other nations, and in return imported models not available from their own production. In that way we could have established a rational automobile industry. However, that possibility is no longer open to us.
While many of us have been forced to give reluctant approval to the kind of rationalization that took place under the Canada-United States auto agreement, we feel quite strongly that this kind of approach should be dropped. It is sometimes argued that continental integration brings great benefits to Canada. Some of the benefits can be demonstrated; others cannot.
I would like to deal with farm machinery, which for a long time has been an integrated industry. There has been free trade in farm equipment between Canada and the United States, yet it is hard to see that major benefits have resulted from this type of North American integration. A report was prepared for the Massey-Ferguson Company by Hed-land and Menzies, the purpose of which was to demonstrate why Massey-Ferguson could not pay parity wages with the United States. Had I been in a position to make a decision on that report I think I would have hidden it, because its conclusions are frightening.
The argument used to show why Massey-Ferguson cannot have parity wages in Canada is that the company has built its labour intensive factories in Canada and its automated factories in the United States, and if the wage rates were the same it would have to close down its factories in Canada. This may or may not be the case; I am not in a position to
March 21. 1968

judge, but the implication of this must surely shock every Canadian, to think that, after the opportunities for continental integration had been worked out, what the company was doing was placing in its factories in the United States rather than in its factories in Canada, the advantages and benefits to be gained from automation.
The only conclusion that can be drawn from that report is that unless we in Canada are prepared to operate on a permanently lower wage scale there will be few factories in this country. If our goal is to be that Canadians must continue to be placid hewers of wood and drawers of water, then continental integration will permanently condemn Canada to a lower standard of living.
The great need in this country is to find a more rational way of organizing our production. Professor Watkins' task force report, tabled recently, pointed out the fundamental problem of Canadian industry as being too many plants producing too many goods in too small a volume. Others pointed this out previously, but when the question of rationalization is raised everyone begins to picture deserted towns and factories, with this plant shut down and that plant shut down. I suggest that this does not have to be one of the end results of rationalization.
We need more specialization in our plants. Instead of our plants trying to duplicate each other's efforts, trying to make a complete range of products, they could effect economies by specializing in a few items. If this were done, all the plants now in existence could continue to operate. A study made comparing plant sizes in Canada with plant sizes in the United States showed that in many cases Canada had better and larger sized plants than the United States, but in most instances the Canadian plant was producing an infinitely greater range of products than its counterpart across the border.
As I say, the department is aware of this problem. The minister's officials know about it. What are they doing about it, and why are they not proceeding faster with the rationalization program? I would like to believe that the minister and his officials wish to do something about the problem, but are under certain constraints. In personal discussions I have had with the minister he has expressed his concern. He has demonstrated his knowledge and awareness of the problem. In his gentle way he has said to me, "Well, it isn't easy, and it's going to take a long time." We
Supply-Industry
on this side are impatient. We know it is not easy but we are not prepared to accept that it is going to take a long time. I think the time can be shortened if there is sufficient political courage to act.
I hope that before too long some concrete proposals will emanate from the department to solve the lack of specialization and the high costs of our secondary industry. It is not good enough, as some economists suggest, to take away tariff protection from our industries and let them compete internationally. I am sure some of our industries would survive, but given the present structure of Canadian industry as a whole many of them would go down, and go down rapidly. Parent companies in the United States would say, "There is no point in our having a plant in Canada any more. We will simply ship our over production from the United States to Canada." A program other than simple tariff removal has to be developed. Tariff removal could be very useful once the rationalization program is implemented.
Perhaps there should be consultation with the various industries involved. They should be called together. The seriousness of the problem to Canada should be pointed out to them, and they should be asked to suggest some solution. They should be asked to find a way of co-operating with the federal government in achieving what in the long run would be a common objective for themselves and the nation.
[DOT] (8:20 p.m.)
One of the industries under consideration by the department was the furniture industry. About a year ago I read an article which expressed some concern about this industry. I do not remember the exact figures, but something in the neighbourhood of over 1,000 small furniture manufacturing industries are located in small towns, and in many cases they are the only sources of employment. What can be done about a situation of this kind? I think the Department of Industry could act as a marketing board for various small manufacturing firms. This would prevent many of them from duplicating sales efforts. Perhaps the department could act in the same way as do the automobile parts suppliers. It could seek out orders and then inform the various small companies of the orders, so that they in turn could place their bids. This would allow the small companies to specialize, rather than produce a wide range of products at tremendous expense because of tooling costs. I think

March 21, 1968
Supply-Industry
the Department of Industry should give serious consideration to this idea.
Perhaps the efforts of the Canada Development Corporation could be directed toward rationalization of industry, or perhaps that corporation and the Department of Industry could work together in this regard. These are some of the areas I hope the minister and his department will explore. Much of the work of this department seems to be isolated from the work done by other government agencies, provincial departments and their planning agencies. Agencies in the maritimes make recommendations which are negated or frustrated by proposals of the Department of Industry. One of these is the designated area program.
The entire maritime area, with the exception of the main cities of Halifax and Saint John, have been designated. Apparently these two cities are the only places in the maritimes where industrial growth is possible. If the objective of the department is to establish a small industry in every small town, perhaps it is carrying out its function. But if its objective is to foster growth and make sure that potential is realized, then it must change its attitude toward the designated area program. This program will not work out in the long run because various industries grow and then decline.
An example of this type of difficulty can be found in the electronics industry in Nova Scotia. The government of that province has had to bail that industry out of difficulty. As long as we continue to have one or two small industries in our small towns we are not being fair to them. I suggest that we are doing nothing but fooling them. At one time during the course of the debate in respect of the Department of Industry my remarks were not as mild as they are tonight. I referred to the designated area program as a cruel hoax. In this regard we are fooling the people and giving them a false sense of security. Because an industry has been established in a small community, the people look forward to employment and feel there may be a future for their children. Technological advances create rapid growth and rapid decline in industry. Very often the employment that exists today will disappear in the future.
For humanitarian and social reasons I should not like to see the development of a program which would take people away from their homes, and the associations which are important to them. Even if it can be demonstrated that this is the most efficient way of

doing things, there must be some balance between efficiency and humanitarianism. There has to be some balance between social plans and industrial efficiency. One of the areas we should examine, to obtain the maximum benefit from both, is the concept of growth centers. I have in mind specific areas in all parts of Canada which could absorb the surplus working population, and the young people who are moving from the farms and small towns where growth is negligible. In this way employment opportunities could be provided for these people.
It is possible in a city such as Halifax to have a variety of industries. There is stability in this situation, because as one industry declines another may grow; yet the employment opportunities remain about the same. The people who might be moved into Halifax could be moved from other parts of the province and would not be far from their homes or associations. They would be much happier under these circumstances than if they were moved from that province to Vancouver, for instance. Anyone who knows the maritime people is aware of how deep their roots are and how important to them are their associations. With growth centres and long range employment prospects we would have employment opportunities and an improved standard of living.
In some ways the designated area program gives us the worst of two worlds. In a private enterprise system people are supposed to know the best places to locate, because of long range employment prospects. The argument in that regard is being offset by the designated area program because it interferes with that type of planning. These areas do not get the benefits of industrial organization or planning on the basis of growth potential. As a result of this program we see a distortion of industrial planning.
Although this program may have been conceived with the best intentions it simply is not adequate in this country, which is rapidly becoming industrialized and needs greater growth and productivity than now seems to be taking place. It seems to me that the department has been saddled with impossible government decisions. It seems as though the cabinet does not know this department exists or what it is trying to accomplish, and perversely tries to destroy whatever good work it may be doing.
March 21, 1968

[DOT] (8:30 p.m.)
We had an example of this recently when the Minister of Finance brought in a budget that was intentionally designed, in our opinion, to create unemployment. When you have rising unemployment, such a policy aggravates the situation. If the designated area program is supposed to have been created for the relief of unemployment or to assist in solving the unemployment problem, why is the Minister of Finance trying to create unemployment? These two approaches are self-cancelling, and I am sure frustrating.
The manpower program is not adequate to meet our needs. We have a limited manpower program, especially in the mobility sector, which pays small sums of money to those who wish to move out of certain areas. The money paid is not sufficient to induce people to leave their homes, because when an area starts to decline there is a rapid decline in all aspects of its economy; there is a loss of market for things like housing and the other assets that are built up over the years by the ordinary workingman.
If we are to have a proper mobility program we must be willing to pay adequate sums of money to those who have to be moved. It is not enough to pay a man $500 or $1,000 to leave his home, especially if his home cannot be sold because of a declining market. You have to ensure that he suffers no loss.


@Deputy Chair(man)? of Committees of the Whole: Order, please. I regret to interrupt the hon. gentleman but the time alloted to him has terminated. The hon. member for Timmins.


Mr. Martin (Timmins):: Mr. Chairman-


Mr. Clancy:: Sit down.


Mr.  M. W. Marlin@Timmins: I feel very badly, Mr. Chairman, because the first time I rise to take part in this debate somebody invites me to sit down. We have just listened to a very interesting and worth-while speech by the hon. member for Waterloo South who represents in the house a very highly industrialized riding. It is only natural that the remarks I make on this subject will be quite different from those made by the hon. member for Waterloo South, because I represent a very different type of constituency. My area does not have the problem of too much industrialization and all the other complex problems the hon. member brought forward with regard to the interplay between the United States and
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Canada-subsidiary companies, and so on and so forth. The area I represent would welcome a few of the problems outlined by the hon. member for Waterloo South. If they are very difficult problems to cope with, at least they would be very different from those with which we have always had to cope. As I think most hon. members know, my constituency is what is known in Canada as elephant country; it is an area of vast resources. We have only scratched the surface of some of these resources in the last 50 years. Anybody who knows this country realizes that its potential has scarcely been tapped.
The problems that have developed over the very short history of the north country are not those of overindustrialization but of no industrialization. The problems in this part of the country have been, ever since the first settlement in the area, like those of the milk cow; the produce has been taken away from the area, and that is the last its people have seen of it. It is only in recent years that governments both provincial and federal have seemed to take any cognizance of these facts, and two attempts have been made under the federal program to bring this area within those regions of Canada which need federal attention and assistance.
Unfortunately, as was pointed out so well by the hon. member for Waterloo South, while these programs have made great headlines in the newspapers, as far as the region I represent is concerned they have had very little, if any, effect. In fact under the first designated area program not one industry was induced to open up a business in my constituency. Then the government realized that perhaps the plan was not as effective as it might be and some changes were made. I am sure the minister would like the program to be effective. I do not think it is natural that any minister responsible for a program that received as much attention, headlines and whoop-de-doo as this one, would want it to be a complete failure. I think the minister would very much like this program to be successful and really accomplish something. But unfortunately, even under the changed terms of the program we have yet to see very much effect in the region I represent. I think the reason is quite simple. I do not believe the government has really looked into this area and considered the problems that it has. I do not think the government has made any really serious effort to try to cope with the problems of the area. If the government were

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really interested in its program being successful and carried out any kind of study of the situation, it would find that the first place at which to start dealing with the problems is the transportation field. Many difficulties have been caused by the transportation policy of this country in the last 100 years.
It is quite possible that this policy had some sense at the time it was first introduced-and I am referring specifically to the policy which subsidizes the transportation of raw materials. We dip into the pocket of the taxpayer in order to subsidize the transportation of raw materials from outlying areas to built up areas or foreign markets in the United States, Europe, Asia or somewhere else in the world. Then we try to compensate for this by again dipping into the pocket of the taxpayer, and more particularly into the pocket of the consumers of the north, in order to pay artificially high rates for bringing back finished products.
This has been the history of the north country and other resource areas of Canada. We should appreciate the problem inherent in this situation, because for many years the United States was a country of tremendous raw materials and natural resources; but most of these resources have either been depleted or are within a few years of being totally depleted. Only in the northern part of this hemisphere and the northern part of our country do we have left vast amounts of natural resources. More and more the hungry maw of the manufacturing and processing industries of the United States and the whole North American continent will be looking with covetous eyes at the resources left on this continent. As I said before, these resources are not in the southern part of this country, but they are in the north.
Even in southern Canada, let alone in the rest of this continent, we have built up tremendous problems; problems of pollution, overcrowding, housing and land development. For example in eastern Canada we are even taking away some of the few fruit growing areas that we have left. They are bulldozing the fruit trees out and putting in factories to add to the congestion, the pollution problems, the overcrowding and the housing problems. We have two things in abundance in the great north country:	natural	resources-raw
materials-and all kinds of space. But many years ago we got into the habit of thinking the economical thing to do is to dig out these resources in the north, reach into our pockets to subsidize the raw materials, take them

down south to the factories where the population is, and then dig into our pockets to try to find some way to assist in housing, to clean up pollution, or to do this, that and the other thing.
[DOT] (8:40 p.m.)
I wonder if we have ever really looked at the over-all situation and stopped to figure out just what is costly and what is economical. If we do this sensibly, we will find that the so-called programs of assistance for the undeveloped areas, as the hon. member for Waterloo South pointed out, have worked reasonably effectively in areas close to industrial regions. This is the only place where we have seen any really effective result from these programs put out by the federal government.
But it is time we took a closer look at the over-all situation. Let us take a look at the region I represent. We produce gold, copper, zinc, silver, asbestos, iron: You name it, it is there. But what do we do? We ship the copper to the province of Quebec, to Sweden or to Japan. We ship zinc to the United States. We ship silver God knows where. We ship asbestos to the United States over railways which we built and subsidized with the taxpayers' money to provide jobs for people in other countries to process our raw material. Yet we have in the north country the problem of underdevelopment.
The people of the north country are sick and tired, when this problem is brought to the federal attention, of hearing from officials that this is under provincial jurisdiction, and, in turn, of hearing from provincial authorities that there is nothing they can do about it, that this is under federal jurisdiction. They are sick and tired of this game of ping-pong which has been going on for so long. I attended meetings last year where it was suggested, and I know there is a strong feeling that it is time the north country broke away from the rest of Canada. This feeling does not go by provinces, but runs right across northern Manitoba, northern Ontario and northern Quebec, because the people in northern Quebec feel they have far more in common with northern Ontario than they have with Quebec city, and the people of northern Ontario say they have far more in common with the people in Noranda, Rouyn, and Val d'Or than they have with the city of Toronto. The same thing occurs right across the northern resource area. The reason for the great difficulties we are experiencing at this time in
March 21, 1968

holding our country together is this lack of realization and lack of understanding of the problem. This is why our country is in danger of flying apart at the seams. I think it is high time this government, or any government, realized this.


Stanley James Korchinski: This sounds like the C.C.F. in the years from 1934 to 1944.


Murdo William Martin: In 1934 to 1944 they saved one province. Perhaps we now have a chance of saving the country.
This is a problem which I would like to draw to the attention of the minister. If he can show me where the present designated area program or the one preceding it has established one industry in this area, I would like to know about it. I have attended meetings at which officials of the department have explained the program and the benefits to be derived from it. It looked very good and the people attending the meetings were very enthusiastic. However, when they looked a little deeper into it they realized it would not work. This program was completely ineffective in areas in which they hoped to develop industries. I think it would be far better if the government devoted its energy, its brains and its time to linking secondary industries to the resources of the north.
Two or three years ago all of us in Canada were very impressed and very pleased by the tremendous discoveries by the Texas Gulf Sulphur Company ten miles north of Timmins which brought in possibly the biggest ore deposit in the world of zinc, copper and silver. By the time this company is fully developed it will be the biggest silver mine in the world, it will certainly be the biggest zinc mine in the world, and if the copper content comes up to expectation it will be one of the biggest copper mines in the world. From the information which I could gather there is a sufficient supply there for the next 75 to 100 years. However, a year after the mine went into production, processing 10,000 tons a day all we saw were trainloads of zinc concentrate being taken south and trainloads of copper concentrate heading for Noranda.
Gold mines were closing down, and I will have some more to say on this when we reach the estimates of the Department of Energy, Mines and Resources. Gold mines are closing down again, as a result of the policy pursued by this government, and the future of this tremendous area is as uncertain now as it was ten years ago. As I said, if the energy, brains
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and resources of this government were directed toward a sensible policy with regard to the smelting, processing and manufacturing of the ores that are right there, the jobs would be where the ore is. Surely with all the waste contained in the concentrates, it is far more sensible and economical to ship the finished product, particularly in view of the transportation problem in this country of large areas. Surely it would be much more economical to ship only the finished product than it is to ship the concentrates, with their 40 to 70 per cent waste which has to be transported and eventually thrown away after being processed at some future time, and in some other country.
I can recall being told many years ago about the big asbestos mine 15 or 20 miles from where I was born, in the constituency of the hon. member for Compton-Frontenac, one of the biggest asbestos mines in the world for the last 90 to 100 years. Even at its peak production Thetford mine at Black Lake employed only some 1,500 or 1,600 men. The processing and manufacture of that product provided 20,000 to 28,000 jobs.
This is what the government should look at and try to correct. This is what we should be doing if we want to build up this country. This is what we should be doing if we want to hold this country together and not make people so frustrated they will expend their energies in trying to break loose to go out on their own because they cannot get people to understand their problems, or what should be done about them. This is the message I should like to bring to the minister tonight. I feel this government should look at the problem in this light, to see if something cannot be done this year.
[DOT] (8:50 p.m.)


Thomas Speakman Barnett: As I was listening to the hon. member for Timmins talk about the area he represents, I was looking at this map, which has some green areas on it. You have a lot of little Irelands in Canada. These are the designated areas under the area development program. Just by way of an aside, I heard the hon. member for Timmins talking about the north. I feel this is quite a relative term in Canada, because the area to which he refers is actually south of the area I represent in Canada, and that is considered to be in southern British Columbia. This area has some similarity to the area surrounding Timmins, to the extent that it is basically

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referred to as a resource area. On more than one occasion in this house I have listened to members representing resource areas discuss the problems of the people they represent, whether it be a gold mining area in northern Ontario or a coal mining area in Cape Breton.
On these occasions, I have had some inward tremors concerning the future of the area I represent, which is generally regarded as a fairly productive area now and one of the higher wage districts in Canada. Unemployment levels have been relatively low. I am as aware as the hon. member for Timmins of what is happening to some of the resources that lie within the area I represent. When he talks about trainloads of concentrates moving out from the new Texas Gulf sulphur mine in the Timmins area, I immediately think of the shiploads of iron and copper concentrates that are moving out of the area I represent. It would appear, on the surface at least, that certain interests are being allowed to high-grade the most easily accessible sources of these minerals. The concentrates containing very little Canadian labour content, are shipped overseas to another part of the world.
Like many Canadians, I find myself asking whether this procedure is in the long range interests of this country. What do we get out of this? Somebody gets a few dollars. I have in my constituency what I have been told is the second largest underground mine in British Columbia, next only to the famous Sullivan mine in the constituency represented by the hon. member for Kootenay East. I have no way of knowing what this mine is providing for its owners, because I understand it is owned by a private United States corporation which is under no requirement to make public its financial position. All of the product from this mine, after some preliminary processing, goes by conveyor belt directly into the hold of a ship. There are probably a couple of hundred men employed in this operation.
These are the kinds of questions we find ourselves asking. It is true that what is often referred to as the major resource in my area is called a renewable resource, because we grow some rather large quantities of trees in the area. As I pointed out in a question to the minister of forestry, we have in my constituency one of the major companies in this field in the whole of Canada, one which in its own right is rapidly becoming something of an international corporation. The chief forester of this corporation has been suggesting that under present methods of using forest products we are going to experience a shortfall

in available supplies to meet expected market demands. This raises the whole question of whether the present methods for perpetuating, managing and developing the future of this resource industry are adequate.
Now, Mr. Chairman, there is not one of these little green Irelands, as somebody called them, on this map within the area I represent. There is one which covers the coal mining area in the southeastern corner of British Columbia and the adjacent area of Alberta. The only other one is in the famous Okanagan valley. I have never had the opportunity of really looking into the reason this area is a designated area. I have travelled through the area on a number of occasions and a good many of the communities appear to be rather prosperous. Some facetious questions have been asked in British Columbia concerning why the only depressed area in British Columbia should be the one represented in the legislature by the premier of that province.
However, it has been suggested to me seriously that the only reason this particular area of British Columbia qualified was the rather artificial definition for these areas as contained in the act. The criterion flows from the exceptional nature of the degree of unemployment in the area. It has been suggested that this calculation was arrived at because the figures for the unemployed included a large number of people who are only seasonal workers in the fruit industry, and who have no serious intention or desire of being permanently in the labour force. I do not know whether the minister would care to reply to these allegations, but certainly I have heard them made on a number of occasions. This does lead one to wonder whether or not the two acts to which the estimate before us is related, the Area Incentive Development Act and the Department of Industry Act, are as they should be.
[DOT] (9:00 p.m.)
The Department of Industry bill was assented to and became law on July 22, 1963. The other act was assented to on June 30, 1965. So that the area of operation under which this particular vote comes is one that has been in existence long enough for us to begin seriously to attempt to assess whether or not the objectives outlined by the government in introducing the bill to parliament are justifiable, and whether the act is fulfilling the purposes stated for it.
March 21, 1968



I am glad the minister who is piloting this estimate through the committee is here tonight wearing, as I suggested this afternoon, his other hat from the one he was wearing as the Minister of Defence Production. The minister will recall that I raised certain questions arising out of communications I received about there being established in part of my constituency a designated area, and also expressing concern over the obvious vulnerability of the economy to any change in the scale of operations, or possible closure of a major defence production installation. The minister gave me a very brief answer this afternoon on this matter, and I did not press him further because I felt that the questions that needed to be answered in some detail should more properly come within his responsibility as Minister of Industry.
This was the first inquiry with which I had had any first-hand experience. I have always had the feeling that any piece of legislation passed by this house could be assessed only in what I might describe as a microcosm, to see how it is actually working out and affecting the people involved in a particular set of circumstances. I have always attempted to assess the value of any particular piece of legislation or any operation of the federal government in those terms, as and when I had suitable opportunity to do so.
It is in this context that I make no apology for focusing the attention of the minister on a situation of which I have some first-hand knowledge. It was only by assessing that situation that I could best arrive at some conclusions of a very general nature, as to the validity of the act as it exists in its current form, as well as the degree of success of the operations of the Department of Industry, and in particular the area development program.
One of the matters I have been examining as a result of the inquiry I have received, in which I was assisted by the very fine co-operation given by the area development agency, is the manner in which the operation is conducted under the act. I should like to draw the attention of the minister to the terms of the sections that are comprised in parts II and III of the Department of Industry Act. As I read Part II, which has to do with the setting up of the area development agency, its terms of operation would appear to be very well restricted to those areas which are, or which are requesting to be, designated. In
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part III, which is headed "General", section 14 states:
The minister, in exercising his powers and carrying out his duties and functions under this act (a) shall, where appropriate, make use of the services and facilities of other departments, branches or agencies of the government of Canada;-
Paragraph (b) provides for entering into agreements with agencies of the provincial governments; and paragraph (c) states that the minister-
-may consult with, and organize conferences of, representatives of industry and labour, provincial and municipal authorities and other interested persons.
One of the questions on which I should like some clarification is whether or not in actual practice the area development agency and its officers are carrying out those functions of the minister that are described under part III of the act. That would appear to be the claim that was made by the regional co-ordinating officer for British Columbia when he indicated that he was endeavouring to work in close co-operation with the provincial department of industry and the minister of industrial development, trade and commerce of the province. He also indicated that he would be quite willing to discuss with the local interested parties and to advise on a proposal to establish a regional industrial development ocmmission, which was one of the proposals made in the brief to which I referred this afternoon when we were discussing the estimates of the Department of Defence Production. I did not wish to pursue this matter earlier in any depth because I thought it was more properly one outside the activities of Defence production and should be raised here.
There is another question I should like to ask the minister. In the correspondence I had with the local agencies I drew their attention to efforts that were being made in another direction to establish in this same area some sort of body under the ARDA program. I indicated that I had discussed this matter with the minister of agriculture of the province of British Columbia, who I understand is head of the ARDA agency for that province.
I also discussed this matter with the federal Minister of Fisheries in the hope that there might be a joint program under ARDA, and the legislation of the Department of Fisheries -because the matter to which I am referring related in part to some salmon spawning

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streams-which would result in the development, expansion and stabilization of the economic base of this community, both in the field of agriculture and in the perpetuation of the fishery. This would be important not only from the point of view of the commercial fishermen, but also from that of the local tourist activity of salt water sports fishing.
Therefore, Mr. Chairman, co-operation is involved here under this particular area development program of the minister. I notice that the minister who is responsible for the application of the ARDA program is sitting not far from the Minister of Industry at the moment, so perhaps this is a good opportunity to ask questions that arise from the act.
Section 14 reads:
The minister-
That is the Minister of Industry.
-in exercising his powers and carrying out his duties and functions under this act
(a) shall, where appropriate, make use of the services and facilities of other departments, branches or agencies of the government of Canada:-
I assume that this includes the ARDA program and the agencies that operate under his colleague the Minister of Forestry and Rural Development.
[DOT] (9:10 p.m.)
It has been indicated to me that as matters stand in the area that I have been discussing, which I refer to as the Comox valley, at the present moment the incidence of unemployment is sufficient for there to be no question of the area being designated under the terms of the Area Development Incentives Act. On the other hand, as I said to the Minister of Defence Production this afternoon, this is the major segment of the local economy at the present time, and it has developed in the post-war period as a result of the retransfer of the Comox base, which was originally built as a world war II operating base, from the Department of Transport to the Department of National Defence. Can the Minister of Industry tell me what, in addition to the assistance that has been referred to by the original co-ordinating officer for British Columbia, he, in co-operation with the ARDA minister, as I will call him, and the Minister of Fisheries will do to ensure a stable economic future for this area, which I am convinced has real potential.
I tie these remarks in with the broader picture that was dealt with in more detail than I shall go into. I am speaking about the

potential future of a resource area and the desirability of having people enter the area, either as workmen or as people setting up commercial enterprises or service industries, and of having the area developed for their benefit. The high grade minerals ought not to be taken out of it, so to speak, and the people who go in there should not be left high and dry, with the area reverting to some sort of barren wilderness at some point in the future.
In order to gain some appreciation of the operation of the departments concerned I have pinpointed the areas of operation of at least four operating agencies or departments of the federal government. If the Department of Industry Act means anything, somewhere in it should be the answers to the questions I have asked the minister. Perhaps he might give an answer, a joint answer, after consulting several of his colleagues who are responsible for the other departments concerned.


William Arnold Peters: Mr. Chairman, I am interested in the area development program and I appreciate the concessions which allowed my part of northern Ontario to be designated. I am afraid I listened to our own propaganda and believed that when our area became designated the problems of northern Ontario would be solved. I am sorry to say that that is not necessarily true.
The designated areas program has a number of weaknesses, one of them being that it asks for provincial government co-operation. I am always unhappy when the federal government passes legislation that calls for the co-operation of provincial governments, since the legislation can only be as good as the lowest common denominator applicable to it permits it to be. Ontario I am afraid is not interested in development, and in this program the province of Ontario represents the lowest common denominator.
Not long ago we had an election in Ontario and as a result some interesting changes took place in northern Ontario. In particular, I wish to refer to the ridings of Timiskaming and Timmins. In both ridings the election was contested by an N.D.P. candidate and in each campaign the central issue was the need for additional development in northern Ontario and the lack of interest being shown in that development by the province. The Ontario cabinet minister who represented Cochrane South, which included Timmins and Cochrane, is without doubt a most capable
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administrator; we shall hear more of him when the greater Ottawa metropolitan area is finally created. The Ontario cabinet minister in question did much for his area; in a Conservative way he did as much as he could. He was instrumental in having a hospital built, though there was some namby-pamby with that. It has not opened yet, because they have had difficulty getting staff. Also, he brought a college to the area, not because it was the best area for the college but because he could get the college to the area.
The Ontario cabinet minister fought his election, saying he had done as much as could be expected for his area. Shortly after that election I met the Speaker of the Ontario legislature overseas and I said, "What happened in northern Ontario?" He said, "Well, every time that cabinet minister asked us for something, we gave it to him; he got his new school and hospital-he got whatever he asked for."
I say, Mr. Chairman, that he did not bring to the area what the people of northern Ontario really needed, development. The people in the designated areas want jobs, but there is no potential for the employment of educated men in northern Ontario. Basic industry does not need educated men, except in a limited way; it wants a strong back and a weak mind. Our people in northern Ontario are being well educated; our educational system is as good as southern Ontario's-however good that may be.


An hon. Member:: That isn't much.


William Arnold Peters: That may not be much, I grant you, but in northern Ontario we are now as well educated as people are anywhere else. The meaning of this is that after a child has been educated, he must leave his area to get a job. Our general public has cottoned to this and they are not interested in quitting the area. They want jobs to be created in the area so that their children will have a future. That is what the area development program is about. Bearing that in mind, the area development program has been a failure, because the provincial government has not made it work.
In northern Ontario, where there are designated areas, the Ontario government has gone to the extent of taking over the original associations which they paid for and controlled, and that were set up by the municipalities. In my area there is the North Eastern Development Association, and in the
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Kenora area there is the North Western Development Association, both of which received contributions from municipalities making up their membership. It was said that these associations did not have enough money for what they were trying to do. They lacked any solid organization and they contained so many components that should a sentence be devoted to each component in a brief, the document would be unwieldy and almost impossible to understand.
That may have been true of our development associations, but under the Ontario government they are entirely useless and serve no function toward developing northern Ontario. Oh, sure, when it is election time candidates speak about this and that. They say, "The world is fine, so why rock the boat." Since these associations are now under the provincial government we should not rock the boat, especially since there are vested interests involved. That is the extent of the matter.
I, like the hon. member for Waterloo South, am impressed by the area development people. It is possible to be more impressed with them, but I agree that the people servicing the area development program are competent, top calibre people. Once the potential of an area had been established, further studies should be made to decide to what extent the nation is capable of transferring industries to take advantage of the opportunities there-the type of carrot, or inducement necessary to coax along the rabbit. The department would then be in a position to make some contribution to industrial development, especially in the field of secondary industry. But I think this is impossible when we are stupid enough to negotiate with provincial governments and say that the administration of the program is to be in provincial hands.
[DOT] (9:20 p.m.)
The provincial government in Ontario is Toronto-only Toronto. They are so stupid in government in Toronto that if they cannot see a thing from the legislative buildings it does not exist. I have heard people on the fringes of Scarborough say that they, too, are living in an outpost. If we are ever to benefit the areas of greatest need under this program it will be necessary to drop our partnership with the provincial governments and go it alone, providing not only money and knowhow but leadership.
If the Minister of Industry is really concerned about the area development program

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he will have to look at projects from the national point of view, and to hell with the provincial governments. I do not believe provincial governments are a sacred cow, and I do not believe all this junk about having a constitution. Anyone in his right mind knows that we have a British North America Act, which is not a constitution, and that this act can be amended when you are willing to give people what they want, as has been done before on a number of occasions. It is said the provincial governments will not go along with suggestions for change. I have heard people connected with the area development program say they have not been able to arrange meetings with their counterparts in the provincial governments. No wonder we cannot get the program off the ground when we are unable to talk with the people who are supposed to be our partners.
I should like to see more leadership. If necessary, the minister should begin by taking action in connection with only one or two projects. I would be willing to have those projects carried out in an area other than my own-Renfrew, for instance, or any other area where they have some hope of success. They should be carried through by the federal government, and I can tell hon. members that the people of Ontario are not going to raise objections on the ground of provincial rights; they will be happy to accept such programs in the absence of authority from the provincial government. It seems to me that this constitutional argument is a week excuse. The provinces are not really involved, in many cases, and should not be involved.
We hear a great deal of talk about separatism in Quebec.


An hon. Member:: What do you have against it?


William Arnold Peters: We have nothing against
separatism. I am sure that the hon. member for Chapleau, the hon. member for Vil-leneuve, the hon. member for Timmins and myself, representing most of northeastern Ontario and the northwestern part of Quebec, have no differences of opinion on the subject we are discussing.
The problems which the hon. member for Chapleau raised this afternoon are the problems which affect Timiskaming, Timmins, Cochrane-yes, I am sure they also affect Sault Ste. Marie, Nickel Belt, Sudbury and the whole area. We are closer in our needs to the
people of northwestern Quebec than we are to the southern part of Ontario-Toronto. Their problems are the exact opposite of ours, and they spend all their time trying to solve them. They have too many industries, industries which are growing so fast as to create all kinds of difficulties; we would be happy to have some of them.
The other day I was listening to a discussion among several people in the city of Montreal. One of those taking part is a millionaire who recently moved to Montreal-I suppose he has been there for three years now. He comes from northern Ontario. This man was talking to one of my hon. friends about the desirability of moving from Montreal; he did not find it a good place in which to invest and he was thinking of moving out of the area. He indicated that 600 companies were transferring from Quebec.
We have all heard about firms transferring from Ontario to Quebec, or from Quebec to Ontario. The flow has been taking place between Toronto and Montreal. I was surprised to And that this was not the way in which industry was flowing now; it was flowing into the state of Vermont to the south. This man is very interested in speculation; he is much concerned about the quality of his investments because he makes his living that way. For many years the state of Vermont has been considered as a backward rural area. Yet I understand the encouragement now being given by its government has already resulted in the transfer from Quebec of a large number of factories, and that other firms are considering locating in that state.
I am not familiar with the legislation in Vermont, but I have always been of the opinion that if suitable encouragement is given industry can be moved wherever a government wishes it to move.
[DOT] (9:30 p.m.)
It was not surprising that hydro developed in Quebec, a region which has one asset, power. They brought help in from Jamaica.


An hon. Member:: Cheap labour.


William Arnold Peters: I think the claim about cheap labour is a myth. A company may start with cheap labour but it does not take long for the unions to get it organized. There was one example of this in Barrie, where wages were 65 cents an hour, but that situation did not last long. There are a number of carrots that can be offered to have the bauxite industry established in Canada and not in Jamaica.

March 21, 1968

At one stage the Bata Shoe Company thought of moving its total enterprise to Canada, but the encouragement given it here was not sufficient. Other countries made concessions, and Bata plants were established in them. The old Massey-Harris company was a Canadian company. There was no tariff on farm machinery. A tractor cost the same price in one country as in another, except for transportation costs. One would have expected the Massey-Harris company to do all its manufacturing in Canada, yet today the Mas-sey-Ferguson Company manufactures only three or four major commodities in Canada. The rest it builds in other factories across the world.
We in the Timiskaming area are happy with the federal government's share of the development that has taken place under the area development plan. Two factories have been built there, and they are modern and efficient. They are the first to make full utilization of forest products in northern Ontario, but eventually we must find other ways to develop new plants in that area.
On a number of occasions we in this group have mentioned how the authorities in England can direct industry into special areas where social capital, housing and employees are available for it. Industry over there has been refused permission to settle in areas where there is a shortage of social capital, of schools, hospitals, fire departments, police departments, housing, and land for industrial development. Other countries have tackled this problem much more effectively than we have in Canada.
I know that other hon. members from Northern Ontario would like to have their areas designated under the area development plan. When my area was designated we said we would do our utmost to help bring industry to it. Possibly I have failed in my efforts, but certainly the municipalities and the province have failed also in the assistance they could give.
The minister's officials have done all they could do. He has the people and the machinery to do the job. I am pleased with the type of entrepreneur assistance he provides, but I am unhappy about the program because of its weakness in securing participation and cooperation from the provincial government. I do not know what "Joey" Smallwood would do with this plan, but I think he would go for broke so far as his province is concerned if he knew the federal government was going to match its expenditures.
Supply-Industry
All the province of Ontario has done is provide salaries for two or three people on a council that the province is going to control. Such councils are so bad that I had great difficulty urging the municipalities in my area to support them. Obviously these councils are not making the contribution they should make. The minister should ask his officials what kind of support, assistance and co-operation they are receiving from the provincial authorities.
I am quite happy with the provincial representation we now have for northern Ontario. For the first time we have a number of people going to Toronto who are interested only in our problems. Previously we had members who went down to Toronto with their hands out and asked, "Would you give us something?" Now our representatives are demanding the machinery that will allow them to participate in the development of the entire area.
If this program fails, the minister may find that we in northern Ontario will develop cooperation of a very close political nature with our colleagues in northern Quebec, because we will be faced with the problem of doing the job ourselves. I do not know what the minister's answer will be, but I am sure he will not go to Toronto and knock his counterpart on the head. Instead he will be nice to him. In effect Ontario is Toronto, and that is as selfish as they come; it is an exceptionally selfish place. I speak not of the people but of the government that we have at Queen's Park, and it seems to me the change has to be made at that level. I am sure that my hon. friend from Kenora-Rainy River will agree with me that the co-operation we get from Toronto does nothing to further the development of the north. If his area were designated I am sure he would find exactly the same problem we are having. He would meet with a bottleneck at the provincial level.
The minister has an obligation to see that this plan works. If it works we will have increased employment, and the economy of northern Ontario will expand rapidly. Service industries will develop.


Mr. Reid:: May I ask the hon. gentleman a question?


William Arnold Peters: Certainly.


John Mercer Reid: I would like to ask him if the much ballyhooed Ontario government loan grant plan has had any impact at all on his area? He will recall that this was a plan

March 21, 1968
Supply-Industry
designed to solve all the problems of the north.


William Arnold Peters: It had absolutely no effect except at an election and even then it did not win any seats. It did not serve any purpose at all. If the provincial authority had spent all the money they said they were going to spend on solving the problems of the north there would be factories everywhere. It is not the government which will put in the factories that are needed, although I would not be opposed to that. If I were the responsible minister I would build factories and sell them to entrepreneurs, or find somebody to operate them.
[DOT] (9:40 p.m.)
The minister has an immense amount of talent in his department. If this talent were used, perhaps we could have one or two successful factories in each one of our areas. The situation would then be 100 per cent better than it is now. There is no point in waiting for the provincial government to give us some assistance because the Ontario cabinet does not appreciate our problems. Whenever they come to northern Ontario the officers of our chambers of commerce wine and dine them, and they end up with a great big northern Ontario hangover. Whatever they get while there does not stay with them long. They go back to Toronto, take a few aspirins, and then everything is cleared up again. Because they do no understand our problems they are unwilling to co-operate.
If the minister is dedicated to the idea of area development, and I think he is, he will have to consider the establishment of pilot plants in given areas. I think it would be better to do this under the area development plan than in the way it has been done in Nova Scotia in respect of Dosco and the Atlantic Development Board. I think by doing it under the area development program we could provide medicine that would be effective much more quickly. If the minister could establish one factory which would employ three or four hundred skilled people we could for the first time utilize all the graduate students from the technical school at Kirkland Lake. These people are highly trained, but there is no possibility of employment for them in northern Ontario. If a factory could employ these skilled individuals at high salaries this would in turn be of benefit to the established services in the area and would at least give us some hope of solving our problems.

The hon. member for Kenora-Rainy River referred to a program which received headline coverage in the papers of northern Ontario. The provincial government announced that it intended to give funds at low rates of interest to help industrial development, and they suggested $1 million would be available. That sounds like a nice tidy sum, but anyone knows that it would only cover the cost of a small industrial development or factory, with a minimum of machinery. Not long ago the hopes of the people in northern Ontario were raised by newspaper stories to the effect that there was some anticipation of locating diamonds in the Kirkland Lake area. This never proved to be the case. We seem to be flipping from one promise or expectation to another, but none of them has paid off.
I do not know what the minister's views are about the constitutional issues the government seems to raise every time it decides not to do something. This is a bogey which is not of benefit to the people, but rather of benefit to vested interests. It seems to me that the minister will have to declare himself in regard to this kind of issue, and indicate what he is going to do regarding-


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


[Stage Direction]
Item agreed to.
30c. To provide for the insurance, on a shared risk basis with the lender, in the current and subsequent fiscal years, up to an aggregate amount of $100,000,000 on such terms and conditions including the payment of such fees therefor as may be orescribed by the governor in council, of loans made before January 1, 1973, under the adjustment assistance program related to the Kennedy round agreements, by private lenders approved by a board established under section 15 of the Department of Industry Act to manufacturers in Canada who, in the opinion of the said board,
(a)	require such loans to restructure their operations but are unable to obtain sufficient financing on reasonable terms without the insurance; and
(b)	either
(i)	are or are likely to be seriously injured by an increase in imports attributable to the Kennedy round tariff reductions made by Canada, or
(ii)	have significant export opportunities arising out of the Kennedy round agreements;
and for greater certainty to deem the insurance referred to above to be a guarantee for purposes of section 27 of the Financial Administration Act, $1.
Mr. Gilbert:: Mr. Chairman, item 30C refers directly to the adjustment assistance program which became necessary because of the Kennedy round negotiations. Perhaps I should
March 21, 1968

read it so that we will all be familiar with what it says. It states:
To provide for the insurance, on a shared risk basis with the lender, in the current and subsequent fiscal years, up to an aggregate amount of $100,000,000 on such terms and conditions including the payment of such fees therefor as may be prescribed by the governor in council, or loans made before January 1, 1973, under the adjustment assistance program related to the Kennedy round agreements, by private lenders approved by a board established under section 15 of the Department of Industry Act to manufacturers in Canada who, in the opinion of the said board,
(a)	require such loans to reconstruct their operations but are unable to obtain sufficient financing on reasonable terms without the insurance: and
(b)	either
(i) are or are likely to be seriously injured by an increase in imports attributable to the Kennedy round tariff reductions made by Canada, or
(il) have significant export opportunities, arising out of the Kennedy round agreements; and for greater certainty to deem the insurance referred to above to be a guarantee for the purposes of section 27 of the Financial Administration Act.
You will notice that this is going to be done for the sum of $1. When the committee on finance, trade and economic affairs met after Christmas it studied the Kennedy round agreements, and the implications to Canadian manufacturers, industry, labour and agriculture. The Prime Minister made a statement to the effect that there would be help for manufacturers in three main areas; by government insured loans, by direct loans and by shared agreement in respect of consultative services provided by the government. When he made that statement he said $10 million would be available for industry. Last year when the Minister of Finance presented his budget he said we must fight inflation by the traditional methods of taxation and cutting down on government expenditures. He was roundly applauded by the Conservative opposition when he suggested we should cut down on government expenditure. A short time later the President of the Treasury Board set forth in an hour-long discourse what those cutbacks would be. I think the government is going too far in cutting the promised $10 million to $1.
The purpose of the adjustment assistance program was to help manufacturers only. We in this party believe this is gross discrimination. Other ministers informed the committee that labour would get some support through additional benefits under the Unemployment Insurance Act. It was stated that before insurance was granted there would be some 27053-499
Supply-Industry
protection for the employees, in that the companies would have to give notice before any layoff. These were the only two items set forth in respect of labour.
The Minister of Industry and other ministers were questioned about this situation and it was obvious that they had not consulted with labour prior to entering into the Kennedy round negotiations. There was no consultation during the negotiations and none as a result of the negotiations. Therefore labour was completely left out and workers were forced to accept whatever small help would be provided under the increase in unemployment insurance benefits.
[DOT] (9:50 p.m.)
We spoke to members representing the agricultural industry. I asked them direct whether any government officials had consulted representatives of agriculture with regard to the Kennedy round negotiations. The answer was that prior to the negotiations there had been rather informal discussions with representatives of the agricultural industry, but during and after the discussions on the Kennedy round these representatives were not consulted.
The main bodies representing agriculture and industry were almost totally ignored by the government with regard to the effects of the Kennedy round negotiations. The only group the government is concerned with are the manufacturers. That is the reason the minister brings forth this item this evening, in order to help manufacturers in certain areas. The minister says: As a result of the Kennedy round we would like to restructure their operations. They may be seriously injured. That is the first ground. Second, the minister says that as a result of the Kennedy round negotiations there may be export opportunities with regard to which we should assist manufacturers. This is the help the minister is prepared to give industry to get it over the difficulty that has arisen as a result of the Kennedy round.
There was no consultation with labour, very limited consultation with agriculture, but full consultation and participation with the representatives of industry. That is the attitude adopted by the government with regard to this very serious problem. There are several questions I should like to ask the minister. The first is why we have this item of $1, when the Prime Minister said at the time that the government would make $10

March 21, 1968
Supply-Industry
million available. I should like to know why the minister is setting up an insurance fund under which the government will guarantee loans that manufacturers obtain either from approved lenders of the government or direct from the government. Why is it necessary that the government act as a lender of last resort in assisting manufacturers? One would think manufacturers could go to the banks and other lending institutions and make arrangements with regard to the changes that will take place as a result of the Kennedy round, without having to depend upon the government to insure loans they obtain through the banks and other lending institutions.
Why cannot the banks themselves, which have shown enormous profits in recent years-it has been a continual pattern of increasing profits for banks-take some of the risk in this matter? Why should loans they make be insured by the government? This means that if a manufacturer cannot keep up the payments on a loan, the government will step in. Surely if the government is going to step in it will cost more than the $1 provided in these supplementary estimates.
I should like the minister to make a statement about how much he anticipates this program will cost. I know that according to the item the loans will continue for a period of five years. A projection should be made by the high priced officials in the minister's department, who are always ready to guide and service him with regard to these problems, as to the cost of the program. The minister should tell us what the actual cost will be.
We should also have from the minister a statement with regard to the interest rates that banks and lending institutions will be allowed to charge in respect of these loans. The government is to be the lender of last resort, much like the Industrial Development Bank. We know that the Industrial Development Bank is a lender of last resort for industries which cannot obtain loans direct from the chartered banks. We know that the interest rates of the Industrial Development Bank are a little higher than those of the banks. Surely the minister should place some limitation on the interest rates that will be chargeable by the banks in respect of loans which will be insured by the government. I think we should be given the answers to these questions.
When the minister appeared before the committee he gave a very glowing report of

how beneficially Canadian manufacturers will be affected as a result of the Kennedy round. He was all encouragement to the manufacturers, but he forgot to mention that the government has made a value judgment and is going to depend upon the development of secondary industry, much to the detriment of Canadian manufacturers in the development of exports. This is one matter he did not really develop in his report to the committee.
Another matter on which the minister should give us more enlightenment is whether he is prepared, even at this late stage, to consider the TAB, the transitional assistance benefits, payments which some industries received when the Canada-United States auto pact came into play. I think he should give us the reasons for the TAB program not applying to the Kennedy round negotiations in respect of labour. When one considers the shabby treatment labour has received as a result of these negotiations, the least the minister and the government can do is set forth a TAB program to help workers who will suffer as a result of the Kennedy round negotiations.
These are some of the problems with which the minister should deal. When I questioned him about the Canada-United States auto pact he waxed eloquent and said what a wonderful pact it has been. However, he dealt quite lightly with the problem of parity of prices as a result of the Kennedy round. I should like to hear what the minister has to say about this policy.
Mr. Chairman, it is ten o'clock. Perhaps the minister wants the evening to prepare the answers to some of the questions that have been asked.


@Deputy Chair(man)? of Committees of the Whole: Shall vote 30c carry?


Some hon. Members:: Carried.


William Arnold Peters: Ten o'clock.


Charles Mills (Bud) Drury: Mr. Chairman, this discussion is so interesting that I would be quite willing to continue if we could get agreement to pass the estimates tonight. Let us not interrupt these estimates.


Some hon. Members:: Agreed.


William Arnold Peters: Ten o'clock, Mr. Chairman.


Some hon. Members:: Filibuster.
Resolution adopted in committee of supply this day reported and concurred in.
March 21, 1968

[DOT] (10:00 p.m.)



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Robert McCleave (Halifax):: Mr. Speaker, last week B.S.A., before the silly age, set in, I asked the Minister of Justice (Mr. Trudeau) a question on March 13 which may be found at page 7587 of Hansard. I asked him whether he had examined and approved the tax bill ruled upon Monday in this house. The minister replied:
Mr. Speaker, this is a question of departmental administration. I am not sure that I am required to answer it under the rules.
I wish to suggest this evening that this is not a matter of departmental administration but a question of ministerial responsibility. I will refer to the Bill of Rights, chapter 44 of the acts of parliament of 1960. Section 3 reads as follows:
The Minister of Justice shall, in accordance with such regulations as may be prescribed by the governor in council, examine every proposed regulation submitted in draft form to the clerk of the Privy Council pursuant to the Regulations Act and every bill introduced in or presented to the House of Commons-
What it boils down to is that section 3 requires that the Minister of Justice examine every bill introduced in the House of Commons. Apart from the requirements of the Bill of Rights, I think it would be obvious that it is the duty of the Minister of Justice to examine every piece of government legislation. After all, he is the chief law officer in this place and the chief legal adviser of the government, and unless times have changed drastically, he is probably head of the cabinet legislative committee, which at least existed under former administrations and I suppose also exists under the present one.
The minister's answer seems to me to suggest that it was the duty of his departmental officials and not of himself to examine the particular legislation, the taxation measure part of which was found out of order. I suggest that in a parliamentary democracy a minister cannot hide behind public servants or his officials. Indeed I suggest that the reverse is true, and that public servants are entitled to every last ounce of protection that a minister can give them. I find the answer 27053-4991
Proceedings on Adjournment Motion even stranger when it comes from a man who aspires to the highest office, the head of the government of this country with 200,000 or more public servants to speak for.
Perhaps there are some reasons for it. The minister in chapter 2 of his "Canadian Charter of Human Rights" tends to make light of the Bill of Rights. He properly points out that it is not enshrined in our constitution, that therefore it can be repealed, and thus is subject to the whim of any parliament. This is true. The Bill of Rights brought in in 1960 could be changed by act of parliament and could be repealed. But until parliament deals with it, I suggest that the minister's responsibility is to carry out every last provision of the Bill of Rights, to be its champion and protector; and above all, if the Bill of Rights tells the Minister of Justice or anyone else in the cabinet to do something, then that minister should hop to it and do exactly what the Bill of Rights tells him to do.
I am driven to make these remarks for two reasons. First, I think the minister has an obligation under the law to do what the law in fact directs him to do. We all recall some rather amusing answers given by ministers of justice in former years when asked whether they read all the provisions of the simple divorce bills which used to bedevil us. Ministers of justice at that time used to say stoutly that they had to see that individual rights were protected. No measure, whether it deals with the plight of specific individuals or deals with larger measures such as the taxes that are imposed on all of us, should escape the eagle eye of the Minister of Justice, if he is doing his duty.
The second reason I rise at this time to make the point arises from a sense of fair play. I believe the Minister of Finance (Mr. Sharp) has been pilloried unmercifully, particularly by the members of his own party, for the venture he was forced to embark upon when his taxation measure fell. It seems to me that the Minister of Justice, in his rather cavalier answer, should not be allowed to escape the fact that not only had he part of the collective responsibility for the health and welfare of that measure, but also he had a particular duty under the Bill of Rights to examine the measure to ascertain whether Canadian taxpayers, for example, were being put in double jeopardy in the sense that the issue had been decided one way, and then some attempt was being made to reverse that decision. For these two reasons, one a sense
March 21, 1968
7930	COMMONS
Proceedings on Adjournment Motion of fair play and the other that the minister had a duty under the Bill of Rights, I have been moved to make these few remarks this evening.


Mr. Albert Bechard (Parliamentary Secretary to Secretary of State):: 

WINTER WORKS-INQUIRY AS TO PROJECT AT DESBIENS, P.Q.

Mr. Alcide Simard (Lac-Saint-Jean):: Mr. Speaker, on March 19 I took the liberty of
i[Mr. McCleave.l

directing the following question to the hon. Minister of Manpower and Immigration, as reported on page 7793 of Hansard.
What was the answer given by the minister to the letter sent to him by the mayor of Desbiens, on March 15, with regard to a winter work project estimated at $40,000?
I do not know whether the minister or his parliamentary secretary have on hand the letter signed by the mayor of Desbiens, a small municipality in my district, who is complaining, and rightly so, about the attitude of the federal government, and particularly of the Department of Manpower and Immigration, which appears discriminatory towards him. __
The reasons on which the request of the mayor of Desbiens was based can be summarized as follows: That municipality has some 2,000 inhabitants, 4 or 5 of whom are farmers. This means that the remainder of the population is made up of labourers who, in part, are working at the St. Raymond paper mill. Now, since that paper mill has been operating at about 60 per cent of capacity, about 100 persons have been out of work for some time.
In December last, I understand that the municipality of Desbiens submitted a winter work project amounting to $28,000 but it was reduced by half. I do not know if the provincial or the federal government is responsible, but that project was reduced to $14,000. Imagine, Mr. Speaker, it was not an exorbitant amount to help 100 unemployed.
The municipal council then submitted another winter works program for $40,000; it was flatly turned down by the Department of Manpower and Immigration. It was claimed that the program did not meet the standards of the act. But, on reading very closely the letter to the mayor of Desbiens, one can rightly wonder whether all the neighbouring municipalities had met the legal requirements. I do not want to insinuate anything unkind about those municipalities, like Cham-bord and Saint-Jerome, for instance, which carried out winter works programs worth $80,000 and $75,000 respectively, while Desbiens was limited to $14,000.
I sincerely believe that the request addressed to the Minister of Manpower and Immigration by the mayor of Desbiens is motivated, and I am willing to state positively that the department showed a lack of distributive fairness in allotting the winter works program.
As I said a while ago, I do not want to insinuate anything unkind about Chambord
March 21, 1968

or Saint-Jerome, but it is still permissible to
make comparisons.
Mr. Speaker, I protest energetically against the discrimination shown in the case of Des-biens, and I beg the hon. minister to revise his decision which deprives that municipality of the help to which it is entitled, on the same footing as neighbouring municipalities.


Bryce Stuart Mackasey: Mr. Speaker, I listened with a great deal of attention to the representations made by the hon. member on behalf of one of the municipalities in the province of Quebec. I was very pleased he stressed that he was not insinuating that there was any malpractice on the part of the department, or that the Minister of Manpower and Immigration (Mr. Marchand) was favouring one municipality over another. The hon. member was quick to emphasize this, so it is obvious that the decision in favour of one municipality as opposed to another must have been based on some criterion other than that of political patronage or favouritism of one sort or another.
I do not have the criteria in front of me but I am familiar with the winter works program. I was an alderman in the city of Verdun, in the province of Quebec, and I do know what an important role winter works projects play in some municipalities. If the municipality of Desbiens was refused a winter works project, then I am sure there must have been a logical reason. I do not think the hon. member can make much of a case if he pleads that some municipalities have received winter works they are not necessarily entitled to. For the most part the department applies the same criterion in each case.
I shall bring to the attention of the Minister of Manpower and Immigration tomorrow the particular case of this municipality and recommend that their application be reviewd, so that at least we can tell the hon. member the reason it was refused. I shall speak to the minister, if not tomorrow, then as early as Monday and try to ascertain why this particular project was refused and why similar projects in nearby municipalities were accepted.
[DOT] (10:20 p.m.)



POWER-COLUMBIA RIVER-REPORTED INCREASE IN COSTS

Herbert Wilfred Herridge: Mr. Speaker, this afternoon in the unavoidable and understandable absence of the Secretary
Proceedings on Adjournment Motion of State for External Affairs (Mr. Martin) I asked the hon. gentleman's parliamentary secretary whether the minister had been informed by the government of British Columbia of the expenditure to date on the Columbia river project. I am glad to have the opportunity to deal with this question for a few minutes because some persons in my riding who are staunch supporters of the Liberal party have asked me to raise it, as have some supporters of the Tory party and of my own party. So I am strictly non-partisan on this issue.
I wish to deal briefly with the sequence of events. On April 13, 1962 the Prime Minister (Mr. Pearson) wrote the following letter to the secretary of the water resources committee of the chamber of commerce of Nakusp: Dear Mr. Waterfield:
Your letter of April 12th has just arrived and I would like to assure you that it is imperative to renegotiate the Columbia river treaty.
May I also assure you that all B.C. interests, particularly those of the water resources committee of Nakusp Chamber of Commerce, will be consulted by a new Liberal government before a final decision is reached.
Kindest regards,
Yours sincerely,
L. B. Pearson
The Prime Minister sent the Secretary of State for External Affairs to undertake this chore for him. Need I add that the water resources committee of the chamber of commerce at Nakusp never saw the hon. gentleman at all; he completely overlooked them in his trip down the river on behalf of the Prime Minister. To indicate how much faith was placed in the Secretary of State for External Affairs I would remind hon. members that in 1965 the Minister of National Health and Welfare (Mr. MacEachen), then minister of labour, had this to say addressing a Columbia river treaty ceremony on Thursday, May 20:
While there are many who deserve credit for what has been made possible, there is one man who perhaps was most responsible for the project going through. This is Paul Martin, who took over the negotiations at the time I spoke of when it looked as if the great gains made by the previous negotiations might be lost, and who proceeded to work so closely with Premier Bennett and his colleagues and with the United States representatives. It was this close association, marked by an atmosphere of determination and good-will, that made possible the results reflected in this ceremony here today.
Apparently this close association and this determination on the part of the Secretary of State for External Affairs was not enough for
March 21. 1968
7932	COMMONS
Proceedings on Adjournment Motion Mr. Bennett, because I read in the Vancouver Sun of Thursday, May 11, 1967:
Asked for his opinion of the treaty, he said: "The treaty missed out. The thing that's at fault In the treaty is that it was signed too quickly."
He blamed federal authorities.
He was referring, of course, to the Secretary of State for External Affairs and expressing dissatisfaction with the hon. gentleman's role in this affair. He recognized him as the key man. The report continues:
Bennett said the arrangement made with Kaiser Aluminum for a dam on the Arrow lakes "was three times better than the treaty".
Imagine that.
The deal concerned the proposed construction in 1954 by Kaiser Aluminum or a $25 million dam on the Arrow lakes. It was championed by former Lands Minister Robert Sommers.
Here is the premier of British Columbia expressing serious dissatisfaction with what the Secretary of State for External Affairs had done in signing this treaty.
I might say that upon being questioned in the external affairs committee on Friday, April 10, 1964, Mr. MacNabb, now a deputy minister, gave certain assurances when asked about the costs of the project. I asked him whether he was sure that his estimate of the cost was correct. The question reads:
In view of the experience of British Columbia Hydro over a number of years-of course their projects would be much smaller than these-we know that the average exceeded the estimated cost by 50 per cent. I have figures supplied by a friend in the British Columbia Hydro. In view of that, what do you think of the assurance that these costs will not greatly increase over the next ten years?
In reply, both Mr. MacNabb and the Secretary of State for External Affairs assured us that the cost had been so accurately estimated that they would have $55 million left over with which to put generators into the Mica Creek dam. Later on, the Secretary of State for External Affairs paid tribute to Mr. MacNabb as a man who knew exactly what he was talking about.
I find, however, on reference to the votes and proceedings of the legislature of British Columbia for Thursday, March 14, that Mr. Strachan asked the premier a number of questions, among which was the following:
With reference to the payment of $274,800,000 received October 1, 1964, under the Columbia river treaty, was any of this money expended to December 31, 1967?
[Mr. Herridge.j

I will not go into the other details of the questions. Mr. Bennett replied as follows:
Yes. Duncan Storage, $30,090,387; Arrow storage, $144,119,555; Mica storage, $85,184,179; general development costs, $1,818,502; total including interest during construction and overhead, $261,212,623.
The government of British Columbia has now practically admitted that the figures which were vouched for by the minister and by Mr. MacNabb are inaccurate and that the government of British Columbia is being obliged to spend over $200 million more than was provided in the treaty signed by the Secretary of State for External Affairs.
When the Secretary of State for External Affairs was in Castlegar he addressed members of the Castlegar chamber of commerce at which time he assured them that the government of Canada-
-would not sign any treaty with the United States which did not provide sufficient money to pay for all the costs of construction of Columbia river projects in Canada.
These various gentlemen whom I have mentioned earlier want this question answered. They are extremely interested in it. I am glad the parliamentary secretary is here this evening; I apologize for keeping him out of bed. I hope that when he comes to reply he will answer this question. In conclusion let me say that in the joint engineering board reports Mr. MacNabb never refers once to the total expenditures on the Columbia to date. I should like the parliamentary secretary to tell me whether the Secretary of State for External Affairs has received these figures and, if not, why not.


Mr. Jack Davis (Parliamentary Secretary to Minister of Energy, Mines and Resources):: Mr. Speaker, in his remarks tonight the hon. member for Kootenay West (Mr. Herridge) has inferred that Canada got a poor deal out of the Columbia river treaty. The authorities, the people competent not only in the fields of engineering and finance, but also economists, differ with this view. Canada did in fact get a good deal out of the Columbia river treaty.
I have time tonight to refer to only one authority, a world renowned authority, Dr. John V. Krutilla. In a book entitled "The Columbia River Treaty" published late last year by the well known independent organization, Resources for the Future Incorporated, he said:
The benefit-on the order of $225 million to $275 million-can be regarded as the benefit to Canada from the Columbia River Treaty.
March 21. 1968

This, he said, is-
-measured by the savings in cost as compared with alternatives available to Canada.
I want to stress the fact that he said it is a savings in cost of $275 million. Dr. Krutilla, interestingly enough, did not think that the United States negotiators did anything like as good a job for the United States as the Canadian negotiators did for Canada. He went on to say:
After considering the problem of meeting the power supply and flood management objectives by such means as developing domestic storage and the Northwest-Southwest inter-tie, we find that the Columbia river treaty results in a relative loss to the United States of about $250 million to $375 million.
To recap, Dr. Krutilla is saying that Canada, as a result of the Columbia river treaty, is about one quarter of a billion dollars better off. The United States, on the other hand, will have lost at least a quarter of a billion dollars as compared with other alternatives. If I have a moment, Mr. Speaker, I would
Proceedings on Adjournment Motion like to quote one further short paragraph from his book.
There is no doubt-
-said this world renowned authority-
-that Canada figured with a very sharp pencil. Analysis was used to illuminate policy choices and to evaluate the magnitudes in the trade-offs when economic and political, long run and short run, and similar conflicting objectives were being weighed in the balance-
Whatever its origin, maintenance of the distinction between technical analysis and policy choice was an outstanding Canadian accomplishment.
This is a world wide authority's opinion on the Columbia river treaty.
Motion agreed to and the house adjourned at 10.29 p.m.
[The following items were passed in Committee of Supply this day:]



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