1969-02-18

ROUTINE PROCEEDINGS


Hon. Jean-Luc Pepin (Minister of Industry, Trade and Commerce):: Mr. Speaker, I have just returned from attending the first meeting of the Canada-Tunisia Joint Committee in Tunis and the annual meeting of the Ministerial Council of the Organization for Economic Co-operation and Development in Paris.
I would like to table first of all the communique of the Canada-Tunisia Joint Committee which, as I said, met in Tunis from February 10 to 12. It was decided to establish this Committee at the end of President Bour-guiba's visit to Canada in May 1968. Its purpose was to reflect Canada's growing interest in its relations with the French-speaking countries of Africa in all fields.
The warm welcome which Tunisia gave to the Canadian delegation is an indication of the friendly relations between the two countries and of the favourable climate which exists for strengthening and expanding them in the future.
As a result of this meeting, Canada envisages increasing its program of economic and technical aid to Tunisia. In the year 1969-70 this aid could exceed a total of $10 million, of which $7 million would be for new initiatives, $5 million for loans on economic projects and $2 million for gifts under the expanded program of technical co-operation. In addition, we will be continuing to extend food aid to Tunisia.
In order to establish a framework which would facilitate expansion of our programs, we suggested to the Tunisians the conclusion of an agreement on economic and technical co-operation. To that end, we submitted a
draft text to be subsequently approved by the two governments.
We also discussed the possibility of concluding a trade agreement. We submitted a draft agreement to the Tunisian government in that respect. Canada intends to do the same with respect to several other African countries during the forthcoming months.
We hope of course that our aid program will pave the way for an increase in our export sales in the future.
I had an opportunity to meet with many of the Canadians working in Tunisia-there are more than 100 at present-and to see for myself one of the main activities in which we are involved, that is the children's hospital in Tunis. We have good reasons for being proud of what has been done and what is being done now by Canadians in Tunisia.
I should also like to table the communique issued at the conclusion of the meeting of the O.E.C.D. Ministerial Council which took place in Paris on February 13 and 14. This was the regular annual meeting of the ministers of O.E.C.D. countries, to review major economic trends and developments, during the past year and prospects for the months ahead.
The O.E.C.D. provides an important forum for joint consultation among the countries of Western Europe, North America and Japan over the whole range of economic policy matters, including finance and external aid. Economic conditions in these key countries have a determining influence on the growth of the world economy as a whole. Thus, the importance of close co-operation in economic and monetary policies among them cannot be over-emphasized.
The agenda for the recent meeting covered three main topics. As for the economic policy, reference was made in particular to the interdependence between international commercial and financial activities, and the need to avoid disturbances likely to affect the expansion of trade. I drew the attention of the delegates to the welcome increase in the export of capital from Europe, from which Canada has benefited in recent months.
The second topic dealt with was problems of the modern society. The O.E.C.D. will be examining in detail some of the implications

February 18, 1969
External Affairs
for economic policy arising from the rapid rate of technological progress in the industrialized world. In this connection, the delegates' attention was drawn more particularly to the growth of multinational corporations. I indicated that the questions raised by the operations of such corporations are, for Canada, of particular importance and suggested that O.E.C.D. should seek to develop internationally recognized ways and means of reconciling the various interests involved.
The third topic covered was Relations with Developing Countries, where O.E.C.D. countries also have a major role to play. I assured Canada's support for the proposed scheme of tariff preferences for the developing world and indicated the importance we attach to achieving an improvement in both the volume and the conditions of aid granted by industrialized countries.
Mr. Speaker, may I table the texts to which I referred?
[English}


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I must first of all express surprise that my good friend the minister has not been his usual courteous self in supplying a copy of the remarks he proposed to make. I am sure that this was simply an oversight on his part and that it will be corrected on another occasion.
[DOT] (2:10 p.m.)
I listened with great interest to the minister's comments on two quite separate matters; one of which related to relations between Canada and Tunisia, the prospect of the development of growing friendship there, and of assistance by Canada to that country. I am sure that this is something of which all Canadians would approve. This should be, of course, part of an integrated program on the part of Canada to assist in the development of so-called underdeveloped countries, particularly where we have some role to play, perhaps because of some cultural or traditional association.
With regard to O.E.C.D., again an organization of great importance to Canada, I was interested to note the emphasis that the minister placed upon the importance that Canada attached to assisting trading opportunities of underdeveloped countries. I too believe that this is of the very greatest importance. It is perhaps equal in importance to any technical or monetary assistance that might be directly offered to assist underdeveloped countries. I assure the minister and

also the Prime Minister (Mr. Trudeau) that his government would have the full support of this party in regard to efforts made to improve trading opportunities for underdeveloped countries, in terms of their trading with the developed countries of the world.
I should just like to take this opportunity, while expressing approval, as I have, of the matters I have mentioned, again to emphasize the importance of Canada's taking a leading part in achieving further monetary reform, which makes it possible for the kind of increased trade to which the minister refers to continue to develop, and not be hampered from time to time by serious crises.
I am a little disappointed that the government of Canada, representing as it does a country with perhaps more, or at the very least as much interest in this matter as any other country of the world, is not playing a more aggressive part in the achievement of additional international monetary reform leading to increased stability.
Secondly, when we think in terms of trade I believe we should be thinking of our future options as a country. I hope that the minister and his associates will not be content simply to attend meetings such as these and to play an active part in such meetings, but that the government of Canada will accept its responsibility in terms of looking ahead to the future possible trading patterns with which Canada will be faced, and the various options that may be open to this country. For example, we should ask ourselves quite seriously whether we can continue simply to rely upon multilateral trading relations, or to what extent we might rely upon them, or to what extent we have to resort to initiatives to explore new trading patterns and possibilities.
I hope that the minister and his associates will be giving these problems-monetary reform, future trading patterns, and the future of Canada in connection with both- their very closest attention.


Mr. David Lewis (York South):: Mr. Speaker, I have a brief comment to make. First, may I congratulate the minister for his part in the discussions in Tunisia. I think all hon. members realize the importance of good Canadian relations with all nations, and particularly with Francophone nations. We can play a useful role in nations speaking the French language. On behalf of my colleagues, may I say how delighted we are to hear the minister's report in that direction.
I also noted his comments about the O.E.C.D.. and I should like to make brief
February 18, 1963

comments on the points that have been raised. After studying the question of external aid, it is my impression that the problem of trade and monetary arrangements may be of less importance than the problem of larger grants in aid and, particularly, soft loans to certain countries to enable them to develop their economies to the point where they can exchange goods with the rest of the world on a proper basis.
I do not wish to sound bitter, but my only regret, which is shared by other hon. members of the house, is that to date Canada's external aid has equalled only about one half of 1 per cent of our gross national product. That includes both grants and loans, soft and hard.
I was also interested in the minister's comment showing that members of the O.E.C.D. were concerned about the role of multinational corporations in the world. As the minister knows, the members of my party share that concern. We have definite views about the undesirability of having multinational corporations control such a large part of the economy of this country. I hope the interesting ideas the minister aired may persuade his colleague the Prime Minister, to do something about the Watkins report very soon.


Mr. Rene Matte (Champlain):: Mr. Speaker, like the two previous speakers, I am pleased with the agreement that has just been signed between Canada and Tunisia. We can only but approve any agreement which promotes the economic, industrial or cultural development of our country. If, at the same time, we can also assist a country like Tunisia, we are delighted.
However, we wish to stress again the fact that if it is possible to help other countries by some financial means or others, we should not turn a deaf ear to similar requests from our own under-developed areas.
The minister states in his report that from the political and economic viewpoints, he stressed the interdependence between international policies on finance and trade and the need to avoid disturbances likely to affect the development of world trade.
Since there is more and more talk of monetary reform, perhaps we should advise the minister to get help from a member of the Ralliement Creditiste next time there is such a meeting, so that the he will be better prepared to discuss those matters.
Inquiries of the Ministry



COMMUNICATIONS


Hon. Eric W. Kierans (Postmaster General):: Mr. Speaker, last Thursday the hon. member for Hillsborough (Mr. Macquarrie) asked if I would release a copy of the report on satellite broadcasting prepared by Canadian and Swedish scientists for the United Nations committee on outer space. This study was prepared for the committee and has to do with the peaceful uses of outer space. I have checked with Sweden and the United Nations and, pursuant to section 2 of standing order 41, am happy to table two copies of the report in English and in French. I should like to express my pride in the work done by Canadian members of this committee, and particularly by those of the new Department of Communications.
[DOT] (2:20 p.m.)



ORAL QUESTIONS


Robert Lorne Stanfield: Mr. Speaker, I would like to direct a question to the Prime Minister. I suppose I might ask him whether "Colonel Blimp" will be offered equal time in Niger? What I would really like to know is whether the Secretary of State for External Affairs has been instructed to offer financial support to the proposed technical cultural agency for the Francophone nations, as reported in the press?


Right Hon. P. E. Trudeau (Prime Minister):: Yes, Mr. Speaker; as a matter of general principle, without committing any amount and of course always subject to approval by parliament, we have given the Secretary of State authority to indicate that Canada would be willing to participate in the financing of the secretariat of this French commonwealth of nations.


Robert Lorne Stanfield: A supplementary question, Mr. Speaker. Is it correct to assume from the Prime Minister's reply that there has been no authorization as to any particular amount? Is the Prime Minister not able to inform the house as to what amount the federal government might be contributing, or what amount

February 18, 1969
Inquiries of the Ministry the provinces of Canada might be contributing?


Pierre Elliott Trudeau: We did give him general guide lines. I would not want to say what they were, in the hope he would be able to stay on the lower side of any contribution rather than on the higher side. His instructions are linked with a proposal that part of the amount forthcoming from Canada might be paid by whatever provinces wish to contribute to such an organization.


Hon. W. G. Dinsdale (Brandon-Souris):: supplementary question, Mr. Speaker. Has there been any consultation with the provinces concerned with respect to this matter?


Pierre Elliott Trudeau: We did invite the provinces, Mr. Speaker, to send delegates to be part of the Canadian delegation. They knew the subjects on the agenda, and I would suppose they would have instructions from their governments as to whether they wished to participate financially or not. I know of one province which so desires. I cannot speak for the others.


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, I wish to put a question to the Prime Minister.
I should like to ask him whether singer Pauline Julien is attending the Niamey conference at the invitation of the federal government or of the Quebec government?


Mr. Speaker:: I have doubts as to whether the hon. member's question is in order.


Hon. Martial Asselin (Charlevoix):: I have a supplementary question, Mr. Speaker.


Mr. Speaker:: Order, please. The hon. member wishes to ask a supplementary question, although the first one was out of order. I will nevertheless recognize the hon. member.


Martial Asselin: I thank you, Mr. Speaker.
Yesterday, the hon. member for Lotbiniere (Mr. Fortin) asked a question concerning the possible confrontation at the Niamey conference between the federal and provincial delegations, and I would like to ask the Prime Minister whether there is only one Canadian delegation including New Brunswick, Ontario and the federal government, or if there is also a Quebec delegation represented by Minister Masse?


Pierre Elliott Trudeau: As far as I understand the arrangements agreed upon between the Quebec government
(Mr. Stanfield.]
and the federal government, Mr. Speaker, Quebec as well as other provinces is sending delegates to Niamey and all these delegates make up the Canadian delegation. I think that a certain Quebec minister prefers to use the words "Canadian representation", and I do not think it is necessary to quibble over the words, but over the substance. The principle is established and if a vote is taken there will be only one vote registered on behalf of the Canadian delegation.


Martial Asselin: Mr. Speaker, I should like to ask a supplementary question.
Does the Prime Minister mean to say that there is at Niamey only one Canadian delegation made up of representatives from Quebec, Ontario, New Brunswick and the federal government?


Pierre Elliott Trudeau: I repeat, Mr. Speaker, that the provincial delegates form a group that I call a delegation, although a Quebec minister prefers to call it "Canadian representation". I believe that, if there is to be some expression of opinion, there will be only one vote, in the name of the Canadian delegation and not for each province.


Gérard Laprise: Mr. Speaker, I would like to direct a supplementary question to the Prime Minister.
I would like to ask him whether hotel and transportation expenses for the Canadian delegation or the provinces taken as a whole are borne by the federal government or whether each province has to defray its own expenses?


Pierre Elliott Trudeau: Mr. Speaker, when the Canadian government sets up a delegation and appoints delegates it is in the habit of defraying the expenses of the delegates. We have in effect offered the provinces to defray the expenses of their delegates, but the province of Quebec, which has vast resources, chose to defray the expenses of its own delegates.



INDIAN AFFAIRS


David Lewis: I have a question, Mr. Speaker, to direct to the Minister of Indian Affairs and Northern Development of which I have given him notice.
February 18, 1969

I would like to ask him whether he is aware of the degrading regulations being enforced in a hostel called Akaitcho Hall in Yellowknife, a hostel which is under the jurisdiction of his department, which regulations call for the informing of every detail of the behaviour of people who live in this hostel? If he is aware of this, can he inform the house whether those regulations were promulgated and are enforced by the authority of his department?


Hon. Jean Chretien (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I wish to thank the hon. member for sending me notice of his question a few hours prior to the question period. I made inquiries and I shall be able to report to the house this Thursday, but I wish to tell the hon. member that apparently those regulations are the work of the students themselves. I am not aware of the nature of the regulations, but I ordered a report to be made, and as soon as this report is received, I shall pass it on to the house. If those regulations are absurd, the hon. member may rest assured that they will not be implemented.


David Lewis: A supplementary question, Mr. Speaker. In his reply the minister stated that these regulations were drawn up by the students. Will there be an investigation into all aspects of the regulations, such as the refusal to let Indians attending the school visit their homes, and the regulation permitting the holding of hands, and no more, between the two sexes? Could the minister look into these childish regulations and inform the house on Thursday exactly what they are about?


Joseph Jacques Jean Chrétien: It is my intention, Mr. Speaker.



TRANSPORT


Mr. Thomas M. Bell (Saint John-Lancaster):: Mr. Speaker, I wish to direct a question to the Minister of Transport. With the successful opening of the Transport Committee maritime hearings in Fredericton yesterday, can the minister answer my question of last week as to when he will be making his appearance in that area, on the line of the visits that he
29180-357J
Inquiries of the Ministry made to various points where the housing task force met?


Hon. Paul Hellyer (Minister of Transport):: I am looking forward to it with great interest, Mr. Speaker. It is very high on my list of things to do, and if I can arrange with my hon. friend a date when he will be there to greet me, perhaps we can work it out satisfactorily.


Thomas Miller Bell: Can the minister give us some notice as to when he is going to be appearing, so that we can prepare ourselves? For example will he be appearing in Halifax tomorrow?


Paul Theodore Hellyer: Mr. Speaker, the last time I went down there, just as I arrived my hon. friend left. Perhaps I was over-sensitive to the situation, but I am sure we can now work out something mutually satisfactory for the next time.


Thomas Miller Bell: As a further supplementary-


Mr. Speaker:: Order, please. I wonder if the minister and the hon. member might make their own arrangements.


Some hon. Members:: Hear, hear.



IMMIGRATION


Hon. George Hees (Prince Edward-Hasi-ings):: Mr. Speaker, I wish to direct a question to the Prime Minister. In view of the greatly increased frequency of disruptive activities in the past few days, such as the bomb explosion in the Montreal Stock Exchange and the great amount of damage done to Sir George Williams University, is the government giving reconsideration to its open-door policy covering the entry into Canada of people like Stokely Carmichael and other agitators who openly urge the overthrow of the government by force, which agitation has an effect on activities of this kind?


Pierre Elliott Trudeau: Mr. Speaker, this kind of problem is under observation and surveillance by the government. We start with the proposition, with which I think the hon. member agrees, that we prefer a free society and free speech. If. however, the situation deteriorates to the point where people come in for seditious purposes then, of course we will have to be much more severe towards that kind of activity than we have been in the past. For the time

February 18, 1969
Inquiries of the Ministry being we remain, on balance, prepared to give the benefit of the doubt in favour of free speech.


George Harris Hees: Could the Prime Minister give the house some idea of Jiow long the bombings and disruptive activities will have to continue before he thinks it is a serious matter?



STUDENT UNREST


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I have a supplementary question for the Minister of Manpower and Immigration. Would the minister say whether his department has received information confirming the assertion of the Minister of Transport in Toronto over the weekend that student unrest and vandalism in Canada may be prompted by political forces from outside Canada.


Hon. Allan J. MacEachen (Minister of Manpower and Immigration):: No, Mr. Speaker. I received no representation on that point.


Mr. Donald Maclnnis (Cape Breton-East Richmond):: Mr. Speaker, I have a further supplementary question for the Prime Minister. Has he taken any steps to stop the agitation developed by C.B.C. crews which go about the country?


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, in view of the statement of the Minister of Transport I should like to ask the Prime Minister whether he would consider the suggestion in respect of setting up a special committee of the Senate and perhaps the House of Commons to discuss the problem with the students, the professors and administrators of the universities to make sure that this does not happen again in some other university.


Pierre Elliott Trudeau: Mr. Speaker, I hardly see that we would be in a position to address our inquiry to the educational institutions. I repeat our position, as stated previously, that in so far as this is a matter for the police it is under provincial jurisdiction, and in so far as it is a matter concerning education it is under provincial jurisdiction also. Only when the problem becomes a matter concerning sedition in Canada, including the security aspects, would we intervene on our own. Until this happens we are of course co-operating with the provinces in every area in which they ask us to do
[Mr. Trudeau.l
so, either by way of exchange of information or in respect of control of explosive materials.
To answer the question about the C.B.C., I have no knowledge of these happenings but if any incidents are brought to my attention I will certainly discuss them with the minister.


Donald MacInnis: Mr. Speaker, I would ask the Prime Minister to review the press releases which came out of Halifax last summer during the time of the disturbances there, in which the crews were very much involved by creating disturbances themselves.



PUBLIC SERVICE


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct this question to the President of the Treasury Board. In view of the complaint by Claude Edwards, the President of the Public Service Alliance to the effect that some 1100 public employees did not receive their retroactive pay in 1968 according to the terms of their contract, will the government give consideration to the request for compensation in view of the extra income tax they will have to pay by reason of receiving this money in 1969?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, because of the progression of labour agreements, and the subsequent adjustments in pay which need to be calculated arising out of those labour agreements there will be a number of public servants in Canada who will have received pay adjustments prior to the coming into effect of the new tax. I think it would be rather difficult to try to distinguish between those who, on some basis, might be entitled to retroactive pay before the tax, and those who would not. Perhaps now we should rely on the physical date of the payment, in view of the fact that the government did put forward a substantial effort and did fairly well in getting as many as possible processed before the date.


Stanley Howard Knowles: In
the cases where it is clear that the fault is not that of the employees will the government take another look at the possibility of meeting their requests?


Charles Mills (Bud) Drury: I do not think there was any fault at all. It was just one of the ineluctable facts of life.
February 18, 1969



VIOLENT DISTURBANCES


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, I wish to direct to the Prime Minister a question which relates to supplementary questions asked a few moments ago. As a committee including members of the R.C.M.P., the Montreal police and the provincial police is now investigating into the explosion of bombs in Quebec last week, does the Prime Minister feel that the Criminal Code should be so amended as to provide for a more severe control of the handling, sale and storage of bombs throughout Canada?


Pierre Elliott Trudeau: Mr. Speaker, I do not think it is a matter of amending the Criminal Code, which is severe enough. It is rather a matter of being able to apply and administer it, and that would mean constant police action.



EXTERNAL AID

[Stage Direction]
TUNISIA-STATUS OF ASSISTANCE PROGRAM Hon. D. S. Harkness (Calgary Centre): Mr. Speaker, I should like to direct a question to the Minister of Industry, Trade and Commerce with reference to the statements he made on motions. Is the aid, which he announced is to be extended to Tunisia, part of our general external aid program administered by the Department of External Affairs or is it a separate program to be operated by the Department of Trade and Commerce?
Jean-Luc Pepin: It is part of the general effort, Mr. Speaker.


Mr. Harkness:: If that is the case, is it included in the budget of the external aid office of the Department of External Affairs, or will an additional $10 million need to be voted to meet this commitment?


Jean-Luc Pepin: So far as loans are concerned, I repeated the announcement made by Mr. Chevrier when he went to Tunisia of about $3 million worth of soft loans. As instructed by the Secretary of State for External Affairs, I added an amount of $5 million for further soft loans and I understand this is in the present budget of the Department of External Affairs.
Inquiries of the Ministry [Translation]



INQUIRY OF THE MINISTRY

Mr.   J.-A. Mongrain@Trois-Rivieres: Mr. Speaker, I should like to direct a question to the Minister of Finance.
Is he aware that one of the old stalwarts of Social Credit, Hon. E. C. Manning, has just abjured the creditist faith to embrace a more orthodox financial doctrine by accepting to serve as a director of the Canadian Imperial Bank of Commerce?


Gilbert F. Rondeau: Mr. Speaker, may I put a supplementary question?


Mr. Speaker:: Order. The question as put by the hon. member for Trois-Rivieres has been considered by the Chair, and there cannot be a supplementary question.



NORTHWEST TERRITORIES


Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct this question to the Minister of Indian Affairs and Northern Development. Yesterday I asked when the minister would be in a position to announce the self-government plans for the Northwest Territories.


Joseph Jacques Jean Chrétien: Mr. Speaker, my cabinet colleagues have not approved as yet the new policy in respect of the constitutional status of the Northwest Territories. I hope to be in a position to announce it within a few weeks.
I wish to point out to the hon. member that I was absent from the house yesterday because it was my day off. In fact, for a month now I have not been absent from the house even once when my presence was required.


Frank Howard: I have a supplementary question, but as a prelude I might point out that people do not wait for the rotation system of the Prime Minister; they are concerned about dealing with things when they occur. Before the minister leaves again, I should like to ask my question. Surely we are not to conclude from what he just said, and in the light of his statement,

February 18, 1969
Inquiries of the Ministry that he would announce this early in February that his policy and submission are so bad that even the cabinet has refused to accept it.


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



NATURAL RESOURCES


Mr. A. D. Hales (Wellington):: Mr. Speaker, my question is directed to the Acting Minister of Energy, Mines and Resources. It arises from inquiries I have received, and which I am sure many other members who have conservation projects in their ridings have received.
Can the minister advise the house whether the federal government has withdrawn its share of conservation projects in various provinces?


Hon. Otto E. Lang (Acting Minister of Energy, Mines and Resources):: Mr. Speaker, there is no question of the federal government's having withdrawn its share. Of course there are continuing discussions about which projects are in fact approved, which are not, and at what stage various projects have been approved. I take it these discussions will continue.


Alfred Dryden Hales: Will the minister advise the house when the various provinces might be advised as to the forthcoming share of the federal government?


Mr. Lang (Saskaioon-Humboldi):: The
provinces are kept informed at all times, Mr. Speaker.



FORESTRY


Mr. Lloyd R. Crouse (South Shore):: Mr. Speaker, I am not certain whether I should direct my question to the Minister of Transport or the Minister of National Defence, but since they are both in the house perhaps the responsible minister will answer. Is it the intention of the federal government to establish a highly mobile national reserve fleet of water bombers which would be kept in readiness for use in various areas in the provinces of Canada experiencing extreme fire hazards?


Mr. Speaker:: I should think this question might be placed on the order paper. If there

is urgency, which is not apparent to the chair, it could be discussed .at the time of adjournment.


Lloyd Roseville Crouse: On a point of order, Mr. Speaker. Let me point out that most of the provincial legislatures are sitting at the present time, and if the federal government anticipates such a move this information would be most helpful to provincial government plans.



POST OFFICE DEPARTMENT


Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I have what might be described as a basic question for the Postmaster General. In reference to his comment about making the post office a more happy place, will he investigate the report of the locking of washroom facilities for letter carriers, and bring about an open door policy?


Eric William Kierans: Mr. Speaker, I do not think there is any question of this having occurred, but I am having an investigation made of it.



NEGOTIATIONS AS TO DEFINITION OF TRAVEL TIME

Mr. Mac T. McCutcheon (Lambion-Kenl):: Mr. Speaker, would the minister say whether it is the position of the government that the question of travelling on paid time or on the workers' time at lunch is considered to be negotiable?


Eric William Kierans: Mr. Speaker, I have explained to the unions on several occasions that if they do not like the present position of the department they can always make the situation the subject of a grievance.



ALLEGED DELAYS IN INTERPROVINCIAL DELIVERIES

Mr. R. R. Souiham (Qu'Appelle-Moose Mountain):: Mr. Speaker, I have an urgent question for the Postmaster General. In light of the fact that under the new postal delivery schedules, more particularly in rural areas, there are delays of up to five days in delivering mail across provincial boundaries, can the minister say what steps he or his officials are taking to rectify this peculiar and serious problem?
February 18, 1969


Eric William Kierans: Mr. Speaker, I do not think the existence of provincial boundaries has anything to do with the delay of mail. If the hon. member has more precise information and will tell me exactly what boundaries he has reference to, I will be glad to look into the situation.


Richard Russell Southam: I am sorry if the minister has not already received a communication from me, but I am thinking of the eastern boundary of Saskatchewan in respect of which there have been definite instances where it took five days to get mail delivery five miles across the boundary.



COMMUNICATIONS


Mr. Ed Schreyer (Selkirk):: Mr. Speaker, having had a week to consider the matter will the Postmaster General now indicate to the house whether he will table the white paper setting forth the form of the organization of the proposed domestic space communications satellite corporation, before the legislation is introduced?


Eric William Kierans: Mr. Speaker, the hon. member is referring to the McIntosh report. That was an internal report prepared for the department. However, as I said I will get the opinion of my colleague as to whether or not this should be released.


Edward Richard Schreyer: Mr. Speaker, since the McIntosh report is an interdepartmental working paper, can the minister say whether or not he will table any document, material or policy of the government having to do with the domestic space communications satellite corporation before he introduces the legislation?


Eric William Kierans: I will take that question under advisement, Mr. Speaker.



VANCOUVER-MOVEMENT THROUGH USE OF U.S. DIESELS

Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, in view of the continuing reports that the grain situation at Vancouver will not correct itself until late in April or May, will the Minister of Industry, Trade and Commerce indicate whether during his discussions with the railway companies recently he indicated an attempt had been made to obtain diesel units from United States railway companies to alleviate the situation?
Inquiries of the Ministry


Jean-Luc Pepin: Mr. Speaker, when I was in Vancouver a week and some days ago the railway companies accepted targets above the targets they had accepted with the transportation committee on November 15. These new targets are 300 box cars a day for the C.N.R. and 301 for the C.P.R.
I have now in my hand a report as to what happened last week. There is an improvement. The C.N.R. for two days has gone above the rates of the accepted target. They are doing pretty well. The C.P.R. is not doing as well, but I was on the telephone this morning to ask them to do better. I have a full report here on the situation of unloading in Vancouver, which I would be glad to show to my hon. friend, and I have received-


Mr. Speaker:: Order, please.


Stanley James Korchinski: In view of the reports I am receiving, that there are still elevator points which have not delivered any grain since last fall, would the minister consider discussions with the railway companies to the end that more power might be obtained from United States transportation systems?


Jean-Luc Pepin: As my hon. friend knows, I receive representations on this subject every day, which I duly pass on to the railway companies, asking them to do as well as they can to remedy special situations.



NATIONAL SECURITY


Robert Lorne Stanfield: Mr. Speaker, I should like to ask the Prime Minister a question which he might regard as one which might appropriately be answered at some future day, on motions. In view of the concern of the government of Canada about proliferation in the use of atomic weapons by states, is it the view of the government that there is any imminent danger of atomic weapons being developed by private organizations, gangs or groups within society? If there is any such concern, will the Prime Minister say whether the government of Canada is taking any initiative in international terms with a view to preventing such developments, or controlling them if they occur? I am not asking for any breach of security, but if the government has such concern, are steps being taken?


Mr. Speaker:: Order, please. It is evident from the way the Leader of the Opposition

February 18, 1969
Inquiries of the Ministry has asked the question that he agrees with the Chair that this is a question of very wide scope, which normally would be answered by way of a statement on motions. That is my suggestion to the hon. member.


Robert Lorne Stanfield: Mr. Speaker, I am not sure whether the Prime Minister undertook to make such a statement.


Pierre Elliott Trudeau: I did not undertake to make such a statement, Mr. Speaker, but I will discuss the matter with the Secretary of State for External Affairs.



EXHIBITIONS


Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I would like to put a question to the Minister of Finance.
In view of the proposal for co-operation from the government of Quebec as regards the financing of Man and His World, could the minister inform the house of the federal government's decision in that connection?


Hon. E. J. Benson (Minister of Finance):: Not at this point, Mr. Speaker, but the offer was to finance it with our money.



REQUEST THAT BILLS BE PRINTED IN GREATER NUMBERS

Hon. Donald S. Macdonald (President of the Privy Council):: Yesterday, Mr. Speaker, the hon. member for Palliser asked me whether or not I could give some assurance to the house as to the printing in the future of larger supplies of important public bills, so that a wider distribution of such bills could be made to members of the public who are interested. I should like to inform the house that I have had discussions with responsible officers of the house and that a system will be instituted which we hope will have the effect of anticipating, to a greater extent, the need for wider distribution of certain bills, and therefore the need of endeavouring to have on hand a reasonably larger supply of them. While I am sure that this system cannot be perfect for obvious reasons, I am sure it will improve considerably the situation pointed out by the hon. member.



TRANSPORT


Mr. Robert McCleave (Halifax-East Hauls):: Mr. Speaker, my question to the Minister of Transport is similar to a question asked yesterday by the hon. member for South West Nova, who is on his way to Halifax now to join the transport committee's hearings. Will the Canadian Transport Commission be represented at those hearings?


Paul Theodore Hellyer: The answer is yes, Mr. Speaker. I understand that an officer of the Canadian Transport Commission joined the committee yesterday at Fredericton, and will continue the tour with them.


Thomas Miller Bell: I have a supplementary question, Mr. Speaker. Would the minister also consider sending on this trip the Minister without Portfolio, who is ready, able and willing to go?



NATIONAL CAPITAL


Mr. Barry Mather (Surrey):: Mr. Speaker, I wonder if I could address a question to the Prime Minister. Having in mind the decision of the federal-provincial conference calling for the development both in the Ottawa and Hull area of a truly national Canadian capital, could the Prime Minister indicate at this time what study is being made or what action is being taken on this important project?


Mr. Speaker:: Order, please. I would like to suggest that the scope of the hon. member's question is very wide and that it would probably require a long answer which should be given by way of a statement on motions. However if the Prime Minister wishes he may give a short answer to the question.


Pierre Elliott Trudeau: Mr. Speaker, I could make the answer short. We did have meetings last week. Apart from the constitutional conference Premier Robarts, Premier Bertrand and myself had certain private meetings with a view to studying the federal government's desire to expand some of its works on the Hull side of the river. Certain agreements were reached before the conference, and further consultation is going on.
February 18, 1868



AIRPORTS


Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, I have a question for the Minister of Transport. I was wondering whether the minister could advise the house whether the federal-provincial committee has been established to pursue the selection of alternative sites for a second airport to service the southern Ontario region and, if it has been selected, could the minister advise what is the federal participation?


Paul Theodore Hellyer: Not yet, Mr. Speaker.


Lincoln MacCauley Alexander: I have a supplementary question, Mr. Speaker. In view of the fact that the minister had so much opposition in the Malton expansion, can he say whether the government intends to hold public hearings in order to get the views of the public from the areas which will be affected, so that we shall have a participatory democracy?


Paul Theodore Hellyer: It is certainly a good suggestion, and one which will be taken into consideration. My hon. friend will appreciate that the kind of area we would seek is one which would affect very few persons; otherwise it would not meet the criteria that, I am sure, would be set down at the outset.



FISHERIES


Mr. John Lundrigan (Gander-Twillingate):: I have a question for the Minister of Fisheries. Can he say whether, in fact, the province of Newfoundland has made representations to his office for price support for the 1968 Atlantic salt cod fishermen?


Mr. Speaker:: It is not in order to ask simply whether a request has been made or a representation submitted to the minister.


John Howard Lundrigan: May I rephrase my question and ask the minister whether as a result of representations made by other bodies the department is in a position to say whether they are going to advance any price support to the fishermen for the 1968 catch.


Hon. Jack Davis (Minister of Fisheries):: Mr. Speaker, the department is considering representations made by the federation.
Inquiries of the Ministry TRANSPORT



DISCRIMINATORY REDUCTIONS IN EXPRESS ASSOCIATION RATES

Mr. A. P. Gleave (Saskatoon-Biggar):: Mr. Speaker, I would like to direct my question to the Minister of Transport. Will he investigate the circumstances surrounding the fact that in Saskatchewan the Express Transportation Association has set new rates allowing higher rates to be charged at points in Saskatchewan than at points farther west, such as Edmonton and Vancouver, for moving the same product?


Mr. Speaker:: Order, please. The hon. member has made a submission to the minister and now he has to assume it will be looked into.



AIR CANADA


[Stage Direction]
TROIS-RIVI^RES
Mr. Andre Foriin (Lotbiniere):: Mr. Speaker, I would like to put a question to the Minister of Transport.
Could the minister tell us whether it is true that Air Canada is about to discontinue its service at its base in Trois-Rivieres?


Mr. Speaker:: Order, please. That question should be put on the order paper.



IMMIGRATION


Mr. Gordon Rifchie (Dauphin):: Mr. Speaker, my question is directed to the Minister of Manpower and Immigration. Will the minister confirm Canada's policies with regard to the entry into Canada of foreign students, in order to allay fears expressed by the ex-prime minister of Bermuda that Canada may exclude all foreign students from the country-a policy very discriminatory and regressive?


Allan Joseph MacEachen: There has been no change in the policy with respect to the admission of students to Canada. We are naturally observing the situation in Montreal, and if any action is indicated following these hearings it will be taken.
February 18, 1969

Inquiries of the Ministry VIOLENT DISTURBANCES



REQUEST FOR COLLECTION OF INFORMATION TO DISCLOSE COMMON CAUSE

Mr. Paul Yewchuk (Athabasca):: Mr. Speaker, I have a supplementary question on the same topic which I wish to direct to the Prime Minister. In view of the fact that the Prime Minister has refused to set up a committee to investigate violence in general, would he consider setting up a committee strictly for the collection of information on the subject of violence to see if there is any common denominator across the country?


Paul Yewchuk: Mr. Speaker, I rise on a point of order. I think the Prime Minister wanted to answer the question I asked him a few minutes ago, if he were given the opportunity.


Pierre Elliott Trudeau: I thought it was addressed to the Minister of Manpower and Immigration, and that he might have some ideas on it. I do not see why we should set up a committee to investigate violence, as the hon. member suggests. If we do, it would be said we are setting up committees to deal with everything, but that they do not report, and so on. I think we have the situation under observation and there are committees of the cabinet which are looking into it.



NATIONAL DEFENCE


Mr. John Burton (Regina East):: My question is for the Minister of National Defence. Has the cause of the explosion last Saturday morning in the Canadian armed forces recruiting centre in Regina been determined?


Hon. Leo Cadieux (Minister of National Defence):: We are still investigating the incident. It is now suspected that it was a commercial gas explosion, but the provincial police, the city authorities and authorities at the base are investigating the problem. We hope to have a report quite soon.



NATO-WITHHOLDING OF FUNDS UNTIL COMPLETION OF REVIEW

[Stage Direction]
Hon. L-eo Cadieux (Minister of National
Defence): While I am on my feet may I be allowed to answer a question which was raised on February 5 by the hon. member for Selkirk. I would like to reassure him that no public funds have been allocated for the construction of permanent buildings for Canadian forces bases in Europe.
[Mr MacEachen.l


Gilbert F. Rondeau: Mr. Speaker, in view of the absence of the Minister of Forestry and Rural Development, I should like to put my question to the Prime Minister who had much to say about regional disparities during the last election campaign as well as at the last federal-provincial conference.
Can he assure us that expenditures in 1966-67 under ARDA, of which $16 million were allocated to the province of Ontario and $20 million to the nine other provinces-


Mr. Speaker:: Order.



TRANSPORT


John Howard Lundrigan: Mr. Speaker, I have a question for the Minister of Transport. Can the minister say whether applications have been received to abandon two further rail line services in the province of Newfoundland?


Paul Theodore Hellyer: I will have to refer the hon. gentleman's question to the Canadian Transport Commission.


John Howard Lundrigan: I have a supplementary question. May I ask the minister, in view of the fact that the committee is now travelling through that particular part of the country, whether he would make an effort to urge the transport commission to set aside its decision. I am thinking of the minister's good health as well as that of Mr. Pickersgill.



PUBLIC SERVICE


Stanley Howard Knowles: Mr. Speaker, I should like to direct a question to the President of the Treasury Board based on information which was placed in Hansard yesterday in reply to a question of mine on the order paper. In view of the fact that since this session began in September more than 600 retired civil servants have died without getting the pension increases that were recommended two years ago, could the minister say how much longer we will have to wait before this matter is dealt with.
February 18, 1969	COMMONS


Charles Mills (Bud) Drury: I cannot give a precise date.


Mr. Baldwin:: When the government changes.



AIRPORTS


André-Gilles Fortin: Mr. Speaker, I should like to put a question to the Minister of Transport.
Can he tell us exactly when the decision on the site of the new international airport will be made known to the public?


Paul Theodore Hellyer: Every day we are getting a day closer to the decision.


Mr. MacEwan:: You will go down in history for that statement.


Paul Theodore Hellyer: I hope it will not be too long delayed.


André-Gilles Fortin: Mr. Speaker, I would like to ask a supplementary question.
Could the Minister of Transport give us the reason for the delay in announcing this decision?


Martial Asselin: Mr. Speaker, I would like to ask a supplementary question.
Will the Minister of Transport, before he makes his decision, take heed of the representations of the government of Quebec about the site of the new airport?


Mr. Speaker:: The question was put, a moment ago, in exactly the same way.


Martial Asselin: May I put it in another way, Mr. Speaker?
Will the Minister of Transport meet again with other representatives of the government of Quebec to discuss the site of this new airport?


Paul Theodore Hellyer: There have been continuous consultations, Mr. Speaker, and as I indicated to the house earlier, and as you so kindly pointed out, we certainly are interested in the views of the Province of Quebec. These views, along with all other considerations, will be taken into account before a final decision is reached.
DEBATES	5647
Income Tax Act and Estate Tax Act



GOVERNMENT ORDERS


[Stage Direction]
The house resumed, from Monday, February 17, consideration of the motion of Mr. Benson that Bill C-165, to amend the Income Tax Act and the Estate Tax Act, be read the second time and referred to a Committee of the Whole, and the amendment thereto of Mr. Saltsman (p. 5191).
Mr. W. C. Scott (Victoria-Haliburton):: Mr. Speaker, the minister has made much of the fact that he has agreed to changes in his original proposal in regard to estate taxation. But these changes were minor modifications only. There is no basic difference between the legislation we are considering today and the original measure outlined by the minister almost four months ago. He set out then to destroy any accumulation of private capital that remained in this country. His intent is still the same. All he did was change the load in the murder weapon. It may take the family farm and small private Canadian business a little longer to die under the new arrangement, but they are just as surely doomed to extinction now as they were when the minister passed sentence on them back last October.
There is one aspect of the minister's behaviour in this whole affair which I must confess I am at a loss to understand. I refer to the atmosphere of deception and trickery in which he has cloaked all his announcements and explanations. Nothing could be more devious than the way in which he has sought to confuse the public and convince Canadians that he has really done them a great favour by the latest changes in his proposal.
The minister implied, although he was careful not to spell it out, that Canadians would now enjoy an estate tax exemption of $50,000 instead of the originally announced $20,000. When we read the fine print, however, we see that what he did was leave the old exemption of $20,000 unchanged. He merely raised the tax floor to $50,000. What this means is that if a man dies leaving an estate of $50,000 he is exempt from the estate tax. But if he is unfortunate enough to have been $1,000 more successful and to have left an estate of $51,000, his estate will be liable to taxation and the exemption will be only $20,000. In other words, it would be liable to the new punitive tax rates on a sum of $31,000.
February 18, 1969

Income Tax Act and Estate Tax Act
Anyone who knows the value of real estate in the province of Ontario today, and who appreciates the inflated value of everything, thanks to the Liberal 60-cent dollar, knows very well that a prosperous family farm or a thriving small business will more than likely be well within the minister's taxing grasp. All he has done by setting the arbitrary figure of $50,000 is to assure that those family farms, small businesses and other family concerns which are efficient and most valuable to the economy will be hardest hit.
The minister has succeeded very neatly in penalizing efficiency. He has hit the very bracket of private business which contributes most to the national economy. The marginal farm, the ineffective manager, the part-time enterprise that needs either moonlighting or other outside assistance to stay alive, have been placed in a preferred position. For the time being at least they will escape the tax axe, if they carry the Benson seal of inefficiency. But the family farm operated by a trained and dedicated farmer will be desperately hard hit. The grocery store, the garage, the local automobile or farm machinery outlet, or any other type of rural Ontario family enterprise which is effectively run as a family business, will get the full cut.
If the minister is sincere in his explanation of this tax, why is he risking the ruin of a large and lively section of our national economy for the sake of a paltry $30 million in revenue? And $30 million is a paltry amount of tax money to those who can shrug off underestimates in national budgeting running into thousands of millions. It is a paltry amount to a minister who countenances an increase of more than $1 billion in national spending in one year while at the same time preaching austerity and restraint in spending.
In a speech some time ago at London the minister said there had been very few cases of businesses or family farms having to be sold to meet taxation. What he failed to mention was that this has been true in the past; it was only true in the days before the coming into effect of his new proposals. He also failed to mention that the actual sale of family businesses or farms would normally take place before the death of the owner, though the chief motive for selling out would still be the menace of the estate tax.
In the Montreal Gazette of January 29 the highly respected financial writer, John Meyer, touches on this point. He wrote as follows:
The exemption of all estates up to $100,000 would cost the government, according to some estimates, only $12 million in revenue while permitting large

savings In processing. Such an exemption would relieve many of the small business and farm difficulties raised by the present taxing process. It would substantially relieve the forced sales which are a particular objection to estate taxation generally. That advantage could be achieved at quite a small cost if Mr. Benson would be prepared to recognize it. Mr. Benson, however, says the experience of the finance department indicated that forced sales after death to meet taxes are limited. No doubt this is true. What neither Mr. Benson or the finance department can possibly know is the number of sales made in advance of death. The tax consultants and professional executors could have told him if given the chance.
No, Mr. Speaker, the minister has not really changed anything. He has juggled some figures and reworded a few press releases but he has kept intact the punitive quality of his legislation. Private enterprise and private initiative are to be discouraged. The minister has made them an offence and he has provided penalties which are harsh, discriminatory and destructive.
The message of this government-this government of the just society, publicly pledged to the support of individual rights and freedom-as broadcast by the Minister of Finance is clear. It is: Get out of the field of private endeavour. Sell your store, sell your business, sell your farm. Move to the city and get a job where we can keep our eye on you and deduct our taxes at source. Become part of the regimented mass and do not foul up our computers with individual initiative. Or, as one of my constituents put it the other day: Sell off all your holdings now, blow the proceeds in high living in Florida and Europe and return broke to live the rest of your lives on welfare.
[DOT] (3:10 p.m.)
Before I finish my remarks, Mr. Speaker, I would like to say something about one of the most arbitrary and unjust aspects of this taxation. As a matter of fact, it is an aspect that is part of all federal taxation. This is the fact that the federal authority levies taxes upon individual Canadians and individual Canadian enterprises at its own valuation.
I am sure there are very few members in this house who have not learned first hand of examples of this inequity. The federal valuation is too often made at long range and without any regard to local valuation or the effect of temporary or long-term economic recession on those local valuations. Under the proposed estate tax scheme it will be quite possible for families sincerely to believe that they are well under the taxation floor only to find that an arbitrary federal valuation places them not
February 18, 1969

only in a taxable bracket but well up in it. This has happened in the past and is even more likely to happen under this proposed scheme. Then just watch the forced sale of farms and businesses to meet estate taxes.
If the minister and the government majority succeed in making this dangerous and destructive measure law, then I suggest that some means of fair and equitable valuation of estates for taxation purposes be evolved. This, at least, would be one gesture of fairness and decency in a taxation scheme that, as it now stands, lacks both.


Mr. George Muir (Lisgar):: Mr. Speaker, I think that most members, like myself, find it rather hard to believe that the finance minister has had, to use his own words, very few protests in regard to the proposed changes in the estate tax legislation. In view of the tremendous number of letters that have been received by most members from all across the country, the taxpayers of Canada must either be unaware of the minister's presence in the house or feel that his attitude is so stubborn and inflexible that it would be useless for them to appeal either to his good nature or to his good judgment.
Personally, I cannot recall a single issue that has brought forth such a volume of mail from my constituents. I know too that many other members have received the same tidal wave of protest. The remarkable thing about all this mail is that it comes from individuals who are concerned and is not part of an organized effort. Surely even the minister of a government as arrogant and as far removed from the thinking of the people as this one cannot long remain totally unaware of the massive resistance to this measure that continues to grow daily from coast to coast.
I want to be fair to the minister. Ey exempting an inheritance between spouses from taxation he has recognized the contribution both partners in a marriage make toward building a common estate. But what he fails to recognize is that the one main incentive for such a partnership is the creation of something tangible to pass on to their offspring. This legislation makes it virtually impossible to pass on a viable family economic unit intact to the heirs without involving them in an undue amount of debt.
I am concerned about the effect of this negative and destructive tax on the Canadian economy and the Canadian society as a whole. Representing a rural riding as I do, I am

Income Tax Act and Estate Tax Act particularly concerned about its effect on Canada's agricultural community, the independent rural businessmen and farmers. In the past it has been difficult enough to establish sons on the family farm. The minister in a speech to a Liberal meeting admitted that the estate tax places a burden on the transfer of family farms and businesses between generations, but he suggested the burden is not a heavy one.
He went on to say that an estate tax does place a special burden on estates in which the major assets are not liquid, which is almost always the case when a farm or business is owned and operated as a family enterprise. The burden, he said, is only significant where the business is to be carried on by the children, or has not been sold at the time of death of the chief shareholder. In other words, he has admitted that the tax is going to make it difficult to continue small family enterprises. He has further admitted it by changing his original proposals in two ways: first, estates under $50,000 will be tax exempt and, second, instalment payments of the tax will be allowed up to five years. Even with these changes he does not grapple with the situation in which the taxes are levied on the basis of an arbitrary valuation of the property, or where such valuations do not bear any resemblance to local market conditions or take into account regional economic cycles.
Let me give an illustration. A farm in Manitoba which could have been sold for $250 an acre last year would, because of the surplus grain situation, shortage of cash and high interest rates, be hard to sell at the present time at any price. It is not unlikely that any family farm in western Canada could be greatly over valuated under those conditions and have to be sacrificed at a valuation far below that placed upon it by the federal tax authorities.
Inflated costs, particularly of machinery and equipment, have placed all but the smallest farm enterprise well over the $50,000 valuation. With inflation still rampant the minister has caught a huge number of small family businesses and farm enterprises in a tax net originally designed to catch only the very largest. In fact, he has left the largest estates virtually untouched and hit out hard at the smaller ones. This is in line with other actions of this government such as the preferred position given people with higher incomes in the application of the new 2 per cent social development tax.
February 18, 1969

Income Tax Act and Estate Tax Act
Nor does the exemption up to $50,000 do much to change the situation. A more realistic exemption base under present inflated conditions would be $100,000. The fact that the tax exemption for estates over $50,000 still remains at $20,000 simply proves that the minister has not taken the time or trouble to study the serious effects the application of the tax will have on our free enterprise system. One does not have to be an economist to realize that all this will lead to the phasing out of the family enterprise and the emergence of corporate groups. It means the extinction of the family farm, and inevitably of Canada's agricultural communities.
The Western Producer had this to say in a recent editorial:
It is almost incredible that the government that has had so much to say about the "just society" should introduce such punitive legislation. It seems to us there could be no quicker way to destroy the family farm and to hasten the day when land resources will be controlled by huge corporations.
When one considers that 75 per cent of estate taxes collected by the federal government goes to the provinces, I say it is just as incredible that discussions were not held with the provinces before imposition of the tax. This is particularly so since the federal share amounts to approximately one per cent of the federal budget. Of this amount it is estimated the government would lose $12 million if all estates below $100,000 were exempt, as my hon. friend from Victoria-Haliburton noted. At the same time there would be a considerable saving in not having to process the greater number of estates involved. One wonders, under these conditions, if this new estate tax set-up is being brought in not as an economic measure but rather as a social measure.
[DOT] (3:20 p.m.)
Surely this levelling off in the distribution of wealth need not reach down to penalize thrifty, independent businessmen and farmers who, in a lifetime, use their earnings to build modest estates for themselves and their families. It is of interest to read what the Ontario Economic Council had to say in its report just prior to the estate tax changes announced as part of the current budget. I quote from that part of the report which is most apt:
Those responsible for guiding the course of our nation's development need only to look to history to find proof that nearly every past civilization has hastened its ruin through dissipation of capital by taxation.

One has only to read the history of the Roman empire to see what economic oppression of the individual farmer and businessman can do to hasten this ruin. There the small farmers and small businessmen were driven from their holdings to become faceless parts of an urban mob that contributed nothing and demanded everything.
In a country such as Canada that is hungry for capital and counts capital as one of its largest imports, one would think the formation and development of private capital within the country would be the government's foremost aim. Among 14 countries surveyed by the Ontario Economic Council, Canada was found to levy the highest percentage of tax on capital. It was ahead of the United States and Great Britain by a wide margin; it was even ahead of socialist Sweden. Canada was third of ten nations in the percentage of total government revenue raised by death duties and gift taxation. Great Britain was first at 3 per cent; the U.S. was next with 2.6 per cent and Canada was third with 1.8 per cent. West Germany, last with 0.1 per cent, had the lowest rate of estate tax but showed the highest rate of economic growth. That may be significant.
One other aspect of the proposed estate tax worth nothing is the supposed concession to wives contained in the new regulations. The Canadian Tax Foundation dismissed this point by saying it was simply "a carrot dangled before wives" that could and probably would lead to unexpected tax pitfalls. The truth of the matter is that it is no concession at all. It is simply a deferral of taxation. And when the tax bite comes later it will be that much sharper and deeper. This deferred tax only means eventual taxation at higher rates.
This is far more a social measure than an economic one. When one considers how little revenue will be forthcoming and when one further considers that the minister did not bother to consult the provinces about a matter that so intimately concerned them, one is forced to conclude his objective was something other than revenue raising.
In the Hamilton Spectator, as quoted in the Winnipeg Tribune of January 11, the editorial writer notes:
Not only does its underlying motive appear to be directed more towards a theoretical political aim than to a fiscal need, but the measure could radically change the character and purpose of Canadian business.
The editorial concludes:
Surplus capital essential to Canadian ownership and to industrial expansion in this country is
February 18, 1969

being increasingly diverted into government coffers. In the years to come these estate tax measures will change the economic and social structure of Canada.
May I also quote an article in the same issue of the Winnipeg Tribune:
Mr. Benson's basic assumption in the draft law is that a man has really no right to direct how his savings are to be used after his death. In Mr. Benson's philosophy a man's life earnings become the property of the government and anything he disposes of by will is allowed only by government benevolence.
With all that I agree, Mr. Speaker. But perhaps the editorial writer laid the blame in the wrong place. I do not believe this is the philosophy of the Minister of Finance. I think that this is the basic philosophy of the so-called "just society". He had no choice except to do his master's bidding. As the Winnipeg Tribune writer put it:
This is, of course, arrant statism and authoritarianism at its worst.
That is not a bad description of this "just society" we are supposed to be enjoying.
I return to the point I made earlier about the family unit and the motivation of the family partnership. On this point and on the whole question of the direction in which the Prime Minister's "just society" is leading us, I recommend most highly to hon. members that they read an article in the Winnipeg Free Press of December 2, 1968, by Shaun Herron. In part he says:
-the impulse to prosper and provide, to "do the best one can for one's family", this we have approved, this we preach, this we applaud. And, of course, what a man makes is his. He pays his taxes on it-and today they are heavy-but what he has left after taxes is the fruit of his work, skill, foresight, and enterprise. It is his, earned and paid for by blood, sweat, toil and taxes-
Has it occurred to Mr. Trudeau that when he forces men, who can, who will, and who want to work hard, to ask "why work?" he has begun the creation of a "just" society in which all men are equally grey, equally poor, equally idle and equally ill? Is this what the Liberal caucus intended?
After that, Mr. Speaker, there is little to add. I simply say that the proposed new estate tax system is unjust, unnecessary and unrewarding. If it has been conceived as an economic measure it will do harm to the economy, not good; it will cause far-reaching economic disaster and will remain a monument to the negative and the destructive. If it is advanced as a social measure in disguise, then I believe it to be unwarranted and exceedingly dangerous to all those beliefs and
Income Tax Act and Estate Tax Act institutions on which our country has been built and which have enabled it to prosper.
I hope that the minister and the government will consider dropping this tax on death, particularly since it applies to moderate family enterprises. I am speaking of independent businessmen and farmers who have contributed so much to our basic philosophy of freedom and who, if allowed to survive, will remain the backbone of our free enterprise system.


William Gordon Ritchie: Mr. Speaker, in rising to speak on this estate tax measure I wish to say that this problem has been debated long and inconclusively by many people. No doubt governments need money; the public purse must be filled in as many ways as possible. But the amount of tax that needs to be raised depends on the spending habits of the government and the demands of society for social programs and money to carry out those programs.
Any single tax measure in a taxation system is introduced as a result of many social, economic and other factors of long standing. It is considered that an undue concentration of wealth resulting from a complete absence of transfer taxes tends to destroy the incentive that makes the economy viable. On the other hand, too severe an imposition of transfer taxes has the same effect; it reduces the national urge to save and build. It can be argued with a reasonable degree of righteousness that it is socially desirable to introduce estate taxes which will prevent the build-up of large units of economic family wealth. It is argued that such accumulated units of wealth do not serve the interests of society generally and ought not to be allowed to remain intact.
The bulk of tax revenue comes from taxation of income and consumption. Transfer taxes, or estate taxes, are levied nationally on accumulations of capital. As such they naturally influence the behaviour of the individual bearing the brunt of this tax. The citizens who are most directly concerned about this problem and who have been very vocal in their objections are farmers and small businessmen. They have been so vocal that the Minister of Finance has seen fit to change the provisions of the estate tax regulations. As a result some relief has been given to these people.
[DOT] (3:30 p.m.)
The imposition of the estate tax on larger estates has meant that on the death of the
5652	COMMONS
Income Tax Act and Estate Tax Act Canadian investor there has been a movement to sell many businesses to foreign firms, especially to United States firms. In a country which is continually worried about the substantial foreign capital investment and which must rely for a high degree of capital inflow either on the savings of its own people or on foreign investment, tax policies that encourage the sale of businesses to foreign investors should be seriously considered by the nation as a whole in the light of whether or not the estate tax is a good tax.
The recent statement of the three prairie premiers in which they urged that the fiscal policy of the federal government should take priority over the language question at the Federal-provincial conference last week indicates the very great concern of these premiers and of many people in Canada that the strains of our nation's fiscal problems could well contribute to our break-up and the fragmentation of the political life of the country. These same premiers have signified their intention of remitting the provinces' portion of the estate tax to estates, which indicates their feeling that the estate tax needs radical revision.
The estate tax falls upon the family of the entrepreneur whose enterprise has created the capital while his family has had to undergo social and economic restrictions. It might be socially desirable that all income and revenue should revert to the Crown on the death of the entrepreneur but such an attitude would, I am sure, prevent or seriously discourage enterprise by individual entrepreneurs.
In a report of the Ontario Economic Council, of 14 countries examined Canada emerged with the highest general capital taxes, including death taxes, gift and property taxes, surpassing the United States and Great Britain. It is significant that Germany had a low estate tax and a high rate of economic growth compared with Britain where there was a high death tax rate and very low economic growth. The study asks: "Are our estate tax laws designed to chastise or to welcome investors and job creators?" In my opinion the rather violent reaction engendered by the minister's estate tax formula is generally the result of the inflationary period through which we have passed and which we will likely continue to experience for a number of the years.
The minister has stated that 95 per cent of Canadians will not be involved in estate tax.
I suggest that the percentage will be much less than he has forecast and that in the

DEBATES	February 18, 1969
future many more people will be involved inasmuch as once this legislation is on the statute books it will not be changed for a number of years. Even with the proviso that estates of $50,000 or less will not be taxed, in the near future many more estates will be taxed and the numbers will grow in volume even though the real value remains constant owing to the inflationary change.
Indeed, unless most farms and small businesses have capital of over $50,000 they will not provide for their owners any reasonable degree of standard of living. The capitalization on western farms, in order to return the owner $5,000 or $6,000 a year even including the operator's wages, needs to be in the order of $60,000 to $100,000. The general philosophy of the farmer and small businessman in his earlier years was to save money out of his income to build up his business so he would have more to retire on or to pass on to his family. In recent years the Canadian economic climate has not been directed at all toward the building up of savings for the farmer and small businessman to pay off their obligations. We have become a very consumptive type of society in which we are projecting a philosophy that everyone is entitled to consume without the corresponding proviso that he should produce.
Regardless of the perhaps basic philosophy that all personal resources should return to the estate on the individual's death, I believe we are overlooking one very important factor that bas not received much consideration or debate by our people. It has been said by many that automation will replace many people in the manufacture of the products we consume, but a recent study by the Economic Council of Canada in its fifth annual review would indicate that we are moving steadily into an economy that is becoming increasingly service-oriented. A service-oriented economy is a difficult area in which to establish a high level of efficiency. For instance, in the United States last year the health service field was considered to be the third largest industry, with the projection that it would become the largest industry within a few years.
The service field is an area where it is increasingly difficult to carry out an efficient operation. The Canadian Economic Council's analysis of changes in the growth pattern of the Canadian economy discloses a really amazing trend. In the period from 1946 to 1966 Canada experienced an enormous expansion and diversification of industrial activity,
February 18, 1969

but the more striking fact is that all the employment growth took place in the service industries. While the shares of the goods producing and service producing sections have remained approximately constant in value of output-each section accounting for roughly 50 per cent throughout the period-the shares in terms of employment have changed places.
In 1946 the goods producing industries accounted for about 60 per cent of total employment; in 1966 tjie service producing industries accounted for about 60 per cent. In the goods producing industries real output expanded about 5 per cent annually while employment did not expand at all, so that the real growth was about 5 per cent annually per worker. In the service industries real output expanded more than 4 per cent annually but employment grew almost as fast and the growth rate of output per worker was only about 1 per cent annually.
In western Europe the service industries account for only about 35 per cent of the employment as opposed to 60 per cent in Canada. This creates a marked imbalance in growth rates between the economies of Canada and western Europe and if carried forward could result in difficulties for our economy. This means that we must look increasingly for greater efficiency in our economy.
I believe it is becoming more and more important that t,he small individual entrepreneur be encouraged to remain and increase his stake in the economic growth of the country, and that our society would be sadly lacking if it attempted to dispense with these people. Management is very important in our economy. Indeed, management is just as important as labour, and unless the two are very closely joined labour is unable to progress without good management. The fact that farm management has increased its efficiency faster than any other part of our economy in the past two decades indicates that the individual farmer is as efficient as his large industrial counterpart. Indeed, an analysis of the position of the Soviet Union shows that relatively many more people are needed to work in agriculture in that country than in North America to produce the food needed to feed the country. The Economic Council suggests that larger farms, new technology, better inputs and research in agriculture are necessary to raise productivity in food production, processing and distribution.
It is my contention, Mr. Speaker, that the estate tax will work to discourage individual
Income Tax Act and Estate Tax Act initiative and saving, at least in the lower strata of those who will be paying the state taxes. Consider the man of 50, either a small businessman or farmer, who has been moderately successful. He sees an opportunity to expand but realizes that perhaps he should decide that the accumulation of wealth is not worth the worry, the saving and the reducing of his standard of living so that he may expand his business. So he remains at his present economic level, takes a trip to Hawaii or does some other spending in a consumptive way. Yet in the 50-70 age group are often found many of the best managers in our economy. We are the poorer if these entrepreneurs suddenly decide that work, worry and striving only bring trouble with the income tax department or with estate tax in the event of his death. I believe we cannot stress too strongly that the individual entrepreneur is a very important part of our financial picture and contributes greatly to our economic efficiency as a society. The estate tax in its present form is retrogressive.
It is well known that there is another aspect of this tax that is not quite realized. It is an expensive tax to collect from the government's point of view and it is costly to the estate to present its case. In many smaller estates where the tax revenue is small the cost of collecting is greater than the tax received by the treasury. To present its side of the case the estate in turn has to hire expensive accountants, lawyers, etc., all of whom must be paid. This further reduces the value of the estate and is eventually a loss to the whole community and country.
[DOT] (3:40 p.m.)
It is a tax where there are many grey areas, where inspectors far removed from the scene of the estate often over value. Indeed, it is very difficult to evaluate much property in small communities where real estate may sell very infrequently and land values may vary by 50 per cent in a year, or in a mile. The estate tax often attempts to tax goodwill in a business when it is advantageous to the tax department. But the breakdown value may be much less and the heirs to the estate may choose to cease business or, if possible, sell the business. To sell to another Canadian only increases his estate problems on his death, and the logical choice is to sell to foreign capital, usually American.
I do not believe it is by accident that the three prairie provinces are the ones that are in the process of rebating the federal portion
February 18, 1969

Income Tax Act and Estate Tax Act of the estate tax revenues. The prairies do not want to accept any measure which might slow their resource development. They have no basic concern about the origins of capital that will pour into those provinces for the development of petroleum, mineral and other resources. The economic nationalism to be found in the east is foreign to the prairies. The contrast between the free trading west and the protectionist east is as old as confederation itself. It has been lessened somewhat by the tariff reductions since the end of the war, but much difference of thought lies between those who live by the exploitation of resources and those who manufacture.
We must consider this tax in our federal approach to the constitutional issue. The economic forces in Canada tend to divide rather than unite. In its approach to the estate tax the federal government is pursuing a policy that is basically not in keeping with the aims and aspirations of the western provinces and the fundamental pull of the economic forces under which they operate.
This bill is largely a reform of the existing estate tax law. It is too bad that in his wisdom the minister did not increase the exemption in line with the rapid rise of inflation to a position where the application of estate taxes would have some relation in real money to what the levels were 15 or 20 years ago. It is my contention that the tax starts too low and is graduated too steeply. I would hope the minister would consider this and make the appropriate changes in the bill before it is finally passed.


Mr. D. Gordon Blair (Grenville-Carlelon):: Mr. Speaker, we are engaged in a discussion about two of the most sombre facts of existence-death and taxes. Such a discussion is sombre enough in itself but this one has been rendered all the more difficult, and I might even say more horrendous, by the vast degree of exaggeration and misrepresentation which have characterized discussion of the government's proposal. One would think from the remarks we have heard this afternoon that even the beneficient parts of the proposal would be opposed by members of the opposition parties. For example, the hon. member for Lisgar (Mr. Muir) can only be said to have damned with faint praise the proposal that bequests and gifts to widows be exempt, and I would like to see how he and his colleagues will vote on that.
We suggest that the changes which are proposed by the bill are in the national

interest and will not bear heavily on any significant section of the Canadian economy. I speak on this bill as one who represents a constituency which can be said to be approximately 50 per cent rural and 50 per cent urban. There is no question in my mind that the urban dwellers in Canada approve wholeheartedly the changes which are proposed.
We live in a society which all of us like to believe can be described as one where a large degree of equality of opportunity prevails. We live in a society where all of us would like to believe that it is the worth of the individual, his effort and his own competence which will lead him to success in life. We live in a society where most people like to believe that a man is judged by what he is, not who he is, not whose son he is.
When I hear some of the comments that are made by hon. members opposite I wonder whether they are opposing this bill or are opposing estate taxes and succession duties as such. This is not at all clear from many things that have been said. I do not think that the people of this country require public men to apologize for the fact that taxes are levied on estates. The time has long since gone when this was a discussible or debatable proposition.
Certainly there is no strong determining mood in this country to confiscate wealth or to confiscate estates, but I think it is the feeling of the great majority of Canadians that we should not live in a society where large blocks of inherited wealth are passed on from generation to generation to the detriment of many people who are not in the fortunate position of sharing in that inherited wealth, and none of us who support this bill, nor public men who through the years have supported estate taxes and succession duties, need apologize for the position that has been taken.
The essential parts of the present proposal have been described many times in this chamber. On the one hand, the government has proposed that bequests and gifts of all kinds to wives and, indeed, to husbands should be tax exempt and, on the other hand, the government has proposed that to make good the loss of revenue that has occurred there be adjustments elsewhere in the tax structure.
It is significant for all of us here to realize that we are not the only country which is giving consideration to changes in tax policy. For example, as we all know there has recently been a change in the administration
February 18, 1969	COMMONS
in the United States. Last week it was announced in the New York Times that serious thought is being given by the treasury department in the United States to the adoption of the very types of proposals which have been made to us in this parliament, that gifts and bequests to wives be exempted from taxation and that as a countervailing measure there be a stiller rate of tax on gifts inter vivos and a higher rate throughout the estate tax structure. Incidentally, with reference to a table produced, I think, by the hon. member for Dauphin (Mr. Ritchie) or perhaps it was the hon. member for Lisgar, that there is very little difference in the incidence of estate tax in the United States and in Canada in percentage terms, and it would be very hard for anybody to say that the American economy is stagnant and has been made so by estate taxes.
I think I am not unique in this chamber in having participated in a large number of discussions with my constituents about the incidence of the new estate tax. As I said a moment ago, there is no question that the changes have been widely accepted in the urban part of my constituency where the predominant interest is that of the public service, but because of the exaggerated and inflammatory discussion about the consequences of this tax which appeared in certain farm newspapers I found to my very great surprise that some farmers in my constituency had become inordinately alarmed about what would happen if this tax measure were passed. I thought it might be of some interest to hon. members if I were to relate some of the things I have said to my constituents which bear upon the concern expressed in rural Canada about the incidence and implications of this tax.
[DOT] (3:50 p.m.)
One thing which struck me immediately was that many farmers spoke as if this was the first time estate taxes or succession duties had been applied in this country. As we know, of course, this is not so. I cannot speak for all the provinces but in the province of Ontario succession duties or inheritance taxes have been collected by the provincial government since 1892. Everybody here knows that the dominant interest of government in the estate tax or succession duty field has been provincial. It was not until 1941 that the federal government entered the succession duty and estate tax field. This was done at that
DEBATES	5655
Income Tax Act and Estate Tax Act time as part of a series of wartime tax agreements under which the provinces in effect rented certain of their taxing jurisdiction to the federal government.
In the discussion which has taken place on this measure it has frequently been said by spokesmen on this side of the house that the provincial interest in estate taxes remains predominant. In the province of Ontario approximately 75 per cent of the taxes paid on death go to the provincial government and only 25 per cent go to the federal government. This is a fact which seems to be greatly overlooked by many critics, particularly critics on the other side of the house who I think might support the present provincial government.
I have before me a table I have prepared showing the comparative incidence of Ontario succession duties, the present estate tax and the proposed estate tax. It is based upon what, from the standpoint of the new estate tax, is the most difficult assumption, namely, a father leaving the whole of his estate to only one adult son. This corresponds with the case put by so many farmers that they intend in one way or another to pass the whole of their estate to one son so that the farm can be carried on in the farm family.
If the estate is valued at $50,000 no Ontario succession duty tax is paid, no tax is payable under the present estate tax and no tax is payable under the proposed estate tax. If the estate is valued at $100,000 the Ontario succession duty amounts to $7,910, the present estate tax amounts to $5,100 and the proposed estate tax amounts to $6,600. If the estate is valued at $150,000 the Ontario succession duty would amount to $13,950, the present estate tax would amount to $10,700 and the proposed estate tax would amount to $13,350. If the estate is valued at $200,000 the Ontario succession duty would take 20,348, the present estate tax would take $16,800 and the proposed estate tax would take $21,600.
These figures lead all of us to certain important conclusions. The first is that many farmers in this province obviously are unaware of the nature of their estate tax liability. It is clear that many people with whom I have spoken personally were completely unaware of the fact that for estates up to $100,000 under the present and proposed estate tax more money would be taken by the Ontario succession duty than by the federal estate tax.
Another thing which I found extraordinary, and which we all must recognize as a fact, is that many farmers in my constituency, and I
5656	COMMONS
Income Tax Act and Estate Tax Act have no doubt elsewhere in the country, were completely unaware ol the total level of their liability for their estate. Let me, for example, quote again the incidence of tax on an estate of $100,000. The Ontario succession duty would amount to $7,900, the present estate tax would amount to $5,100, and the net tax would be $13,000. Under the proposed estate tax it would be increased by $1,500.
Many people with whom I spoke felt that for the first time they were to be taxed under this proposal when in fact they were already taxed at a high level and the added tax is relatively small. The discussion on this matter in the province of Ontario has been complicated by the fact that many people have been unaware of the present provision in the federal Estate Tax Act which is being carried forward that a tax credit of 50 per cent is given to the taxpayer in recognition of the fact that he has to pay Ontario succession duty. I, and I am sure other hon. members, have seen Ontario publications which have recited what was alleged to be the tax payable under this proposal in this province but which have failed to take into account the fact that the tax is reduced by 50 per cent by reason of the fact that Ontario succession duty is payable.
I should say that the figures I have quoted are net figures making allowance for the 50 per cent tax credit. I have found that the initial concern of farmers in my constituency, and I believe in eastern Ontario, about the proposed tax changes has been to an almost complete extent allayed and removed as a result of further study and consideration. The attempt which some people have made, whether intentionally or not-someone has said intentionally; I hope that is not so but it could be-to portray this tax as if it were a new imposition completely different in kind and character from anything farmers or businessmen have ever experienced before has been dissipated, I think, by the knowledge which has come from greater study of this measure.
[DOT] (4:00 p.m.)
It is my belief that no farmer who in any way could be described as an average farmer in this province is put in a perilous position by the tax change. It is my considered opinion that this tax will not have any of the horrendous effects which have been ascribed to it. The headlines which have appeared in farm newspapers to the effect that the new

DEBATES	February 18, 1969
estate tax will doom the family farm are simply untrue and cannot be substantiated by the facts. In fact, I would go so far as to say that the making of this change in estate tax law will produce an unintended benefit for many farmers and businessmen.
I repeat again that a large number of people were simply unaware of the fact that they were exposed to a very substantial degree of taxation under the existing law. They now realize what their existing tax liabilities were, and many of them for the first time are turning their attention to ways and means of reorganizing their affairs in order to lessen the incidence and burden of taxation. I need not tell hon. members that there are many ways in which farmers in particular can reorganize their farm business to their own advantage and in such a fashion as to lessen the incidence of taxation. I say in answer to those concerned about the incidence of estate tax that this change to a considerable extent will be beneficial to many farmers.
Although no one welcomes tax changes, it is easier to live with them when we can see, as we do here, that the main change will provide a beneficial relief to widows from the burden of estate tax. It is much easier then to take into account the upward adjustments in the tax structure elsewhere. Bearing in mind, as I have been trying to point out by these few remarks, that the upward adjustment in the tax structure applicable in this province is not likely to create any appreciable extra tax liability, I suggest that this measure should command our support and should be adopted.


Hon. Hugh John Flemming (Carlelon-Char-lotie):: Mr. Speaker, it is not my intention to try to summarize in detail the proposals of the Minister of Finance (Mr. Benson) as embodied in these two bills, but I hope to be able to persuade him to consider the lack of encouragement or in fact the actual discouragement that these two bills will offer to the ambitious people whose efforts in connection with the general economic activity of Canada are most important.
I do not believe it is reasonable to compare the value of estates in this year of our Lord, 1969, with those that existed 15 or 20 years ago because there has been an increase in valuations which has been brought about to quite a large extent by the inflationary activities of which the present government and its predecessor in office have been guilty. I offer as proof of this statement the fact that within
February 18, 1969

the last few days the government, through the minister, has placed estimates before the house calling for expenditures of $11,500 million, an increase of almost 10 per cent over last year. Presumably the government has to make a choice between cutting expenditures and increasing taxes. It would appear that it has decided it is easier to increase taxes. I do not agree with this decision. The argument may have been advanced, and I do not say it was not advanced by the minister, that there should be a combination of both. I do not believe that the need for balanced budgets should come about as the result of increases in taxation.
The previous speaker laboured hard-no doubt as a lawyer he has had bad cases before and has tried to make good cases of them-to put across the idea that this is not a new tax. The thing he avoided telling the house was that it is an increase in taxation.


Edgar John Benson: Oh, no.


Hugh John Flemming: Yes, it is an increase in taxation. The minister will have an opportunity to speak in rebuttal. He may pick out isolated instances to prove his point, but this is not the case in respect of small estates.


Edgar John Benson: It is over all.


Hugh John Flemming: The minister is including estates up to $2 million, $3 million or $4 million, but how many of them are there in Canada? There is no use in the minister trying to pull the wool over my eyes because I have checked this point and I am confident that what I am saying is correct. If the minister intends to try to convince the people otherwise, that is something he will have to undertake in time.
There is one point on which I think the minister will agree. I refer to the need for dampening the forces of inflation, which calls for reductions in spending. Instead, the government has apparently initiated policies which have had the effect of pouring oil and fanning the fires of inflation to the complete frustration of the objective I have just suggested. The government has never ceased to add to the already overly large public service. A real tightening of the belt by anyone in a position to contribute to the success of a policy of restraint and restriction has apparently never been considered. At least, there have been no results. One has only to check his incoming mail to see this. Every day one receives a great number of calls for additions to the public services.
Income Tax Act and Estate Tax Act
I do not suggest that public services should be reduced, but when there is need for additional public servants people could be transferred. Instead, we experience more and more spending such as the interior decoration at a cost of $100,000 per room about which we have heard. There is more and more disregard by the government of the taxpayers who will in the final analysis be asked to pay the shot. There is more and more indifference to the general danger of inflation than ever before. This government inherited, and apparently it intends to continue it, a policy of spend and spend and tax and tax with the hope that it will be elected and elected again. Perhaps this is not absolutely strange. It was put in operation in the country to the south a good many years ago. But I say to the house that it is still not a policy that leads to the general progress of any country.
[DOT] (4:10 p.m.)
The estate tax is divided so that 75 per cent goes to the provinces by various means. This continues to be government policy and it is recorded at page 1685 of Hansard in the minister's speech. I believe the total estimated revenue from this source is $200 million, of which the federal government will retain $50 million. I point out that this amount represents increased taxation for the purpose of making up the loss incurred by establishing total exemption of estates passing from husband to wife and vice-versa.
This brings one to consider another point. The previous speaker went to some length and took great care to try to convince us that this was a most desirable thing. I suggest there is room for argument here. I think this change in attitude deserves more thought than the minister and the government have apparently given it. In the case of a small business or a farm which suddenly becomes the responsibility of a wife owing to the death of her husband the wife suffers hardship in trying to manage the farm or business herself or to secure adequate help to conduct the business with a succession duty liability of up to 50 per cent of the value. I know that 50 per cent is applicable only to extreme cases and probably does not apply to many farms, but nevertheless this possibility exists. Here is a woman who at the death of her husband has no one to lean on unless she has a son or sons. There is a succession duty liability facing the property and it is only deferred for an uncertain period. Suppose she has sons who are faced with this financial
February 18, 1969

Income Tax Act and Estate Tax Act liability and responsibility. I ask the minister, how enthusiastic will such people be to take over the property and manage it, whether it be a farm or small business?
The minister has had a lot of experience in business and he knows that this happens. He must know it by virtue of his experience because even I know it with my limited experience. I will tell you what happens, Mr. Speaker. The widow sells the property or the business at a sacrifice price. So I take exception to the conclusion drawn by the previous speaker that this is a wonderful measure for the widow. I submit that she would be better off if her husband gave her a life income from the property and then at her death it went to her children. That would be much better.


Duncan Gordon Blair: Mr. Speaker, would my hon. friend permit a question? Is it not a fact that under the new arrangements a similar provision could be made to give the widow an income as opposed to capital?


Hugh John Flemming: I believe there is a qualification that if this is incorporated in the will or if a new will is made this may be brought about, but it would not mean the full estate unless she gets the full estate.
In my opinion the great disadvantage of this measure will become apparent if that same widow is advised to sell her property to a competitor or to an outside interest that has no wish to continue the business as such and closes it down. I suggest to the minister that this will aggravate the unemployment problem and the maintaining of maximum employment at all times. I say it is an important consideration in the life of this or any country to have its citizens working hand in hand with the government to provide maximum employment. No one would disagree with that.
In the morning's issue of the Montreal Gazette we read the following headline: "Regional Disparity To Be All-out Focus Of Incentives Act". In my opinion the very use of the word "incentives" means that the government is conscious of the need for soliciting at all times the utmost co-operation from the business sector in the country. The article mentions the minister, and it also contains the following statement:
Under this system, federal and provincial governments would agree on one or more towns in an underdeveloped area and provide incentive programs to encourage industrial growth there.


Again I draw the minister's attention to the use of the word "incentive". I do not think that any free society or any country or government can get along nearly as well without the utmost co-operation of business and all concerned as they can with it, and I would like to think that this is the attitude and the opinion of the government and the minister.
We find that the Minister of Forestry and Rural Development (Mr. Marchand) will introduce new incentives, but at the same time the Minister of Finance (Mr. Benson) in the bill now under discussion lessens and in some cases eliminates old incentives. So one minister will bring them in and another will take them out. This government giveth and taketh away, almost in one breath.
Last week a federal-provincial conference was held and was broadcast throughout Canada. I was able to watch and listen owing to special circumstances. I saw the Minister of Finance sitting in the front seat alongside the Prime Minister (Mr. Trudeau), and I know that he is familiar with what took place on the day that I will mention now. I was impressed with many aspects of the conference, but I do not mind saying what particularly aroused my interest. It was the tenacious insistence by the premier of Manitoba on the interest of the taxpayer and on a discussion the following morning of the taxation burdens imposed by all levels of government, federal, provincial and municipal, upon the taxpayer. This was complied with by the Prime Minister and the subject was discussed. My point is that of all the people attending the conference, with the exception of the premier of Ontario the premier of Manitoba was the only man who mentioned the following day that gentleman who in my judgment is the forgotten man- the taxpayer. I remember his words. He said: said:
Let us examine the effects of all taxation upon the man who pays, no matter what level of government imposes the tax.
That is what was done, and this is what impressed me. In my opinion, in this legislation the federal government is completely ignoring its effect upon the taxpayer. It appears that I was not the only one impressed. I was interested to read an article in the Globe and Mail of February 12 written by Mr. Scott Young in which he went to great pains to elaborate on the number of congratulatory messages which had been received by the premier. There were 45. One
February 18, 1969	COMMONS
of these, apparently received through a secretary from an admirer in Chatham, Ontario, read:
s (4:20 p.m.)
We watched your premier on television. We're 100 per cent behind him. He is being firm and strong for the benefit of Canada, especially on the taxes deal.
So I was not the only one to be impressed by the premier of Manitoba.
Let us consider the response so far as the premier of Ontario is concerned. First of all, he said that medicare was a fraud. Right?


Edgar John Benson: How did you vote?


Hugh John Flemming: The minister asked how I voted. Possibly it is a good question. I voted for the principle but I did not vote to apply it when we have a $750 million deficit brought about by the actions of this government. We voted for the principle of the bill but we did not vote for its application without knowing where the money is coming from.
I have had experience on both sides of the house. The opposition does not govern. If we were governing I could give some of the answers. As things stand, people do not vote against the principle of doing something, but they do not agree with everything the government does to bring it about, at any unsuitable time, without money-


Edgar John Benson: You voted on every clause, including the date.


Hugh John Flemming: I do not blame the minister for trying to wriggle out, because I think he should try to do so.
The premier of Ontario described the medicare measure as being Machiavellian. I should like to read to the house the meaning of that word as given by the Globe and Mail in its report of the conference that day, because I think it will be of interest to the government and to the Minister of Finance in particular. It says:
Niccolo Machiavelli, who died in 1527, was a Florentine statesman and author of a treatise on politics known as The Prince. The aim of his book was to show that rulers may resort to any treachery and artifice to uphold their arbitrary powers. Although there has been some controversy over the interpretation of his works, his name is frequently used as an epithet or synonym for an unscrupulous politician and the term Machiavellian to describe political cunning and diplomatic intrigue.
Nobody interrupted or contradicted the premier of Ontario when he applied that label to the introduction of the medicare bill.
DEBATES	5659
Income Tax Act and Estate Tax Act


Edgar John Benson: I did.


Hugh John Flemming: The minister says he did and I certainly take his word for it, though I did not hear him. I did hear him say that Ontario members had voted for it.


Edgar John Benson: That is right.


Hugh John Flemming: And the chances are they will answer for it; they will not be here in the next parliament.


Edgar John Benson: It is you who will not be here.


Hugh John Flemming: I would be glad to have the minister come down and run in New Brunswick if that is the way he feels about it.


Gerald William Baldwin: He will have too much trouble in his own riding next time.


Hugh John Flemming: He will not be here.
This government is, without question, the greatest government for irresponsibility that the country has ever seen. In June of 1966 the 10 per cent tax reduction they had allowed was reimposed. Early in January, after they had been defeated in the house, they wiggled around and got a 3 per cent tax put on. The government had been defeated on the 5 per cent proposal. Then they put on the 3 per cent tax. Now they are putting on a 2 per cent tax. It will be confirmed; there is no question about that.
Let me remind the minister that the 2 per cent tax imposes a great burden on many people. I have particularly in mind families where the man and his wife are both working. It is quite within the realm of possibility that their combined income is $12,000 a year, upon which the 2 per cent tax would amount to some $20 a month. I assume the minister has received letters to the effect that these people do not know how the extra money will be raised, taking into account all their expenses and so on. They are making an extraordinary effort to balance their budgets and they do not know where the money for this tax will come from. But the 2 per cent has been imposed, and apparently the provinces do not like it.
So far as the federal-provincial conference is concerned, I shall conclude by expressing the hope that the committees which have been set up can agree on worth-while recommendations to be presented to the next meeting. I hope something may be done about the prevention and eventual elimination of duplication of activity as between federal and
February 18. 1969

Income Tax Act and Estate Tax Act provincial governments. There is a lot of duplication at present; there is no doubt about that. There are places where co-operative activity is a logical course. Since the provinces are anxious to co-operate with the federal government 1 think they should be encouraged in this regard.
I am one who believes quite firmly that no country can operate without a strong central government. We in this great country of Canada must have a strong central government. I would just as soon not have the government which is sitting opposite at the present time, but I still believe that a strong central government is a necessity.
I have talked about the 2 per cent surtax. I have talked a little about indirect taxation which is really a spur to inflation. Before the minister concludes this debate I think he should tell the house what he proposes to do about the high cost of living, because that is really the product of inflation. Is the government taking steps to stimulate economic expansion? Is it taking steps to increase productivity? These are questions which I direct to the minister. I am not asking for the views of hon. members behind me to my right. Inflation is a deadly and disastrous thing. It creates a vicious, never-ending circle of higher prices and higher living costs unless kept within due bounds. Under no circumstances should increases in price ever exceed increases in productivity. It should be the aim of governments, unless there is a special economic situation existing such as excessive unemployment, to maintain the purchasing power of the people.
I intend to read an editorial along these lines which appeared in the Toronto Telegram of January 25. It reads in part as follows:
As taxes and inflation soar, as the Ottawa government piles cost on cost in its annual operations, Canadians pursue a massive indifference.
If we think Benson and company will stop at a social development tax, take a look at his quiet hut incisive inroads into tax recommendations of the Carter report.
Farther down in the same column the article states:
Business Week, in an otherwise buoyant report on the Canadian economy in 1989, offered the staggering information that Canadians earning middle management salaries, that is in the $10,000 to $25,000 bracket, are taxed at a 25 per cent greater rate in Canada than in the United States. Here as in the U.S., many of these income earners are men on their way up, moving into higher incomes.


Edgar John Benson: Yes, I am aware of him.


Hugh John Flemming: No doubt the minister's recollection of him is favourable. The article says:
The finance department disputes the suggestion that estate taxes are a larger factor in the break-up of family businesses and in foreign takeover of Canadian industry. Mr. Benson argues that he has evidence to the contrary.
If such evidence is available it should be made public in order to end this protracted debate. Such evidence apparently was not available to the late Grant Glassco when in the 1956 royal commission on Canada's economic prospects he reported that several factors "including our succession duty system, tend positively to discourage ownership of companies by Canadians."
February 18, 1969	COMMONS
I wonder what the minister thinks of that statement.
Mr. Glasseo also warned that "concern as to the amount of succession duty and fear of inability to obtain these funds .. . has been one of the major factors in the transfer of ownership of many Canadian private businesses to foreign control."
That is exactly what I have been saying in these remarks. The widow who is left with a small business and no one to manage it has no recourse but to sell it. Although I know my plea will be unsuccessful, I suggest to the minister that this cloud is not entirely silver-lined, that there are some aspects of the matter he should take a second look at. The article goes on:
Perhaps Mr. Glasseo was in error, but it must be more than coincidental that the same conclusion was reached in a 1968 study by the Ontario Economic Council after the researchers actually interviewed the people who had sold their businesses to foreigners.
I now return to my argument relative to the principle of an increase in the estate tax. Having denied that there is anything wrong with the act I should like to congratulate the minister for persuading the government to change the statutory exemption of $20,000 to $50,000. However, I do not consider this figure high enough. In view of the large dose of inflation we have received since this government assumed office, and perhaps even before that, I believe the figure should be raised to at least $75,000. With the old ceiling of $60,000 this would represent an increase of 25 per cent. I submit that the value of small estates has risen much more than that.
I recall to mind one gentleman in my own business who operates five trailer trucks and hauls lumber to the United States for my company. Each one of these machines costs over $50,000. If you were to ask this man whether he is liable to succession duty, he would reply: "Oh, no, I don't have that kind of money". But his widow would soon find out whether he is liable to succession duty.


Lloyd Roseville Crouse: His trucks would go.


Hugh John Flemming: Yes, she would not know what to do with them. However, my point is that all is not sunshine or a bed of roses in this provision in regard to total exemption on gifts from husband to wife. I am not going to worry about the case of the widower, but certainly it is not all sunshine for the widow.
I regret any increase in tax-and may I tell the member who spoke before me that this is what it is-because it is an attack upon the
DEBATES	5661
Income Tax Act and Estate Tax Act spirit of thrift, upon the desire on the part of some Canadians, I hope many, to accumulate an estate. Surely the accumulation of an estate is the right of any member of a free society, and for a great variety of reasons it may be most necessary to pass on one's heritage to one's family.
May I draw to your attention, Mr. Speaker, that no one tries to accumulate an estate for his own use. One builds an estate so that those who come after will have some assurance of future development. In addition, employment opportunities may be created. I know of many sons who developed their fathers' businesses and enlarged them ten times because these businesses were given to them on the death of the fathers. The establishment of an estate means that the sons and daughters may start out in life with the opportunity of receiving an education and the chance of establishing themselves.
It is the right of every citizen in a free nation to use his abilities, mental and physical, as a means to ensure to his dependants an opportunity to take a step up in the economic scale. Is there anything wrong with that? Will the minister and this government, in their frantic search for funds to continue a spending spree that is destroying the credit and economy of this country, deprive fellow Canadians of their right to pass on a reasonable portion of the accumulated wealth of their lifetimes, having paid income tax year after year, to members of their own families? Although the minister will say that he is not denying them this right, he is nevertheless increasing taxes and this is what I object to. This tax should not be increased because too many people are affected. Too many people will be discouraged by the increase. The government should be encouraging these people and assisting them. I should like to hear the minister's answer to this question before he closes this debate. If the answer is in the affirmative, then we have no choice but to face the facts.
[DOT] (4:40 p.m.)
I wonder whether the government introduces measures of this type purely because of economic considerations; or do ideological considerations influence it in introducing them?


Gerald William Baldwin: This is the thin end of the wedge.


Hugh John Flemming: I am against this legislation because it penalizes thrift at a time when the
February 18, 1969

Income Tax Act and Estate Tax Act indirect tax of government created inflation has eaten into fixed incomes and because it will remove the incentive to save. Certainly there is a case for reducing estate tax rates in a country where taxation is becoming the highest in the free world. The government has not made out a case for increasing the tax rate, and I ask the minister to consider increasing the exemption level to $75,000. Unless action is taken the estate tax will hasten the liquidation of small businesses and farm properties. That fact is clearly set out in studies prepared for the Ontario Economic Council, which has said:
The most predominant reason (for sale) was the tact the business would have had to be sold to meet estate taxes and succession duties-
I acknowledge that the minister has improved this legislation by bringing in a provision permitting succession duties to be paid over six years. This may help some businesses to survive, but the majority will not survive notwithstanding that provision. You see, Mr. Speaker, the lady who inherits a business will not be able to manage it. You may think credit is scarce; I can tell you that staff capable of exercising management responsibilities is even scarcer. What will the woman who is left a small farm or business do? She has to meet death duties and other expenses. I am convinced that by virtue of his profession the minister has run across situations that come under this heading. On this subject he said on January 17, as reported in the Globe and Mail:
The estate tax does place a burden on the transfer of family businesses between generations but I have satisfied myself that the burden is not undue.
With respect, I am satisfied that the minister is wrong in his conclusion. The estate tax is often the straw that tips the scale in favour of the sale of the business. The estate tax reduces the amount of money available for investment and penalizes enterprise. That is not to the government's advantage. The greatest contribution to inflation has been made by government spending which by stimulating inflation has reduced the purchasing power of the dollar by as much as 20 per cent in five years.
The minister has changed the floor below which estate tax will not be levied from $20,000 to $50,000. Otherwise the rates remain the same. I think I am correct in that statement. If I am not correct I hope the minister will correct me. The bill also contains new exemptions for children, which are welcome. A feature of the estate tax legislation is a provision
[Mr. Flemming.)
allowing for the valuation of estates by the minister. I do not know under what machinery estates will be valued; I presume that machinery has not changed.
We live in a democracy, Mr. Speaker, and our laws must take into account the rights of individuals. In framing laws legislators must make certain they do not transgress individual rights and do not abuse the concept of equity. The estate tax, as it is now proposed, is an abuse of that concept. Moreover, it is economically unsound and socially unwise. It is destructive of individual rights and abusive of our social structure.
In concluding may I say that I appreciate the attention the house has been willing to give me. I ask the minister to give all the attention to my remarks that he thinks they deserve.


Mr. William Knowles (Norfolk-Haldimand):: Mr. Speaker, I rise to speak in this debate chiefly because a flood of correspondence has come to me from the people of my riding complaining about and opposing the changes in the estate tax introduced by the Minister of Finance (Mr. Benson).
Notwithstanding the suggestions of hon. members opposite, I wish to make it abundantly clear that I am not opposed to taxing accumulations of great wealth, but I do not want to see small economic units such as small farms and small businesses taxed out of existence. Small farms and businesses are the backbone of this nation and of the rural area I have the honour to represent.


Some hon. Members:: Hear, hear.


William David Knowles: Our
small farms and businesses provide an income for many persons. The owners of small businesses have an incentive to work hard and prosper.
Actually, the new estate tax proposals were contained in the October budget speech of the Minister of Finance. I well recall that night and the thunder of applause which swept this chamber as the minister announced that estates could pass from husband to wife without taxation. Although the estate tax amendments were mentioned in the speech the public did not become aware of the proposals until a number of months had elapsed. It takes time for public opinion to become aroused. The full impact of the proposals took some time to reach the public, and they caused a great deal of anxiety and grief. The confusion following the introduction of this
February 18, 1969
legislation is exemplified by the fact that lawyers could not advise their clients on how to draw wills in a way most advantageous to them. The best advice any lawyer could give a client was, "Do not die before the new proposals become law."
As I said, it takes time for the public to become aware of proposals put before this house. It took time for public opinion to make itself felt with respect to proposed rule 16A. If public opinion had not been aroused, that rule undoubtedly would have been incorporated in the Standing Orders of the house. It was an aroused public opinion that made the minister change the proposed legislation. Although the changes do not go far enough and are minor, they are heartily welcome.
I represent a tobacco growing area in Ontario. To indicate how vigorously some of my constituents have protested the new legislation may I be permitted to read some correspondence I received from small businessmen and farmers in my area. May I first read a letter dated January 27. The writer is a tobacco farmer.
[DOT] (4:50 p.m.)
The tobacco farm industry in our area was developed by all members of the family working long hours with no pay to establish a living. These are small businesses in which sons and daughters contributed, in many cases without pay,-
The new proposed estate tax law would mean many of these farms would have to be sold to obtain money to pay the estate tax. There are no liquid assets available, only land, equipment and buildings, and each year 90 per cent of the farmers borrow money from banks to finance the high cost of producing the crop. This is a risk crop in which hail or frost can wipe out your earnings for that year and affect your financial position for future or present commitments.
Forced farm sales to raise cash means low prices because most of the farms sell here on low cash down payments with one-quarter crop payments to pay off the balance over many years. For example a $200,000 farm-
You may think this is an exaggeration but it is not.
__$10,000 down and one-quarter crop payments
until balance is paid off. Farms do not sell for $200,000 cash. The one-quarter crop payment works well since in years of loss by hail or frost the owner has only to pay off one-quarter of whatever he sells in that crop year. The new proposed estate tax would put the family farm out of business.
The question is asked, how can he sell the farm to raise the $40,000 cash, plus or minus, required to pay the estate tax and still provide for the other terms in the will? Another question asked is:
What does a son or sons now do for a living after the farm has been sold?
Income Tax Act and Estate Tax Act Their means of livelihood is gone. This is the vocation for which they are trained.
Add previous estate planning and amount of labour by sons in farm now dissolved, what steps to take, to insure retaining the farm in the family and providing a living-
He concludes by saying:
Please note income tax has been paid over the years on income from the business. It would be much better to pay a higher rate of income tax each year rather than a large lump sum payment which could wipe out the business as suggested by the new estate tax law.
If I may infringe upon the time of the house, Mr. Speaker, I would like to read the comments of a small businessman. My previous example was a farmer. I quote:
We, the people with a small business, founded in 1843-
That is when the business was founded.
-are frightened about having the hard work of three generations fold up. Under your proposed revision of the succession duties it would be necessary for our sons to forfeit the family business.
We now receive only a modest interest on money invested so that the increased succession duties would make it impossible for our sons to carry on. Fifty-four people employed by us who now pay income taxes would be unemployed.
There are many family businesses operating in the same manner. The letter goes on to say:
Woudn't you be killing the goose that lays the golden egg?
I will quote from one more letter. It shows the despair that fills the hearts and minds of many farmers in my area. It reads:
-at 48 years of age I find myself in a dilemma. When my father passes away I will have to purchase the farm I feel I have already helped pay for. The question I would like answered is this: Where does this leave my teenaged son, will he have to purchase this farm again from my estate? Do you suggest we just give up farming?
These are the feelings of some people in my area. It is these protests I wish to draw to the attention of the minister. Last Saturday a meeting was called by the directors of the Ontario Flue Cured Tobacco Growers Marketing Board for the farmers in the two adjoining townships. One hundred and fifty farmers from this small area attended this meeting on a bright, sunny afternoon. They were concerned about the problem of estate taxes. Of the 150 in attendance at the meeting 75 per cent were newcomers to Canada. They had come to Canada from various homelands in central Europe which had been taken over by the communists and turned into collective

February 18, 1963

National Capital Commission farms. Perhaps it was exaggerated, but the feeling was that what these people had once lost in a revolution would again be lost through taxation.


Edgar John Benson: That is nonsense.


William David Knowles: The result of the discussion at the meeting is that responsible representation is required in this house. I tried to allay their fears somewhat by pointing out that the minister was not really a bogeyman, and that there are ways and means by which estate planning would help ease the burden of estate taxes. The feeling of the farmers in that room was that the proposed estate tax was a negation of the free enterprise theory. They came to this country to earn their living. They do not want handouts from the government. A forced sale is not their idea of fair play in a country like Canada. They felt that an economic unit would be destroyed which would produce wealth for themselves and their sons. They felt there was a contradiction. On the one hand, the Department of Agriculture, through the Farm Credit Corporation, provides farm improvement loans so that farmers may borrow money to increase and enlarge their economic units.


The Acting Speaker (Mr. Bechard):: Order.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Bechard):: It is my
duty, pursuant to Standing Order 40, to inform the house that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Winnipeg North Centre (Mr. Knowles)-Health and Welfare-Manitoba-optometric and chiropractic services in medicare plan; the hon. member for Regina East (Mr. Burton) -Transport-discriminatory reductions in express association rates; the hon. member for Kootenay West (Mr. Harding)-Air Transport-Castlegar, B.C.-consultation before change in service.
It being five o'clock the house will now proceed to the consideration of private members' business as listed on todays' order paper, namely, public bills, private bills, notices of motions.



PUBLIC BILLS


Mr. Lloyd Francis (Ottawa West) moved: second reading and reference to the Standing Committee on regional development of Bill C-20, to establish a National Capital Region Planning Board.
He said: Mr. Speaker, I have the honour to introduce Bill C-20 entitled: "An Act to establish a National Capital Region Planning Board".
Last week, for instance, the future of Canada's provincial capital was settled at the federal-provincial conference. It was proposed to create a capital unequaled in the whole world, a capital made up of the twin cities of Ottawa and Hull, a bilingual capital, the capital of a federal state.
This bill is intended to establish for this region a planning board, which is under discussion at the present time and which has not been determined as yet. It is in the spirit of what the Prime Minister (Mr. Trudeau) said last week that I introduce this bill this afternoon.
[DOT] (5:00 p.m.)

Mr. Speaker, this afternoon I present a bill which is designed to call attention to something which is absolutely essential if we are going to build thk kind of national capital we have in mind. Last week at the federal-provincial conference a tripartite committee was established of federal officials and provincial officials of Quebec and Ontario to carry forward a series of technical discussions.
Our Canadian national capital, such as it is apparently agreed we will create, will be one without parallel in any other part of the world. It will be a national capital with part in the province of Quebec, with its primary use of the French language, with its own educational institutions, with its own code of property and civil law, and part in the province of Ontario with a different code of property and civil law, with a different educational system and with the primary use of the English language. There is no question that the task of combining the cities of Ottawa and Hull into a functioning federal capital will be a great challenge to Canadians and
February 18, 1969

one which will be the subject of many discussions before it is completed.
I think it is particularly appropriate at this stage that we should have a debate in this place to concern ourselves with some of the absolutely fundamental things that must be decided before we can proceed to build the capital we all want to see. My bill this afternoon calls attention to only one aspect of the problem, that is, the creation of a planning board which will include part of the province of Quebec and part of the province of Ontario within the spirit with which there was general agreement at the federal-provincial conference.
The problems are very complex, Mr. Speaker, and I would like to outline some general features of them. First, there is the problem of resolving the conflicts over land use and traffic arteries. At this stage the province of Ontario has created a regional municipality of Ottawa-Carleton. This has brought a measure of rationalization to the Ontario side of this region which was long overdue. We certainly anticipate that on the Quebec side the 30-odd municipalities involved in the area which seems to be under discussion can be unified through some type of parallel legislation, and there is every evidence that this is under close examination by the Quebec authorities. Then the problem will be to bring together the planners of one side of the river and the planners of the other side of the river.
We are aware of the delicate constitutional problems and do not wish in any respect to minimize them, but surely the very first step must be to bring together in some kind of advisory board representatives of the province of Quebec, the province of Ontario, the federal government and the municipalities concerned. It will be essential, in my opinion, that there be an informal and advisory function at least in the beginning, no more than that, in order that the parties may get to know each other, in order that they can hire the necessary staff to serve the purposes they have in mind, in order to resolve some absolutely essential priorities.
I can think of the new bridges that certainly have to be built over the Ottawa River, but there has been a serious question in my mind whether a bridge for public transit purposes should not have a prior claim over a bridge designed to serve private automobiles. My colleague, the hon. member for Hull (Mr. Isabelle), who I hope will be speaking in this debate, certainly has some very interesting 29180-359

National Capital Commission proposals in the field of public transportation, and I am sure these will be examined by the appropriate authorities in the near future.
But, Mr. Speaker, the task of bringing them together is only the first challenge. The second challenge is to somehow, in some kind of orderly way that makes sense, bring a degree of supervision over these functions and a co-ordination of them. This I hope will be the task of the National Capital Commission which was created by act of this parliament and which functions sometimes, I may say, with doubtful constitutional jurisdiction in the area which it considers its primary responsibility, that is, the planning of land use in the national capital region and, if I may say so, the constitutional problem with respect to property and civil rights makes its task not a very easy one. Somehow the role of the National Capital Commission has to be fitted into the planning authority that we propose to create. I am not at all sure that my proposal of 11 members, with the chairman from the N.C.C., five from Ontario and five from Quebec, is the precise answer. I offer it merely as a suggestion of the kind of formula that may be discussed and decided. The numbers might be varied, but I think it would be a useful principle if the chairman of such a planning board were a member of the National Capital Commission because the National Capital Commission is almost the sole agency in a position to look at the whole region in order to take the large view, in order to make the kind of suggestions that we hope will be observed by the municipalities and the provinces.
This is the season of the year when many things begin to stir in our very beautiful national capital region, a region which I think is one of the most beautiful in the world. It is going through the late stages of winter and very soon we will see the springtime. Problems debated in this house in previous years in springtime have followed a very regular and not particularly brilliant pattern.
I see my hon. friend, the hon. member for Skeena (Mr. Howard), in his seat on the other side of the house. For the last four or five years I have followed his springtime incursions into the pothole problem. He looks into his files and pulls out the problem of the condition of Ottawa streets and potholes, and usually he has a television presentation on this matter. Then there is the suggestion that members of this house could do a better job of running municipalities. That has very frequently been mentioned by hon. members
February 18, 1969

National Capital Commission who have not had experience in running municipalities, at least according to their background as given in the Parliamentary Guide. May I suggest at this time that we try to rise a little bit above the location oi the Union Station and the potholes.


Mr. Peters:: It is pretty hard if you drive over the darn things.


Cyril Lloyd Francis: We hear that record every spring. The hon. member should make a good record of it, bring it out every spring and let it run.


William Arnold Peters: We have to go through this every year.


Cyril Lloyd Francis: 1 think that the question of the planning of traffic arteries is one of the things that should go before a planning board and should have high priority. There is no question that the city of Ottawa needs a new road to the airport. We do not need any major examination or any consulting firm to tell us that something has to be done about this. It is very obvious. It is equally obvious that there are major problems on the Hull side of the river. The peak hour traffic problems in this whole area are very bad.
But we have to ask ourselves even more fundamental questions than these relatively simple ones. We have to ask ourselves what kind of community are we going to create? What is the role of public transportation in this community? What is the role of private transportation? What incentives are going to be provided to move people in the way that we want to move them, to create the densities in the core of the national capital region that some of the planners want to create? I ask hon. members, please do not give us this spring the usual tirade about how much better members of this house could run the city, and how bad the potholes are.
I suggest it is time that hon. members looked at the larger problem of the creation of a national capital region, at the problem of creating instruments for long-term planning, at the problem of federal and provincial cooperation, at the problem of creating the mood in which the spirit, shall I say, which seemed to exude from last week's federal-provincial conference in this area can be carried forward into something very much more concrete.
[DOT] (5:10 p.m.)
I hope hon. members will feel as I do that the first priority of the new federal capital
[Mr. Francis.1
that we are building will be the creation of a planning authority within the spirit of a bilingual national capital with two cities, two provinces, two languages, varying education laws and the rest of it. This is Canada; this is the capital we are apparently resolved to create. Let us build the very necessary instruments in order that it may be carried out.


Frank Howard: Mr. Speaker, after listening to the almost poetic dissertation of the hon. member who sponsored this bill it is somewhat awkward to have to refer to some factual situations. All this bill does is prove the old adage that you cannot tell a book by its cover, because while the title of the bill sounds fine and is well phrased, and while the introductory remarks of the sponsor were nice to listen to, it really would not matter one bit whether we passed the bill because it would not accomplish anything. There is no power in the bill; there is no authority to do anything. No money is to be authorized and there would be no opportunity for whoever happens to be on this board to do anything except exist.
I must give credit to my colleague the hon. member for Winnipeg North Centre (Mr. Knowles) because there is something in the bill he has pointed out which I would not have noticed. Even the construction of clause 1 is incorrect in a grammatical sense because it does not compare properly with the clause as it appears in the French language. Therefore there is an element of criticism even in regard to the draftsmanship of the bill. This does not worry me because the bill is worthless. It is fine to provide a vehicle by which the member who is the sponsor of the bill can say what should be done and might be done, but in terms of the fundamental essence of doing anything it is just a piece of paper. I am sure the hon. member realizes this. I am not objecting at all to his using this opportunity to say what he thinks should be done. I am just saying that the bill itself if it were put into effect would be meaningless. The hon. member knows this and in fact said so in the explanatory notes.
I was interested in the hon. member's reference to those, presumably including myself who have had no experience in respect of city councils and municipalities. I could not help but recall that the hon. member was a member of the board of control of the city of Ottawa at one time. Obviously he should have used the vast experience he gained in running or misrunning, whatever the case may be, municipalities in drafting his bill so that it
February 18, 1969	COMMONS
would make some sense, have some import and have some value and authority. This simply proves he is a great talker but not much of a doer when it comes to trying to do things.


Some hon. Members:: Oh, oh.


An hon. Member:: You don't like that.


Frank Howard: My friends may be able to dish it out but they cannot take it in return; that is fairly obvious. The sponsor of the bill said himself that the bill was designed simply to call attention to a problem. In other words, the bill is a vehicle by which to make a speech, but I do not disagree that he should use this opportunity because this in part is what parliament is all about. Inasmuch as he has no authority to do anything in a substantive way to deal with these matters, certainly he should take this opportunity. I simply point out that by his own designation the bill seeks to deal with only one aspect of the over-all problem, that is, a planning board. If the house were to pass the bill and it became the law of the nation even that one aspect would not be dealt with because the planning board which the hon. member conceives would not have any money with which to do anything. It would be a body that had no money or authority to engage in anything except the carrying on of conversation about something.
The hon. member spoke of our record of saying the same thing spring after spring after spring and year after year after year, but I regret to say, although the hon. gentleman really does not want me to say this, that our capital city gets worse year after year after year. There does not seem to be any sign of improvement. So far as I am concerned Ottawa is not just another municipality among the surrounding Ontario municipalities or the municipalities in the province of Quebec. The city of Ottawa and the surrounding municipalities are just as much my capital as they are the capital of the hon. member who sponsored the bill or those who live in the area. Ottawa is regarded as the capital city just as much by people who live in British Columbia as it is by those who live in this city and area.
But that is not the way the hon. member's friends and colleagues in city hall think about it. That is not the way certain controllers and city officials think about it. Every time in the past anyone has raised the subject of dealing with the national capital area in a manner
DEBATES	5667
National Capital Commission other than that in which it is being dealt at the moment, who has raised the greatest obstacles, the greatest hue and cry? The opposition does not come from the members of Parliament who look upon Ottawa as their capital city. The opposition and the great fuss come from the petty politicians in the municipalities who do not want to see their power and authority interfered with.
The streets of Ottawa are bloody awful. This situation existed long before I became a member of parliament and long before many others were elected to the House of Commons. From reading old newspapers one can discover that it has existed for a long time. Whenever questions are raised about the potholes or anything else people like Controller Heit immediately get up on their horse and say, "Give us some money, we will fix it, but we do not want your interference". They want the people from British Columbia and elsewhere to give them tax money so they can pour it into their coffers, but they do not want to give us any overriding authority in respect of co-ordination or planning.
[DOT] (5:20 p.m.)
Back of the people in these municipalities to some extent are the authorities in the provinces of Ontario and Quebec. The Prime Minister (Mr. Trudeau) did a great disservice to the concept that the member who sponsored this bill talked about, that of developing a national capital region of which all the people of Canada could be proud. When the present Solicitor General (Mr. Mcllraith), who is a member from the Ottawa area, was Minister of Public Works he spent a great deal of time and effort in dealing with the provincial governments of Quebec and Ontario and the municipalities in the area in an effort to reach an agreeable solution in respect of our national capital area. We all know how conciliatory, gentle and hard-working the Solicitor General was when he was charged with this responsibility. He almost brought his efforts to fruition, and we were on the verge of having something concrete. The Prime Minister, however, out of ignorance or for some other reason, perhaps not knowing what the then Minister of Public Works tried to do, shunted him from that position into the position of Solicitor General. All the work he had done and all the efforts he had made were pushed to one side.
We do not hear a whisper from the present Minister of Public Works (Mr. Laing), or
February 18, 1969

National Capital Commission whoever is responsible lor the National Capital Commission about what is or is not being done. After 10 or 12 years of talking in the House of Commons something might have been accomplished had the Solicitor General been allowed to continue his work toward the worth-while goal of establishing this area as the national capital, something other than just another municipality in the province of Ontario, in the province of Quebec or both.
We all feel proud of our national capital. The people of British Columbia and people in other parts of Canada would be pleased, I am sure to have part of the tax dollars they pay to the federal government used to develop this area into an aesthetic and beautiful national capital. I am sure they would be pleased to have this area developed into something far better than it is at the moment so far as its physical aspects are concerned.
The people in other parts of the country should be able to feel that this is the national capital rather than just a city in the province of Ontario like all other cities in terms of structure. They look upon the national capital as being something better than that and perhaps a place for which they could have an emotional attachment.
We had almost reached the stage of starting to create such an area and might be well on the road had the Solicitor General been left in his position as Minister of Public Works. Perhaps the Prime Minister did not know what was taking place, or perhaps he saw fit to remove him from the position of Minister of Public Works in order to have someone else there who would have to start off from scratch. For whatever reason, this is regrettable.
The potholes are bad in the city of Ottawa. The situation is allowed to continue without regard while we talk about it. The hon. member who sponsored the bill will just have to be content to listen to us talk about the situation. He knows the potholes are bad. Perhaps he knows it better than I because he lives in this area and probably travels more often over a greater number of the streets.


William Arnold Peters: Maybe he thinks they are good.


Frank Howard: Perhaps he thinks they are good, but I think he was really putting up a front in the hope of getting some <endorsation for his bill. If it had any real meaning or was designed to establish something concrete rather than simply being a vehicle for the making of a speech, as the

hon. member did, perhaps he would receive some support. I do not see much point in endorsing a bill which appears to have no function other than to provide a mechanism whereby people can get up and make speeches.
We are not opposed to the bill, and if it comes to a vote I will not vote against it. I will not vote for it but I will let it pass. I think it is meaningless in the true sense and will not come to anything. If the hon. member's experience on city council was worth while and if the government considered his experience of some value, perhaps the member might have put his message across and the government might have introduced a bill containing full authorization and authority to move ahead in this direction. Without that support this is just another private member's bill which will likely have the same fate as other private members' bills.
It is fine to talk about some of the ideals about which we are all concerned, but in the meantime we are making no contribution and the potholes in the city of Ottawa are just as bad if not worse than they were last year. This is primarily so because the councillors sit in their seats at meetings unable to see beyond the boundaries of the municipalities and realize that this is the national capital of Canada.
Most people think in terms of this area as just another municipality in the province of Ontario. That is not good enough. It is too bad the hon. member is not back on the council in order that he might have some influence there because he does not appear to have a great deal with the government here.


René Matte: Mr. Speaker, it would seem at least in theory that this bill, as much as all other public bills, is a logical piece of legislation.
However, if one analyses the present situation one realizes that this bill cannot be discussed in this house for the simple reason that such consideration appears to me to be unconstitutional in view of the fact that the area under discussion is part of the Quebec territory. We all know to what extent the Province of Quebec is now more than ever, jealous of its rights, privileges and prerogatives, and all the more so of its territory.
This is particularly true in the wake of experiences as disastrous for the Province of Quebec as that of Labrador, when following
February 18, 1969

the intervention of the federal government, Quebec lost one-third of its territory. Thus we are faced with the fact that, even though we could admit that it would be very nice to plan and organize a national capital area in this manner, we cannot proceed until the Province of Quebec has dealt with the situation and expressed its views. In other words, the matter cannot be discussed unless the position of Quebec is known.
[DOT] (5:30 p.m.)
I should also like to point out the situation that exists in Ottawa, the capital of Canada. The way French Canadians are treated in that unilingual city, capital of a bilingual country, has often being experienced. It would take too long at this point to enumerate all the frustrations of which the French Canadians in Ottawa have been the victims, as well as those from the outside who have visited their national capital. Suffice it to recall the statements of the former mayor, Miss Charlotte Whitton, which truly reflected the unilingualism of Ottawa. Instead of tackling the problems of the federal district, it would be better, in a country which claims to be bilingual, to show at least in the national capital a will to respect in fact the requirements of bilingualism.
The leader of the Ralliement Creditiste (Mr. Caouette) recalled an incident that occurred last fall in which a member of our party was involved and where once again, the unilingualism of the Ottawa police force was revealed. In fact, a French-speaking Canadian cannot do business effectively in his mother tongue in Ottawa.
I recognize that the federal government has made a real effort, with some results I must say, to improve the situation in all the territory and buildings which fall within its jurisdiction. But there is a real problem when it comes to the city as a whole. It seems to me we should forget about other projects until that absolutely abnormal, not to say paradoxical, situation has been corrected, of which Quebec is is well aware. Every Quebecer knows what the situation is really like in Ottawa.
On the other hand, Quebecers know full well that the city has been given considerable help, which was only logical since it is the capital. But they also know that the other shore of the river was neglected and that the central government developed the south shore of the Ottawa river to the detriment of Quebecers. Now, on studying the situation,
National Capital Commission one realizes that by introducing a bill dealing with planning, the construction of roads, the development of land and even the building of offices for the federal district, we are not tackling the real problem.
That is why I am coming back to my first argument. In theory at least, here is a bill in no way devoid of common sense and which it might be quite normal to pass in any country under normal conditions. However, we are all aware-and if not, just remember the federal-provincial conference which took place last week-of the very serious problems facing Canada. There are many things to settle before we tackle this particular point. Had this bill been introduced after Quebec had adopted a clear-cut position about its territory, and after the government of Ontario had done the same regarding the city of Ottawa and considering the mutual attitude of these province, we might have been in a better position to discuss such a bill.
I therefore oppose Bill No. C-20 and I hope my arguments will lead other hon. members to do the same.


Mr. Gaston Isabelle (Hull):: Mr. Speaker, I am always glad to take the floor on matters pertaining to the national capital area, especially when the Quebec side is concerned.
I shall not assume the part of the devil's advocate and to criticize, as some previous speakers have done, the structure of government for the past few years.
Neither shall I shun the problem. Bilingualism is a current topic in the federal capital as well as other problems which I consider sometimes quite superficial. A good number of people in the national capital area, are French-speaking and I do agree with these who contend that the federal government has quite often ignored them, and that Quebec has always neglected this area of the Ottawa valley.


Some hon. Members:: Hear, hear.


Joseph Gaston Isabelle: Recently a report was submitted which I qualified and which I still qualify as irresponsible. It is the Dorion report which simply advocates thieving, and, to my mind, any report that advocates thieving is an irresponsible one. It advocates that the lands of the National Capital Commission on the Quebec side be returned to the provincial government. We know, however, that before 1958, all the lands in the National Capital area were bought by private contract. Since 1958, only one per cent of all the lands of the National Capital Commission have
5670	COMMONS
National Capital Commission been expropriated according to the Expropriation Act which was enacted by parliament in 1958.
I understand my friend, the hon. member for Ottawa West (Mr. Francis) who did not want to introduce a bill whose application would reflect his whole attitude, but who just wanted to create a kind of incentive in order to arouse the people of the national capital area and to tell them: It is about time that you should consult each other and that the representatives of areas located a quarter of a mile away be invited to discuss the planning on the Ottawa side as well as on the Hull side so that this economic unit which nobody wanted to recognize, neither in Quebec nor anywhere else, be recognized.
This is why, today, when it is a question of building a bridge, on the Ontario side, a road is built that does not reach it, because the building of the bridge was not expected then and, on the Quebec side, a road is built which also does not reach the bridge. So, there are two roads that lead to the river, and the bridge is five miles below.
That is why my hon. friend from Ottawa West wishes to create a certain atmosphere that will make possible the establishment of a planning board. To me, the planning board is important. Some may say: The National Capital Commission is capable of planning under the law. That is right. However, when the general planning was done, nobody thought of consulting the municipalities concerned. A highway was built, expropriation of land took place often without consultation with the municipalities that were unable to do any planning.
It has been said that large sums of money were granted to Ottawa. That is true. The city of Hull got almost nothing. That is equally true. The Hull area is complaining because it did not get any money from the central government and Ottawa is complaining because although it was given money it did not have the opportunity to do any planning. They are no better off, one way or the other.
That is why we should seek a way of planning without changing the constitution for it may be taken as a fact that the Quebec territory will remain within the provincial jurisdiction of Quebec and that the Ontario territory will remain within the jurisdiction of that province.
However, this does not mean that because of the jurisdictions to which the territories

DEBATES	February 18, 1969
located on both sides of the river are subjected, we should let the people fend for themselves, as has been the case for so long. It is about time that we should wake up and find the means to come to an agreement so as to avoid discriminating between the citizens living on this side or that side of the river.
It is about time that we should find the means to solve the transportation problem within the national capital not by setting up two, four or six transportation companies but a single transportation company subsidized and administered by the federal government. It is the only government in the area which is able to do something. It is the only one which can bring something to fruition instead of letting the people in the hands of a second-rate company as can be found in the area.
It is about time that the federal government, because of the site of its main buildings, of its planning and of the number of people it employs in the federal capital, should take its responsibilities with regard to transportation. I advocated the establishment of a means of transportation. I do not suggest that it is the best solution; however, I think that it is a valid suggestion and that it should be taken into consideration in the framework of a system which would cover the whole area of the national capital.
The National Capital Commission has been mentioned by everyone. If the Commission had not carried out some works on one side of the river or the other, even though it consulted no one, I do not think the present situation on the Quebec side or on the Ontario side would prevail. At any rate the National Capital Commission has become an economic power. It administers an estate worth about $100 million, half of which has been acquired during the past five years.
o (5:40 p.m.)
In my opinion, we could look for some way of joining forces and doing some planning so that this land may become more profitable. It has been said that the city of Ottawa is badly managed and that this region is not like others. I do not know of any elected body which, if it does not give satisfactory service, is not replaced by another when election day comes around.
With regard to particular problems arising at particular times of the year, one has only to have worked for a city, as a mayor, a controller, an alderman, or what have you, to be well aware of the difficulties facing Canadian municipalities today, including Ottawa and Hull.
February 18, 1969

I wanted to say also that this region is not like any other. It is true. There is not other region in Canada where a provincial frontier borders on the national capital. The Hull area has however always been neglected by all.
Somebody mentioned a while ago that it is only since the Liberals took office in 1960 that it has been disregarded. The city, the region of Hull does not exist since 1960 only; it exists since 1854, and it has always been forgotten due to the good offices of the Quebec government which said: We cannot do anything in Hull because it is close to Ottawa. On the other hand, Ottawa said: We cannot do anything for Hull because it is not under our jurisdiction. The provincial government does not allow us to do anything.
Then, at the expense of the citizens, efforts were made to settle constitutional problems that are basically practical problems.
Can it be imagined that if one travels in the east-west direction, a single fare is required whereas a double fare must be paid for every trip in the north-south direction. Is that fair? However, that situation was never discussed at the level of the provincial governments. There never was any willingness to meet in order to discuss a problem, which could have restored equality among the population of the Ottawa-Hull area.
Further than that, let us talk about this famous sales tax. In fact, I hope the agreement between Quebec and Ontario will be challenged. People from Hull who come to Ottawa to buy goods must pay 13 per cent; that is 5 per cent when they pay by cheque at the store and 8 per cent when Quebec charges a special duty, as it is currently done. This practice brings in many thousands of dollars. Am I going to be deluded into believing that it is fair that people of that area be treated as second class citizens, within such an economic area as that of Ottawa-Hull? Let us think it over, let us ask ourselves whether or not the basic principle of the bill introduced by the hon. member for Ottawa West is valid.
What it advocates, I think, is a mere dialogue between the Quebec and the Ontario areas, so that they can both benefit of the economic advantage of their territory, rather than discriminate against the people.
I will be asked to give examples. When I see Quebec leaders taking part in a federal-provincial conference in Ottawa, a quarter of a mile from their own province, and stay in Ottawa hotels, nobody will make me believe that they are sincere. I will not be deluded into believing that it is fair to insist that the

National Capital Commission people of the Hull area be penalized when they purchase in Ottawa, when they come and sit in state in Ottawa as kings or princes. To use a popular expression, I am fed up with the situation these Canadian citizens have had to put up with for so many years.
Today, the leaders of Quebec, like Nero, are looking at the city and at the province from atop the provincial legislature building, and like Nero they are saying: "Burn, Rome, burn", or if we transpose: "Burn, Quebec, burn". As for me, I would say that first of all we are going to save the Hull area, and that by way of a referendum we are ready to approve all the means the federal government will see fit to provide us with in order to make of the Ottawa-Hull area a bicultural and bilingual entity and a single economical entity, which will ensure that everybody in the area gets the same treatment.


Some hon. Members:: Hear, hear.


Duncan Gordon Blair: Mr. Speaker, the bill which has been brought forward by the hon. member for Ottawa West (Mr. Francis) is a valuable means of rivetting the attention of this house and indeed the attention of the whole country upon the problems of the Ottawa area.
As one who came to Ottawa to live some 18 or 19 years ago, I believe that the discussions as to the relationship between the municipalities in this area and the federal government have not always been of a proper order, nor have they been carried on, in my opinion, in a proper manner. In my view there has been far too much recrimination, too much of one authority blaming the other, too much confusion and inaction resulting from conflicts between municipalities, provincial governments and the federal government. I say that the worse thing any of us could do in this chamber at the present time would be to perpetuate the nonsense implicit in this ancient manner of talking about our capital.
We are faced here with a problem of immense magnitude. In this area at the present time there are perhaps less than 400,000 people. It is estimated that some time after 1980 there will be over a million people in the area. Unless all the government agencies and other authorities concerned take the necessary steps to look ahead and plan for the future we shall indeed be faced with grave problems. Indeed, our capital may well develop in a way which is altogether different
February 18. 1969

National Capital Commission from the needs and desires of the citizens. This is why I commend the hon. member for Ottawa West for initiating this discussion. We should be grateful to any hon. members of this house who bring forward matters relating to the future of this area for our consideration.


Frank Howard: Hear, hear.


Duncan Gordon Blair: I pause at this point, though perhaps I am entirely out of order-something which would not be exactly new in the history of this chamber-to comment on a remark made by the hon. member for Skeena (Mr. Howard) when he suggested that no one should make a proposal here unless it could immediately take practical effect.


Frank Howard: I said no such thing.


Duncan Gordon Blair: I noted while the hon. member was speaking that he has nine or ten bills of his own on the order paper. I wonder whether he would apply the same reasoning to them.


Frank Howard: Absolutely, but stick to the facts.


Duncan Gordon Blair: We must be prepared to consider a number of varying ideas as to how this capital area might be organized. In doing so, we cannot blind our eyes to the difficulties which exist, some of which were exemplified by the remarks of the hon. member for Champlain (Mr. Matte). There is inherently a great problem about organizing a viable structure for this capital region and planning its development when the necessary measures must embrace two provinces and countless municipalities on both sides of the provincial boundary. It is my belief that for the future we must proceed in an orderly way with certain specific objectives in mind. In my opinion we must collectively, all the governments concerned, take steps to avoid the conflict between jurisdictions that has been the curse of government in this area.
[DOT] (5:50 p.m.)
Up until now the federal government, though it is the largest property owner and has the largest stake in the development of this area, has not been able effectively to participate in the government of the area or in its planning. As some hon. members have pointed out, a very significant contribution has been made to planning in the national capital area by the National Capital Commission. But this has been accomplished by the

Commission buying land and developing it as it thought best for the area.
Neither the federal government nor any of its agencies, such as the National Capital Commission, has had jurisdiction or authority to plan or to participate in the control of planning in this area. Many of us who are interested in this problem noted with feelings of shame and disgust the unedifying controversy over building heights in this city which arose three or four months ago. In my opinion, this is example No. 1 of the present unsatisfactory and conflicting planning authorities in the capital area. If that is not enough to convince the residents of this area and the government of Canada that something better has to be worked out, then I do not know where we can find a better example. I am hopeful that in the life of this parliament tremendous progress will be made in the development and planning of this capital area. First of all, I think it is proper for me to call the attention of hon. members to the important discussion that took place at the federal-provincial conference last week at which time the Prime Minister of Canada (Mr. Trudeau), speaking at the afternoon meeting on February 12, was able to report immense progress in the tripartite study being carried on by the provinces of Ontario and Quebec and the government of Canada. All participants in the conference agreed to a resolution which I think it is proper to record here:
1.	The Constitutional Conference is agreed that the cities of Ottawa and Hull are the core of the Canadian capital area.
2.	No changes be made to provincial boundaries or to the constitutional responsibilities of the governments concerned.
3.	The boundaries of the Canadian capital area are to be established by agreement of the governments concerned.
4.	In line with the aforementioned objectives, steps must be taken so that the two official languages and the cultural values common to all Canadians are recognized by all governments concerned in these two cities and in the capital region in general so that all Canadians may have a feeling of pride of and participation in and attachment to their capital.
5.	That the Study Committee on the Canadian capital continue its work giving particular importance to the following:
(a)	the definition of suburban areas which would eventually constitute, along with the cities of Ottawa and Hull, the Canadian capital regions;
(b)	a study of the administration and the financing of the tripartite organization.
In my judgment, there lies the hope for the future; a determined, sincere and honest attempt by the three major governments
February 18, 1969	COMMONS
involved to evolve a mechanism for future government and planning.
In conclusion, might I suggest that we as members of this parliament should be able to play a significant part in the future discussions which should take place. I hope that in the life of this parliament the project that has been often mentioned of creating a joint committee of the other house and of this house to consider the national capital region and its many problems will materialize. I think there would be widespread support from all members for the creation of such a committee. It would, if nothing else, serve this nation well by informing everybody of the importance of the national capital area, of the interest that all Canadians have in it, and of the problems that will have to be solved if it is to develop in a way of which all Canadians approve.
May I call it six o'clock?


The Acting Speaker (Mr. Bechard):: Order. The hour appointed for the consideration of private members' business having expired, I do now leave the chair to resume the same at eight p.m.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Mr. Benson that Bill C-165, to amend the Income Tax Act and the Estate Tax Act, be read the second time and referred to a committee of the whole, and the amendment thereto of Mr. Saltsman (p. 5191).
William David Knowles: Mr. Speaker, at five o'clock before the debate was adjourned I was talking about what a number of farmers had said at a meeting. They were very much opposed to the imposition of the new estate tax. I also spoke of contradictions inherent in government policy. On the one hand, through farm improvement loans and the Farm Credit Corporation, the government enables farmers and small businessmen to accumulate property and small businesses; on the other hand, through the medium of estate taxes, the government sees
DEBATES	5673
Income Tax Act and Estate Tax Act to it that small farms or businesses are dismantled or divided up.
As a result of pressure from members of the opposition, government backbenchers and public opinion, the minister changed the exemption level from $20,000 to $50,000, where it had previously been. We must, of course, give the Minister of Finance (Mr. Benson) credit for increasing the exemption level. Nevertheless, the impression the government seeks to leave is misleading. From my reading of the bill it appears that, in certain cases, the exemption level is still only $20,000. I believe my colleague has already dealt with this aspect of the problem.
About 10 or 15 years ago $50,000 was considered an appropriate floor for the exemption. Inflation, of course, has inflated farm values, and in our present inflated economy $50,000 is a totally inadequate and unrealistic exemption floor. I do not think any farmer or businessman objects to paying taxes on the increased value of his holdings, if the value of those holdings has been increased by his own efforts. When the value of those holdings is inflated and he has to pay tax on that inflated value, he has reason to complain.
A farmer in my constituency wrote these words, which I quote:
I, and perhaps the majority of farmers, are still opposed to the new proposed tax, because I do not feel that a $50,000 exemption will be adequate in the very near future.
I understand that by 1980 there will be only 35,000 farmers in operation. Therefore this would mean that the present owners, will have to increase in size, increasing their net worth by two or three times. This would make the proposed exemption very unnoticeable.
We also give the Minister of Finance full credit for allowing estate tax to be paid over six years. That provision will bring relief to some. Yet, it will still be difficult for widows and children inheriting small farms or businesses worth $200,000 or more to pay inheritance taxes.
In the bill there is what may be called a once in a lifetime exemption of $10,000 which applies to a son who inherits farm property and continues farming after his parents' death. That exemption will make it easier for the farmer to pass his farm to his son; it will make it easier for the family farm to survive. But, again, in today's inflated economy that exemption of $10,000 is far from adequate. I urge the minister to consider increasing that $10,000 to a more realistic figure, more in keeping with today's inflated economy.
5674	COMMONS
Income Tax Act and Estate Tax Act Another tool which will assist our farmers and businessmen in estate planning is the measure providing for tax free gifts. Under the old legislation a father could pass on to a son $4,000 per year. Now, he can pass on only $2,000. We feel this is a step in the wrong direction, just as leaving the exemption floor at $50,000 and the exemption in the once in a lifetime gift provision at $10,000, are moves in the wrong direction. I submit that that $2,000 exemption ought to be increased to $6,000. By using the tools of estate planning, farmers will be able to pass to their sons parts of their property. Their sons will take an interest in the operation of the farm and will be imbued with a desire to make the enterprise succeed. I urge the Minister of Finance to re-examine the whole question of exemptions.
The one saving factor in this entire estate tax matter is that, if a farmer or small businessman uses the tools of estate planning he can gradually divest himself of his interest in the venture and pass it to his children. If he is deprived of the use of these tools, the small business or small farm will founder.
In conclusion, I wish to say this: In view of today's inflated economy, exemptions should be brought up to more realistic levels. Tools permitting the planning of estates ought to be made more useful. A farmer ought to be able to increase the size of gifts to his son because those gifts may take the form of property. The Minister of Finance ought to consider these matters before this bill becomes law. With proper estate planning, the small farm or small business could be enabled to survive.
I will conclude by reading from a letter from a constituent that expresses my sentiments. It reads in part:
The point in question is this. Are you trying to penalize me for working and for trying to make myself and my family comfortable? Since when has initiative, ambition and drive become something to be frowned upon? I don't like work. No one likes work. But I like the better things in life and work makes this possible.
If this proposed estate tax is passed in Parliament and if the present trend of taxation continues there will be no reason or hope for me to try to advance. When I find that I am spending more money than I have, I stop spending. I suggest that the government stretch the dollar rather than collect it. . . Although this letter contains my opinions it also represents the attitudes of any Southern Ontario farmer or small businessman-
[DOT] (8:10 p.m.)
These are the sentiments that I leave with this house and especially the Minister of 
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Finance. I ask him to take a realistic look at the exemptions and figures which he has placed in the bill in the light of today's inflated values.


Mr. Norman A. Cafik (Oniario):: I take great pleasure, Mr. Speaker, in addressing myself to this debate on the estate tax. There are a number of views I would like to put forward in the hope they may be of some value.
With respect to this tax, there has been a great deal of confusion in Canada, and there still is confusion here in the house as to the implications. Before suggesting any recommendations, I would like to spend a moment or two and elaborate upon the real meaning of this tax. When the proposals were originally put forward I must say frankly that I did not agree with them in total. At that time I felt that no estate under $50,000 should be taxed. Since that time many hon. members have suggested the exemption should be $100,000. However, I think they are wrong. I do not believe the average working man in Canada would accept a $100,000 exemption or minimum upon which taxes would be paid. Taxes not only have to be just, but they must appear to be just. I think many people in Canada would feel $100,000 would be far too high to give any pretence of justice.
The previous speaker suggested that taxing estates of $50,000 would be completely unrealistic. I would point out that if a man wishes to leave his farm to his children, $50,000 could be left to his wife as a gift which would not be taxable, and $50,000 could be left to his children which would not be taxable because of the floor in the taxation plan. In effect, such a farmer could leave $100,000 without any tax being paid, $50,000 tax free to his wife and $50,000 tax free to his children. In addition, there would be an exemption of $10,000 if left to one child. In that case $110,000 would be tax free. If the same principle were applied to an estate with a $100,000 minimum, no estate tax would be paid on estates far in excess of $100,000. I do not think that would be fair or just.
As a newcomer to this house, I feel that the changes put forward are very important. They show that parliament and democracy are really working. The people of Canada and hon. members from both sides of the house made recommendations. I think it is a great thing that some of these recommendations have been accepted. Another change is the right to a time payment plan. It is important that people be given the opportunity to pay
February 18, 1969

estate taxes over a period of time. The new legislation allows, as a matter of right, six years in which to make payment.


An hon. Member:: Five years.


Norman Augustine Cafik: I treat six equal instalments as six years.


An hon. Member:: The law states it is five years.


Norman Augustine Cafik: In view of the complexity of the estate tax, a period of time is allowed to choose whether exemptions will be claimed under the old or the new Estates Tax Act. The estates of persons who die between now and August 1, 1969, can claim whichever exemption is the most favourable. This is a step forward in settling some of the confusion which has arisen as a result of these estate tax changes.
I have a recommendation to suggest which I feel would be worth while, particularly in my riding of Ontario. This area is 50 per cent rural. It is very close to metropolitan Toronto. As a consequence, the value of land has increased very sharply in the last few years. Some of these farmers wish to continue farming and their children wish to continue farming. Under the present legislation, their farms would be assessed at real estate value rather than at farm value and there could be an excessive estate tax payable.
I suggest that the farm be assessed at both real estate and farm value. If the beneficiary of the estate guarantees that he or she intends to continue farming, then the estate tax should be payable at the farm value. If the farm is later sold the estate tax would become payable as originally assessed, at the real estate value plus interest. This would give farmers the right to continue farming in areas of great increases in values of land. I think this plan is workable. It may sound complicated from an administrative standpoint, but I do not believe this. At the time of the death and the assessment of the property, the government could put a lien on the property for the difference in estate tax payable as between farm and real estate values. This lien would be held until such time as the property is sold. Such a practice would be a step toward helping farmers in my particular area.
Looking at the new proposals in detail, I am impressed with the social implications of this new estate tax. It is a step in the right direction to recognize the principle that both a husband and wife contribute to the value of
DEBATES	5675
Income Tax Act and Estate Tax Act an estate and, consequently, not to tax the estate when left by a husband to a wife or vice versa. From a social standpoint this legislation is welcome.
Another point which is most important, is that this legislation bears in mind the amount of work which the estate has to do and then taxes accordingly. This is being done by allowing an exemption of $10,000 per adult child, plus an exemption for non-adult children of $1,000 per year between the ages of 1 and 26. Under this principle, a child is entitled to exemptions up to $35,000. In the past the exemption was $10,000, and in the case of a wholly dependent infirm child it was $15,000.
e (8:20 p.m.)
I think it is also important to recognize that this tax takes into consideration the dependency of an infirm child where the estate must take care of that child. In this case, the exemption can be a maximum of $70,000, whereas in the past it was only $15,000. This is a great step forward in social legislation.
What about the negative views that have been expressed? First of all, the argument has been put forward by some on the opposition side that a person has earned his money so there should be no tax on it whatsoever, and that, in particular, there should be no such thing as estate tax. I do not think that is a valid point. If we carried that practice through for a number of years we would end up with the wealth of the nation amassed in the hands of far too few people. Therefore, the principle of estate tax is valid. It is the details of the tax that we have to discuss.
Then there is the opposition view-I do not know if anyone here holds it-that in terms of estate tax we should confiscate all money left after a person dies. This view is also invalid. We have to find a happy medium whereby we can redistribute the wealth and at the same time recognize it is important that people have incentives to earn money and to save it. This kind of legislation recognizes the needs of both levels.
Let us look at the implications of the estate tax in practice. I think I pointed out earlier that many people seem to feel that estate tax is a new kind of tax in Canada. Estate tax was first introduced in 1892 in the province of Ontario and has existed there ever since. Estate tax on the federal level was introduced in 1941. Some people think that all estate taxes come to the federal government.
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February 18, 1969

Income Tax Act and Estate Tax Act According to my information 75 per cent of the money raised in estate taxes goes to the provinces, with the remaining 25 per cent to the federal government. On an annual basis, the income to the federal government amounts to roughly $100 million. According to my information, it is not the intention through this legislation to increase the revenue of the federal government but simply to achieve some of the worthwhile social objectives of which I spoke earlier.
If estate tax were abolished and the same amount of revenue were to be raised from the same group who presently pay estate tax, roughly 5 per cent of those who die, it would require an increase in income tax of 15 per cent. On the other hand, if the federal government were to raise this $100 million by dividing the load equally among all tax payers it would mean the social development tax would be increased from 2 per cent to 3 per cent. I do not think there is any justification for either of those two approaches, and I believe that the approach in this legislation is the ideal one.


Eldon Mattison Woolliams: How is it all Grits think the same?


Norman Augustine Cafik: I guess we are all smart. Now, turning to the chart outlining the amounts of tax payable, I find one category where an estate is left outright to a widow and on her death divided equally among the children. I understand the vast majority of Canadians leave estates in this category. To my surprise,
I find that under the new rate the estate tax on a $60,000 estate increases from $2,600 to $4,800 Where there is one child, and where there are two children from $2,600 to $3,000. There is one other category where there is an increase, an estate of $80,000 with one child, but the increase is hardly worth mentioning, from $8,332 to $8,700. The rates are lower in every other instance. I cannot see the justification for the difference in these two categories, except that it must be the mathematical application of a formula which happens to work out that way. I would hope some adjustment could be made with respect to those two categories.
In other categories where an estate if left to a stranger the new rate is much higher, and substantially higher in many categories. I have no particular objection to this because I think our primary concern is to protect the estates left to children and wives.


In conclusion, Mr. Speaker, I wish to say this legislation is good. I have reservations with respect to the two categories of estates that I mentioned, and I think something might be done to solve the situation. If an exception were made in these two categories I do not think the revenue loss would be very great. I also think consideration should be given to a new formula for assessing the value of farm land along the lines I have suggested. With no other reservations, I have no hesitation in supporting this legislation which is a step forward in the over-all plan of tax reform.
fTranslation]


Mr. Henri Laiulippe (Compton):: Mr. Speaker, after listening to the speeches on the estate tax, I am pleased, in turn, to say a few words.
I should like to give my point of view on the new rules concerning the proposed amendments to the Estate Tax Act. I shall not go into details, because several hon. members have done so.
Briefly, I would like to say that corporations do not die but individuals do. The law under consideration affects individuals, the small corporations, the small companies whose president holds almost all the shares. When the president of such a small company dies, it is subject to the same laws and regulations as the individual, including the Estate Tax Act. Mr. Speaker, under that act and its regulations, we will continue to undermine private enterprise and free enterprise.
Mr. Speaker, free enterprise will no longer exist in a few years, for even if the bill contains some desirable tax exemptions, such exemptions are not considerable if one realizes that $100,000 are not worth today what that same amount was worth 50 years ago. In fact, a $100,000 or $200,000 estate is negligible today, since money is valueless now.
I was saying that corporations do not die. The large corporations that operate with the help of millions of dollars cannot be taxed, and since they will never die, in consequence, they will never pay. Once again, the small estates, the small businessmen will pay the piper, will be thrown in the street, in short will disappear to leave only the large corporations and state organizations which can enjoy privileges denied to small companies.
It is basically unfair, in my opinion, to tax individuals more than corporations. There is no honest or serious reason to treat instruments better than individuals who use them,
February 18, 1969

consequently to treat corporations better than individuals.
Mr. Speaker, under this legislation, corporations should pay as much estate taxes as individuals. The mere fact that they are organized in a corporation does not entitle individuals to privileges, at the expense of isolated people in our society which collects taxes for its administration.
[DOT] (8:30 p.m.)
If it is impossible to tax the estates of corporations, since corporations do not die, there is no logical reason to tax the estates of individuals. We wait until their real or financial property are transferred to their heirs, who will pay taxes as individuals. That is the principle in application.
If indeed, circumstances have favored the establishment of practices contrary to principles, there is no reason why we should maintain the same mistakes, the same lapses.
In the particular case at issue, regarding the tax on individuals' estates, we must make inquiries, charge for assessment of property inherited, deduct taxes owed to the government by the one who died, and that is all.
No succession duties are levied on corporations, but a last inspection and collection of taxes is made from citizens after they die.
I know, Mr. Speaker, that I am bringing forward arguments that may astonish some hon. members or the minister, but it is always the same thing. When the government extracts money from individuals, it is almost always in an unfair way, while that same government grants exclusive privileges to the big multimillionaire corporations. That is the situation that must be set right again.
The minister did not enter the picture; he did nothing so that small and large corporations would be treated on an equal footing in connection with succession duties. Small corporations are doomed to disappear and large companies will be allowed to go tax free.
My whole argument proves once again that I wish to respect the true principles of social life, that I am in favour of private enterprise at all levels, particularly at the level of the individual and the family, for death involves enough difficulties already without the government or the income tax people unduly complicating the settlement of the estate or the inheritance to the survivors.
Income Tax Act and Estate Tax Act
The large millionaire or multi-millionaire corporations do not die. They are well protected at the death of their main shareholders. The securities they own are transmitted to their heirs very often without the inspectors noticing it. The corporation itself does not die, and it is not taxed. Why do we still protect the instrument more than the individual?
Nobody, Mr. Speaker, can carry his estate or his money to Heaven. It is for the living to distribute his estate, not for the government. The government is not more than Heaven, and Heaven does not claim a part of the estate of individuals. Why then do governments place a heavier tax on individuals than on corporations? There is no logical reason to justify the passing of this law: It can only be explained by absurdity.
Mr. Speaker, the bill now before us certainly contains some improvements, but it is unfair even though it only takes a part of their property when it taxes the poor. This is a kind of injustice all hon. members should recognize.
I, with some other members of the Progressive Conservative party, am among those who do not support this legislation. I have listened to them; some were right; but not a single one of them I think has pointed out the situation as clearly as I am doing now: it is a question of taxing the little man and the big man. We must be fair in this world, otherwise we are bound to see all kinds of atrocities, such as the ones we have witnessed recently.
In fact, we notice dissatisfaction throughout our beautiful country, when it would be so easy to do justice. It would be enough to tax everyone equally, according to one taxing formula. It would be sufficient to exact lower duties from small farmers or industrialists leaving estates of $200,000 or $300,000, which is not worth much today, when our money is worthless.
Mr. Speaker, I attempted to sum up in a few words the conclusions I drew after listening to the remarks of other hon. members on this bill. I therefore urge the minister to amend, and even withdraw his estate tax bill, because the taxpayer has always paid taxes during his lifetime. In fact, they are not satisfied to tax once those who have accumulated savings; those people are taxed a second, a third and even a fourth time; this is nonsense, and again the small man will be wiped out, although he has as much right to
February 18, 1969

Income Tax Act and Estate Tax Act live as the big man. Mr. Speaker, one has to crawl before one can run. To have the right to live and breathe, one is born a baby, and then one grows into an adult, and any adult Canadian has the right to make a living.
Canadians who made some money should be able to distribute it among their heirs, who would then further the economy of the country. The government has no business taking all the people's money away from them to spend it on its own.
Citizens are honest and clever enough to spend their money as they see fit and to run their industries and to keep working their lands, if they want to. If the proposed amendments were adopted, they would result in the disappearance of several industries. As a matter of fact, several small businesses will be driven to bankruptcy.
Mr. Speaker, we would be wrong to adopt such a bill. Once more, let us try and make justice prevail: let us tax the big ones as much as the small ones.
It was said a short while ago that this would bring in $200 million of which half would go to the Canadian government. In my opinion, the hon. member who quoted those figures is making a mistake. If the federal government receives $100 million and gives 75 per cent of this amount to the provinces, it will be left not with $100 million but with $25 million. I suggest that it is not worth it to destroy companies and private enterprise for $100 million. The government should therefore withdraw from this field and leave estate taxes to the provinces.
[DOT] (8:40 p.m.)


Mr. Rod Thomson (Balileford-Kindersley):: Mr. Speaker, I do not wish to belabour this subject at great length, but I do have an item I wish to draw to the attention of the Minister of Finance (Mr. Benson). The other evening the hon. member for Selkirk (Mr. Schrey-er) suggested that, as he interpreted the schedule presented by the minister, the effective tax rate was closer to the rate for $100,000 estate than it was to the rate for the $50,000 estate. We in this group hope the minister will make a statement on this aspect, perhaps in replying to the amendment if he does not wish to close the debate. We might change our point of view if we had a statement from the minister clarifying this particular item. Let me suggest that the tables are not as clear as they might have been.


Perhaps some of the responsibility for the lack of understanding lies on this side as well on the other side of this house. I, for one, would appreciate the minister explaining these tables again. Perhaps he would clarify them for me.
Let me emphasize an item referred to this evening by the hon. member for Ontario (Mr. Cafik). I refer to the arbitrary assessment by estate tax people who come out into the country and make assessments. I know of a case which involved four houses in a small prairie town. They were assessed at a value more in line with city values. The people involved were not lawyers but farmers who had inherited this property. While there may be appeal procedures available, these people felt they had as much chance of changing the assessment as stopping the sun from rising in the morning. Their feeling was similar to the feeling I have when I argue with the Postmaster General (Mr. Kierans).
When assessors on behalf of the income tax department or in respect of estate taxes come into an area they try to find out what property has sold for in the same area. They might discover that a quarter section of land was sold at one price and another quarter section at another price. This method of arriving at a value does not necessarily bear any relationship to the productive value or the overall value of a farm. I may be that someone was willing to pay a high price to obtain a quarter section or a half section in order to put together an economic unit. I feel that this practice should be corrected because it has caused a great deal of trouble and confusion in the settlement of estates. I have received many letters about this particular problem and I sometimes wonder whether I should not go into the estate planning business. I am not a lawyer, but I have learned quite a bit since I began discussing this matter and listening to speeches here.
When I receive a letter from a man who is well into his seventies asking me what he should do about his property, I wonder, as a member of parliament responsible to his constituent, whether I should act on his behalf or bring the situation to the attention of the Minister of Finance. As a member of the opposition, I have a tendency to protect the individual.
This brings me to another point. It is unfortunate there is not more estate planning done. We have many provisions under the old act and the proposed act which, if properly
February 18, 1969

used, would help many people settle their estates in a much more effective manner. The result would be less taxes paid. I am not sure that this is a responsibility of government, but since the government does thereby collect a greater amount of money than it might otherwise collect, it acts unfairly in situations which are the result of a misunderstanding or lack of knowledge of the law. In view of this fact, I think the government should bear some responsibility.
If one of my constituents does not understand this particular measure and has not planned his estate accordingly, I as a member of parliament, explain it to him. If I did not do so I would feel I had neglected my responsibility. Some time ago I was invited to attend a meeting in the country to explain this particular legislation to the people of the area. I accepted the invitation, but in the meantime the Minister of Finance changed the base rate from $20,000 to $50,000. I am glad I did not attend that meeting. If this legislation is passed in its present form, I may attend such a meeting at a future date.
Let me come back to my original point. We, on this side of the house, feel there is more doubt or confusion as to the effective tax rate for the lower schedule than for the higher schedule. This was referred to by the hon. member for Selkirk. Perhaps the Minister of Finance could clarify this situation. If we are wrong in this idea we will be glad to admit it. If the Minister of Finance has a different view, we should like to see a printed statement clarifying this situation.


Mr. Cliff Downey (Baffle River):: Mr. Speaker, it is not my intention to speak at any length this evening on the estate tax bill. If the Minister of Finance (Mr. Benson) has taken the trouble to read the mail which has poured into his office during the past weeks from businessmen and farmers across the nation he must be aware of the situation, and nothing I could say at this point would be of great assistance. Some hope was held out briefly a while ago when the minister announced the $50,000 exemption, but when we read the fine print we discovered that by the time an estate reaches $75,000 we are considering a $20,000 exemption.
At this time I think I can be of no more service than to read several excerpts from some of the local papers in my area which reflect the opinion of people out that way. Let
Income Tax Act and Estate Tax Act me quote from the Wainwright Star-Chronicle as follows:
It doesn't take much of a farm these days to be worth $100,000, including everything. And those who operate this size of a farm are having a hard time to keep going. Thousands of them at this very moment are finding every cent of income is committed to paying bills-and there never seems to be enough to pay them all.
[DOT] (8:50 p.m.)
A cash reserve is non-existent under these Circumstances.
Almost three quarters of Canada's farmers have a taxable income of less than $4,000 a year; one in four has a taxable income between $4,000 and $10,000. Not much opportunity to build up cash reserves there, especially in the last few years. Yet the heirs of the farmer who leaves a farm valued at $100,000 must raise $17,400 to pay the estate tax on it. The same applies to many other types of small business enterprises, whose operators have a lot of money tied up in the enterprise, but have little ready cash and low net earnings.
If the farm is valued at $200,000-again not an unusually high figure these days-the heirs would have to raise $51,000 to pay the tax.
It is almost incredible that the government that has had so much to say about the "Just Society" should introduce such punitive legislation. It seems to us there could be no quicker way to destroy the family farm, and to hasten the day when land resources will be controlled by huge corporations.
The following is another excerpt from another prairie publication which reads:
It seems strange to me that in these times when so much emphasis is being put on maintaining family farms and family units both by the government and farm organizations that we would be faced with such a bill as the new estate tax proposal. We seem to be trying to make the tail wag the dog and this never works for very long. It looks like a pretty short term outlook to me. Commercial agriculture just can't stand estate taxes; farmers and ranchers have been having enough of a struggle as it is to keep in business and the proposed tax would mean every generation would have to start all over again and everyone knows this is impossible in agriculture. It isn't an in-and-outers game but a business that takes years to build. If you can't turn your business over to your heirs there really isn't much point in having a business at all. If the proposed bill is approved by Parliament a guy with a ranch might as well sell out rather than try to build an outfit to pass along to his sons because it looks to me like he will just be putting them in debt for the rest of their lives and when and if they do ever own the thing they won't be able to pass it on to their sons anyway. Just looking at the thing from a farmer's viewpoint it seems to me some very careful thought and consideration better be put into this estate tax bill before they ever consider approving it. This can do more harm to agriculture than anything I know of. Agriculture has to have continuity and this idea of a double taxation surely is the wrong approach.
In the past, the people of Canada have been led to believe that the Liberal party of
5680	COMMONS
Income Tax Act and Estate Tax Act Canada was representative of the businessmen and of the farmers of the nation, just as we know that the Conservative party has been representative of them. In my opinion, and not only in my opinion but also in the opinions of tens of thousands of Canadians today, the Minister of Finance is aligning himself solidly with the socialist doctrine that all wealth belongs to the state. He is accepting one of the proposals in the Carter Commission report that has been advocated for so long by our friends in the New Democratic Party.
The hon. member for Coast Chilcotin (Mr. St. Pierre), when he spoke yesterday, deplored amassed wealth and referred to the Rockefellers, the Krupps and the Duponts. He would have us believe that the new estate tax proposals would remedy all this and that all wealth would be equalized. Absolutely the opposite is the case. We are working on an entirely different group of people here. I remind you that the estate tax affects only 50 per cent of the real wealth of the nation, whereas it used to tax 54 per cent. On estates in the million dollar class, the reduction, in estate tax has been 4 per cent. We might go on to look at the equity of the social development tax, according to which a man who has an income of $4,000 to $8,000 is being taxed at the same rate as the man who makes $1 million. Certainly, there is nothing here that would indicate that the minister is doing something to distribute the real wealth of the country.
I must congratulate the hon. member for Ontario (Mr. Cafik) on his suggestion with regard to the assessment of land because, as I see it, this is one of the real inequalities. He mentioned that there should be one taxation rate on real estate and he gave an example of the way in which the encroachment of cities pushes up land values. He thought it would be a good idea to assess land on the basis of farm values. I would certainly go along with this suggestion. In my area a great many farms may be valued at $100,000 according to present inflated land values but in actual fact the net return on them may be less than $2,500 a year. This was the figure given by the Economic Council of Canada as being at the poverty level.
These people cannot keep a property of this kind and pay these estate taxes. If we allow the discontinuance of farming that will have an effect on the employment situation. If farmers who are forced off the farm are employable, someone else will be out of a job.

DEBATES	February 18, 1969
We have only to look at some of the provinces today to realize that in at least one of them the unemployment figure is reaching over 10 per cent.
So the real problem as I see it is the inflated property values. If we are to accept the estate taxes as proposed by the minister, then let us assess property in line with the production capacity of the property. In my area it may take 30 acres of land to support a cow for a year. At current market prices which are artificially high because of the pressures brought to bear by many factors-and I would use as examples hobby farmers, foreign corporations and Hutterite colonies- the value of the land is vastly over-rated. In my area the land to support one cow for a year would cost possibly $1,200. In a typical cow-calf operation $25 per unit is a decent profit, and this is on a well rim outfit. So, here we would have an operation on land valued at $120,000 which would only return the operator an income of from $2,000 to $3,000.
# (9:00 p.m.)
The farmer who owns the land may have paid only five dollars or ten dollars an acre for it but in the eyes of the estate tax people he is a wealthy individual. If we are to have estate taxes, then let us have assessments related to profits. I beg the minister to reappraise his position.
In this connection I would quote from an article which appeared in the Globe and Mail:
The department's statisticians have ignored the fact that if one owes, say, $50,000 in estate tax, unless he sells assets to pay the tax he will have to pay it with after-income tax dollars, so it may come closer to $60,000 in actual cost.
We can readily understand that a man with a family and an income around $4,000 would have great difficulty in paying a $50,000 or $60,000 estate tax bill with after-tax dollars.
I think the hon. member for Battleford-Kindersley (Mr. Thomson) said, something about the minister remembering something which had gone before. I can only say that the hon. member for Battleford-Kindersley is probably also hoping that the farmers in his constituency do not remember the stand of his party with regard to the Carter report and the taxation of capital.
In closing, I should like to quote from a report of the Ontario Economic Council:
Those responsible for guiding the course of our nation's development need only look to history to find proof that nearly every past civilization has
February 18, 1969

hastened its ruin through its dissipation of capital through taxation.


Some hon. Members:: Hear, hear.


Mr. Mark Smerchanski (Provencher):: We
have heard much in this chamber tonight about views which newspapers and some tax experts have expressed with regard to this estate tax. Frankly, I think nothing has been so badly misrepresented in the newspapers as the proposed new estate tax. It is obvious that neither the Leader of the Opposition (Mr. Stanfield) nor the right hon. member for Prince Albert (Mr. Diefenbaker) have done their homework on this subject. They are not in a position to give the true facts about the proposed new tax.
What is the position, Mr. Speaker? Previously an estate of $60,000 was taxed. Under the proposed new tax there is no estate tax levied when property passes between a man and his wife, whether it is worth $100,000 or $200,000 or even a million dollars. This is a move in the right direction. I agree with my hon. friends who say that members of the opposition do not understand the implications of the new tax. We hear much about the destruction of family farms. We hear criticism on the ground that this proposal will destroy small businesses. This proposed estate tax will definitely help the family farm and will definitely help small business enterprises.


Some hon. Members:: Hear, hear.


Mark G. Smerchanski: We have recently concluded a week of federal-provincial meetings during which the provinces were asking for a higher percentage of the tax dollar. I would point out that the provinces take 75 per cent of every dollar collected in estate duty by the federal government. Yet, members of the opposition tell us that the federal government is being unrealistic. I suggest they go into a corner with a pencil and paper in order to figure out the exact implications of the new tax which is being presented.
I hear it said that small corporations are being taxed unfairly when compared with the large corporations. If there is any difference between the tax percentages applied to small businesses as opposed to large businesses, I do not understand the type of argument the opposition is using in this connection.


Some hon. Members:: Hear, hear.


Mark G. Smerchanski: We also hear criticism on the grounds that a family farm cannot be sold to an only son who wishes to carry on.

Income Tax Act and Estate Tax Act We are told that previously the exemption in connection with a gift was $4,000. Now, it is argued, it will only be $2,000. The fact of the matter is that since there is to be no tax on transfers between a man and his wife, a husband and a wife will, together, be able to give the child $4,000 as was the case previously. To say anything else is simply untrue. Yet the right hon. member for Prince Albert made statements in Montreal before Christmas and after Christmas, as well as in one of the provinces only last Friday, misrepresenting the position. For a man of his calibre and standing to misquote the facts is something with which I cannot live. If members of the opposition feel this is playing politics let them carry on in the same way, because they are going to destroy themselves and we shall not have to help them.


Some hon. Members:: Hear, hear.


Mark G. Smerchanski: The proposed new tax in its modified form is far better and more equitable than the estate tax of previous years. We were told tonight that small businesses and small corporations would be taxed out of existence. That is simply not the case. If we sit down and think out the implications of this proposed legislation, we shall find it is far better than the old estate tax. On the one hand, we have large corporations paying better than 50 per cent of their profits to the federal government.
[DOT] (9:10 p.m.)


An hon. Member:: Fifty-two per cent.


Mark G. Smerchanski: Yes, that is right. Then, when they declare dividends the tax on those dividends amounts to anywhere from 10 to 20 per cent. So, if you analyse the situation the average corporation pays something between 60 to 70 per cent of their net profits in taxes. No matter how you slice it, it ends up as a tax bait to the federal government. Hon. members opposite say that there is a hardship placed on a small business or family farm under the new proposed estate tax; but I recommend they do their homework because this is not the case under the proposed legislation.
We hear much today about federal-provincial relations. We hear of the constant approach made by the provinces for a larger percentage of the tax dollar. I will wager before all members of this house that 75 per cent of every estate tax dollar collected by the federal government goes to the provinces.
February 18, 1969

Income Tax Act and Estate Tax Act It might be advisable to have the members of the opposition suggest to the Minister of Finance how to divide the remaining 25 per cent of the federal share of the proposed estate tax; this indeed would be a very interesting experiment in financing.
It is suggested that the owner of the small family farm cannot plan for the future if unfortunately, he dies and an estate tax is levied. This bill is one of the most outstanding pieces of legislation that has come before the house because it provides for fair and equitable distribution, and hon. members cannot deny it.
I heard one member say that if an estate were worth $100,000 the estate might be called on to pay $50,000 in tax. Either the member who made that statement is completely irresponsible or he does not know what he is talking about.


Mr. Groos:: Both.


Mark G. Smerchanski: It might well be both. Coming from such an irresponsible group as this opposition, it might well be both. Let us suppose an estate is worth $100,000, and that tax is levied at $50,000. If there were one child exempted at $4,000 a year, with 12 years of proper estate planning no estate tax would be due on that $100,000 estate. If there happened to be two children the period would be reduced to 6.2 years. If there are three children it is reduced to 4.2 years. So to say that there are no provisions for estate planning in this legislation is simply not true.
Members of the opposition have been going across the country quoting what they allege to be newspaper opinions and newspaper polls.
I suggest that before they refer to polls conducted by newspapers they do their own homework and find out exactly what they are talking about in terms of dollars and cents. To do otherwise is to fly a kite, to gamble in spiritualism, instead of understanding the true facts of the situation.
From the standpoint of dollars and cents, the proposed estate tax is equitable. With regard to estate tax planning, after August 1, 1969 one can opt either to take the old rates or the new rates. This too is fair and equitable. Being given the option to pay the tax over six years is a fantastic improvement over the previous provision. This is a move in the right direction. I only wish all members of the house would do their homework, understand the implications of the new estate tax and tell their constituents the truth about
[Mr. Stewart (Cochrane) .1

the new estate tax. If that were so they would find that their constituents were pleased and delighted with the new legislation that is before us tonight.
The proposed legislation that is before us tonight is not going to affect adversely the family farm. It is not going to put the small business enterprises of this country out of business. It is going to help them. It is going to encourage and enable small family farms and business enterprises to pass on their operations to the children of the family and will levy far lower estate taxes than would be the case under the old estate tax legislation.


Stanley James Korchinski: Mr. Speaker, in discussing the estate tax bill I think we must keep in mind several things that the Minister of Finance (Mr. Benson) has in mind. I suggest that as a result of the original budget proposals the Minister of Finance is introducing very shortly, so we are told, a tax reform bill to cover not only this particular type of tax but other forms of taxation. Some of this taxation may be new; some may be old and due for revision.
In discussing this estate tax bill, we must keep one eye on the bill and one eye on other areas the particular bill touches. I believe the government was flying a trial balloon when it first introduced its tax measures early in the fall. It was testing public reaction on two fronts. First, they were testing the reaction to the imposition of estate taxes. These would include taxes on every form of inheritance. Secondly, they were testing the public's reaction to the imposition of a capital gains tax. In this connection I wish to suggest some changes to the legislation which the minister may not wish to accept at the moment but which he and his officials may consider when planning tax reforms.
[DOT] (9:20 p.m.)
When this measure was introduced we were told that monetary considerations influenced the government in introducing it. The Minister of Finance said that the provinces needed money and he was thinking of the provinces. Where else could he find this type of money except in the field of estate taxes? The minister made similar remarks inside and outside the house on a number of occasions.
Figures presented during the federal-provincial conference show that the federal government keeps only 24 per cent of all estate taxes levied. The figures show that in 1967 all
February 18. 1969	COMMONS
estate taxes amounted to $217 million. Answering the Leader of the Opposition (Mr. Stanfield) the other day, the minister said that as the result of exemptions spouses will benefit from, there will be a reduction in the amount of estate tax collected of $45 million.
I think that is correct, is it not?


Edgar John Benson: Mr. Speaker, that is the total reduction for all governments.


Stanley James Korchinski: 
Edgar John Benson: On a point of order, Mr. Speaker, since the hon. member is quoting from the tables might we not get permission of the house to have the total tables printed in Hansard along with the hon. member's speech?


Stanley James Korchinski: I am sure I don't mind. As a matter of fact it might prove the point I am making, that from $100,000 on these proposals make it a lot easier to pay your taxes. As a matter of fact, the tax was a lot higher previously than it will be now.


Mr. Deputy Speaker:: Order. I am not sure whether the minister's point of order was by way of formal request or interjection. If the minister wishes to table these documents he needs the consent of the house. I am not sure really what his intention was.


Edgar John Benson: Mr. Speaker, the hon. member was quoting from tables I had given him. I was going to ask unanimous consent of the house to have the total tables printed in Hansard along with his speech so that all can see what the figures are.


Mr. Deputy Speaker:: Is this agreed?


Some hon. Members:: Agreed.
[Editor's Note: The tables above referred to are as follows:]
ILLUSTRATIONS OF THE EFFECT OF THE ESTATE TAX CHANGES On Estates between $50,000 and $100,000
Estate of $50,000	Estate of $60,000	Estate of $80,000	Estate of $100,000	Present Law	Proposed Law	Present Law	Proposed Law	Present Law	Proposed Law	Present Law	Proposed Law$	$	$	$	$	$	$	$Estate left outright to the widow, and on her death equally amongst her adult children; where the number of children is:	One	0	0	2,600	4,800	8,332	8,700	15,160	13,200Two	0	0	((	3,000	ii	6,600	"	10,800Three	0	0	it	1,500	"	4,800	((	8,700Four	0	0	it	0	ii	3,000	ii	6,600Estate left outright by a widower:	(a) to a stranger	0	0	2,600	5,000	6,200	10,800	10,200	15,600(b) equally amongst his adult children; where the number of children is:	One	0	0	2,600	4,800	6,200	8,700	10,200	13,200Two	0	0	ii	3,000	"	6,600	it	10,800Three	0	0	a	1,500	"	4,800	"	8,700Four	0	0	tt	0	it	3,000	a	6,600Estate left in trust with the income to the widow during her lifetime and the assets divided equally amongst the children on her death; where the number of children is:	One	0	0	0	4,800	2,600	8,700	6,200	13,200Two	0	0	0	3,000	ii	6,000	"	10,800Three	0	0	0	1,500	"	4,800	"	8,700Four	0	0	0	0	"	3,000	it	6,600Estate left outright with one-half to the widow and one-half divided equally amongst the children, and on the widow's death her estate is divided equally amongst the children; where the number of children is:	One	0	0	0	0	2,600	1,500	6,200	3,000Two	0	0	0	0	ii	0	"	1,500Three	0	0	0	0	ii	0	"	0Four	0	0	0	0	it	0	a	0February 18, 1969	COMMONS DEBATES	5685
Income Tax Act and Estate Tax Act

ILLUSTRATIONS OF THE EFFECT OF THE ESTATE TAX CHANGES On Estates between $120,000 and $1,000,000
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Income Tax Act and Estate Tax Act
February 18, 1969


Stanley James Korchinski: What the minister does not realize is that according to these tax tables he is making it harder for those who are struggling, those who are setting up business and reaching the point where it may be a paying proposition. At that juncture, the minister jumps in and apparently imposes a heavier tax. If he believes that the scattering of estates is conducive to the economic improvement of the country then perhaps he should continue in this course.
Last night the hon. member for Oshawa-Whitby (Mr. Broadbent) suggested that the estate tax should be 100 per cent, except in cases involving spouses. To me that spells communism.
Although $100,000 sounds like a lot of money, it is only the paper value of many estates. Owning property is no assurance of a better life. In fact it can be a lot rougher and less rewarding than working for a wage. This is the case with many farmers. Most farms are essentially a father and son enterprise passed on from generation to generation. A farmer's assets are all tied up in one parcel.
It does not take much of a farm these days to be worth $100,000, but many farms worth that do not earn enough for the farmer to pay income tax. This is indicative of the type of money made on an operation of that size. It is indicative of the type of poverty that exists, despite a book value of that size.
We have spent considerable time in parliament passing legislation to set up economic farm units. This session we passed an amendment to the Farm Credit Act, making it possible to advance loans up to $100,000. Amendments to the Farm Machinery Syndicates Act, to provide $45,000 loans, are presently before the standing committee. In the ten years since it was established, the Farm Credit Corporation has been authorized to make loans of $27,500; this ceiling was later increased to $55,000, and only this year increased again to $100,000. These high book values are caused by inflation, by rising costs of machinery and higher taxes. If a farmer is to continue to have an economic unit he must stay with the game; in other words, he must continue to borrow.
On paper the value of a farm looks like a fantastic amount of money. The hon. member for Coast Chilcotin (Mr. St.-Pierre) last night showed that he understands the problem very well, when he quoted figures to show the type of investment that in some cases gives a return of less than 1 per cent on capital. This is what is really happening in the farming industry.
Income Tax Act and Estate Tax Act
The Saskatchewan Association of Rural Municipalities sent a letter to the Minister of Finance (Mr. Benson) in which they said the following:
Because of high land values and large land holdings which successful farming operations require. farm estates attract high estate taxes but have no liquid assets readily available to pay them. We cannot see how our national well being could be served by the breaking up of production units to pay estate taxes.
An editorial in the Western Producer of February 13 contained the following:
-thousands of farmers nearing retirement have sizeable estates when their value is based on inflated prices of land, which may have doubled in the past ten years. But while the book value of the farm has increased, its earning power has actually diminished, to the point that returns are completely out of proportion to the book value of the land. The situation has been aggravated by rising costs of production and shrinking or static prices for farm products.
The problem then, is one of acute shortage of cash. On the books, the farmer appears to be a wealthy man. in terms of what he owns; but in actual fact he may be living close to the poverty line.
Frozen assets don't pay debts, nor will they provide for the ready cash needs that arise when an estate passes from one generation to the next- such as estate tax.
The Manitoba Co-operator had a very interesting article which read in part:
[DOT] (9:50 p.m.)
It has been calculated by one source that a section farm in Manitoba with a modest machinery and livestock inventory would be subject to about $26,700 taxes on inheritance. Now tell us where a son inheriting such an estate, and intending to remain in farming, is going to get that amount to pay off the government.
In most cases he will be faced with selling off some of the land-probably resulting in an uneconomic unit-or borrowing at the current exhor-bitant interest rates and trying to survive in an industry that is already sorely beset by problems.
Despite the protestations of the hon. member for Provencher (Mr. Smerchanski) I think that pretty well illustrates that the farming community has an understanding of the situation. I believe it is unfair that this type of industry which is so depressed should be treated in a manner which would seem to indicate that the bureaucracy here in Ottawa believes there is money to be made. What are we creating by this attitude? What are we doing to all the communities that are struggling for survival? What will happen to all these little service stations and garages? A garage owner does not have to have very much to reach the figure of $50,000. There might be a few automobile parts, a building and a lot of junk outside in the yard.
February 18, 1969
5688	COMMONS
Income Tax Act and Estate Tax Act
Many of these small businesses go broke. We might ask ourselves, what we are doing in respect of these little grocery stores and so on? All these people ask for is an opportunity to operate a small business or farm, economically if possible, so that they will be independent. What should the government role be in this regard? The government should make it possible for them to operate these businesses. Instead, the government with one hand is reaching in their pockets, and with the other hand is forcing them to split up these economic units. The Farm Credit Corporation provides money for the setting up of the economic unit and then the government turns around and introduces legislation which in effect says that the economic unit must be split up. Where can the money come from? These people do not have money lying around. In the farm industry, as in business, there is always room for improvement. Therefore, the money is continually tied up.
The trouble with estate taxes is that they destroy incentive. What small businessman will spend money to improve and expand his operation if by doing so he is subjecting his property, and his heirs, to a crippling tax payable on his death? Surely, this encourages economic stagnation, rather than stimulating this growth which Canada badly needs. I think whatever may be said of Premier Thatcher in Saskatchewan, he fairly well understands the situation. For this I give him full marks. I believe he is well aware of the need for capital in that province. I think he has indicated his government is quite prepared to quit levying estate taxes. These are some of his comments as reported in the Leader Post of January 31, 1961:
The government of Saskatchewan adheres to its basic position that estate taxes in these times of inflated land values, will work a particular hardship on farmers.
The $50,000 limit is all right, but as far as I can see he hasn't changed his rates which we describe as savage.
I welcome the proposal to allow payments on estate tax over a period of six years.
This is fine, except that I wonder why interest must be collected on the balance owing. Even if estate taxes are necessary, why must interest be collected? All the government need do is wait six years and everything will be balanced. There is no need to apply interest on top of an inequitable tax. I am sure the minister might wish to look at that. The estate tax is not like the income tax under which, if there are arrears, another tax payment is due in the following year. This is


a once in a lifetime situation. If we are to make payment of the tax as easy as possible, then surely it is not essential that interest be collected. The minister will receive the same amount of revenue in the end.
In the next minute or two, before concluding, I should like to suggest that the government should consider dropping out of the estate tax field entirely. However, if the government feels it must remain in this field I believe it should consider the fact that many of these values are inflated and, therefore, the exemption should be increased to $100,000. As reported in the Toronto Telegram for February 11,	1969 the President of the
Canadian Imperial Bank of Commerce is quoted as saying:
Reducing exemptions in estate taxes would run counter to other government policies and could weaken Canada.
The article with reference to the President of the Canadian Imperial Bank of Commerce states:
His criticism of the inheritance-tax changes was part of an attack on Government tax and welfare policies which, he claimed, promote inflation and reduce the individual's incentive to work.
People in banking are familiar with the struggles of small businesses to build up assets. It is a slow, laborious process.
Small businesses, often they are family businesses, do much for the strength of Canada. Why should they be put in jeopardy when the owner passes on?
It would be "tragic" if Canadians lost their initiative because of Government policies.
I simply want to say that the government should not heed pleas like those we heard last night from the hon. member for Oshawa-Whitby (Mr. Broadbent). We heard that all inheritances other than those of a spouse, should be taxed 100 per cent. I say that is communism. At the present rate, even though it is 50 per cent, I say to the government we are half way toward communism.



BUSINESS OF THE HOUSE

Gerald William Baldwin: Mr. Speaker, may I ask the Minister of Finance (Mr. Benson), probably as acting house leader, whether we will be carrying on tomorrow with this item. The house leader suggested, I think last Thursday, that we should deal with this bill on Tuesday, Wednesday and Thursday of this week. I assume this will be the order of business.


Edgar John Benson: Yes. The intention is to carry on with this bill through the second reading stage, the committee stage and the third reading stage.
February 18. 1969



PROCEEDINGS ON ADJOURNMENT MOTION

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

Stanley Howard Knowles: Mr. Speaker, on Monday January 27 as recorded at page 4829 of Hansard and on Monday February 3 as recorded at page 5046 of Hansard I asked questions about the inclusion of optometric and other paramedical services within the provisions of the various provincial medicare plans. In particular, I asked whether the federal government intended to honour its commitments to share in these plans in keeping with the amendment made to section 4 of the Medical Care Act in 1966.
When I asked my question on January 27 the answer of the minister was that he did not think there was yet sufficient consensus for this to be done. When I asked my question on February 3, with particular reference to Manitoba, the minister said categorically that the federal government was not going to share in the cost of optcmetric and chiropractic services being included by Manitoba in its medicare plan. One does not like to use the word "betrayal" very often, but I am afraid that is the word which applies in this case.
[DOT] (10:00 p.m.)
In 1966 when we were adopting the Medical Care Act we insisted through a very long debate that there be a provision written into the act whereby other services could be added such as optometry. In due course, an amendment was made. As a matter of fact, it was made by the government, the terms of which are quite clear, namely that there can be other services. The wording appears in subsection (3) of section 4 of the Medical Care Act which says in part "in the application of this act a plan established by any of the legislatures of a province", and I stop there to emphasize the words "a province" because that is the key phrase. It was not necessary to have a number of provinces; rather if any one province sought additional services this could be arranged by agreement between that province and the federal government.
Lest there was any misunderstanding about that interpretation questions were put to the
Proceedings on Adjournment Motion minister by several of us, notably by one T. C. Douglas, who will be coming here in a couple of days as the hon. member for Nanaimo-Cowichan-The Islands. He was then the member for Burnaby-Coquitlam. His question appears on pages 10764 and 10765 of Hansard for December 6, 1966. Let me read the part of his question which had reference to the amendment to which I just referred. This is it:
I take it this means that the governor in council, on the recommendation of the minister, can extend paramedical services in a plan in a particular province even though other provinces have not asked for a similar extension. In other words the minister would be free, under this amendment, to accede to the request of a particular province that wanted to add to the services which are provided under this legislation, and it would not have to wait until a majority or a specified number of provinces, indicated their desire to have these paramedical services included.
The question was clear. The emphasis was on "a province", by itself. A little later on the same page the then Minister of National Health and Welfare, the present Minister of Manpower and Immigration (Mr. MacEachen) was equally clear when he said this:
Mr. Chairman, I think the construction the hon. member for Burnaby-Coquitlam has put on the proposed amendment is correct, namely, that it would be possible for one or any number of provinces to admit any health services. I want to assure the committee that the amendment proposed is not a pious wish.
A week or so later the office of the Prime Minister, then Mr. Pearson, wrote to the President of the Manitoba Optometric Society, Mr. Roy Brown of Virden, Manitoba, and spelled it out to him that the amendment which had been passed to this bill made it possible for an agreement, and I quote, "between the federal government and a provincial government, to bring under the plan, at a later date, additional health services, including optometric services".
Thus it is in the act, that it can be done if one province requests it. The Minister of National Health and Welfare at the time made it clear that it was not necessary to wait for a number of provinces, a majority, a consensus or anything of that sort. In fact, the word "consensus" was not mentioned. The government is now refusing to honor its commitment.
The two provinces that are already in the plan, British Columbia and Saskatchewan, found that they had to include optometry. The doctors cannot handle the load. Manitoba, after assessing the situation carefully, is faced with the fact that it too has to include
February 18, 1969

Proceedings on Adjournment Motion optometry in the plan, yet the federal government still says it is not going to share in this cost.
This is a repetition of what was done to the provinces under the hospitalization scheme in respect of mental health services and tuberculosis. The provinces were left in the position where they had to carry their own costs despite the fact that we were being given a piece of legislation that was supposed to be all inclusive. I submit this is quite unfair, and a clear case of the government breaking its commitment when it does not now include these other services which provinces like British Columbia, Manitoba and Saskatchewan are requesting, not to mention New Brunswick and perhaps one or two others.
In light of the commitment made by the former Minister of National Health and Welfare, and in the light of what is stated in the act, I call upon the government not to take the negative position it is now taking. The Minister of National Health and Welfare (Mr. Munro) said the other day that he would put the emphasis on getting all of the provinces in. Mr. Speaker, you do not get all the provinces in by not keeping the word of the government, and I call for that word to be kept.


Mr. Robert Stanbury (Parliamentary Secretary to Secretary of State):: Mr. Speaker, the Minister of National Health and Welfare (Mr. Munro) advises me that the possibility of including the services of other health professionals, including optometrists, under the Medical Care Act has been discussed at various federal-provincial conferences of ministers of health. The view of the federal government is that we should not yet consider extending benefits when all provinces have not yet made clear their intentions regarding participation in the medical care plan.
This is not in any way a breach of commitment. Our present efforts are directed toward obtaining for all Canadians the benefits of the Medical Care Act. The difficulty with determining the extent of provincial requests for the inclusion of optometry lies in the fact that some provinces which might unofficially support its inclusion officially oppose in one form or another the Medical Care Act itself. However, some of the provinces certainly have indicated interest in the inclusion of optometry under the plan. It would seem likely that this inclusion might be expected to be speedily accomplished once all provinces have indicated their intentions with regard to the basic package under the Medical Care Act, which was passed almost unanimously with support from all parties in this house.



TRANSPORT-DISCRIMINATORY REDUCTIONS IN EXPRESS ASSOCIATION RATES

John Stratford Burton: Mr. Speaker, on Wednesday, February 12 I addressed the following question to the Minister of Transport (Mr. Hellyer):
Will the minister undertake to investigate recent rate reductions by the Express Transport Association in western Canada which appear to discriminate against Regina and Saskatoon.
Tonight I am disappointed that I do not see in the house either the Minister of Transport, the Minister without Portfolio with special responsibilities in the field of transport, or the Minister without Portfolio, the hon. member for Saskatoon-Humboldt (Mr. Lang) who has a special interest in this subject. I presume that the parliamentary secretary to the President of the Privy Council (Mr. Forest) will answer the question and probably slough off any responsibility for this particular matter.
The Express Transport Association is an independent body acting on behalf of Algoma Centre Railway, Northern Alberta Railway, Ontario Northland Railway, Railway Express Agency Incorporated, Canadian National Railways and Canadian Pacific Railway. In December, the Express Transport Association and its member companies introduced freight rate reductions on bulk and individual shipments from Toronto and Montreal to western Canadian cities including Winnipeg, Calgary, Edmonton and Vancouver, but not including Regina and Saskatoon. The rate reductions which were introduced amounted to from 13 per cent to 28 per cent depending on the type of shipment. For example, to quote some of the effects of these new rates, a 200 pound shipment from Montreal to Swift Current can be shipped to Winnipeg and then reshipped to its destination for $13.45. However, if the same order were to be shipped to Regina and then shipped to Swift Current the cost would be $16.82, a difference of 25 per cent which is incomprehensible and can only be classified as discrimination against Regina and Saskatoon, as distribution points in western Canada.
In addition, it might also be noted that the same 200 pound article can be shipped to Alberta cities, that is Calgary and Edmonton, for $11, which is $2.90 or 25 per cent less than it would cost to ship the same goods to Regina alone. I can only conclude that this is discrimination not only against Regina and Saskatoon, but against the Province of Saskatchewan.
February 18, 1969

[DOT] (10:10 p.m.)
Protests were entered by the Regina Chamber of Commerce, the Saskatoon Board of Trade, the Saskatchewan Chamber of Commerce, my colleagues, the hon. member for Saskatoon-Biggar (Mr. Gleave) and the hon. member for Regina Lake Centre (Mr. Benjamin) and myself. I understand there were other protests as well. On the basis of the early acknowledgement of these protests there was some cause for hope. We waited until February 7, when a decision was reached, but that decision was disturbing, as quoted in the Leader Post of February 10:
Rail express rate reductions already granted to other major cities in western Canada will not be given to Regina and Saskatoon, the Express Transport Association of Canada announced Friday.
G. A. Shaw, general manager of E.T.A., said in a telegram to Regina Chamber of Commerce and Saskatoon Board of Trade that carriers are not prepared to reduce rates to Regina and Saskatoon in shipping from Toronto and Montreal,
In addition, I myself received an acknowledgement of my protest regarding action taken by the Express Transport Association in the following words:
The question of including Regina and Saskatoon in our existing list was given serious consideration by member companies. However, I regret to advise that we are not prepared to add them to our listing at the present time.
Further protests were sent by the Regina Chamber of Commerce, the Saskatchewan Chamber of Commerce and other bodies. In addition, I added my word of protest in a letter dated February 14. In my letter, I stated:
I must say I find this action most disappointing and disturbing. For my own part I cannot condone this type of discrimination against Regina and Saskatoon and I assure you I do not intend to remain silent on the question. It is this type of action on the part of railway companies which has resulted all too often in a loss of favour among the public.
Furthermore, I must say that I was disturbed by the cavalier attitude in your letter to myself and in other pronouncements on this subject. At no time have I seen a rationale or explanation of the new rate structure as it affects Regina and Saskatoon.
I would point out to you that while the transportation legislation approved by parliament in 1967 gives the railways more freedom of action in rate setting, it is now incumbent upon the railways to exercise some responsibility in the use of discretionary powers. Should the railways continue policies which have an effect such as is the case with Regina and Saskatoon in this instance, it will soon bring pressure to place more restrictions on railway rate making power.
DEBATES	5691
Proceedings on Adjournment Motion
I would urge the government to intervene to put an end to this discrimination and make it clear to the railways that this type of discriminatory practice and policy will, if continued, result in a reconsideration of the powers allowed to railways under the legislation passed in 1967.


Mr. Yves Forest (Parliamentary Secretary to the President of the Privy Council):: On
behalf of the Minister of Transport (Mr. Hel-lyer), who cannot be here tonight, I wish to inform the hon. member for Regina East (Mr. Burton) that the rate reductions referred to were made by the Express Transport Association, effective November 11, 1968, and are applicable to shipments weighing 101 pounds up to 10,000 pounds. The justification given by the Express Transport Association is set out in the following telegram sent by its manager on February 14, 1969 to the Regina Chamber of Commerce and the Saskatoon Board of Trade:
Please refer to exchange of correspondence in respect to Express Transport Association rates between Montreal, Toronto, western Canada. These rates are an experiment to attempt to attract long haul traffic not presently handled by express carriers. For this reason the number of points were kept to a minimum; the rates as well as the results are under review to determine whether they will be continued, extended, modified or cancelled. In the meantime it is not the intention to add any further points to the tariff.
The matter is currently being looked into by the Canadian Transport Commission and as soon as the Minister of Transport has received a report from that body he will be glad to make the house aware of its contents.



AIR TRANSPORT-CASTLEGAR, B.C.- CONSULTATION BEFORE CHANGE IN SERVICE

Mr. Randolph Harding (Kootenay West):: Mr. Speaker, last Friday I directed the following question to the Minister of Transport, as reported at page 5522 of Hansard:
Were the municipalities involved in the operation of the Castlegar airport and other airports consulted by the Canadian Transport Commission before the decision was made to authorize B.C. Air Lines to operate local services on C.P.A.'s southern run?
Then, Your Honour suggested that if there were some urgency about the question it could be discussed at the time of adjournment. The matter is not only urgent, it is of vital importance to my area and I have therefore taken this opportunity to expand on this very important problem.
February 18, 1969
5692	COMMONS
Proceedings on Adjournment Motion
It seems to me that when, any major change in the transportation facilities affecting an area is contemplated, then it is just plain commonsense that the people of the area affected be consulted as to the advisability of the proposed changes. I understand that the municipalities of the area were never consulted about these changes or given an opportunity to express their views on the proposed changes in service.
Transportation services are vital to the growth of all areas. A cutback in any type of transportation service can do great harm to a district unless other forms of transport are substituted. Today, air transport is growing rapidly. There is expansion everywhere, for air travel is coming into its own. However, in the proposed schedule for travel and facilities as outlined for the Castlegar airport by the air transport commission, there is every indication of the present service being drastically curtailed. The schedule certainly was not drafted with a view to giving better service to an area with over 70,000 in population and which is expanding rapidly.
When the Canadian Pacific Railway closed out its passenger service over the Kettle Valley railway it indicated that it would provide good passenger service by air. There was really an obligation on Canadian Pacific and it did provide a fairly good service to the area. C.P.A. used a DC-6 which carried 84 passengers. It made two trips daily to Vancouver. It gave our district direct service to Calgary. This aircraft was able to carry express and freight where needed in fairly substantial amounts. The number of passengers leaving the Castlegar airport was on the increase, and sometimes the DC-6 had a full complement of passengers. This C.P.A. service provided meals to the passengers on the Vancouver and Calgary rims. This necessitated, of course, a very fine stewardess service on this C.P.A. run.
Now the air transport commission has offered our area an inferior service as far as I am concerned. We are to have service from B.C. Air Lines which will use 18-passenger planes. They will make three return trips per day to Vancouver and two trips to Cranbrook. We will lose our through service to Calgary. I understand there is no meal service, and of course there are no stewardesses on board. The carrying capacity out of Castlegar will never be able to meet the passenger demand. There will be lengthy waiting periods at Cranbrook for P.W.A. flights to Calgary.


In addition to this, P.W.A. flights to Cranbrook will bypass the Castlegar airstrip with the Boeing 737, 95-passenger plane. The smaller 18-passenger planes are extremely limited in the amount of freight and express which can be handled. It is expected that they can provide a more continuous service to the airport than the larger planes, although the increased percentage of landings might well be disputed.
On the whole, the picture of air transport from Castlegar would seem to have been adversely affected by this move. Even the limousine service from the Castlegar airport will be affected. Now, limousine service runs to Nelson, Trail and Castlegar, and this service caters to a DC-6 capable of carrying 84 passengers. What kind of service will be provided for an 18-passenger plane which is partially loaded before ever reaching Castlegar? The answer is obvious; the limousine service will have to cease, and the air carrier service will receive another black eye.
Even the airport committee has been bypassed by the commission. Plans were in the offing to increase the capacity of the airport to handle 100 passengers at a time. An expenditure of $150,000 was planned. This expansion will most likely have to be cancelled.
[DOT] (10:20 p.m.)
Time does not permit me to give all the details or background of the need for increased service; we do not want decreased service. These few remarks should show the need for immediate action and review by the Department of Transport. It is much easier to prevent a foolish error than to correct it once it has been made.
I urge that the transport department hold an immediate and complete review of the situation. May I suggest to the Minister of Transport that the following points should be given prompt attention. First, a formal hearing in the area concerning the proposed changes should be held. Second, a check on the carrying capacity of the aircraft to be used by the proposed carrier should be carried out. This point relates to both passengers and express. We should see if the capacity is inadequate. Third, there should be an examination of retrogression of service, of the lack of direct access to Calgary, of extended waiting periods at Cranbrook for aircraft to the east, and so on. Fourth, there ought to be an examination of the feasibility of limousine service at these centres. Will such service, which is dependent in part on passengers
February 18, 1969	COMMONS
from 18-seat aircraft, be feasible? Fifth, the loss of revenue to Castlegar Airport because of proposed changes should be investigated. And, sixth, there should be a study of the drastic economic effects resulting from the fact that over 70,000 citizens of the area in question do not have adequate air transportation.
I urge the Department of Transport to look into this problem without delay. I trust that the local municipalities will have an opportunity to give their views on this all important matter of air transportation.


Yves Forest: Mr. Speaker, the Minister of Transport reports

DEBATES	5693
Proceedings on Adjournment Motion that the Canadian Transport Commission gave public notice of the application of B.C. Airlines to operate local services on Canadian Pacific Airlines' southern route. The municipalities were notified in this manner and could have sent representations to the Commission for examination. The Minister of Transport is investigating further the points raised by the hon. member and will report his findings later.


Mr. Speaker:: The motion to adjourn the house is deemed to have been adopted. The house stands adjourned until two o'clock tomorrow afternoon.
Motion agreed to and the house adjourned at 10.20 p.m.



VOLUME V


[Stage Direction]
Tuesday, January 21, 1989