1971-10-26

ROUTINE PROCEEDINGS


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, under Standing Order 41(2) I should like to table copies in English and French of the communique issued at the conclusion of the visit of Premier Kosygin to Canada.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to ask the right hon. Prime Minister a question or two about the communique he has just tabled which says, among other things, that "it is the intention of both sides to continue furthering, jointly and separately . . . the reduction of military expenditures". In view of the fact that the White Paper on Defence envisages some increase in our military expenditures, is the government of Canada here speaking about reducing the military expenditures of other countries or does this mean that the government of Canada would be prepared to reduce our military expenditures proportionately to the reductions in military expenditures of certain other countries?


Pierre Elliott Trudeau: Mr. Speaker, the Leader of the Opposition will notice that this is put in the context of the NATO approach to mutual and balanced force reductions and also the Soviet idea of a conference on European security. The statement there is in line with our posture at NATO, a posture made known in the House, that if we can reach some agreement to de-escalate the arms race or even, in the European situation, to reduce military commitments, Canada would be interested in participating in such discussions. It is impossible to know how this will end up. That is why we are in our white paper taking a position of our own, but of course our military posture in Canada would be subject to any over-all agreement we reached.


Robert Lorne Stanfield: Mr. Speaker, I have a supplementary question arising from the Prime Minister's reference to the NATO discussions and the possible discussions about European security as well as the reference in the communique about the importance of reducing troops on both sides in that area. Does this envisage the withdrawal of Canadian and United States troops from the European theatre?


Pierre Elliott Trudeau: It is much too early, Mr. Speaker, to know what the posture of the NATO countries would be in that regard. Only a few weeks ago the NATO countries named Mr. Brosio as an explorer to see to what degree the other side, the Warsaw Pact countries, is prepared to engage in serious negotiations. Certainly government policy has not been established as to whether this would end with a complete or partial withdrawal of some of the American and Canadian forces over there now.


Robert Lorne Stanfield: It
does not appear to mean anything very precise but I would like to ask the Prime Minister a very precise question with regard to the reference in the communique emphasizing respect for independence, national sovereignty, territorial integrity and non-interference in internal affairs of other countries. I should like to ask my right hon. friend whether this arose following any discussion, for example, of the so-called Brezhnev doctrine under which the right was asserted to intervene in other countries to protect and preserve Communist governments in those countries and whether the Prime Minister regards the statement in the communique as a repudiation by the U.S.S.R. of the so-called Brezhnev doctrine invoking, as it does, the right to intervene in the affairs of other Communist states?


Pierre Elliott Trudeau: I would not be hopeful enough to use the word "repudiation" which the Leader of the Opposition used. Certainly we indicated that we did not accept the Brezhnev doctrine, and the meaning of the communique as it reads to us is as described by the Leader of the Opposition. Of course we do not know how the other side will implement this, but we are hopeful.


Mr. Woolliams:: Oh, oh!


Pierre Elliott Trudeau: Ha, ha! We are hopeful that this joint statement indicates indeed a step in the direction that the Leader of the Opposition and we desire.


Mr. Speaker:: The hon. member for York South.

October 26, 1971
Inquiries of the Ministry


Mr. Lewis:: Mr. Speaker, I want to deal with some other aspects of the communique.


Mr. Speaker:: Order, please. Is the hon. member's question supplementary, because there is a request for a supplementary question on the part of the hon. member for South Shore?


David Lewis: I will leave it to Your Honour. It is supplementary in the sense that it deals with the communique, but perhaps your Honour might want to allow the other supplementary question first.


Mr. Speaker:: The Chair might allow the hon. member for South Shore a supplementary question and then we will go to the other aspect of the communique to which the hon. member wishes to allude.


Mr. Lloyd R. Crouse (South Shore):: My question deals with the tabling of the Canadian-Soviet communique and I wish to direct it either to the right hon. Prime Minister or to the Minister of the Environment. The communique that has been tabled does not mention the fisheries problem which is troubling Atlantic Canada, despite the assurances given us by the Minister of the Environment as well as by the Prime Minister that this matter was discussed. Was there discussion about the excessive overfishing by the Russian fleet off the coast of Atlantic Canada? If so, was any agreement reached and when may we expect this agreement with regard to the conservation of our fisheries resources off the Atlantic coast to be tabled?


Hon. lack Davis (Minister of Fisheries):: Mr. Speaker, a representation was made, an emphatic one, and there was some discussion of the matter. The Premier of the U.S.S.R. did say that he would take the matter under careful consideration.


David Lewis: Mr. Speaker, I would like to ask the Prime Minister some questions arising out of the language of the communique. It is perhaps necessarily general but it would be useful if he could elucidate what some of these statements mean. The communique refers to working groups of the mixed commission between the two countries concentrating on sectors of industry in their discussions which offer "the best prospects for further co-operation and the development of trade." Is it possible for the Prime Minister, or any other minister-in view of the wave of the arm that I noticed the Prime Minister make-to tell us what sectors of industry fall into that category?


Hon. Iean-Luc Pepin (Minister of Industry. Trade and Commerce):: Mr. Speaker, these groups operate under the agreement on Industrial application of Science and Technology. Already there are six bilateral working groups in existence. One is on oil, one on gas, one on construction,

one on hydro power, one on non-ferrous metals, and there is another one I cannot recall at the moment.


Mr. Baldwin:: On communications.


Jean-Luc Pepin: The idea is for these groups to get together- each has already met at least once-is to try to identify areas where we have complementary technology and to see if trade opportunities can develop in these areas. Already on the Canadian side prefabricated homes and pulp and paper machinery have been identified as products that could sell in the Soviet Union. This is the purpose of the agreement and both sides give a lot of importance to it.


David Lewis: May I ask a supplementary on the other side of the coin. In another part of the communique it was stated that Canada was prepared to facilitate the importation into Canada of goods from the Soviet Union, "including machinery and equipment," and that the Soviet Union would do likewise for Canadian exports. Would the minister be able to inform the House at this stage what areas of machinery and equipment are under discussion, if those areas have in fact been identified?


Jean-Luc Pepin: That is the name of the game, Mr. Speaker. The Soviet representatives are supposed to identify these areas for their government.


David Lewis: Mr. Speaker, there are a good many aspects of this communique that are not very clear. I am not saying this critically, but it is a fact. I would like to ask either the Prime Minister or the minister of pollution-


Some hon. Members:: Oh, oh!


David Lewis: -the Minister of the Environment-looking across I could only think of pollution, Mr. Speaker, I could not think of the exact title-


Mr. Guay (St. Boniface):: You really got polluted, didn't you?


David Lewis: -to inform the House what machinery has in fact been set up or what machinery is in fact planned to carry out the statements in the communique with regard to joint plans and joint action against pollution in the Arctic and general action to protect the environment in the Arctic? Has there been any machinery already set up? Is additional machinery contemplated? Generally, what is involved in that statement?


John (Jack) Davis: Mr. Speaker, I am not aware of machinery set up during the course of these recent consultations, but I am sure either the Secretary of State for External Affairs or the Prime Minister could elaborate on this subject.


Mr. Speaker:: Order, please. I will recognize the hon. member for York South for one more supplementary and then recognize the hon. member for Temiscamingue.
October 26, 1971


David Lewis: Then may I ask whether the Prime Minister or the Secretary of State for External Affairs can inform us of what machinery there is with respect to fighting pollution in the north?


Hon. Mitchell Sharp (Secretary of State for External Affairs):: Mr. Speaker, we have been having continuous discussions with the Soviet Union and with the United States on the question of pollution of the Arctic and we have established machinery for continuation of these talks. It does not seem to us very likely that we will be able to have a treaty. Therefore we are working toward co-operation in controlling pollution in the Arctic.


Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I have a supplementary question for the Minister of Industry, Trade and Commerce.
The Minister has just said that six different groups are now studying trade possibilities with the USSR and mentioned that we could export prefabricated houses, heavy machinery, etc, to that country. On the other hand, on the basis of the studies that have been made, what can we buy from the Russians that we cannot produce in Canada? Can the Minister mention any one product?


Jean-Luc Pepin: It is not the government's policy to limit imports to those products that we cannot produce ourselves? To give concrete exemples, I will say that Canada recently bought heavy water from the USSR in order to meet the needs of Atomic Energy of Canada Limited. Also Canadians may buy raw cotton from the USSR. Likewise there is a possibility to sell turbines in British Colombia.
The Soviets do for the Canadian market exactly what we do for the Soviet market, that is, they explore the needs of the Canadian market as we explore those of the Soviet market.


Mr. Jack McIntosh (Swift Current-Maple Creek):: I wish to address a supplementary question to the right hon. Prime Minister. As a result of the statement he made today I would ask if Canada still belongs to the NATO and NORAD organizations?


Pierre Elliott Trudeau: I think so, Mr. Speaker.


Mr. Diefenbaker:: I am not so sure either after that answer.



THE CANADIAN ECONOMY


Mr. Lincoln M. Alexander (Hamilton West):: I have a question for the Prime Minister related to a contingency
Inquiries of the Ministry
plan for wage and price controls. As the Minister of Labour has been holding discussions with the CLC and the CNTU, and in light of recent indications of labour and management's willingness to consider and consult on the development of a contingency plan of wage and price controls, has the government decided to present a specific plan to labour and management for their consideration?


Pierre Elliott Trudeau: Mr. Speaker, I think this news item, which was only brought to my attention this morning, is a good sign and we are happy if labour is now prepared to consider such a plan. I have said repeatedly that the government's policy would be to have a plan of wage and income control only if necessary. As I just said two days ago, there has been no approach to business or management or the provinces for the application of such a plan at this time.


Lincoln MacCauley Alexander: In light of the fact that labour seems to accept its responsibility and appears to be equally concerned about the state of the economy, can the Prime Minister advise the House at this time if the government is prepared to accept the five criteria for a fair income, policy that were stated by Mr. Ed Finn?


Pierre Elliott Trudeau: I am not aware of the policy stated by Mr. Ed Finn, Mr. Speaker, but I shall look into it.	^


An hon. Member:: You are not very sharp today, are you?


Mr. Robert Muir (Cape Breton-The Sydneys):: I have a supplementary question for the Prime Minister, Mr. Speaker. Can the Prime Minister assure the House that any further co-operative development of a contingency plan of wage and price controls will be undertaken by the Department of Labour, the Department of Industry, Trade and Commerce and the Department of Finance rather than by the discredited Prices and Incomes Commission headed by one Young?


Mr. Speaker:: Order, please. The right hon. member for Prince Albert.



PENITENTIARIES


John George Diefenbaker: Mr. Speaker, my question is directed to the Solicitor General and concerns the riots in Prince Albert penitentiary in the fall of 1970. Following this there was an investigation by officials of the penitentiaries department and six guards or warders were suspended. They appealed by way of grievance. Is the minister now in a position as a result of independent investigation which took place, to say whether the six who were condemned by him and in the original investigation have now been cleared of all negligence? [Translation]


Hon. Jean-Pierre Goyer (Solicitor General):: Mr. Speaker, as the right hon. member knows, there was an appeal from the sentences rendered in the first instance which

October 26, 1971
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recognized negligence by the employees. Following the appeal, the independent commission rendered a decision that there had not been negligence.


John George Diefenbaker: Mr. Speaker, will the minister table that report in the House? Also, since in that report it was found that there had been no negligence and that the responsibility was that of penitentiary headquarters in Ottawa, is the minister now prepared to withdraw the statement he made in the House to me on January 22, 1971 when he said:
-six penitentiary officers were suspended following the inquiry, because it revealed circumstances where these officers had been negligent to say the least.
He also said on January 21 that the officials in Ottawa who were responsible-


Mr. Speaker:: Order, please. I suggest to the right hon. gentleman that it might be difficult from a procedural standpoint to quote in detail the references which the right hon. gentleman wants to use in support of his question. Perhaps the question might at this point be asked of the minister.


John George Diefenbaker: Mr. Speaker, the minister stated in the House that he agreed there had been negligence by the six guards. He also stated that there had been no responsibility resting on the penitentiary officials. Now the report finds that those allegations on his part had no foundation.


Mr. Speaker:: Order, please.


John George Diefenbaker: I am asking, will he withdraw those allegations?


Some hon. Members:: Withdraw!


Jean-Pierre Goyer: Mr. Speaker, following the first investigation, it was established that there had been negligence and the penitentiary authorities decided in favour of suspending the guards. At that time, I think the decision was based upon the results of the first investigation.
The second investigation revealed that there had not been any negligence and these people were reinstated.
Would the right hon. member want some change- [English]


John George Diefenbaker: Mr. Speaker, the minister has not been gracious enough to withdraw the criticism he made of the officers. I ask him to table the report so we can find out exactly what took place and how wrong he was in the petty attitude he took.


Mr. Speaker:: Order, please.



PROPOSED TAKE-OVER OF SUPERTEST BY BRITISH PETROLEUM-POSSIBLE GOVERNMENT ACTION-ACQUISITION BY PANARCTIC OILS

Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, may I direct a question to the Minister of

Industry, Trade and Commerce who is also Acting Minister of Energy, Mines and Resources. In view of the action which the government took in preventing the take-over of Denison Mines and Home Oil, is the government planning any measures to deal with the proposed take-over of the last major Canadian-owned distributor of petroleum products, Supertest, by British Petroleum Limited?


Jean-Luc Pepin: Mr. Speaker, this situation has been under study and an announcement will be made in due course by the minister or somebody speaking for him.


Thomas Clement (Tommy) Douglas: In view of the statement made by Mr. Heatherington, President of Panarctic Oils that he hopes that his organization will become a fully integrated oil company, is the government carrying on any discussions or will it carry on discussions with Panarctic Oils to see about the possibility of acquiring Supertest as a distributor for the products of Panarctic Oils Limited?


Jean-Luc Pepin: Mr. Speaker, I am not aware of any particular discussions between Panarctic and Supertest. I will find out about it and, if such conversations have not been held, suggest that they might take place.


Thomas Clement (Tommy) Douglas: Since this matter is to be dealt with by the shareholders on November 2, am I to assume from the minister's statement that the government proposes to stand idly by and watch this Canadian company being taken over?


Mr. Speaker:: Order, please. The hon. member for Sarnia-Lambton.



CROWN CORPORATIONS


Mr. Jack Cullen (Sarnia-Lambton):: Mr. Speaker, I have a question for the Minister of Supply and Services. Did the minister summon the Chairman of Polymer Corporation and the president of Polymer Corporation to come to Ottawa in order to discuss the current reduction in the work force, and has the minister anything to report on the results of the said meeting?


Mr. Maclnnis:: He must have, or the hon. member would not ask the question.


Some hon. Members:: Hear, hear!


Hon. James Richardson (Minister of Supply and Services):: Mr. Speaker, it is not normal practice for the government to interfere directly in management decisions. However, in view of the seriousness of the position for the employees at Sarnia, I called the chairman and the president of Polymer to Ottawa and met with them, this morning. I am pleased to be able to report to the hon. member and the House that management have been able to cancel 35 notices of termination that were issued earlier this month. Further, Mr. Speaker, subject to the number of hourly paid employees who accept early retirement,
October 26, 1971

management are hopeful of being able to cancel an additional 25 notices of termination. Finally, Mr. Speaker, I have been assured that there are no current plans to give further notices of termination to either salaried or hourly paid employees.


Mr. Mac T. McCutcheon (Lambton-Kent):: May I ask the
minister if the government is thinking of or prepared to give a grant to cover wages and benefits for those who are not fortunate enough to be kept on?


James Armstrong Richardson: Mr. Speaker, as I have stated before, the government has a number of programs. What I have done is establish a group of senior officials to work closely with Polymer to maximize the benefits of various government programs, such as the employment support bill, the winter plan program and a number of other programs possibly PAIT, which can help Polymer to maintain employment.


Mr. Speaker:: Order, please. I suggest to hon. members that we are running short of time. The Chair will recognize the hon. member for Lambton-Kent for one last supplementary and then try to go on because very soon we will have to call orders of the day.


Maclyn (Mac) Thomas McCutcheon: Thank you, Mr. Speaker. I wonder if I could ask the minister to answer my question.



NATIONAL DEFENCE


Mr. Craig Stewart (Marquette):: My question is for the
Minister of National Defence. Can the minister indicate to the House whether the government has any plans or is contemplating an expanded role for Camp Shilo in the training of the forces of our NATO allies and, if so, have any agreements been signed?


Hon. Donald S. Macdonald (Minister of National Defence):: Mr. Speaker, while no agreements have been signed, as the hon. member knows an investigatory team has been in Shilo for the past several weeks looking at the possibility of using it for artillery training. It will depend, of course, upon negotiation of an agreement. At the moment the matter is in the exploratory stage but we are hopeful.



RECONSIDERATION OF USE OF SUFFIELD MILITARY RESERVE BY BRITISH ARMY IN LIGHT OF ECOLOGICAL REPORT

Mr. Steven E. Paproski (Edmonton Centre):: I wish to direct a question to the Prime Minister. In light of the government's negative ecology report on the possible consequences of the British troop exercises in southern Alberta next spring, is the government taking a second look at going ahead with these tests and are arrangements with the British finalized?
Inquiries of the Ministry


Donald Stovel Macdonald: If I can answer on behalf of the Prime Minister, Mr. Speaker, the report rather than being negative indicated that with the exception of one or two sites on the Suffield reserve it could be effectively used for this purpose and it will be so used.


Hon. W. G. Dinsdale (Brandon-Souris):: I have a supplementary question for the Minister of the Environment. In view of the statement he made on October 8 that the report would be tabled, is the minister now in a position to do so?


John (Jack) Davis: I expect it will be tabled later this week, Mr. Speaker.



UNITED NATIONS


Mr. Andrew Brewin (Greenwood):: My question is for the
Secretary of State for External Affairs. In light of the vote at the United Nations for the recognition of the People's Republic of China as the government of China with a permanent seat on the Security Council, will the minister say whether he accepts the view advanced by some quarters that Taiwan has been expelled or whether it is not the situation that Taiwan was never a member of the United Nations?


Mr. Speaker:: Order, please. It seems to me that the question as asked is academic.



EXPULSION OF TAIWAN-CANADIAN ACTION TO RESTORE REPRESENTATION

Mr. S. Perry Ryan (Spadina):: My question is for the
Secretary of State for External Affairs. Now that Canada has voted at the United Nations to expel the de facto government of Taiwan from that body, what initiatives does the government intend to take to help restore proper representation at the United Nations for the 14 million people in Taiwan?


Mitchell William Sharp: Mr. Speaker, there is no government of Taiwan as far as I am aware. The government at Taipei claims to be the government of China and for that reason walked out of the General Assembly when the People's Republic of China was seated in the China seat.


Sylvester Perry Ryan: Canada did not take that position for 20 years-


Mr. Speaker:: Order, please.


Sylvester Perry Ryan: -and we have had an embassy of Taiwan in Ottawa.


Mr. Speaker:: Order, please.


Sylvester Perry Ryan: Will the government-

October 26, 1971
Inquiries of the Ministry


Mr. Speaker:: Order, please. The hon. member has been called to order and he should resume his seat.



ATOMIC ENERGY


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I have a question for the Minister of Industry, Trade and Commerce.
In view of the fact that hundreds of millions of dollars have been spent for the Glace Bay heavy water plant, can the minister tell us whether that plant has effectively produced since 1969 heavy water for sale in Canada?


Jean-Luc Pepin: Mr. Speaker, there are few people in Canada unacquainted with the Deuterium situation.



LABOUR CONDITIONS


Mr. Georges Valade (Sainte-Marie):: Mr. Speaker, my question is related to unemployment and I should like to direct it to the responsible minister. In his absence, however, I shall put it to the Prime Minister.
Could he tell us whether the government has any statistics indicating that the unemployment rate, in Montreal, could reach the same level as that in the Maritime provinces, that is 11 or 12 per cent during the coming winter? If not, what is the government unemployment rate forecast for this winter in Montreal and in the whole province of Quebec?


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


Georges-J. Valade: Mr. Speaker, I wonder if the Prime Minister really understood that I was asking him the question in the absence of the minister responsible.


Mr. Speaker:: Of course, the hon. member can ask his question, but he cannot insist on getting an answer.


Georges-J. Valade: I would like to ask a supplementary question, Mr. Speaker.
Would he tell the House whether he has data indicating that the unemployment rate will reach 11 or 12 per cent next winter in Montreal or in Quebec?


Mr. Speaker:: The hon. member is only repeating the question he asked a moment ago.



NATIONAL SECURITY


Eldon Mattison Woolliams: I wish to direct a question to the Solicitor General with regard to security. Can the minister tell the House at this stage how many members form the new security force and who is in charge of that force?


Jean-Pierre Goyer: I am unaware of the existence of such a security force, Mr. Speaker.


Eldon Mattison Woolliams: How many people form this security group, for whom do these analysts work and to whom are they accountable for their actions when they analyse the reports which the minister discussed in the House last week?


Jean-Pierre Goyer: Mr. Speaker, I will have to inquire. I am not primarily concerned about the number of employees in the department.


Eldon Mattison Woolliams: With the greatest of respect, Mr. Speaker, I asked a very simple question. The Solicitor General is in charge and I am sure he has the answer. I am asking to whom these analysts are accountable and who is in charge? The minister hired them. He advertised for them. They are to do the analysing of this work. Who is in charge of this group?


Jean-Pierre Goyer: Mr. Speaker, I have already answered about employment. The Public Service Commission, through competitions similar to those held in any other department, looks after the matter.


Eldon Mattison Woolliams: I rise on a point of order, Mr. Speaker. I am asking to whom these analysts are accountable and who is in charge. The Solicitor General will not give these answers because he is hiding the facts from the House and the country.


Some hon. Members:: Hear, hear.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please.


EXTERNAL AFFAIRS
Robert Lorne Stanfield: wish to ask the Prime Minister a question arising from the suggestion that a possible reduction in Canadian military
October 26, 1971

expenses might arise from the European security conference in respect of NATO obligations and this sort of thing. Has the right hon. member any indication that the U.S.S.R. is prepared to discuss at a European security conference a reduction in military expenditures, a reduction of troops, or simply a reduction of troops in that area of Europe, in other words, a withdrawal of troops rather than a reduction?


Pierre Elliott Trudeau: It is in order to get an answer to this type of question that the NATO countries have encouraged our discussions with the Soviet Union and are conducting some themselves, and that, indeed, the NATO countries have named an explorer to try to find the answer to that type of question.


Robert Lorne Stanfield: I should like to ask the right hon. gentleman whether there has been a change in the position of the U.S.S.R. during the past year? I ask this in view of the fact it was clearly indicated to me when I was in the Soviet Union that what was involved was a withdrawal and that the U.S.S.R. could discuss an actual reduction of troops only in a global context rather than in the context of European security. Has there been a change in the position of the U.S.S.R. in that regard?


Pierre Elliott Trudeau: Well, Mr. Speaker, perhaps as a result of the trip of the Leader of the Opposition to that country there has been some advance in the Soviet position-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: If the Leader of the Opposition does not wish to take credit for it, that is fine, but we think they have moved since he last saw them.


Robert Lorne Stanfield: On a point of order, Mr. Speaker, it is all very well for the Prime Minister to be smart. I am simply seeking information on a point of great importance to this country. I asked him whether there had been a change in the position, as would have been indicated by the Prime Minister's response to my question initially. I do not think that calls for any smart-aleck remarks by the right hon. gentleman.


Some hon. Members:: Hear, hear!


David Lewis: I have a supplementary question for the Prime Minister. In view of the fact that one of the differences between the Soviet Union and the NATO countries with regard to a European security conference has been the insistence of the NATO countries that there be a carefully prepared agenda and so on before a conference is called, does the statement in the communique that both sides declare themselves in favour of a properly prepared conference on security and cooperation in Europe mean that the Soviet Union has now come closer to the NATO position that the conference must be carefully prepared and an agenda agreed upon before it is held?
Inquiries of the Ministry


Pierre Elliott Trudeau: I would venture to answer in the affirmative. There has already been a very serious advance by the Soviet side in that they have concluded negotiations with the Federal Republic of Germany. We think this is a clear indication that they are prepared to go some distance to follow up statements made last May, I believe, by Mr. Brezhnev, that they were looking for a detente in Europe and heeding the opinions which have been given by Canada and other NATO countries that there would have to be progress on the Berlin question before we could fruitfully sit down to discuss European security generally. In that sense there has certainly been some movement on the part of the Soviet Union since the Leader of the Opposition last went there.


John George Diefenbaker: While discussions are going on concerning certain reductions in armed forces-infantry, artillery and the like-did the Russian premier mention the fact that the U.S.S.R. today has the largest fleet on earth, including 340 submarines, that it controls ingress to and egress from the Mediterranean-


Some hon. Members:: Question.


John George Diefenbaker: What did he say he intended to do concerning the reduction of naval forces, particularly in the Atlantic, and especially in the number of Russian submarines which are parading through the north Atlantic and the south Atlantic as well? After all, he has protested a desire for peace. What did he say about these things?


Mr. Speaker:: Order, please.


John George Diefenbaker: Mr. Speaker, there is no way to get an answer out of this government. The Prime Minister has no right to deal with Parliament as he sought to do with the Leader of the Opposition a moment ago.


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please.


John George Diefenbaker: Mr. Speaker, I rise on a question of privilege. The arrogance of this government-


Some hon. Members:: Oh, oh!


John George Diefenbaker: -in refusing to give answers while protesting itself to be in favour of peace, yet allowing Kosygin to fool them in the way they have been fooled in the last few days, is something that should shock Canadians as a whole.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I suggest to hon. members that this is debate rather than privilege. I would hope that in the last two minutes remaining before the end of the question period we might contrive to get two or three more questions dealt with.

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ATOMIC ENERGY


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, I should like to put a question to the Minister of Industry, Trade, and Commerce.
As the heavy water plant in Glace Bay, Nova Scotia, which was built thanks to thousands of dollars of financial aid from the government of Nova Scotia, then led by the Leader of the Opposition, has proved to be a real fiasco-


Mr. Speaker:: Order. I would point out to the hon. member that a question cannot be put in those terms.


Gilbert F. Rondeau: Thank you, Mr. Speaker. As that fiasco was later on compounded by the Liberal government-


Mr. Speaker:: Order.

The hon. member for Dartmouth-Halifax East.


Mr. Forrestall:: Thank you, Mr. Speaker. My question is related to the communique tabled by the Prime Minister.


Mr. Speaker:: Order, please. I apologize to the hon. member. He will be recognized in a moment. I gather there is a question of privilege being raised by the hon. member for Shefford.


Gilbert F. Rondeau: Mr. Speaker, I rise on a question of privilege.
A short while ago, the minister gave an answer, but unfortunately, in this corner of the House, we did not catch it.
Has the federal government lost any hope of producing heavy water in Nova Scotia, since it is buying some from the USSR?


Mr. Speaker:: Order. The hon. member has indicated that he was rising on a question of privilege, and he takes this opportunity to repeat his question. He will agree that the Chair has recognized the hon. member for Dartmouth-Halifax East.


J. Michael Forrestall: Mr. Speaker, my question-


Mr. Lambert (Beliechasse):: On a point of order-


Mr. Speaker:: Order, please. I again have to apologize to the hon. member for Dartmouth-Halifax East. With a little more patience we shall get to him. The hon. member for Beliechasse is rising on a point of order.


Marcel Joseph Aimé Lambert: Mr. Speaker, I rise on a point of order since I was involved.
In fact, my colleague from Shefford said that we did not catch the minister's reply to my question. It might have been understood but nobody heard it because of the noise.
I did not want to interfere then as I preferred to wait till the end of the question period. If Your Honour would

permit the minister to reply, I would be very happy provided that reply is heard.


Mr. Speaker:: Order. The minister could perhaps repeat his reply, but I respectfully submit to hon. members that if half the question period is spent repeating answers or questions, it will really be reduced to twenty minutes. In any case, we could perhaps allow the minister to reply to this question in a minute-

-after the hon. member for Dartmouth-Halifax East has had a chance to put his question.


Mr. Knowles (Winnipeg North Centre):: Make it good.


J. Michael Forrestall: I don't know whether it will be good but I shall try.


EXTERNAL AFFAIRS
J. Michael Forrestall: My question arises out of the communique tabled by the Prime Minister. I want to ask him whether or not the possibility of purchasing Soviet-built icebreakers or Soviet engineering services for the design and construction of an expanded Arctic fleet was considered during the talks with the Soviet delegation? At the same time I might ask whether any consideration was given to the purchase of long-range maritime patrol aircraft?


Pierre Elliott Trudeau: No, Mr. Speaker, I know of no talks having covered either of those machines.


Mr. Speaker:: We will return now to the question asked by the hon. member for Beliechasse and allow the minister to repeat the reply which was not heard by that hon. member.




Jean-Luc Pepin: Mr. Speaker, as far as I can understand, the hon. member for Beliechasse asked me whether the government was aware of the difficulties of a company called Deuterium of Canada Limited. The hon. member for Shefford told me the reasons why that company is in trouble. I suggested that along with many Canadians we were also aware of that situation.


Mr. Speaker:: Order. The hon. minister now has repeated the answer he gave earlier.
October 26, 1971



UNITED NATIONS


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. In view of the reasons given by the Canadian government for supporting the resolution at the United Nations which in effect expelled the government of Taiwan as not being the de facto government of China, does the government intend to undertake steps at the United Nations to see that the governments of Byelorussia and the Ukrainian Soviet Socialist Republic are expelled on the same grounds?


Mr. Speaker:: Order, please. I suggest that this is debate.
I apologize to the many hon. members who have not had an opportunity to ask their questions. I have tried to make a mental note of them as they rose during the question period and will attempt to give them preference tomorrow.



POLLUTION


Mr. Speaker:: Does the hon. member for Charlevoix have a supplementary?


Hon. Martial Asselin (Charlevoix):: Yes, Mr. Speaker.
Would the Prime Minister tell us whether, in his discussions with the Russian Premier, any mention was made of a summit meeting between Canada, the United States and the USSR to deal with the questions of the pollution of northern waters and the rational development of those waters?


Pierre Elliott Trudeau: Mr. Speaker, I raised that question when I visited the USSR in May. At that time, the Russian government indicated that it was not interested in a summit or other level of meeting between the several countries interested in the Arctic. So, this time, I did not suggest such a meeting. Instead we discussed a treaty which could be signed by all interested nations. I must admit that the Russians did not appear very enthusiastic about that either.


Mr. Speaker:: Orders of the day.


Georges-J. Valade: Mr. Speaker, on a question of privilege.


Mr. Speaker:: Order. The hon. member for Sainte-Marie raises a question of privilege.


Georges-J. Valade: Mr. Speaker, my question of privilege is as follows: The leaders of the various parties had agreed on the establishment of a list of ministers who would act for those compelled to be absent from the House on official business. According to that list, the minister responsible for manpower was to be present to answer questions
Inquiries of the Ministry
relating to employment, labour and unemployment in Canada.
A short while ago, I asked a question to the government, in the absence of the responsible minister and no minister gave me a reply. My question was warranted, Mr. Speaker, since a minister of the Crown stated yesterday in Montreal that unemployment was to reach a rate of 12 per cent in the province of Quebec in the next few months.
Here is my question of privilege: If members of the opposition cannot get answers from the ministers designated to replace those who are not here, and if no other minister answers our questions, I feel that we are being deprived of a fundamental right-that of having our questions on crucial or current problems answered.
I hope, Mr. Speaker, that my question of privilege will be taken into consideration, and that we will be assured that in the absence of a minister who should be here, the government will, through his spokesman, the right hon. Prime Minister, answer the questions asked.


Pierre Elliott Trudeau: Mr. Speaker, I know you do not like this matter to be discussed in the House. I would only suggest to the hon. member that perhaps he is getting the roster wrong since neither the Minister of Manpower and Immigration, nor the Minister of Regional Economic Expansion, nor even the Minister of Labour is on the list for today.
Once again, I think the hon. member is barking up the wrong tree.


Mr. Speaker:: Order, please. I do not believe there should be a debate on that point.


Georges-J. Valade: Mr. Speaker-


Mr. Speaker:: Order. The hon. member cannot speak a second time on a question of privilege. He submitted the problem to the Chair and the Prime Minister answered. I do not think the question should be pursued further.
If the hon. member wants to raise a question of privilege once again, I will listen to him, but under the rules, a member is not allowed to speak more than once on the same question of privilege.
The hon. member has raised the problem and it will be considered.


Georges-J. Valade: I rise on a question of privilege once again, Mr. Speaker.


Mr. Speaker:: The hon. member has another question of privilege.


Georges-J. Valade: Mr. Speaker, I am raising this question of privilege in reply to the Prime Minister who did not answer my first question.


Mr. Speaker:: Order. This is not another question of privilege, but the same that gave rise to a debate between the Prime Minister and the hon. member, which I cannot allow.


Stanley Howard Knowles: Mr. Speaker-


Mr. Speaker:: Order, please. The debate which is being pursued by hon. members on both sides of the House

October 26, 1971
Inquiries of the Ministry
makes it difficult for the Chair to hear the hon. member for Winnipeg North Centre.


Stanley Howard Knowles: I rise on a point of order, Mr. Speaker. In view of the many references during the question period to the communique the Prime Minister tabled today, I wonder whether the House would agree that it be made an appendix to today's Hansard?


Mr. Speaker:: Is it agreed?


Gilbert F. Rondeau: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: Does the hon. member for Shefford rise on a question of privilege?


Gilbert F. Rondeau: Yes, Mr. Speaker. I would like to make a correction on page 9018 of yesterday's Hansard.


Mr. Speaker:: Order. A correction cannot be made in Hansard by way of a question of privilege. All the hon. members know that a correction in Hansard is usually made directly through the officials concerned and when it is an important correction, it must be made on motions. The hon. member can ask the unanimous consent of the House to revert to motions. Does the House agree?


Some hon. Members:: No.


Mr. Speaker:: The hon. member might make that correction tomorrow on motions. I think it is extremely important, because during the debate-


Gilbert F. Rondeau: Mr. Speaker, according to Hansard-


Mr. Speaker:: Order. I indicated to the hon. member that such a change should normally be requested on motions. If the change is important, he should make it tomorrow on motions.


Mr. Gerard Laprise (Abitibi):: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: Is the hon. member for Abitibi rising on a question of privilege?


Gérard Laprise: Yes, Mr. Speaker.
During the debate, while the hon. member for Shefford (Mr. Rondeau) was speaking, the hon. member for Laurier (Mr. Leblanc), from the seat where the hon. member for Louis-Hebert (Mr. Cantin) usually sits, rose on a point of order for the sole purpose of having it reported in Hansard that the hon. member for Louis-Hebert was out of the House at the time. That is the correction we wanted made, Mr. Speaker.


Mr. Speaker:: Order. Will the hon. member please resume his seat. It seems to me that we have spent the last ten minutes of the time of the House going over points of order and questions of privilege. I feel that these ten minutes could be put to better use.


Stanley Howard Knowles: Mr. Speaker, you will have to admit there has been some confusion today. I did not understand what happened to my request

that the communique be made an appendix to today's Hansard. Was that agreed to?


Donald MacInnis: No, the Prime Minister turned you down.


Mr. Speaker:: It is my understanding that the response to the hon. member was negative. I might ask again if there is consent.


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: Perhaps the matter might be considered after the House has gone into committee. The suggestion made by the hon. member is that the communique be made an appendix to Hansard.


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: As the hon. member has heard, there seems to be some opposition and I think at this stage there might be some communication made directly-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. Perhaps hon. members might allow the Chair to complete the remarks I am trying to make in response to the point of order raised after two questions of privilege. The hon. member for Winnipeg North Centre might consider communicating directly with the government House leader to determine whether his suggestion might be put in a more formal way tomorrow.


Donald MacInnis: Mr. Speaker, on a question of privilege, when the discussion was taking place as to who was responsible for the refusal to allow the communique to be made an appendix to Hansard the hon. member for Calgary South indicated it was the Conservatives. There is no question that it was the Prime Minister who made the first refusal.


Mr. Speaker:: Orders of the day. Order, please. I believe the hon. member for Timiskaming is rising on a point of order.


Mr. Peters:: On a point of information, Mr. Speaker, I should like to inquire of Your Honour whether, when a request is made for the addition to Hansard of a communique or document that has been tabled, unanimous agreement is necessary before this can take place?


Mr. Speaker:: The hon. member is asking for a ruling from the Chair in abstract. The Chair cannot, of course, be called upon to make that kind of ruling. Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, October 25, consideration in committee of Bill C-259, to amend the Income
October 26, 1971
[Stage Direction]
tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that act-Mr. Benson-Mr. Honey in the chair.
The Chairman:: Order, please. House again in committee of the whole on Bill C-259, to amend the Income Tax Act and to make certain provisions and alterations in the statute law related to or consequential upon the amendments to that act. When the committee rose last evening section 109 was before the committee. Section 110 has been grouped with section 109 for the purpose of debate.
On clause 1-section 109: Deductions permitted by individuals.


Mr. Burton:: Mr. Chairman, last night when the committee rose I had pointed out that in the Carter Report on taxation there was discussion of the principle involved in comparing a system of tax exemptions with a system of tax credits in order to provide some relief for taxpayers, particularly those at the lowest end of the income scale. I mentioned that the Carter Commission pointed out quite clearly what the difference was between tax credits and tax exemptions. I quote:
A tax credit involves a reduction in taxes of a given amount, while an exemption grants a reduction in taxable income.
Of course, the report, points out that quite obviously the application of a tax exemption has a different impact from the application of a tax credit. The Carter Commission, in its report, went on to draw a conclusion from its studies of this subject. I quote again from the report at page 180, volume 3:
We believe that the primary purpose of the additional allowances for dependants, working wives, educational support, and so forth is to reduce the tax burden on low income families whose ability to pay is most heavily affected by the additional non-discretionary expenses resulting from each of these circumstances. We therefore regard the use of tax credits as a more efficient means of achieving this objective. Accordingly, we have recommended the adoption of tax credits in place of exemptions to reflect the effect of family responsibilities upon ability to pay, and have used the tax revenue gained from this substitution both to increase the effective allowances to low income families and to reduce marginal tax rates below what they would otherwise be.
So, it is quite clear, in terms of the principle put forward by the Carter Commission, that the commission opted for a tax credit system. This, of course, leaves open the question of the mechanics of the application of this principle. There are many variables which could be introduced in applying this principle, but certainly in terms of the principle itself the commission came out very clearly in favour of the principle of tax credits. The commission went on to discuss, at page 183 of the report on taxation, the effect of tax credits if substituted for the present tax exemption plan:
The credits that we propose for dependants are equivalent to a liberalization of exemptions for lower income families and a tightening of upper income families. For families with income under a certain level, the proposed system of credits would reduce taxes from what they would be with current personal exemptions.
Possibly this explains why the government has been so reticent about introducing tax credits into Bill C-259. I want to acknowledge, of course, that in any tax structure a system could be devised based on either tax credits or tax exemptions that would, at any given point of time,
Income Tax Act
produce an equivalent amount of dollars for any given income level. It is simply a matter of mechanics to arrange a tax system based either on tax credits or tax exemptions which would provide for a certain income level. Let us call it income level one-X dollars of tax. Then this could be arranged for income level two, the next higher level of income, for which the amount of dollars in tax collected would be X plus Y dollars of tax. This could be applied to any situation in any given circumstance, but that of course involves a static concept of taxation. That is certainly not the type of world in which we live. We live in a very dynamic world in which the systems we attempt to organize and establish must be designed so that they are flexible enough to accommodate change and so that it is possible to adjust to any new condition or new circumstance as they arise.
I would also acknowledge that with the tax exemption system it is possible to make a change which would have an impact similar to a change to a tax credit system. This could be done by simply knocking off the lowest rate of taxation and then increasing the exemption level. This is fine if it can be done, but I suggest it is much more difficult than might be imagined to introduce such a system into practice. Certainly it is very difficult politically, I think, to introduce such a system because there are very obvious difficulties. Any government, regardless of its political persuasion, has to face the problem of persuading people that they must or should pay higher taxes. Certainly, if there is the appearance of a higher tax level, even the type which I described, this is not very acceptable to anyone.
So the method adopted by the government when it wanted to make some improvement in the situation of people at the lowest end of the income scale was to increase exemptions. This in some ways is much easier to administer and in some ways also it is easier politically, at least under given circumstances. But I suggest there will be tax changes in the future and, by the very nature of our economy, a tax system must be designed so that it can accommodate to change both up and down. Very often the general trend has been in the upward direction, but certainly I think now and at given times in the future our taxation system will be subject to either increases in taxes or decfeases in taxes. Thus, it is very necessary that we design a tax system that is both flexible and equitable. This is my concern, and the concern of many of us, in taking a look at the plan as it is proposed by the government.
I should like to examine briefly the whole idea involved in making changes in exemptions, whether it is now or at some other point in time. Basically, it seems to me that the purpose is to provide help to the lower income people in particular and also to provide one means of stimulating the economy. In terms of the help that is provided to lower income people, I think it has been pointed out already in this debate that it is questionable whether it is of any real value. Certainly it has been pointed out that if there is an increase in basic exemptions from $1,000 to $1,500 per person on a $2,000 gross income the tax saving from the increased exemption is only $33, whereas if a person has an income of $100,000 the tax saving is $397.

October 26, 1971
Income Tax Act
Certainly, this is not very equitable in terms of being of assistance to people at the lower end of the income scale.
Secondly, there is the point of stimulating the economy. This, of course, must come through increased consumption. I do not think that anyone would suggest that an increase in exemptions is designed to increase in some way the savings capability of a segment of the population in order to assist the process of capital accumulation. Rather, I think an increase in exemptions is designed by its very definition to increase consumption in the economy. I think it is obvious, or it should be obvious to all hon. members, that the best way to increase consumption through a tax change is to help people at the lower end of the income scale. By the very nature of the economic system, people at the lower end of the income scale will spend a larger percentage of their increased income or increased savings from a change in exemptions or tax credit than will people in the upper income levels. I think it should be obvious to hon. members that this will be the case. Thus, I think it can be shown quite clearly that a system of tax exemptions, as we have it now, does not achieve the objectives that are claimed for it by people on many occasions. I suggest, therefore, that our tax system must have equity if it is to be acceptable to the public and if it is to achieve the social and economic objectives that a tax system must hope to achieve.
Reference was made during the discussion of the white paper and the report of the House of Commons Committee to the question of equity versus growth. The government, and some government supporters, attempted to put this situation in the very simple terms that this was the alternative before the people, that they have to choose between equity and growth. I want to suggest that I do not accept that particular set of alternatives as it has been put forward by some people. I think it is not a simple alternative of that sort. If one wants to look at either one of those objectives, namely equity or growth, the present tax exemption system does not help to produce equity in the tax structure. I suggest that the present system of tax exemptions does not stimulate economic growth in our economy. On the other hand, I suggest that tax credits will produce a greater degree of equity in the tax system. The stimulation and encouragement of consumption will be a more effective way of stimulating and encouraging growth in the economy.
In conclusion, I should like to say that a point of concern for the government and for all members of the House must be the question of confidence in the tax system. Do people really feel that they are getting a square deal under our tax system? I know that the government will go to the country within the next year or two. They will make claims regarding what this new tax system is doing for people, that it improves the position of many people in the country. But I suggest that the government should not be too smart about this question. They should reflect very carefully on this because once this new system is in effect people will see very soon that in fact the improvements claimed for it by the government, and by government supporters, mean very little in the context of economic conditions today. I suggest that there will be disillusionment among people in Canada when they see the little that has been done for the ordinary people through the tax bill before us.
I suggest there will also be a great deal of disillusionment when people find that there are many loopholes and escape clauses for many of the larger corporations and the wealthy people of Canada. This will reduce confidence not only in the government-if any government dares to stick by such a tax system-but in the entire process of our handling affairs, and that is a matter that must be of concern to all members of this House. That is why I feel it is so important that in this particular area of the bill, sections 109 and 110 as well as other areas, the government take another look at the proposals it has placed before Parliament, and that it come forward with a more equitable tax package which will produce real tax reform, not just an imaginary type of tax reform such as we have in this bill.


Joseph Adrien Henri Lambert: Mr. Chairman, during a press conference he held a few days ago, the Prime Minister informed the nation that the gross national product in Canada for the year 1971 was about $95 billion and he compared this with the year 1960-61 when it was $40 billion. He rightly stated that Canadians are increasingly efficient and that we have good reasons to be happy that the national product continually increases from year to year.
What he said is so true that the Canadian Imperial Bank of Commerce news letter of September 1971 features a table that is most interesting, that we should all consult in order to have a clean conscience, when we will have terminated study of Bill C-259, having adopted legislation in keeping with its possibilities, reducing as far as possible taxes applying to those who do the most to increase national production.
The table appearing on page 8 includes the following: Gross national product, 1961, 39 billion dollars, 1974, 84 billion. And the right hon. Prime Minister tells us that it will reach some 95 billion for 1971.
Now, Mr. Chairman, further on it can be seen that some groups of persons have contributed to that increase in the gross national product in Canada, and certain details are given: Man-hour production in agriculture, based on 100 for 1961, was in 1970 up to-


Mr. Mahoney:: Mr. Chairman,-


Russell Clayton Honey: Order. The parliamentary secretary is rising on a point of order.


Patrick Morgan Mahoney: I am wondering when the hon. member is going to relate the GNP tables for 1961 to sections 109 and 110 presently before us.


Mr. McCleave:: Now you are getting fussy again, Pat.


Russell Clayton Honey: I think, with respect, the parliamentary secretary has a valid point and I would ask the hon. member if he will keep his remarks within the rather broad area that I will permit him under sections of 109 and 110.


Joseph Adrien Henri Lambert: Mr. Chairman, I readily submit to the directives of the Chair, but in order to

October 26, 1971

support the reasoning that I want to make regarding clauses 109 and 110, I must find some argument. This is what the Minister of Finance (Mr. Benson) has done, on June 18, when he introduced his budget, and when he quoted the gross national product and other figures as arguments.
So, I think that I will not be departing from the Standing Orders when trying later on to show, regarding clauses 109 and 110, what I intend to recommend to this government. Since we have no opportunity of moving amendments to legislations, I hope, Mr. Chairman, that we will at least have the opportunity of bringing forward some arguments. This is what I am doing and I am convinced that, as the Chair has just said, I am perfectly in order.
I was saying that the efficiency of farmers in 1970 had reached a level of 177, compared with 100 in 1961. On the basis of 100 in 1961, the efficiency rate of manufacturing industry reached 140 and that of non-manufacturing industry, 127.
Farmers and workers having made considerable effort to contribute through their work to the increase of the gross national product, they have shown they are serious and efficient. Should Canadians get greater benefit from the national product? I think so. To allow them to do so, they must be given more purchasing power. That can be achieved in two ways: by salary increases or greater profits, or still by lower taxes.
In the case that concerns us, clauses 109 and 110 aim at amending the tax legislation by increasing the basic exemption. I entirely agree with the government about that proposal. However, I think it is not going far enough considering the great possibilities I have just outlined regarding the gross national product.
Now men's work, as a whole, that is national production, is not meant to keep on adding to the wealth of a small group of citizens but rather to ensure the well-being to all. In my opinion a society is not just if it tends to condemn a great many of those we call proletarians to be without any other property than their arms, and to be always threatened by a refusal of employment in times of unemployment or by a considerable reduction of income in cases of sickness or accident. Then, more and more, the number of those who do not own any property increases on account of the tax burden.
This is why I strongly urge the government to clearly grasp the scope of our arguments which, as far as I am concerned, I do not bring in on a sudden impulse, but from a sense of duty because I know in what situation thousands of families find themselves. I am personally aware of that situation and every day we receive representations, requests from people asking us to see that the tax burden is lessened in order to allow the Canadian family to develop.
I cannot understand how some people will not admit that it takes at the very least an income of $5,000 free of tax for an average family to live in normal conditions. I am speaking of the income tax that we are discussing right now.
I know that married couples have to pay a number of other taxes, it is a normal thing, but as far as income tax goes, in view of the immense possibilities of Canada, of
Income Tax Act
the considerable increase of the national product, it is now possible to lower the contribution made by this category of people, by raising the level of exemptions.
Are we really aware of the fact that the government is asking the people to live in poverty in an affluent society? Our country is rich in many ways. I was given, a moment ago, a document which is not very old; it is dated October 25, and entitled "The National Conference on Law and Poverty". The conference will be held in Ottawa from October 28 to 30.
It offends a number of members when someone reminds the government that there is inexcusable poverty in Canada. It riles them. They say that it should not be mentioned.
Mr. Chairman, this conference on law and poverty is organized by people who are interested in the welfare of the population, among others a group of lawyers who call themselves the defenders of the poor, and it is sponsored by a section of the Canadian Law Professors Association seeking justice for the poor.
I did not have time to read the communique, for it has just come to my attention, but it seems that it was by an act of God that this document appeared on my desk at the very moment when I was about to champion the rights of these elements of the population.
Mr. Chairman, I have known the distress of not even having a 3-cent stamp to send a letter to my mother. I remember the hurt and that is why, today, being called upon to speak for those people, I discharge my duty by saying what must be said.
Mr. Speaker, this is what being underprivileged means. There are underprivileged people in Canada, just as there are in Europe, Asia and Africa. We just have to open our eyes to see where they are. We only need to visit our cities and see those retarded children for whom we are asked to provide more financial assistance so that they may adapt to Canadian society.
When we see, as I did last Sunday, Richelieu clubs organizing suppers in order to try and raise funds to assist underprivileged children, we realize that people are really willing to help the underprivileged in Canada.
We only need to open our eyes to see unemployed people who have to make do with the miserable pittance which they get from welfare, and yet who would like to work. Last Saturday, of 12 people who called at my office, 11 were asking for work.
People want to work, Mr. Chairman! But in order to give them the opportunity to work we will have to give a new impetus to the economy, to further the sale of our products so that the industries in turn can get going again and hire those people.
Mr. Chairman, that is the reason why I insist so much on putting the basic exemption for married couples at $5,000, because Canada can do it. Otherwise I would say: Let us tighten our belts! But, since Canada can do it-we know that, because the Prime Minister said so on the air- we must do something.
Mr. Chairman, that is my suggestion in connection with sections 109 and 110 in favour of families that do their share.
9042

October 26, 1971
Income Tax Act
I would also draw the attention of the government to the fact that it seems very liberal to increase the basic exemption from $1,000 to $1,500 and from $2,000 to $2,850. It must not be forgotten that new elements have been included in the taxable income, like one-half of capital gains for instance. Payments from income maintenance plans will likewise become taxable, as well as adult training allowances, allowances paid under the Textile and Clothing Board Act, unemployment insurance benefits and scholarships, fellowships and bursaries, except for the exemption of $500.
This means that the basic exemption will be reduced by all these forms of income which become taxable, and one could find oneself not with $2,850 anymore, but with $2,500 or $2,400.
Mr. Chairman, in concluding my remarks, once again I urge the Parliamentary Secretary to the Minister of Finance to get my message to him on behalf of my constituents of Bellechasse and of all other Canadians. Let us be reasonable and prove that we are intelligent people, that we know how to use the gross national product and let us allow Canadians to benefit from that product in order to meet their everyday needs.


Gerald William Baldwin: Mr. Chairman, I shall not detain the committee very long. Indeed, I hesitate to get into this debate after the remarkably strong and eloquent address to which we have just listened, but I am going to deal with a much more mundane issue. When I read through sections 109 and 110 I am disappointed that they do not make provision for something for which I have argued in the past, namely a special tax reduction for those resident in the northern part of Canada. This is something that I have been pursuing for 25 or 30 years. In the House and elsewhere I have always met with the answer that it cannot be done because there must be tax rules of uniform application across this country; that it is not possible to take a parallel of north latitude as the boundary line between those taxed at one rate and those taxed at another or changes in deductions. I recognize that for administrative purposes there is some merit in the answer, but when we look at some of the things that have taken place in the last few years, particularly in the regional economic expansion program, we note that with respect to the recovery and depreciation rules at least, there are opportunities for varying the rules by the application of different rates across Canada.
The fact remains, Mr. Chairman, that what we have seen in the northern part of this country has been a failure to develop what I think is required if we are to settle in and win the north, in the sense that it should be won, a small entrepreneurial class. We have the native peoples who are now in many cases emerging from their native positions to take jobs in the milieu of the outside world. We have the large corporations and we have government, both of which make certain provisions for special northern living allowances. However, these are uneven in application and are applied to people who go into the north for a comparatively short period of time, maybe two or three years, and who serve their time and leave. The result of this policy has been that the increase

in the northern population has not been what it should be when compared with other countries.
Recently we have had an opportunity to entertain Premier Kosygin and I am sure he has related some information about northern development in the Soviet Union. No doubt when the Prime Minister and others were over there they saw what has happened. It is known that certain incentives are given to people in the Soviet Union to go into the north. I suggest that through deductions for income tax purposes it would be mechanically and administratively possible to work out additional concessions for people living and working in the north. I shall not deal with the question of corporations because that comes under a different aspect of the bill. I think it is essential, however, that there be some permanency of tenure in that part of the country. Today we have to provide concessions for people who go in there to work, so they will have an incentive to stay. These concessions will have to be reflected in the rate of taxation.
In all seriousness I suggest to the minister and the parliamentary secretary that they should review their files on this matter. I know that my hon. friend from the Yukon has mentioned this subject from time to time, and I have raised it in this House on a number of occasions. There is no doubt that the further north you go the more expensive it is to live. I can recall the early days when I first went into the northern part of Alberta. It used to be fairly rough rule of thumb that every 300 miles you went north of Edmonton doubled the cost of everything, including liquor, Mr. Chairman. While it might not be that severe today, I suggest that this phenomenon is still to be observed. The government has a responsibility to make longer range plans for the development of the northern part of Canada than those that exist today because the people living there are subjected to a much higher cost of living. I am just going to leave it at that.
I am not berating the government particularly because I know there are departmental and administrative difficulties. I warn the government that failure to enact some simple concession of this kind is bound to have an adverse effect on development in the northern part of this country. I ask the parliamentary secretary to look seriously at this proposal. It may be impossible to implement it by December through the December budget. We are now in a cycle of monthly budgets. It may be that when we come to the January, February or March budgets this proposal can be implemented. You see, we are looking six months ahead, and there ought to be ample time for the gestation of this creative idea so that it may be delivered as a healthy and virile child some months from now.


Stanley Howard Knowles: Mr. Chairman, I hope and believe that we have made our position with respect to proposed section 109 as clear as it can be made. We favour a tax credit system rather than a system based on exemption levels. We did our best when the Standing Committee on Finance, Trade and Economic Affairs was dealing with the white paper to make this point. We did our best to make it at second reading and we have done our best thus far, in committee of the whole consideration, to make that point. We do not seem to have persuaded the
October 26, 1971

government to make the change. This is regrettable, but that is the way democracy works.
I confess to you, Sir, that I did quite a bit of reading in my favourite books to see whether there might be any way in which one could move an amendment to substitute a tax credit system for a tax exemption level system. I am afraid all the authorities are against the possibility of that being done. Although there are provisions indicating that amendments can be made with respect to tax bills, nevertheless, those amendments must be grafted upon the government's system. I will not, therefore, put Your Honour to the task of having to read the same books, as a result of which I fear you would rule out an amendment seeking to substitute a tax credit system for a tax exemption system.
That is not the end of my story. As you can imagine, I sat here yesterday with an amendment to raise the exemption levels which was similar to the amendment moved by the hon. member for Bellechasse and similar, also, to the amendment moved later by the hon. member for Port-neuf. Again, since you have already ruled that type of amendment out of order, it would hardly be responsible of me to try that one again. I did not jump in with it yesterday, so to speak, because I thought that, procedurally, we already had before us one amendment to proposed section 109, namely, the amendment moved by the Minister of National Revenue which changes the word "taxpayer" to the word "individual" in one line of that proposed section. It is nice to know that a taxpayer is sometimes regarded as an individual. That change, however, is not significant. It is just a matter of using the proper word in the context of that particular part of the section. At any rate, that is why I did not move the amendment yesterday which was moved by my Social Credit friends.
Now that the possibility of an amendment that merely raises exemption levels has been ruled out of court by your rulings of yesterday on the amendments proposed by the hon. member for Bellechasse and the hon. member for Portneuf, I wish to follow another course. However, Sir, in this case I confess that I shall present my procedural argument before I move my amendment. Perhaps the citations that I shall read will indicate what is coming. Part of paragraph (2) of citation 263 of Beauchesne's Fourth Edition reads:
-The principle that the sanction of the Crown must be given to every grant of money drawn from the public revenue, applies equally to the taxation levied to provide that revenue. No motion can therefore be made to impose a tax, save by a Minister of the Crown, unless such tax be in substitution, by way of equivalent, for taxation at that moment submitted to the consideration of Parliament;-
There is more to the paragraph, but I think I have read the pith of it. It is pretty clear, Mr. Chairman, that it is in order for a private member to move an amendment to a tax bill which is a substitution by way of an equivalent amount for taxation at that moment submitted to the consideration of Parliament.
A couple of pages farther over you will find citation 268. We are still looking at Beauchesne's Fourth Edition. Let me read these words from paragraph (1) of that citation:
-Though it is the function of the Committee of Ways and Means to impose rather than to repeal taxes, example-
It says "example". I believe it ought to say "examples". -of the repeal of taxation effected in this committee are to be found upon the journals.
Income Tax Act
Now comes the important sentence:
Proposals for the variation or modification of taxation can therefore be made in the committee; but these proposals must be grafted upon the financial scheme submitted by the Government,-
And that is why I knew I could not move a motion to substitute tax credits for tax exemptions.
-and must not affect the balance of ways and means voted for the service of the year. Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the Government, as an alternative duty, the necessity of new taxation, to that extent, being already declared on behalf of the Crown.
Now, Mr. Chairman, may I relate that procedural submission to our position in terms of policy. We have already made it clear that we favour a tax credit system as opposed to a tax exemption system. Yesterday I said that if the government was not prepared to go for a tax credit system, we would plead with it to raise the exemption levels from the proposed $1,500 and $2,850 to $2,000 and $4,000 a year. I indicated that I was somewhat concerned about that because, after all, this is our second line of approach and not our first. As I say, I was somewhat concerned about that because, unless one adjusts the rates, the effect of raising exemption levels is to give benefits which are larger for those at the top of the income scale than for those at the bottom of the scale. But now my hand has been forced by your rulings of yesterday against the hon. member for Bellechasse and the hon. member for Portneuf and also by these citations that say that as a private member I can move an amendment for a tax that is a substitution for something the government has proposed, provided it is for an equivalent amount. The words are there. They are as clear as they can be in the English version of Beauchesne's Fourth Edition and I suspect they are just as clear in the French version.
I come, therefore, to the second approach that we take. If the government is not prepared to bring in the tax credit system, I plead with it to raise the exemption levels to $2,000 single and $4,000 married and at the same time to adjust the rates that are set out in another portion of clause 1. After all, Mr. Chairman, we are dealing with clause 1 in its entirety, a clause that has 596 pages. I suggest that changes be made in the rates of another portion of clause 1 so that the revenue lost to the Crown by raising exemption levels will be gained by higher rates for those in the upper brackets.
I have put all of this in the form of an amendment. It reads in technical language, but I have plenty of copies so that hon. members can look at it. I move:
That Bill C-259 be amended at page 277, (a) by deleting the figure "$1,500" from lines 12, 37 and 48 and by substituting therefor the figure "$2,000", and (b) by deleting the figure "$1,350" from lines 13 and 38 and by substituting therefor the figure "$2,000", and that the rates of tax provided in the proposed section 117, on pages 305 to 312, be adjusted to provide revenue equivalent to the revenue lost by changing the exemption levels as herein provided.
I suggest that should meet with everyone's wishes. Even my good friend the member for Bruce will like this. He complained yesterday that I wanted to cut out some taxes and not say where we could get money to take their place. This motion suggests where that money can be obtained.
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This motion does what I think most Canadians want done. I am prepared to admit that most Canadians may not understand the tax credit system. They would understand it if it were in effect and they were getting the benefit of it. To most Canadians, the heart of this whole issue is that the exemptions levels ought to be higher.
The effect of this exemption, changing the figure $1,500 to $2,000 and the figure $1,350 to $2,000 in certain places in the bill, is that the exemption level in all places becomes $2,000 single and $4,000 married. It should not only satisfy the hon. member for Bruce, but also the government. It shows where the money will come from. It satisfies the provision in Beauchesne's Fourth Edition which clearly states that it is in order for private members to make certain changes in tax bills provided they are grafted upon the financial scheme submitted by the government and provided that where a tax is reduced another tax is substituted for it of an equivalent amount. I ask anybody in the House, what is wrong with that? Let's do it.


Some hon. Members:: Hear, hear!


Russell Clayton Honey: Order, please. I ask the parliamentary secretary to excuse me. I did not read the motion. The hon. member for Winnipeg North Centre read it in the context of his remarks. I want to express some reservations about the procedural acceptability of the motion. Before I recognize the parliamentary secretary, may I read the motion for the purpose of hearing arguments on the procedural acceptability. It is moved by the hon. member for Winnipeg North Centre:
That Bill C-259 be amended at page 277, (a) by deleting the figure "$1,500" from lines 12, 37 and 48 and by substituting therefor the figure "$2,000", and (b) by deleting the figure "$1,350" from lines 13 and 38 and by substituting therefor the figure "$2,000", and that the rates of tax provided in the proposed section 117, on pages 305 to 312, be adjusted to provide revenue equivalent to the revenue lost by changing the exemption levels as herein provided.


Mr. Jerome:: Mr. Chairman, when the hon. member for Winnipeg North Centre began, he carefully covered all of the ground that put him under any disability, giving advance notice that we were getting the full impact of his ingenuity in the final product. He certainly did not disappoint us with the amendment that came forward after the magnificent preamble.


Stanley Howard Knowles: I am glad you like it.


James Alexander Jerome: It is supposed, at least, not to be the prerogative of a counsel on a case to cite only those aspects which further his position and keep from the court those which do not. I suppose it is not fair to shackle a Parliamentarian with the same obligations. The hon. member has quoted those references which support his position and has conveniently ignored those which do not. Be that as it may, the argument in citation 263, which in general terms supports the idea he has in mind, should be carried on with the balance of the paragraph. It reads as follows: -nor can the amount of a tax proposed on behalf of the Crown be augmented, nor any alteration made in the area of imposition. In like manner, no increase can be considered either of an existing, or of a new or temporary tax for the service of the year, except on the initiative of a minister, acting on behalf of the Crown; nor can a member other than a minister move for the introduction of a Bill framed to effect a reduction of duties, which would incidentally
effect the increase of an existing duty, or the imposition of a new tax, although the aggregate amount of imposition would be diminished by the provisions of the Bill."
In the reference to citation 268, the hon. member failed to bring to the attention of the Chair the fact that the reference in that citation was to the committee of ways and means. This, of course, is a committee which has now been eliminated from our procedures. The considerations are obviously a good deal different when we are dealing with the final product than previously in the committee of ways and means. In addition, citation 269 was overlooked. It reads as follows:
No augmentation of a tax or duty asked by the Crown can be proposed to the committee, nor tax imposed, save upon the motion of a Minister of the Crown; nor would an amendment to extend the imposition of a tax to persons enjoying an exemption therefrom be now permitted.
The dilemma which the hon. member obviously faces is that if his amendment does what he intends it to do, it offends the rules. If his amendment does not offend the rules or does not do those things which have already been ruled out of order, it is not in his interest to put forward such an amendment. The answer to that dilemma is not a single amendment which offends the rules, but two amendments, one designed to correct the other. The amendment he is proposing to us which changes the exemptions is clearly out of order. What he proposes is a second amendment which is specifically designed to counteract the reduction in revenue resulting from the changes in the exemption levels, which are out of order, by making consequent amendments to the tax rates in order to bring the picture back into balance. The second amendment is equally out of order because it makes the same kind of changes, changes which are prohibited by all the citations to which I have referred Your Honour. I submit, therefore, that the amendment, despite the initiative which has been shown, is not less offensive to the rules which have been cited.


Stanley Howard Knowles: Mr. Chairman, it is a frequent way of doing things, when we get into procedural arguments, to say that the other fellow did not read the citations in full. Frankly, I abridged the citations because I thought it was better to focus attention upon the issue which is really before us. The things which the parliamentary secretary has read, in addition to what I read, have no effect on what we are now discussing, one way or the other. They do not alter the picture at all. For example, he read a bit more out of citation 263, where it says:
-nor can the amount of a tax proposed on behalf of the Crown be augmented, nor any alteration made in the area of imposition.
I ask Your Honour to note that this follows immediately aft er the clear authority given to a private member to propose a substitution of one form of tax for another, provided it is grafted upon the government's scheme. The net result of my amendment would not increase the total tax imposed by one dollar. It comes out to the same amount. The word "equivalent" is there as required by the rule. As for the suggestion that the area of imposition would be widened, my amendment does not include anyone under the tax arrangement who is not already there, although it does leave some out.

October 26, 1971

Then, when the hon. member looks at citation 268, he reads more of paragraph two which relates to probate and legacies and duties on real property, things which have no real bearing on the issue at all. My limiting of quotations to the parts I read was, I submit, to the advantage of everyone, to the extent that it concentrated attention on what is before us. I am fully aware of the rule that financial matters are the prerogative of the Crown and that it is the Crown which takes the initiative. But this is not an absolute rule.
Yesterday, and I draw this to the attention of the Parliamentary Secretary to the President of the Privy Council, you, Mr. Chairman, when you were ruling against an amendment put forward by a member of the Social Credit party, said a certain tax might be 10 erp cent and there might be an amendment by a private member to reduce it to 9 per cent, and provided the amendment did not alter the area of imposition you would have to accept it. So an exception was pointed out yesterday by the Chair itself. Authority for such exceptions is clear. There is also, of course, the citation which was read yesterday by an hon. member of the Social Credit party-the last sentence of 265(1):
This duty the members may perform by moving amendments to reduce the tax proposed by the administration.
So the parliamentary secretary cannot get away by making a sweeping generalization and saying what I have done is to compound a felony by seeking to move two amendments which are out or order. The first, by itself, I realize, would be invalid, but I maintain I do have the right to substitute one tax for another provided it is grafted upon the government's ifnancial scheme and provided the revenue form the substituted tax is equivalent to the revenue lost by revksing the first one.


Mr. Fortin:: Mr. Chairman, I should like to make a very precise remark and refer you to page 9007 of Hansard of October 25, 1971, when my colleague for Bellechasse (Mr. Lambert) moved an amendment.
Mr. Chairman, at that moment you referred to citation 265 from Beauchesne's Parliamentary Rules and Forms, 4th edition page 221. You said to my colleague for Bellechasse as well as to the committee members that the said amendment was out of order, because it intended to change the taxation field, in brief, it was against the very principle of the bill. You said that if the amendment moved by my colleague was concerned only with tax reduction, it would be acceptable, but because it was aimed at getting a number of taxpayers off the rolls, it would not be acceptable.
In this connection, I should like to repeat very quickly the citation. On page 221 of Beauchesne, it says, and I quote:
This duty the members may perform-
-of protesting the government's administration-
-by moving amendments to reduce taxes proposed by the Administration.
Now then, that was exactly the objective of the amendment moved by my colleague the hon. member for Winnipeg North Centre (Mr. Knowles) and that is why, Mr. Income Tax Act
Chairman, I would like to submit, with respect, that, in our opinion, this amendment is in order.


An hon. Member:: Question.


Stanley Howard Knowles: Question? Okay, call it.


Some hon. Members:: Oh, oh!


Russell Clayton Honey: I thank hon. members who have assisted the Chair on the points of procedure arising from the amendment proposed by the hon. member for Winnipeg North Centre. I should like to have time in which to think about it. If I were a betting person, I would not bet on the side of the hon. member for Winnipeg North Centre because I have grave doubts as to the acceptability of the amendment. But the hon. member for Winnipeg North Centre has made a most persuasive argument, as has the hon. member for Lotbiniere and it would not be fair for me to make a ruling off the cuff when there has been so much preparation by the learned members who have argued both sides of this question.
There is just one point on which I might ask for the assistance of hon. members. One of the proposed amendments also purports to amend, as described, the proposed section 117 on pages 305-312, and that section is not before the committee. Do hon. members have any suggestions for dealing with that aspect?


Stanley Howard Knowles: I will be happy to make a comment on that aspect, Mr. Chairman. There is also before the committee an amendment to clause one by the Minister of National Revenue containing, I think, 95 parts designed to alter subclauses throughout clause one. If he can do it, if he can move one amendment to clause one dealing with a host of proposed new subclauses, then surely I can move an amendment which relates to two of them.


Russell Clayton Honey: I did not raise the point in order to throw a block in the way of the committee proceeding or to indicate that the hon. member could not proceed with the amendment. I appreciate the point made by the hon. member for Winnipeg North Centre. The fact is, however, that the motion moved by the Minister of National Revenue on behalf of the Minister of Finance is before the committee. There may be some difficulty in connection with the point I have raised, but I do not think it is of great importance. I wonder whether the committee would give consent to dealing with the motion of the hon. member for Winnipeg North Centre notwithstanding any procedural question which might arise. Of course, section 117 is not formally before the committee at this time.


James Alexander Jerome: With respect, Mr. Chairman, I do not think that is the whole problem. I do not wish to endeavour to sustain a very strict position and argue that because we have agreed to approach this long bill in an intelligent manner, and deal with it in parts, and because we are not now discussing other parts which the hon. member proposes to amend, it would not be possible to proceed.

October 26, 1971
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An hon. Member:: You should hear Benson do it.


James Alexander Jerome: The difficulty is much greater than that in that Your Honour is required to rule upon the legality of the amendment before us at the present time. It is designed specifically to raise exemptions and does so in dollars and cents terms. It is argued that while that is clearly procedurally offensive, what is designed to correct it is some amendment to section 117. What is really happening is that the hon. member is not putting forward that amendment to section 117, but is simply saying we should accept his amendment now and make some amendment to section 117 in the future.
The obligation to put forward a legal amendment to section 117, making changes in the incidence, the burden and the orderly imposition of taxation, has been argued today. At the best of times, if not always, it would be extremely difficult to put such an amendment in acceptable terms. I submit we are not now dealing with section 117 but rather an amendment which is supposed to legalize this procedure, but I submit it is not in sufficiently precise terms to enable the Chair to rule on it or to enable anyone to make an argument as to whether it is procedurally acceptable. I submit this puts the Chair in an absolutely impossible position.


André-Gilles Fortin: Mr. Speaker, I listened with interest to the comments of the Parliamentary Secretary to the President of the Privy Council (Mr. Jerome), and I beg to differ with him.
First of all, fundamentally the question is what we discussed earlier and the arguments are the same.
Secondly, the Chair wonders whether we are not dealing with two sections, one of which is not now before the House. Now, when the representatives of the various parties agreed on the procedure to be followed, the question was this: Will we discuss Bill C-259 clause by clause or will we regroup them by sections or main titles?
In any event, the present debate is basically an experiment. That is what we are now doing: experimenting. The House leaders agreed on main titles, and we are experimenting, trying to speed up the work while performing our duties as members of Parliament, properly and conscienciously.
That supposes many things, Mr. Chairman. It means that if my colleague for Bellechasse (Mr. Lambert), for Champlain (Mr. Matte), or any other rises and does what the hon. member for Winnipeg North Centre did, trying to amend-


James Alexander Jerome: I rise on a point of order, Mr. Chairman. Perhaps the hon. member who is now speaking did not understand what I first said, or perhaps what I said was not translated adequately. It appears he is under the impression that in my earlier remarks I was suggesting the committee should be forced to stay with only those sections we are discussing. I want to make it perfectly clear that I was not attempting to sustain that position because it would be too rigid. I have no objection and do not propose that we on this side have any objection in a

situation like this, or one which may arise at another time, to discussing other related sections. If it is necessary to put forward an amendment which deals not necessarily with the section we are discussing, but coincidentally with an amendment to another section, no one on this side would argue against that. It would appear from the matter to which the hon. member addresses himself that I took precisely the opposite position. I just wanted to make that perfectly clear.


André-Gilles Fortin: Mr. Chairman, I am now pleased with the remarks of the parliamentary secretary since he says that there is no opposition from his party. This is precisely what we want, Mr. Chairman. We wish that the principle of debate be honored so that we may discuss a clause respecting capital gains. In this way we recognize the principle whereby we may talk about another part of the bill also under the heading of capital gains. This implies that a member of this House and of this committee may rise and introduce comprehensive amendment.
This is not provided for in the Standing Orders but it was generally agreed upon. Therefore, Mr. Chairman, it seems to me that we could end the discussion since, as indicated by the parliamentary secretary, we quite agree on that point.


Russell Clayton Honey: So there will be no misunderstanding as to how the committee is to proceed I should like to make one or two comments. As I said earlier, the Chair did not raise this matter for the purpose of precluding consideration by the committee of all aspects of the hon. member's motion. I should like to take the arguments of the three hon. members who assisted the Chair under advisement. It would be helpful if we considered the motion as proposed by the hon. member for Winnipeg North Centre. If the first part of the motion is allowed, then at some later date the hon. member would have to satisfy the Chair on the procedural acceptability of the second part. I think that is the argument put forward by the parliamentary secretary. If there is no disagreement to my suggestion, I will take the matter under advisement and make a ruling later. If I allow the motion it will be on the understanding that at some later time the hon. member for Winnipeg North Centre must satisfy the Chair as to the second part. Is that agreed?


Some hon. Members:: Agreed.


Russell Clayton Honey: Hon. members have taken a great deal of time and effort and it would not be fair to make a hasty ruling. I will consider the matter as quickly as possible and rule on it.


Mr. Blackburn:: Mr. Chairman, my remarks will be brief but there are three aspects of sections 109 and 110 to which I should like to refer. The first aspect concerns the high expenses incurred by parents in respect of children suffering from cerebral palsy and other related diseases which require extensive treatment. To make it a little more clear, I am speaking not about medical expenses but about travelling expenses that parents incur when they take their children from smaller communities, villages and cities in the countryside, to major medical centres where specialized treatment can be obtained. Very often these parents run up high expenses over a period of
October 26, 1971

several years. They must travel sometimes by plane to centres such as Toronto, Hamilton, Montreal, Vancouver and so on.
This disease which afflicts children requires extended treatment. I have talked to some constituents in my riding who have had expenses in the neighbourhood of $5,000 to $7,000 over a period of perhaps 10 to 12 years. A couple of weeks ago when speaking on second reading of the tax reform bill I alluded to some aspects of what I consider to be a double standard of taxation. I think we all agree there are some groups in our society which have a greater advantage in respect of writing off expenses than other groups. I feel that parents with children afflicted by diseases such as cerebral palsy should be allowed some kind of tax reduction in relation to the expenses incurred in taking their children to major medical centres. They must travel and often stay overnight at a hotel or motel. They must eat in restaurants and they may be away from home for a couple of days or perhaps a week while the child is being treated. Let me suggest to the parliamentary secretary that some consideration should be given to granting tax exemptions in this area.
Another aspect of section 110 relates to the economic or financial problems parents have in attempting to cope with a child who has a perceptual handicap. As a school teacher, I recall that 10 or 12 years ago we did not know what perceptually handicapped meant. We were under the impression that every child who was dull or a slow learner was a child with a low I.Q. who could not learn. We find now that they have physical disabilities which make it difficult to understand what they are reading. This slows down considerably their learning ability. As a result, much money is being spent officially at the board level in our school systems and in the department of education to help correct this deficiency. However, many parents believe their children should have specialized tuition. This kind of specialized tuition can be rather costly, particularly to people in the low income brackets. I would like to suggest to the parliamentary secretary that perhaps some provision could be made for a tax exemption to be given to parents who have to pay extra tuition fees for the perceptually handicapped. Again this can run into a fairly high cost if you consider that to rectify the problem in the learning process of the child, it might take not just a couple of years or five years but perhaps 10 or 12 years.
From my own experience I know the schools can do only so much. In most instances, the parents send their children to specialists in this field. Of course, the fees very often are fairly expensive. A third aspect of this section of the bill relates to expenses incurred by teachers who are attempting to upgrade their standards and improve their professional ability. Obviously, it appears I am trying to speak for only my own profession, but I think it is a well known fact that other professions in this country have-I will not say built-in safeguards-members of their professions in politics who have spoken out in their favour. I am not attempting to set myself up as a lobbyist for the teaching profession at any level, but merely wish to point out some of the problems teachers have. I refer particularly to those who are beginning their careers and are in the low or middle income bracket and those who are
Income Tax Act
teaching at the elementary school level. I am not referring specifically to those teachers who are now earning, shall we say, $15,000 or $16,000 a year.
I should like to preface my remarks in this regard by saying that, as we all know, society is becoming extremely complex. In order for a good teacher to keep abreast of things and to improve his knowledge and specifically his capability to direct students in new educational processes, it is necessary for him or her to take refresher courses. At the present time so far as I know the only tax concession granted in this regard is related to tuition fees during the summer recess. Again, most teachers who are taking courses go back to school. The tuition fee itself very often is paid by the board of education and is one of the smallest items of expense incurred. They have to travel. Some of our teachers come from the north to the various urban centres across Canada. Their expenses are high. I think we should be able to provide some tax concession to enable teachers to write off at least part of the expenses they incur while attending these schools. One might argue that since teachers take these courses to increase their income, why should the government assist them in increasing their own level of income. Let us not forget that in raising their levels of income they will be paying higher income taxes, so I think it makes some sense to suggest that the Department of National Revenue will receive as much or more than it gives.
Several years ago when Bell Telephone was switching over to a more complicated technological process a friend of mine working for Bell at that time was sent to Toronto for a course. His wages came in regularly. The cost of his course was by Bell. All his bills, the hotel account, his food, lodging and so on, were paid for and the company could charge this amount to operating costs and obtain a tax concession on it. I feel that if employees of a private company can be upgraded to improve their output,-and bear in mind I do not think it is incumbent upon boards of education to pay the expenses out of public taxes-the least the government can do is allow those teachers who have the determination and ambition to improve themselves to write off their living expenses or part of their living expenses while they are away taking courses to upgrade themselves.
These are the three major points I wanted to make. I am not asking for special concessions in the sense I am asking for special status for any one group. I am simply referring back to what I said a few weeks ago to the effect that I strongly believe there is a double standard in this new tax bill. Some people can write off expenses while in pursuit of their jobs, while others can not. In referring to the first two points I have raised, I do not believe it would be unfair or inequitable to allow parents of children with cerebal palsy or any other serious ailment which requires highly specialized medical treatment in centres many miles away from home, to write off some of the expenses involved in taking their children to these centres for help. Nor do I believe it is unfair or inequitable to ask the government to consider allowing some tax concession to parents with children who have learning difficulties or who are perceptually handicapped and who require highly specialized treatment. So, Mr. Chairman, this is what I wished to contribute to the discussion at this point.

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Robert Jardine McCleave: Mr. Chairman, the Minister of Finance is in the House. Yesterday I made a point which I presented in the form of a question. I did not think the parliamentary secretary or the officials could substitute their opinion for that of the minister or the government, so I now take the opportunity to raise the same question again. I imagine the minister is familiar with it. It involves discrimination against non-married people who are living together, whether or not they are free to marry each other, and the fact that they are not given the same type of exemption as those of us who have followed the orthodox route to such a union. The Prime Minister of this country has stated that the government has no business in the bedrooms of the nation. If that is good enough for the criminal law of our country it should be good enough for the tax law of Canada. I, therefore, ask the Minister of Finance if he will agree to make amendments to section 109 to correct what appears to be a glaring case of discrimination, or are the Prime Minister's words simply to be regarded as hypocritical baloney.


Mr. Benson:: Mr. Chairman, in this respect I would simply like to say that, while I obviously am sympathetic in this case, it is very difficult to establish what a common-law relationship is. Do you allow people to claim married status because somebody has a girl friend whom he visits every now and then? The law is pretty definitive in respect of what married status is. I think that the relationship about which my hon. friend is talking may, in some instances, be the relationship of people who have gone through the formality of marriage in church or of civil marriage, but at least there is some evidence in that case, and you then move from the stage of people who have this kind of claim, a legitimate claim, down to the end. I believe that in the law it would be impossible to define the kind of relationship that is recognized if you were to consider allowing common-law marriage under the Income Tax Act.


Robert Jardine McCleave: May I make a very sensible observation to the minister because the formula that he is looking for and which he thinks is difficult to achieve happens to be within section 109 already. It deals with people who maintain a self-contained domestic establishment. So we do not have people sneaking all around the city to accomplish this purpose of being in the category that I mentioned. They live together; it is as simple as that. They live in a self contained domestic establishment and provision for that is right in the act.


Mr. Matte:: The clause now before us deserves our unremitting attention of course, because it can affect the greatest number of Canadian taxpayers. We should therefore take all necessary precautions in order to bring about a real change that would amount to something new for the taxpayers.
As I said before, the government has certainly sought, through this clause, to innovate so that other far less palatable sections could be adopted. The increase of the basic deductions from $1,000 to $1,500 for a single person and from $2,000 to $2,850 for a married person was thought to be a present to Canadian taxpayers.

Mr. Chairman, let us forsake the mathematical and technical juggling and revert to the real problems facing the Canadian taxpayer.
I would like also to point out how this government or the Minister of Finance (Mr. Benson), through these inadequate deductions, are unable to somewhat correct certain anomalies, not to say inequities, which taxpayers have to endure.
Mr. Chairman, if one would think in terms of the individual's needs and if the tax legislation could be changed to take into account the will, the wishes and the interest of the taxpayer, the new tax deductions would have been calculated on the basis of the bare minimum that should be guaranteed to each and everyone to enable them to live at least decently if not comfortably. And it is absolutely illogical, and I repeat "illogical" that this bare minimum be taxable.
If we ever calculate the bare minimum which an adult needs to live in Canada, we reach the figure of $1,500. If we exercise a minimum of judgment, we are going to say that it is $1,500, but the minister as well as everybody else knows that if a survey were conducted, it would indicate that this amount is largely inadequate and will not even pay for the upkeep of a CEGEP or university student. This does not even cover living expenses for any other individual. It is therefore indecent to tolerate such a small exemption.
There exists a sort of contradiction which I should like to underline. When considering the minimum exemption, taking into account that when the Old Age Security Act was amended, it was estimated that the amount granted as old age pension and guaranteed income supplement was a vital minimum, I believe, Mr. Chairman, that we have in this case the vital minimum for two people 65 years old without any income. Such a vital minimum is recognized as allowing two people to live decently. They are given $255 per month, that is $3,060 per annum. This is accepted as a basis, since this is the amount given.
Now, we must at least acknowledge that since the amount of $3,060 is felt to be needed by people of 65 to live on, in general, people only 65, 45, 30 or 20 years of age need more money.
In that case, to tax an amount of $1,500 even before the individual has had time to secure food, clothing or housing is nonsense and the Income Tax Act should immediately be amended in that respect.
All hon. members will agree that no one in the House can rise and suggest that $1,500 is an appropriate vital minimum for a Canadian citizen, when they know very well that such is not the case. Nobody else would pretend that it is so.
I wonder from simple common sense why the tax exemptions have not been raised higher, at least to the minimum income level which each Canadian is entitled to have.
All the more so as this tax reform proposal is so complicated that taxpayers computing their returns will be lost to the extent that they will probably have to pay someone if they want to pay their taxes. Besides, an odious factor will be added to something already not too exciting since our workers, the salaried people, precisely those who pay their taxes at the source-consequently
October 26, 1971

before their food, lodging and clothing-have no time to study all these technicalities and will therefore have to call in an accountant to figure out their taxes.
This again reveals how eager the government was to show its false generosity because certainly nobody can live with $1,500 a year. I think this no longer exists and if it did it should be definitely changed.
This is why I fail to understand why the Minister of Finance does not immediately propose an amendment similar to that moved yesterday by the hon. member for Bellechasse and to that moved today by the hon. member for Winnipeg North Centre. I wonder why the Minister of Finance does not immediately move an amendment to boost this amount of $1,500 to $3,000 and allow a $5,000 exemption for married couples.
There would be no exaggeration in that, Mr. Chairman, but it would merely be logical and sensible. And we would have then done something for the Canadian taxpayer. Moreover, considering all the means that are resorted to and that are used to get more money, one must say after all that with this mass of taxation reform, the government would surely get more from taxes.
How strange that one should not realize that if more money were left in the taxpayers' pockets, there would be less involvement on the part of the state in the individual's life and government's administration costs would therefore be reduced. That thought never occurs to us. Put an additional $500 or $1,000 in every taxpayer's pockets, and the unemployment problem might perhaps not be what it is today. Perhaps we would not have to cope with the problems of small, average or big industries that are fighting against financial difficulties and must therefore lay off employees.
That would be a good solution because everybody could go their own way and that is, I believe, what Canadian taxpayers want above all, namely that kind of freedom which will make them really happy to live in this country. But it rests with the government to grant them that possibility and that is why I deem it my duty to express once more the taxpayers' opinion, in my constituency and throughout Canada: That the exemptions advocated in section 109 are inadequate, that they are far from being satisfactory to the Canadian taxpayer and that in the case of a person earning $3,000, $4,000 or $5,000, a small wage-earner, it would be put a mere difference of some $30 or $40 for a whole year of work. That is merely making fun of the taxpayer.


Mr. Skoberg:: Mr. Chairman, I read reports in the press today that the parliamentary secretary, replying to the hon. member for Winnipeg North Centre on the question of tax credits, said that these would not be nearly as simple and straightforward as the advocates of a tax credit system seemed to believe. But, Mr. Chairman, all of us realize that nothing is as simple and straightforward as we would like.
I think we should look back and see what the Carter Commission did say. That commission was dominated by an eminent accountant, a former tax expert in the civil service. You would not expect such a person to recom-
Income Tax Act
mend a plan that would be impossible to administer. At that time there was a lot of talk about the necessity of hiring armies of tax experts, but it was just talk.
We in the New Democratic Party believe in that portion of the commission's report which advocates a tax based on tax credits, a comprehensive system that should include capital gains and windfalls. But when we talk about tax credits and exemptions the thing that makes me worry is how one person, Colin Brown, can convince the government, through a skilful propaganda process, to change its mind and not even consider tax credits as recommended by the Carter Commission.
I would like to quote one short paragraph for the benefit of the Minister of Finance and his parliamentary secretary, and then give the source. It reads as follows:
The Carter Commission would not limit, much less deny, the rewards of successful individuals and companies. It would insist that they, like everyone else, pay their fair share of taxes on gains in wealth. The outcry against the Carter Report has come from a very small section of the Canadian people-not more than the top-earning 2 to 5 per cent, according to a speaker at a Canadian Tax Foundation Conference. But because of the lack of any comparable outcry for the report from the unorganized millions of lower and middle income taxpayers, there is a clear danger that the report will be shelved. It may become an academic document to which professors refer wistfully when they are talking about an ideal tax system, rather than a practical charter of just taxation for Canadians. The Church should urgently support the Carter Report as a magnificent document which deserves to be implemented in the main.
That is from "The Cutting Edge," the 43rd annual report, 1968, of the Board of Evangelism and Social Service of the United Church of Canada. If we are talking about justice and equity in taxation, then instead of being harassed by people like Colin Brown the government should take into consideration the 95 per cent of people who could be helped by a tax credit system. However, it appears that the government is too concerned about its friends in the upper 5 per cent bracket. It wants to try to please them rather than introduce a proper, equitable tax system to help millions of people across the country.
We have to ask ourselves whether the rights and liberties of the individual are protected under the system. It appears to me that adoption of the amendment offered by the hon. member for Winnipeg North Centre, which the Chair has taken under advisement, would bring about a more equitable tax system. So far as this party is concerned it would not take the place of tax credits, but is second best.
I believe the Minister of Finance must realize that it is the principle of equity that is facing this Parliament. We have to ask ourselves a number of questions about the type of exemptions proposed here. We have to ask what personal circumstances should be recognized in allocating tax burdens among individuals and families. How much should tax burdens differ between those in one circumstance and those in another? There are questions of belief, and we in this House must recommend and put into legislation that which we believe to be fair. We in this House are given the responsibility of making recommendations and enacting legislation that we think will be fair to the majority of the people. The tax burdens of those facing heavy family obligations and responsibilities should be reduced to reflect the non-discretionary expenditures that they are required to make. We know, Mr. Chairman, that
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this could be done through the adoption of separate rate schedules and tax credits. The parliamentary secretary suggests that such a system would be difficult to administer, although Carter indicated that it was possible.
The National Pensioners and Senior Citizens Federation presented a brief to the government in 1968, to which reference was made yesterday. One clause reads:
RESOLVED that we ask that the allowable income ceiling be raised to $3,000 per couple, $2,000 per single person,
The brief from the same body dated October 18, 1971 suggests $3,000 for single people and $4,500 for married couples. This body is representative of the senior citizens all across this country. Surely, more could be done for them than has been done in the three years since the first brief was presented. It appears, however, that the government is not interested in this area.
I should like now to refer to that portion of section 110 dealing with exemptions and would call the attention of the Minister of Finance and his parliamentary secretary to it. The cost of burial-I am quite prepared to say facetiously that this bill should be buried or cremated and then maybe we could get back to the basic problems of this country! This is a matter of great concern to the senior and all citizens of this country. I have a letter dated October 8, 1971 from the minister which reads:
Funeral expenses are, of course, a personal expenditure unrelated to earning income and, in cases of hardship, need not be incurred in any significant amount. For these reasons such expenses are not provided for as an allowable deduction.
Well, Mr. Chairman, though it may sound frivolous, one individual told me recently that this would be fine and dandy if you could leave the body on top of the ground and tell the government to bury it or cremate it. The minister is in the House at the moment and I should like to ask if he could give some serious consideration to allowing funeral expenses as a legitimate deduction from income taxes. The letter suggests that funeral expenses are a personal expenditure, but surely it ceases to be personal when the law decrees that a body must be buried or cremated. Whether we like it or not, this is a legitimate expense and should be included in the provisions of this act. It appears to me that when we talk about funeral expenses being a personal expenditure which has to be absorbed somehow, we must be realistic and acknowledge that it is a burden to the majority of people.
The minister's letter states that such expenses "need not be incurred in any significant amount". Surely, this suggests "have" and "have not" funerals. The minister probably did not mean to suggest two classes of funeral-one rather elaborate and one to drop the body in a hole. But this is the reply received to a letter I wrote to the minister concerning an individual who wished to have such expenses considered for exemption from income taxes.
In many cases when a husband or wife is ill, the doctor will recommend that the spouse remain near by. This can entail considerable expense for travelling and accommodation, but as far as I know such expenses are not allowed under the Income Tax Act. I should like very seriously to ask the minister if he could give consideration to allowing a fair amount for funeral expenses, whether cremation or burial, and thus eliminate the "have" and "have-not" dis-
(Mr. Skoberg.]
tinction. I know that we will not make any radical change at this time, but perhaps he would look into it. Allowances are made in many other areas and with the increasing cost of burial in Canada today, surely consideration could be given to this matter.


The Deputy Chairman:: Order, please. Before I recognize the hon. minister I should announce the proceedings on the adjournment motion. The questions to be raised tonight at the time of adjournment are as follows: the hon. member for Nanaimo-Cowichan-The Islands-Regional Economic Expansion-Atlantic provinces-assessment and revamping of departmental programs in light of criticisms-long term targets; the hon. member for Brandon-Souris-Post Office-Steps to improve service and avoid exorbitant cost for mailing letters; the hon. member for Battleford-Kindersley-Agriculture-Farm machinery- federal assistance to prairie provinces in testing program.


Edgar John Benson: Mr. Chairman, I simply wanted to say that I would consider the representation of my hon. friend but it is a very difficult matter when one suggests bringing in expenses which are not related to the earning of income. I should indicate that the government did recognize problems in this area when we enacted the Canada Pension Plan. A death benefit was included there to look after the particular situation for people who had contributed to the plan.


Mr. Rynard:: ures, the exemption for a single person ought to be established at around $1,800 and for a married couple at around $3,600. Perhaps the minister could tell us of any figures that the people in his department have established. Perhaps he can tell us why he has established the present levels. At any rate, so far as I can figure out, the exemption levels I have suggested ought to apply. If one considers cost of living increases between 1949 and 1961 and between 1961 and the present, one will see that the exemption levels I have suggested are about right. Surely, in this age of computers and electronics we can arrive at a better way of working out these matters without cheating our taxpayers.
By setting exemption levels as we have we are cheating the taxpayers at a time when their dollar is being eroded. Surely, that is not right. Provision ought to be made in this bill, for higher levels, and I will ask the minister to give that serious consideration. He ought to introduce a new system whereby exemption levels are adjusted each and every year to take into account increases in living costs, inflation, or whatever the case may be. There is no reason for not doing that in this electronic age. Actually, income tax forms are processed electronically, so that there is no excuse for not looking into this matter every year, two years or even five years. Let us not wait again for a period as long as that between 1949 and 1971 before adjusting exemptions. Such neglect looks a bit ridiculous in the present age.
The increased exemption of $650 for those of 65 and over is a good measure, because among those people there is an increasing toll of illness and their illnesses are of longer duration. As I say, however, the minister ought to give the matter of the adjustment of exemptions serious consideration. If they cannot be adjusted yearly, perhaps they could be adjusted every three, four or five years. I think it could be done yearly. I would not like to see exemptions increased in the same way as the guaranteed income supplement is being increased. Let there be no 2 per cent per year escalation there. I think exemptions ought to be granted which would take into account inflation and the erosion of the dollar. I leave that thought with the minister in the hope that he will bring the system up to date and rectify the erosion that is taking place every year, so that in the future people will be treated as nearly as possible in the same way as when this bill is passed.


Patrick Morgan Mahoney: Mr. Chairman, I am afraid the number of unanswered questions I have accumulated may outrun the opportunity that I will have to answer them in 20 minutes. At this time, I should like to answer at least a few of them. Perhaps I may sufficiently anticipate the points of the hon. member for Fraser Valley West that he will not feel called upon to exercise his talents of oratory.


Some hon. Members:: Oh, oh!


Patrick Morgan Mahoney: That is most unlikely, however. Perhaps the wish is father to the thought.
The matter of tax credits has been raised again by numerous speakers. I ought to say that this point was investigated thoroughly by the Standing Committee on Finance, Trade and Economic Affairs when it was considering the white paper proposals. A document submitted to that committee under date of January 23, 1970 and preincome Tax Act
pared by the Department of Finance for the information of the committee, made a number of points worth noting. Although the figures, Mr. Chairman, refer to the exemptions and rates as proposed in the white paper, the point is equally valid at present and a comparable set of tax credits and adjusted rates could certainly be prepared in connection with Bill C-259.
The paper presented to us made the point that both tax credits and exemptions are methods by which amounts of income can be excused from taxation. An exemption can be viewed as adding a zero rate bracket to the bottom of the rate schedule. A tax credit can be viewed as transforming the bottom rate bracket or brackets, or parts thereof, into a zero rate bracket. The paper prepared a series of comparisons of a tax credit system showing tax credit for a single taxpayer of $210 and then an additional tax credit of $253 if he were married. It demonstrated that, point for point in the various income brackets, these were precisely the taxes that would have been paid by a single taxpayer or by a married taxpayer without dependent children, if one were to compare them to the schedules appended to the white paper.
The paper also pointed out that under a tax credit system, if the government wishes to provide that no one with an income of $1,400 or less will pay income tax, it must provide a credit which equals the tax on the first $1,400 of income. If a rate of 50 per cent had been applied to the first $1,400, the tax on $1,400 of income would have been $700 and the tax credit would have been $700. If the' rate applied to the first $1,400 of income had been zero, the tax credit would also have been zero. In summary, the document said, and I quote:
-the rate or rates applied to the first $1,400 are meaningless in that no one pays them. In practice, only the rates which apply to income above that level affect the amount of tax that is actually to be paid, and these rates can be adjusted in either regime.
So, again, I suggest to the committee that the easy suggestions hon. members have made in their general submissions that the tax credit system is more flexible and fairer to low income taxpayers than the exemption system are simply superficial observations completely without foundation. Hon. members cited no authority for their submissions. The important thing is not whether we introduce a tax credit system or a tax exemption system. The important thing is the rates that are applied to income upon which tax is actually paid, no matter whether that income is above the income which is excused from taxation, as under the exemption system, or whether it is that tax on income is net after the deduction of tax credits, as under the proposed tax credit system that hon. members opposite have been discussing. There is nothing magic about the tax credit system. The exemption system that this government has decided to remain with certainly gives the same opportunities for flexibility and fairness.
The hon. member for Edmonton West raised a number of points yesterday, and I want to refer to them. First, the hon. member referred to subparagraph 110(l)(c)(iv) and said:
At the present time there is difficulty in interpreting those words. Some assessment officers indicate that a taxpayer or a dependent must be confined to bed for a period of 12 months prior to entry into a nursing home if any nursing home expenses during that 12 months in the taxation year are to be claimed or allowed.
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The interpretation of this language, as well as the language of other sections of the bill, of course, will be the responsibility of the Minister of National Revenue. I can only say that that particular paragraph is the same as present subsection 27(l)(c)(iv) and has therefore been administered for many years. There ought to bfc ample precedent for its interpretation.
The hon. member for Dauphin raised a related question about the same section. He wanted to know whether an elderly person could deduct as medical expenses the amount that he pays for full time care in a nursing home. In this case it is assumed that the elderly person requires care but is not confined to bed or a wheel chair. Such expenses under the bill do not qualify as medical expenses. There is a problem in defining a nursing home, as the hon. member pointed out. Amounts paid to a hospital qualify as medical expenses, but homes for the elderly range all the way from private hospitals to accommodation which would compare favourably with some of our better hotels. A deduction for amounts paid to nursing homes could give some individuals a deduction for personal living expenses that would be quite unjustified.
Yesterday the hon. member for Greenville-Carleton raised a point under section 110(l)(c)(vi). The hon. member for Brant reiterated that point today. Each of them was talking about a different ailment, but nevertheless the answer is the same. This pertains to the question of children requiring special care or training because of mental or physical illness. Section 110(l)(c)(vi) is a new section in the bill. I commend it to both hon. members. It is among the list of deductions that may be made for a medical expense, and I quote:
for the care of the taxpayer, his spouse or any such dependent in a school, institution or other place of care that is specially equipped to provide care to persons who are physically or mentally handicapped and that admits for care only persons who are so handicapped,
There is an amendment to that clause which has been submitted by the government. It will make it clear that this provision extends to care and training as well as care alone. We feel that answers the question which the hon. member for Grenville-Carleton raised in connection with the disease dyslexia and which the hon. member for Brant raised in connection with perceptually handicapped children.
Yesterday the hon. member for Edmonton West raised the question of the guaranteed income supplement still being included in the computation of taxable income. The reason for including this supplement in income is to require that it be taken into account along with the old age security pension and other income in determining the extent to which an individual may be regarded as a dependant for tax purposes. It does not affect the taxation of the individual receiving the guaranteed income supplement. Indeed, at the present time no tax will be payable by that person. It does affect the taxation of persons who may be claiming a recipient of a guaranteed supplement as a dependent.
If the supplement were excluded from income, many elderly individuals would be regarded as receiving only the old age security pension of $960 a year for taxation

purposes and would be qualified as dependents even though they may be actually receiving at least $1,620 a year. Under the system in Bill C-259, an individual does not cease to be a dependent for tax purposes when he has income in excess of $950 a year, as is the present system. A taxpayer could deduct $550 for his parent who had income of only $960. The requirement that the supplement must be included in income will have the result that all individuals eligible for old age pension throughout the year will have at least $1,620 income for tax purposes.
The hon. member for Peace River raised the matter of special concessions for northern residents under the Income Tax Act. There is no doubt that mechanically this could probably be done. However, it is a basic policy decision. It is a policy dealing with the northern territories and economy rather than a tax policy question. I really cannot offer to answer it beyond that point.
The hon. member for Brant raised the question of travelling expenses for handicapped persons. We have looked at this. We do not have any satisfactory answer to offer at this time.
The question of upgrading teachers and refresher courses was raised. In his speech, the hon. member was fair enough to cite most of the arguments against implementing his recommendation. I can only say that we place a different weight on the arguments against it than he obviously does.
The question of deemed realization on charitable donations, of items of property as opposed to money, was raised by the hon. member for Edmonton West. I prefer to deal with that question when we come to the capital gains section of the bill rather than under 109 and 110.
The hon. member for Edmonton West also raised the question of adjusting the provision dealing with eligible medical expenses, so that all such medical expenses would be prescribed by regulation. The bill before the House has made an amendment to the section dealing with appliances and devices to provide for that. The reason for that amendment in this particular instance is that technological advances in this area are proceeding extremely rapidly. In the opinion of the government, the law was not sufficiently responsive to these changes. It was necessary to be fair to taxpayers to provide a means by which deductions in this area could be allowed on a more rapid basis than has been the case in the past where an amendment to the act is required. However, on a general policy basis, deductions, changes in incidence of taxation of this nature, can be a very important decision. The government feels that Parliament should have the right to pass on them rather than the governor in council.
I think, Mr. Chairman, that tidies up the bulk of the questions to which I have not responded over the past few hours. I will check my inventory and no doubt I will have an opportunity to pick up any loose ends later.


Philip Bernard Rynard: I wish to ask the parliamentary secretary a question. I was not clear on his answer with reference to nursing homes. Did I understand him to say that this might lead to people going into homes and claiming deductions when it was not necessary for them to go into these homes, thereby getting an allowance for living expenses?
October 26, 1971


Patrick Morgan Mahoney: No, Mr. Chairman. I was not questioning the motivation of people going into nursing homes. I was pointing out that the conditions under which they go into them, from a personal point of view, can be vastly different. Some nursing homes are tantamount to private hospitals. Others are very fine accommodation indeed, but do not render medical care or treatment of any description. In many instances, a general allowance of payments to nursing homes would result in taxpayers being allowed to deduct what are essentially personal living expenses. This would be inequitable as far as the vast body of taxpayers is concerned.


Philip Bernard Rynard: As far as I know, and I know the Minister of Finance will correct me on this if I am wrong, in Ontario it is necessary to obtain a doctor's signature to get into these homes. They are all licensed.


Edgar John Benson: I believe in most cases they are licensed.


Mr. Rose:: Mr. Chairman, ordinarily I would be delighted to respond to the suggestion of the parliamentary secretary that he be denied my oratorial skills on the ground that some of the things I am about to say have been covered, at least in part by other speakers. From my experience, I feel that repetition in this House is not unique and that I must move ahead. Therefore, I cannot stand pat.


Some hon. Members:: Oh, oh!


Some hon. Members:: Hear, hear!


Mark Willson Rose: I say that with the utmost charity.
Mr. Chairman, I understand that although today we are discussing section 109, section 110 is also fair game, although it was not yesterday. I am glad this has been ironed out. I am concerned about the 3 per cent rule, the situation in which medical expenses for a variety of the things the parliamentary secretary has mentioned in response to other members' speeches are covered or allowed as deductions. We should examine what this means. It means that a person earning $5,000 can deduct expenses in excess of $150. That is the way I read it; if I am wrong I would be pleased if the minister would correct me. I suppose one might describe $5,000 as an average sort of income and depending upon other circumstances the allowance might, or might not, be of great benefit, because a taxpayer would still have to pay the first $150. Those who earn a great deal more money are entitled to be sicker, or at least, deduct a larger amount for medical expenses.
I should like to draw attention to cases which have arisen in my own constituency and which have been brought to my notice. I have been in touch with the department about some of them. I was pleased to hear the parliamentary secretary indicate that transportation expenses would be considered tax deductible if associated with an illness. Perhaps, I did not clearly understand him correctly.


Patrick Morgan Mahoney: No, Mr. Chairman, the hon. member did not hear me correctly, I am afraid. The bill proposes no change in the situation as far as that is concerned.
Income Tax Act


Mark Willson Rose: I am sorry to hear that. In my view it should. A difficult situation is created for many people who are affected directly, or whose families are affected, particularly when regular treatment for certain ailments is required. I recall a situation where a businessman in the community which I have the honour to represent is obliged to put about 20,000 miles on his car each year to take his wife to a large centre where she can receive treatment for a kidney ailment requiring the use of a special machine. At 10 cents a mile, this adds up to $2,000. The man has no choice. If he does not follow this routine, his wife will die. He is allowed a deduction amounting to $150, yet he must face this fantastic burden of transportation costs. Situations of this kind should be investigated.
What is happening is this: the purpose of the medicare legislation, which has been applauded on all sides of the House, is being defeated. I know the minister must be tired of hearing about these special cases and I realize it is difficult to design legislation which will cover all eventualities. In spite of what some people say, I do not believe he is a hard-hearted individual. His own doctor has suggested he should go to Florida. While this is a wonderful idea, I would not argue that he should be allowed to deduct the cost of such a trip from his income tax. But I have made my point, and I do not wish to be facetious about it. By the way I might add, before I leave this case, that the constituent I have mentioned was invited to talk this matter over with the regional director. They had a nice chat but it did not mean a thing. He still faces the same high travel expenses.
Case No. 2 is another difficult situation involving a child requiring special training and care-a little girl suffering from spinal meningitis. The family is doing its best but is bearing a tremendous burden since school and training facilities suitable for this child are remotely situated. In a case like this, a maximum allowance of 3 per cent is not enough. If the child had only been sensible enough to have contracted a different kind of illness, things would have been fine. But this did not happen. It was not the luck of the draw.
The next point to which I should like to draw attention concerns the cost of necessary prescription drugs to older citizens. Many of these older people are obliged to live on meagre incomes. The party to which I belong has discussed this issue many times and our position in regard to it is well known. On occasions, the cost of prescription drugs runs as high as $90 or $100 a month. Three per cent of $3,000 amounts to $90 a year, which is no exemption, really. Something should be done about this; most of the people about whom I am concerned in this context have incomes which would fall close to the figure I have mentioned.
Reading the bill we find that in section 110 (1) there are some 14 places in which the need for such things as wheelchairs, special appliances, trusses, limbs, glass eyes and so on is recognized. But the legislation does this only in a tokenistic way. Members of Parliament should be well aware that there is no magic attached to the 3 per cent figure. It has not always been 3 per cent. Once it was 4 per cent.


An hon. Member:: No.

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Mark Willson Rose: An hon. member over there said "No". Does he want me to yield him the floor? I believe we should be considering seriously whether the 3 per cent figure should be retained. I understand the problems encountered by the minister responsible for this legislation. There are always people who will try to take advantage of any concessions. However, I do not think this is any reason we should not strive to enact the best possible kind of legislation. After all, legislation should be designed to serve the people; people are not designed to serve the legislation. If we keep this in mind it will be helpful. Instead of 3 per cent, why not 1 per cent? What is special about 3 per cent? It is simply a figure out of the air. I believe an amendment should be introduced to change this figure. I hope someone will move it. I shall not do so because there is already an amendment before the committee.
I want the parliamentary secretary to pay attention. I know that when a member speaks in the House he does pay attention and takes the representations made to him under consideration. I believe there should be provision in the bill which would allow a regional director, in the Department of National Revenue, or, if you like, a specially constituted board, to hear special cases and make provision for meeting them. If this were done, the law could be just, and anomalies could be handled with proper consideration. Most of the work which falls on me as a Member of Parliament in dealing with constituents concerns people who have run up against the stone wall of bureaucracy. They cannot get through to the decisionmakers. They are stopped by the clerks at the front desks who have nothing before them but the rulebook.
I am saying nothing against our public servants when I say this. The people who meet the general public most of the time are not in decision-making roles; they can only operate on the basis of the rules before them. We want cases of the kind I have mentioned to go before someone with the power to act, the power to interpret.
I leave the committee with these two suggestions as to how to look after the anomalies hon. members have raised. We should reduce the 3 per cent rule because it is unjust. Whether we remove it or allow it to remain, we should have in the national revenue legislation a provision so a regional director will have the power of interpretation in respect of the extraordinary and special case.


Mr. MacKay:: Mr. Chairman, I shall attempt to take a positive position in what I have to say. I think we all agree that the government is to be commended for taking this long overdue step in increasing exemptions for Canadian taxpayers. However, I realize also, as I think all hon. members do, that there is a limit above which personal exemptions cannot be raised.
The question before us is whether or not equity is being achieved for the average Canadian. I suggest, with deference, that it is not being achieved. As the hon. member for Fraser Valley West has said, I do not think that many of us here seriously doubt the good will of the Minister of Finance. Certainly I do not doubt it. I may question his forecasts and statistical bases sometimes, but I feel he has the basic welfare of the country at heart.

The money required to run this country has to come from somewhere. There is no magic formula available by which we can get money, as some monetary theorists would like to suggest, such as from a printing press. I suggest, however, that something could be done. Our taxation rate schedule could be revised. I say this in all seriousness because in the lower income groups the tax increases very sharply in proportion to income, whereas in the higher income groups we find that an increase in income is not subject to the same sharp tax rate increase.
The government should take a good look at the rate schedule. Perhaps it will find that those of us who are fortunate enough to be in a higher tax bracket would not seriously object to paying a higher percentage of income tax if it were to the benefit of those Canadians who are not so fortunate. When talking about the unfairness and inadequacy of these exemptions for Canadians we are forgetting one factor. Much has been said about the cost of living increase since 1949, but other factors have come into play which did not exist in 1949, one of which is the increase in the types of tax the average Canadian must now pay.
Only recently in my own province have we had to cope with provincial sales tax. It is only fairly recently that federal sales tax has been a factor with which all Canadians must reckon in the purchase of ordinary goods and services. Municipal taxes have risen dramatically, in some cases 10 times since the early 1950s. That is the case in at least the province in which I live. These factors have not been given sufficient emphasis. The average Canadian has to pay a great deal more in over-all taxes than he did in 1949 when the St. Laurent government, in its wisdom, decided that personal exemptions of $1,000 and $2,000 were adequate.
Let me leave that point for a moment and associate myself with the remarks of an hon. member who spoke before me regarding the exemption of funeral expenses. I agree that benefits from the Canada Pension Plan are available and do alleviate some of the difficulty, but there are some people to whom the benefits of the Canada Pension Plan are not available. This is a fairly new scheme in our country. In all seriousness, the Minister of Finance should take another look at the possibility of permitting in specific cases the deduction of funeral expenses or at least a portion thereof.
Another area in which there seems to be some unfairness is that of municipal tax and mortgage interest payments. I think it would be worth while if the government were to consider allowing the home owner to deduct either part of his municipal taxes or a portion of his mortgage interest. If a home owner was smart enough to form a small corporation or make other arrangements he could in fact deduct mortgage interest and municipal taxes from his income. The average Canadian who owns a home cannot do so.
As a gesture, if nothing else, this would be the equitable thing to do, and it would promote the desire in everyone to own their own home if they felt they could benefit to some extent through a tax exemption. This government, rightly so, has promoted the idea that Canadians should own their own homes except in crowded urban centres. I think the government should make a tax concession for those Canadians who are struggling under the burden of
October 26, 1971

owning their own homes in this day and age when it seems they must pay taxes to everyone.
I do not intend to continue at length because much has been said about these sections and there has been a great deal of repetition. It seems to be illusory to some extent to talk about exemptions of $1,500 and $2,850 being of great benefit. Certainly this is a substantial benefit, but it is not good enough. In view of present concepts of income, many taxpayers who will be taken off the tax rolls this year will be right back on them before too long, paying more taxes than ever.
In conclusion, it is rather obvious that tax revenue has to come from somewhere. In all sincerity, the place to get the revenue is from taxpayers in the higher income brackets, giving the lower income people a break even though it is at the expense of those a little more fortunate. I should not like to see corporations taxed more heavily; I should like to see the tax rate on corporations lowered still further. The business community and the corporations must create the impetus if we are to generate economic activity in this country permitting it to grow and develop without undue reliance on foreign capital.


Mr. Ritchie:: Mr. Chairman, I should like to say a few words about the 3 per cent rule in respect of medical expenses. I agree with the hon. member for Fraser Valley West who suggested this figure should be reduced. The 3 per cent rule was adopted a long time ago when incomes were much lower and 3 per cent was considerably less, relatively, than it is now. There are other reasons why this rule should be reduced. At the present time almost everyone has hospital and medical expenses covered by insurance for which they pay premiums. I have no argument against this system, and I am sure the 3 per cent rule applies in respect of an extremely small number of taxpayers.
There are some people who have legitimate expenses and substantial costs which are not covered. At this time we have vast increases in medicare, hospital and general welfare services. We must have some control in this regard. One way to meet the situation is to have citizens spend some of their own money to obtain medical and hospital services. Many people cannot obtain these services at times convenient to them and some will leave the country to obtain them elsewhere. It is a fact that our institutions are being overloaded and that this overloading will substantially increase. If there is any way in which citizens would pay for some of their expenses I think we as a country would be much better off.
The parliamentary secretary was kind enough to give me an answer in respect of the nursing home situation. I believe the department should look at this aspect of the matter. In my province of Manitoba and, I believe, in other provinces, nursing homes are rigidly licensed and regulated and nearly all admissions are under the control of the public health department. No one, whether a paying or non-paying patient, is admitted without the sanction of the public health officials. In effect, this means that admission to a nursing home is by means of a government official.
Income Tax Act
I am not sure of the figure, but I believe that approximately 90 per cent of the persons in nursing homes in my province are there as guests of the state. In other words, they do not have sufficient funds to pay for their care, which amounts to $400, $500 or $600 a month. Only a small number pay their own way. There would seem to be unfairness in this regard. Last night I detailed the case of a 100-year old woman whose old age pension plus a pension from her deceased son just equalled the cost of her stay in the nursing home. On top of that she had to pay income tax. This deprived her of the extras she might have had and meant that her family in effect had to pay her income tax.
Then there are people who find their life's savings being chewed up in order to pay for their care in nursing homes, whereas 90 per cent of the citizens receive it gratis. It would seem that this is an area in which something should be done. It affects a relatively small number of people. There would seem to be unfairness in the income tax regulations in this regard.
Finally, I should like to make a comment or two in respect of section 110(l)(c)(iii) which refers to medical practitioners, dentists and nurses. Here, again, it would seem that this provision could be broadened to include all members in the health field who are licensed in the province in which they operate so that whatever payments are made to them could be deducted in computing income tax. It would seem that in some professions which are licensed to carry on health disciplines, payments made are not deductible in the same way as payments to a medical practitioner, a dentist or a nurse. In this area it would seem that an anomaly exists and I thought the matter should be raised.


John Leroy Skoberg: Mr. Chairman, I should like to raise a further question in respect of funeral expenses. When the Minister of Finance was here he said that the Canada Pension Plan would pay part of this cost. I am sure the parliamentary secretary would agree that people who are covered by the Canada Pension Plan are covered, but it is those who are not covered by the plan that we are concerned about. In fact, some people will not be covered in so far as funeral expenses are concerned. Therefore, could the parliamentary secretary or his officials give an undertaking that they will look at this area which is of concern to many people?


Patrick Morgan Mahoney: I think I can indeed give an assurance that we will look into it. I know the minister was here when the hon. member raised the question and is certainly well aware of the interest, as I am, and representations of members from other corners of the House. The general philosophical question of what deductions from income which are not related to earning the income should be allowed for various other good reasons is a tough one. There are many good causes, many unavoidable expenses and many occasions in the lives and deaths of people which result in expenditures which one cannot regard with anything but a great deal of sympathy. Yet if we were to extend the deductions from income tax into these areas we would be open to some serious question.
The question raised by the hon. member for Central Nova regarding home ownership and the possibility of deducting mortgage interest and property taxes of course

October 26, 1971
Income Tax Act
is a subject which has been raised by many people. However, I believe such a provision would be very discriminatory against people who cannot afford or do not choose to own their own home. I would only say to the hon. member that if he is really aware of any situation where a home owner has been able to claim such an expense through the medium of a corporation, I think the district taxation office would be most interested in knowing about it, even under the present law.
In my earlier answers I neglected to deal with a couple of questions raised yesterday by the hon. member for Edmonton West. I should like to deal with them briefly. He suggested, when I originally discussed the relative levels of taxation in Canada and in other jurisdictions, that I was perhaps misleading the House. I was very careful at that point to use statistics which are not subject to any variation on the basis of provincial, municipal or other taxes. The figures I used were the income figures at which a person starts to pay taxes on those jurisdictions. This figure does not vary, so far as I am aware, on the basis of any particular local condition.
The hon. member suggested that perhaps under section 109 (l)(d) the age of 21 that is presently prescribed in respect of a dependant resident in his parents' household should be reduced to 18 in conformity with changes in the law being made in both federal and provincial jurisdictions. I believe that upon analysis the hon. member would agree that such a change would impose an additional burden on taxpayers, would not be relieving, and that perhaps it would be of advantage to taxpayers to be able to automatically claim their children up to age 21 as dependants rather than having to prove they are mentally or physically handicapped or are in an educational institution once they get beyond age 18.
I may not have picked up all the points raised recently by hon. members. The hon. member for Dauphin raised some points concerning medical expenses. Certainly we are most interested in obtaining a suitable definition of a nursing home because we agree there is a great deal of merit in the argument presented here. We will look into the situation in the provinces to ascertain the validity of the contention that persons require bona fide medical certificates, and so on, in order to get into nursing homes. If it is possible to obtain a fair definition, then I am certain the minister would be more than happy to consider the representations which have been made here. The hon. member for Dauphin also made representations concerning the extension of the medical category to other health services. We will consider that matter but I am not, perhaps, too optimistic in this regard.
I do not think there is anything else. I gather that no one else is prepared to speak and that the Chair is ready to rule on the hon. member's amendment. If I am correct, we might call it six o'clock.


Stanley Howard Knowles: Mr. Chairman, I wonder if the parliamentary secretary would make a few comments on the remarks made by the hon. member for Fraser Valley West, the hon. member for Dauphin and perhaps others on the 3 per cent level that is still in the Income Tax Act with respect to medical expenses. One of

the advantages of having been around here for a while is that one remembers the history of these things. When it was first brought in, it was 5 per cent. We pleaded for it to be wiped out altogether, and eventually we got it down to 4 per cent and then down to 3 per cent. Why stop there?


Patrick Morgan Mahoney: I think that the figure cannot be regarded as anything except one arbitrarily chosen and this is, in my opinion, fair enough. I think most families, in addition to the assistance that is available to them through medical plans today which are subsidized by the general body of taxpayers, have to regard a certain amount of medical expenses as being personal living expenses.
The objective here is to make sure that people with unusual burdens of medical expense not be placed in a very unfair and untenable position. I have not heard any arguments that would lead me to believe that 3 per cent is wrong. I appreciate the fact that 1 per cent or 2 per cent would be more favourable to the taxpayers; certainly it would be more favourable to some in the higher income brackets who would benefit greatly from the ceiling being lowered.


Stanley Howard Knowles: A tax credit would be better.


Patrick Morgan Mahoney: However, a figure has been chosen. Perhaps there are arguments, but I have not heard them, to suggest persuasively that it should be reduced.


John Stratford Burton: Mr. Chairman, may I put a question to the parliamentary secretary in that regard? He expressed the view that an individual should retain some responsibility for medical expenses and that this provision is really designed to provide some compensation relative to unusual medical expenses. The parliamentary secretary will recall that when the 3 per cent level was established, with the exception of progressive and forward-looking provinces like Saskatchewan which had a hospitalization plan already in effect, most of the provinces and jurisdictions did not have any hospitalization or medicare plan and all of these expenses could be considered in making the calculations concerning medical expenses. Therefore, would the parliamentary secretary not agree that the concept at that time was that only medical expenses of an unusually high nature were to be considered?
I ask this question relative to the fact that at that time the 3 per cent covered all medical, hospital expenses and other items now included in the proposed bill, or most of them. The proposal now before us relates only to special items, and the 3 per cent level is still being retained.


Patrick Morgan Mahoney: I do not pretend to know what the criteria were in choosing the original 5 per cent, reducing it to 4 per cent and then to 3 per cent, but I do think that the 3 per cent level has not been demonstrated to be unfair as yet. I can see, certainly in general terms, the desirability from the point of view of individual taxpayers of having that figure reduced, but I do not know what the criteria were in the first place.
I think today we accept the idea that in most cases publicly supported medical plans are available in Canada and most Canadians enjoy the benefits provided by them. This is, today at least, more of a safety valve and not necessarily designed to permit the deduction of what
October 26, 1971

would be regarded as ordinary or normal medical expenses.


Gérald Laniel: Order, please. I am advised that the Chairman of the committee is ready to make his ruling on the amendment proposed by the hon. member for Winnipeg North Centre. I think it would be best to leave it to the committee to decide whether it prefers to hear the ruling now or at eight o'clock, and to call it six o'clock now.


Stanley Howard Knowles: Mr. Chairman, are you privy to this at all? Do you know how long it would take? If it would take four or five minutes we could have it now, but if it would take ten minutes I suggest we should hear it at eight o'clock.


Gérald Laniel: My understanding is that it might be a five-minute ruling.


Some hon. Members:: Six o'clock.


Some hon. Members:: Now.


Gérald Laniel: The Chair cannot call it six o'clock unless there is unanimous consent, and there does not seem to be unanimous consent. But if we invite the Chairman of the committee to make his ruling at this time, I hope the committee will agree to sit beyond six o'clock.


Some hon. Members:: Agreed.


Stanley Howard Knowles: If you keep on talking, Mr, Chairman, it will be six o'clock.


Russell Clayton Honey: Order, please. I am prepared to make the ruling now although I admit that, as the Deputy Chairman indicated, it may take six or seven minutes. I should like to leave it to members of the committee to decide whether they want to hear the ruling now or at eight o'clock.


Some hon. Members:: Six o'clock.


Gérard Laprise: Mr. Chairman, as it is now six o'clock, it would be better to wait for your ruling until eight o'clock, when we will be much more inclined to understand it.


Russell Clayton Honey: It being six o'clock, I do now leave the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Russell Clayton Honey: Order, please. When the committee rose at six o'clock the Chair was prepared to make a ruling on the motion of the hon. member for- Winnipeg North Centre. Hon. members will recall that I had asked the committee the privilege of considering the motion of the hon. member, the arguments made in support of it and the
Income Tax Act
arguments made in opposition to it, earlier in today's sitting.
It might be helpful if I began my comments by reading the motion. It was moved by the hon. member for Winnipeg North Centre:
That Bill C-259 be amended at page 277, (a) by deleting the figure "$1,500" from lines 12, 37 and 48 and by substituting therefore the figure "$2,000", and (b) by deleting the figure "$1,350" from lines 13 and 38 and by substituting therefor the figure "$2,000", and that the rates of tax provided in the proposed section 117, on pages 305 to 312, be adjusted to provide revenue equivalent to the revenue lost by changing the exemption levels as herein provided.
At this time I took the matter under advisement. Because of the importance of the proposed amendment and after taking into account the obvious care and thought put into its preparation, the Chair sought and obtained leave of the committee to take the question under study. I would assure the hon. member that I have given careful and earnest consideration to his proposal. At the outset of my study I endeavoured to reconcile one authority with another, but inevitably it seemed that I could do no better than refer to a decision of Mr. Speaker which in my opinion bears directly on the point at issue.
If I may be permitted, I should like to put in my own words-I want to do this before referring to the ruling of Mr. Speaker so that we may consider it in the context of the motion made by the hon. member for Winnipeg North Centre-what I consider to be the purport of the proposed amendment. It seems to me that the hon. member's proposal would increase the exemptions and as a result thereof, as stated in his proposal, the rates of tax provided in proposed section 117 on pages 305 to 312 of the bill would have to be adjusted to provide revenue equivalent to the revenue lost by changing the exemption levels provided in the bill.
With the leave of the committee I should like to read from the proceedings of the House as recorded at pages 188 and 191 of the Journals of the House for December 11, 1969. Before I do this I would suggest that hon. members who are familiar with the arguments made earlier today on the procedural acceptability of the motion of the hon. member for Winnipeg North Centre note that the various authorities referred to in those arguments are dealt with by Mr. Speaker in the ruling to which I shall now refer. That authority is as follows:
The order being read for resuming debate on the motion of Mr. Gray, seconded by Mr. Mcllraith,-That Bill C-155, An Act to amend the Excise Tax Act, be now read a third time and do pass.
And on the motion of Mr. Lambert (Edmonton West), seconded by Mr. Dinsdale in amendment thereto,-That all the words after "That" be struck out and the following substituted therefor:
"Bill C-155 be not now read a third time but be referred back to the Committee of the Whole with instructions that clause (i), paragraph numbered 10 be reconsidered to provide an air transportation tax on a flat fee basis to be determined by the committee as providing an equivalent return to and in lieu of the tax therein provided".
That was the motion that Mr. Speaker had for consideration. I now come to Mr. Speaker's ruling where he said:
We all recognize that if this amendment was accepted as put to the House it would have a rather far reaching effect in that it would be a new principle. I recognize that we should not be afraid to accept a new principle simply because of the fact that it is new,

October 26, 1971
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but we should look at such situations perhaps with even more attention than is normally accorded to such procedural matters.
Mr. Speaker continued:
The proposed amendment terminates with the words "in lieu of the tax therein provided". These words, it is suggested, if they have a meaning would direct the Committee of the Whole to delete a complete provision from Bill C-155 and substitute in lieu thereof a new taxation provision.
Mr. Speaker went on to say:
The President of the Privy Council (Mr. Macdonald) has quoted section (2) of citation 263 of Beauchesne's 4th edition. I would agree with the hon. member for Winnipeg North Centre (Mr. Knowles) that this citation does not help the hon. minister's case at all. The effect of the citation would appear to support the proposition that a private member may move to substitute a taxation provision for a proposal in a government bill provided that it is estimated that the new provision would yield an equivalent in the amount of moneys to be collected. That would appear to be the logical conclusion which could be drawn from that citation. In this respect I fully agree with the hon. member for Edmonton West and the hon. member for Winnipeg North Centre, but Beauchesne's citation is based on May's Parliamentary Practice, 13th edition. This is the authority given by Beauchesne for his citation.
However, at page 733 of May's 17th edition it is stated: "The view which made the proposal of taxes dependent upon the demand for supply prevailed at the time when it became necessary to find a procedure which would protect the financial initiative of the Crown from being infringed by amendments. It tended to connect the Royal initiative exclusively with the amount of revenue which it was the object of a tax to raise. Hence, in early editions of this book, it was stated that 'the Crown has no concern in the nature or distribution of taxes.' Hence, also, amendments were at first permitted which proposed the substitution of a different tax for a tax proposed by the government (provided that both were estimated to yield an equivalent amount) on the ground that the necessity of new taxation to that extent had already been declared on behalf of the Crown. In modern practice this view is regarded as incomplete, and as requiring to be supplemented by the view that the Royal initiative in taxation implies the exclusive right to define the incidence as well as the amount of burdens to be placed upon the people, and that an amendment which transfers a burden to taxpayers not previously liable is an infringement of this initiative."
The principle outlined in the foregoing citation from May's 17th edition is also set out in section (1) of citation 276, Beauchesne's 4th edition. That has already been brought to the attention of the Chair by the three hon. members who took part in this discussion. At page 826 of May's 17th edition it is stated: "Amendments must not exceed the scope, increase the amount or extend the incidence of any charge upon the people, defined by the terms of the ways and means resolutions, as agreed to by the House, by which the provisions proposed to be amended are authorized."
Mr. Speaker's ruling continued:
May I again refer to page 826 of May's 17th edition where it is stated: "A new clause offered in committee on a bill, which proposed to alter the incidence of income tax as between landlord and tenant, was ruled out of order on the grounds that it increased the existing charge upon one of the parties.
An amendment moved in committee on a bill, proposing to vary the method of levying a new tax, was required by the Chair to be framed in such a way as not to increase the charge which would be imposed on any individual payer of the tax."
There is little question that the purport of the amendment proposed by the hon. member for Edmonton West is to reduce the tax in respect of transportation by some persons travelling by air and to increase the tax in respect of other persons. Even if the amendment is intended to affect precisely the same taxpayers and that, in theory at least, it means to provide precisely the same amount of revenue, it would of necessity transfer a greater burden of taxation to one particular class of taxpayers or to a particular group of taxpayers. In doing so it is suggested that the amendment is an infringement of the financial initiative of the Crown.
[The Chairman.]
Having referred to and quoted from the decision of Mr. Speaker, I feel I must follow it. Indeed, the authorities direct me to follow His Honour's decision. I should like to say, however, that in the helpful argument on the procedural acceptability of this motion emphasis was placed upon various citations which, as I have mentioned, are difficult to reconcile. It seems to me, in the final analysis, that I must be guided by the practices of this House as enunciated by Mr. Speaker.
Accordingly, following the precedent of Mr. Speaker to which I have referred, I must regretfully decline to put the motion of the hon. member for Winnipeg North Centre.


Stanley Howard Knowles: Too bad.


Russell Clayton Honey: The hon. member for Regina East.


John Stratford Burton: Mr. Chairman, earlier in the debate today we had some discussion on the question of medical expenses. I feel that this matter deserves further consideration, because section 110 at page 282 continues the present system which involves a threshold level of 3 per cent of income in relation to medical expenses before a deduction is allowed. I questioned the parliamentary secretary on this matter before the dinner hour and I was not satisfied with his answer. He acknowledged that there were arbitrary features to the law as it has existed and as it is proposed in this bill. That is not good enough, Mr. Chairman.
First of all, when the 3 per cent level was enacted it was possible for taxpayers to include the entire cost of a doctor's services, the entire cost of hospital services and a variety of other services such as are now included in subsection (i) (c) at pages 282-283 of the bill. Since then, Mr. Chairman, there has been a reduction in those items which qualify for inclusion as medical expenses: it is no longer possible to include the cost of a doctor's services or hospital services as medical expenses. A long list of expenses which do qualify is set out at page 282. But while the situation regarding those two major items of medical expense incurred by most families has been changed, there has been no change with respect to the 3 per cent threshold level in calculating medical expenses Thus, I feel that it is very necessary for the level to be changed to keep up with the great change in the concepts of medical care and medical practice in recent years.
In the past we have had what might be termed curative medical practice; whereas today we are more interested in preventative medicine. I think we should not retain the concept as outlined before the dinner hour by the parliamentary secretary, namely, that only unusual expenses would qualify for deduction from taxable income. This is a thing of the past. If the government is to achieve the objective it is trying to achieve, namely, the reduction of health care costs without in any way impairing the quality of medical care, we must adopt new approaches.
Thus, I feel that it is necessary for us to look at the provisions contained on page 282 of the bill. I think one of the best steps that could be taken would be to reduce the threshold level above which taxpayers could deduct expenses incurred as medical expenses. At present that threshold is set at 3 per cent of taxable income.
October 26, 1971


Stanley Howard Knowles: The hon.
member should have said, not "taxable income" but "income".


John Stratford Burton: I beg your pardon. The hon. member for Winnipeg North Centre has pointed out that I should have said 3 per cent of income. This 3 per cent level has been in existence since 1953. For some years prior to 1953 it had been set at 4 per cent, although when first introduced in the wartime budget of 1942, I believe, it was set at 5 per cent.
Therefore, Mr. Chairman, I feel it would be in the best interests of the Canadian people and would assist the government to achieve its policy objectives in other areas, namely, the areas of health care and government considerations involving health costs, if we were to reduce the threshold level for taxpayers. Accordingly, I would move the following motion:
That Bill C-259 be amended at page 282, line 7, by deleting the figure "3%" and substituting the figure "1%".


Russell Clayton Honey: Order, please. Hon. members have heard the motion of the hon. member for Regina East. The inclination of the Chair is to accept it as being in order. It deals with the deduction under subsection 110 of certain medical expenses and the effect of the hon. member's amendment would be to reduce the figure of 3 per cent to 1 per cent. Before the committee deals with this motion I invite hon. members to submit procedural argument.


Mr. Deachman:: Mr. Chairman, would you read the motion again? Some of us did not hear it when the hon. member read it.


Russell Clayton Honey: I will be pleased to accede to the request of the hon. member for Vancouver Quadra and read the proposed motion. It occurs to me that there is before the committee a government amendment that precedes this proposed amendment. Does the committee wish to deal first with the amendment of the government and then revert to the motion proposed by the hon. member for Regina East and deal with it?


Robert Jardine McCleave: Mr. Chairman, we have had the government's amendments in our hands for some time, and I think that probably the amendments of private members on the opposition side should be dealt with first on this and other occasions.


Russell Clayton Honey: For the sake of orderly procedure, does the committee wish to deal first with the motion proposed by the hon. member for Regina East and then with the government's amendment?


Some hon. Members:: Agreed.


Russell Clayton Honey: I thank the hon. member for Halifax-East Hants for bringing forward a good point. Now I will accede to the request of the hon. member for Vancouver Quadra and read the proposed amendment of the hon. member for Regina East:
That Bill C-259 be amended at page 282, line 7, by deleting the figure "3%" and substituting the figure "1%".
Amendment (Mr. Burton) negatived: Yeas, 10; nays, 59.
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Russell Clayton Honey: I declare the amendment lost. For the sake of procedural clarity I wonder if members of the committee now wish to deal with the amendment moved by the Minister of National Revenue for the Minister of Finance. The minister moved:
That section 109 as set forth in clause 1 of the said bill be amended by striking out line 37 on page 279 and substituting the following:
'(ii) dependent upon the individual for'
Is it the pleasure of the committee to adopt the said motion?
Amendment (Mr. Benson) agreed to.


Russell Clayton Honey: Shall section 109 as amended carry?


Some hon. Members:: Agreed.


An hon. Member:: No.


Robert Jardine McCleave: Mr. Chairman, I wish to indicate that this section is to carry on division. It contains conflicting parts, some of which we support and some of which we do not. It ought to carry on division.


Russell Clayton Honey: Shall the section carry on division? Is that agreed?


David Réal Caouette: No, Mr. Chairman.


Russell Clayton Honey: Would the hon. member please resume his seat? I understood the hon. member for Halifax-East Hants to say that the section would carry on division. Is it agreed that this section shall carry on division?


David Réal Caouette: No, Mr. Chairman.


Russell Clayton Honey: Shall section 110 carry?


David Réal Caouette: No, Mr. Chairman.


David Réal Caouette: Mr. Chairman, before section 109 goes through, I would like to say a few words.
Even in an amended form, that section 109 under which exemptions will be $1,500 for a single person and $2,850 for a married person does not meet the requirements or even the wishes of the Canadian people. Indeed, the federal government itself admits that the minimum wage providing a decent standard of living is $3,000. How can a government introduce in this House section 109, clearly stating that a single person will be taxed from $1,500 up and a married person from $2,850 up when we know that the minimum should be $3,000?
That section 109 is directly in opposition to the policy stated in this House by the government. There is more and more talk about a guaranteed yearly minimum for every Canadian citizen.
Mr. Chairman, we moved amendments to the section before us and this afternoon my colleague for Bellechasse (Mr. Lambert) suggested raising the exemption to $3,000 per year for a single person and to $5,000 for married couples. The government ignored that. The Chairman says that it is out of order because we ask the government to take measures so that there would be fewer taxpayers, while the government itself says-


Gérald Laniel: Order.

October 26, 1971
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David Réal Caouette: All right, speak all together and the Chair will not hear anything.


Russell Clayton Honey: Order please. The Chair is really seeking advice from the committee. Hon. members will recall that yesterday there was general agreement that sections 109 and 110 should be debated together. I think we have followed the correct procedure. However, we have adopted section 109 and it seems to me the hon. member is now dealing with that section. I, personally, do not have any objection to that because of the general agreement arrived at by the committee yesterday, but I think it is my responsibility to draw this point to the attention of the committee.


Patrick Morgan Mahoney: The hon. member has not yet spoken on either of these sections in this debate and I think he should be accorded the opportunity to do so. I certainly would have no objection to his continuing.


Lincoln MacCauley Alexander: On a point of order, Mr. Chairman. As I sit here wondering what occurred at the time you called for the vote I ask myself whether in fact the section was carried. There seemed to be some confusion. I noticed the leader of the Social Credit party attempting to get your attention and I believe that when he started to speak he was under the impression the vote had yet to be decided. Perhaps there was some misunderstanding.


André-Gilles Fortin: Mr. Chairman, apparently, there was a misunderstanding. For our part, we thought that the question was on the amendment moved by the previous speaker or by the hon. member for Timiskaming (Mr. Peters), and not on the main motion, that is, on the clauses now before the committee. That is why our colleague is taking the floor. The committee proceedings seem quite confused. We regret being constantly interrupted in our work and wish some attention was paid to the speech of the hon. member for Temiscamingue and he would no longer be interrupted with questions that seem out of order.


Russell Clayton Honey: As Chairman, I have no real difficulty, as I intimated when I reluctantly interrupted the hon. member for Temiscamingue. The point of order arises as a result of dealing with two sections together for the purpose of debate. It seemed it was proper to put section 109 to a vote. However, there was agreement yesterday that the two sections would be grouped for debate.
I did not interrupt the hon. member for Temiscamingue with the intention of curtailing his speech. My purpose was to clarify the situation. Having said this, I hope there will be agreement among hon. members that the hon. member for Temiscamingue be allowed to continue on the basis established yesterday.


Robert Jardine McCleave: I was about to say what you have already indicated, Mr. Chairman:	there should be
generosity among all of us in dealing with this complicated legislation, and I am sure my hon. friends will agree that the hon. member be allowed to continue his speech.
[The Deputy Chairman.)


Russell Clayton Honey: I thank the hon. member. He has echoed my sentiments and, I believe, the sentiments of all hon. members.


Joseph Adrien Henri Lambert: Mr. Chairman, I rise on a point of order.
Once more, I wish to remind the Chair that, through no fault of ours, we sit in the far corner of the House and hear with some difficulty the rulings of the Chair. The hon. members talk in good faith and we do not understand what you say. I should like to know at what point of this sitting clause 109 was carried, because, after all, it is quite important that we know. If it was carried and a special favour is being granted to the hon. member for Temiscamingue (Mr. Caouette), I am all for it, but I wish I were told at what point that famous clause 109 was carried.


André-Gilles Fortin: Mr. Chairman, I rise on a question of privilege.


Russell Clayton Honey: The hon. member for Lotbiniere is rising on a question of privilege.


André-Gilles Fortin: Mr. Chairman, we are not challenging your ability in conducting the debate, neither do we question your integrity, but while you were speaking, nobody on this side of the House could hear what you were saying and when you put the question of clause 109-and we realize it now-we understood absolutely nothing. We would like to ask you to consider that the question on clause 109 has not been put so that we may proceed with the debate since some Social Credit members including the hon. member for Temiscamingue (Mr. Caouette) have other comments to make. We have nothing against the Chair, but we do not understand what it says. We are unable to hear what comes out of the loudspeakers.


Russell Clayton Honey: The Chair understands the difficulty and must bear a considerable amount of the responsibility in the matter. If there was a misunderstanding about the vote taken on section 109, the matter is now in the hands of the committee; but it was my duty to put the question. If there is a misunderstanding I hope that hon. members will open the matter again. If that is the case, and it is important to hon. members who have spoken on this point of order, I would ask the committee whether there is leave to open section 109 and then put the question again.


Stanley Howard Knowles: Agreed.


Russell Clayton Honey: If there is leave, I will put the question. Is it agreed that I put the question again on section 109?


Some hon. Members:: Agreed.


Russell Clayton Honey: Shall section 109 carry?


Some hon. Members:: Agreed.


Stanley Howard Knowles: On division.


Some hon. Members:: No.
October 26, 1971


David Réal Caouette: That is true, Mr. Chairman. Clause 109 has not yet been carried and we are thus able to proceed with what we have to say.
I was stating a few moments ago that my colleague, the hon. member for Bellechasse (Mr. Lambert), asked that deductions up to $3,000 for a single person and $5,000 for a married person be allowed, whilst the government's proposals are for $1,500 and $2,850 respectively, because it does not recognize-and at this stage I call upon the Parliamentary Secretary to the Minister of Finance (Mr. Mahoney)-that to attain a minimum of social or economic standing, you need at least $3,000. Why is it that the government proposes a legislation which penalizes single persons by limiting their non taxable income to $1,500 and that of married people at $2,850? Why?
The government is contradicting itself. But the vital point on which the government is basing its policy is to create a decent standard of living in Canada. We are then seeking out all kinds of solutions and proposals in order to establish what is termed in English a welfare society, a society in which people expect to live on government resources. And this applies equally to the Minister of Labour (Mr. Mackasey) who is chatting with his neighbour and is totally oblivious to what we are saying.
Mr. Chairman, he did not even understand. He keeps on talking. This does not change anything. If the Minister of Labour was listening perhaps he could understand, but he is not listening and he will not understand, his earphone is not working.


An hon. Member:: He is listening!


David Réal Caouette: If the minister would send his chum back to his seat, he would have more time to listen because those people will not settle the Lapalme workers case tomorrow morning by discussing as they are doing.
Mr. Chairman, the government is seeking to establish a society where both bachelors and married men would feel at home. Under this bill, nothing will enable Canadians to enjoy better living standards.
Let me explain, Mr. Chairman. Everyone, and the Prime minister first with his cabinet, is talking about social welfare and a just society. The 1968 election has been won by the Liberals with their slogan "The Just Society" which all the Canadians-I see an hon. member applauding across the way-think will exist someday.
After three years of liberal administration, we find that the number of unemployed people has increased. Everybody is convinced of that. The Minister of Regional Economic Expansion (Mr. Marchand) stated last night in Montreal: "We have more unemployment than ever and we will still have more in November." This is a statement the Minister of Regional Economic Expansion made in Montreal last night to the members of the Board of Trade. So we will have more unemployed in November. He did not mention December, January or February when we have perhaps one million, one million and a quarter or one million and a half unemployed.
So this is the just society! And in its attempt to better things, the government is offering us solutions that will help out American companies. As a matter of fact, it will distribute $80 million as incentives to Canadian industries
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to allow them to export to the United States because our neighbours below the border have imposed a 10 per cent surcharge. This program will not create a single job but will simply allow some of our industrialists to export their goods to the United States.
Mr. Chairman, this program will not create a single job; it will not help us to set up the just society that we want in Canada, nor will it-


Russell Clayton Honey: Order, please. If I understand the position of the committee, the hon. member who has the floor may direct his remarks to sections 109 and 110. It seems that he is now engaging in a debate which may have been in order on second reading or during our initial round of discussion in committee of the whole. I have some doubt whether the hon. member has the right to roam as far as he has roamed, and with respect I would ask him to confine his remarks to those two sections which deal generally with the compilation of taxable income, deductions, exemptions, and so on. I invite the hon. member to assist the committee in this regard.


David Réal Caouette: Mr. Chairman, I thank you for your suggestion that I stay within the ambit of sections 109 and 110. But this afternoon, I had the opportunity of listening to the speeches of members of all parties and the Chairman never called anyone to order and told him that he was not dealing with the tax exemptions mentioned in sections 109 and 110. This evening, I am called to order and I am asked to deal strictly with the government proposals.
Mr. Chairman, this afternoon, social security and all kinds of things were discussed, but this evening I would not be permitted to express my views on those tax exemptions which, after all, are the basis for an economic reform which would allow Canadians to be better off than they are now.
Mr. Chairman, I say this: at the present time in Canada, with the government proposals about the direct taxation system, we are taking from some to give to others. Such is the program included in clauses 109 and 110. We say that we are wasting our time and that we are not farther ahead today than we were five or ten years ago because this is a social welfare system based on income tax exemptions which is offered to the Canadian people. All that social welfare encourages fraud, laziness, scheming and stealing. Everyone runs for help from social welfare. Some refuse to work for fear of losing their welfare benefits.
Mr. Chairman, reducing the income tax is ridiculous finally because many people do not earn enough to pay income tax, and single people who earn $3,000 or $5,000 a year will have to pay some. The government is not consistent. This is where we, the Creditistes, make a concrete suggestion, which rubber-necks still laugh at whether they are liberals or progressive conservatives. They laugh! There is but one solution: guaranteeing Canadians social security, regardless of the income tax system, to achieve a balance between consumption and production. What did we suggest? Instead of lowering income tax which the government now suggests, that all persons 18 and over be

October 26, 1971
Income Tax Act
guaranteed an annual income of $1,500 when they are single and $2,500 when they are married.
A married man with one child would get a basic exemption of $2,750; with two children, $3,000; with four children, $3,250; with five children, $3,750 and with six, a maximum of $4,000 as guaranteed annual income or social security.
Now, Mr. Chairman, the people will be told, as I said on the national TV network; If an individual finds a job of $4,000 or $5,000 a year, he should accept it, because it would not reduce his social security allowance, since it would be guaranteed. We would all receive it: the poor, the less poor, the more or less rich, everybody. We would all have that guarantee, regardless of our income.
We would see the unemployed-there are some 500,000 in Canada at the present time-look for a job and their salary would be added to the social security guaranteed to all. A person earning $10,000 would still receive his $3,000 in social security.
It is the opposite at the present time. Nowadays a man drawing welfare allowances keeps away from work. Even prostitutes in Montreal draw welfare payments on top of their earnings or whatever salary they may get from various firms.
Mr. Chairman, the present system of social welfare is an incitement to laziness and dishonesty. We ought to replace it with a system of social security which would foster honesty, work and personal initiative in every Canadian citizen.
This is not understood yet. We hear people make fun of our proposals. The other night, I heard the hon. member for Papineau (Mr. Ouellet) say that this would cost $18 billion. It will soon cost more than that to cope with revolutions which are being organized throughout Canada. Then members on the government side or members of the opposition will feel sorry and say: We were not courageous enough to act while there was still time left.
It is being said today that the silent majority does not move. Now, the silent majority begins here in this House where people do not have the courage to rise, where people laugh at those who offer concrete solutions, solutions that appeal to the intelligence of man, instead of the intelligence of the chap who will sell his vote at the next election for a small amount of social welfare.
Mr. Chairman, sections 109 and 110 will not change Canada's economic situation. The other day, the Minister of Finance (Mr. Benson) announced a 3 per cent reduction in personal income tax. For the Canadian who has to pay $300 in taxes, this will mean a reduction of $9 for a year or 75 cents per month. If he has to pay $200 per year, the reduction will be $6, or 50 cents per month. And Liberal members will say: We have been generous to the people of Canada.


An hon. Member:: Hear, hear!


David Réal Caouette: That is what I call a stupid person! I see a Liberal member applauding. He does not know why he is applauding, but he applauds. He thinks this is funny; he sits on the Liberal side of the House.
Mr. Chairman, they may laugh, they may take our suggestions lightly, but things will happen before long in

Canada-we have already experienced a few-exactly as they have happened in communist and socialist countries, because the government will not have had the guts to take position and act at the right time. We are afraid of making decisions. Again recently, we have been scared to make decisions as a free people, as free citizens.
Last night-and this has nothing to do with tax exemption in Canada-Communist China was admitted in the United Nations. Do we know that China became communist because of terrorists, bandits and murderers? And they are recognized in the United Nations while the Canadian army is called in to fight a dozen FLQ members or people planting bombs in Montreal. The Prime Minister of Canada is ready to roll out the red carpet for those people's entry into the United Nations Organization.


An hon. Member:: Yes indeed!


David Réal Caouette: When they are raising cain in Montreal, those people are called bad lots.
I see the Chairman rising, which would indicate that I am straying from the subject, to which I shall therefore return immediately.


Russell Clayton Honey: It did occur to the Chair that the hon. member might have been somewhat irrelevant in the latter stages of his remarks, but in any event I rose to advise him that his time has expired.


Some hon. Members:: Continue.


Russell Clayton Honey: Order, please. Of course, the hon. member may continue if there is unanimous consent of the committee.


Some hon. Members:: Agreed.


Some hon. Members:: No.


Russell Clayton Honey: There is no such consent. Is the hon. member for Parry Sound-Muskoka rising on a point of order?


Mr. Aiken:: No, I am rising to speak, Mr. Chairman. I was quite prepared to permit the hon. member for Temis-camingue to continue but I understand he has not been given consent. I would yield to him at this point so that he may continue.


Some hon. Members:: Encore!


Some hon. Members:: More.


David Réal Caouette: Mr. Chairman-


An hon. Member:: Democracy at work.


David Réal Caouette: -I thank my good friend of the Progressive Conservative party for having suggested that I continue my comments, but I shall not take advantage of this courtesy.
I congratulate the Conservative member from I do not know what riding.


An hon. Member:: Parry Sound-Muskoka.
October 26, 1971


David Réal Caouette: The hon. member for Parry Sound-Mus-koka (Mr. Aiken). I believe he will become a Creditiste one day.
Mr. Chairman, I do not intend to hold the committee too long. Earlier I was talking about the United Nations, as everybody knows. The Liberals know it and we know it. Last year, I was one of the most convinced advocates of using the Canadian armed forces to fight terrorists in Montreal during the October crisis.


Mr. Roy (Laval):: Mr. Chairman, I would like to ask the hon. member for Temiscamingue a question.


David Réal Caouette: Agreed.


Marcel-Claude Roy: I would like to ask the hon. member for Temiscamingue-the leader of the Social Credit party whose convention I followed carefully and whom I congratulate on his organizing ability-whether he could tell me the difference between a socialist party on credit and a socialist party that wants to socialize all existing companies for cash.


An hon. Member:: That is stupid. Have you ever heard anything more silly?


An hon. Member:: That is inexplicable.


David Réal Caouette: Where does that chap come from?


Joseph Adrien Henri Lambert: From Laval.


Russell Clayton Honey: Order, please. I suggested to the hon. member before he relinquished the floor following his first presentation that perhaps he was not staying within the confines of sections 109 and 110. I was fortified in my decision when I heard the question of the hon. member for Laval. I would hope that hon. members would give due regard to the rules of the committee and would not enter into a general debate. The question having been asked, perhaps the hon. member would wish to answer it briefly. I hope that he will then continue his remarks having regard to the confines of sections 109 and 110. [Translation]


David Réal Caouette: Mr. Chairman, you are absolutely right. The Liberal member for Laval (Mr. Roy) got a bit mixed up while asking his question, he did not know exactly how to put it. It is rather difficult to answer a question that does not make sense. But, in any event, I say to him that a socialist system, in my opinion, is not appreciated in Canada, but with all the rules and bills like the one that is before us, particularly clauses 109 and 110, we are moving on toward state socialism that constitutes a step toward authentic communism.
Mr. Chairman, while trying to address myself to clauses 109 and 110, I want to say this: A moment ago, I spoke of the admission of Communist China to the United Nations and I say-let us remember that we have here about fifty Liberal members from the province of Quebec,-that last year I supported the government 100 per cent as far as the war measures were concerned when taken against the terrorists of Montreal. Everyone knows that.


Russell Clayton Honey: Order, please. Under the rules of the committee the hon. member for Temiscamingue has the
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floor. I think this is the third or fourth time that I have appealed to him. I do it in all sincerity, I think with the support of the committee. The hon. member should not discuss matters which are irrelevant to the purport of sections 109 and 110. I entreat him to obey the rules. All of us transgress at times. I know the hon. member is a very fluent and forceful speaker, but I hope he will try to confine his remarks to sections 109 and 110.


David Réal Caouette: I will definitely try to obey your request, Mr. Chairman. There is my good friend, the doctor, who has saved my life once anyway, and he is a Liberal. I am not a socialist. But this is not on section 109. He saved my life once and I am still alive. The Conservatives know very well that I am, and so does the Minister of Labour.

Mr. Chairman, I want to confine myself to the subject matter of clauses 109 and 110. However, I cannot at this point but admit that I am in the same frame of mind this year as I was last year when I sided with the government. When I see a government, be it China's or the U.S.S.R.'s, assuming power with the help of terrorists, and by resorting to violence, I cannot accept anything more now than I did last year. This is all I have to say on that subject.
Mr. Chairman, clauses 109 and 110 clearly state that the government intends to improve the standard of living of Canadians or to create the just society which we were promised during the 1968 election campaign. This just society has not even materialized in Valleyfield. Neither has it materialized in Quebec City, Montreal or Rouyn-Noranda.
Mr. Chairman, I have specifically detailed our suggestions a few moments ago and I urge all sincere members, whatever their political allegiance,-not as social credit-ers, or progressive conservatives, or new democrats or liberals-


An hon. Member:: Or independents-


David Réal Caouette: If we are to have a hard working people, a people who works, whose initiative we respect, let us give him a social and economic security which it has not hitherto obtained. We are giving economic security to the U.S.S.R. and China, but at the expense of personal freedom. Nobody, even a member of this House, wants to lose his personal freedom.
Then, Mr. Chairman, a solution is available although the hon. member for Papineau interjected the other night that it would cost $18 billion. The last war cost us $14 billion and nobody has warned about inflation. We have made war and won it, but it has cost $14 billion. No one objected to this expenditure of $14 billion, not even the Minister of Finance. Even the hon. member for Lac-Saint-Jean (Mr. Lessard) did not object.


Martial Asselin: A former colleague.


David Réal Caouette: A former colleague who used to understand more when he was with me than he does presently. Nobody objected to an expenditure of $14 billion to wage a war. But when it comes to spending $18 billion to guarantee social security to each Canadian citizen, people

October 26, 1971
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stand up and say: The Social Crediters "are starting the money press".


Joseph Adrien Henri Lambert: This is quite funny!


David Réal Caouette: It is funny, indeed, but what is funny is to see those funny guys, the liberals, being funny. And when the Liberals were not in power, the Tories were having the same reaction. And that was thought to be funny.


Martial Asselin: No one ever talked about the money press.


David Réal Caouette: The hon. member for Charlevoix never talked about it because he does not know how it works. The hon. member for Charlevoix is consistent. He came to see me the other day behind the curtains to ask me how it would work. I told him it would work very well.


Gérald Laniel: The Chair hesitates to interrupt the hon. member but it can hardly see the relation between the hon. member's remarks and the two sections under consideration. I think all hon. members are interested in the analysis of the problems that are presently facing this country but since the committee must study two specific sections of bill C-259, the Chair would appreciate it greatly if the hon. member for Temis-camingue would relate his remarks from time to time to the sections being considered.


David Réal Caouette: Thank you, Mr. Chairman. I am not used to relating my remarks to just anything. I am used to making remarks and at this time we are discussing sections 109 and 110. Several things are related to them. The objectives of sections 109 and 110 are an increase in the purchasing power of Canadian consumers by allowing exemptions of $1,500 for single persons and $2,850 for married couples.
The minister of Finance himself said not so long ago that the vital minimum was $3,000. A great deal of things are connected with that minimum and we bring proposals that would enable hon. members to study something. The government does not give them anything to examine; we are the ones who give them something to think about and those who can think-there are some who cannot, and I sometimes wonder if the minister of Finance can-can at least consider our proposals.
Mr. Chairman, the government proposals under which a single person's income up to $1,500 and the income of married persons up to $2,850 is to be tax free do not meet the people's requirements. The government itself admits there must be at least a $3,000 minimum, in order that people may live or at least exist.
We ask, as my colleague from Bellechasse (Mr. Lambert) did this afternoon, tax exemptions of $3,500 for single persons and $5,000 for married persons. We, members of this House, have tax-free expense accounts up to $8,000. I have yet to see a Liberal say in this House or in his constituency that it was inflation in his pockets. Everybody thinks it is all right. And for ordinary workers, millworkers, plant workers, farm people the exemption is $2,850.
Mr. Chairman, we believe that all incomes under $3,000 for single persons and under $5,000 for married persons should be tax free. Let us establish in this country not what we call a welfare state but a state of social security,
a state where people are provided with social security, where they feel free, where they are still human beings, where the individual can act by himself, not through the government's will or through any other organization the human being must be respected.
Mr. Chairman, the day we get that, Canada will be sheltered from outside attacks, revolts, revolutions, revolutionaries and terrorists. But until then, if the government members, the ministry and the other hon. members remain idle, before not too many years there will be in Canada terrible bloodshed as occurred in some countries in Europe or Asia.
If that is the kind of administration we want, all we have to do is to let things go. But if we want something else, we should assume our responsibilities. I call upon the Liberal members, who are holding a caucus tomorrow morning, to tell the Prime Minister. The Prime Minister, the federal cabinet, the government should be told such things. Hon. members should assume their responsibilities. We are the silent majority. If we do not act, the revolutionary minority will crush us as it crushed the people in Russia, Poland, Hungary and China. This is not what we want. We want a Canada that belongs to us, to which we can contribute. Therefore, we should pull together, not as members of this or that political party, but as Canadian citizens determined to save their country, Canada.


Some hon. Members:: More! More!


Mr.   La Salle@: Mr. Chairman, after the various speeches made today, I would like in turn to give my opinion on those most important clauses.
I admit that this bill is important because it is bringing a number of changes which I think are necessary. As a member of Parliament it is my duty to express my opinion on sections 109 and 110 which, I think, are far from meeting the needs of Canadians.
Many people before me have informed the minister and the government of their claims and have asked their representatives in Parliament to unite so as to convince the Minister of Finance (Mr. Benson) that the exemptions of $1,500 and $2,850 are inadequate.
All we need is to compare with the social security pensions which allow a $3,060 exemption for people aged 65 or more. If we want to justify our positions it is quite easy to prove that a couple or a much younger family has greater needs and this $1,500 exemption for a single person or $2,850 for a married couple is inadequate. I think this is self-explanatory.
This is why I want to draw the attention of the House and of all government members who will have the opportunity, as stated earlier by the Social Credit leader, of discussing this question with the ministers and the Prime Minister.
I would request their greatest consideration to the "inadequate minimum".
We referred to a $5,000 yearly minimum for married people and one of $3,000 for a single person. No member of this House could say that a person earning $60 per

October 26, 1971

week should be taxed. I do not believe either that a couple earning $100 per week should be subject to any tax.
We are all aware of the increase in the standard of living and I believe it is only fair to claim a much higher exemption than that suggested by the minister.
I recognize the difficulties that this creates for the government. I also recognize willingly that it will cost more to the government. However, the government must find a way of providing for that minimum living wage. I believe that every member considers $5,000 for a couple and $3,000 for a single person as a necessary thing. No member of this House would dare deny that we can afford to tax people with such an income.
The first reply we will get will be that it is difficult to change the estimates since it would complicate the drafting of the bill. Other comments will be made about those citizens who do need that vital minimum.
Since we are still considering sections 109 and 110 I would invite all hon. members to speak on those sections and say in plain words who is right.
I am convinced that it poses some difficulties to the government but I think that in the present circumstances no government should hesitate to provide the vital minimum resulting from a basic exemption much greater than the one proposed in this bill.
Of course, this is an improvement that goes back to 1947 since it is not often that amendments are introduced to tax legislation. As far as I remember, the changes brought into the tax legislation go back to 1947, since it is always very difficult for the government to alter substantially its tax policy. It is all the more important that we seriously consider the amendments of clauses 109 and 110 because I have the strong impression that they will be in force for many years to come.
With reference then to all the speeches that were made in this House and to all the arguments which were submitted, I take the liberty once more to urge hon. members and the members responsible for the government to adopt a straightforward attitude which would be far more attuned to the just society which is desired not only by liberals but by all hon. members alike.
We long for that just society as much as those who promised it but, nonetheless, endeavours are necessary. I am under the clear impression that we do not take that great step when setting the exemptions at $1,500 or $2,850. In fact, we would be in a better position to conquer or at least obtain the confidence of the people if, through a positive gesture, we were to set the exemptions at $3,000 and $5,000.
I do not think that I am exaggerating. A while ago, the leader of the Social Credit (Mr. Caouette) drew a parallel with the non-taxable $8,000 allowed to hon. members. I am not entirely in agreement with him, because I think that the workman who might discuss the $8,000 exemption surely does not know what is involved in an hon. member's duties.
The argument used by the leader of the Social Credit is indeed not serious. However, his observations were perfectly justified, like those of the member for Champlain (Mr. Matte) this afternoon, and should be taken into consideration by the vast majority of members.
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Mr. Chairman, I close on those words, hoping that the government will amend clauses 109 and 110, thus proving to the Canadian people that it is seriously endeavouring to achieve a more just society.


Gordon Harvey Aiken: Mr. Chairman, I rise to say a few words-and they will be few-on behalf of the many parents of university students who are sending their children through university and paying their tuition fees, their board and lodging and their incidentals which may run as high as $2,000 or $2,500, and who receive no tax exemption or deduction whatever. All they are allowed is what is set out in various parts on section 109 for a child over 21 years of age who is attending university, and the maximum there is $550.


Robert Jardine McCleave: Not enough.


Edgar John Benson: But we are paying half the cost.


Gordon Harvey Aiken: I would be glad to accept the minister's question, Mr. Chairman.


Edgar John Benson: I am sure my hon. friend understands that half the operating costs of post-secondary education are paid by the taxpayers of Canada.


Gordon Harvey Aiken: Mr. Chairman, I think the minister interrupted me too soon. I am trying to draw a little equity into this situation and perhaps he will see my point in a moment. Those parents who pay the full amount of their children's tuition are taxpayers and presumably they are paying an income tax on that $2,000, if we take a round figure, of between 20 per cent and 50 per cent. It is therefore costing such a parent not only the $2,000 actually paid out but also the tax he pays on top of that.
I am trying to compare this situation to that of a student who is sent to university on a bursary or scholarship, who must borrow money under the scholarship plan, or who in some way or other gets the money from a source other than the parent. In such a case there is no tax attracted to the money that is paid for tuition. I am trying to point out the unfairness of the situation to the same group of people who are paying most of the taxes of this country, the people in the middle-income bracket, the people who are sending their children to school, the people who are paying their way through life and in the result get stuck with income tax whereas other income attracts no tax and there is no benefit to the federal treasury.
This question has been put to me many times by parents who are laying out a great deal of money and getting no tax reduction. I agree with the minister that this money comes from taxes in any case to pay for university education. But I do not feel that it is a fair distribution when those who are making an effort and paying, when the student cannot get work during the summer-as many have not during the last couple of years-end up paying a premium on whatever their income tax rate is for the right to send their children to university on top of the expense incurred in sending them there. The point I am trying to make is that there should be some deduction in order to create equity in taxation for the parent.
I shall not move an amendment at this point. We have had rulings on amendments which seek to raise exemp-

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tion levels, so I will not waste my time or the time of the committee in moving such an amendment. Despite the many efforts to get around the difficulty, all such amendments have been ruled out of order. I am merely bringing this matter to the minister's attention and asking him to give serious consideration to the tax to be imposed on a person who is trying to put his children through school. Many people will make that effort even though they cannot afford it. They will do that rather than ask for a bursary or a student loan for the child.
In many cases the circumstances in which a student loan is given are very narrow and the situation is most unfair. When a student gets a government loan under the student loans program, no tax is attracted; however, if that narrow line is crossed and the student does not get a loan, then not only must the parent pay the penalty but he must pay tax in addition. This situation is most unfair and in many cases applies to the middle-income person who is trying to pay his way-not depend on the government, not draw sustenance from other people but who is trying to do the right thing. In doing so, not only does he get stuck with the cost but he pays income tax in addition which can run as high as 50 per cent. For these reasons I think the minister should give this matter serious consideration and see if some equity cannot be introduced into this situation.


André-Gilles Fortin: Mr. Chairman, due to the importance of clauses 109 and 110 of Bill C-259, I feel it is my duty to take part in this debate to put forward some arguments which may perhaps prompt the government members to review their position concerning those exemptions.
I would like to base my arguments on two particular points: The increase of poverty in Canada and the efficiency of means to control it. In conclusion, we will see that we are before a dilemma or a problem with two possible solutions, either true socialism or Social Credit.
First, I should like to make a brief summary.
This government proposes, in clauses 109 and 110, to increase personal tax exemptions to $1500 for single taxpayers and to $2850 for the married ones. This, according to the Minister of Finance (Mr. Benson), so as to give these people a greater hope for a just society. According to him, this would mean that these people would be more fairly treated by federal taxation.
Mr. Chairman, I shall not go through the scientific calculations of my colleagues, but it happens that this tax mess proposed by this government does not, in fact, amount to a difference of more than $50 a year, which is finally a swindle and does not reduce poverty in Canada.
On the other hand, the Minister of Finance-the Minister of High Finance-has already stated that, starting from a certain date, 750,000 Canadians would be totally exempted from income tax. And he boasts about this as if it were good news. This does not make anybody happy in our party.
If 750,000 Canadians do not have to pay any income tax, it means that 750,000 Canadians do not have enough income to make them liable to the tax according to the government's rates. So, the government deserves no credit for removing some people from the tax rolls, because, even if it wanted to compel them to pay taxes, they would

no longer be able to do so because they have had to tighten their belts too much at the government's request.
It is now proposed to increase basic exemptions. This is the same argumentation, the same spirit, the same principle and the same administrative philosophy which would have us believe that this is a step forward.
Mr. Chairman, as my colleagues of the Social Credit party of Canada, I pretend that this is administrative hanky panky which settles nothing. Increasing the exemptions to $1,500 or $2,850 will not solve things any more than the elimination of income tax for 750,000 Canadians will solve their problems, allow them to take part in production and increase their purchasing power.
To be fully understood, these remarks must be placed in a general context; for example, we offer retraining courses to workers. It is an indirect and disguised way of providing them with social welfare allowances. Retraining courses have become for the federal government an indirect means to intrude in the area of social welfare which, in some provinces, is exclusively the latter's responsibility. In fact, 50 per cent, if not more, of those who benefited by the training programs sponsored by the federal government are people living below the poverty level.
Mr. Chairman, I will be told that exemption of these people from income tax might solve their problems. That is wrong, just as those training programs did not solve them. I will be told that increasing the amount of their basic exemptions will solve their problems; that also is not so.
And to support my assertions and make the hon. members opposite well aware that the proposals contained in Sections 109 and 110 will not be efficient, I would like to refer them to the 8th Annual Review of the Economic Council of Canada issued in September 1971, and more specifically to page 97, where the following can be found:
We are constantly striving to bring the policies of the Department within the reach of the underemployed and the working poor ... Of 301,000 adults trained last year, some 50 per cent were below the poverty line.
That means, Mr. Chairman, that 50 per cent of the 301,000 adults in training receive an income below the poverty line, that is less than $3,000. Will their removal from the income tax lists solve their problems, Mr. Chairman? Not at all, since they had no income on which to pay income tax anyway, because they were already being retrained or unemployed.
Therefore, Mr. Chairman, the problem is not solved. It might perhaps be said that that training will solve it, but let us ask ourselves the question. I will then refer my colleagues to page 116 of the same Annual Review, Table 6-3 entitled Pre- and Post-Training Annual Earnings Distributions, 1969, which deals with the program that is doing wonders, according to the federal government. This table indicates that of the 301,000 Canadians who took a course, and who cannot pay income tax because they are below the poverty level, 78.4 per cent in each class, before undergoing training, had an income of less than $5,000, $4,999, it says here. Before the course, 78.4 per cent had an income of less than $5,000. Therefore, their margin over the poverty level is $2,000 only. Moreover, the family must be small! After these so-called effective courses provided
October 26, 1971

by the federal government, which are disguised social welfare, 73.1 per cent of these people could not find employment and are still under the $5,000 level.
So, Mr. Chairman, in order to achieve that just society and this small mathematic calculation is ample proof, the government invented various programs. To the aged, it gives old age pensions. To children, it will give family allowances; recently we messed around with that. To the penniless, it gives welfare benefits with the tip of its fingers, a pittance, after both provocating and humiliating tests. To the unemployed, it gives unemployment insurance, and even then the individual has to fill out oodles of forms before being eligible. Those who are left over, when the rate of unemployment is too high, receive training courses and, finally, as I have just demonstrated, nothing is solved.
All those programs, as my hon. colleague for Temis-camingue pointed out, cost billions each year; they cost a mint. Any wonder they represent the major item in the federal budget; that is what raises personal income tax. The people whom the government is concerned with in clauses 109 and 110 do not have, even before exemptions, the means to pay their income tax. Is the government doing them a favour? No way! On the contrary, it is only messing about further in their almost empty pocket book, even though it may hold $50 more a year.
Such is, Mr. Chairman, the just society! This is why we object to clauses 109 and 110. We maintain that the lot of the people affected by those provisions will not be improved. This is why we are again urging the government to increase those basic exemptions to $3,000 for single persons and to $5,000 for married couples.
There is nothing more logical than the figures which I have just given you in connection with the retraining courses. Indeed, I stated that before attending those courses, 78.4 per cent of the 301,000 individuals in each group had an income lower than $5,000. They were attending courses to improve their lot, because their income was inadequate. If the government recognizes that it is necessary to improve their lot by providing courses for them, could it not much more easily solve most of the problem with a total tax exemption, at $3,000 for single taxpayers, and at $5,000 for married people?
My colleague, the hon. member for Champlain (Mr. Matte) even told the government, this afternoon, and the same argument applies in the field of old age security pensions-when both husband and wife are drawing the maximum, that is $255 a month or $3,060 annually, establishes a sufficient minimum income, not to live, but to subsist. People who are the least fortunate in our society, the unemployed, the aged, children, the crippled, the widows, are precisely those who must pay the most for housing, clothing and food. These three essentials of live are precisely the most expensive items, judging from the increase in the cost of living and the tables of Statistics Canada. Consequently, the less favoured are the first hit by the increase in the cost of living and the government's failure in its fight against inflation.
Of course, if the government considers that $3,060 is enough as a minimum income ensuring the bare subsistence of the older person, supposing that both the husband and wife receive the guaranteed income supplement, our
Income Tax Act
argument is all the stronger when we ask the government to grant the same amount to the people who, as my colleague from Champlain has stated, are not 65, but 60, 40 or 30.
I have already shown that people who receive less than $5,000 per year cannot make ends meet. That is why they are registering for retraining and that they make use of government programs. They have no other choice.
Mr. Chairman, when old people are asking for an increase in their old age security pensions it is because they cannot make both ends meet. Furthermore, if the government is aware of that, is it not willing to increase basic exemptions from $1,500 to $3,000 for single people and from $2,850 to $5,000 for married couples?
Mr. Chairman, if the head of a family of two or three children receives a $5,000 income, it represents only $1,000 a year per person, less income tax. Because the government is refusing to increase these exemptions, these people will have to pay taxes. This is sheer nonsense. If that is what we call the just society, Mr. Chairman, living conditions were better under the old system of 1867. At least, at that time people were not annoyed with tons of documents and with the administrative flimflam of incompetent Public Service employees. At least they could manage with their axe and make a living.
How is it that in those days, people could do without degrees, education, social welfare, old age pension, retraining programs, the just society. Indians and Englishmen managed to live. Today, billions of dollars are spent on old age pensions, family allowances, unemployment insurance benefits, retraining courses, scholarships. Now, Mr. Chairman, one hand will give a scholarship and the other will take taxes from the recipient. How brilliant!
Mr. Chairman, as my colleague from Temiscamingue (Mr. Caouette) said, that is really serious. If the government does not wake up and smarten up and if it continues to have bats in the belfry, it will very soon face a revolution in Canada.
It seems to me it is high time to get out of the clouds and come down to earth and look at the problem where it is. The problem of poverty is increasing in Canada. How can we explain that with all this fine government programs promoted with such ability, they have not succeeded in getting rid of i per cent of poverty in Canada? On the contrary, it keeps on increasing. Would it be that these programs are inadequate?
Mr. Chairman, this does not make sense and we cannot swallow this fact. That is why my colleagues and I, following our devoted leader, the hon. member for Temiscamingue, stand up and protest against these schemes, these proposals. This bill of 710 pages, designed to tax our fellow citizens, which does not remove the least bit of poverty and solve any problem, is only an example of administrative tinkering that civil servants are fond of. It justifies their salaries.
Mr. Chairman, I must protest. I address my protest to the Minister of Finance (Mr. Benson) who will not even listen to what we have to say, preferring to joke and "swing". Mr. Chairman, I am compelled to urge that he increase the basic exemptions so that our fellow citizens

October 26, 1971
Income Tax Act
in Lotbiniere and throughout Canada may have at least a semblance of subsistence and no longer depend on governments.
That goes with governments, Mr. Chairman. That is what the Economic Council of Canada say in their Eight Annual Review, which I invite my hon. colleagues to read. They speak of government and decision-making, of political implementation of development of human resources. There can be no further development of human resources, they are being crushed, frustrated, forced to sign application forms, on all fours before civil servants to obtain their hand-outs.
That is not the way to develop human resources. Let us implement the social security program mentioned by the hon. member for Temiscamingue in order to safeguard individual freedom instead of crawling before tipsy officials. In that way, we will begin to set up some sort of just society at least.
Then, let us stop giving with one hand and taking away with the other. If we go to the universities and tell the students "Long live the just society!" they will answer: "Is that the just society when you give us a scholarship with one hand and take it away with the other through taxes? Moreover, we cannot find jobs during the summer." Mr. Chairman, those young people are not all "lousy" and revolutionaries. They want to build Canada. Those young people want to work, as the hon. member for Temiscamingue told the House. Those young people are not heartless; they want to participate.
Mr. Chairman, if we grant single people a basic exemption of $1,500, while a year at university costs them $2,500 and if, moreover, they end up on the unemployment market-we cannot talk of the labour market any more in Canada-it is hard for a father to teach them the value of authority, it is hard for any authority, at any level, to say to those young people: "Help your country, get involved, get into the game!" The young man will reply: "Help me first of all to make use of my degrees which are lying on a shelf, then we will talk about politics."
People-those in my constituency as well as those in the constituency of the Prime Minister (Mr. Trudeau) or any other member-want to participate, but let us quit messing around!
If, on the one hand, the maximum old age pension awarded is $3,060 a year, it means that the government is conceding that the minimum for subsistence is $3,000. Why not then grant basic exemptions of $3,000 for single people and $5,000 for married couples?
Before resuming my seat, I would like to ask the Minister of Finance, who did not listen to a word of what was said, to at least reveal his own thoughts on the bill.


Gérald Laniel: Order, please. I must unfortunately interrupt the hon. member to remind him that his time has expired.


Mr. Danforth:: Mr. Chairman, I interject at this moment merely to ask a question for clarification. I have in mind section 110 (1) (c) (xii). In this regard rulings are made with due and just cause-but we only receive rulings, never an explanation. Subparagraph (xii) provides: for any device or equipment, not described in any other subpara-

graph of this paragraph, of a prescribed kind, for use by the taxpayer, his spouse or any such dependant as prescribed by such a medical practitioner-
Let me give an example of what I have in mind, for the information of the minister and his parliamentary secretary. I know of a gentleman who has unfortunately been struck with a serious and incurable disease which necessitates his using a wheel-chair to travel from his place of residence to his business. In order to do this it was necessary to instal handrails and a ramp at his home as well as special controls in his automobile.
As outlined in this section, this type of equipment must be prescribed by a medical practitioner. As a matter of fact, the devices were prescribed by this man's doctor who advised him on the manner in which they must be installed and how they should be used. His doctor also helped to obtain the necessary equipment for the automobile. On making application to have the costs of these things deducted from his income, this man found they were disallowed and he asked me to make an appeal on his behalf. I did this, but the ruling was not in his favour.
I know the department looks at these matters very carefully, but I am unable to understand why they disallowed what I considered a very fair and just deduction in accordance with the wording of the act. I am wondering whether an explanation can be given.


Edgar John Benson: Mr. Chairman, under the existing law the only things that can be deducted are those defined in the act. Under the act as it will be when this bill is passed, I hope very soon, the Minister of National Revenue will have the power to decide on the new things that should be allowed as deductions, such as equipment, and so on. I cannot say whether it will cover such things as ramps, hand-railings and that sort of thing. We are allowing wider discretion to the Minister of National Revenue in order that he can hear cases and make changes rather quickly without having to come to Parliament each year in order to make small changes.


Harold Warren Danforth: Perhaps I might be permitted to ask the minister another question. The minister has just stated that this is a new provision and is a modification of the act. The minister is familiar with the problem I have outlined, but is it his understanding that under the terms of the new act such a deduction will be allowed, in terms of the bill now before us?


Edgar John Benson: I cannot say that. Certain things are prescribed in the act and the Minister of National Revenue is given certain latitude in determining those things which may be additionally prescribed. I should not like to prejudge decisions which will be made in this regard.


Mr. Haidasz:: May I ask a question, Mr. Chairman?


Gérald Laniel: Order, please. Unless the hon. member has unanimous consent, the responsibility of the Chair is to indicate that we have now reached ten o'clock and unless otherwise directed by the committee I must report progress.


Some hon. Members:: Agreed.


Gérald Laniel: If it is agreed that I do not see the clock for a few moments, that is fine, otherwise the committee must abide by the rules of the House.
October 26, 1971


Robert Jardine McCleave: Mr. Chairman, I think there might be agreement to get through these two sections, and I ask whether it is understood that we will be dealing next with sections 4 to 8 inclusive.


Edgar John Benson: Yes, Mr. Chairman.


André-Gilles Fortin: Mr. Chairman, we are trying to reach an agreement on an experimental basis between parties and, so that members of other parties can keep their word, why not carry on before the agreement has been reached on what is now proposed? We gave our word of honour and we shall keep it.


Gérald Laniel: It is not a matter of knowing what sections will be dealt with tomorrow, but rather of finding out if the Committee is allowed to sit past ten o'clock or whether the Chair should call it ten o'clock.


André-Gilles Fortin: Mr. Chairman, we do not agree. We shall use the rest of the evening preparing ourselves for a good day's work tomorrow.


Edgar John Benson: Mr. Chairman, perhaps I could suggest that we answer one question which has been raised and that tomorrow we proceed with sections 4 to 8 which are very wide ranging. I should think if the Chair wanted to indicate that we would accept one question, we would be pleased to do so, but without additional debate. If there is no consensus among members opposite to deal with these two sections tonight, then of course we cannot deal with them.


André-Gilles Fortin: Mr. Chairman, we disagree. This is like when we ask the minister to study Social Credit and his answer is no.

Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Thomas Clement (Tommy) Douglas: Mr. Speaker, on October 20 last, as recorded at page 8856 of Hansard, I raised the question of evaluating and assessing the program of the Department of Regional Economic Expansion because of the criticisms levelled at that department at a recent meeting of the Atlantic Provinces Economic Council. Those who attended that meeting are not opposed to the purposes for which the Department of Regional Economic Expansion was set up. What they are saying is that a department which is now 2} years old and which has become one of the major spending depart-
Proceedings on Adjournment Motion
ments, spending in the order of $330 million a year, with 2,000 employees, needs to be evaluated to see whether Canadian taxpayers are getting value for their money and whether the programs are accomplishing the objectives for which DREE was set up.
The criticisms from those who attended this meeting of APEC were three in number, in the main. First, the programs of DREE seemed to lack long-term planning and co-ordination. Mr. Guy Henson of Dalhousie University put it very well. The press report states:
-he chided the government for its failure to produce an imaginative concept; a clearly definable long-term strategy similar to those developed for the Tennessee Valley scheme and a regional development program in northern Norway.
Instead of a long-term concept, Ottawa had produced ad hoc plans couched in all the right phrases and cliches and with an appearance of high competence, which amounted to no more than narrow development of tools.
APEC itself, in its annual report, criticized the DREE program and said that rather than working closely with the provincial governments and municipalities to plan an infrastructure, DREE has simply lunged forward with a whole series of what can only be described as public works thinly disguised as regional economic expansion.
The second criticism had to do with the fact that the long-term objectives that the Department of Regional Economic Expansion was established to pursue have been short-changed in the interest of short-term political expediency. It seems that increases in the programs are determined by the political complexion of the region rather than by the economic needs of the area. The original concentration of certain carefully selected regions for development has been submerged in the cross-currents of political pressures. For instance, the area for federal incentive grants has now been extended to the point where half the labour force of Canada now lives in designated areas. The result has been to dilute the effectiveness of the incentive programs.
The third criticism which seemed to come out of these discussions was that the government's regional development policies have been undermined by lay-offs in firms which have received grants to establish plants in slow-growth areas. An instance was pointed out the other day of Canadian Ingersoll-Rand starting to lay-off some 300 workers in Sherbrooke, Quebec, although the firm received a grant of almost $200,000 from the Department of Regional Economic Expansion in 1970. The minister of the department said yesterday, according to a report from Montreal, that there is nothing abnormal about lay-offs in subsidized firms. I take this to be an admission that regional development policies have little hope of success when the national economy is faltering and employment is dropping.
DREE often talks about the national-regional trade-offs that are necessary to bring about balanced growth throughout the country, but what can the national economy spare for the slow-growth regions when apparently it can do so little for itself? I think this was summed up very well by the former deputy minister of DREE, Mr. Tom Kent, who said at the same conference, as reported in the Globe and Mail of October 20:
"It is impossible to expect" that a program conceived on the assumption of an expanding national economy would be successful when economic growth rates declined.

October 26, 1971
Proceedings on Adjournment Motion
It seems to me that in light of these criticisms and in light of the growing concern which is being felt in many areas, the time has come for the minister to give us an evaluation and an assessment of these programs. I think it was summed up very well by Mr. T. N. Brewis of Carleton University who said the following at the conference, as reported in the Globe and Mail of October 20:
-there is need for a greater public evaluation by DREE of its efforts. What assessment has been made in ministerial statements has been unsatisfactory and he accused the department of supporting its arguments with "phony" figures.
In view of the money which is being spent, in view of the desirable objectives which this department was set up to achieve, I think the time has come when Parliament has a right to expect from the minister of this department a statement as to the extent to which it has accomplished the goals set out for it, whether or not the programs being carried on have brought about the results which were required and whether the Canadian people are receiving value for these expenditures.


Mr. lames Hugh Faulkner (Parliamentary Secretary to Secretary of State):: Mr. Speaker, I am pleased to reply on behalf of the Minister of Regional Economic Expansion (Mr. Marchand) as follows: The report of the Atlantic Provinces Economic Council has been received and carefully read. It contains a good deal of useful information and analysis of a number of interesting suggestions. For this reason it will receive intensive study in the department. The report also contains a number of criticisms of departmental programs. To the extent these are constructive, or so intended, they are welcomed. To some extent, however, they seem to be based on misconception or lack of perspective.
The hon. member undoubtedly knows that many of the department's programs are based on a joint planning process that is dependent on a close working relationship with provincial governments. The department is engaged day in and day out in a planning exercise with its provincial counterparts and this exercise is now generating in each of the areas in which the department functions with a comprehensive development strategy. The programs of the department are subject to continuing evaluation, but if changes are considered necessary they will be made. No such changes, however, are contemplated at the moment.



POST OFFICE-STEPS TO IMPROVE SERVICE AND AVOID EXORBITANT COST FOR MAILING LETTERS

Walter Gilbert Dinsdale: Mr. Speaker, on October 20 I directed a question to the Postmaster General (Mr. Cote) with respect to a statement that had been made in the city of Winnipeg by one of his officials, supported by the hon. member for Winnipeg South Centre (Mr. Osier), to the effect that if efficiency did not increase in the Post Office Department in the immediate future, Canadians would be paying 26 cents to mail a letter.
In recent months discussion of the Post Office service has been somewhat quiet compared with what it was immediately following 1968. We have a new Postmaster General and I think hon. members have been waiting to see how he handles the mounting problems of Post Office
(Mr. Douglas.]
service. It now appears that the pattern that took shape in 1968, with services decreasing and costs increasing, is still present in the postal service of Canada.
Tonight I would like to ask whoever will speak for the Postmaster General some very specific questions. When this Postmaster General took over he said he would be adopting a more humane and understanding approach to Post Office problems. We accepted this at face value because, after all, postal service is the basic and most important communications service in any country. I suppose it was the first government service to be established as a public utility for that purpose. But the volume of mail handled by the Post Office still continues to decrease as a result of rather exorbitant increases in rates, along with a declining service. For example, by January 1 of next year the cost of mailing a letter in Canada will have increased by 100 per cent since 1968.
I want to deal specifically with protests that have been raised by the Letter Carriers Union in their publication "The Courier" of September-October, 1971. They point out that there has been a 30 per cent reduction in postal service in recent years. Obviously, there is dissatisfaction among letter carriers. I think it goes without saying that if you are to have an efficient postal service you must have a happy work force.
I would like the comments of the government spokesmen on this point. There can be, and there have been reforms. There was the assured mail delivery reform which was supposed to guarantee 24-hour delivery service to the major cities in Canada. This is not actually an improvement because Canada has had air mail delivery for 20 years. In the ordinary course of events, were it not for the decrease in efficiency over the past three years we should have expected the service to be substantially improved by assured air mail.
Recently there was the announcement of the all up overseas rate which provides air service to all mail originating in Canada at the rate of 15 cents per ounce. This is a five-cent increase on an overseas air letter because the air mail form is no longer used. I understand there has been such a log jam of air mail destined for overseas that there is now a considerable delay, mainly because no reciprocity has been achieved for this service with countries in Europe and other parts of the world. This is one of the matters put forward as an urgent necessity when the Postmaster General originally made his announcement in the House. Now we are to have the zip code which is supposed to bring the dawn of a new age in postal efficiency. It could, if the Canadian public accepts the mechanization of the post office service.
I want to specifically get the answer that I tried to get the other day. Is it the policy of the government to insist on a profit in this basic communications service? This seems to be the thought behind the various changes in operation and direction of the Post Office over the past three years. They say the Post Office is losing money. I would remind hon. gentlemen on the treasury benches that the CBC loses $200 million in public funds, we are spending $70 million to launch a Canadian satellite, and railroads and other basic means of communication all lose money. Why does the Post Office Department, why does the Postmaster General, why does the government
October 26, 1971

insist that this basic means of communication realize a profit?
Even in this Parliament we maintain parliamentary mailing privileges to ensure maximum communication between representatives and constituents. We have come a long way from the penny Post Office and I hope that the prognostication made in Winnipeg the other day, of 26 cents to mail a letter within nine years, will not be realized. Tonight I should like to hear how the Postmaster General intends to avoid this very undesirable situation.


Mr. Marcel Lessard (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, I wish to thank the hon. member for Brandon-Souris for raising this question. Unfortunately, when he did so, the minister was not allowed to reply in the House because of certain allegations. But I can assure the hon. member that it is my pleasure to reply tonight since the minister and his parliamentary secretary are not in attendance.
I would like to advise the hon. member that the Post Office Department has of course no idea of how much it will cost to deliver a first class letter within the next nine, 10 or 20 years.
The amount of 26 cents has been mentioned. Perhaps we shall reach this amount but probably not for many years.
But I would like to point out to the hon. member that there is a huge difference between what it costs the Post Office for the handling of a letter and the proportion of that cost that will eventually be paid by the user. The government's present policy-I insist upon that-does not imply that the Post Office will necessarily pay its way. The honourable member emphasized that point. We may be sure the department does not necessarily intend to pay its way.
I do not know what will be the government's policy in 1990, Mr. Chairman, but last year the Post Office implemented measures to prevent an excessive increase in costs and consequently in the deficit. The first of those measures is of course the Postal code and the mechanization programme which Mr. Fultz referred to the other day in his Winnipeg statement.
The mechanization programme will help to reduce mail handling thereby reducing the cost of such handling. We hope that the use of the postal code will be general by July, 1974. The guaranteed postal delivery program also will reduce expenditures while easing the pressures being exerted on the postal services during peak hours, as well as ensure a better use of both personnel and facilities. Besides, expect the creation of new postal facilities in Toronto, Winnipeg and Montreal, when these are entirely automated, costs will be maintained at a reasonable level.
The work to be done in the field of commercialization, which has been mentioned so often, will boost postal revenues in encouraging the use of the "postpack", promoting the philatelic service sales and developing the small parcels service and the use of containers, thus reducing handling costs.
Proceedings on Adjournment Motion
I should like to assure the hon. gentleman with regard to the other point he raised in his presentation. I will certainly bring this matter to the attention of the minister and he will take care of it in due course.


Walter Gilbert Dinsdale: Just keep the cost down. That's the thing that worries me.



AGRICULTURE-FARM MACHINERY-FEDERAL ASSISTANCE TO PRAIRIE PROVINCES IN TESTING PROGRAM

Mr. Rod Thomson (Battleford-Kindersley):: Mr. Speaker, yesterday I asked the Minister of Agriculture (Mr. Olson) this question:
In view of the fact that the three prairie governments are cooperating on a farm machinery testing program, as recommended by Professor Barber, have those three provinces approached the Minister of Agriculture for assistance in this regard? If not, what will his answer be if they do approach him?
The minister answered to the effect that there have been a number of discussions about this. I suggest that it is not enough to appoint a royal commission that has done a wonderful job. I suggest that there comes a time when you must do something about the recommendations that the commission has made to the government. If the Minister of Agriculture intends to do anything about those recommendations, he is surely taking his time.
We can see that the provincial governments are considering co-operating in this regard. I ask the minister this evening whether the federal government will contribute any money towards a farm machinery testing program, as recommended by Professor Barber. May I read a small excerpt from Professor Barber's report. His royal commission was a creature of the federal government. In that sense I think he speaks with authority, the authority of the government. I read as follows from page 3 of the report of the Royal Commission on Farm Machinery:
With farming much more highly mechanized, the farmer has also found himself more vulnerable to the effects of machine breakdown during his busy seasons-in particular during seeding operations in the spring, during the haying season, and at harvest time.
At page 10 the report reads:
Yet as machines become larger and more expensive, a farmer's machinery-investment decisions become increasingly critical. It is for this reason that this report includes a recommendation for an evaluation and testing unit that could supply farmers with much more reliable and comprehensive information to help them make their decisions on machinery investment and replacement.
A little further on Professor Barber suggests that people who are in a position to judge farm machinery are under pressure from farm machinery companies. He was thinking of newspapers and universities which receive advertisements and grants from farm machinery companies. That is why they are not in a position to make known critical evaluations of how farm machinery works. Professor barber suggested that logically the government ought to set up a unit to look into this particular problem. The Barber report says at page 495:
In an earlier section of this report ... it was pointed out that the benefits that had been derived from improvements in farm machinery technology in the past were extremely large. Indeed,

October 26, 1971
Proceedings on Adjournment Motion
over the period from 1926-66 it was estimated that the net benefits obtained were probably of the order of from $2 to $3 billion annually and might well exceed those derived from all other agricultural improvements.
This is one of the reasons in support of the suggestion that there should be evaluation of machinery. The following is one of the recommendations of Mr. Barber:
Accordingly it was recommended that the Canada Department of Agriculture set as its short term goal to be reached by 1980 the allocation of 10 per cent of its social research budget to supporting improvement in farm machinery.
It seems to me, as a farmer, that the system of testing agricultural machinery operated in Saskatchewan in the past received almost universal approval. I have in mind the reports of the Agricultural Machinery Administration. One heard farmers quoting the AMA reports as to what certain machines could do or could not do. Many people were critical when the program was dropped, but consideration is now being given to re-establishing it.
I should like to know whether the government intends to do anything. Professor Barber recommended that something be done. In view of the success of the program in Saskatchewan, is it not time to consider again the advantages which were derived from a project of this kind? It is not only farmers who benefit. It has been suggested that we might provide testing facilities for Canadian farm machinery manufacturers which are small by world standards and which do not have the means or the facilities required to carry out elaborate testing on their own. As a result they may not have been getting their share of the farm machinery market.
If we could do something to improve the technology of our home-made farm machinery, so to speak, we might not only be able to supply a larger share of our home
market but also sell more abroad. I suggest to the government and to the parliamentary secretary that what I am suggesting would be of advantage to all Canadian farmers, not just to prairie farmers. Imagine a machine shut down at harvest time for lack of a 25-cent seal! It is not a good thing to happen but it has happened. These machines should be tested thoroughly before they are put on the market; it would save the farmer and the country a lot of money. Mr. Speaker, we have procrastinated long enough and I believe it is time we did something. I want to know what the government intends to do.


Marcel Lessard: Mr. Speaker, on behalf of the Minister of Agriculture (Mr. Olson) I am pleased to inform the hon. member for Battleford-Kindersley (Mr. Thomson) that under the auspices of the Canada Committee on Agricultural Engineering discussions were held as late as September 22-24 among the federal government, provincial governments and the universities on the subject of the Royal Commission on Farm Machinery.
As to the question raised concerning assistance from the federal government, I must say that up to now we have received no requests from provincial governments concerning present programs. At the moment a committee within the department is studying the practical application of some of the recommendations contained in the Barber commission report and I can assure the hon. member that these discussions within the department and between the provinces and the federal government will be continued. I am sure that very good results will flow from these discussions. We may be in a position in a short time to announce interesting programs and progress which might help to solve the difficulties raised, quite properly, by the hon. member.
Motion agreed to and the House adjourned at 10.33 p.m.

Wednesday. October 27, 1971