1969-12-01

MESSAGE FROM THE SENATE

Mr. Speaker:: I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bills, to which the concurrence of this House is desired:
Bill S-4, an Act to amend the Yukon Placer Mining Act.
Bill S-5, an Act to amend the Oil and Gas Production and Conservation Act.
Bill S-10, an Act to incorporate Pitts Insurance Company.
Bill S-ll, an Act to incorporate Pitts Life Insurance Company.



ROUTINE PROCEEDINGS


[Stage Direction]
Fourth report of Standing Committee on Finance, Trade and Economic Affairs in both official languages-Mr. Clermont.
[Editor's Note: Text of foregoing report appears in today's Votes and Proceedings.]

[Stage Direction]
TABLING OF LETTERS EXCHANGED BETWEEN PRIME: MINISTER AND MR. LUCIEN SAULNIER
Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, as I indicated to the House last Friday afternoon, during the week-end I sought Mr. Saulnier's permission to my tabling the letter he sent me on March 17, as well as my reply dated April 1.

I did obtain this permission from Mr. Saul-nier, Mr. Speaker, and I am prepared to table these two letters now.



LABOUR CONDITIONS


Mr. James A. McGrath (St. John's East):: Mr. Speaker, I desire leave, by unanimous consent, to introduce under Standing Order 43 a motion which I consider to be of urgent and pressing necessity. I do so on the following grounds:
1.	The statement by the Minister of Regional Economic Expansion on November 26, reported in Hansard at page 1268, expressing the hope that the committee "will be able to meet as soon as the House returns in January", meaning that the government does not intend to propose to the House an order of reference for the committee before seven weeks have passed at the earliest.
2.	The statement made yesterday on the CTV network by Dr. John Young, Chairman of the Prices and Incomes Commission, that if present trends continue unemployment in Quebec and the Atlantic provinces would be very serious by March.
I therefore move, seconded by my hon. friend, the hon. member for Peace River (Mr. Baldwin):
That the Standing Committee on Regional Development be empowered to examine and inquire into the following:
The present and worsening unemployment situation in the province of Quebec and the Atlantic provinces: and that the first report thereon, with its recommendations, if any, be submitted not later than December 19, 1969.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Hon. members have heard the motion proposed by the hon. member for St. John's East. According to Standing Order 43 the motion can be put before the House only if unanimous consent is obtained. I have to ask whether there is such unanimous agreement.


Some hon. Members:: No.


Mr. Baldwin:: The government said no.


James Aloysius McGrath: Mr. Speaker, I should like to rise on a question of privilege. In view of the fact that unanimous consent to put my motion under the terms of Standing Order 43 has been withheld, and in view of the urgency of this matter, I wish to serve notice on the

December 1, 1969
Proposed Legislation
leader of the House that I shall be instructing forthwith the Chief Clerk of Committees to convene immediately a meeting of the Standing Committee on Regional Development so that the committee can elect a chairman and vice-chairman and obtain the appropriate reference from the House to proceed with an examination-


Mr. Speaker:: Order, please. The hon.
member for St. John's East will probably have expected my ruling that this is not a question of privilege.



ELECTORAL BOUNDARIES READJUSTMENT ACT


Mr. Yves Forest (Parliamentary Secretary to President of the Privy Council) moved: for leave to introduce Bill C-162 entitled "An Act respecting the Electoral Boundaries Readjustment Act.


Some hon. Members:: Explain.


Yves Forest: Mr. Speaker, that bill aims only at changing the name of the Missisquoi constituency.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.
[DOT] (2:10 p.m.)


Hon. Donald S. Macdonald (for the Minister of Industry, Trade and Commerce) moved: for leave to introduce Bill C-163, to provide for the establishment of a Standards Council of Canada.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.


Mr. Jack Marshall (Humber-St. George's-St. Barbe) moved: for leave to introduce Bill C-164, to establish a Newfoundland Tunnel Authority.


Some hon. Members:: Explain.
[Mr. McGrath.)


Jack Marshall: Mr. Speaker, the purpose of this bill is to establish an authority to undertake all preparatory steps necessary with a view ot the ultimate construction of a tunnel between the island of Newfoundland and the mainland of Labrador, with the objective of promoting an all-weather, multipurpose connection between those two land masses in the general interest of the national economy.


[Stage Direction]
Motion agreed to, bill read the first time and ordered to be printed.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. Rose: 1.	Is the Government of Canada and/or the Canadian Radio-Television Commission presently giving favourable consideration to imposing formal limits on the financial rate of return of Community Antenna Television (CATV) systems in Canada?
2.	If so, when is a decision expected on this issue?
3.	If not, what are the reasons for not imposing a formal rate of financial rate of return?


Hon. Gerard Pelletier (Secretary of State):: 1.	No.
2.	Not applicable.
3.	I am informed by the Canadian RadioTelevision Commission that the CATV undertakings licenced by the CRTC are not public utilities subject to fixed rate of return structures determined by statutory bodies. However, the CRTC recognizes that its duty to implement the policy of the Broadcasting Act in the public interest may involve considerations of costs to the public and a licensee's responsibility for programming, both of which may affect the financial rate of return.


HOME MAIL DELIVERY
Mr. Maiher: 1.	Which Canadian communities presently have the population to qualify for home mail delivery but are not receiving such a federal service?
2.	What are the reasons for this discrimination and when is it expected that the above communities will be given home mail delivery?


Hon. Eric W. Kierans (Postmaster General and Minister of Communications):: 1. The
basic requirement for the establishment of an independent letter carrier delivery service is
December 1. 1969

the availability of 2000 points of call. No figure has been set as to required population. The communties having 2000 potential calls are:	Amherstberg, Ont.; Arnprior, Ont.;
Bridgewater, N.S.; Castlegar, B.C.; Chatham, N.B.; Coaticook, P.Q.; Courtenay, B.C.; Delhi, Ont.; Fergus, Ont.; Hanover, Ont.; Hespeler, Ont.; Lac Megantic, P.Q.; Louiseville, P.Q.; Mont Laurier, P.Q.; Perth, Ont.; Sherwood Park, Alta.; Sidney, B.C.; Stephenville, Nfld.; Terrebonne, P.Q.; Whitehorse, Y.T.; Windsor, P.Q.
2. As part of its program to comply with general government policy for the control of inflation, the Post Office Department is not establishing new letter carrier delivery offices at this time. When future conditions are such as to accommodate the establishment of additional letter carrier delivery offices, consideration will be given to providing door-to-door delivery in communities having 2000 points of call.


NEW GOVERNMENT BUILDINGS, OTTAWA
Mr. Mather: Which federal government buildings are anticipated to be built in Ottawa, starting construction in the calendar years 1969 and 1970?


Yves Forest: Headquarters Building for the Department of External Affairs; Canadian Police Information Centre (R.C.M.P.); Office Building for the Dominion Bureau of Statistics; Greenbelt Farm-Intensive	Research Sheep Barn;
Greenbelt Farm-Minimal Disease Livestock Bam; Headquarters Building for Department of National Defence; and The National Science Library. Consideration is also being given to the construction of: Office building for the Department of Energy, Mines & Resources; Building for National Police Services (R.C.M.P.).


STATUS OF MISTASSINI INDIANS
Mr. Howard (Skeena): 1.	Do the Mistassini Indians in Northern Quebec come under the federal government's Indian Act?
2.	Is the Department of Indian Affairs aware that the Mistassini Indians are being subjected to provincial game and fishing laws and, if so, what action is contemplated by the Department?
3.	Are the Indians of the Mistassini tribe permitted to hunt in the Mistassini game reserve and, if not, why not?


Hon. Jean Chretien (Minister of Indian Affairs and Norihern Development):: 1. Yes.
Questions
2.	The Minister of Indian Affairs and Northern Development is aware that the Mistassini Indians are being subjected to provincial game and fishing laws beyond the immediate confines of the Mistassini Indian Settlement. Although this matter is within the provincial jurisdiction, possible action is now being discussed by Quebec Government officials, Association of Quebec Indians and officials of this Department.
3.	Except for the provisions of the Migratory Birds Convention Act, the regulation of hunting in the area is a matter within the jurisdiction of the province.


CBC POLICY ON TELEVISION PROGRAM VIOLENCE
Mr. Mather: 1.	What presently is the general policy of the CBC on violence in television programming and its effects on viewers, especially children?
2.	What are the results of the review of CBC policy regarding violence in television programming, as indicated in answer to Question No. 2,100 in Hansard of May 14, 1969, page 8683?
3.	For the years, 1966, 1967, 1968 and 1969, which feature films and program series have been refused because of their violent character as mentioned in answer to Question No. 2,100?
4.	Does the CBC consider that its new fall broadcasting program has not an undue content of violence?


Gérard Pelletier: I am informed by the Canadian Broadcasting Corporation as follows: 1. It is CBC's practice not to broadcast entertainment programs which unduly exploit violence and not to schedule a large number of program series built around themes of violent action. In its news and public affairs programs the CBC has acted with restraint in showing scenes of violence; for example, from battlefields or riots. It continues to be CBC policy to reflect the reality of violence in the world in its information programs but not to dwell on scenes of violence for their sensational effect. In all programs the use of violence must be justified by strict standards of dramatic integrity and by its honest reflection of reality. The use of violence for its own sake or as a substitute for other dramatic values is not acceptable. The CBC practice regarding violence in children's programming is based on its general policy of programming for young people. It is not CBC's view that young people should be sheltered from the realities of life; but neither is it CBC's view that children are prepared for adult entertainment. The CBC

December 1, 1969
Questions
has tried to produce programs and to select films whose content and treatment are consistent with what is known about the creative growth and development of North American children.
2.	The previous policy, particularly as it related to programs for adults, was strengthened. Program staff were provided with a general policy statement supported by specific examples of what must be avoided.
3.	No record has been kept of feature films or syndicated program series which have been refused because of their violent character.
4.	The Corporation is satisfied that its schedules for 1969/70 meet the tests specified in (1) above.


CBC-REDUCTION OF PROGRAM VIOLENCE
Mr. Mather: 1.	Is the CBC giving favourable consideration to reducing the number of T.V. programs containing violence?
2.	Is the CBC giving favourable consideration to the elimination of violence from Children's cartoon T.V. programs?
3.	Is the CBC giving favourable consideration to the scheduling after 9 p.m. of all T.V. crime programs and western and adventure stories which contain violence?


Gérard Pelletier: I am informed by the Canadian Broadcasting Corporation as follows: 1. The CBC does not consider that it has in the past scheduled an excessive amount of violent programming. The Corporation has, on the whole, successfully applied a policy of restraint in this area of its programming and will continue to do so.
2.	Aside from one series on the English network, which will be discontinued as soon as the present contract has expired, the Corporation is satisfied that its programs for children meet the standards outlined in reply to Question No. 150, Part 1.
3.	Each program must be judged on its own merits and it is difficult to generalize in terms of broad program categories. However, the Corporation will continue to minimize the exposure of programs which could be construed as violent, in keeping with CBC policy as outlined in reply to Question No. 150, Part 1.


CBC NEWS COVERAGE ARRANGEMENTS WITH U.S. NETWORKS
Mr. Broadbent: What arrangements does the CBC have with U.S. television networks for coverage of (a) U.S. news (b) World news?


Gérard Pelletier: I am informed by the Canadian Broadcasting Corporation as follows: The CBC has access to U.S. world news coverage of the two major U.S. networks, NBC and CBS. In return, the CBC provides these networks with access to CBC coverage. There are other available sources of U.S. world news coverage, including CBC overseas bureaux, the Commonwealth newsfilm agency known as Visnews and such world news agencies as Associated Press, Reuters, United Press International and Agence France-Presse.


BANK OF CANADA-RESEARCH STUDIES
Mr. Burton: 1.	For the fiscal years 1968-69 and 1969-70, what specific research studies have been undertaken by the Research Branch of the Bank of Canada?
2.	Who are the individuals involved in these studies and when is it anticipated that these studies will be completed?


Hon. E. J. Benson (Minister of Finance):: 1 and 2. Much of the work undertaken in the Research Department of the Bank of Canada involves the continuing analysis of current economic and financial developments in Canada and abroad for internal use within the Bank. Special studies of particular subjects are also undertaken for the same purpose. These concern the internal administration of the Bank on which it is not appropriate to answer questions.
In addition to the research studies referred to in the preceding paragraph, certain aspects of the Bank's research program have been reported in a series of reports published by the Bank known as Staff Research Studies and in professional journals. The following Staff Research Studies have been published: No. 1, Quarterly Business Capital Expenditures by R. G. Evans and J. F. Helliwell. No. 2, Canadian Inventory Investment by R. G. Evans. No. 3, RDXI by J. F. Helliwell, H. Shapiro, I. A. Stewart and L. Officer.
The following Staff Research Studies are to appear in the near future: No. 4, Government Sector Equations for Macroeconomic Models by J. F. Helliwell, R. G. Evans, F. W. Gorbet, R. Jarrett and D. Stephenson. No. 5, The Dynamics of RDXI by J. F. Helliwell, H. Shapiro, I. A. Stewart and L. Officer. No. 6, Canadian Housing and Mortgage Markets by Lawrence B. Smith.
December 1. 1969

The following articles have recently appeared or will appear in professional journals: "Consumer Attitudes, Buying Intentions and Expenditures: An Analysis of the Canadian Data," by H. Shapiro and G. Angevine, "The Canadian Journal of Economics," May 1969. "Labour-Force Participation in Canada," by L. Officer and P. R. Andersen, "Canadian Journal of Economics," May 1969. "A Structural Model of the Foreign Exchange Market," by J. F. Helliwell, "The Canadian Journal of Economics", February 1969. "An Econometric Analysis of Policy Choices for an Open Economy," by J. F. Helliwell, H. Shapiro, I. A. Stewart and L. Officer, "The Review of Economics and Statistics", November 1969.


COMPENSATION FOR COUNTERFEIT MONEY
Mr. Caoueile: What steps does the Bank of Canada intend to take to compensate people who receive counterfeit money including banking institutions?


Edgar John Benson: The Bank of Canada does not compensate individuals or institutions who receive counterfeit banknotes. The Bank points out that such a procedure would make more difficult the task of controlling counterfeiting since the public would be less on guard against counterfeit notes if holders were to be compensated. The Bank is concerned about the incidence of counterfeiting in Canada and is engaged in a continuing program of investigation to make its notes more and more difficult to forge. However, it believes that careful public scrutiny is and will remain a major deterrent.


STUDENT LOANS
Mr. Robinson: Is it the federal government's intention to increase the amount of the student loans in view of the inflation and increase in the cost of living that has taken place during the last five years since the program was initiated?


Edgar John Benson: Amendments are currently being considered by Parliament which increase the level of loan provision under the Canada Student Loans Act. It is not proposed to alter the amounts which an individual student can borrow under the program.
Questions


POLLUTION ABATEMENT EQUIPMENT TAX INCENTIVES
Mr. Goode: Does the Minister of Finance presently have plans under consideration to extend Income Tax incentives now granted to industry for water pollution abatement equipment to include incentives for air pollution abatement equipment and does the Minister plan to initiate action to eliminate federal sales tax from both these types of equipment?


Edgar John Benson: This is a matter of government policy. If the government proposes amendments to the Income Tax Regulations or to the Excise Tax Act they will be announced at the appropriate time.


CANADA STUDENT LOANS ACT-TAX COMPENSATION TO QUEBEC
Mr. Dionne: 1.	What was the amount of tax compensation granted to the Province of Quebec since the adoption of the Canada Student Loans Act and in what form was such compensation granted?
2.	How many students from each province have benefited from a loan under this Act?


Edgar John Benson: 1.
There is no tax compensation to any province with respect to the Canada Student Loans Act. However, the Province of Quebec has received the following alternative payments under the Canada Student Loans Act-
Loan Year in Respect of which Payment Made
1964/65
1965/66
1966/67
1967/68
1968/69
Amount of Payment $	74,262.00
$	757,448.00

The alternative payment is a cash payment to the Province of Quebec and is determined by applying the ratio of the general population in the 18 to 24 year age group in Quebec to the same population in the rest of Canada at the beginning of the loan year to the total of the statutory costs incurred by federal government during that loan year.
2. Number of certificates of eligibility issued to students by participating provinces- July 1, 1964 to June 30, 1969-
1410	COMMONS DEBATES	December 1. 1969
Questions
Province	Loan Year (July 1 1964/65 1965/66	to June 30) 1966/67	1967/68	1968/69Newfoundland	737	1,339	1,414	1,819	2,233P.E.I.	437	614	838	935	1,034Nova Scotia	2,513	3,828	4,654	5,963	6,810N.B.	2,027	2,996	3,720	5,524	6,272Ontario	21,920	20,444	24,628	42,185	53,744Manitoba	2,272	3,447	4,070	4,604	4,816Saskatchewan	2,992	4,866	5,965	7,377	8,282Alberta	4,519	6,381	8,064	10,504	13,415B.C.	4,675	7,326	9,854	11,434	10,503Yukon	12	23	14	11	25N.W.T.	9	8	22	15	11Total	42,113	51,272	63,243	90,371	107,145


PUBLIC WORKS EMPLOYEES' WAGES
Mr. Caouelte: What steps are taken or contemplated to ensure that wages paid to employees of the Department of Public Works are on a par with those paid to Department of National Defence employees, including the Canadian Forces, when both Departments co-operate in joint or combined programs?


Hon. C. M. Drury (President of the Treasury Board):: Rates of pay for most employees of the Public Service are determined through the collective bargaining process. In the case of employees excluded from collective bargaining because they are employed in a managerial or confidential capacity, rates of pay are established by the Treasury Board, which takes into consideration the salaries prescribed in collective agreements for employees in the relevant occupational group and level.
The collective agreements signed by the Treasury Board and the bargaining agents apply to all members of the bargaining units regardless of department. Consequently, all employees classified in a given occupational group and level are paid the same rate of pay, whether they are employed in the Department of Public Works, National Defence, or any other department.
For some groups in the Operational Category, rates of pay vary according to geographic location. In these cases, employees classified in a given occupational group and level would receive different rates of pay depending on the geographic location of their place of work.
[Mr. Benson.)
Where the Departments of Public Works and National Defence are cooperating in joint or combined programmes, the Public Service employees involved receive the rate of pay that is prescribed in the collective agreement for their classification and locality of employment. If differences are found to exist in the rates of pay of employees, they can be attributed to the fact that there are differences in classification levels, or differences in the locality of employment if the employees are under a zone system of pay.
The rank and classification structure and the terms and conditions of employment of the Canadian Armed Forces are significantly different from those of the Public Service. For this reason it is possible that on a job-for-job basis there may be differences in rates of pay as between members of the Forces and Public Service employees. On the other hand, every attempt is made to ensure that the level of salaries in the Forces is generally comparable to that of the Public Service, taking account of differences in terms and conditions of employment.


VANCOUVER DISTRIBUTION OF PROPOSALS FOR TAX REFORM
Mr. Harkness: 1.	How many copies of the Proposals for Tax Reform were sent to Vancouver for distribution there?
2.	How many of these copies were in English and how many in French?
3.	If French copies were sent to this area and distributed to English-speaking firms, what reasons would the department have for such action?
December 1, 1969


Edgar John Benson: 1.	1,075.
2.	English, 1,050; French, 25.
3.	So far as is known, French copies were distributed only to those firms or individuals who specifically requested them. Any distribution to English-speaking firms which had not requested copies in French would have been unintentional.


SPEECH BY MINISTER OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Mr. Howard (Skeena): 1.	Did the Minister of Indian Affairs and Northern Development deliver a speech on October 2, 1969 to the Saskatchewan Liberal Women's Federation meeting in Regina and, if so, was this speech distributed and to whom?
2.	How many copies of this speech were reproduced?
3 What was the total actual and estimated cost of preparing, reproducing, collating, stapling and mailing of these copies?
4.	Was this same speech with minor modifications reproduced under a title page entitled, "Statement by the Honourable Jean Chretien, Minister of Indian Affairs and Northern Development based on a speech delivered in Regina, October 2, 1969" and, if so, was the reproduction distributed and to whom?
5.	How many copies of the reproduction referred to in part 4 were reproduced?
6.	What was the total actual and estimated cost of preparing, reproducing, collating, stapling and mailing the reproduction referred to in part 4?
7.	What minor modifications, in detail, were made to the original speech?


Joseph Jacques Jean Chrétien: 1. Yes-
M.P.'s and Senators, Press Media, Chiefs of Indian Bands, General Mailing Lists.
2.	3573 (English), 600 (French).
3.	$247.
4.	Yes. To general mailing list including subscribers to the Indian News. The remaining copies are used to answer public requests on the subject.
5.	57,500.
6.	$4,600.
7.	Original speech with minor modifications in detail follows.
"The Government Policy on Indians What is the Debate About?"
A speech by the Honourable Jean Chretien, Minister of Indian Affairs and Northern Development, to the Saskatchewan Women's Liberal Federation, Regina, Saskatchewan, October 2, 1969.
Questions
In June I announced the Government's proposals for an Indian policy. I hoped that a vigorous debate might start over the policy proposals put forward. The debate duly began and is continuing, but much of it is not over the proposals advanced by the government. The debate has become clouded because of misunderstandings, misinterpretation, and a lack of knowledge on the part of the Canadian public of the Indian situation.
The policy Statement is pretty clearly written. The English, French and Cree texts agree with each other. It is a straightforward document. But while in this age of instant communication everyone knows within minutes that an announcement has been made, few seem to find out what it was that was announced.
Let me explain.
The statement is NOT a final policy decision to be implemented regardless of what anyone else says.
The Statement does NOT propose or suggest that Indian reserves should be abolished.
The Statement does NOT propose that the provincial governments should take over responsibility for Indian land.
The Statement does NOT propose to disregard the Treaties and end them unilaterally.
The Statement does NOT propose that the federal government "abandon" the Indian people to the provinces without ensuring that the provinces have the resources to maintain and improve upon the existing level of programs and services.
The Statement does Not suggest that Indians, or Indian bands should be given clear, freehold title to their land within five years- or indeed within any period of time at all.
The Statement does NOT advocate any weakening of Indian culture or identity. It does NOT advocate the assimilation of Indian people.
The statement is clear on all these points. On many occasions, both privately and publicly, to Indian and non-Indian people alike, I have tried to clear up these misinterpretations.
Now what does the policy statement say?
It says that the time has come to change a system which has been discriminatory and paternalistic towards Indian people.

December 1, 1969
Questions
It says that the proposals contained in the policy statement are to be discussed with Indian people, provincial governments and the Canadian public before any of them are implemented.
It says that provinces should extend the services to Indians that they extend to others who dwell within their domain and that the federal government will transfer funds to help them do it.
It says that representatives of the Indian people should be involved in discussions with the provinces.
It says that federal departments will do this concurrently with those provinces which agree.
It says that the Indian people should control their own land.
It says that those bands which want title to their land should be able to take it.
It says that if the provinces extend their services to Indians and other federal departments besides mine do likewise, the Department of Indian Affairs would be phased out of operation. After all, Indian Affairs has been attacked by everybody. Who could complain if the Government believed that the critics had meant what they said?
The Statement says that it hopes the phasing out could be done in five years. And this reference to five years applies ONLY to the phase-out process. It goes on to say that the matter of Indian control of Indian land will take longer. Among the numbers of years which are greater than five, there is wide range of choices. But everyone has fixed on five years, which is impossible. There are 550 bands. There are more than 2,000 reserves. An Indian Lands Act is necessary to protect the land. Such an Act will have to be talked about, consulted about, drafted, made into law and put into effect. In five years? Not at all. We know, and Indian people know, that this will take time.
The Statement said that the Treaties would be reviewed by the Indians and the Commissioner for Indian Claims to determine the best way of adjudicating claims arising from them.
The Statement said that the Government recognizes that all Canadians should acknowledge the virtues, strengths and richness of Indian culture and languages.

The Statement said that the Government would develop, with the Indian people, programs to enrich their cultural heritage and their sense of identity.
How can these proposals be taken as an abrogation of Treaties? Do they sound like cultural genocide? I do not see how anyone can suggest that they are.
As soon as the policy proposal was made public, there were headlines about "turning the Indians over to the provinces".
Shortly after the headlines, there were editorials about the problems involved in doing that which was never suggested should be done.
At the same time some Indian leaders began telling the government it ought not to do that which many of them had sought for years.
What is needed now is a sensible and meaningful discussion about the steps to be taken and to separate the principal components of the problem so that they can be dealt with one after another, or jointly where possible.
We want to talk. We want to have a dialogue with Indian spokesmen and we want the provinces to join in the talks.
I can well appreciate the reaction of Indian people towards the policy proposals. The proposals represent a dramatic break with the past. Spokesmen for the Indian people have asked for time to consider the proposals and to draft alternative proposals of their own. This is a reasonable position to take.
Indian people, because of past experiences, have a deep distrust of governments, both federal and provincial, and tend to regard the proposals with suspicion.. In private meetings with representatives of the Indian people I have explained the policy proposals, and I have listened to their comments and criticisms. These meetings have been helpful and many more will be held.
There is room for disagreement about what is to be done. There is room for a great deal of discussion before anything is done.
There is no room for rejecting out of hand that which was never proposed at all.
Last year a series of meetings with spokesmen for each band of Indian people were held. It soon became apparent that the Indian Act, as such was not the first priority of many Indian people. It also soon became apparent that the restrictions imposed by the present Act had outlived their usefulness. It was clear
December 1. 1969



that the Government could not sit back. It had to respond to what Indian people had been saying.
It was clear to the Government that many Indians were preoccupied by considerations of their treaties and rights. It was equally clear that this is a complex matter that cannot be resolved quickly.
The Government does not believe that the whole matter of the Indian people's wellbeing should be set aside pending resolution of treaty problems and claims. It is the Government's view that the various elements of the problem should be separated. Treaties include land entitlement. This major factor is dealt with as one which must be worked out on a band by band basis over an extended period of time.
The Government recognizes that many Indians want to see some safeguards which will insure that their land is not alienated from Indian occupancy, remains with the band, and cannot be grabbed by land speculators. The Government hopes that an Indian Land Act can be evolved to provide Indian people with both control of their own land and the degree of protection for it which they feel is appropriate. The legislation will have to be flexible so that the degree of control and protection can be worked out and applied band by band.
Indian land will stay Indian land. It will not be up for grabs by speculators. This does not mean that the present federal trusteeship for Indian land-which is both bureaucratic and paternalistic-should remain. This does not mean that the Minister of Indian Affairs has to make every decision about every summer cottage site leased on Indian land.
It does not mean that Indian people should have to turn to Ottawa every time they want to act.
I would like to see a vigorous debate about what is proposed and what is needed, but I am not very enthusiastic about a debate based on badly written headlines and misinterpretations about the proposals. If people have alternative proposals, they should make their views known.
One thing is certain-the time has come for basic and fundamental changes in a system which works against the interests of Indian people. The federal government has made a series of proposals, aimed at creating a nondiscriminatory society, for discussion with Indian people, provincial governments, and the Canadian public as a whole.
Questions
We have made these proposals in good faith, knowing full well that they would be controversial, but knowing also that if an attempt was not made to break the pattern of discrimination and paternalism of 100 years, that no progress could be made in solving the problems which have plagued Indian people for so long.
At the root of the Indian reaction to the proposals is distrust of government and Canadian society as a whole. This must change. Concerned Canadians should consider this problem, to be certain that each of us is doing his part to open the doors of opportunity and remove the blight of discrimination from this country.
It is Canadian business that has the jobs to offer Indian people. It is Canadian society which must break down the barriers of misunderstanding.
We cannot solve our problems in isolation. Everyone has a part to play.


EMPLOYMENT OF SARAH ANNE ROBINSON
Mr. Howard (Skeena): Since January 1, 1966, has Sarah Anne Robinson, Ph.D. been under contract by the Department of Indian Affairs and Northern Development for any purpose and, if so (a) what, in detail, was she required to do (b) in what geographic areas was this work conducted (c) what amounts of money was she paid, and (d) does the government consider that it received full value for the money so expended?


Joseph Jacques Jean Chrétien: Miss Sarah Anne Robinson has never been under contract to the Department of Indian Affairs and Northern Development for any purpose, although she has made a study of the leadership of the Nanaimo band with the Band's consent.


POST OFFICES CLOSED, CARDIGAN RIDING
[Stage Direction]
Question No. 518
Mr. McQuaid:: 1.	How many post offices have been closed in the Constituency of Cardigan since January 1, 1969?
2.	How many more are scheduled to be closed within this Constituency?
3.	As a result of these closings, how many people have been deprived of employment?
4.	What was the total annual compensation being paid to these people who have been deprived of employment by reason of the above closings?

December 1, 1969
Questions


Eric William Kierans: 1. Eight.
2.	None.
3.	Eight.
4.	$17,000.


REPORTING BY LENDERS TO SUPERINTENDENT OF INSURANCE
Mr. Coates: Do all lenders in Canada making loans at rates higher than one per cent per month report to the Superintendent of Insurance for Canada under the Small Loans Act?


Edgar John Benson: The Small Loans Act applies to loans of $1,500 and under, and with the exception of banks and pawnbrokers which are not subject to its provisions, all lenders in Canada charging more than 1 per cent per month on such loans are required to be licensed under the Act and to report to the Superintendent of Insurance.


THE VATICAN-CANADIAN EMBASSY EXPENDITURES
Mr. Howard (Skeena): What are the estimated federal government expenditures for the fiscal year 1970-71 regarding the maintenance of a Canadian embassy at the Vatican?


Hon. Miichell Sharp (Secrelary of Stale for External Affairs):: 


$200,000. BREAKDOWN OF JOBS BY PROVINCES, ATLANTIC REGIONAL PROGRAMS
Mr. Marshall: Of the 8,935 jobs created by projects approved under Regional Programs in the Atlantic Region, what is the breakdown by province?


Mr. Martin P. O'Connell (Parliamentary Secretary to Minister of Regional Economic Expansion):: Newfoundland, 1,015; Prince
Edward Island, 711; Nova Scotia, 3,627; New Brunswick, 3,582.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Gilbert: 1. What position did Canada take at the meeting of the International Monetary Fund in September 1969 regarding the removal of pegged foreign exchange rates to a system of floating or crawling peg rates?

2.	What specific position was taken by each of the other members of the International Monetary Fund?
3.	Is the Government of Canada giving favourable consideration to changing the present fixed Canadian exchange rate to a floating exchange rate?
Return tabled.


AMERICAN AND CANADIAN PROGRAMS ON CBC
Mr. Benjamin: 1.	For the years 1960, 1961, 1962, 1963, 1964, 1965, 1966, 1967, 1968 and 1969, which American-produced series were carried by the Canadian Broadcasting Company?
2.	For the same above years, which Canadian-produced series were carried by the Canadian Broadcasting Company?
3.	For the same above years, which series were carried by the CBC during the prime viewing times of 7 p.m. to 11 p.m.?
Return tabled.


PUBLIC SERVICE-RETROACTIVE PAY ADJUSTMENTS
Mr. Knowles (Winnipeg: North Centre):
1.	What was the final date set by the Public Service Staff Relations Board for full implementation by the Government of Canada of retroactive pay adjustments?
2.	For each collective bargaining unit and for each government department or agency, when were these retroactive pay adjustments made.
Return tabled.



MOTION TO ADJOURN UNDER S.O. 26 THE CANADIAN ECONOMY AUTOMOBILE, STEEL, NICKEL AND OIL PRICE INCREASES

Mr. J. Edward Broadbent (Oshawa-Whit-by):: Mr. Speaker, I ask leave, seconded by the hon. member for Waterloo (Mr. Saltsman), to move the adjournment of the House under Standing Order 26 for the purpose of discussing a specific and important matter requiring urgent consideration, namely, the need for public inquiries to be held into the sudden rash of price increases in the basic Canadian industries of automobiles, steel, nickel and oil, a course of action supported by the labour leaders involved in wage negotiations in these industries.


Mr. Speaker:: The hon. member has given the Chair notice of his proposed motion in accordance with the requirements of this Standing Order. I have studied the motion
December 1, 1969

and given this matter very serious thought. Undoubtedly the matter raised by the hon. member for Oshawa-Whitby is one of great importance and one of serious concern to all hon. members. This does not mean, however, that it is acceptable under the provisions of Standing Order 26. In my view this rule is not intended to apply to circumstances such as those described by the hon. member in his proposed motion. Although he has used the words "sudden rash of price increases", the motion seeks to deal basically with a situation that has obviously existed for some time. This is evidenced by the number of questions which have been asked in the House for some weeks now on every one of the topics alluded to by the hon. member. The Chair must rule, therefore, that the question cannot be put to the House at this time.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the Minister of Consumer and Corporate Affairs. In light of the interview yesterday with the Chairman of the Prices and Incomes Commission, will the minister say what department or agency of government discouraged a quick settlement of the Inco strike?


Hon. Ron Basford (Minister of Consumer and Corporate Affairs):: Mr. Speaker, I
watched the broadcast to which the hon. gentleman refers and I am not sure what his question has reference to.


Robert Lorne Stanfield: Mr. Speaker, I think the question is clear enough. I asked the hon. minister whether he would say what department or agency of the government discouraged, privately or otherwise, a quick settlement of the Inco strike last summer.


Stanley Ronald Basford: Mr. Speaker, I should like to check the transcript of the broadcast as I am not aware of any department that intervened in the way the hon. member suggests.


Robert Lorne Stanfield: Mr. Speaker, will the minister say whether the Prices and Incomes Commission in the course of this strike suggested any guidelines or limits of restraint within which the settlement should be made?
Inquiries of the Ministry


Stanley Ronald Basford: As I have explained before, and as was explained on the program to which the Leader of the Opposition made reference, the commission has been endeavouring to work out with private price and wage-makers in the country an acceptable formula of restraint.


Robert Lorne Stanfield: Will the minister say
categorically or will he not say categorically whether the government or an agency thereof discouraged settlement of the INCO strike last summer or, specifically, whether the government or an agency of the government suggested specific guidelines within which the company ought to try to settle the strike?


Stanley Ronald Basford: As I said, I will check the transcript of the broadcast. As I also said, I am not aware of any such action by the government but because of the hon. member's question I will check that.


Hon. George Hees (Prince Edward-Hasf-ings):: Will the minister accept this copy of the transcript and give his answer right away? I will send it to him.


Stanley Ronald Basford: Mr. Speaker, I rise on a question of privilege. A while ago I was asked questions by the Leader of the Opposition and I have now been sent a copy of the transcript involved by the hon. member for Prince Edward-Hastings. I am very grateful, but it would seem to me the questions were based not on a quote from Dr. Young but on a question to him, not on an answer from him.


Some hon. Members:: Oh, oh!


George Harris Hees: Mr. Speaker, is the minister not aware that the question was not disagreed with by the chairman?


Mr. Speaker:: Order, please.


George Harris Hees: In other words, he agreed with it.


Mr. Speaker:: May I have the co-operation of the hon. member for Prince Edward-Hastings. I would think this is hardly a question of privilege and I do not think the matter should be pursued further. The hon. member may have an opportunity later to ask a supplementary question.


George Harris Hees: I was not speaking on the question of privilege, just a question of order. I

December 1, 1969
Inquiries of the Ministry asked the minister a straightforward question, which he will not answer, of course, because he never does.


Robert Lorne Stanfield: Mr. Speaker, I would like to ask the Minister of Consumer and Corporate Affairs whether he would give a perfectly simple straightforward answer to the quesdon I asked and not to the question I did not ask. Will the minister say yes or no as to whether the government, a department of the government or an agency of the government privately persuaded Inco from an earlier settlement of the strike and, alternatively, whether the government or an agency thereof indicated specific guidelines it did not wish exceeded in the case of that strike?


Stanley Ronald Basford: Mr. Speaker, I can only answer on what I have responsibility for and in that light the answer is no.



CONSUMER AFFAIRS


John Edward Broadbent: Mr. Speaker, is the minister prepared to make a statement on whether he will have a public inquiry made into the recent price iincreases in steel, nickel, automobiles and oil?


Stanley Ronald Basford: Mr. Speaker, it might be helpful for me to say two things. First, it was envisaged in the white paper on price stability that inquiries by the commission would be conducted in private in order that they might be conducted as quickly as possible and that public reports would be made for examination by a committee of this House.
Second, perhaps I might read, in view of the hon. member's question and the previous motion, a telegram from the Chairman of the Prices and Incomes Commission to Mr. Larry Sefton, director of the United Steelworkers of America, in which he says:
As you know the Prices and Incomes Commission has been exploring with unions, business, farm and professional groups and governments the feasibility of reaching agreement on some generally acceptable form of price and income restraints. If a set of commitments of this kind were in place today agreed criteria and review procedures would exist for judging whether or not the recent price and wage increases at the International Nickel Company were justified. As you also know, however, the two major trade union federations-


Some hon. Members:: Order!


Mr. Speaker:: Order, please. I suggest to the minister that if he wants to make a lengthy statement it should be done by asking for the consent of the House to revert to motions.


John Edward Broadbent: Mr. Speaker, the minister's answer does not bear directly on the particular question I asked. Would he agree to have a standing committee of the House conduct an open, public inquiry?


Stanley Ronald Basford: Well, Mr. Speaker, it was made clear in the white paper to which I referred that the commission was intending as a general rule to conduct private inquiries, the reports on which would then be referred to a committee of the House for public examination and inquiry. As the chairman of the commission said in his wire, if the two major trade union federations had not rejected the approach of the commission but had agreed, there would now be in place agreed criteria for judging such increases.



LABOUR RELATIONS


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, may I direct this question to the Minister of Labour. Because of what I consider a mutual desire that there be no more waterfront strikes in Vancouver, may I ask the minister whether he has sent a federal conciliator, as requested, to attempt to resolve the difficulties between the grain workers union and the elevator operators? If so, can he report on any progress that is being made?


Hon. Bryce Mackasey (Minister of Labour):: Last week in Vancouver I met with both the union and management. Contrary to public opinion, both sides seemed to be encouraged that they would be able to reach settlement without a conciliation board.


Harold Edward Winch: Do I understand that a conciliator was not requested as reported in the newspapers?


Bryce Stuart Mackasey: I have not read the papers on that particular subject.



COMPANY OF YOUNG CANADIANS


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, I wish to put a question to the Prime Minister.
December 1, 1969

Does he agree with the viewpoint put forward over the weekend by a majority of Liberal members who sit of the committee investigating the operations of the Company of Young Canadians and who objected to a legal inquiry being conducted before the committee's report is officially released?


Pierre Elliott Trudeau: I am not aware of any such discussion, Mr. Speaker.



POSSIBLE BRITISH ENTRY INTO ECM-SAFEGUARDING OF CANADIAN INTERESTS

[Stage Direction]
Kon. Marcel Lambert (Edmonton West):
Mr. Speaker, my question is directed to the Prime Minister in the absence of the Minister of Industry, Trade and Commerce. In light of present negotiations for the entry of Britain into the European Common Market, what steps is the Canadian government taking to safeguard private Canadian trading interests, especially with relation to agricultural products, which would be affected by British membership in the ECM?
Mr. Speaker:: The question is perhaps
rather wide in scope but the Prime Minister might wish to reply to it.
Right Kon. P. E. Trudeau (Prime Minister):
Mr. Speaker, you do not have to take into consideration that the department will be answering questions tomorrow, but personally I would like to take that into consideration.



COMPANY OF YOUNG CANADIANS


Right Hon. J. G. Diefenbaker (Prince Albeit):: Mr. Speaker, my question is directed to the Secretary of State. Now that the letter from Mr. Saulnier and the reply of the Prime Minister have been tabled, will he tell the House frankly what he did after this matter was brought to his attention some time between March 17 and April 1? Did he get in touch with the Royal Canadian Mounted Police or with any representative of the police? In short, what action did he take to put an end to the suggestions contained in the letter from Mr. Saulnier?
21545-19J
Inquiries of the Ministry [Translation]


Gérard Pelletier: Mr. Speaker, I have already had an opportunity to explain very fully to the committee inquiring into this matter that-


John George Diefenbaker: We are here in the House of Commons, not in the committee. You are to answer in the House of Commons.


Gérard Pelletier: Yes, that is what I was about to do. But there have been rumours-[DOT]


John George Diefenbaker: Dont give us more of that supercilious contempt.


Gérard Pelletier: -and I say it once more in the House, I have done what the minister could do, within the scope of my extremely limited powers under the act. I met the executive director of the Company of Young Canadians. I informed him of the concern expressed, as I have always done each time I have received expressions of misgivings, whatever the source. I also contacted the Solicitor General from time to time to ascertain whether he had any information he could pass on to me of a nature to either confirm or refute the complaints which had been placed before me.


John George Diefenbaker: Mr. Speaker, on what date, following the receipt of that letter from Mr. Saulnier, did the minister first call in the director of the CYC and also communicate with the Solicitor General?


Gérard Pelletier: Mr. Speaker, since I do not keep a personal diary, I cannot give the exact date and I must answer: A few days later.
Some bon. Members: Hear, hear.


John George Diefenbaker: Is it because he did not keep a personal diary that he allowed this matter to be brought before the House the other day and remained silent when he knew of the existence of the letter?


Mr. Speaker:: Order, please.


Mr. Eldon M. Woolliams (Calgary North);: Mr. Speaker, I should like to ask the Solicitor
December 1, 1969

Inquiries of the Ministry General when the letter was brought to his attention, and when he had a conference with the Secretary of State in this regard? I am referring to the letter to which the right hon. member for Prince Albert referred a moment ago.


Hon. G. J. Mcllraiih (Solicitor General):: Mr. Speaker, the subject matter of the letter was communicated to me immediately after the discussion between the Prime Minister and Mr. Saulnier took place, referred to in the Prime Minister's answer last week in the House of Commons. After that took place there were many discussions between the Secretary of State and myself on this subject, and all relevant information that would have a bearing on the matter was communicated to him by me and from him any that he had to me. Those conversations started immediately after the conference referred to by the Prime Minister and after he reported it to me.


An hon. Member:: And vice-versa.


Eldon Mattison Woolliams: I am most interested in the Solicitor General's reply. When did he have a conversation with the Secretary of State and communicate it to the Prime Minister, if it was so important? I see the Prime Minister whispering to the minister, filling him in.


Mr. Speaker:: Order, please.


John George Diefenbaker: Does the minister suggest that he now remembers the letter and the fact that its contents were communicated to the Secretary of State right after the letter was received, although for the last couple of days there has been nothing but silence on the part of the government in regard to this important matter?


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. Perhaps the Solicitor General should be allowed to reply. Hon. members will recognize that considerable leniency has been allowed in the asking of these questions. This is the question period, not the cross-examination period-


Some hon. Members:: Hear, hear.


Mr. Speaker:: -but in view of the general interest in the matter raised by these questions I thought some leniency should be exercised and that the ministers questioned should be given an opportunity to reply. That is why I would allow the Solicitor General to reply to the last question.


George James McIlraith: Mr. Speaker, I thank you for permitting me to answer this question by the right hon. gentleman. The right hon. gentleman, if he had listened to the answers-


John George Diefenbaker: Which answer?


George James McIlraith: -I gave, would have noted carefully that I spoke of the subject matter that was in the letter. I did not see the letter nor did I know of it at that time, but the subject matter was disclosed to me at the time of the interview.


John George Diefenbaker: By whom?


George James McIlraith: By the Prime Minister of this country, who is very careful about these things.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


George James McIlraith: And it was communicated to me right after the discussions between Mr. Saulnier and the Prime Minister in Montreal. As I indicated to the House last week in answer to a question, I did not see the letter-


Mr. Speaker:: Order, please.


John George Diefenbaker: Me thinks you do protest too much.


George James McIlraith: -but I saw the letter on Friday afternoon.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!



NATIONAL DEFENCE


Mr. Barry Maiher (Surrey):: I have a question for the Minister of National Defence which arises out of his recent statement that Canada's role in chemical warfare is strictly one of defence. In his absence may I ask his Parliamentary Secretary to take notice of the question. Has the minister's attention been drawn to a statement reportedly made by Mr. James Eayres, Professor of International Relations at the University of Toronto, to the effect that Canada has always opened her gas chambers and germ tunnels at Suffield, Alberta, to British and U.S. establishments and that Canada's role has been one of "reckless hospitality"?
December 1, 1969


Mr. Speaker:: Order please. I have some doubts as to the form of the question.



AGRICULTURE


Mr. H. A. Moore (Welaskiwin):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. In view of the opposition of the Association of Dairy Farmers of Canada to the decision to reduce dairy price support by $10 million, is the minister reconsidering this decision?


Hon. H. A. Olson (Minister of Agriculture):: Mr. Speaker, we have asked the representatives of the dairy industry and the many organizations concerned to give us their opinions as to the design of a dairy program for the 1970-71 fiscal year based on $115 million, and they are co-operating in providing us with their assistance in designing this program.


Harry Andrew Moore: A supplementary question, Mr. Speaker. Was there any consultation with the representatives of the dairy farmers of Canada prior to the announcement by the minister?


Horace Andrew (Bud) Olson: Mr. Speaker, usually all of the changes in programs are announced only a day or two before the beginning of the dairy year, which is April. This year for the first time we have advised the dairy industry, and other industries respecting other matters, four months in advance so that they can help us to do the design work on the program.


Mr. R. R. Souiham (Qu'Appelle-Moose Mouniain):: Mr. Speaker, I have a question for the Minister of Agriculture related to the one asked a few moments ago by the hon. member for Wetaskiwin. In reviewing the dairy policy between now and April 1, 1970, will the minister take steps to restore the quotas to the prairie west, representing some four million pounds of butterfat for Saskatchewan, two million pounds for Manitoba and two million pounds for Alberta?


Mr. Speaker:: The hon. member has put the question in the form of a representation which he has to assume will be taken into account.
Inquiries of the Ministry



REQUEST FOR REFERENCE OF MATTERS TO STANDING COMMITTEE

Mr. A. P. Gleave (Saskaioon-Biggar):: Mr. Speaker, in view of reports emanating from the Outlook Conference that the 430,000 farmers in Canada may well be reduced to 150,000 in the coming decade, may I ask the Minister of Agriculture to tell us when he will refer some of these matters to the Standing Committee on Agriculture so that they may receive the attention they deserve from the members of this House?


Horace Andrew (Bud) Olson: Mr. Speaker, if the hon. gentleman read the reports of the Outlook Conference or the papers presented there as indicating that the number of farmers would be reduced to 150,000 in the next decade, then I suggest, Sir, that he did not read them very well.


Alfred Pullen Gleave: Mr. Speaker, my question to the minister was: Will he give consideration to referring some of these urgent matters to the Standing Committee on Agriculture so that it can meet and discuss them?


Horace Andrew (Bud) Olson: Mr. Speaker, there will be a number of matters referred to the Standing Committee on Agriculture, such as the legislation that will be brought before the House, as well as the Department of Agriculture estimates and a number of other things. However, I think the hon. member realizes that there are a number of committees meeting now and it is not easy for members to find sufficient time to attend all of the committee meetings.



LABOUR CONDITIONS


George Harris Hees: Mr. Speaker, I wish to direct a question to the Minister of Regional Economic Expansion. In view of the statement yesterday by the Chairman of the Prices and Incomes Commission that he considers that by next March unemployment east of Montreal will be unacceptably high, will the minister take the first opportunity on motions to outline what programs he and his department are planning to introduce in the immediate future so that this very serious situation does not develop as predicted by the chairman of the commission? On your feet!


Hon. Jean Marchand (Minister of Regional Economic Expansion):: Yes, Colonel.

December 1, 1969
Inquiries of the Ministry [Translation]
As everyone knows, Mr. Speaker, the department under my jurisdiction is seriously getting to work.
We have received a great many applications concerning new industries. We have reached an agreement with the provinces about the creation of growth centres. The effect of our new policy will undoubtedly begin to be felt early next year.


George Harris Hees: A supplementary question. Has the minister honestly not got anything more than these general hopes and wishes for the future? Can he not give us some concrete plans?


Jean Marchand: Mr. Speaker, when the Golden Eagle Company builds a plant at St. Romuald and the federal government pays them a $10 million grant, I think it is more than a general statement. In addition, when the McCain Food Company sets up a plant in New Brunswick, it is also more than a general statement. On the contrary, these are concrete solutions.


James Aloysius McGrath: Mr. Speaker, I wish to direct a question to the Minister of Regional Economic Expansion. What does the government propose to do about the growing and serious unemployment problem in Quebec and the Atlantic provinces?


Mr. Speaker:: The previous question, as I understood it, was whether the minister would make a statement on motions. I would think that the information now sought by the hon. member for St. John's East would normally be given to the House by way of a statement on motions and not by way of answer to a question at this time.



BROADCASTING


Mr. Mark Rose (Fraser Valley West):: Mr. Speaker, I wish to direct a question to the Secretary of State. It concerns the sale of Windsor television station CKLW. Is the minister giving favourable consideration to permitting the CBC to purchase this station in Windsor?
[Mr. Marchand (Langelier.)


Mr. Speaker:: The question should be placed on the order paper. If there is urgency it can be considered at the time of adjournment


Mark Willson Rose: On a supplementary, Mr. Speaker-


Mr. Speaker:: Order, please. Perhaps the hon. member might ask a related question.


Mark Willson Rose: This is a related question, Mr. Speaker. I would like to ask the Secretary of State when he feels he can make a statement on motions, as he indicated in the House on November 26 he would consider doing?


Gérard Pelletier: All I can say in reply, Mr. Speaker, is that the matter is being studied concurrently by several agencies, and this will not allow us to give answers or to come to decisions as quickly as if there were only one agency concerned.



REGIONAL ECONOMIC EXPANSION


Mr. Donald Maclnnis (Cape Breton-East Richmond):: Mr. Speaker, I have a question for the Minister of Regional and Economic Expansion. I would ask the minister if the government has yet decided on a chairman for the co-ordinating committee in respect of development in Cape Breton?


Jean Marchand: Mr. Speaker, is the hon. member speaking on behalf of the president of Devco?

Would you repeat the question?


Donald MacInnis: Mr. Speaker, might I be allowed the observation of calling the attention of the House-


Mr. Speaker:: Order, please. My understanding is that the minister asked the hon. member if he would kindly repeat the question as he did not understand or hear the question.


Donald MacInnis: Mr. Speaker, on a point of order, it would appear I got an answer before I asked the question and I was asked
December 1. 1969

another question. Why answer one question-


Mr. Speaker:: The hon. member has had a reply. We will go on to the hon. member for Gander-Twillingate.


Donald MacInnis: Mr. Speaker, I would ask the minister not to answer until he gets the question first. Has the government decided on a chairman for the co-ordinating committee with respect to the development of Cape Breton?


Jean Marchand: No, Mr. Speaker. [English]


Donald MacInnis: A supplementary question, Mr. Speaker. Has the government made any arrangements for setting up this committee?


Jean Marchand: No, Mr. Speaker.



MANPOWER


Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, my question really is supplementary to the question raised by a number of hon. members regarding unemployment in Atlantic Canada. On November 24 the Minister of Manpower and Immigration indicated that any plans the department had would be announced in the House. I wonder if the minister could indicate whether in fact there are any plans by his department to alleviate the heavy unemployment and if he could indicate when he would be prepared to make a statement concerning the nature of these plans?


Hon. Allan J. MacEachen (Minister of Manpower and Immigration):: Mr. Speaker, the original answer still stands.


John Howard Lundrigan: On a point of order, Mr. Speaker, the minister is passing out tidbits indicating he does have plans. I wonder whether we could have-


Mr. Speaker:: Order, please. The hon.
member for Winnipeg North Centre.



DATE OF BY-ELECTION IN SELKIRK CONSTITUENCY

Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question
Inquiries of the Ministry to the Prime Minister. In view of the fact that there has been a vacancy in the representation in this House with respect to the constituency of Selkirk for nearly six months, is the Prime Minister now in a position to say when the by-election to fill that vacancy will take place?


Pierre Elliott Trudeau: Mr. Speaker, I am very shortly going to make an announcement to that effect. A decision has been taken and I had the impression it had been announced but perhaps it has not. I shall make the announcement very soon.


Stanley Howard Knowles: supplementary question, Mr. Speaker. If the Prime Minister knows the date and if he thinks we all know it, why doesn't he tell us?



AGRICULTURE


Mr. H. W. Danforth (Kent-Essex):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture. Is the minister ready to announce to the House yet any government plan to stabilize the Canadian soyabean market, especially in view of recent representations by the producers organization regarding the present alarming situation?


Horace Andrew (Bud) Olson: Mr. Speaker, we have received some representations in this respect which, as the hon. member knows, we are considering very carefully.



OILSEEDS-STEPPING UP OF DELIVERY

Mr. George Muir (Lisgar):: Mr. Speaker, I have a question for the Minister of Agriculture. In view of the current very low overseas shipment of wheat and the fact that the minister has suggested to agricultural producers a switch in production from wheat to other grains, would the minister give urgent consideration to having delivery of oilseeds stepped up in order that the producers of these seeds may be encouraged to make the necessary switch in production for the next crop year?


Horace Andrew (Bud) Olson: Mr. Speaker, in this current selling season the Canadian Wheat Board is in fact taking that into account and making special arrangements so that rapeseed and other oilseeds can be put in an export position as rapidly as there is a demand for them to be shipped into the export market.

December 1, 1969
Inquiries of the Ministry


John George Diefenbaker: Mr. Speaker, a supplementary question. I just want to fully understand and the people of Saskatchewan are naturally interested that when rapeseed has a foreign market the government will permit it to be sold. In view of the fact that Mr. Joe Caplan of Prince Albert was down here for several days a few weeks ago trying to get the consent of the government-


Mr. Speaker:: Order, please. Would the right hon. member please ask the question?


John George Diefenbaker: -to the sale of rapeseed for which there are orders abroad and hundreds of thousands of dollars available in foreign exchange, does the statement the minister just made mean that rapeseed may be sold outside the quota?


Horace Andrew (Bud) Olson: Mr. Speaker, I have also had a meeting with Mr. Caplan and what he advocated through the resolution and so on was not a sharing of the market for rapeseed although he is one of the exporters; What he is asking is for him and his associates to have some special consideration so that they may move their rapeseed ahead of all the other farmers. I do not subscribe to that theory.


John George Diefenbaker: That is not true.


Alfred Pullen Gleave: Mr. Speaker, a question for the Minister of Agriculture. Will the government consider taking steps to end the confusion that exists and the lack of co-ordination by putting rape-seed and flaxseed under the total jurisdiction of the Canadian Wheat Board?


Gerald William Baldwin: A couple of resignations would help.


Horace Andrew (Bud) Olson: There is no confusion except perhaps in the minds of hon. members opposite who refuse to try to understand the situation.



TRANSPORT


Mr. David MacDonald (Egmonl):: Mr. Speaker, my question is for the right hon. Prime Minister and relates to the day-long strike on the Canadian National car ferries between Tormentine and Borden. Would the Prime Minister indicate whether he has received a request from the government of

Prince Edward Island and whether action is being taken to alleviate the labour unrest among Canadian National personnel on the Northumberland Strait car ferry system, as well as ensuring continuity of service between Prince Edward Island and the mainland as guaranteed under the terms of Confederation?
Righl Hon. P. E. Trudeau (Prime Minisier):
If there was such a request by the end of last week, the matter has not yet been brought to my attention.


David Samuel Horne MacDonald: Mr. Speaker, a supplementary question. When investigating this matter, would the Prime Minister ascertain whether such necessary maintenance as is required to service the car ferries can be obtained in the home port of Borden, thus perhaps alleviating some of the labour unrest there?



CONSUMER AFFAIRS


Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question is for the Secretary of State and is related to the question the hon. member for Vancouver-Kingsway directed on Thursday last to the Minister of Consumer and Corporate Affairs concerning a toy car with a sulphuric acid battery that may be dangerous to children. Would the minister check with the Canadian Broadcasting Corporation and advise this House if in fact a public affairs program, prerecorded on November 2 for showing on November 27, the same day as the hon. member asked her question, was in fact cancelled and the producer subsequently fired after he pointed out in letters to his member and also to the management the potential hazards of this sulphuric acid battery propelled toy which is now on the market and being pushed in metropolitan areas of Canada in view of the season?


Gérard Pelletier: Mr. Speaker, I will be very glad to check whether the allegations made by the hon. member are justified.


Mrs. Grace Maclnnis (Vancouver-Kingsway):: Mr. Speaker, may I ask a related question of the Minister of Consumer and Corporate Affairs. Because of the continuing safety hazard in some Christmas toys for children,
December 1, 1969

will the minister take immediate steps to establish safety standards for toys so that parents and others can buy them without fear of possible consequences to their children?


Stanley Ronald Basford: Mr. Speaker, we have been working on this for six months now and hope to draw up a safety standard. The matter is extremely complicated. The British have been working eight years drawing up such a standard. I am confident we will be much quicker than the British.



ASSISTANCE TO CANADIAN SKI PATROL

Harold Edward Winch: wish to direct a question to the Minister of National Health and Welfare. I do so because I understand it comes under his jurisdiction. As a result of my question addressed to the Prime Minister some two weeks ago, has reconsideration been given to granting financial aid to the Canadian Ski Patrol during the present ski season?


Hon. John C. Munro (Minister of National Health and Welfare):: Not that I am aware of, Mr. Speaker.



CANADIAN BROADCASTING CORPORATION


Mr. W. B. Nesbitt (Oxford):: I wish to direct a question to the Secretary of State in his capacity as spokesman in the House for the Canadian Broadcasting Corporation. Will the Secretary of State make inquiries as to why last Friday morning, on the CBC Gerussi program, one Fred Dobbs, a guest of Mr. Gerussi, was cut off the air when he made some unpleasant and unflattering remarks about the Minister of Finance and the figure of $30 a week compared with a salary of $800 a week?



EXTERNAL AFFAIRS


Mr. J. M. Forrestall (Dartmouih-Halifax East):: I wanted to direct a question to the Secretary of State for External Affairs, Mr. Speaker, but in his unfortunate absence I will 21545-20
Inquiries of the Ministry direct it to the Prime Minister. It relates to the recent statement of the President of the United States having to do with the use of chemicals in war. Can the Prime Minister indicate to the House whether Canada has assurance from the United States that in the course of disposal of the stockpile of chemical and other warfare instruments of this nature the ocean deeps will not be used?


Mr. Jean-Pierre Goyer (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I am glad to take the question as notice and I will inquire to find out whether such discussions took place.


J. Michael Forrestall: I wonder if the parliamentary secretary could indicate to the House whether a statement could be made by the minister in order to alleviate any fear that this might possibly happen?


Jean-Pierre Goyer: Mr. Speaker, whoever makes the statement on behalf of the government, the responsibility is always the government's.


HEALTH AND WELFARE
Mr. John L. Skoberg (Moose Jaw):: My
question is to the Minister of National Health and Welfare. In view of the fact the federal government contributes upwards of 50 per cent of hospitalization and medicare costs and in view of the fact that approximately $8,000 is all that is needed to settle a dispute at one of the hospitals in the province of Saskatchewan, can the minister say whether any increase in grants necessary to settle this dispute will be shared by the federal government?


Mr. Speaker:: The hon. member's question as asked is in the form of an argument. In this respect it is not acceptable.


John Leroy Skoberg: On a question of privilege, Mr. Speaker, it certainly was not meant to be in the form of an argument. I can assure Your Honour it is of the utmost concern to the people of Saskatchewan. If I may reword it I will try not to put it in argumentative terms. In view of the federal government's participation in hospitalization and medicare costs in Canada, could the government at this

December 1, 1969
Inquiries of the Ministry time say whether it will share in the added grants necessary to settle the dispute in the province of Saskatchewan?


John Carr Munro: Mr. Speaker, under the Hospital Act the amount of federal sharing is well known in terms of operating expenses of hospitals. We will share in accordance with that well known formula with the province of Saskatchewan.


John Leroy Skoberg: Will the minister say whether any request has been received from the premier of Saskatchewan for any increase in grants to settle this dispute in that province?


John Carr Munro: Not that I am aware of, Mr. Speaker.


INQUIRY OF THE MINISTRY
Mr. Lloyd Francis (Ottawa West):: My question is to the President of the Privy Council. Is the government prepared to introduce measures to counteract the depressed state of western football following yesterday afternoon's proceedings?


Donald Stovel Macdonald: Yes, Mr. Speaker. I will do my best to prevent this from becoming a further cause for western alienation.


HEALTH AND WELFARE
Mr. Robert Simpson (Churchill):: I wish to direct my question to the Minister of National Health and Welfare. Will the minister give consideration to making a full statement before the Christmas recess as to the future construction of the several hospitals which were to be commenced next year under the guidance of his department and which have now been shelved, such as the hospital planned at Hudson, Manitoba?


John Carr Munro: I will look into the particular hospital the hon. member referred to.


Mr. Les Benjamin (Regina-Lake Centre):: supplementary to the Minister of National Health and Welfare. Have there been any discussions between him and his counterpart in the province of Saskatchewan or between him and the government of Saskatchewan relating to the conditions of payment of the provincial

and federal share of costs of hospitalization in Saskatchewan?


John Carr Munro: Mr. Speaker, the discussions that have taken place with the health minister for Saskatchewan are of the same nature as those discussions which are being carried on with every other provincial health minister, namely, going into methods by which the federal and provincial governments can cooperate in limiting costs in this whole area.




Robert Lorne Stanfield: My question is directed to the Prime Minister. In view of the doubt that now exists whether the government of Canada intends to achieve the objective of providing 1 per cent of the gross national product for foreign aid in the early 1970's, when will the Prime Minister be able to indicate to the House the government's objective in this regard and whether the 1 per cent objective still remains? Also, in what year does the government propose to meet this objective?


Pierre Elliott Trudeau: Mr. Speaker, subject to correction I believe I did say in the month of August when I announced the guidelines for the ensuing year that we would not be moving toward this objective in the coming year, but that we would be keeping the same position in the sense that we are going to be giving substantially more, many millions of dollars more, to external aid in the coming year. We are not, however, increasing our contribution measured as a percentage of our gross national product.


Robert Lorne Stanfield: A supplementary question, Mr. Speaker. Am I to assume that the government has at least temporarily abandoned the goal it previously adopted of achieving a level for foreign aid of 1 per cent of the gross national product in the early 1970's?


Pierre Elliott Trudeau: No, Mr. Speaker. We have not abandoned it but we have not reaffirmed it for the coming year because of the reason I gave. We decided that we were going to be giving more but that we could not increase our percentage. We felt that this was necessary in view of the over-all guidelines expenditure program which we announced last summer. We tried to freeze most areas of
December 1, 19G9

government spending. This particular area we did not freeze. We increased the spending but not the percentage.


Mr. Speaker:: Order, please. There are a number of hon. members seeking the opportunity to ask supplementary questions at this point. Other hon. members, including the hon. member for South Shore, have been waiting quite a while to ask questions this afternoon. As the question period expired some minutes ago, I have to call Orders of the Day.
[DOT] (3:00 p.m.)


GOVERNMENT ORDERS
[Stage Direction]
The House resumed from Friday, November 28, consideration of the Motion of Mr. Benson (for Mr. Macdonald, Rosedale):
That the white paper entitled Proposals for Tax Reform tabled in the House on November 7, 1969, be referred to the Standing Committee on Finance, Trade and Economic Affairs.
Eldon Mattison Woolliams: Mr. Speaker, in taking part in the debate on the white paper I might say at the outset that like other hon. members I, too, have studied the white paper. I listened carefully to the speeches made in the House of Commons on Friday, particularly to the speech of the Leader of the Official Opposition (Mr. Stanfield). It set out our position very carefully on the major items contained in that paper.
I have read the Carter Report. I have read the briefs submitted to the Carter commission by trade unions, industry, farmers and ranchers, the extractive industries, the petroleum and mining industry and professional people. As a result of that study, I have come to certain conclusions.
Twenty minutes is not time enough to analyse the complete white paper. As I said on Friday when speaking to a procedural matter, after studying the white paper and reading the briefs, I have come to the conclusion it does not actually contain a tax doctrine. It really changes the whole social being of our nation. In fact, I am not afraid to say immediately in my opinion it is a red manifesto. The government, particularly the Minister of Finance (Mr. Benson), is being very silent about one matter. The minister has made no recommendations at all with regard 21545-201
Taxation Reform
to something that lies at the very heart of our tax problem, and that is a matter for regret. I refer to the swelling volume of government expenditure.
We have heard on television and through all the other media of communication what a wonderful doctrine is set out in this white paper which I call a red manifesto. I shall have something to say about that aspect later. The government has been strangely silent about its own rising expenditures, but unless hon. gentlemen opposite discharge their responsibility for setting out strict guidelines for coping with rising expenditure the tax burden is bound to increase. It is essential that this tendency to increasing expenditure be resisted and controlled. I shall give a good example. The government makes it clear that people earning $9,000 and upward will be called on to pay more taxes.


Robert Lorne Stanfield: Four thousand and upward.


Edgar John Benson: If you are single.


Eldon Mattison Woolliams: In 1963, the estimates of the Department of the Secretary of State amounted to $4,788,000. By 1969 they had risen to $342,613,000. In other words, they had increased by 6,800 per cent. If this is called a cutback, what would a real cutback amount to?
This, Mr. Speaker, is what has happened in the case of the estimates of one department since 1963. The Secretary of State is the real czar of this government. In my opinion, the government should establish guidelines and controls concerning the expenditure of the taxpayers money before it embarks on additional taxation measures affecting the wage earning and property owning classes of people as well as others.


Some hon. Members:: Hear, hear.


Eldon Mattison Woolliams: What effect will these proposals really have on the poor, on those in the low income tax brackets? What effect are they likely to have on trade unionists, on wage earners generally, on ranchers, farmers and small businessmen? I say immediately that the proposals here will not really improve the lot of those living below the poverty line and I intend to set out my reasoning in this regard. Above all, I say they would seriously curtail Canadian investment and restrict the productivity from which all jobs flow and from which all government revenues ultimately flow.

December 1, 1969
Taxation Reform,
What is this white paper? What is it all about? It is as I have described it-a red manifesto; white pages with a red cover. It is not a tax doctrine but, rather, a policy which if adopted would change the whole democratic process in this country. In ten years, if carried out, it would take over the property of our people together with the means of production as effectively as if it had been done by revolution. In my opinion, it smacks of totalitarianism.
Consider the position of the small businessman, the small corporation or the motel operator in one of our urban centres or in one of the national parks. His tax in the past has been 21 per cent on profits up to $35,000. The money he leaves in the company is used to enlarge the business in order to better serve the needs of Canada. Under these proposals, 50 per cent of that income would go to the government. Let us suppose that in order to comply with parks regulations or urban planning directives he is required to embark on new capital expenditure. How is he, in these circumstances, to raise the money required? Both the Governor of the Bank of Canada and the Minister of Finance have told the banks to tighten the money supply. What will be the consequences of this? The smaller enterprises to which I have referred will no longer be able to serve industry effectively, productivity will fall, and unemployment will reach even higher levels than those which exist today.
What will happen to the farmers and the ranchers if this proposal for a capital gains tax is adopted? Every five years, if the present trend of inflation continues, a farmer will have to raise money to pay this tax.


Edgar John Benson: I wonder whether I might ask the hon. member a question; I am sure he would not want to be wrong about his facts. The five-year revaluation applies only to shares in public companies.


Eldon Mattison Woolliams: All right. But the minister has not told us what will happen to those farmers who own farms upon which they are not living-farms which are held, in some cases, as investments. Production in Canada is not based on the amount the government spends but on the development of our resources and services.
This paper endeavours to lull the average taxpayers into its acceptance by holding out the prospect of reduced taxation. There is talk of increased exemptions, but their benefit is likely to be destroyed by the effects of

continuing inflation. In my opinion, the only fortunate thing is that the government itself will, in my opinion, be destroyed before Canada makes the mistake of carrying out this plan. The hon. minister reminds me-and I hope he will not take offence at this-of a small town bookkeeper. Wlien he tells us that 750,000 people will be taken off the tax rolls, I say to him that this is a false statement, that he is using a pernicious argument. I seriously challenge his figures and trust knowledgeable financial journalists at all levels will not only question the basis of this vexatious argument, but explode it. Let us not gobble up the dogmatic, uneconomic dogmas of this little bookkeeper. If the tax saving to the average taxpayer amounts to between $15 and $20 a year, how are those presently living at the poverty level to be assisted? All this confirms the minister's statement that he believes people can live on $30 a week. What fraud! What hypocrisy!
I turn now to the effect as far as the provinces are concerned. We have all heard of those conferences at which provincial premiers meet with leaders of the federal government, and are familiar with complaints that the federal government has, in effect, changed the nature of the constitution by altering the financial set-up and the relationship between itself and the provinces. Whether it applies to medicare or to any other cost-sharing program between the federal government and the provinces, the result is the same: the central government thrusts the program on the provinces, says it will pay its share and then leaves the provinces to bear the financial burden. If the minister is right in saying that the average taxpayer will pay less in federal taxation he is, in effect, saying that the provinces, which have to bear the burden of such items as medicare, will be forced to impose higher sales taxes in order to meet their obligations. Municipal taxes will also increase. So, the average taxpayer will have to pay more, in the over-all picture, even if his income tax does not increase.
I maintain that the position of the provinces and of the municipalities has been overlooked. The minister has not taken into account the effect of these proposals across the whole board. I agree with the hon. member for York South (Mr. Lewis); the fact is that the effect of removing 750,000 people from the tax roll does not amount to $1 billion. He can shake his head, but he did not deny it on Friday and he cannot do so today.


Edgar John Benson: I do deny it now.
December 1, 1969


Eldon Mattison Woolliams: Well, time will prove
whether I am right or not. But I do not think he can deny that the effect of this white paper would be to cause provincial and municipal taxpayers to pay more. They are likely to end up with less take-home pay.
[DOT] (3:10 p.m.)


Edgar John Benson: I deny that too.


Eldon Mattison Woolliams: The minister can say what he likes. The fact is that this document contains a hybrid dogma which purports to take over the means of production and puts union workers into an economic strait jacket. It is socialistic; it keeps the rich rich and privileged. In that regard it has a fascist approach. The document is inflammatory and revolutionary. In my home city, the Liberals held a dinner to support the Liberal party and to raise money for the government. Yet the minister was booed by his own supporters.
The small businessman, the small corporation, the farmer and rancher will be forced out of business as a result of the proposed capital gains tax. The implementation of a capital gains, which requires such gains to be added to one's income, is confiscatory and will force sales of farms and businesses either during the lifetime of the owners or at their death, when many farms and ranches in western Canada are passed on to the sons.


Edgar John Benson: There is no capital gains tax on such transactions.


Eldon Mattison Woolliams: If the minister does not call an estate tax a capital gains tax, then I do not know what he would call it. I would be very concerned at the implementation of the kind of capital gains tax proposed by the white paper. It would be different if a certain percentage were applied on capital gains, so the people would know where they stood; but on the basis of the proposals of the white paper the minister would have to confiscate property and put our farmers and ranchers out of business in order to collect his tax.
The will of the average Canadian cannot be shattered; it must be softened, bent or guided. I am not suggesting that the minister is trying to tyrannize the Canadian people, but I do suggest that his proposals are going to compress, enervate, extinguish and stupefy us all. These liberal Liberal hybrids are endeavouring to reduce this nation to nothing but a flock of timid, industrious folk of which the government will become the arrogant, dictatorial shepherd. According to Francis Neil-
Taxation Reform
son in "The Cultural Tradition", the greatest insult you can offer to the human race is to regard it as a herd of cattle to be driven to the selected pasture.
What the minister is really doing through these proposals is to follow his own profession. He wants to reduce Canadians to a nation of small, petty bookkeepers. Instead of energizing our human resources, he wants to engage us in the task of keeping the nation's books. The minister and his socialist friends see themselves conducting bookkeeping courses and setting up offices in the living room of every suburban home and farm kitchen. Everyone will be a bookkeeper.
I should like to know who is going to pay for all the appraisers who will be required to evaluate property. We will experience complete chaos, the same kind of chaos that occurred in Great Britain when they introduced the capital gains tax. Perhaps the minister himself never experienced, prior to his appointment to the government, how hard it is to make a dollar.
The people who will be most affected by these proposals possess talents which are highly rewarded here, as in other nations, irrespective of political system. We will suffer a further brain drain to the United States, and there will be a deterioration in capital investment here in favour of more go-ahead nations. The university graduates of the nation, after spending several years at university, are going to be asked to bear the main brunt of this country's tax burden. If life seems more attractive to them in the United States, the brain drain will increase. To my mind, these proposals mean that we will lose our scientists and those in the professions.
As the Leader of the Opposition said, nothing will give greater assistance to foreign powers to take over the capital resources of this nation than the capital gains tax that is suggested in this so-called white paper. As the minister knows, desire for monetary profit competes with other factors, such as preference for leisure and other pursuits. Work also entails fatigue and anxiety. Therefore, it follows that when monetary reward is lessened by taxation, personal situations must be reassessed.
This white paper will not be endorsed by members of our labour unions. Many workers in labour today earn up to $10,000, even $15,000, and they are the people who will be most affected by these proposals. They will

December 1< 1969
Taxation Reform
have to carry the tax burden of the nation. I should like to hear what the union leaders of Canada have to say about the minister's white paper.
In addition to the cost of appraisers, who is going to pay for the expensive litigation proceedings which will surely arise from such a complicated tax structure as this? I should also like to know how these tax changes will affect provincial revenues and the dollar thirsty urban centres, where at the present time education imposes such a high tax burden. Nothing has been said by the minister about whether the federal government will increase its share of the cost, and the white paper also sheds no light on this point. In fact, I believe the statement was made at one of Liberal Party's thinkers' conferences that they had nothing to do with urban centres or municipalites; that if they were in financial trouble, it was their own responsibility.


Edgar John Benson: Mr. Speaker, could I ask the hon. member a question. On this question of sharing with the provinces, has the hon. member looked at table 13 on page 94 of the white paper?


Eldon Mattison Woolliams: The provinces have already examined the minister's tables, and the premier of Saskatchewan for one is not enthused at the revenue sharing proposed. Even the Liberal premier of Newfoundland, Premier Smallwood, is not happy with this Liberal government, so I do not know why I should be impressed by the minister's tables. These Liberal provincial premiers have been telling the Minister of Finance that his proposals are going to cut down the revenue of the provinces, which in turn means reducing the amount paid at the urban and municipal level.


Edgar John Benson: You just have not read them. You are not doing your homework.


Eldon Mattison Woolliams: Talking of homework, you said that 750,000 people would be taken off the tax roll.


Mr. Speaker:: Order. Both the minister and the hon. member who has the floor are forgetting the Chair.


Eldon Mattison Woolliams: I am sorry, Your Honour. I became so enthused with the "red manifesto" of the Minister of Finance that I forgot myself for a moment or two. Before I was interrupted by the minister, I was asking who was going to pay for the property appraising

that will be required under the capital gains tax, and for the expensive litigation that will follow. I also say that provincial revenues will be cut back as a result of these tax changes. They will do nothing to assist the provinces or municipalities, and I suggest chaos will be the result.
When a dispute over payment of income tax arises in this nation, what happens? The department, sometimes with the assistance of the "legal beagles" of the Department of Justice, take over companies' books and statements while the owners of small companies fight the government for their rights under the nation's tax structure. When this valuation day comes, in spite of what the minister will say, what will happen in respect of farms, ranches, stock and those properties to be valuated? Who will do the evaluation? Who is going to evaluate the millions of acres of land in Saskatchewan, Alberta, Manitoba and the rest of Canada? Who is going to evaluate the development in urban centres in Canada? I say this will reduce the whole thing to chaos.
[DOT] (3:20 p.m.)


Mr. Speaker:: Order, please. I regret to interrupt the hon. member but his time has expired unless he has the unanimous consent of the House to continue.


Alfred Pullen Gleave: Mr. Speaker, I should like to say a few words about how this white paper will affect the co-operatives, the farmers and the people who work in my constituency and in my part of Canada. Let me congratulate those who prepared the paper. It has a very nice cover, some very nice designs and some very nice artwork. However, most of us are concerned about what the proposals it contains will do to the Canadian economy as a whole and whether our institutions will function better. We are wondering whether, as a result, we will have a better society.
I am very much concerned about one proposal in this white paper which relates to taxation of co-operatives. Co-operatives have been very important to the rural areas and those regions in Canada which have been at an economic disadvantage. I have in mind those regions which find themselves at a disadvantage vis-a-vis the concentration of economic power. These are the areas in which these co-operatives have grown and flourished. The leaders were people who attempted
December 1, 1969

to achieve some bargaining power and to provide the things these areas needed at lower cost.
Let me refer to the views expressed in the Financial Post on November 22, 1969 regarding this white paper. The article reads:
What complicates consideration of the impact of the white paper on co-ops and credit unions is that it is a tax package. These organizations are holding back formal responses until their advisers have looked at the whole package.
The Equitable Income Tax Foundation did not hold back its opinion until the whole package was considered. It said, and I quote from the same article:
An official of the Equitable Income Tax Foundation. which has campaigned to have co-ops taxed exactly as other corporations are, suggests that the white paper might still leave co-ops with some tax advantage. However, it would not be so marked an advantage as it was.
In other words, in the opinion of the Equitable Income Tax Foundation these proposals will result in a more severe tax on co-operatives than ever before. If the Government, in its wisdom, is convinced that it is no longer necessary to encourage co-operatives to grow and develop I suppose it is justified in following such a course. There was a time when the government did consider that co-operatives were important and absolutely essential to the improvement of conditions for people in certain areas of Canada. It might be worthwhile to call to the attention of the government some of these instances.
I should like to quote from a book entitled "Prairie Progress," which is a history of progress in western Canada. It was written by J. F. C. Wright. On page 10 of this book appears the following:
Today (1955) the history of Saskatchewan agriculture and therefore the essential history of the Province of Saskatchewan since the turn of the century, cannot be evaluated without an understanding of parallel co-operative development. Nor can the significance of this co-operation be grasped without a comprehension of early prairie settlement and the economic problems confronting pioneers of European heritage taking over a vast and potentially agricultural land from scattered tribes of nomadic plains Indians-
He goes on in that book to describe the development of co-operatives by stating:
It was out of the organized prairie farmers' early struggle with railroad and grain elevator companies and the Winnipeg grain exchange that producer (marketing) co-operative enterprise emerged to condition prairie farmers for subsequent development of consumer co-operation.
Taxation Reform
I wonder whether this government considers that this phase has ended. Does it consider it unnecessary to administer the taxes and the policies of Canada in order that co-operatives may continue to accumulate capital and do the necessary job? If this is the case, and if that is the position the government is taking, I think it is sadly wrong.
At the present time in western Canada we have a need to reorganize grain handling facilities. At least two thirds of these facilities are in the hands of co-operatives. These cooperatives will have to absorb a considerable loss in depreciation if these grain handling facilities are to be effectively reorganized. This proposed reorganization is not an attractive undertaking. The only major terminal elevator which has been built since the 1930's was built by the Saskatchewan Wheat Pool in the Vancouver area. The money was raised locally in Saskatchewan through participation by farmers like myself. They contributed to the cost of these handling facilities because they were absolutely necessary, not because they would be profitable. The same thing is true of our local facili ies on the prairies. The government at this time should be considering ways to make it easier for co-operatives rather than making it more difficult for them to raise and retain capital. The government should make it easier for these organizations to serve those regions in this country which are at a disadvantage.
[DOT] (3:30 p.m.)
We might take a look at the situation in respect of co-operatives, such as Canadian Co-operative Implements, the establishment of which is another major attempt to give farmers some advantage on the consumer side. When Canadian Co-operative Implements was established, not one but three governments provided capital to meet the challenge that existed in respect of getting a better price for farm machines. The Saskatchewan government, at that time a Liberal government, offered financial support to a wholesale co-operative in order to investigate and formulate a practical plan to deal with the problem in respect of farm machinery prices. In 1944, when Canadian Co-operative Implements Ltd. took definite action to purchase a factory in Winnipeg, funds were made available by the three prairie governments. A loan in the amount of $250,000 was to be repaid on a 20-year amortization basis.
Now, when we have a commission which has been working for two years in an effort

December 1, 1969
Taxation Reform
to find an answer to high machinery costs and a way to meet those increasing costs, we have a government that intends to increase the taxation for one of the few organizations, Canadian Co-operative Implements, that is attempting day by day, through its factory in Winnipeg, to deal with the problem of machinery prices that faces farmers. I do not need to mention only western Canada. In rural Ontario and in the maritimes there are cooperatives through which people attempt to meet the economic conditions they have to face. Maritime Co-operatives is the single most important agency in the Atlantic provinces. It imports feed grain and supplies the farmers of that area with the feed grain they need. Co-op Federee, a local co-operative in Quebec, is performing the same function. Surrey Co-op, on the coast of British Columbia, is also performing the same function. Does the government not know the role that is played in the economically disadvantaged areas in Canada by the co-operative movement?
Surely, big business in Canada is not worried about the co-operatives, how big they are and the role they are playing in Canada. Can they be considered a threat when in Saskatchewan, after all these years, the co-operative movement probably does not handle more than 7 per cent or 8 percent of the retail business in that province? It is not the Federated Co-op, with its oil refinery at Regina, that dictates the price of farm fuels in Saskatchewan; it is Imperial Oil, Gulf, Shell and Texaco. However, so far as I know in western Canada the co-operative refinery has the only significant refining and production capacity that is totally Canadian owned. The balance is owned outside Canada. Do we wish to make it just a little more difficult for them to operate or, perhaps under this proposal, a great deal more difficult?
If there is one area to which the government should be urged to direct its attention, it is this area and the area referred to by the previous speaker. Before the government puts these changes into effect I say it should ask itself two questions. First, was the type of tax legislation which was designed to fit the needs of the co-operatives justified in the first place? If the government can say that taxation policy was not justified in the first place, then perhaps it has the right to say it is not justified now. But if the government cannot say it was not justified in the first place, then it certainly cannot logically

say it is not justified now, because the circumstances in these disadvantaged areas have not improved that much.
A Canadian press story which appears in the Ottawa Citizen of November 24, 1969 bears the headline, "Too many farmers, not enough money". Do not forget it is probably the farmers more than any other group who are served by the co-operatives. Labour, to a very great extent, has depended on the labour unions to protect it within the financial milieu we have in Canada. The farmers, to a much greater extent, have relied on the co-operative movement. Let me give you an example of the load some people wish the co-operatives to absorb. In the Toronto Globe and Mail of November 26 there is an item headed "Export company may be formed by Alberta Pool". The reference is to the Alberta Wheat Pool. Of course, I would forecast that if such an export company should be formed it would be formed in concert by at least the three prairie pools, and perhaps the United Grain Growers. This would take a great deal of financing. A great deal of capital would be required. If it is done, it will be done only as a service to the farmers of western Canada and not as a profit-making operation. Anyone who is knowledgeable about the grain handling and marketing situation in western Canada is aware of this.
The history of the co-operative movement will show it is a movement that serves the people and is not a movement primarily for the purpose of making money; that never was the purpose. Perhaps some members on the government side should do a little reading and discover that this is the situation.
Finally, I should like to say something about the proposed changes which will affect the farmers. These are nicely wrapped up in the white paper. The changes which are proposed are set out, but the whole idea is contained in the first paragraph. A number of the proposals would have an impact on the farmers who are taxable under the present system. It is estimated that 70 per cent of the farmers who file taxation returns will have a reduction in their tax, while about 30 per cent will have an increase in their tax. The method that will be used to do this will be the imposition of a tax on capital gains, most of which would come from the turn-over on machinery. Again, the proposal refers to the same industry which was mentioned in the story on the outlook conference by the Canadian press headed, "Too many farmers, not enough money." According to this same
December 1, 1969

article, over the next years there will have to be a considerable economic adjustment. There is a reference to the number of farmers being reduced from 450,000 to 150,000. Even if a quarter of that number of farmers were to stop farming it would be disastrous.
[DOT] (3:40 p.m.)


Mr. Speaker:: Order, please. I regret to advise the hon. member but the time allotted to him has expired.


Mr. Hyl Chappell (Peel South):: Mr. Speaker, in my opinion many of the white paper proposals for tax reform are excellent-there is no mistake about that-but they can be improved upon. Certainly capital gain, if a true capital gain, should be treated as income. No one questions the fact that the cost of child care and unemployment insurance payments should be deductible. But while the approach appears sound from a taxation review standpoint, it is really a document for social change which appears to have been drawn up by economists without consultation with social scientists. Has there been sufficient consideration of the long term effect on society when the approach, although a rational one, is substantially directed to the transfer of taxation burden from one group to another, which is already heavily burdened.
I should like to refer to some statistics. All governments in Canada hope to raise, and will spend this year, approximately $27.6 billion, of which $7.8 billion will come from income taxes. The Dominion Bureau of Statistics reported that in 1967, the two and a half million wage earners, earning between $5,000 and $10,000 earned 46 per cent of the income and paid 44 per cent of all income taxes; that a much smaller group of less than 500,000 or 7.5 per cent of the total had incomes of over $10,000 and paid 35 per cent of the total income taxes-the taxes in the upper income levels being as high as 80 per cent. The proposal is to obtain even more from this group as capital gains are brought into income. Under the proposed reform, taxes would remain the same for about 820,000, be eliminated for 750,000, reduced for 3,100,000, and increased for about three million.
The basic philosophy of the paper in respect of personal income tax is found in paragraphs 1.6, 1.9, and 1.19.
Paragraph 1.6 reads as follows:
A number of goals and standards have guided the government in its approach to reform. They include a fair distribution of the tax burden based upon ability to pay; steady economic growth and continuing prosperity;-
Taxation Reform Paragraph 1.19 reads:
More than any other tax the personal income tax can be carefully adjusted to the income of the individual and the circumstances which affect his ability to pay-
Paragraph 1.9 reads:
There is no single or simple rule for increasing the tax rates up the income ladder that can be said to be the "right way". It is a matter of opinion, of judgment.
The criteria seem to be the ability to pay and the recognition of modern social needs, but tied to steady economic growth with continuing prosperity.
Exemptions from taxation for 750,000 and reduced taxes for 3,100,000 is an admirable and I believe a realistic goal. I am sure every member of the House wishes we could afford to exempt or lower taxation for even more, but desirable as this is and recognizing that it must come, can we afford to accomplish it at the expense of an increase on the middle group? I agree with the principle. I question the timing. When do we load the bus to the extent that it cannot reach its destination?
This summer I took a trip through communist socialistic countries. In Bulgaria in particular it was apparent that they had taken over all accumulated wealth. Then, they divided up the pie and had a banquet, but no one was left with capital or incentive to provide dough for another pie. Obviously, they killed the goose that produced the eggs. Now, they are in real trouble, begging for tourist dollars, but they do not have people with capital or the profit incentive to create the desired tourist industry.
The middle group and the upper 7.5 per cent now pay a very large share to provide old age security for their own parents and all of the other parents as well as for family allowances and other social benefits for themselves and all the others. In addition, they pay taxes to relieve regional disparity in less fortunate parts of the country.
Humane and desirable as it may be to reduce taxes and to increase modem social services, is it right to further increase the load on this middle group? Is it their responsibility to accept this added load now, or is there another way? Can we not say: here is our objective, here are our priorities? As we become more efficient and learn to save, as our national income increases, we will do these things in this order. Our gross national product, and thus our tax base, is bound to increase substantially. The labour

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Taxation Reform
force, and thus the number of taxpayers, is increasing rapidly. Wages, and thus taxation, are increasing. Regional development is converting certain sections of the country from a loss to a profit position, and the increase in the national product, with corresponding increases in sales taxes and other revenue, could accelerate if we do not lose confidence. We could implement this program of reduction in a year or two without increasing taxation on the middle group except to treat their capital gains as income.
As I said earlier, the philosophy of the paper seems to be a distribution of the tax burden based upon ability to pay and a recognition of modern social needs, tied to steady economic growth with continuing prosperity. Nowhere in the criteria is incentive mentioned. Nowhere do I find any attempt to establish that a further increase in taxation on the middle income group will not cause a reduction in recovery in 10 or 20 years. Let us not go too far along the well meaning but destructive road of socialism. Look at the example of England which socialism turned into a welfare state but dragged down to a third rate producer of wealth.
I agree there is a need to help, but I question the timing. It is not a kindness, but is in fact a gross blunder, to increase the load on the middle group if we impair incentive and thus impair production and the accumulation of wealth. We might lessen confidence and, as a result, adversely affect the steady economic growth and continuing prosperity which is part of the criteria.
Today, few decisions of major importance are made at universities or in big business without all of the disciplines being brought into consultation. I had the feeling after reading the white paper that it had been prepared by economists who worked from statistics only. Basic research in social science is not immediately available in Canada, but before taking such a major step I suggest that historical economists check to see what happened to incentive in England at this stage of the tax climb, that this be looked at from the sociological and psychological point of view to see whether this step would be harmful to the nation.
Think of the young couples starting out in life hoping to accumulate sufficient savings to start a business and buy a home. Their taxes are high enough now. It may be said in reply that this is not a large increase, but we must look at the whole picture.

[DOT] (3:50 p.m.)
In 1970 municipal taxes in Ontario, and I expect in other provinces, will go up substantially. So also will provincial taxes. How much can these people take before they begin to believe that incentive and energy are disadvantaged, and that it is impossible to buy your own home or start a b ismess? Will their attitudes change to why bother? Will we be encouraging them to join some protest group demanding that education be completely free for their children, that they get a larger pension at a lower age? Will they simply give up and begin to believe that they are owned by the government and they, in turn, must demand everything from government? What would the social research people say about this?
We are a young nation with a great future if we handle our resources correc ly. Surely, the main resource is the imagination, enthusiasm and the energy of the peopie. At what point can we say to them that federal taxation is stable and that they can push on with their plans within a known framework of tax obligation?
As I said earlier, I agree with taxation on capital gain. There is no reason why this source of income, to all groups, should not be taxed in order to increase exemptions and lower taxes for those in the lower income group, but there should not be any tax on a bona fide home or homestead, or on the furnishings except where the value of these furnishings is relatively high.
Paragraph 3.19 reads in part, "Generally, capital gains on the sale of homes would not be taxed.'' I disagree with this inte-pretation. In my opinion, there would be taxation in almost every area in Canada where there is growth.
Paragraphs 3.22 and 3.23 provide for a tax on personal belongings and furnishings such as stamps, jewelry, fur clothing, paintings, sculpture, rugs, books and other works of art if the sale price exceeds $500.
A homeowner would be allowed an increase of $1,000 a year, plus $150 a year for improvements. The average person would spend, say, between $500 and $700 a year on improvements so a complete record of screen doors, storm windows, new hinges, new water taps and roof repairs would have to be kept. In many cases, these records would have to be maintained for as long as 40 or 50 years. Unless there were audited statements, imag-
December 1, 1969

ine the difficulty to prove that accounts for improvements were authentic, after even 10 years.
Almost every home would have to be evaluated at or close to valuation day, presumably some time in 1970. To prevent abuses, the government would have to evaluate also. For those with rather expensive homes they would be wise to have two evaluations. At the moment appraisers are scarce and expensive. I expect the cost to appraise a home would be from $200 to $1,500. If only 50 per cent of the owners wished to have their homes appraised as of valuation day the available appraisers could not complete the task in 40 years and I expect the fees would become ridiculous.
It may be argued that evaluations are not necessary, that both the owner and the government can reply on the sales recorded in the registry office as of valuation day, and that people won't want their valuations too high because they could be used for succession duty purposes. However, the vast majority of homeowners will sell their present homes and pay capital gains tax long before their estates will be called upon to pay succession duties. Moreover, the records in the registry office are very little help in determining value if the home is any way different from the others on the street or if the owner has made improvements. In all of these cases, the real value can only be established by adjustments after inspection by experts.
I have seen valuations vary as much as 100 per cent between owners and metropolitan Toronto authorities, between owners and the Ontario government, and between owners and the federal government. For a relatively modest home worth perhaps $32,000 there could very well be a difference of $4,000, which could cause an owner to pay on a capital gain of $3,000 if he sold one year after valuation day. I can see no reason for assuming that these differences in valuation won't exist between the Department of Revenue and owners as they have in the past between expropriation authorities and owners.
If one goes to the trouble to have his home evaluated he should be able to call upon the department to accept it immediately and, if there is a difference, that a tribunal be immediately available to determine which figure is correct. It is not the same as determining the value for succession duty purposes. In that case the home is there for an inspection and evaluation at the date of
Taxation Reform
death, but for capital gains tax on the first sale after valuation day we must establish value as of some day in 1970. It cannot be left until an owner sells in five, ten or 20 years to establish what the value was in 1970. The witnesses would no longer be available and the owner himself might be dead, leaving the dispute to his widow.
Add to this the need to valuate paintings, sculpture, rugs, jewelry, fur clothing, books, silver and other works of art. Evaluators in these fields are even more scarce and less qualified, but many homes would require the services of from one to five of these experts. The cost to the government to collect, and the cost to the owner and the government to evaluate, would far exceed the recovery. The nation would have injured itself.
Trying to keep and maintain records of home improvements and articles purchased and sold would require a bookkeeping system and an office. Our wives would become badgered bookkeepers rather than homemakers. It is an invasion of privacy. We would have the constant presence of the tax collector in our homes. Big Brother would want to know every last detail of our personal affairs. The tax would be even more annoying than the radio licence of the past.
The family that sacrificed present pleasures in order to collect a few paintings and other works of art would be penalized for this contribution to society. Much that would be taken would not be capital gain but straight confiscation. Three bedroom homes in the Toronto area now sell for around $35,000. These homes have been going up at the rate of one per cent per month because of the increasing construction cost. It just happens that inflation is at its peak in the construction industry.
If an owner sells his home he must replace it with another. There is no way for him to get along without a home. To take away from him part of the inflated price which he received for his home without taking into allowance the inflated price which he paid for the new one is confiscation. A home that sold three years ago for $40,000 would now sell for $53,000. Under the new system if the owner sold for $53,000 he would have to pay $53,000 to replace it, but he could not. He would be allowed to deduct $1,000 a year, or $3,000, and pay perhaps $5,000 of the $10,000 increase in value in taxes. He would then have to settle for a $48,000 house. Even a relatively modest

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Taxation Reform
home worth, say, $32,000 goes up at least $2,000 a year and the owner would have to pay taxes on half of it.
It would be an interference with freedom. No longer could an owner change homes every five or ten years as his family changes. He would be nailed down to the same home for life. It would be no answer to say he can go into an apartment. Apartments are now being converted to condominiums, and the prices of condominiums are following the prices of homes.
In conclusion, Mr. Speaker, I wish to repeat the warning that appraisers will be over-burdened with evaluations of commercial and other income properties without touching homes.


Harold Warren Danforth: Mr. Speaker, on reading the white paper proposals for tax reform I came to the conclusion that anyone in the business community, in fact any citizen of Canada who wished to ascertain what the government proposed to charge individuals to reside in this country of ours, this so-called land of the free, should consider the white paper required reading in order that they will understand the ramifications of the proposals for tax reform.
[DOT] (4:00 p.m.)
It is my considered opinion that the citizens of Canada do not fully understand the proposition of the government under this heading of tax reform. As a result of all the publicity in the media and the advance propaganda that has been put forward by government members, the citizens have understood that the government was embarking on an investigation and a study, the prime purpose of which was to institute a tax reform. I believe the people understood the term "reform" to mean there would be an attempt by officialdom to bring some consistency out of the chaotic condition of taxes at the various levels of government. I believe they felt the prime purpose would be to make a more equitable basis of taxation for all the citizens of Canada, to close the loopholes and ensure that everybody paid a fair share. In this way there may be some hope of tax reduction, especially for those overburdened with taxes at the present time.
One does not have to look at this paper before us for very long to realize that it does not cover that aspect of tax reform. By the admission of the Minister of Finance (Mr. Benson) himself, the paper is nothing less
IMr. Chappell.]
than a carefully worded economic document which will, in the main, increase by millions of dollars income tax derived from the citizens of this country. In my estimation it is not a proposal for tax reform. As far as the middle class wage earner is concerned, the farmer and the fisherman, in reality it is not tax reform but confiscation by taxation. Time and time again when this government has wished to pursue its policies on any controversial subject raised in this House, it has pointed out that the action taken is as a result of a mandate of the people of this country. I contend that the government has no mandate for these proposals for tax reform. Their mandate in 1963 was on the basis of a balanced budget without tax increases; their mandate in 1968 gave no promises but stated that there would be balanced budgets and that things would be different under the just society.
Let us see, Mr. Speaker, what an investigation of the "balanced budget" and "no increased taxes" means. Since this government took office in 1963 we have had an increase in income tax; we have had an additional surtax; we have had a social development tax; we have had a corporate refundable tax; a tax on building supplies; a compulsory tax for the Canada Pension Plan; a tax for the Canadian Medicare plan and, in addition, the introduction of a new estate tax. All that these proposals do for the people of Canada is indicate still more taxes at a higher rate. I think the government is moving away from the basic principles of taxation. I have found, as I am sure other hon. members have, that Canadians are willing to pay their fair share. But when we consider that in addition to federal taxes the people must pay provincial taxes, municipal taxes, all types of sales taxes both apparent and hidden, the tax burden is very onerous indeed.
It seems to me, Mr. Speaker, that the primary purpose of government is to raise funds by taxation for the purpose of accomplishing those aims and objects, of providing those goods and services which cannot be obtained by the action of the individual, the municipality working in concert or by the province itself. With this in mind, the government should set down certain guidelines to see that expenditures do not exceed revenue. This is not the case today. With the competence of the new IBM machines and the ability to mechanically forecast future trends, it seems to me the object of the government should be to take into account average expenditures
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through the years and project them to the future to see how much is needed. The appropriate taxes could then be levied to accomplish the government's goals.
May I illustrate some instances in which I feel the government has been absolutely wrong in this regard? Through this tax proposal we are being asked to legislate greater tax burdens on many Canadians, but looking at the record for the past few years how can this be justified? Just look at the increase in expenditures of government departments. The addition of new departments over the past three or five years has cost literally hundreds of millions of dollars. Had this money been diligently applied to slum clearance perhaps it could have solved some problems in our major cities. But the money was not spent that way, Mr. Speaker, so this tremendous project is still ahead of us.
Imagine what those hundreds of millions of dollars could have accomplished in the attempt to obtain clean water, air and soil. Then there is the increased expenditure in the Prime Minister's (Mr. Trudeau) office itself, and the refurbishing of all those other offices over the past three or four years. I do not object to refurbishing nor to ministers having up-to-date equipment, but the cost of all this would have provided new schools for Indians and Eskimos. These will have to be provided anyway, and the taxpayer will have to pay. And what about the cost of refitting the Bonaventure, our aircraft carrier, now destined for disposal by the government? This expenditure alone could have provided $1 million for every province in Canada for a new high school, a new sub-college or a new school for Indians and Eskimos.
Then, there is the Company of Young Canadians, Mr. Speaker. I do not wish to deal with their present problems but the money allocated to this group alone, without supervision, would have been ample to pay in two years' time for all the grants to small fairs and 4-H clubs that are being cut off this year as an austerity measure. It seems to me that the government is not moving in the right direction. We are faced with the dilemma of the government seeking increased funds and those who are forced to pay are wondering when these monies will be channelled in the right direction.
[DOT] (4:10 p.m.)
The minister has indicated that this is a motion to refer proposals for tax reform to a
Taxation Reform
Parliamentary committee for study, and this is true. I hope that the history of this committee will not be the same as the history of past committees of this parliament in which the opposition members sat as a minority and the chairman was a member of the government Party. If this were the case it would then be possible for the majority in the committee to produce recommendations to the government on tax reform. I hope there will be ample time provided for all those who are concerned with making recommendations on tax reform.
I trust some of the matters that have been outlined by my leader in this House, and which are of such vital importance to Canadians, will receive adequate attention from all sides. Only in this way will it be possible to present a fair case, I hope the history of some committees will not be repeated, and that this committee will be genuinely interested in the welfare of Canadian citizens. I hope that the Committee's study and report will indeed be the basis for a tax reform meant to bring about equality of taxation and not place the burden on any individual class in this country.
As a result of the actions of this parliament, Mr. Speaker, we have over the past few years lent hundreds of millions of dollars to small businessmen, farmers and fishermen. We have established new businesses and attempted to develop economic units in all fields so that the over-all productivity of this country could be expanded. Now, what are we doing, Mr. Speaker? Now that we have placed a tremendous number of citizens of this country into that category, by these proposals we are taking away from them the funds necessary to develop their business. We are taking away from them all incentives to build up a business or establishment, with pride of ownership for themselves and something that can be handed down from family to family.
If I have one main objection to this paper, Mr. Speaker, it is the feeling it is designed with the aim of making it practically impossible to hand down any type of business from one generation to another. I feel this is disastrous in this day and age because, to my way of thinking, this has been one of our greatest incentives. This practice has been the driving force that has given us our wheelers and dealers, the men who take a chance not only for the love of business and business combat, but for the fact they are going to create a legacy for those who come after them. I feel these proposals will destroy this incentive and

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Taxation Reform
will thus destroy the very fibre that has made Canada great. We cannot survive under these proposals. There must be a steady growth in gross national income. All that we are doing is removing the incentive I have described, as well as the necessary capital to accomplish these ends.
No matter how you approach it, the financial policy of this government since 1963 has been formulated around the single principle of removing from the control of individuals the greatest possible amount of capital in order that Canada's economy would no longer be directed by the private sector, but would be under the direct control of the federal government. This has been apparent from their regional directives and the direction of all kinds. I feel this is one more step on the road to ruin for many thousands of Canadian people. They do not deserve this treatment. I am sure once hon. members of this House realize the end result of the changes in taxation brought down by this white paper, they will do everything possible to bring about amendments that will give Canada a working tax base that will be a credit to Canadians.


Hon. Jean-Pierre Cote (Minister of National Revenue):: Mr. Speaker, having reread this morning the speeches made Friday by the members of the opposition on the tax reform proposals, I cannot help saying that, in their criticism, they have taken advantage of the great freedom enjoyed by those who are not burdened with the responsibilities of government. On second thought, I admit that this does not necessarily show irresponsibility or lack of logic on their part. It is quite possible, as a matter of fact, that they have not really understood this tax reform program or that they have not read the white paper carefully and from cover to cover. How else can their somewhat illogical positions be explained?
I do not dare think that they are being stupid. I would prefer to believe that considerations of a purely political nature have brought them to this. However, I do wish to tell my colleagues in the opposition that last year's experience should have shown them that the public is no longer satisfied with fine promises, no more in the field of taxation than in that of underwater tunnels linking undeveloped areas.
Those who criticize the white paper should not forget some obstacles which interfere with any tax reform: the general need for

revenue, the not very profitable nature of other taxation sources and the economic context.
The government, while taking such factors into account, has nevertheless tried to work out tax reform proposals which would bring about the most equitable system.
My colleagues in the opposition know very well that the taxation system revolves around the income tax, because at the present time it represents almost 30 per cent of government revenue. So it becomes important to change first the Income Tax Act-if one intends to be fair, of course.
It seems that such is not the view of the Leader of the Opposition (Mr. Stanfield), since he contends that the government should also have introduced a program of reform concerning the sales tax, which would have resulted in delaying study of the fiscal reform, thereby affecting the small wage earner, he who will benefit most from the raise in exemptions; and certainly more time would have been needed to prepare a general reform of the taxation system.
Moreover, Mr. Speaker, everyone is aware that the sales tax system, because it is uniform and applies to all-since everyone pays the same sales tax-does not take into account the particular situation of every individual. The income tax, as opposed to that, is much more equitable, for it takes into account those particular situations. As regards the tax reform, we think that the part concerning personal income tax has priority, and the Canadian people will appreciate it.
In addition, fiscal reform proposals allowing for the establishment of a system which would yield globally the same revenue than the former one should be made. This implies the notion of compensatory changes, that is to say, the effect produced by a change in one sector of the fiscal system must be balanced by a change elsewhere. Some have suggested that this tax reform was a disguised means to introduce a new tax rate increase.
The main reason for the increase in revenue, Mr. Speaker, which will amount approximately to $630 million in five years from the implementation of this system, is due essentially to the widening of the tax basis of assessment. This will result in a gradual increase of about 5 per cent.
Naturally, these figures are only estimates because I think nobody can extrapolate. It is
December 1, 1969

easy to infer what the figures will be in the future years, but one is never quite certain of the results.
And yet, is it possible to actually reduce the existing tax rates in order to avoid a surplus of revenue after five years, as advocated by the Leader of the Opposition? In short, there must be a perfect coincidence between the revenue of the two systems.
A study of the forecasts for the first year of operation of the new system tells us that the revenue will increase by 1.5 per cent, which for all practical purposes may be ascribed to the inaccuracy of the forecasts. To reduce the existing rates in anticipation of revenue that will be collected in five years would bring, in effect, right in the first year, a very substantial deficit. Is this one of the brilliant solutions advocated by the Leader of the Opposition in order to check inflation?
Let us consider now the position of the Leader of the Opposition and examine some of his arguments. Generally, the position of my hon. colleague is completely inconsistent. In short, the tax reform is doing both too much and too little. In fact, according to him, the exemptions suggested are not sufficient in the case of low income tax-payers. The income tax levied on the middle class is too high, and on the wealthy too low.
It must be understood that the structure of Canadian earnings seriously limits any change in the Income Tax Act. Statistics show us that over half of the tax-payers have an income of less than $5,000. On the other hand, if all tax-payers with an income over $25,000 paid an additional tax of $1,000, the extra revenue thus obtained in 1967 would have amounted to $48 million, but each tax-payer whose income is less than $5,000 would have paid only $13 less.
The government chose to recommend an increase in basic exemptions and in order to do so, it must find the necessary money by taxing capital gains, on the one hand, which will mean increased taxes for the well-to-do taxpayers and, on the other hand, by placing part of the tax burden on the middle-income taxpayers.
The Leader of the Opposition-I think he was once premier of Nova Scotia-should know that an administration has to look somewhere for the funds required to balance its budget, unless he was suggesting that this year the administration should simply show a deficit or else should not increase the basic exemptions, as his plea for the middle-class
Taxation Reform
people would make us believe. The correspondence received up to now allows us to assume that the middle-income taxpayers understand the intentions of the government much better than the Leader of the Opposition and are willing to pay the price for the amendments.
His argument that inflation will erase the proposed increase in basic exemptions and the solutions he offers demonstrate the contradictory position of the Leader of the Opposition.
It is obvious that everybody is affected by inflation, including the government. Consequently, if the exemptions are raised proportionately to inflation, interest rates should also be raised. Finally, this is only feeding inflation.
Is this another brilliant suggestion from the Leader of the Opposition to fight inflation?
In any case, a $400 raise in the basic exemption for a tax-payer earning $4,000 represents one tenth of his income. On the contrary, for a taxpayer with a $40,000 income, this is only one hundredth of his income. I think this is a very strong argument to demonstrate that even though all the taxpayers should benefit by the raising of the basic exemptions, it will be more advantageous to the low income than to the high income taxpayer.
On several occasions, the Leader of the Opposition has alluded to small industry without being specific. I noted he listened very carefully to the Minister of Finance (Mr. Benson) and brought the matter up again.
I should like to know what he means by small industry. Does he mean a business with few employees, with a limited capital stock, with a small sales volume, or a company that does not pay much tax? Or does he mean, for instance, a company the owner of which decides to issue 1,000 shares, and gives one of them to his accountant and another to his lawyer in order to become incorporated and benefit from the preferred treatment accorded corporations and pay the tax on the first $35,000 profits at a rate of 21 per cent whereas most other taxpayers, such as employees and professional people, are not entitled to such treatment?
[DOT] (4:20 p.m.)
Finally, Mr. Speaker, a closely-held company is not necessarily a small business. If, on one hand, this small company is owned by an individual, there is no problem because the

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Taxation Reform
tax collected will be the same as if it were on personal income; on the other hand, if the company is owned by a financier who has a chain of small enterprises, fairness requires that he pay his normal share of taxes.
Does the Leader of the Opposition suggest that companies pay proportionally less tax on the first $35,000 of profits than the small taxpayer does on his first $5,000 in wages, as is now the case?
Does he suggest that the system have a double standard, a double yardstick? Since he appears so concerned with matters of incentives and disincentives for economic expansion, does he not believe that preferential treatment for small enterprises will not prompt them to avoid by various means to exceed a certain level of profit in order to pay less taxes, or to elude taxes-which is perfectly legal-through the establishment of multiple enterprises, in order to take advantage of the 21 per cent rate for each of them? When the Leader of the Opposition wonders why the white paper proposes to lower to 50 per cent the taxation rate of well-off taxpayers, he shows great naivety or an unusual slowness of mind. In proposing this reduction, the government wanted to restore a certain balance by preventing a perfectly legal tax evasion.
Mr. Speaker, I must say that it is indeed possible for an individual with a large income to set up a personal incorporated company in order to take advantage of a reduced tax rate, that is a rate of 50 per cent. The proposed reduction will do away with this tax evasion. And for those who scrupulously refrained from availing themselves of this loophole, the 80 per cent rate was unfair.
I might perhaps remind my friends of the opposition that in 1967 there were less than 140 taxpayers who were assessed at the 80 per cent rate and less than 50,000 taxpayers at 50 per cent and over. It is therefore impossible, if the purpose is to raise the basic exemption figures, exempt from taxation 750,000 taxpayers and reduce the taxes of 3 million more, to have the cost of these changes borne only by those few taxpayers who pay 50 per cent and over.
If the Leader of the Opposition proposes that a rate of more than 50 per cent be applied to this group, he will also have to increase the rates applicable to corporations, otherwise, it would be an injustice. If I am not mistaken, this is another brilliant initiative of the Leader of the Opposition with a view to promoting economic activity.

As for the capital gains tax, it reminds me of some rodents which will attack a small part of a building but, in the long run, will cause it to collapse. For instance, the argument to the effect that a five-year extension period is unfair to farmers in particular does not make sense. In fact, any farmer can sell his farm and hold a mortage, and as a matter of fact, that is very often the case. This formula allows to spread the proceeds of the sale over a much longer period, for the duration of the mortgage.
On the other hand, to say that the capital gains tax will be much higher than in the United States is completely false and a close look at the white paper is enough to convince us it is not so. The United States impose a 25 per cent tax on public companies shares. The white paper suggests a 50 per cent tax on half the gains, which represents a real 25 per cent tax.
The white paper also proposes granting an annual $1,000 exemption for the main residence of taxpayers, in addition to the allowance of $150 for repairs, which is a much better taxation method than the American one.
In submitting the white paper on tax reform, the government wanted to encourage a discussion of those proposals by all individuals concerned. Discussions have already been held with the various provincial representatives. It is clear that the government is ready to hear any constructive criticisms and to consider any worthwhile solutions. And I hope, Mr. Speaker, that those who have and who will take part in the debate in this house will readily attend the meetings of the parliamentary committee and that they will put forward more constructive proposals than those they made in this house up to now.
I would now like, Mr. Speaker, to make a few comments about the position of the hon. member for York South on the white paper. When I read his speech over, I realized how true is the saying that one quickly burns what one had formerly worshipped. Not so long time ago, the hon. member for York South considered the Carter report as his bible on tax matters. Yet, the Carter report did not recommend increases in basic exemptions whereas the white paper does. The report recommended that the income tax rate in higher income brackets be lowered from 80 per cent to 50 per cent, the same as the white paper.
Finally the Carter report proposed a 100 per cent reduction in income tax on the divi-
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dends of widely-held Canadian corporations. The white paper suggests an exemption of 50 per cent only in order to maintain a balance between shares and bonds.
Through what crooked reasoning can the honorable member for York South justify his present opposition to the white paper proposals?
As regards basic exemptions, how can he now turn about and state that the Carter report is not up to date in this matter and in the same breath say, trying to prove his point with statistics, that the increase is inadequate and should have been granted long ago?


Mr. Speaker:: I am sorry to interrupt the hon. minister but his time has expired.
[DOT] (4:30 p.m.)


John Howard Lundrigan: Mr. Speaker, having listened to the Minister of National Revenue (Mr. Cote), the nation's tax collector, reading his speech, my first observation to him would be to ask him for goodness' sake to read the white paper. Having also had the privilege of sitting here for the past two hours while the Minister of Finance (Mr. Benson) has absented himself, it is rather discouraging in a two-day debate-


Mr. Gray:: Mr. Speaker, I rise on a question of privilege.


The Acting Speaker (Mr. Bechard):: The
Minister without Portfolio on a question of privilege.


Herbert Eser (Herb) Gray: The record should show that the Minister of Finance had to leave the chamber temporarily on urgent public business, and that I represent him in my own ministerial capacity.


John Howard Lundrigan: I do not accept that at all. That is not a question of privilege. The Minister of Finance has a responsibility to the Canadian people to be in this House to listen to the arguments of hon. members. I have attempted to consider the white paper-or what the hon. member for Calgary North (Mr. Woolliams) referred to as the "red manifesto"-on the basis of its effects upon Canadian taxpayers, its equity, its fairness of tax distribution, as well as something that the Ontario Economic Council refers to as incentives in the tax structure. These incentives relate to the proposed reforms that govern the extent to which our economy can expand, as well as the extent to which individuals exercise their
Taxation Reform
ingenuity and eagerness and display aggressiveness in developing their own businesses. In other words, when I think of incentives I think of fattening the animal, of building a little more muscle in the Canadian economy, so we can afford to pay for those services that the Canadian people deserve and demand.
If the Minister of Finances reads my speech, I hope he will not think I am being partisan when I say that I can find no way in which the white paper succeeds to any measurable extent on either count, whether in terms of equity or in terms of incentive. With regard to fairness of the tax distribution, in other words equity, having listened to the Minister of National Revenue and to the speeches of a number of other ministers, including the Minister of Finance, I am still convinced that the small increase in the basic exemption does nothing more than cloud the issue, befuddling the Canadian taxpayer into thinking he is getting a break. In actual fact it is nothing more than an increase in taxation; and the Leader of the Opposition (Mr. Stanfield) has done a masterful job in pointing out the effects the tax changes will have upon the average Canadian. By the end of two years when these tax proposals come into effect, inflation will have eaten away most of the benefits. Why are these benefits not brought in now? Why do we have to wait for two years if we are interested in helping the little man?
[DOT] (4:40 p.m.)
What about the tax credits to which the Leader of the Opposition referred? This appears to have quite a bit of relevance. Why was the alternative of '"tax credits" not considered and recommended to the committee for study? Let me leave that point, Mr. Speaker, because there are a number of other members who want to talk about that.
I am interested in the consideration of the effects of the white paper on the Atlantic provinces. This is a poor area in Canada about which we have had numerous discussions. In this regard, we must consider the unemployment situation. In consideration of the measures proposed in the white paper I think that if many of the proposals are implemented the Atlantic provinces might just as well forget about Confederation. That area of Canada will be at such a disadvantage it will literally have to close shop. The minister reminds me of a hibernating bear when he talks about these tax proposals. He thinks the Canadian nation will literally live off its own

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Taxation Reform
fat. There are no incentives and the proposals in the white paper must be considered as being disadvantageous to Atlantic Canada.
What kind of an economy do we have at the present moment in Atlantic Canada? We have the highest unemployment rate of any part of this country and reference has been made to this fact. Let me mention two or three statistics to verify this fact. These statistics do not exaggerate the situation, as a matter of fact, the situation is worse than the statistics suggest.
In October 1967 we had 4 per cent unemployment in Atlantic Canada. The situation was actually worse than the statistics indicate. I understand the sampling procedure used by the Dominion Bureau of Statistics does not accurately reflect unemployment. In October 1967 we had 4 per cent unemployment and in 1969 we have 5.2 per cent unemployment. In October 1967 New Brunswick had slightly more than 3 per cent unemployed, yet in October of 1969 it had 5.7 per cent. In October of 1967, Newfoundland had over 5 per cent unemployment and in 1969 has 7.4 per cent, the highest level since I was born a Canadian.
Again, we have a tight money situation in the Atlantic provinces. When there is a tight money situation in Canada we see the effect immediately. Investors do not want to move into areas where there is speculation and risk. Again, the economy of our area is related directly to small businesses which suffer a very high mortality rate. This area is made up mostly of small businesses. We do not have many of the large corporate clusters like metropolitan areas of Toronto. Montreal and Pittsburgh have. We have a multiplicity of small businesses. This is the economic fibre of that part of Canada.
Let us consider the type of economy we enjoy and the effect the proposals contained in this white paper will have on Atlantic Canada. Small construction firms build apartment blocks, houses and so on. Under the present tax system there is an incentive in respect of capital cost allowances. Now when they are faced with this recapturing clause that will apply to each property independently they will no longer have incentive to expand their operations. I hope there will be changes made when the committee studies this white paper. The minister suggests that the loophole under present recapturing arrangements will be plugged. This will remove that incentive and force each proper -

ty owned by a business man, to stand on its own merit. When these small construction companies sell a property they will face the recapturing clause immediately. This proposed change will make it impossible for the small construction firms to expand or get into new business. They will pretty well have to retain existing properties. This is the "disincentive" about which I am talking.
Again, in the past some small builders have, as a result of ingenuity and effort, been able to build houses for resale at a profit of $10,000 or $12,000 in respect of a real expensive home, or $4,000 to $5,000 on a lower priced home. This present proposal will completely eliminate the incentive for these people to get involved.
I could not go on without reference to the Home Owner's tax, a tax which will be applied to a man if the sells his home and makes a profit. I really cannot see the advantage to Canadians of this aspect of the white paper. On the contrary, I think this will put many people in a mess. This is true because of the administrative costs and red tape involved. The Prime Minister (Mr. Trudeau) does not want to go into the bedrooms of the nation, but he is coming damn close to doing so as a result of this proposal. The Government is forcing Canadians to be materialistic. They are becoming the victims of government involvement in their own affairs. The government is trying to play the role of a political pinnochio when it sticks its nose into the affairs of every Canadian. As a result of government red tape the average Canadian is no longer a free man in his own home. A man's home used to be his castle. It is now becoming merely a piece of property. I could go on and on in this regard, but time does not permit me to do so.
Reference was made earlier to small business. The Atlantic provinces are made up of small businesses. With the elimination of the 21 per cent concessional provision, the small businesses will now have to compete with large corporate businesses. I have in mind small lumber dealers as well as primary, secondary and tertiary industries which net $20,000 or $30,000 per year employing 25 to 30 people more or less. These companies are already faced with stiff competition. They are also faced with the difficulty of raising funds. Banks have tightened up and are demanding high collateral. These firms can no longer get the money they need to expand and develop markets. They face difficulties not faced by big companies. As well there is a great deal
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Taxation Reform
of speculation involved in small business ventures and a very high mortality rate.
In view of the present proposals of the minister, these small businesses will have to close shop. They will be faced with a 50 per cent tax if they make $20,000 to $30,000 a year or more. I am amazed that there is not a greater conflict between the Minister of Finance and the Minister of Regional Economic Expansion (Mr. Marchand). One minister, the minister of Regional Economic Expansion, recognizes that incentives must be provided to small businessmen in the four Atlantic provinces who want to expand. In the case of a company which plans to expand and invest $30,000 there is a 20 per cent incentive. If such a company wishes to establish a new business costing $60,000 or more it receives a 20 per cent incentive. These companies must face initial high labour costs and the new Regional Development Department is to help with these costs.
In spite of this recognition by the Minister of Regional Economic Expansion, the Minister of Finance takes an opposite view. One minister says we should not discourage small businesses from getting on their feet, yet the other uses the excuse that small businessmen ought not to be encouraged by the 21 per cent concessional arrangement. We have become involved in a political push-me-pull-you. The Government is moving in both directions. One minister wants to build incentives into the Atlantic economy while the other minister is cutting his legs out from under him. I should like to tune in on cabinet discussions when this matter is considered.
A great deal of the employment in the Atlantic provinces is created by the exploration of extractive industries, namely the mining operations. This is where a lot of our growth has taken place in the last few years. Recently I read in the Ontario Economic Council report that there has been one billion dollars annually put into the Canadian economy by oil and mining companies through exploration work. A great percentage of that has been investment in northern parts of Canada. Much has been invested in Quebec, Labrador, Nova Scotia and New Brunswick where there is a great deal of undeveloped resources. In other words, the aim should be to build incentives in these areas to encourage industry to Atlantic Canada to develop our resources.
[DOT] (4:50 p.m.)
In other words, there should be extra incentives for companies which are willing to gamble and explore. If they make good, they are really protected. But this white paper, if it should be accepted, would eliminate practically any incentive to a mining operation to move into an area in which there is a danger of failure. It eliminates the three-year protective tax agreements which have been in existence. This will really disrupt mining in Atlantic Canada. The government says, "If you move in and do not make it, thanks anyway; if you do make it, pay up". The government says, "If you pay for your capital and operating costs, then start paying your taxes". In other words, there is no real incentive to large companies to move into areas in which there is a need for development and where there should be incentives.
I could refer at length to evidence in support of my position if time permitted. However, I shall refer to something which perhaps is of great concern to some people. In reply to the hon. member who mentioned that the provinces are very dissatisfied the minister said, "Refer to Table 13." I have referred to it. It indicates that every province will get an increase as a result of this proposal and that there will be $165 million generated by the tax proposals. You may refer to page 85 for that statistic. The government says that, as a government, it is prepared to give all 10 provinces a total of $20.4 million. I am not a mathematician, but it seems to me that is $20 million to the provinces and $145 million to the federal government, which means the federal government receives 88 cents out of every dollar and that the provinces combined receive 12 cents.
I have computed the average percentage of increase to the provinces. These are the percentages of increase in income tax going to the provinces along with the equalization payments: Newfoundland less than .5 per cent. The province of Nova Scotia will receive an increase of .8 per cent from Ottawa on the basis of the income tax and equalization payments. Prince Edward Island will receive .8 per cent; New Brunswick .7 per cent; Quebec, .6 per cent; Ontario, .6 per cent; Manitoba, 1.2 per cent; Saskatchewan, .6 per cent; Alberta, 1.5 per cent and British Columbia, 1 per cent. This represents an average increase of less than 1 per cent. The provinces are supposed to be satisfied with this amount. There is no reference to the need for reviewing the tax-

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Taxation Reform
sharing arrangements with the provinces. How can one blame the premiers of the various provinces for expressing regret at the almost complete contempt the federal government has shown for the provinces. This is really discouraging. At the Hot Springs conference when the Prime Minister was asked about the provinces, the Prime Minister said he would tell the provinces that perhaps they ought to consider doubling their taxes. This is the federal formula for helping the provinces-one times two, double your taxes. This is what the Prime Minister tells the provinces. He tells them that if they want services they should double their taxes. How can they double their taxes in the face of these income tax increases, as well as other increases by the federal government.
If this white paper is to make sense, it would seem to me there should be some study of the tax-sharing arrangement with the provinces. This is not a reform of our tax structure. As a new member I expected some proposals to change the balance of our tax structure in Canada. This is a disguise for an increase in taxation.
I could continue and give more details, but I wish to sum up my feelings about the impact of the white paper on Atlantic Canada. First, it will force the provinces to increase their taxes because of the heavy demands for new services and the imposition of certain programs by the federal government which the federal government plans to vacate, in some cases by the year 1975 and earlier in other cases. It will pretty well ruin the small businessman in Atlantic Canada. It will discourage mining exploration and in that sense will lessen the opportunities of Atlantic Canada to develop its resources. It will bring about a substantial increase in the number of unemployed which is now being increased by present government policies.
I see that the Minister of Manpower and Immigration (Mr. MacEachen) is blushing. I can appreciate the reason he is blushing. It is because of the lack of support he receives from his cabinet in his efforts to improve the situation in Atlantic Canada. The Minister of Regional Economic Expansion could not take it; he stayed away. There will be an increase in unemployment in Atlantic Canada, a situation which is chronic because of present government policy. There will be a reduction in the standard of living and a dampening of incentive. There will be a need for more welfare because fewer people will be employed. All I can say is that from now on I hope for goodness sake the government will very seri-

ously consider the need for an increase in regional disparity grants. There will have to be an increased effort to feed the people of Atlantic Canada because this is what the government will have to do if some of the basic tenets of this proposed white paper are adopted.


PROCEEDINGS ON ADJOURNMENT MOTION
The Acting Speaker (Mr. Bechard):: It being five o'clock it is my duty, pursuant to Standing Order 40, to inform the House of the questions to be raised at the time of adjournment. The questions are the following: The hon. member for Winnipeg North (Mr. Orli-kow)-consumer affairs-Canadian price of Ford "Maverick"; the hon. member for Comox-Alberni (Mr. Barnett)-Indian Affairs *

Band council borrowing regulations-provision of fund; the hon. member for Halifax-East Hants (Mr. McCleave)-Highways- Atlantic provinces-cost-sharing formula.
It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions and public bills.


Yves Forest: Mr. Speaker, there have been discussions and I believe there would be general agreement to waiving private members' hour so that more members might participate in this discussion on this motion.


Stanley Howard Knowles: This is correct.


The Acting Speaker (Mr. Bechard):: Is it so
agreed?


Some hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the Motion of Mr. Benson (for Mr. Macdonald, Rosedale):
December 1, 1969
[Stage Direction]
That the white paper entitled Proposals for Tax Reform tabled in the House on November 7, 1969, be referred to the Standing Committee on Finance, Trade and Economic Affairs.
Mr. Tom H. Goode (Burnaby-Richmond):: Mr. Speaker, it is indeed a pleasure to follow my good friend from Gander-Twillingate, but I was considerably disturbed to hear the hon. member who is from Newfoundland criticize to such a great extent the white paper on tax reform because it has been my thought that the white paper was designed to help the low income provinces.
It was with a great deal of interest that I listened to the speech given in this House on Friday by the Minister of Finance (Mr. Benson). The minister, as usual, was well prepared and articulate as he outlined the proposals for tax reform. Let me say now that I believe the great majority of those proposals are sound and will shortly be the basis for excellent legislation which will recast our present outdated tax structure in a form more in line with the concept of fairness and justice which most Canadians desire.
Lest the minister get too comfortable, I should warn the House that this is the last kind word I will speak about the white paper today. My concern is with the plight of the small businessman. When we talk about the small businessman in Canada we are talking about a man who, to complement his ingenuity and resourcefulness, often works 10 or 12 hours a day. We are talking about a man who finds himself competing with large firms, many of which are international or even multi-national in character. He is a man who cuts short his summer vacation, if he has any at all, in order to return home to deal with his business problem; a man who rises from the supper table and heads, not for the t.v. set but for the den to work out business problems; a man who must fight long and hard to keep his small part of the market. The small businessman in Canada stands as a living example of the difference between socialism and free enterprise. Let us not take from this man, who has pride in both the growth of his company and his country, the incentives which he needs to carry on his business. At present, the tax rate is 21 per cent on the first $35,000 of corporate earnings and 50 per cent on any amount over that. If the proposals in the white paper were to be adopted, the 21 per cent tax rate would ultimately be abolished and the 50 per cent rate would apply on
Taxation Reform
total corporate income. This would be disastrous for Canada. The Minister of Finance (Mr. Benson) proposed that the new 50 per cent rate be phased in over five years with the 21 per cent rate applying only to the initial $28,000 in the first year, $21,000 in the second, $14,000 in the third, $7,000 in the fourth, and be eliminated in the fifth year.
[DOT] (5:00 p.m.)
Why has this new so-called reform been suggested? In his speech to the House on Friday, the minister gave his answer to this question. He believes that the main reason Canadians set up corporations is to avoid tax. My belief is that this is not the case. I believe that there are many reasons for setting up corporations, but the most acceptable is to limit the liability of the persons involved.
The small businessman does not seek to avoid paying taxes. He merely wants to remain in such a position as to be able to use his profits to expand and improve his operation, in other words, to re-invest in the country. Are we to stop this re-investment? After all, the small businessman does not realize any immediate personal gain or see any instant improvement in his own standard of living by plowing profits back into the company. He needs this capital to enable his small corporation-a Canadian corporation- to develop and enlarge, perhaps by purchasing more sophisticated equipment to produce a superior product.
However, I realize that there may be some persons who, under the present tax structure, have made a practice of leaving corporate income for an indefinite period of time in the company, particularly in a closely held corporation or series of such corporations which boast incomes of $35,000 or less. Clearly, in such cases the tax revenue of the country suffers because the corporate profits are only being taxed at the rate of 21 per cent.
What is the solution? I propose that the solution is not to tax 50 per cent, which cuts down the incentive. I propose that the closely held corporations which have incomes of $35,000 or less be allowed to retain the present 21 per cent tax rate for five year periods. At the end of any given five year period, the businessman would be taxed on the profit of each consecutive year in the period at the rate he would have been taxed had his corporate income been treated as personal income. In other words, the small businessman would only be deferring his payment of taxes. He

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Taxation Reform
could not avoid payment. For the privilege of delaying tax payment he would pay interest to the government on the amount of the deferred taxes at the rate of 1 per cent above the long-term borrowing rate of the federal government. It would also be stipulated that to benefit under this deferred taxation plan a corporation would have to be at least 51 per cent Canadian owned.
I feel that my proposal is a good compromise between the recommendations in the white paper, which would lead to greatly restricted growth of existing Canadian small corporations as well as to the discouragement of individuals with exciting ideas from going into business for themselves, and the present legislation which admittedly is open to some abuse. The solution I put forward in my brief remarks today would allow legitimate businessmen with closely held corporations to retain the internal source of expansion capital they so desperately need to compete, while at the same time not reducing over-all the taxation revenue due our country.
In conclusion, I would like to read from an editorial entitled ''Profit and Loss" which appeared in the November 11 issue of the Toronto Globe and Mail. It reads as follows:
Canadians cannot know how much of their productivity and prosperity has depended upon creative men who started small, with the aid of the low 21 per cent rate, and eventually grew big and forced their competitors to grow also, and thereby provided wealth and jobs all round.
All the Canadian small businessman wants is to be allowed a chance to survive and the opportunity to grow. My hope is that the minister will not decide to take away that chance of growth.


Winona Grace MacInnis: Mr. Speaker, so much has been said about the good features of the white paper on tax reform-mostly by the minister-that the public is in no danger of overlooking them. Indeed, after his prodigious efforts in promoting this particular package of payments, the minister could well take on the job of advertising the advantages of bikinis to the belles of Baffin land. Probably it would prove an even more agreeable task than winging his way across Canada accompanied by the white paper.
In any event, I shall say at the outset that there are measures in the white paper which distribute the tax burden a little more fairly, and where these exist we favour them as far as they go. But the net result falls far short

of an equitable and effective taxation policy for Canada. I am glad of this opportunity to indicate some of the reasons.
In his speech opening the debate the other day, the Minister of Finance said that people in the middle income group of taxpayers want to be sure that those in the upper income group are pulling their fair share of the load. If middle income taxpayers need this assurance, it is doubly necessary for those in the low income groups, and extremely urgent for those who do not get enough income to be taxed at all. For it is only when those in the upper brackets are paying their full share of taxes that those on low incomes can keep their heads above water. Fair taxation of the wealthy is the only way to provide the public goods and services which alone can prevent the cancer of poverty from spreading in this country.
In the opinion of the New Democratic Party, the proposals of the white paper do not ensure taxation according to ability to pay, nor will the imposition of a capital gains tax redress the balance. As long as there is a ceiling on the tax rate, we shall not have taxation according to ability to pay. We do not intend to settle for anything less than the removal of the ceiling.
[DOT] (5:10 p.m.)
Various ideas have been given in this debate about criteria to be kept in mind when designing a tax system. Our deputy leader gave an admirable summary of our ideas the other day. But I would like to add just one more thought. To me, the most important thing is not how much you pay in taxes; it is how much you have left to live on after you have paid your taxes. Judged by this standard, taxpayers in the upper brackets will not have too much to worry about, not if the recent statements of bank incomes and corporation profits mean anything. Judged by this standard, however, there are a lot of people in the low income brackets who do have plenty to worry about, to say nothing of those millions of Canadians below the taxation and poverty levels altogether.
The Economic Council says that one Canadian in five is living below the poverty level now. That verb "living" is inaccurate. The proper one is existing, and existing in a state of insecurity and misery impossible for any of us in this chamber to comprehend. In today's conditions, the minister's suggestion of $30 a week provides the kind of existence
December 1, 1969

that no modern prison or penitentiary would dare to tolerate. In this connection it is interesting to note a reference in today's Globe and Mail to the minister's visit to Vancouver. It shows that his hotel suite there cost $45 daily, in other words enough to keep a $30 a week man for a week and a half, yet that was merely for lodging in the hotel room for one night.
The minister boasted that the white paper will take three quarters of a million taxpayers off the rolls because of their poverty. The Economic Council says poverty begins for a single person below $1,800, and for a family of four below $4,200. Senior citizens' organizations and others have been campaigning long and hard for income tax exemptions of $2,000 for single persons and $4,000 for married couples. Yet the minister sets the new exemptions at only $1,500 a year for a single person and $3,500 for a family of four. What kind of justice is this? What kind of sense? It has been said that you cannot get blood from a stone. Well, the minister is having a good try. What he fails to recognize is that these poverty striken taxpayers are not stones. They are men and women of flesh and blood and feelings, and have the same kind of needs as the rest of us.
The proposed exemptions should be raised, and raised well above poverty level. Our recent New Democratic Party Convention in Winnipeg put our policy in a resolution in these words:
Tax reform to make the over-all tax system truly progressive: integration of the income tax system with the minimum income so that no income taxes are paid by persons below the poverty level and the income tax form can be used for determining eligibility for the minimum income.
The minimum income? That brings me to another point of criticism of the white paper, a point which has been dealt with already but which needs much emphasis. You cannot make a proper assessment of the value of these proposals without knowing what other proposals the government is going to make in interrelated fields.
What is the government going to do about the rising cost of living? Establishing boards, councils,, committees, task forces and other similar pieces of machinery is not action. It is merely buying time for inaction. The public, and the members of Parliament here who are their representatives, need to know what is going to be done to stop inflation and rising living costs. They need to know in order to pass judgment on the validity of the white
Taxation Reformpaper proposals. Yet all our inquiries in this direction are met by smiling secretiveness. The masterpiece will be unveiled in due course. Meanwhile it is government property. Keep out! The taxpayers are beginning to get tired of this. They have paid for the machinery. They want to know what, if anything, is going on. They have a right to get value for their money.
A second question relevant to the proposals in the white paper is: what is the government going to propose at the end of its long review of existing social security programs? Is it going to penny pinch still further by applying the means test to all of them? Is it going to face reality by making long-overdue increases? Is it going to replace the outmoded patchwork by a guaranteed income?
The Prime Minister's recent answer to that question when I asked it was not too reassuring. He said, "... as a government we are not yet satisfied that this is a realistic step." Not realistic? With four and a half million Canadians existing below the poverty line, with all that such an appalling figure indicates in the way of public taxation for unnecessary social assistance, disease, delinquency, crime, divorce, drugs, mental breakdown, and ultimately the outbreak of civil disorder in our great cities.
Not realistic? With the average gross income of a manufacturing worker only $5,723, and his family exposed to the hazards of unemployment and all the other risks which become so acute where income leaves no margin. Not realistic? How realistic is this government? And how long will it refuse to face reality in the matter of a fair distribution of income?
If this is the government's answer, what other social security proposals does it have in mind? If we are to assess the proposals in the white paper we need to know. Then, there is the sales tax. What does the government intend to do about it? For years now the public has been clamouring to get rid of it as a brake on production, with particular reference to housing. We need to know the answer to this one, too.
Undoubtedly these and many other relevant questions will be raised when the white paper is in committee. Until the answers are provided the public can get no accurate and comprehensive idea of the effect of the white paper proposals on the individual taxpayer and on the state of our economy as a whole. What is the sense in granting increased

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Taxation Reform
exemptions if the cost of living and other kinds of taxes are going to gobble up the increases?
One feature that we in this party deplore is that the white paper proposals perpetuate the double standard of income tax deductions which exists in our present tax laws. There is one standard for the self-employed, the professional and business taxpayer, who can deduct all sorts of costs as expenses of earning his income. There is quite another for the wage and salary earner who can deduct practically nothing. True, the white paper proposes a slight easement for the wage and salary earner, 3 per cent of his income, with a maximum amount deductible of $150 a year. But for the self-employed there is still no maximum to the amount he can deduct.
Nowhere does this double standard of deductibility show up more glaringly than in the new proposal of child care expenses for working parents. Let me say at once that we welcome the idea of helping working parents bear the burden of expense for their children while they, the parents, are working. The proposal to pay up to $500 per year per child under the age of 14 is one small and very belated step to protect family life. But upon examination it is really a very limited one.
Why cannot a working mother, a taxpayer, deduct the actual cost of child care as an expense of earning her income in the same way as the self-employed taxpayer can do with his expenses? Surely, if the principle is right in the one case it is right in the other. The new child-care provision is thus manifestly discriminatory against the working mother who earns a wage or salary. Alimony and child care payments made by men have always been tax deductible. Why not babysitting or nursery school expenses for women?
The white paper proposal sets a limit of $2,000 per family for child care services. In other words, the government is saying clearly to parents across Canada, "Four children is enough." I am inclined to agree. But what about existing families of five or six or more children, children in mother-led or single parent families where the need for child care is great?
You will say, of course, that if a woman or a parent has a number of small children her place is at home, bringing them up. Bringing them up on what? Mr. Speaker, it seems to me that we have here a powerful argument for the measure I have urged in this house on

a number of occasions-the provision of an allowance which would permit mothers of young children to stay at home and look after them instead of having to take jobs outside the home to get enough to feed and clothe them and keep them in decent surroundings. Such a measure has been in effect in France for a number of years now. I would hope that our government would soon consider this kind of family protection for Canada. If it will not do it for the family, let it do it for the taxpayers who have to pay all the costs of neglected homes and neglected children.
Another shortcoming of the white paper child-care proposal is that the $500 figure bears no relation to the actual cost of child care. One organization of single parents, Single Parents Associated, with headquarters in Toronto, summarizes the actual cost per year of child care service for one child. The figures are based on a 50-week year and enumerate the various forms of child-care which now exist: live-in help $4,200 per child; daily help $3,550 per child; outside day care $1,000 per child; nursery school $1,680 per child; and private school $3,000 per child. Obviously the white paper has not priced the actual cost of child care before setting its tax deduction figure because the two have no relation to each other. Further, it is true that every single form of child-care service enumerated is in short supply and would have to be greatly augmented if even a small fraction of the children of working parents were to be adequately protected.
[DOT] (5:20 p.m.)
One further criticism of this child-care proposal that is the need to keep receipts in order to qualify for the deduction. It seems to me that this is an almost insurmountable and quite unnecessary obstacle. Working parents and the baby sitters they employ are just not geared for such paper work which is the delight of public servants like those in the minister's department. The income tax form clearly sets out the occupation of the taxpayer and the number of his or her dependants. Why not permit him or her simply to deduct a definite amount per year for child care, in the same way that for years all taxpayers were permitted to deduct a flat $100 for medical expenses? To me, this would seem a much simpler way to do it.
There are many more things Mr. Speaker, I should like to say about the white paper if time permitted. But I want to end with just one more observation which seems to me very
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important. A greal deal is said about the serious consequences of endangering incentive by taxing the upper income brackets their full share. We are told it would be fatal to the future of Canada to make these taxpayers feel that their efforts were going to be curbed. I have come to believe that there is a far greater danger in frustrating the initiative of the people at the lower end of the income scale. A great many of these people have never had a chance to exercise that initiative and in too many cases it is atrophied. The cost to the taxpayer of carrying these people along in idleness because their initiative cannot find an outlet, is very great. Too many children are growing up who have never known what initiative is because their parents, too, were born and raised in poverty and insecurity. They have no chance to exercise their initiative and no incentive to do the sort of thing that is natural to people in higher income groups. How can such children be expected to develop initiative? The very limited success of the Head Start Program and other programs designed to coax out this almost dead initiative in children has indicated the seriousness of allowing this to be stifled at the source.
To my mind we need an income tax policy which, by taxing according to ability to pay, right up to the top of the income scale, will encourage the initiative of those low income citizens whose efforts could add so much to their own lives and the life of this country. I do not believe this white paper provides such a policy.


Mr.   Fernand-E. Leblanc@Laurier: Mr. Speaker, I am happy to participate in this debate on tax reform proposals though, in my opinion, it seems somewhat premature and this for two main reasons. The first one is that it was absolutely impossible in the short time we have had at our disposal since the white paper was tabled to assimilate it entirely and to understand fully all the recommendations it contains. The second reason is that it might perhaps have been more appropriate for us to hear from the various agencies that might have wished to submit briefs.
The Canadian Institute of Chartered Accountants, the Canadian Bar Association, the Chambre de Commerce, the Board of Trade intend to submit briefs which, I am sure of it, would have been very useful to the members of the House before they got ready to take part in the debate.
Taxation Reform
As far as I am concerned, I am interested in talking about these problems, both as a member of parliament and as an accountant. My constituents in the riding of Laurier are poor people, but they nevertheless were pleased with some recommendations, particularly the one relating to basic personal exemptions that are increased from $1,000 to $1,400 for single people and from $2,000 to $2,800 for married people as well as the exemption that applies to working parents. In such a case, a deduction would be allowed for child care expenses, up to $500 per child under 14 years of age, or 2,000 per family.
They are also satisfied with the one allowing a deduction of 3 per cent of the salary for professional expenses up to a maximum of $150.
Mr. Speaker, some years ago I had an opportunity to take part in a debate and I chose to speak on the report prepared by the Belanger Commission after its study of possible tax reforms in the province of Quebec. I then opposed the capital gains tax and I used as main argument that it might keep eventual investors away.
However, considering the new philosophy established by the minister in the proposals for tax reform, I have to side with him, because, at the present time, the point is priority and equity for the Canadian taxpayers. At the beginning of the paper entitled "Main points", it is said and I quote:
A number of goals and standards have guided the government in its approach to reform. They include a fair distribution of the tax burden based upon ability to pay; ... steady economic growth and continuing prosperity; the understanding of modern social needs... a system that can and will be used by the provinces.
Naturally, the minister immediately states that the co-operation of the provinces will be needed if we are to be in a position to apply the recommendations that will be made. It would therefore be fitting that we meet with the provinces for a joint conference on the recommendations of the white paper and that we endeavour to find a uniform tax system for the country, that would be equally applicable to the provinces.
As an accountant, I naturally have a number of questions that I would like to ask the Minister of Finance (Mr. Benson) in order to obtain more information about certain matters which, at the present time, appear rather obscure.

December 1, 1969
Taxation Reform
[DOT] (5:30 p.m.)
Recommendation 5.5 of the white paper
says:
The government proposes to create a new depreciation class which would sweep up all of these nothings and would enable the taxpayer to deduct 10 per cent of the book value of this class each year.
The first question would be: What does the minister mean by the book value? It would seem advisable to me that the minister give us, whenever he feels it is the right moment, a definition of the expression "book value", so that we can understand the exact meaning of the recommendations when they are approved, with or without amendment.
It is proposed that 10 per cent of the book value of assets be deducted each year, but it is not said whether this deduction will apply on a direct line basis or whether it will be calculated on the basis of the residual value, as is the case now throughout the nation. This is another element to consider and on which to obtain more explanations.
What surprises me somewhat is that recommendation 5.14 again mentions depreciation, and I quote:
Therefore, the government intends in due course to invite briefs on the system and rates of capital cost allowance.
Yet, if we are revising all the rates, it may have been somewhat premature to set a 10 per cent rate, as we would like to know the views of experts in this field before setting or revising rates.
Recommendation 5.8 concerns the selling of goodwill, and I quote:
-taxpayers who sell goodwill in the first year of the new system would be taxable on 40 per cent ... if in the second year, taxable on 45 per cent and exempt on 55 per cent; and so on, with the taxable portion increasing by 5 percentage point each year until the thirteenth year-
Now, it would seem, at first sight, that such a way of taxing the selling of goodwill is not very equitable, that the 40 per cent tax is arbitrary and that, consequently, it might be appropriate to know the reasons behind it.
If an individual sells his shares instead of the goodwill, it would seem that the tax would not apply and, consequently, there could be an injustice with regard to the sale of the goodwill. I wonder why we could not, when the minister sets evaluation day, evaluate the goodwill of the various business concerns according, naturally, to recognized accounting criteria.
[Mr. Leblanc (Laurier).l
What about the criterion whereby the number of years during which the business has existed should be taken into account? Indeed, if an individual has been in business for five years, he could perhaps spread the tax over a five-year period; he could do the same if he has been in business for ten years, perhaps at a maximum rate of 5 per cent per year. On the other hand, the tax levied could go from zero to 5 per cent per year; thus after a 20-year period the whole amount would become taxable.
Mr. Speaker, there seems to be some confusion, or at least the translation of some articles would seem to be misleading. I should like to mention, in particular, recommendation 3.20 which says in French:
... le Gouvernement propose que les contribua-bles qui, en raison de leurs occupations profes-sionnelles, sont appeles 4 se deplacer d'une region a une autre au Canada, soient autorises a consi-derer la vente de leur maison et l'achat d'une autre residence dans la nouvelle region comme une transaction non imposable, ...
The English text is somewhat different. It might be advisable to know which text is the right one. This is what we have in English, and I quote:

In addition to the exemption, the government proposes that a taxpayer who moves from one area to another within Canada in connection with a change of job-

In French, the term "change of job" has been translated as follows:
-en raison de leurs occupations professionnel-les,-
Does it actually mean therefore that the individual should also change jobs or whether he only has to move from one city to another. For instance, if the comptroller of a large company in Montreal was called back to the head office in Ontario, in order to perform the same duties would it be considered as a change of job or a transfer for professional purposes?
This could apply to salesmen as well as to accountants or lawyers who, for one reason or another, must travel from one province to another in order to do their job.
As to recommendations 5.46 and 5.47, the English text is much more precise than the French text.
Recommendation 5.47 reads as follows, and I quote:
December 1, 1969

En consequence, le Gouvernement propose que ces contribuables soient autorises a echelonner la declaration de ces sommes sur plusieurs annees. En d'autres termes, ils les feraient figurer dans leurs revenus declares a mesure que diminueraient leurs creances et leurs stocks.
[DOT] (5:40 p.m.)
Now the English text says-and I quote:

Specifically, they would bring them into income as their total outstanding receivables and inventories are reduced.

So the English text contains the word "total" which does not appear in the French text. As to the word "outstanding", it means exactly what the government has in mind but it does not seem to be translated faithfully in French.
By the way, the C.C.H. produced recently hypothetical model figures about the recommendation to place the book-keeping system of business men and professional people on an annually increasing basis instead of maintaining the present collection basis.
The C.C.H. gives the following example: If there are $25,000 in bills receivable in 1970, they will have to be entered in the books and in 1971 there would be bills totalling $40,000. There would be at the end of the year $30,000 in bills receivable and $35,000 in cash received.
One would have to know the exact taxable amount, as there seems to be some confusion among accountants as to this. Indeed, the figures published by the C.C.H. are merely an interpretation and are not necessarily the same as the ones obtained by some accountants.
I believe it is important that this matter be cleared up. If professional people and non incorporated owners have to set up their accounting system on a new basis, will they benefit from the same exemptions that are granted to corporations, especially as concerns pension fund contributions for current and past services, since corporations may deduct from their income tax their payments in that regard under contracts signed with their employees. Professional people cannot, at the present time, deduct them.
If we require equitably professional people and other businessmen who are not incorporated to pay taxes according to another system, we could perhaps grant them the
Taxation Reform
same exemptions that can exist, particularly in relation to the pension funds, for current and past services.
Chapter 4 deals with the granting of a fiscal benefit to shareholders. Indeed, a shareholder who receives a dividend will also obtain from the corporation a credit that will be proportionate to the taxes that have been paid.
This is obviously an advantage as far as promotion is concerned. It amounts, I think, to an incentive to industry as a whole. There is perhaps the danger of some difficulties arising in the bond market because those who will get interest will have absolutely no credit that might minimize the amount which they receive in that way as interest. And we can wonder if these people will buy the bonds issued by the three levels of government and by the school boards since they will have no credit to offset their amount of taxes. This could perhaps bring about-if my assumption is correct-an increase in the rate of interest in order to find buyers. Thus, if you increase the rate of interest for the municipalities, you might get an increase in taxes, in rents and finally in the cost of living.
Mr. Speaker, as I said earlier, due to all my other tasks, it was impossible for me to go through this white paper. I agree with its main philosophy, which is to ensure the imposition of a fair share of taxation based on the ability to pay, and I hope that we shall soon be more enlightened on this matter, after the Minister of Finance will have given us additional particulars and after hearing the various briefs that the experts intend to submit to the Finance, Trade and Economic Affairs Committee.


Hon. Hugh John Flemming (Carleion-Char-lolle):: Mr. Speaker, in any discussion of a matter as important as tax reform I am sure consideration as to the reasons for such reform and the events leading up to it is vital to an understanding of the situation presently brought to the attention of the House by the government. I shall confine my remarks pretty well to general observations, consistent with the limited time at my disposal, and I should like to consider first of all the first chapter of the white paper, the document which has been referred to as a red manifesto.


Mr. Gibson:: By whom?


Hugh John Flemming: I did not say by whom. I said it had been referred to as such, and that

December 1, 1969
Taxation Reform
was a proper statement of fact. Under the heading Tax Reform, the imposition of a fair share of taxation based on the ability to pay is mentioned as the objective of the tax proposals. I rather object to soaking the person who has the ability to pay. It seems to me there should be considerations other than just the ability to pay; there is more to it than that.
Ability to pay is derived from the willingness of individuals to work to earn money and to acquire that ability. It does not just happen, and I do not think it should be taken for granted by any government. I feel that the person who has made an extraordinary effort should not necessarily be discriminated against. I am thinking, now, of the individual who has ambition for himself and for his family and who possesses a desire to improve, create and accomplish something.
Surely such a person deserves special encouragement rather than simply being soaked, which is the suggestion in this paragraph of the white paper. Why should he be penalized? This is a point which the Minister without Portfolio (Mr. Gray), representing the Minister of Finance (Mr. Benson) here this afternoon, might well bear in mind when the subject is further examined. I urge the government not to be induced into applying the principle embodied in the ability to pay theory. It is not automatic; government must be careful not to kill the goose which lays the golden egg; it should not discourage ambitious people. There are some who are willing to make the utmost use of the opportunities which present themselves, and there are others who do not possess such ambition. To my mind, the function of a government is to create a climate of opportunity and then encourage the individual to take advantage of it.
The phrase "tax reform" pretty well suggests a necessity for taxation. Under our system, taxation is essential inasmuch as it provides for the needs of government. Whether this is a good thing or not does not come into the question at the moment; it is simply a fact under our system. The state today is taking more and more of the pay checks of individuals; it is having deductions made from pay envelopes, it is asking people to pay in advance if they are eligible to pay. The suggestion is that the government can spend the people's money more wisely than the people themselves. There may be an argument against it, but that is our system. In recognizing the system, however, there is a

danger that with it comes altogether too much freedom in taking liberties with people's earnings, and it is my opinion we should frown upon the free and casual use of this sort of liberty by any government, regardless of its authority.
I wonder whether anyone has looked up the meaning of the word "tax". In the context of this discussion it means: "Forced contribution of wealth to meet the need of a government." Another meaning is: "A disagreeable and burdensome duty or charge." These are not very pleasant meanings for a word to have. I submit we are dealing here with something we should not be very happy about; it just happens to be a necessity that individuals shall be taxed. A noted authority has said that "the power to tax is the power to destroy". This brings into sharp focus the danger of a careless or excessive use of that power and the serious effects unlimited taxation can have upon the financial conditions of many people. It could destroy them. I am also concerned about the effect it could have upon individual initiative and effort, because it could destroy that too. It could also destroy the incentive of individuals to make full use of opportunities presented.
[DOT] (5:50 p.m.)
In the government's proposals no mention is made of governmental responsibility properly to administer and to conduct financial affairs. No mention is made of control of governmental expenditures. The government is asking the people to accept tax reforms as a responsibility of the people, but makes no mention whatever of what the government will do on behalf of the people in the disposition of tax dollars collected from them.
I submit that the white paper should not only underline the responsibility of the people to accept the principle of the collection of taxes, but it should also commit the government to undertaking a proper financial operation with proper stability by not increasing its expenditures beyond a certain percentage of the gross national product.
The proposed tax reforms have been referred to as a movement toward socialism, and other labels have been applied to them. But, surely, in any far-reaching tax reforms the government should be responsible to Parliament, and through Parliament to the people, clearly to set out the measures it proposes to adopt in the interests of the people. This policy is rendered imperative by
December 1, 1969

the inflation that exists and an apparent willingness on the part of the government to accept inflation as inevitable.
Why do I say that, Mr. Speaker? In respect of the last issue of Canada Savings Bonds purchasers are guaranteed that their investment will be doubled in a period of eight years. I say this in itself is inflationary beyond question. It is probably the greatest indication of inflation today. My point is that if the government regards inflation as inevitable, it must take some measures that benefit the interests of the taxpayers, instead of merely soaking them with increased taxation. In my opinion, inflation is not inevitable. The government can cure inflation by applying business methods to meet the problem. The government is going to phase out some expenditures and live within its income. In other words, the government is going to do what Israel and West Germany have shown can be accomplished by hard work, thrift and the adoption of proper financial measures. Canada can well take a lesson from these two countries.
Since 1963 either this government or a government of the party of our friends opposite has been in office. What has been accomplished, Mr. Speaker? I should like to list some of the accomplishments. First of all, there has been an almost continuous series of deficits on ordinary account. Second, there is a degree of inflation which has brought about the highest cost of living in our history. Third, we now have the highest cost of money in history, as well as the highest expenditures. Similarly, we have had the greatest increase in taxation of any similar period in history, as well as the greatest increase in the number of bureaucrats, paid large salaries for mediocre performance, ever to be on the payroll of this country.
Deficit financing is justified only in times of high unemployment and limited economic activity. I acknowledge there have been times when this sort of situation existed and it was necessary, so to speak, to prime the pump by adopting deficit financing. However, since 1963-in fact, since 1961-all economists have agreed that we have been living in what has been termed the affluent society; times have been good. Yet successive Liberal governments have paid no attention to conditions. They have acted as though the affluent society did not exist. They have continued to borrow money and to compete with private industry. Instead of allowing private industry
Taxation Reform
to take care of capital expenditures, Liberal governments have competed with private industry for labour, for materials and for money. To a very great extent the government is responsible for the inflationary situation that now exists in Canada. The government was warned by the Governor of the Bank of Canada several years ago that this was happening, but paid no attention. Only when the situation became serious was drastic action taken.


Mr. Deputy Speaker:: Order. The hon.
member may want to call it six o'clock. It being six o'clock, I do now leave the chair until 8 p.m.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Hugh John Flemming: Mr. Speaker, I want to conclude these remarks by reference to a capital gains tax. I feel strongly that an underdeveloped country like Canada should make a great effort to attract risk capital. Our three-year exemption from income tax and the absence of a capital gains tax attract this type of capital, the beneficial results of which have been very apparent in recent years. My leader, in the course of his speech on Friday, made our position very clear. He stated that under the government's proposals there will be less encouragement for the development of mines and of oil exploration in the more remote areas. This is undoubtedly true. The factor of capital gains caused by inflation is surely something which will be most unfair to tax in any form whatsoever.
I can understand a government proceeding with a plan to do so, but I want to refer to the suggested mechanics of applying the capital gains tax. To accept a valuation on a certain date as being final and then apply a five-year revaluation at the end of that period, regardless whether the capital gain has been realized, constitutes a tax on capital rather than a capital gains tax. I submit that a country like Canada, needing capital investment for development purposes, should not apply a tax on capital at any time. This is especially true when the rates suggested in the white paper are higher than those presently in effect in the United States. I ask the minister and the government to recognize the difference which exists, so far as tax pay-

December 1, 19S9
Taxation Reform
ments are concerned, between small business and large, widely-held business. I have some knowledge of the former because I have an association with companies which qualify under that heading.
In the first place, small companies often find it difficult to raise funds with which to pay the tax bill as rendered. In . many instances the owners are active in the management. They draw as salaries the minimum amount needed to meet living costs. They use all the available capital to effect improvements in operation by purchasing equipment, machinery, erecting buildings and making other capital expenditures designed to improve their productivity and ability to compete, sometimes with other countries for world markets. To be asked to pay in cash the capital gains tax on an accumulated basis for all their improvements in value, when their liquidity does not justify the same, leaves only one alternative; and that is to sell out, even at a price which involves a substantial sacrifice.
Then the question arises, to whom do they sell? With Canadians facing the same tax laws and having the same general limited financial resources, the prospect of their having the financial ability to purchase seems remote; so they have no choice except to sell the business, at the best price obtainable, to foreign buyers. This is a hard blow to Canadian ownership. The chances are that the buyer will be a United States company.
I have never been very worried about United States ownership of Canadian companies so long as they observe Canadian laws, if such ownership has been the determining factor in creating and developing industry. But to have tax laws which are likely to drive Canadian companies into U.S. hands through a forced sale for the reason that it may be not only be the last but perhaps the only place to go, seems most undesirable. Governments should take a very dim view of presenting such legislation.
The government must recognize the need for incentives rather than discouragement, attractive tax rates rather than the utmost in extraction, and decisions leading to growth rather than to sacrifice sales. In the language of my leader on Friday last, Canadians will regret that this government, given an opportunity to develop a tax system that would not only be more equitable but would help provide a greater opportunity for Canadians to control our economic growth, failed to do so.


Mr. Warren Allmand (Nolre-Dame-de-Grace):: Mr. Speaker, if an independent
observer had listened to this debate last Friday and today, he would wonder whether the speakers were talking about the same white paper. Conservatives have described the white paper as a socialistic document and, even today, as a red manifesto, while the socialists, members of the NDP, have described it as a very conservative document.
In my opinion it is unfortunate that opposition members have taken such a partisan approach to this white paper, because when the minister introduced it he said he was putting forward proposals designed to bring about more equity in the tax system, balanced with incentives for economic growth. He said he was putting forward these proposals and wanted to hear discussion, criticisms and alternatives. However, all he got was criticism without any facts and figures behind it, and no alternatives suggested.
When the Leader of the Opposition (Mr. Stanfield) was speaking on Friday he said this was wrong in the white paper, and that was wrong. He criticized the increased income tax rates in the middle-income bracket; he criticized the revaluation and the five year period; he criticized other things. But he did not say how we should raise the money that we would lose if we increased exemptions at the lower level. He did not say how we would make up the $1 billion that would be lost by increasing these exemptions and adding new ones. He spoke very much as though he is in favour of everything good, and he opposes anything that is hard to take in the system. He appeared as a very lean Santa Claus in the House of Commons at this time as we approach Christmas. In his speech he almost appeared to favour motherhood.
If I could be convinced by the opposition that anything in the white paper was bad for the economy, I would certainly agree with them. However, I do not want just broad criticisms in general terms about these measures. All we have heard is wide criticism of measures. Let us know the exact dollars and cents picture behind those criticisms. If hon. members approve of the exemptions at the lower level, let them tell us how we are going to make up the money that will be lost. Such a loss has to be made up. Let them tell us in dollars and cents where that money is to be found. Let us not have this type of speech in which hon. members say they approve of the exemptions but disapprove of the increased
December 1, 1969

rates in the middle brackets and disapprove of the capital gains tax. Let us hear alternatives in specific terms. If hon. members convince me, I will vote with them.


Some hon. Members:: Oh, oh.


William Warren Allmand: I put the challenge to you. If you cannot meet that challenge, that is a failure on your part. I am interested in seeing good tax law, as I am sure the minister was when he put forward these proposals. He has put the challenge to hon. members and I hope we can have a reasonable discussion with suggested alternatives. It was my impression that this two day debate on the motion referring the white paper to the committee would provide an opportunity for members of this House to find out whether, and where, there was agreement in respect of the white paper among members of this House, as well as where there was disagreement and what the alternatives might be. In referring the white paper to the committee I felt we might have a non-partisan approach with alternatives and constructive criticism.
This afternoon the hon. member for Peel South (Mr. Chappell) criticized the white paper. He is a government member. The hon. member for Burnaby-Richmond (Mr. Goode) criticized the white paper. These hon. members did put forward what I thought were constructive alternatives. Some hon. members of the opposition have done so but many others have not, including the hon. member for York South (Mr. Lewis), the lead critic for the New Democratic Party.
The Minister of Finance (Mr. Benson) suggested we would lose approximately $1 billion by raising the income tax exemptions at the lower level. The hon. member for York South said "nonsense", but he did not say how he calculated these increased exemptions, nor did he mention what type of losses would result. He said "nonsense", "bunk" and then turned to another subject. If hon. members do not think that $1 billion is the correct figure, let us have their figures and let us hear their alternative proposals for obtaining this extra money. If they do that, I will consider their proposals seriously.
[DOT] (8:10 p.m.)


Eldon Mattison Woolliams: We will be very informative.


William Warren Allmand: I hope so. I hope we have not lost all opportunity in this debate. There will no doubt be other spokesmen and I am sure
Taxation Reform
they will put forward some constructive proposals as alternatives to the measures in the white paper.
The hon. member for Calgary North (Mr. Woolliams) this afternoon suggested it is not necessary to increase the rates in the middle-income bracket in order to make up losses at the lower level. He said we should cut our spending; that we should be more careful with our spending program. I was surprised to hear him say that because this summer in the month of August the Prime Minister (Mr. Trudeau) put forward one of the most pervasive and widespread systems for reducing the operations of all government departments.


An hon. Member:: Look at the Department of the Secretary of State.


William Warren Allmand: That was an exception. When that system was put forward this summer, the Prime Minister said that the program to deal with bilinguahsm would be an exception. Not only that, but let me quote what the Leader of the Opposition said when these cuts were put forward by the Prime Minister. He said that it is a pretty rough kind of axe, meaning that because of this program some civil service positions would have to be eliminated. That is true; but we cannot have it both ways. You cannot restrict government spending and expect everybody to applaud. It is a tough decision to make.
Whenever we discuss the matter of restricting government expenditures, members of the opposition always want the cuts made in an area which will not affect their constituents. If you live in Montreal and are a constituent of mine, and a cut is to be made which will affect something in the city of Montreal such as the airport or harbour, you would probably say "Oh, no" and suggest that the cut should be made perhaps in respect of the Prince Edward Island causeway. I do not agree with my constituents when they say that.
Mr. Speaker, I have sat here for two days listening to hon. members opposite. I was very quiet when they spoke. I must be touching their sensitive spots now because they are becoming excited and do not appear to want to listen to me. If hon. members are really serious in suggesting to the government where cuts in spending can be made, they should be specific. They should be honest about it. If they have in mind a certain area, they should mention that area. I suggest that recommendations in respect of cuts in expenditure should not be made in a general way.

December 1, 1969
Taxation Reform
On the point of increasing the exemptions at the lower end of the income tax scale, the Minister of Finance (Mr. Benson) said that with the increased exemptions we would lose $1 billion in revenue.


Eldon Mattison Woolliams: $1 billion.


William Warren Allmand: Yes.


Eldon Mattison Woolliams: Get your figures right.


William Warren Allmand: That is what I said, $1 billion. I have not heard what figure you have calculated. The Minister of Finance also pointed out that when you increase the exemptions in this manner, you do not have too much room for manoeuvring. He said there are not too many areas where you can raise that amount of money without raising the income tax of the middle income groups. At the beginning of the white paper the minister points out that 39 per cent of the taxpayers are in the group having incomes between $5,000 and $10,000, and that this 39 per cent pay 44 per cent of all the income taxes. He goes on to point out that fewer than 500,000 taxpayers or 7.5 per cent of all taxpayers who have incomes over $10,000, pay 35 per cent of the total income tax. So if the intention is to raise the exemption at the lower end of the income scale, and if that $1 billion is to be made up, it will necessarily have to be done in the middle-income area.


John Edward Broadbent: What about those at the top?


William Warren Allmand: The top too, but you cannot get it all from the top. I will put a challenge to the hon. member for Oshawa-Whitby (Mr. Broadbent), who I assume will be speaking in this debate. If he can show me how $1 billion can be raised in the top area without affecting the people in the middle-income area, I will go along with him; I will accept his argument.


Eldon Mattison Woolliams: You did, and then came back and voted against it.


William Warren Allmand: At page 9 in the white paper the minister points out that if additional tax of $1,000 was paid by every taxpayer with an income over $25,000, the additional revenue in 1967 would have totalled $48 million, enough to reduce taxes by only $13 for each taxpayer with income under $5,000.


Eldon Mattison Woolliams: Tell us more.


William Warren Allmand: This afternoon a spokesman for the New Democratic Party stated that

they did not want any limit on the upper level. I do not know what they were suggesting. I would presume one would have to balance out the possibilities for revenue from all sources and make satisfactory decisions. It could be that it would still be possible to increase the upper level and lower the middle-income level by some figure. As I say, if a rational approach were put forward in that regard, I would accept it. I would agree with hon. members that a laudable principle is-and I would support it-that we have an equitable income tax system with graduated and progressive rates. I think this is what we should try to work out in the committee. If it can be established that it is unfair to have the levelling off on the rates of income tax at the upper levels, compared with the middle levels, let us have suggestions in respect of rates that would be workable and just.
I am quite willing to look at this question very seriously because I fully support the statement in the white paper that at present our income tax system is not equitable and that something must be done. As the minister said, we must combine incentives and economic growth with an equitable income tax system.
Although I support the general principles contained in the white paper, there are certain things I should like to see in it which are not included. I wish to mention these briefly. For example, I think that the $500 exemption for those who are 70 years old should be granted at age 65. Let us assume there are two old age pensioners, one of whom is 68 and the other 70; they each receive the old age pension, and nothing more. One would get an extra exemption because he is 70, while the other who is under 70 would not get it. I think this is an inequity, and yet it is suggested in the white paper. I believe that if there is to be an exemption for people on retirement, it should be given to all those on retirement at the age at which they receive the old age pension from the government.
[DOT] (8:20 p.m.)
Another point in the white paper with which I am not too pleased is the limit of $150 on the personal exemption in respect of people on salary. I cannot understand why a person who is working for a salary should be restricted to $150, while his colleague who may be working on his own in the same trade or profession should have no limit. I know that when I was working as a lawyer, I worked for a salary-I never worked in my
December 1, 1969

own business-and if I wanted to buy law books or buy my legal gown or the other things that are necessary for the carrying on of my profession, I received no exemption whatsoever. I had to operate under conditions which were not the same as those which applied to persons practising on their own.
Another matter in the white paper which I do not understand very clearly is the rule with respect to personal residence. I think that if we accept the premise that the personal residence should be exempt from capital gains tax, it should be exempt altogether. I cannot see the rationale behind the rule which introduces the $1,000 per year principle. I favour a system according to which the personal residence is completely exempt from capital gains tax.
Another item about which I have been concerned for several years is with respect to medical expenses. I know many people who have to buy medical supplies, such as syringes and needles for diabetics, which expense they cannot deduct under the provisions of the Income Tax Act although other people can deduct the cost of their medicines. I could never understand why a diabetic who had to buy these needles and syringes each week could not deduct their cost, just as those who had other ailments could deduct the cost of their medicines. However, there is nothing in the white paper which refers to that problem, and I would like the committee to deal with it when it meets.
There is also the question raised by paraplegics. There is a $500 exemption for people confined to a wheelchair. Originally this exemption was to help those people because they had to take taxis or pay for other means of transportation to get to work or to carry on their everyday affairs. However, the $500 exemption is out of date now. It does not in any way cover the expenses that a paraplegic or a person restricted to a wheelchair must bear. Paraplegics in my constituency have given me the exact figure, and it far exceeds $500 per year.
These are a few of the things in the white paper with which I am not too happy, and I would like the committee to deal with them if possible. There are a few other matters which have not been referred to by many people but which I think are good points which did not receive much publicity. One of them is the right to deduct gifts to national amateur athletic associations. That is a step in the right direction. It is in accord with the recommen-
Taxation Reform
dations of the task force on amateur sport. I think it will do much to stimulate the groups that are trying to promote amateur sport in this country. I think amateur sport here needs a great deal of support.


The Acting Speaker (Mr. Bechard):: Order. I regret to interrupt the hon. member, but his time has expired.


Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I am pleased to have an opportunity to express my opinion on the white paper that was tabled.
That document, I feel, might create a very poor impression on any clever person. To describe that document, I shall use the words of Mr. Charles Neapole, president of the Montreal Stock Exchange and of the Canadian Stock Exchange, who terms that measure "nonsense". I shall base my statement on four main points.
To increase taxes by $500 million, as stated, is, I believe, a patent theft, that penalizes small enterprises, but in no way helps the consolidation of the provinces, who considers this bill with some suspicion.
I should like to deal with a point which seems to me to reflect perfectly the policy of the present government, which is proposing to tax scholarships, among other things. If I give $2 to someone and the next day I take back 50 cents, he will think surely that there is something wrong with me. Why not simply give him $1.50 instead of giving him $2 and extract from him 500 the next day. Would it be that when I gave him $2, I wanted to make a good impression or that I am not smart at figures? If I give money to a taxpayer and take back some of it the next day, it is because I am a flatterer or because I do not know how to count.
This is the position of the present government: Either the minister is not smart at figures-and this does not say very much for him-or he wants the scholarships recipients to think highly of him, even though he intends to take these grants away by way of taxes later on, and this is nothing else but false pretences.
[DOT] (8:30 p.m.)
1 humbly suggest that this is a most realistic image of the government system as it is administered by our ministers, or as it is described in the white paper. It is nothing
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more or less than giving money to the taxpayer with one hand, either by means of scholarships, loans, allowances or anything else, and taking it back with the other, but with a smile and a flower in a button-hole.
Mr. Speaker, I want to deal now with the tax increase of $500 million. Whether this amount comes from the rich or the poor, everyone must realize, I think, that the government will take $25 more from every Canadian taxpayer. And they say that will help the Canadian people. How can the government make us understand that?
I contend that it is a patent theft as far as Canadians are concerned, and I do not believe I am the only one who thinks so, because Mr. W. H. Rapsey, former president of the Canadian manufacturers' association of electrical appliances said, and I quote:
It is patent theft.
Taxation by the government of Canada, at the stage where things are at present, is especially very contradictory and I explain myself. There are, indeed, unsold products, people condemned to unemployment, unused productive power on account of products failing to be sold and because of the lack of purchasing power, reduced for a great part by taxation. I think that all that is simply ridiculous.
Thus taxes are equal to theft nowadays because they should exist but only to take surplus money out of circulation while there are too few products. When money is needed, taxes should not be levied but purchasing power should be distributed through the grant of a national dividend and a compensatory discount, which would bring prices down to the real cost of production.
The financing of governments, of public investments must be made through new credits according to the actual needs and the production capacity of Canada, not through a tax increase at the expense of producers. Which brings me to tell the house that small businesses will therefore be the most hardly hit by the proposed reforms.
We are back where we started. Indeed, a year ago, the Post Office DeDartment curiously strangled a good deal of small publishing businesses, under the pretext of serving the interests of the Department which, I insist, must serve the Canadian people; the opposite should not be true.
Now, I would like to quote an article of Mr. Fraser Robertson published in the Globe and Mail of November 12, in which he noted how

contemptuous of small businesses the government seems to be, according to the contents of the white paper. Here is what he said:
In his proposals he chose to term a tax reform, the Minister of Finance obviously endorses the views of the Economic Council of Canada, namely that what Canada needs is the development of a few powerful monopolies which could easily fall under the responsibility of other cabinet members. He scorns small businesses, especially family ventures, thus reflecting the arrogance of our times.
Recalling that big companies such as General Motors, IBM and Massey Ferguson had modest beginnings, that they were small concerns before becoming powerful monopolies, Mr. Robertson said that even now, big businesses must rely on the small ones to obtain the raw materials they need.
He recalls that General Electric, for example, has more than 10,000 small suppliers.
By stifling small concerns, we must not forget that the government will be hurting the monopolies and will not encourage the Canadian economy. Those proposals are therefore contrary to those which should be set forth in the white paper.
Mr. Speaker, should a capital gains tax be levied, private industrial investments are going to be curtailed and the people's consuming power is going to be greatly reduced.
As a matter of fact, if capital gains are taxed, foreign and even Canadian businessmen will not be interested any longer in investing in our country. As a result, the productive sector which is kept rolling by investments-you will agree with me on that point-will be greatly paralyzed, hence unemployment, our natural resources left unused and high prices for our products. In a word, it will be a big setback in every field of our country's economy, even though our country is regarded as highly industrialized.
I believe that the fiscal reform proposals, if adopted as they are, will demonstrate an approach both ultra-conservative and ultrareactionary since studies carried out by top economists have established that the government should use the budget to carry out a fiscal policy over an economic cycle in order to maintain current production at a level as close as possible to that of potential full-employment and maximum production and to balance the budget from year to year, a policy followed by the governments before the 1929-1930 economic slump.
It seems to me that the government does not follow a functional, modern financial policy, which would centre on the means to
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have an economy of full employment while avoiding unwarranted price increases.
For this reason I think that the government, in submitting its white paper, is acting contrary to all modern principles of government. I suggest that the Minister of Finance should consult other competent economists so that he can present tax measures designed to ensure the progress of our economy and not its regression.
In an article published last Saturday in La Presse, Mr. Paul Allard, Minister of Natural Resources in Quebec, wonders seriously about the federal proposal to tax capital gains and to modify the tax rates, and I quote:
Speaking at the Universal Motel in Quebec, Mr. Allard stated that a certain danger might result from such policies, that "investors might prefer putting aside some no doubt productive but somewhat risky investments and concentrate on those offering higher dividends."
"Such a reaction" Mr. Allard added, "may have disastrous effects on the opening of new industries especially with regard to natural resources. It would be too bad if, through some action designed to give a more equitable tax system, the government should cause a slowing-down of the economy and as a consequence an increase in unemployment and in the cost of living."
I believe that federal-provincial relations are truly in need of a catalytic agent in order to develop in a peaceful climate.
The white paper on taxation, far from promoting understanding, is rather another vexatious measure imposed on the provinces by the federal government.
In British Columbia, Mr. Dan Campbell, Minister of Municipal Affairs, indicated that this document does not mention at all the provincial or municipal authorities whose views must, of course, be taken into consideration in any fiscal reform.
Premier Harry Strom of Alberta, in conjunction with other politicians in that province, regrets that nothing is done to alleviate the tax burden of the provinces and the municipalities in his own province.
Premier Smallwood of Newfoundland fears that the capital gains tax will jeopardize capital investments in Canadian industry.
In closing, I wish to tell the House that a tax reform is a good thing in itself provided it is not negative and does not interfere with the eoonomy, since it is a pyramid in which the biggest businesses depend on the smallest ones, while the smallest ones depend on the individual.
Now, if the government strangles the small businesses, the big consortiums will be in a bad predicament and this tax reform will be
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detrimental to the workers, because if the owners of small businesses are forced to sell to pay their taxes, this will lead to unemployment and many other problems.


Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I think that the document we are discussing is misnamed a white paper. In reality it is a murky grey. It is as difficult to see its real purpose and to judge its actual impact as it is to see the outlines of anything in a heavy fog. The economic objectives of a democratic society in which the greater part of economic activity is managed by free enterprise are generally considered to be as follows: full employment, reasonable price stability and a satisfactory balance of payments, all combined with an adequate rate of economic growth. The white paper proposals must be judged by their efficacy in fostering these goals. The position of the people who drafted the white paper on taxation is that Canadian national identity is so fragile that if outside economic influences are not restricted by using government action, the absorption of Canada will inevitably take place. By implication, anything Canadian per se is valuable, and outsiders less valuable. The white paper proposes many measures to foster this point of view.
To begin with, it is questionable whether these proposals will produce the benefits to the Canadian people that are claimed for them. They are more likely to have the effect of countervailing action or, at best, benefiting particular groups of Canadians at the national expense. The arguments that have been trotted out are the customary old fallacies: inability to compete with foreigners in free competition demonstrates their superior potential efficiency lurking beneath the surface, so that a subsidy of one kind or another is justified.
[DOT] (8:40 p.m.)
The Minister of Finance (Mr. Benson), in explaining the aims of his tax reform proposals, said they were to attain a more equitable application of the tax burden, to maintain prosperity and steady economic growth. An examination of the white paper indicates to me that not only will its provisions not attain these objectives, but they are more likely to achieve results diametrically opposed. The minister proposes to take away any trace of a tax burden from a large segment of low-income Canadians, lighten it considerably in respect of Canadians who enjoy very high

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incomes, and sock it to the middle-income group. This is a deceptively simple explanation, and when coupled with the claim of greater equality it is somewhat dishonest.
The group he plans to sock it to are the very people who are currently carrying the greatest share of Canada's total tax burden. They are, largely, the creators and the doers, the producers of national wealth and development. They are also the same group that pays for education through municipal property taxes, and for soaring costs of higher education and welfare and health programs through provincial taxes of one type oi another. There is a real danger here of the minister killing the geese that lay the golden eggs.
Lower income groups would be helped by raising the annual exemptions, for single taxpayers from $1,000 to $1,400 and for married taxpayers from $2,000 to $2,800. If both parents are working, an exemption of $500 per child is provided for costs connected with the outside supervision of children. Of the estimated 7,700,000 taxpayers, theoretically 750,000 would be removed from the tax rolls. This contrasts with the widely accepted theory that everyone should file a tax return and pay some tax even if it is a nominal one only, so that he realizes he is part of the community and not just a guest here. Taxes for about 3,000,000 would supposedly be reduced slightly, but the burden of taxes would be shifted to those who earn more than $9,100 per year, hypothetically 3,000,000 other taxpayers. On the other hand, the maximum tax rate would be lowered from 80 per cent to 50 per cent, but this would not affect very many because few taxpayers actually pay more than 50 per cent over-all, even under the existing schedules.
Income redistribution to favour lower income categories would be of some assistance to handicapped people who cannot function effectively. Tax relief to lower paid Canadians in some measure helps those who are starting their working careers and whose small incomes do not reflect their actual conditions. It would have been more fruitful to recognize the social needs of the disadvantaged in other ways. For example, the government could permit voluntary workers and teachers to include the cost of the time they spend in assisting the handicapped. Advisory work, employment counselling and voluntary teaching could have been given a boost if the time spent by volunteers were allowed to count as a tax reduction for these workers, at [Mr. Ritchie.1
reasonable rates. Also, professional advisory training and job counselling firms specifically geared to help the handicapped should have been given tax considerations as an effective way of encouraging the private sector to participate in the effort needed to alleviate distress.
The estimates of the number of taxpayers who would be aided and/or hurt by the income redistribution proposals were based on 1967 figures. Inasmuch as wage gains have been averaging about 8 per cent per year compounded, by 1972 the number of taxpayers in the middle-income bracket would be nearer 4,500,000, not 3,000,000 which is assumed by the white paper. Middle-income taxpayers would bear the brunt of the tax increases proposed by the government. Similarly, the number who would gain from the revisions would be less than the white paper estimates and fewer than 750,000 would be dropped from the tax rolls.
The white paper is more of a social and political document than an economic one. No doubt there is a rich harvest of votes to be had by anyone who can remove 750,000 people from taxation. No doubt the proposals suggested will help to get this government off the hook of the overambitious and vastly expensive social welfare programs it plans to launch or has already launched. But the real problems of Canada have been deliberately avoided and sacrificed to political popularity and expediency.
The Economic Council of Canada emphasized what was already very clear, that each year this country must create thousands and thousands of new jobs simply to keep our economy turning over at the same pace, let alone speeding it up. Yet the reforms suggested in the white paper will sorely cripple, if not kill, the business expansion, the new economic initiative and the spirit of development vitally necessary to create these needed jobs. "The word 'reform' is an euphemism for increasing taxes", a leading Manitoba tax expert, 1. H. Asper, said in a recent speech about the white paper. Even increased taxes might be supportable if it were certain that the new taxes would go for positive, productive development programs and not simply to carry Canada's multitude of ill-conceived, badly constructed and foolishly expensive social welfare schemes.
This, of course, brings us to another major weakness of the tax reforms suggested, the failure to consult about them with the prov-
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inces, the failure to take the growing crisis in federal-provincial tax and financial relations into account and above all, the disastrous effect the tax reforms will have upon our already grievous regional disparity.
I believe, Mr. Speaker, that one of our most grave economic complaints, one that intimately affects the federal and provincial governments' need for more tax revenue and their inability to undertake many much needed development programs, is the unbusinesslike manner in which our major social welfare programs operate. Take any of them, medicare, hospitalization, and so on; they all appear to operate without even the most primitive form of cost control. The result is that all levels of government in Canada today are caught in a vortex of rapidly accelerating costs which they do not seem to know how to check or control. It is little wonder that people like the Minister of Finance will attempt any subterfuge, underwrite any wild scheme, to procure the great quantity of tax revenue needed every year by these open-ended programs that apparently cannot be changed and certainly cannot be abolished.
As to regional disparity, many provinces, including my own province of Manitoba, suffer from several severe economic handicaps. They are discriminated against in such matters as tariffs, freight rates, immigration policy, regional development and half a hundred other areas. What they all desperately need-in fact, it is a common No. 1 priority- is industrial growth; and it is industrial growth that suffers most from the tax reforms suggested in the white paper. They actually penalize small business, individual initiative and enterprise. These factors are the whole foundation of industrial development and expansion.
New tax rates on business also would affect middle-income groups in other ways. The existing 21 per cent tax rate on small business is raised to 50 per cent, whether it is paid out in dividends or in gains in selling shares in these "closely held" businesses. This hurts family-controlled concerns and other small establishments. It is detrimental to growing enterprises. The natural urge to plough back earnings for growth expansion is squelched, and growth is thus diminished. Therefore, it would encourage small business to sell its shares to the public as widely-held Canadian shares listed on exchanges and becoming subject to the lower 25 per cent capital gains tax.
Taxation Reform
Dividends received from Canadian corporations would entail a credit equal to the tax paid by the corporation. Thus, if a Canadian corporation paying 50 per cent tax to the federal government declared a dividend of $1 per share, the recipient would "gross up" his dividend to $1 plus the 50 per cent rate of taxation, or $1.50 per share, and the shareholder would receive a credit of 50 cents per share in respect of his own tax. This is the main and only true sweetener for investors and would replace the present 20 per cent dividend tax credit. This would be a discrimination against those holding bonds and mortgages, because until the taxpayer reached an income of approximately $17,000 it would be greatly to their advantage to have shares in widely-held Canadian corporations and not hold mortgage or bond issues.
Pension funds would be obligated to have at least 90 per cent of their assets in Canadian investments or they would be subject to tax. This would replace the present requirement that only 10 per cent of the income of pension funds could be derived from nonCanadian sources. There is an assumption here that the primary obligation of pension funds is not to ensure maximum safety for the pension fund recipients at the least cost to the contributors; rather, it is suggested that pension funds should invest in things Canadian regardless of their relative merit.
[DOT] (8:50 p.m.)
Income from non-Canadian sources would be penalized so that Massey Ferguson, Moore Corporation or a distillery company would not be entitled to pass on a dividend credit to their Canadian share-holders on taxes paid outside Canada. International companies such as these would be discouraged, therefore, from locating their headquarters in Canada!
Similarly, subsidiaries abroad would be discouraged. Interest charges incurred as part of the debt structure of these subsidiaries would not be allowed, and the low rate of taxes of such subsidiaries would be discontinued. In many cases firms establish subsidiaries abroad in underdeveloped areas where they receive a several-year tax exemption from the host country; but now these tax-free earnings will be taxed by Canada. Consulting firms, among others, would no longer be likely to set up a foreign subsidiary in these havens. This would tend to discourage Canadian exports, because consulting firms and other subsidiaries usually promote the use of products and equipment with which they are familiar.

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Any analysis of the white paper must take note of the careless anomalies which are present. For example, Standard Oil Company of New Jersey, E.I. duPont, Ford, Union Carbide and others would be obligated to pay every five years a tax of 25 per cent of the "paper" gains in the value of their Canadian subsidiaries based on market price changes of their stock. The five-year assessment of unrealized gains could not work for individual shareholders of many Canadian stocks classified as widely-held, because of the limited marketability of many issues. There are innumerable other examples which illustrate the impractical nature of the proposed legislation. There is no point in dwelling on this aspect of the white paper except to state that the improper drafting will inevitably mean that many of the proposals will have to be redrawn, even in the unlikely event that the basic concepts were accepted by the nation.
The onerous nature of many of these proposals, some apparently serving no purpose other than sheer maliciousness, such as the arbitrary periodic taxation of gains whether realized or not, will encourage tax evasion on an unprecedented scale in Canada. Enforcement, after all, depends ultimately on the consent of the taxed. The valuation of personal property, improvements of houses or farms and taxing gains in foreign securities would be so difficult to police that tax avoidance would become commonplace.
Without industrial and commercial growth there can be no new profits to tax, no new salaries to tax and no accumulated capital either to employ or to tax. If this growth slows because of discriminatory taxation or for any other reason, if it begins to dwindle, then so will tax revenues and the standard of life. If we ever allow this to happen we are simply creating for ourselves more non-productive social deadweight that will require a great expenditures of tax money to carry. This is why, in my estimation, the tax proposals as they now stand are so short-sighted and so damaging.
Capital, business ability and imagination always seek a congenial atmosphere. They take freight easily and move away swiftly. There is nothing in this proposal for tax reform that is congenial to capital or business, and in many respects it is freightening. At the very time we Canadians should be bending all our efforts to encouraging capital and business enterprise and know-how at home, we are by this white paper threatening them. If you doubt, as the minister professes

to doubt, that individuals or small businesses will pull up stakes, let me give one or two examples. Take the case of a man in Winnipeg earning about $13,000 annually, smack in the middle of the group the minister has threatened to soak. In some instances under the new tax proposals he would pay $3,100 in tax, while a man with the same salary across the United States border in Minneapolis would pay only about $1,100. There is the example of a Winnipeg company manufacturing a certain product which it sells 90 per cent of in the United States. If he moved his business to Minneapolis, the proprietor of that small business would increase his after-tax profit by 50 per cent strictly on the basis of differences in the tax systems.
All one needs to do is look at the Dominion Bureau of Statistics' figures regarding the natural population increase in Manitoba and Saskatchewan. Manitoba's population increased naturally by 70,000 during the years quoted in the figures, and Saskatchewan's population increased naturally by 75,000. But with a net migration for Manitoba of 28,000 and for Saskatchewan 45,000, Manitoba was left with an actual increase in population of only 41,000, and Saskatchewan 30,000. Canada must stop the haemorrhage that is bleeding us of brains, capital and know-how. These proposed reforms will only quicken the bleeding.
I mentioned the murky look of this white paper and the difficulty of seeing clearly what it intended. There are many who see much greater dangers in it than any I have mentioned. A highly respected Montreal financial and investment firm, Jones Heward and Company, were quoted in the Winnipeg Free Press as saying in part:
The white paper is no simple Robin Hood approach to society, no simple accountant's concept of a redistribution of income, but a pure and simple attack on the free enterprise system embodying a punitive and discriminatory capital gains tax, a capital levy every five years, and an increased tax burden on the middle income productive group of Canada. There is no room for the small business with enterprise and imagination.
The same firm stated that "wealth is to be destroyed". Surely, Mr. Speaker, when such things can be said by responsible and knowledgeable Canadian firms, it behooves us all to take the closest look at the subject of the charge. After all, the cardinal tenet of Marxism is the destruction of private wealth. Other reputable authorities have made similar grave charges and have seen in this white paper, not a makeshift economic program but
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an extremely radical blueprint for social and political change.
The assumptions of the white paper are that the government needs more revenue because more than $1 billion would be collected if the scheme were fully operating, given present levels of the economy. There is no mention of the fact that taxes can or should be used for economic stabilization or growth. Little consideration is paid to the implication of these tax levels on the economy, incentives for work or capital accumulation. The radical nature of these proposals is somewhat surprising in view of the fact that Canada's economic system is working reasonably well. There is an assumption that the people who build and run this country are stupid, because thrift and productivity are to be discouraged.


The Acting Speaker (Mr. Bechard):: Order, please. I regret to interrupt the hon. member but his time has expired.


Mr. J. A. Jerome (Sudbury):: Mr. Speaker, I do not know how often a participant in a debate in this House begins by outlining those things which he proposes to avoid. Perhaps unlike the speakers who contributed to this debate last Friday and today, I do not intend to deal specifically with the widsom or otherwise of releasing some of the tax burden from the low-income people, although in my constituency there is a very heavy preponderance of people who carry a lunch-pail and punch the clock. It was welcome news that the government intended to alleviate the tax burden on that taxpayer.
I will not comment on the wisdom or otherwise of increasing the tax rates for those people whose incomes fall in the $10,000 to $30,000 bracket, nor will I talk about the crack-down on expense account living. I will not comment on the capital gains tax, although it certainly has a very direct effect on my constituency. Nor will I talk about the wisdom or otherwise of changing the situation with respect to the mining industry and the tax holidays they have enjoyed in the past.
The reason that I am not going to deal specifically with subjects of that sort, Mr. Speaker, is that I think they are matters of individual taxation approach and are not so much a question of the broad philosophical concern that we should be dealing with at this time. In any case, even if it were a proper consideration to be debated in this chamber, I would draw attention to the fact
Taxation Reform
that when the white paper on taxation policy is about to be transferred from this chamber to the standing committee, is not the time to be dealing with these specific items, the specific concerns of pages 1, 2, 3, 20 or 30 of the white paper.
[DOT] (9:00 p.m.)
This is, in my opinion, the time for us to concern ourselves with a more philosophical approach. I suppose hon. members who have had more experience in this chamber than I will be somewhat surprised to find someone standing up and talking about the philosophy of government or the basic principles of government in a democratic society, of government for the people, of the people, by the people, or whatever combination of those words one wants to use at any given time.
Some of these phrases may sound a little tired, or as if they came from an essay by a political science student. Nevertheless, I think it is an appropriate time for us to consider the basic philosophic principles underlying our system of government. I say this because today, perhaps more than at any time in the history of our country, we are aware of the influences which are attempting to divide us as Canadian citizens, to set provincial governments against the federal government, province against province, east against west, citizens of one linguistic group against those of another. These forces are stronger now than at any time in our history.
When we talk about separatism, or the tendency to try to divide us and break up our institutions, we are not taken as lightly as we were a few years ago. Of course, it is not radical to talk about the fact that there are forces at work in this nation today which would divide us and break up confederation. But the ideological forces which compare our system of government with the systems in vogue in other countries are no longer distant, no longer theoretical. They are present in our country today, taking their place and making their influence felt. It is no accident that people are talking about separatist influences and subversive influences in everyday speech in this country.
When people in various parts of our nation are talking in these terms and, particularly, when the young people in our schools and universities are telling us that our political system is out of step and irrelevant, it is surely time for us to become concerned. When they come to us, as they came to the

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Taxation Reform
recent convention of our party, not to tell us, not that they support some other political party, or that our party is not as good as one of the other opposition parties, but to tell us that all our parties are irrelevant to the needs of the Canadian people today, we had better wake up and consider whether our system of government can stand up to this kind of scrutiny.
I think this is an appropriate time at which to consider whether the approach we are taking to the subject of taxation in this white paper is, from all points of view, the correct one, the democratic one, so that regardless of our individual political differences, regardless of the narrower approach which individual hon. members may take, we can all of us in the long run say we are proud of the system we employ to govern ourselves and that we believe it will stand up to the scrutiny and attacks of those in our country who deride and denigrate it, try to separate us and break down confederation rather than support it.
When we examine our system of taxation as a whole we realise we are not dealing with a piece of legislation which affects one part of the country; we are not dealing with a piece of legislation which has to do with a particular region or a particular pressure group; we are not dealing with legislation which concerns one particular facet of Canadian life; we are dealing with something which touches every citizen of every age, in every walk of life. Thus it is appropriate to ask ourselves whether our handling of this important and comprehensive subject is consistent with our understanding of good democracy and representative government. It involves the power of the government to collect money, and this in turn influences directly its ability to continue its programs or embark on new ones, to spend money, much of which will be redistributed among our citizens. It affects every citizen, every possibility, every potential, every hope which Canadians have for the future. More important still, it represents our approach in 1969 to the correct government policy involved in the redistribution of the wealth of this nation. If this is not sufficiently important from the point of view of every taxpayer, I cannot imagine what is.
If there is one area in which the federal government must take a lead at this time, if there is one clear, consistent and strong reason for supporting the federalist type of governmental system in this country, it is the necessity for a central government able to assume primary responsibility for redistribut-

ing money to the citizens among the economic groups of all the regions. The federal government must see to it that the power to collect taxes and the consequent power to spend money is used in such a way as to promote economic equality. So we are testing the very fabric of the government, which involves the right to tax and the method of doing so.
We are testing its programs and its ability to take money and spend it among the less privileged of our nation; we are examining the role of the government in redistributing the wealth of our nation. The final test of any governmental system is: to what extent does it see to it, through our system of taxation and spending, that all citizens have a reasonable opportunity to enjoy a decent standard of living? In doing this, we are examining what I believe to be the very basis of our system of government. In this respect we should take pride in the fact that we have advanced to a stage at which we can abandon the archaic system under which changes in taxation policy could only be implemented under conditions of the greatest secrecy and could only be enforced by means of a budget which was kept secret even from members of this House until it was announced. Measures thus introduced take effect with stunning force and the citizens directly concerned wake up to find themselves suddenly confronted by news of the way in which the government proposes to collect money from certain sources for redistribution to others.
This atmosphere of secrecy was, in my opinion, a weakness in our system of government. The fact we have now progressed to a stage at which we are able to adopt a white paper approach, and table in this House complete background information outlining in detail the policy of the government on taxation matters, is something which I profoundly welcome. This gives the nation an opportunity to react, an opportunity to understand the background and to express its views, an opportunity for citizens to discuss the measures proposed and apply them to their own way of life, to their own spheres of activity, to their own line of work or class of business. This in turn enables them to take part in our democratic and representative way of government by voicing their reactions.
[DOT] (9:10 p.m.)
In addition, I take pride in the fact that we will also be using extensively the facilities of the standing committees' system. When this debate is concluded the matter will be trans-
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ferred to a standing committee. In line with the rules changes recently made in this chamber and the increased responsibilities given to our standing committees, a full discussion and detailed examination of this document will there take place. All members of the chamber will have an opportunity to question those responsible for this white paper, to examine the government officials involved and, more importantly, to bring to the floor of the standing committee the views of their constituents as to the wisdom or otherwise of every page and paragraph, every proposal and provision contained in this white paper on taxation policy.
This is an important debate because we are discussing for the first time the white paper approach to a comprehensive taxation policy for Canada. When the matter is put on the floor of the standing committee for extensive and detailed study, we will be able to test our system of government further, and in two ways, the first being the capacity of every citizen in his country to voice his reaction to this important policy.
Since the introduction of this document I have spent a number of hours on week ends in my own constituency talking with various people about the white paper. Certainly it adds nothing new to this debate to put on record that the people at the lower end of the income scale are, generally speaking, happy at the fact that their tax burden will be lessened if these proposals are implemented. Neither is it surprising, I am sure, to inform the House that the people who are expressing greatest concern at the present time are those businessmen and others whose incomes fall within the $10,000 to $30,000 or $35,000 bracket.
Over the past weekend I discussed at great length these proposals with what I consider to be a good cross-section of my community. For example, I talked with the operator of a dry cleaning business, with the operator of a refrigeration business, with an architect, an accountant and the regional sales manager of a very large manufacturing concern. Each of these persons expressed different concerns and problems that he felt he would meet if these proposals were introduced.
With regard to the crackdown on expense account living, the feeling was that although others were able to advertise and charge the cost as an operating expense, under the new proposals they would be unable to take advantage of tax exemptions on money spent
Taxation Reform
entertaining clients personally. However, such details are not the important matter; what concerns me is the opportunity that each of these persons, in his own individual capacity, will have to make a forceful representation to this House in regard to the problems he will face if these proposals are introduced.
All members of this House-not simply government members, or opposition members in their narrow political capacities, but all members-are faced with a challenge, and it is this: Are they going to use the views of their constituents to their own political advantage, or are they prepared to make a full contribution to the representative and democratic process that is involved in examining that most important facet of government, the power by taxation to raise and to spend money?
I suggest we face not one but two challenges. First of all, by being responsible members of this House we have to assist each individual citizen to react to this white paper. In addition to that, through our work on standing committees and in our contributions to this debate, both before and after the subject is studied in the standing committee, we must see to it that this chamber possesses the capacity to evaluate public reaction and apply it to government policy.
If we are successful, then in the final analysis, when these proposals are implemented in a year or 14 months from now, we will be secure in the knowledge that the white paper has had the best possible exposure to the democratic and representative process of government. Whatever be the final policy of the government, we will be able to say with pride that it has resulted from good democratic, representative government in Canada today.


Mr. J. H. Horner (Crowfoot):: Mr. Speaker, in rising to take part in this debate I cannot help but comment on the remarks of the hon. member for Sudbury (Mr. Jerome) who has just taken his seat. He spoke at length on the democratic processes of government. He dealt with the idea of taxation policy being put forward in the form of a white paper, which is a sophisticated way of flying a kite. He then expounded at length on the fact-I think he repeated this three times-that this white paper will be referred to the standing committee and that the standing committee will examine it. Then he went on to accuse opposition members of being partisan. I say there is not one man on the government side who

December 1, 1969
Taxation Reform
can stand in his place and declare that the government has not been manipulating the committees of this House.


Some hon. Members:: Oh, oh.


John (Jack) Henry Horner: Certainly the government
manipulated them last year and also the year before. For example, look at what happened to the transportation committee. As soon as we had the government members licked in the committee, they were withdrawn and members more in line with government thinking took their place.


Mr. Deputy Speaker:: Order, please.


James Alexander Jerome: Mr. Speaker, I rise on a question of privilege.


Eldon Mattison Woolliams: Don't start raising nonsensical points of privilege.


Mr. Deputy Speaker:: Order, please. The hon. member for Sudbury (Mr. Jerome) on a question of privilege.


James Alexander Jerome: Mr. Speaker, the hon. member for Crowfoot (Mr. Horner) just stated that I accused members opposite of being narrow and partisan. I did no such thing. I said that the question we will have to ask ourselves is whether the members opposite will become partisan. I made no accusation at any time with respect to the hon. member.


John (Jack) Henry Horner: I hope the hon. member is not withdrawing his remarks through the use of such a fictitious point of privilege. My point was that the committees system adopted by this government is a farce. The committees are used as tools of the government. There is no way in which this white paper will receive fair and non-partisan scrutiny by the standing committee, because as soon as two or three government members begin to criticize the white paper they will suddenly find their names withdrawn from the membership of the committee. They will be sent to New York, to Siberia or somewhere; in any event, their names will be conveniently withdrawn. This is what happened with the transportation committee last year and again this year, and I imagine we will see it happen with other committees too. As the Prime Minister (Mr. Trudeau) and his henchmen understand the democratic system, committees are nothing but tools to be used by the government.
Let me now address myself to the white paper. The Minister of Finance (Mr. Benson) has used this white naper as a sophisticated

method of flying a kite and is trying to sell it to the Canadian public. However, once they take a close look at it they will soon realize what is really happening to them and to their country. The finance minister of this country-this applies to any country, for that matter-must remain credible. We all remember what happened, when a former finance minister, Mr. Gordon, brought in a budget a number of years ago. He destroyed himself and his credibility. In fact, he nearly brought down the Liberal Party.
[DOT] (9:20 p.m.)


Eldon Mattison Woolliams: That was one of his better contributions.


John (Jack) Henry Horner: He could not implement what he brought in and he never fully understood the implications of what he brought in. If the present Liberal government is not careful and continues to support the Minister of Finance, and if that minister does not withdraw many of the proposals listed in the white paper, the government may well be brought down again.
Let me read from an article which appeared in the Montreal Gazette of November 21, written by John Meyer. He had this to say about the white paper under the heading "Collecting those taxes won't be easy or cheap".
The Benson proposals, for all their apparent simplicity raise more questions than they answer on application. This is becoming so evident that there is now a strengthening belief that many of them must be either substantially modified or else withdrawn. Once this is set in motion before the parliamentary committee it is quite possible that enough of the main thrust of the reforms will be blunted to make them acceptable.
Some of the difficulties are in the area of collecting the tax. The best examples are to be found in the tax on gains and the five year valuation; The proposal to tax all gains from an investment in a foreign security, instead of half of the gains as in an investment in a Canadian security, simply encouraged the investor to set up an account in the U.S., something quite easily done.
Many members of this House have spoken about the fact that the proposals in the white paper hit hardest at the middle-income group.
I am not sure they do not also hurt the people at the bottom of the ladder. Perhaps they hurt those people the worst. I have always been proud, as a Canadian, that an individual with nothing can rise to the very height of success. A Canadian does not have to be born with a silver spoon in his mouth, but can through his own efforts become successful. What would this white paper do for these
December 1, 1969

people? It would allow them to earn $1,400 instead of $1,000 tax exempt. Isn't the government being big? It would give these people an
It is a sham to suggest that this document ment do to allow him to earn $400 extra? Let us look at page 24 of the white paper.
It shows the combined federal-provincial tax as it was, on less than $909, as 14.80 per cent. The combined federal-provincial tax as proposed in this table in the white paper, on anything less than $1,000, is 23.04 per cent. This represents an increase of about 9 per cent. As soon as the individual who is suffering what I refer to as poverty gets the $1,400 exemption, or an additional $400, and attempts to crawl out of the mire, he finds himself right back in a situation of poverty with an increase in tax of 8 per cent of the first $1,000. This destroys one of the cherished beliefs I have always had as a Canadian. I have in mind the fact that someone from the prairies or from an area of economic disparity could rise to great heights in this country of ours. One could do so more easily in Canada than in any other country in the world. The proposals in the white paper shatter that belief because they would build a wall around those people who are in desperate need. This white paper does not encourage them to get out of that mire step by step, small steps at a time; it knocks them right back in. They will very seldom have the opportunity to get out.
I am pleased to see the Minister of Finance come into the House and take his seat. One might suggest I am misinterpreting this table in the white paper, but the same principle applies to small corporations, which represent another step forward in our economic society. These small corporations are just barely getting started and in many cases have borrowed money for funding capital. They will now have to pay 50 per cent tax instead of 21 per cent. The minister might say there was a loophole here which had to be plugged. Surely he does not believe that the small grocery store, wholesaler, farm corporation or mining company should be taxed to the same extent as General Motors. Surely if there was ever any foundation for establishing the $35,000 criteria, it is more apparent today than it ever was.
If the minister felt that $35,000 was too high why did he not lower it to $20,000 or $25,000? If he felt that 21 per cent tax on corporations earning less than $35,000 was too low, why did he not raise it to 25 per cent or 29 per cent? Certainly, anything would be
Taxation Reform
better than 50 per cent. If the minister considers the number of small corporations that will go broke after the implementations of these proposals in the white paper, I am sure he will have grave second thoughts about these proposals.
What else does the white paper do? We have always been proud of this young country, with its tremendous development. Do the proposals in this document encourage us to get out and develop our own country? Do they encourage us to get out and own this country? I suggest they do not. This white paper discourages incentive. It discourages the individual who is now at the bottom of the mire and is trying to crawl out. It takes away the incentive of small corporations, farmers and people who may have some money and are prepared to invest it. It discourages big corporations from plowing money back into Canadian companies.
Does the white paper encourage Canadians to develop capital for the development of this country? I suggest it does not. This white paper discourages the accumulation of capital and the re-investment of that capital. What does the white paper do to the mining and oil companies? It certainly does not encourage them to continue exploration. This document discourages the growth of Canadian-owned companies because of the five-year valuation period. This proposal will in fact encourage United States takeover. The NDP does not have a monopoly of concern in respect of United States ownership of Canadian resources. Most Canadians are concerned about this, and most Canadians have a different idea as to how to go about recovering ownership of these companies. The white paper encourages takeovers by United States and foreign interests.
What does this white paper do for homeowners in Canada? I suggest it makes every homeowner a bookkeeper. Every homeowner will have to keep track of every little item of expense in order that he does not lose money. If he sells at a net gain, the pipe-smoking Minister of Finance will come along and scoop up that profit. What does the minister think he is doing in respect of the capital gains tax? Does he really think this will benefit the Canadian public? The Canadian public is today concerned about business efficiency and efficiency in government. We have heard all kinds of advice about a capital gains tax and whether it really pays to collect it. Surely it is not efficient to pay three civil servants to collect an amount equal to the salary of four.

December 1, 1969
Taxation Reform
The application of a capital gains tax as proposed in this white paper will be more severe than the capital gains tax in the United States. I suggest it will not accomplish anything if one considers the high rate of inflation we have experienced since the Minister of Finance and his cohorts took over.
[DOT] (9:30 p.m.)


Edgar John Benson: Mr. Speaker, would the hon. member permit a question? I should like to ask him what the position of his party is in respect of a capital gains tax.


Mr. Crouse:: We are not in power, Mr. Minister. You are, and it is up to you to do something.


John (Jack) Henry Horner: This is an interesting question. I am sure the minister knows the answer. I am not in a position to speak for the party of which I am a member.


Edgar John Benson: Why?


John (Jack) Henry Horner: That would require a long answer. I do not have the time to explain that. I wish to deal with the question of what effect the white paper has on farmers. I cannot be sidetracked by such remarks from the Minister of Finance. What does the capital gains tax on farm land have to do with the farmer? The minister shakes his head as if to imply nothing. It is obvious that he is not a farmer. We saw evidence of this in respect of the Estate Tax Act. He does not concern himself about the farmers. He says the effect of the white paper would be to increase the tax on only 9 per cent of the farmers. Where are the farmers who pay income tax in this country?
Eighty per cent of these farmers are from western Canada. Is there a farmer in western Canada who can stand an increase in income tax? If there is, I do not know him. If the Minister of Finance knows one, perhaps he would place his name on the record so that all the other farmers in western Canada can visit him to see how he does it.


Eldon Mattison Woolliams: Just Harry Hays, the
millionaire.


John (Jack) Henry Horner: Because the effect of the white paper would be to increase the tax of only 9 per cent of the farmers engaged in agriculture in this country, the minister thinks it is not bad. What percentage of the farmers pay any income tax at all? Something like 18 per cent, and many of them are in western Canada. Most of the farmers are from west-

ern Canada. Not too many of them can even now afford this, and by 1972 perhaps they will be worse off because of the rate of inflation. What effect would the white paper have on the livestock industry? It would completely destroy the effectiveness of keeping a basic herd. The minister shakes his head. He knows nothing about agriculture. Let him read his own white paper. The basic herd principle will be of no real value to the farmer if the white paper is implemented.
What will the effect of the white paper be in respect of the depreciation of farm machinery? Up until this time there has been a capital gain in respect of the sale of used farm machinery. All of a sudden this will become taxable. In the long run this might have the effect of bringing down the price of farm machinery, but it will be so far away that both the Minister of Finance and myself will be in our graves. To me this represents an increase in taxation to the farmer. What happens to the five-year averaging principle by which farmers for years have been able to average their income over a period of five years? With the ups and downs in agriculture, particularly western agriculture, this is very necessary. The five year averaging principle which has been beneficial to farmers will now be completely eroded by the effect of the white paper.


Edgar John Benson: It is not changed.


John (Jack) Henry Horner: The minister says it is not changed. He does not know what he has written in his white paper.


Edgar John Benson: It is not. Did you read it?


John (Jack) Henry Horner: It is changed; there is a different formula. The evaluation principle is taken into consideration in the averaging of the five
years.


Edgar John Benson: Not for farmers.


John (Jack) Henry Horner: Well, for how many years will it not be for farmers?


Edgar John Benson: Come on, read it.


John (Jack) Henry Horner: What effect does the white paper have on farmers who wish to borrow money from the Industrial Development Bank, from farm credit organizations or from other lending institutions? The Minister of Agriculture (Mr. Olson) stood up in this House and said that the avenue to success in agriculture is to become a farm corporation, a corporate entity. He said that farmers should
December 1. 1969

band together. If the family farm was O.K. previously, it may not have the same success today. What will happen to the small farm corporation? Will the minister stand up in his place and say that the small farm corporation will not be hurt by the increase from 21 per cent to 50 per cent?


Edgar John Benson: If they have more than $24,000 profit.


John (Jack) Henry Horner: If they have a profit of more than $24,000 they will be taxed at the rate of 50 per cent, but less than $24,000-


Edgar John Benson: No-


Mr. Deputy Speaker:: Order. I would prefer to hear the hon. member for Crowfoot. We are not in committee of the whole and I do not think we should proceed with this type of exchange.


John (Jack) Henry Horner: Well, Mr. Speaker, the minister continually nods and shakes his head, and it has been difficult for me to continue because of the way he has been carrying on. What effect will this have on the provinces? The basic implementation of the white paper will bring about an increase in taxes over a five year period of $560 million. The federal government's share will be eight times the share of the provincial governments. Anyone who has studied revenue needs over the past two years will agree that municipal and provincial revenue needs in the next two years will increase faster than the revenue needs of the federal government. What did the minister take into consideration here? Did he consult the provinces? Did he concern himself with the plight of the provinces in respect of money? Not very much,


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


Donald Stovel Macdonald: Mr. Speaker, I understand there are only two more speakers who wish to take part in this debate. In view of the fact that it would be desirable to complete the discussion of the matter now under consideration, I should like to move, seconded by the Minister of Finance (Mr. Benson):
That today's sitting shall be continued beyond the ordinary hour of daily adjournment for the purpose of considering Government Order No. 32 until 12 o'clock midnight or until the said order be disposed of, whichever be the earlier, and that S.O. 40 shall be suspended for today's sitting.
Taxation Reform


Mr. Deputy Speaker:: Order, please. Hon. members know that under Standing Order
6(5), if more than ten members object, the motion shall be deemed to have been withdrawn. Accordingly, I must ask those members who object to please rise in their places.
And more than ten members having risen:


Mr. Deputy Speaker:: As more than ten members have risen, the motion is deemed to have been withdrawn. The hon. member for Oshawa-Whitby (Mr. Broadbent).


John Edward Broadbent: Mr. Speaker, the last act was rather difficult to follow. The hon. member for Crowfoot (Mr. Horner) has made the Minister of Finance (Mr. Benson) look like someone a little left of Karl Marx. My following the hon. member for Crowfoot will, I hope, put him back in some kind of perspective, perhaps not so far as the twentieth century but possibly so far as the late nineteenth century is concerned.
The white paper has been proclaimed by many members on the government side, including the Minister of Finance, as a great, progressive document. However, if our standard of comparison is taxation policies in advanced industrial nations, including those in western Europe, the document is in fact a conservative one. Considered in the light of progress, the document is very long on suggestion and very short on substance. One of the best signs that this document is a conservative proposal in Canada is the fact that most newspapers in the country have accepted the general principles outlined in it. When editorial writers in Canada's newspapers accept something, it is a pretty good indication that we are not in for a radical change.
[DOT] (9:40 p.m.)
The government members have made a lot of the fact that 750,000 people are going to be taken off the tax list. I for one am not at all impressed by this fact, if one looks at what will be the average tax saving. A man who saves $20, $30, $100 or even $200 in taxes, according to the proposal which, if we are lucky, will be implemented two years hence, will have that very quickly written off, given the trend of inflation in this country. So the gains are really insubstantial, I suggest.
What are the principles of good government spending and of a just taxation system? I suggest they are four: first, taxes should be based on ability to pay; second, tax proposals

December 1, 1969
Taxation Reform
should be comprehensive, that is to say, all income should be included-a buck is a buck, as many have said; third, the tax system in an advanced country should have, as one of its principal objectives, the goal of achieving a redistribution of incomes; fourth, the tax system, in the judgment of this party, should be one means of offsetting the influence of a consumer goods industry by providing needed public goods and services such as hospitals, parks, athletic facilities, theatres, streets, schools and universities.
The hon. member for York South (Mr. Lewis) last Friday in this debate tried to deal in a general way with each of these objectives. I would like to take the time available to me to deal with one in particular, that is, the argument that has been advanced by the New Democratic Party that even if implemented-and we have no guarantee of this- the proposals for tax reform in the white paper would still leave Canada with a taxation system which grossly favours the rich as opposed to the average and the poor income people.
I want to try to document this argument very briefly. First of all, nothing would be done about the serious plight of the poor in this country. The Economic Council of Canada showed that the percentage of income of low-income people in this country, of people at the poverty level in fact, has not changed in a significant way in the last couple of decades. It has also been shown by the Economic Council of Canada that the percentage of income of the bottom 20 per cent of families in the income schedule of this country between 1951 and 1965 did not change. In 1951, 20 per cent of families on the income scale received only 6.1 per cent of income. In 1965, some 14 years later, this increased to 6.7 per cent, or almost no change. The second 20 per cent rose only from 12.9 per cent to 13.4 per cent in the same period. In 1965, just four years ago, the bottom 40 per cent of Canadian families received only 20 per cent of the income.
What is the conclusion? The conclusion, also very ably documented in a whole series of studies that have appeared in recent years, is that 20 per cent of Canadians live in poverty-serious, unhealthy, unpleasant poverty. They consist of the elderly, the people in our rural areas, probably half the population of the Atlantic provinces, a large number in Quebec, a very high percentage of our Indian and Metis population, and many thousands in the cores of our large cities. Another 20 per
[Mr. Broadbent.l
cent of the population are barely above the level of poverty. What does this mean? It means that 40 per cent of Canadians, almost half the population, live on very low incomes.
What does the white paper really propose to do about this situation? One suggestion has been to raise the exemption to $1,400 and to $2,800 for married couples. Will this lift the burden of taxes completely from the poor? No, it will not. According to the Economic Council of Canada, even in 1967 a family with two children needed a minimum income of $4,200 to get by. In his speech last Friday the Minister of Finance (Mr. Benson) indicated he knew very well that many of Canada's poor would still be paying taxes if this white paper is accepted.
He accepted the fact then-and I think it bears repetition-that this great document proposing a taxation reform will still leave thousands of Canadian families living in a state of poverty and paying taxes. He indicated in the debate on Friday that to change this we would have to increase taxes on the rich to levels beyond the one which he is proposing. I say: Why not increase the level of taxation well beyond what is proposed here for those who can afford to pay? Why not remove completely the special tax exemptions which still remain for the petroleum industry and others? If we take seriously the goal of eradicating poverty, as have countries with a per capita income much lower than our own, we can do it; but it means those who are in a position to do so will have to pay more taxes.
A few years ago I spent a month in Scandinavia, a good part of that time in Norway. When I was there in 1963 the per capita income was approximately the same as that in Great Britain, but the distribution of income was very different. I was given to understand at the time that only some 1,100 people in that country had incomes which exceeded $10,000 a year. But the social effects were amazing. Nowhere in that country did I see concentrations of poverty. Nowhere did I see grotesquely run-down cities or undernourished and badly-clothed children. The reason is simple. Given the same per capita income as Great Britain, which is much lower than that in our country, their government was seriously concerned with the problem of poverty and applied taxation as a means of social reform. In order to look after those who needed it, they taxed those who could afford to pay.
December 1, 1969

[DOT] (9:50 p.m.)
It is a shame to suggest that this document before us moves in any significant degree in that direction, and I am astounded by my friends on the political right, and also those on my physical right in this House, who rise and suggest we have here a radical document of some sort. That is absurd. Not only is there no significant increase in the tax levels for the higher income groups, but the whole means of taxing and the degree to which the rate is raised seem to me to be basically erroneous. Raising the exemption level, as has been pointed out, is in fact benefiting those at the higher levels in terms of dollars. It benefits them more than the poor. What should have been used in much greater degree is a whole series of tax credits, and these could have been applied to the lower levels only.
The answer is a complete system of tax credits instead of exemptions. As calculated by the hon. member for York South (Mr. Lewis) in his speech on Friday last, such a system would raise two-thirds of the money which the minister's proposals are designed to raise. The second and related point to be made is that the wealthy in Canada are quite happy. In the Minister of Finance we do not have a Robin Hood, a man who takes from the very rich and gives to the very poor.
What are the real facts about the increases in taxation? A married couple, with two children, who have an income of $20,000 will pay only $60 more. If such a married man earns $25,000 he will pay only $47 more, and if he should be a poor man with an income of $30,000 he will pay only $35 more. On the very highest level of income, Mr. Speaker, the government, this supposedly progressive government, has the audacity to put a 51 per cent ceiling on income tax. What view of justice, I ask, can lead the government to tax men living in the state of poverty in Canada, but allow millionaires to have a 51 per cent tax ceiling? Anyone who would suggest that this is at all just needs to undergo very serious self-analysis.
The principle is clear. With this proposal, the richer you are in Canada the smaller is your tax increase. It is no excuse to say, "Oh yes, but we are also going to tax those people on capital gains. They have not been taxed that way before." That is a curious kind of fallacious argument. Because we perpetrated an injustice for many years by not taxing capital gains, the government now says we should modify the blow by taxing them at a very modest rate. This is an argument of the most expedient political kind. It says to the
Taxation Reform
higher income group who vote for the Liberal Party, "Don't switch back to the Conservatives now. We are not going to be too tough on you. We are not going to introduce a really just system of taxation."
Generally speaking, as has been pointed out the real burden of increases in taxation is to be felt by those with incomes between $9,000 and $15,000. Why not on the rich? Why the special exemptions for certain kinds of industries? Why not a higher increase in corporation taxes? If we want to remove poverty and lift the burden of taxes that will still be paid by people living in poverty, why do we not do those things?
I would now like to turn to another example of inequity in the proposed system. It concerns the supposed benefit that an employed person can obtain by deducting certain expenses for his work. A $150 ceiling has been placed on the amount a worker can claim. Why this ceiling? Why impose such a limit on what a working man can claim when no equivalent limit is placed on employers or professional people? Again, it appears a clear case of discrimination which favours the rich over the poor. It is very hard for me to escape the conclusion that there is a very high degree of cynicism involved. To me it is an unscrupulous trick, the main purpose of which is to get the working people to accept the higher rates of deductions allowed for other people.
The fourth point I want to make on this general question of benefits which favour the rich over the poor and the average Canadian, concerns the failure of the government to embark upon a serious program of public investment and public expansion. If we build public swimming pools, parks and universities, the average income and poor Canadian benefits as much as the rich. If we remove pollution from our waters and air, if we preserve and build attractive cities, if we expand our hospitals and increase our medical research, the ordinary Canadian gains as much as his wealthy neighbour.
All of these are public goods; all require public investment. They all tend to favour the ordinary or the average man with benefits he could not purchase on the open market. Through this kind of use of our economic resources we can really equalize conditions to a very significant degree for all Canadians. However, if we look at the white paper we again see the kind of discrimination which tends to perpetuate the status quo as against expansion in this public domain.
December 1, 1969

Proceedings on Adjournment Motion



BUSINESS OF THE HOUSE

Donald Stovel Macdonald: Mr. Speaker, 1 would like to clarify the business for tomorrow. The plan to have the motion presently under debate disposed of after a two-day debate has been aborted, and it looks like two weeks from today, December 15, before it could be dealt with again. The business for tomorrow will be as announced, starting with item No. 10 in regard to the CNR-


James Aloysius McGrath: Don't count on that one either.


Donald Stovel Macdonald: -and we will be seeking co-operation with respect to a special order for four finance bills, items Nos. 42, 43, 44 and 45. I hope to be able to announce that to the House tomorrow.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 40 deemed to have been moved.

Mr. David Orlikow (Winnipeg North):: Mr. Speaker, on November 20 I addressed the following question to the Minister of Industry, Trade and Commerce (Mr. Pepin), as recorded at page 1031 of Hansard:
Mr. Speaker, I should like to ask the Minister of Industry, Trade and Commerce whether his department is investigating the charge made by the Canadian director of the United Auto Workers that the Ford Maverick car produced at St. Thomas and exported to the United States is sold there for $380 less than in Canada?
The minister was not very impressed with my question or with the importance of the problem, because his answer consisted of simply saying:
These things happen. It is quite possible that a company's general marketing policies give rise to this situation.
In other words, the minister saw nothing wrong with the policy and proposed to do nothing about it. It is interesting that the minister thought there was nothing wrong and proposed to do nothing about a policy under which Canadians will pay more for a product produced in Canada and exported to the United States.
[DOT] (10:00 p.m.)
On the same day the Minister of Energy, Mines and Resources (Mr. Greene) was asked whether, in view of the increased prices for natural gas being paid in the United States which would undoubtedly lead to an increased price in Canada for natural gas, he would consider a policy whereby prices in Canada would be less than those in the United States. The minister suggested that it was an inefficient industry which permitted a two-price system, one in Canada and one in the United States. In other words, Mr. Speaker, it is inefficient in the opinion of Liberal ministers if the price paid in Canada is less than the price paid in the United States, but it is quite normal if Canadians pay more for something produced in Canada which sells for less in the United States.
What are the facts in this case? There are two Ford plants, one at St. Thomas in Ontario and one at Kansas City, which produce all Ford "Mavericks" being made. Seventy-five per cent of the Ford "Mavericks" produced at the St. Thomas plant are exported to the United States and sold there. What do we find? These cars are shipped across the border every day, duty free. The same type of car off the same assembly line, built by the same workers with the same materials and the same built-in cost factor sells for $380 less in the United States than in Canada. In other words, Mr. Speaker, the minute the car crosses the border the price is reduced by $380. Part of that differential is due to the different tax system, but according to the company the remainder of it is due to the fact that warranty servicing is more expensive in Canada, Canadians roads are more expensive and the policy of bilingualism is adding to the Canadian price.
These are merely excuses. When we dealt with the U.S.-Canada auto pact we were told that a number of things would happen: We would produce more cars in Canada, and this has happened; we would reduce the balance of trade deficit as a result of auto transactions, which was important and has happened. We were also told that part of the cost to the Canadian taxpayer would be that we could no longer collect $50 in duty because that, in effect, now goes to the automobile companies; that the industry would be more efficient; that it would be rationalized for production; that runs would be longer and therefore prices would come down. But that has not happened. As I have pointed out, in the case of the "Maverick", prices are substantially higher in Canada than in the United
[Mr. Broadbent.l
December 1, 1969

States. The price of cars produced in Canada is higher in Canada than that of the same cars shipped to the United States.
There are two explanations for this, Mr. Speaker. Either every car shipped to the United States and sold for less than in Canada is sold at a loss-and I do not believe that, nor do I believe that the minister or his parliamentary secretary would argue that-or the price in Canada is such that the companies are making an exorbitant profit on Canadian sales. I suggest that the minister could handle this situation either by renegotiating the U.S.-Canada auto pact or by removing the duty, so that if the individual consumer wants to purchase a car he can bring it in duty free in the same way as Ford, General Motors or Chrysler. The day he can do that, Mr. Speaker, there will be real competition and the price will come down to where it ought to be.


Abram Ernest Epp: Mr. Speaker, because of the unavoidable absence of the Minister of Industry, Trade and Commerce (Mr. Pepin) and his parliamentary secretary, I shall be pleased to reply to the hon. member's questions.
It was indicated in the House previously that the suggested retail price of the Ford "Maverick" is United States $1995 for sales in the United States, and Canada $2375 for sales in Canada. After making allowances for exchange and the higher federal sales tax in Canada, and allowing for the effect of dealer mark-up, a difference of about $100 in Canadian funds or 5 per cent remains. In looking at this residual difference of about $100 or 5 per cent, I think I can do no better than quote from a paragraph at page 10588 of Hansard for June 25, 1969, where the parliamentary secretary to the minister made an answer to a very similar question concerning the price differential of the "Maverick". I quote it because I think it is a very fair statement of a basic source of this differential. He said:
For "Maverick" sales to be made in volume in the U.S. market the car must be priced competitively with other cars in the Ford range and competitive cars of other makes. Since the general level of prices is still lower in the U.S. than in Canada this results in a differential pricing situation between the two countries.
It is not the government's policy to intervene in this pricing process unless there is evidence of serious distortion. The pricing of particular models is a matter for company decisions, decisions which are governed by the normal constraints of competition and
Proceedings on Adjournment Motion consumer acceptance. It is expected that the auto agreement will continue to reduce the disparity of car prices in Canada and the United States.
I am not quoting from statistics, Mr. Speaker, but I think I am correct in saying that under the auto agreement the price differential has narrowed from approximately 10 per cent to approximately 5 per cent and that it is expected to narrow even further. The hon. member asked whether the government should be reconsidering its position under the automotive agreement. In answer to that question, I would like to say that in view of the increased production and the new employment which has been generated as a result of the agreement, a price differential which has been rapidly narrowing would not seem to be a justifiable reason why the government should reconsider its position under the automotive agreement.


Mr. Deputy Speaker:: Order, please. The hon. member for Comox-Alberni (Mr. Barnett) .



INDIAN AFFAIRS-BAND COUNCIL BORROWING REGULATIONS-PROVISION OF FUND

Mr. Thomas S. Barnett (Comox-Alberni):: Mr. Speaker, on November 21 I asked the Minister of Indian Affairs and Northern Development (Mr. Chretien) a question about the newly enacted regulations under the Indian Act entitled "Indian Band Council Borrowing Regulations" which appeared in the Canada Gazette, Part II, indicating that this was an entirely new set of regulations. Mr. Speaker suggested that it was a question that might be put on the order paper, but I felt that there are, or can be, important questions of public policy involved in these regulations; therefore, I thought it would be a suitable subject to raise at this time.
I notice that these regulations are made under section 72(l)(m) of the act. On checking the act I find that subsection (l)(m) was added to the act in 1956. I might draw to the attention of the House what seems to me to be a rather interesting parallel. The regulations read:
1.	These Regulations may be cited as the Indian Band Council Borrowing Regulations.
2.	The council of a band may borrow money for band projects or housing purposes and may make loans out of moneys so borrowed to members of the band for housing purposes, on such terms and conditions as may be determined by the council.
[DOT] (10:10 p.m.)
On checking the legislative authority for these regulations I found that section 72 of
December 1, 1969

Proceedings on Adjournment Motion the act authorizes the Governor in Council to make regulations. Under subparagraph (m) the Governor in Council may make regulations for empowering and authorizing the council of a band to borrow money for band projects and housing and providing for the making of loans to members of the bands for housing purposes. It is obvious that the regulations are simply a re-enactment of the terms of the legislation which give this power to the Governor in Council.
The question which I feel should be answered is, naturally: What does the minister intend to accomplish through the passing of this set of regulations late in 1969, when authority was given to the Governor in Council in an amending act as long ago as 1956? It is true the authority has not been exercised either by Liberal or by Conservative governments in the intervening years.
One would have expected the regulations to expand somewhat on the provisions of the act. There are one or two questions which occur to me immediately. First, as I have mentioned, there is the question: What is the purpose of these regulations? We are all familiar with Indian needs and the limitation on their borrowing power because they are unable to make mortgaging arrangements in the ordinary way either as individuals or as a band. Are we to understand that the government is preparing, as suggested in my question, to set up a fund from which Indian bands might borrow at reasonable rates of interest under the terms of the regulations; or does the government have in mind making available some form of insurance guarantee such as is provided under various lending regulations so that, in effect, Indians can go into the public market when they want to borrow, with some kind of government guarantee behind them? I think this is a matter of general concern to members of the House and to all who are concerned with the possibility of the Indian people being able to proceed more directly to the management of their own affairs and the development of housing on the reserves in a self-sufficient way.
I again express the hope that the parliamentary secretary will be able to explain why the government should at this particular time have decided to act upon powers which were granted to it by Parliament as long ago as 1956.


Mr. Russell C. Honey (Parliameniary Secretary to Minister of Indian Affairs and Northern Development):: Mr. Speaker, I can probably supply the information which the hon. member has requested. He should not be too concerned or even too critical of the fact that some time elapsed since the enabling legislation was passed and the regulations were promulgated. He will realise that in all areas of this government's legislative program, especially in the field of the Department of Indian Affairs and Northern Development, many new initiatives have been undertaken and many new programs are being proposed for discussion. This is the sort of thing that the government and the minister are doing to assist the native peoples of Canada.
I should like to put on the record in the very short time available to me a little information about what the government is doing to assist Indians and other native peoples in their economic development and in their housing programs. The hon. member who has placed the question before the House tonight will recall the recent statement of the minister-I am sorry I do not have the date in my notes-that an amount of $50 million would be made available over the next five years for the economic development of Indian communities.
The hon. member will also recall that Orders in Council were passed in September of 1967 pursuant to the Indian on reserve housing regulations. These orders provided that individual Indians may borrow money for the construction of houses on reserves from Central Mortgage and Housing Corporation. These loans are guaranteed by the minister, and a fund has been established to back the minister's guarantee.
In addition to that, pursuant to the Indian off-reserve and Eskimo re-establishment housing regulations, which were published in 1967, Indians and Eskimos who are regularly employed off reserves may be assisted in securing first mortgage loans from CMHC or approved lenders. They may also establish eligibility for second mortgage loans from a departmental loan fund. The second mortgage loans are forgiveable over a period of ten years if certain conditions are met.
Although my time is about to expire, I might just mention that by Treasury Board minute passed in 1966 capital grants may be
December 1. 19G9	COMMONS
made to. Indian band councils for the construction of houses. This is another part of the program to provide for the economic development of Indian peoples and to assist them to help meet their housing requirements.



HIGHWAYS-ATLANTIC PROVINCES- COST-SHARING FORMULA

Mr. Robert McCleave (Halifax-East Hants):: 
Abram Ernest Epp: Mr. Speaker, I should like to provide an answer to the member for Halifax-East Hants although I am afraid it will not be in the specific terms necessary to fully satisfy him. Let me say that the development programs which the Department of Regional Economic Expansion is currently discussing with provinces in the Atlantic region are expected to make provision for a certain amount of highway assistance integrated with comprehensive plans for regional development. Let me assure the hon. member that the department is fully aware of the importance of communications, particularly highways and roads, to area development and regional development in the whole Atlantic region. I think that kind of concern is apparent in the FRED programs which have already been established in some Atlantic areas.
I hope the hon. member will appreciate that while these comprehensive regional plans are under current and active consideration, it would be premature to forecast the details of cost-sharing assistance to a particular component of those comprehensive plans, in this case the transportation or highway component. I regret that my reply is so brief, par-
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1474	COMMONS DEBATES
Proceedings on Adjournment Motion ticularly in view oi the understandably high understand that specific details at this time interest of members from the Atlantic region are just not available.
and others in this subject of highways. I hope Motion agreed to and the House adjourned in these particular circumstances he will at 10.25 p.m.

Tuesday, December 2, 1969