1971-10-12

[Stage Direction]
On the order: Motions:
September 10, 1971-Mr. Howe: That the second report of the Standing Committee on Transport and Communications, presented to the House Wednesday, April 7, 1971, be concurred in.
Mr. W. M. Howe (Wellington-Grey-Dufferin-Waterloo):: Mr. Speaker, in view of the fact that the chairman of the Standing Committee on Transport and Communications has a motion similar to mine on the order paper I should like to ask that mine be withdrawn.


Mr. Speaker:: Does the hon. member have leave to withdraw his motion?


Some hon. Members:: Agreed.
Order discharged and motion withdrawn.



AGRICULTURE


Hon. H. A. Olson (Minister of Agriculture):: Mr. Speaker, I am pleased to be able to announce that the Agricultural Products'Board has been authorized to purchase turkeys for processing, with the canned meat going to the world food program. This action is the first action taken under the previously announced programs designed to offset the impact of the surtax on agricultural products entering the United States. It is estimated that the amount of turkeys purchased will compensate for the market for Canadian turkeys in the United States lost during the period August to December because of the surtax which has further distorted an unbalanced supply and demand situation.
The Agricultural Products Board will be issuing tender calls, specifications and other details shortly.


Mr. R. E. McKinley (Huron):: Mr. Speaker, having regard to the statement just made by the Minister of Agriculture (Mr. Olson) I am aware that the Ontario Turkey Federation made representations to the minister and the board as early as late August or early in September. I have also made strong representations to the minister and the chairman of the Agricultural Products Board in this regard.
We all know that at this time turkey prices are the lowest they have been for 25 years. This has resulted from the fact that when chicken broilers were put on quotas in Quebec many buildings which were easily adaptable to raising turkeys were switched over and there was an increase in turkey production. We now understand that some of the provinces have got together in an endeavour to control their production to some extent to assist in achieving a better price.
The United States surcharge has created a tremendous hardship for turkey producers because the price dropped two cents per pound on its implementation. In addition, the surcharge is causing the loss of many jobs in this country. Canadian hatcheries that produced turkey poults in Canada are finding they cannot sell in the United States because of the increase from two cents to four cents in the duty on turkey poults. Production of turkey poults by Canadian firms in the United States is increasing and Canadian workers are being laid off.
I am sure we are all thankful for the little bit of assistance the minister has announced today. I realize that the producers asked that some 8 million to 10 million pounds of turkeys be purchased for the world food program. The minister has not said how much will be purchased for this purpose, but I do not think the amount will be anything like what was requested, I am sorry to say. I certainly hope that what has been decided will be helpful at the present time and that further action will be taken when necessary. We will expect the government to keep a watchful eye on the situation and take further action in this regard when necessary.


Mr. A. P. Gleave (Saskatoon-Biggar):: Mr. Speaker, the minister assured the House a while ago that agricultural products affected by the United States surtax would be considered product by product, and I suppose this is another instalment in that procedure. Because I have spoken to producers personally I know that some producers in western Canada are in a very serious situation. The minister's announcement will certainly make them feel somewhat better since he is taking at least this much action to meet the existing situation. Some of them have discussed with me the possibility of finding other markets than the United States and the possibility of research into processing and developing special products. I suppose those who have such ideas will bring them forward to the minister, and I hope he will extend to them whatever co-operation is within his power.


Mr. Real Caouette (Temiscamingue):: Mr. Speaker, from the applause of my colleagues, one would say they are convinced I shall become Prime Minister of Canada after the next election.

October 12, 1971
United Nations
Mr. Speaker, I am extremely grateful to my colleagues for this mark of their esteem. Before commenting on the statement made by the Minister of Agriculture (Mr. Olson), I should like to assure them that, as ever, in the Parliament of the Canadian nation I shall co-operate with each and everyone in order that Canada may remain Canada and that our nation may be united irrespective of a diversity which makes for its greatness.
Mr. Speaker, I am gratified by the statement made by the Minister of Agriculture. It expressed in substance what he used to say when he was a deep-dyed Creditiste. He recommends assistance to some sectors of agriculture, and if he made such statements regarding all areas of Canadian agriculture I believe our western and eastern farmers would no longer believe that government aid to the west is detrimental to the east and vice versa. I think that this policy which is one of guarantee for turkey producers, for instance, could also apply to wheat, dairy, corn and other agricultural producers.
Mr. Speaker, we welcome this statement and express the hope that the Minister of Agriculture takes the same action to assist the Third World, the underdevelopped countries, as well as this country, and above all Canadian consumers.



UNITED NATIONS


Mr. S. Perry Ryan (Spadina):: Mr. Speaker, pursuant to Standing Order 43 I ask the unanimous consent of the House to propose a motion of urgent and pressing necessity.
This matter concerns the decision of the government to support the Albanian resolution at the United Nations. This resolution calls for the recognition of the People's Republic of China and at the same time for the expulsion forthwith of the representatives of Taiwan.
As the government in Taiwan is clearly in de facto control of the Island of Taiwan and adjacent islands, the question arises whether the Albanian resolution is contrary to the United Nations principle of universality of representation. The resolution also creates the precedent of expelling a member from the world body.
I therefore propose to move, seconded by the hon. member for Hamilton West (Mr. Alexander):
That the government do forthwith provide an early opportunity before the U.N. vote on the Albanian resolution for full discussion of this important matter in this chamber.


Mr. Speaker:: The House has heard the motion moved by the hon. member for Spadina. This motion can only be put with the unanimous consent of the House.

Is there unanimous consent as required under the terms of Standing Order 43?


Some hon. Members:: Agreed.
(Mr. Caouette.]


Some hon. Members:: No.


Mr. Speaker:: There is not unanimous consent; therefore the motion cannot be put.



CROWN CORPORATIONS


Mr. David Lewis (York South):: Mr. Speaker, I seek the unanimous consent of the House under Standing Order 43 to place before it a motion on a matter of urgent and pressing necessity. It arises out of serious lay-offs made in the last few days by the Polymer Corporation in Sarnia where 250 production and scientific employees have been laid off, some with 25 years of service. The lay-offs were announced by the president of the corporation and services were terminated without notice although employees were given the appropriate pay in lieu of notice. This has caused tremendous hardship for the families concerned and has produced a sense of insecurity not only throughout the Polymer work force but also throughout the community.
Since Polymer is a Crown corporation answerable to this Parliament through the Minister of Supply and Services and since there is great fear that further lay-offs may follow, I move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the lay-offs which have been imposed by Polymer Corporation and the circumstances leading thereto be referred to the Standing Committee on Labour, Manpower and Immigration for immediate and full inquiry.


Mr. Speaker:: Hon. members have heard the motion proposed by the hon. member for York South. This motion requires unanimous consent.

Is there unanimous consent?


Some hon. Members:: No.


Mr. Speaker:: There is not unanimous consent. Therefore the motion cannot be put.



TRANSPORT AND COMMUNICATIONS


Mr. H.-Pit Lessard (LaSalle) moved: that the 2nd report of the Standing Committee on Transport and Communications tabled in the House on Wednesday April 7,1971 be agreed to.


[Stage Direction]
Motion agreed to.
October 12, 1971


Mr. John Gilbert (Broadview):: Mr. Speaker, my motion is under Standing Order 43. Last week two metro Toronto constables were caught using wiretapping devices against members of a trade union involved in a legal strike against Redpath Refinery, a subsidiary of Dominion Sugar Company Limited. At present there is no law prohibiting wiretapping. This wiretapping practice is so abhorrent to Canadian principles of justice that it gives weight to the Minister of Justice's statement that we are living in a bugged society and fast approaching an Orwellian state. Therefore I move under Standing Order 43, seconded by the hon. member for Greenwood (Mr. Brewin):
That the question of the illegal use of electronic equipment and wiretapping devices against persons involved in strikes and lockouts be referred to the Standing Committee on Justice and Legal Affairs with instructions to report back to the House prior to second reading of Bill C-252.


Mr. Speaker:: The motion requires unanimous consent. Is there agreement?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Speaker:: There is not unanimity and the motion cannot be put.



LABOUR CONDITIONS


Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise under the provisions of Standing Order 43 which provides that in cases of urgent and pressing necessity a motion may be made if unanimous consent is given. The matter of urgent and pressing necessity is the potential loss of jobs to thousands of Canadians employed in the automotive industry. I therefore move, seconded by the hon. member for Brant (Mr. Blackburn), the following motion:
In order to clear up the present uncertainty concerning the future of 83,000 Canadians employed in the automotive industry, this uncertainty having arisen because of the repeated refusal of the government to assure the country that notwithstanding American pressures to the contrary, including a recent proposal for free trade in used cars, the safeguards in the Canada-U.S. automotive agreement will be maintained in principle and strengthened in detail, this House resolves that such commitments be made.


Mr. Speaker:: Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.
The Canadian Economy


Mr. Speaker:: There is not unanimous consent. The motion cannot be put.



ELECTORAL BOUNDARIES READJUSTMENT ACT


Mr. E. F. Whelan (Essex) moved: for leave to introduce Bill C-269, respecting the Electoral Boundaries Readjustment Act.


Some hon. Members:: Explain.


Eugene Whelan: Mr. Speaker, the electoral district now known as Essex is one of the fastest growing in western Ontario. With its great diversification of people and its production, both industrial and agricultural, from the city of Windsor and the county of Essex, I feel it would be proper to change the name so that both areas would be properly recognized.


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

Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, pursuant to Standing Order 26 I ask leave to move the adjournment of the House for the purpose of discussing a specific and important matter requiring urgent consideration.
This specific and important matter is the apparent breakdown in communication between the government and the government of the United States at a time when confusion regarding economic relations between the two countries must accelerate the rate of unemployment in Canada.
If my motion is acceptable, Mr. Speaker, I will move the adjournment of the House, seconded by the hon. member for Peace River (Mr. Baldwin).


Mr. Speaker:: The hon. Leader of the Opposition has filed with the Chair the due notice of his motion to request the adjournment of the House for the purpose of discussing a specific and important matter requiring urgent consideration under the provisions of Standing Order 26.
The question which the Chair must determine is whether or not the problem as posed by the Leader of the Opposition meets with the procedural requirements of Standing Order 26.
It is obvious to all hon. members that the general question of communications and relations between the governments of the United States and of Canada is of paramount importance. It is of national and urgent interest. It does not follow necessarily that such a vast and complex prob-

October 12, 1971
Inquiries of the Ministry
lem must be debated today, by an adjournment of our regular proceedings under the terms of Standing Order 26, rather than later this week or next week.
My understanding of Standing Order 26 is that its provisions apply when there is an emergency of a sudden nature which requires an immediate debate in the House. The standing order does not apply when we have before us a situation which is claimed to be developing or evolving over a period of time. Hon. members are well aware that this suggestion has been advanced in the House on a number of occasions in past weeks, and particularly during the lengthy debate which took place in relation to Bill C-262. That condition in itself would tend to indicate that the proposed motion does not satisfy the criteria set out in the standing order.
In view of all circumstances and after reiterating that the Speaker's ruling, in such circumstances, is essentially a procedural one, I must conclude that for today at least the motion cannot be put to the House.



ORAL QUESTION PERIOD


Robert Lorne Stanfield: Mr. Speaker, I would like to ask the Prime Minister whether, in light of the most recent press reports of a so-called shopping list of American grievances with Canada, he would tell the House if his government, as reported in the press, has in fact requested from the United States administration a specific list of complaints regarding our trade relations with the United States?


Hon. Mitchell Sharp (Secretary of State for External Affairs):: Mr. Speaker, since I have had some discussions with the United States directly on these issues, perhaps I might be permitted to answer the question. During the discussions we have had recently with the United States they have from time to time indicated that they have certain matters they would like to negotiate with us and we have indicated, of course, that we would be happy to receive such a list. So far we have not received it.


Robert Lorne Stanfield: I have a supplementary question for the Prime Minister. As a matter of government policy, is it intended to pursue a direct approach to the United States or does the Prime Minister intend to continue a course of oblique communication back and forth with the United States administration by way of speeches in Canada and the United States, leaks here and there and press releases?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, as far as we are concerned there have been no oblique communications; they have been at the ministerial and official levels at all times. If the Leader of the Opposition wants to take press leaks as his authority, then he is using them in an oblique way, but our relations with the Ameri-

can authorities are very direct, I understand that this leak has been denied any authenticity by the State Department and the White House. If indeed it had been some form of an oblique representation to Canada, the Secretary of State for External Affairs was going to speak to the State Department to ask if there was anything in this so-called leak, but we now understand that the White House and the State Department have said that these leaks have no authenticity at all.


Robert Lorne Stanfield: Mr. Speaker, I am not referring to just that leak but to various speeches made by ministers and parliamentary secretaries in Canada which seem to be leading to considerable deterioration in relations between the two countries. Since it is now eight weeks since I first urged the Prime Minister to communicate directly with President Nixon and as there has been no clarification in the meantime but apparently a deterioration in the situation, I should like to ask if the Prime Minister is now prepared to reconsider his position and initiate direct communications with President Nixon?


Pierre Elliott Trudeau: Mr. Speaker, there have been extremely direct communications between the two governments. I have not decided that it would be necessary at this time to speak to President Nixon directly.



SUBJECTS THAT UNITED STATES WISHES TO NEGOTIATE WITH CANADA-CONSIDERATION DURING SURTAX DISCUSSIONS

David Lewis: Mr. Speaker, I should like to direct a supplementary question to the Prime Minister or to the Secretary of State for External Affairs. In view of the fact that the Secretary of State for External Affairs today, the Minister of Finance on other occasions and the Minister of Industry, Trade and Commerce on still other occasions have indicated that the American authorities had suggested there were matters which they wanted to negotiate, may I ask whether in a formal or informal way, directly or indirectly, at the ministerial or official or any other level, the government has been informed of the subjects the American administration wants to negotiate with the Canadian government?


Mitchell William Sharp: Mr. Speaker, we have of course been negotiating the automobile agreement so that this is not a matter that comes afresh. We have been negotiating this for months. On the list that leaked to the Chicago Tribune there are some other matters that are very familiar to us and some that I must say are new. But we also have our list.


Some hon. Members:: Oh, oh!


An hon. Member:: You have a list?


An hon. Member:: Did you leak it?


Mitchell William Sharp: I do not think that we would want to be exchanging lists at this time through the public press and I do not think the United States administration intended that either. However, we have similar problems that we would like to negotiate with the United States, such as their ban on the importation of uranium, their manufacturing clause in their Copyright Act and their restrictions
October 12, 1971

on immigration into the United States. We have a long list, but I think that these are matters that ought to be negotiated between our two countries in the ordinary way and certainly should not be associated with the surcharge.


David Lewis: Mr. Speaker, I have no doubt there is a long Canadian list. One may agree with the Secretary of State for External Affairs that it should not be associated with the surcharge, but I should like to ask him, the Prime Minister, or any other minister who can tell us, whether it is not a fact that some of the grievances that the Americans feel they have have been brought up during the discussions with regard to the surtax, not necessarily as preconditions but as part of the discussions regarding the surtax? Is that not so?


Mitchell William Sharp: Mr. Speaker, perhaps the best way of answering this question is td say what the spokesman for the American State Department said. He said: "The United States has not given Canada a specific list of conditions for the lifting of the 10 per cent surtax on Canadian imports."


David Lewis: A supplementary question, Mr. Speaker.


Mr. Speaker:: Order, please. The hon. member will be allowed one further supplementary, after which the Chair will recognize the hon. member for Temiscamingue on a supplementary.


David Lewis: Mr. Speaker, in view of the very precise language that the Secretary of State for External Affairs has just read, namely, that they have not produced a list of conditions for the removal of the surtax, and since neither the minister nor the Prime Minister has indicated any word from the Department of the Secretary of the Treasury of the United States, may I again ask the minister whether the government is giving consideration to informing the House and the people of Canada about the nature of the discussions that are taking place and, instead of our having to listen to the kind of thing which we have read, letting us know what in fact is taking place between the two governments?


Mitchell William Sharp: Mr. Speaker, I am sure if I gave a complete answer it would be out of order now. I should like to say to the hon. gentleman that we have never at any time had any indication that if we complied with a particular request 'of the United States that they would lift the surcharge. It is true, as I said earlier, that there is a list of points that the Americans would like to negotiate with us and they would like to get their way, but we have a list of points that we would like to raise with them and on which we would hope to get our way.



UNITED STATES IMPORT SURTAX-PROGRAM TO EXPAND TRADE WITH OTHER COUNTRIES

David Réal Caouette: Mr. Speaker, I should like to put a supplementary to the Secretary of State for External Affairs.
To palliate the situation caused by the levy of the 10 per cent American surcharge, the minister says that Canada
Inquiries of the Ministry
also has a list of negotiable items, but has a formula not been developed which, in addition to palliating the situation, would divert our exports a little bit more towards USSR and Communist China markets?


Mitchell William Sharp: Mr. Speaker, I do not think there has been any government in history that has spent more time in trying to cultivate markets for Canadian goods. I am thinking of the Minister of Industry, Trade and Commerce who has gone to China as well as the Prime Minister who has gone to Russia. The Minister of Finance, the Minister of Industry, Trade and Commerce and I have been to Europe on innumerable occasions to try to enlarge the horizons of Canadian trade, and this has worked.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Order, please.


David Réal Caouette: Mr. Speaker, could the Minister tell us if there is not already a program advocating our withdrawal from the American market in favour of that of the USSR and communist China?


Mitchell William Sharp: Mr. Speaker, I remember the rather sorry story of the efforts made by a previous Prime Minister to divert trade from the United States to Great Britain. It is not an experiment I should like to follow.



UNITED STATES ECONOMIC MEASURES- COMMUNICATION BY PRIME MINISTER WITH PRESIDENT NIXON-GOVERNMENT PLAN TO CREATE JOBS

Hon. George Hees (Prince Edward-Hastings):: Mr. Speaker, may I direct a supplementary question to the Prime Minister. Has the Prime Minister been in touch with President Nixon either by letter or by telephone to make sure that there is no doubt in the President's mind about the very serious effect his economic program will have on the economy of this country?


Pierre Elliott Trudeau: By letter or by telephone, no, Mr. Speaker.


Mr. Baldwin:: How about by extrasensory perception?


Some hon. Members:: Oh, oh!


George Harris Hees: A supplementary question, Mr. Speaker. As it therefore appears highly unlikely that the American 10 per cent surcharge will be removed until a great many months have passed, is it the intention of the government to introduce a program to create jobs, similar in nature to the kind of program which was announced by Premier Davis of Ontario over the week end-


Some hon. Members:: Oh, oh!


George Harris Hees: -and which on a national basis would create well over 100,000 jobs?


Some hon. Members:: Hear, hear!

October 12, 1971
Inquiries of the Ministry


Pierre Elliott Trudeau: Mr. Speaker, we are not on the eve of an election.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!


George Harris Hees: For how long does the government intend to remain in its present state of petrified lethargy? Why does it not get on with the job?



UNITED STATES ECONOMIC MEASURES-AMERICAN GRIEVANCES AGAINST CANADA

['Mr. Speaker, my purpose would be to appear before the Standing Committee on External Affairs and National Defence, and it would be a pleasure.']
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, my question is for the Prime Minister. I wonder if he could clarify the confusion that exists between himself and his colleague. He indicated that the State Department and others had denied that there was any sort of list or anything of that kind; yet the Secretary of State for External Affairs tells us that for some time it has been known that the Americans have had a number of demands or grievances against Canada. Who is telling the truth?


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member will appreciate that a question asked in those terms is not in order.


Marcel Joseph Aimé Lambert: Mr. Speaker, I will rephrase the latter part of it. Would the right hon. gentleman attempt to reconcile the difference?


Mr. Speaker:: Order, please. Even put in those terms, the hon. member must know that he is inviting the Prime Minister to reconcile one statement with another. I have suggested to hon. members in the past that this is debate.


Marcel Joseph Aimé Lambert: On a point of order, Mr. Speaker.


Mr. Speaker:: The hon. member rises on a point of order. After we have heard the point of order I suggest that we give other hon. members-will the hon. member kindly resume his seat-an opportunity to ask questions on another subject and return to this one eventually.


Marcel Joseph Aimé Lambert: Having listened to previous questions and answers, in the same sense I used it seemed to me that the two statements I have referred to need to be reconciled, particularly since the ministers sit in adjoining seats.


Mr. Speaker:: Order, please. I am not sure that the Chair ought to take that into account.



Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the Minister of National Defence. Will he tell the House whether the proposed test on Amchitka Island is for the purpose of testing a nuclear
(Mr. Hees.]
warhead to be used in the proposed AMB safeguard system. Also, has the minister made any representations on strategic grounds as to why there is no purpose in such tests?


Hon. Donald S. Macdonald (Minister of National Defence):: Mr. Speaker, I thank the hon. gentleman for having advised me of his intention to ask the question. Regrettably, I cannot give him a full response today on this point.


Francis Andrew Brewin: Mr. Speaker, may I ask a related question. Can the Minister of National Defence say whether he would be willing to appear before the Standing Committee on External Affairs and National Defence in order to discuss thoroughly the government's white paper on defence?


Donald Stovel Macdonald: Mr. Speaker, my purpose would be to appear before the Standing Committee on External Affairs and National Defence, and it would be a pleasure.



CRIMINAL CODE


Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I have a question for the Prime Minister.
Considering that murder shows an alarming increase in number in Canada, can the Prime Minister tell us if the government intends to introduce a bill reinstaling capital punishment for persons found guilty of capital murder?


Pierre Elliott Trudeau: No, Mr. Speaker, not immediately, but hon. members know that the present legislation calls for revision after five years. When the time comes, the government will have to consider the matter, but it does not intend to do so now.



THE CANADIAN ECONOMY


Mr. David MacDonald (Egmont):: Mr. Speaker, my question is directed to the Prime Minister and relates to earlier questions asked concerning the deteriorating relations between the governments of Canada and the United States. Could the Prime Minister indicate, in view of this very serious situation, what steps are being taken to correct it and whether or not some proposal is being made to the American administration with respect to better communications and a better exchange of information concerning the vital points of mutual interest to both our economies?


Pierre Elliott Trudeau: Mr. Speaker, with respect, we believe there is nothing wrong with the communications. The difficulty-


George Harris Hees: Is with the relations.
October 12, 1971


Pierre Elliott Trudeau: -is in ensuring that the communications are put to use so that we know what the Americans intend doing in their future policy. This worries not only Canada but the many nations that are affected by the 10 per cent surcharge. I think it is significant that President Nixon in his recent statement to the nation did not refer to international relations. Apparently this aspect of communications is not foremost in his mind. That is not because there are no channels open between us; it has arisen because it is not American policy now to put the proper stuff into the channels which would satisfy the Canadian people.


David Samuel Horne MacDonald: A supplementary question. I thought the Prime Minister might asknowledge there is a special relationship that has existed between Canada and the United States. In view of the obvious frustration and perhaps lack of accurate information that must be behind the recent enunciation of grievances in the Chicago newspaper story, can the Prime Minister indicate to the House what action is being taken by our government to see that we will not continue to be placed in a very disadvantaged situation with regard to economic decisions made in the United States?


Pierre Elliott Trudeau: Mr. Speaker, there are frequent communications at the ministerial level between the American administration and ours. I answered the Leader of the Opposition a moment ago that, had the American administration not denied the validity of this so-called leak, the Secretary of State for External Affairs would have in fact communicated with the Secretary of State in Washington to see if there was anything behind this so-called leak.



UNITED STATES ECONOMIC MEASURES-SETTING OF TIME FOR NEGOTIATION OF AMERICAN AND CANADIAN GRIEVANCES

Hon. D. S. Harkness (Calgary Centre):: Mr. Speaker, I wish to address my supplementary question either to the Prime Minister or to the Secretary of State for External Affairs. Has the Canadian government or the American government made any specific proposal for a definite time and date for a meeting to negotiate the differences between the two countries as found on their respective lists of grievances against each other?


Pierre Elliott Trudeau: Mr. Speaker, I think it has been said repeatedly in the House that on some of these matters there have been negotiations and exchanges for several months now. There is not one list with one timetable, if that is the question of the hon. member.


Mr. Speaker:: Order, please. A moment ago I suggested to hon. members that we might go on to another subject. We have perhaps inadvertently returned to the original subject. I again suggest we should not have too many supplementaries on this matter. I will recognize the hon. member for Calgary Centre and then the Leader of the Opposition.


Douglas Scott Harkness: I wonder if the Prime Minister can explain to us what he means by a timetable in connection with these negotiations?
Inquiries of the Ministry


Pierre Elliott Trudeau: The question from the hon. member was whether any time had been agreed to. When I said that there was no timetable agreed to nor even discussed, I was answering the hon. member's question about time.



UNITED STATES ECONOMIC MEASURES-SUGGESTED PERSONAL COMMUNICATION BY PRIME MINISTER WITH PRESIDENT NIXON TO OBTAIN INFORMATION

Robert Lorne Stanfield: In
view of the importance of this whole subject and the concern that the Prime Minister has expressed about the possible difficulties and long-term effects of the American policy, will the Prime Minister indicate why he will not personally contact the President of the United States in order to get the information that the Secretary of State for External Affairs does not seem able to get? I do not ask this in an argumentative way. Will the Prime Minister personally attempt to get from the President of the United States the information, part of which the Secretary of State for External Affairs is seeking, which is of vital importance to Canada at this time?


Pierre Elliott Trudeau: Mr. Speaker, I suspect that the question lacks slightly in candour. If I thought anything positive would come from following up such a suggestion, I would have followed it up long before now.



INDIAN AFFAIRS


Mr. Frank Howard (Skeena):: I wish to direct my question to the Minister of Indian Affairs and Northern Development. It is with regard to the very important meeting scheduled to commence tomorrow in Alberta and involving Indian people from all across the nation. Will the minister be in attendance at that meeting to hear firsthand the decisions that are made?


Hon. Jean Chretien (Minister of Indian Affairs and Northern Development):: No, Mr. Speaker. However, I invited the chiefs of the area to come and meet me in Ottawa on Thursday and they refused. I hope that they will reconsider my invitation and that we shall be able to discuss the matter here as soon as possible.
IEnglish]


Frank Howard: I do not know whether the minister has been invited to the meeting in Alberta tomorrow. If he has been invited, does he not think it would be more worth while for him to appear on the scene and see at first hand-


Mr. Speaker:: Order, please.



STATUS OF JEANETTE CORBIERE LAVELL-APPEAL TO SUPREME COURT OF CANADA

Mr. Len Marchand (Kamloops-Cariboo):: In the absence of the Minister of Justice I will direct my question to the

October 12, 1971
Inquiries of the Ministry
Minister of Indian Affairs and Northern Development. In view of the far-reaching decision in the federal court of appeal last Friday in favour of Jeanette Corbiere Lavell, which returned her to Indian status after she had lost this status upon being married to a non-Indian, will the minister consult with his colleague, the Minister of Justice, and have this most important and momentous decision appealed to the Supreme Court of Canada so that it will be ruled upon by the highest court in our land?


Joseph Jacques Jean Chrétien: Mr. Speaker, we have not yet received the written decision of the Federal Court. As soon as we do, we shall study it and I shall be pleased to consult with the hon. Minister of Justice and examine the possibilities of an appeal to the Supreme Court, as the hon. member suggests.



ESTABLISHMENT OF PROGRAM IN LIGHT OF MULTICULTURAL POLICY

Mr. Lincoln M. Alexander (Hamilton West):: I have a related question, Mr. Speaker. As the government has just accepted the important fact that this country is a multicultural society, can the minister now advise if and when he will be making a statement with regard to a dynamic approach and a dynamic program whereby Canada's first citizens, the Eskimos and Indians, will in fact play a leading role in the mainstream of Canadian life?


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not think it could be said that there was no dynamic action in this direction. One can notice every day that for the last two or three years Indians have had a new conscience, a new pride. They are very well organized in federations financed by the federal government.


Lincoln MacCauley Alexander: A supplementary question. As a result of this approach of the government, will the minister advise if he will be making a statement in due course on any new approaches in order that there can be some credibility given to the statement of the government which was just made on Friday? Are there any new approaches?


Joseph Jacques Jean Chrétien: Mr. Speaker, we announced a new policy two years ago and we then asked the Indians to inform us of their reactions. Last Thursday, the Manitoba Federation of Indians submitted a very important document on this subject. It is presently under study. We have received other suggestions or documents from Indians. It was about time the Indians were given the opportunity to inform us of their views on their future.


Lincoln MacCauley Alexander: One last supplementary. In light of the fact that Mr. Harold Cardinal seems to be as well advised, if not more so, than the minister, will the minister convene a meeting with this young man in order that he can take

his advice if for no other purpose than to say that he is sorry for the remarks he made the other day?


Mr. Speaker:: Order, please. The minister is rising on a question of privilege.


Joseph Jacques Jean Chrétien: I rise on a question of privilege, Mr. Speaker.
I want to inform the House that I had the opportunity to meet with Mr. Cardinal in my office twice, only ten days ago, and he is welcome at any time.



SUGGESTED ATTENDANCE OF MINISTER AT NATIONAL INDIAN BROTHERHOOD COUNCIL MEETING

David Lewis: A supplementary question. Has the Minister of Indian Affairs and Northern Development in fact received an invitation to attend the special meeting of the council of the National Indian Brotherhood of Canada? Also, in view of the fact the Indian people feel that the difficulties in Alberta are duplicated in other parts of the country, does he not consider it advisable to attend this meeting in order to discuss the matter with them in earnest?


Joseph Jacques Jean Chrétien: Mr. Speaker, I received that invitation on Friday, and discussed it with the president of the Indian Association of Canada. I told him that I would not be able to attend, as I was leaving the North today. We discussed the situation for several hours, and I told him that I would gladly welcome the Alberta Indian chiefs and the national association executives here, in order to hold a discussion as soon as possible.



UNEMPLOYMENT INSURANCE


Mr. B. Keith Penner (Thunder Bay):: Mr. Speaker, my question is for the Minister of Labour but in his absence I will direct it to his parliamentary secretary. Can the parliamentary secretary inform the House whether the numerous complaints concerning unemployment insurance benefits payable to the workers of the Caland Ore Company in Atikokan have been investigated and resolved?


Mr. Ray Perrault (Parliamentary Secretary to Minister of Labour):: Mr. Speaker, I want to thank the hon. member for bringing the plight of these workers to the attention of the department several days ago. An investigation has been made and unemployment insurance benefits have been increased as a result of a recompilation of average unemployment insurance contributions. The company incorrectly deducted unemployment insurance contributions while the employees were in receipt of holiday pay,
October 12, 1971

and as hon. members are aware this would have the effect of lowering, unfortunately, the base used in assessing their benefits. I thank the hon. member for his question.



NATURAL GAS-APPROVAL OF APPLICATION FOR EXPORT

Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I should like to direct a question to the Minister of Industry, Trade and Commerce in his capacity as Acting Minister of Energy, Mines and Resources. Has the application now before the National Energy Board to export approximately 2.7 trillion cubic feet of natural gas from Canada to the United States been approved by the board and, if so, has it been approved to date by the cabinet?
Hon. ]ean-Luc Pepin (Acting Minister of Energy, Mines and Resources): Mr. Speaker, I am sorry but I am not aware of these facts. I was led to understand that the parliamentary secretary might answer this question if he were here. I will take the question as notice.


Eldon Mattison Woolliams: I wonder whether I might direct this question to the Prime Minister. In light of the fact that there is an application before the National Energy Board for approval of the export of 2.7 trillion cubic feet of natural gas spread over a 15-year period, and since there is a serious shortage of energy in the United States, would this not be one respect in which the Prime Minister could personally negotiate with the President of the United States to relieve difficulties in the trading relations between our two countries at this time?


Pierre Elliott Trudeau: Mr. Speaker, as the hon. member knows, the board would have to make its recommendations before I would be able to make such representations.


Eldon Mattison Woolliams: May I just follow that through.


Mr. Speaker:: Order, please. We are running short of time. The hon. member can ask a supplementary and then we will try to go to another subject.


Eldon Mattison Woolliams: Mr. Speaker, to follow up the Prime Minister's reply, is he suggesting that the application has not yet been approved by the board, or is he saying that it is before the cabinet of Canada? I do not think you know, Mr. Prime Minister.


Pierre Elliott Trudeau: Perhaps my minister would know, if you asked him.


Mr. Pepin:: Mr. Speaker, I can assure the House that the decision is not before the cabinet. As everyone knows, it has to come before the cabinet before it is finally approved.
Inquiries of the Ministry BRIDGES



PROPOSED STRUCTURE TO SEA ISLAND, VANCOUVER- NATURE OF PLAN IN RELATION TO TOLLS

Mr. Barry Mather (Surrey-White Rock):: Mr. Speaker, I have a question I want to direct to the Minister of Transport which is of considerable interest to many people on the lower mainland of British Columbia. Can the minister indicate whether a plan has been decided on to provide toll-free access to Vancouver International Airport and Sea Island, or toll-free access to Sea Island itself, or whether a modified toll plan has been arrived at?


Hon. Donald C. Jamieson (Minister of Transport):: Mr. Speaker, I think it is obvious that I cannot answer this question in detail. I can say that there are a number of variations on a plan that are presently being considered and these will be submitted to the interested parties in the Vancouver area before any final decision is made. We have already had one meeting with these parties and we will have another.



AGRICULTURE


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, I would like to put a question to the Minister of Agriculture who seems quite willing to give me a good answer.
The Agricultural Stabilization Board recently sent hog producers a letter recommending that they keep their sales slips probably in order to grant them a deficiency payment.
Could the minister tell the House if he expects deficiency payments to be made by the end of 1971 to hog producers in order to help them get a better income?


Horace Andrew (Bud) Olson: Mr. Speaker, there is a heading on these grading certificates at the top in red ink indicating that they should be retained in the event that a deficiency payment is made. I have advised the House a number of times that the mandatory level is $24.14 based on the national weighted average. If the average for 1971 is below that, there will be a payment at least up to that amount.


Joseph Adrien Henri Lambert: Mr. Speaker, I have a supplementary.
In view of the fact that prices are definitely inadequate according to hog breeders, could the minister indicate to the House whether he is prepared to recommend that the price of $24 be changed in order that those breeders may have an opportunity to get an income consistent with 1971 needs?


Horace Andrew (Bud) Olson: Mr. Speaker, I do not think I could make any announcement of that kind until I know for a fact what the national weighted average is for all of 1971.

October 12, 1971
Inquiries of the Ministry EGGS-INQUIRY AS TO DEFICIENCY PAYMENT


Robert Elgin McKinley: Mr. Speaker, can the minister tell the House whether a deficiency payment for the past year will be made on eggs? I understand that the assessment period ended at the end of September.


Horace Andrew (Bud) Olson: I will look into that to see whether the price falls below the moving average and I will report to the House tomorrow.



SHEEP-PROGRAM TO SUSTAIN INDUSTRY

['Mr. Speaker, on the Canadian delegation are representatives named by the provinces of Quebec, New Brunswick, Manitoba and Ontario. The province of Quebec has the additional distinction of being a gouverne-ment participant.']
Mr. J. H. Horner (Crowfoot):: Mr. Speaker, I have a supplementary question for the Minister of Agriculture concerning the effect of the stabilization bill on support for the sheep industry. The minister has discontinued the wool subsidy. What other program has he in mind to sustain the Canadian sheep industry?


Horace Andrew (Bud) Olson: Mr. Speaker, in response to that kind of question, though not precisely the same question, I have advised the House and the sheep industry on many occasions that there has been a substantial increase in the price of Canadian lambs which more than offsets removal of the deficiency payment on wool.	.



Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs regarding the conference of Francophone countries now being held in Canada. Could the minister advise by what government these delegates to the conference were appointed and from what government they receive their voting instructions?


Mitchell William Sharp: Mr. Speaker, as I recall the situation, at the conference where the agence was approved the membership was determined at that time. All of the members who joined the organization at that time were invited by the secretariat to attend.


Heath Nelson Macquarrie: A supplementary question, Mr. Speaker. Are any delegates at the current conference appointed by the governments of any of the provinces of Canada and, if so, which provinces are they?


Mitchell William Sharp: Mr. Speaker, on the Canadian delegation are representatives named by the provinces of Quebec, New Brunswick, Manitoba and Ontario. The province of Quebec has the additional distinction of being a gouverne-ment participant.



PUBLIC SERVICE


Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I have a question for the President of the Trea-

sury Board. Will guidelines be developed to put an end to the practice of regional pay disparity for first level nurses across the country, and will the government review the specific instance which next year will grant to first level nurses in the Maritimes about $6,500 while nurses in British Columbia will receive about $7,800?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, I cannot reply affirmatively to that suggestion. As I indicated in the House last week, in the interests of fairness and equity the government is proceeding to establish relativity between government rates of pay and local or regional rates of pay. This policy has recently been confirmed in the case of nurses. There was a hearing on this issue before an arbitration tribunal, and as a consequence of the award the pay levels the hon. gentleman referred to were granted.



INDUSTRY


John Edward Broadbent: Mr. Speaker, if I may have the minister's ear I should like to direct a question to the Minister of Industry, Trade and Commerce. In the government's discussions with the United States government on the Canada-United States automotive agreement, in addition to the concessions that it seems willing to make on the question of safeguards in the pact, has the government of Canada agreed to or discussed any proposal that would remove tariffs on new or used automobiles purchased by individuals, as opposed to corporations, in one country for shipment to the other so that they would enter duty free?


Jean-Luc Pepin: Mr. Speaker, this particular aspect has not been discussed in my presence but it may very well be that it was raised at the official level. However, I cannot say that it was.



THE CANADIAN ECONOMY


Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, my question relates to some of the questions asked earlier of the Secretary of State for External Affairs. In view of the fact the hon. gentleman admitted we do have a list of some sort for use at some time and to be presented somewhere, I wonder whether this list of ours is a substitute for or supplemental to the fundamental review of policy the minister said we were having in respect of our relations with the United States?


Mitchell William Sharp: Mr. Speaker, I want to assure the hon. gentleman
October 12, 1971

Inquiries of the Ministry
that it is not our purpose to prepare such a list unless, of course, we receive such a list from the United States, which we have not received.


John Patrick (Pat) Nowlan: Mr. Speaker, without arguing with the answer or its inconclusive nature, I should like to ask the hon. gentleman whether he would use his good offices to assure this chamber that the Minister of Finance, while he may not have formally received a list from the external affairs people of the United States, does not have in fact a working list from the Secretary of the Treasury of the United States and. if he does not, will he instruct the Minister of Finance to appear on some television show with the Secretary of the Treasury so they can exchange these lists?


Mr. Speaker:: Order, please.



AGRICULTURE


Mr. H. W. Danforth (Kent-Essex):: Mr. Speaker, I should like to direct my question to the Minister of Agriculture. In view of the fact some time has elapsed since representations were made to the minister regarding the corn industry and the further deterioration of the market, will he indicate whether he will be in a position in the next day or two to state the government's policy on motions?


Horace Andrew (Bud) Olson: Mr. Speaker, I hope that will take place very soon, but I am sure the hon. member is as aware as I am of the many implications and ramifications of the alternatives open to us and certainly we would like a consensus on what would be the most useful thing to do before reaching a decision.



TURKEYS-PRICE TO BE PAID BY AGRICULTURAL PRODUCTS BOARD

Alfred Pullen Gleave: Mr. Speaker, in view of the program announced earlier this afternoon by the Minister of Agriculture, I should like to ask what price will be paid for these turkeys or, if a definite price has not been arrived at, will be indicate what will be the means of arriving at the purchase price?


Horace Andrew (Bud) Olson: Mr. Speaker, the hon. member will have noted from the announcement I made that there will be a call for tenders which will include specifications for tendering. I think the details will be out later today or tomorrow.



FINANCE


Mr. Henry Latulippe (Compton):: Mr. Speaker, my question is directed to the right hon. Prime Minister.
Would he tell the House whether he foresees the possibility of reducing the interest rate of the Bank of Canada so that chartered banks may reduce their own, thus promoting the economic expansion of Canada?


Pierre Elliott Trudeau: Mr. Speaker, this kind of decision usually comes from the Bank of Canada, which makes the announcement itself, rather than the government.



THE CANADIAN ECONOMY


Mr. Roch La Salle (Joliette):: Mr. Speaker, I should like to put a question to the Prime Minister.
With reference to negotiations that will surely take place between the United States and Canada, would the Prime Minister indicate whether the government has any positive proposals to make to the United States, whether he intends to make them known to hon. members of Parliament and whether he would go as far as invite them to discuss such proposals, taking into account the interest of Canadians.


Pierre Elliott Trudeau: Mr. Speaker, the only proposal we are making to the United States government, which we indicated to the House several weeks ago, is to remove the 10 per cent surtax. There are no other general decisions that we are trying to get from them.
As the Secretary of State for External Affairs said a few minutes ago, a lot of issues are discussed throughout the year with the United States, as well as with other countries by the way, and we always keep the House informed in due course.



WELFARE


Sylvester Perry Ryan: Mr. Speaker, my question is directed to the Prime Minister. As a survey of Ontario welfare offices indicates another significant increase in the welfare rolls this winter caused by unemployment, and in view of the statement of the Minister of National Health and Welfare about unemployed employables on welfare, is the government considering providing emergency funds to the provinces to finance increased welfare costs this winter?


Pierre Elliott Trudeau: Mr. Speaker, there is no announcement I can make in that regard at this point. If the government had any plans of that nature it would discuss them with the provinces when we meet and make the plans known to the House at the same time.
8598

October 12, 1971
Business of the House


Sylvester Perry Ryan: Mr. Speaker, is the Prime Minister agreeable to having provincial welfare costs on the agenda of the forthcoming first ministers' conference?


Pierre Elliott Trudeau: If such is the desire of the provinces, Mr. Speaker, the federal government would, of course, agree to establishing an agenda which the provinces wanted.


Mr. Speaker:: Orders of the day.



BUSINESS OF THE HOUSE

Gerald William Baldwin: Mr. Speaker, I would if I could ask the government House leader what he intends to do today in view of the fact that on Friday last the government's legislative shopping list was a little unclear?


Mr. MacEachen:: Mr. Speaker, I am still a little unclear as to the long-term prospects. It had been my intention today to move a time allocation order under Standing Order 75B in respect of the grain stablization bill. If that order were passed, as I think it might be, it would bring an end to the debate this week. However, my readiness to move that time allocation order rests on the assumption that we can get the parties to agree to postpone the court action that is to take place in Saskatchewan tomorrow. If we are assured that an adjournment of that action could take place, then I would move the time allocation order later today. Of course, if an adjournment is not possible I think the government would have no alternative later today than to make payments under the Temporary Wheat Reserves Act. However, I am still waiting for final word on the outcome of the efforts to arrange an adjournment among the parties to that court action. With that background and with the expectation that we might be able to move that time allocation order later today, I would advise my hon. friend that we will take the tax bill as the first item this afternoon.


Mr. Knowles (Winnipeg North Centre):: Mr. Speaker, I wonder whether I might ask the government House leader to make one point clear. The hon. gentleman referred to an agreement among the parties. An agreement among the parties in this place usually means among the four political parties represented here. I think he should make it clear that the use of the phrase "the parties" in this case refers to the applicants at Regina and the Minister of Finance (Mr. Benson), who is the respondent.
While I am on my feet, may I say that the minister has indicated he would be prepared to move a time allocation order under Standing Order 75B. Of course, that implies he does not have unanimous approval for such an order but only majority approval. That is quite correct. I have not agreed, for we do not feel the House should be put under the gun in respect of this matter.


Allan Joseph MacEachen: Mr. Speaker, I just want to assure the House that I agree with the definition of "parties" as given by learned counsel on the other side.


Mr. Speaker:: Orders of the day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Friday, October 8, consideration of the motion of Mr. Gray (for Mr. Benson) that 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, be read the second time and referred to the committee of the whole.
Robert Lorne Stanfield: Mr. Speaker, there are some points regarding this bill I should like to call to the attention of the House at this stage on second reading. We are discussing an immensely complicated piece of tax legislation. The bill is very complicated, very detailed and very dry. One would have to admit, consequently, that the discussion of this bill is not exactly going to grab the Canadian people.
Nevertheless, the contents of the bill are of tremendous importance to the Canadian people and indeed to the whole future of this country. The most obvious reason is the immediate and long-term effect that this legislation will have upon the pocketbooks of individual Canadians. This is important because it involves the freedom of choice of the individual, his ability to spend his money as he desires, the proportion of his earnings he will have to give to the public treasury for public purposes and the proportion he may be allowed to keep for his own priorities. We of the official opposition have been saying from the start that as a result of the rapidly increasing proportion the government intends to take even from the relatively low wage earners, as their earnings may go up because of inflation or because of an increase in their salary for other reasons, most Canadians would rather quickly find they will be paying more rather than less to the government of Canada.
The sleight of hand trick may well have an effect for a few months or even for a year or two, but the whole thrust of this tax package is to get more money from the low or relatively low income workers. That is what we have been denouncing and continue to denounce. However, beyond the impact on individuals there is another aspect of taxation which affects the whole economy, its capacity for growth, its capacity to adapt to changing conditions in the country and its capacity to adapt to changing conditions in the whole world. The question we must ask ourselves, and ask the government, is what does this proposed tax package really accomplish in terms of the health of the whole Canadian economy. What do these changes do, for example, to help us fight the battle against massive unemployment in Canada. What do they do to help us in the battle against inflation. What do they do to improve or even maintain our trading position in the world, where all the established trading patterns are under attack as they have not been for a long time. The answer must be that this present tax bill is irrelevant to the solution of these problems. That is the best answer one could give.
The most optimistic answer one could give is that this tax bill is irrelevant to the fight against inflation, the fight against unemployment and the fight to enable the Canadi-
October 12, 1971

an economy to adjust to world trading conditions. Indeed, as I say, that is an optimistic point of view to take as I shall indicate in a few moments. Even the government does not pretend that these proposals, if they should be applied at the beginning of next year, would have any real effect on unemployment. That is, they would not in any way reduce unemployment. It is just as well the government does not claim this, because it would be laughed out of court if it were to try to do so. The government does not claim these tax proposals will help in the battle against inflation, that is clear; and once again it is just as well because they could not make any case. As for the present trading position in Canada and Canadian industry, especially with regard to the United States, the relevance of these proposals has not been laid out. It is clear to all of us who have sat in this House and who have lived in Canada for the past number of months that the country is faced with tremendous problems, problems which are immediate and problems which are right here in front of us as well as problems which we see stretching out into the future.
Let us not forget that tax policy, both long and shortterm, inevitably has an enormous impact on our present and future economic performance in Canada.


Mr. Cote (Longueuil):: Order, There should not be a caucus in the House.


Mr. Speaker:: Order. I regret to interrupt the Leader of the Opposition, but I suggest to hon. members who want to have party caucuses that they should have them outside the Chamber.


Some hon. Members:: Hear, hear!


An hon. Member:: Shame.


Robert Lorne Stanfield: Maybe it is not just the country that is faced with tremendous problems, I don't know, Mr. Speaker. In any case, the country certainly is faced with tremendous problems. That is why these proposals should be relevant, and why it is so tragic they do not seem to be relevant to these urgent questions. What has in fact happened has been that the legislation has been presented to us in sort of a vacuum. It was as though the government decided it could make these decisions in some kind of air-tight compartment, regardless of changing conditions outside the compartment.
I reject that concept with all the force I can command. What we should be doing is taking steps to create a tax arrangement that will help us find our way in the world as it seems to be evolving.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: What we should be doing is finally setting our goals in terms of employment, in terms of price stability and in terms of trade expansion. On that basis, we should be working out tax policies to fit our problems to these conditions and ensure the viability of our economy. That is what this bill fails to do. And that is what this government notoriously has failed to do in its tax policy and for that matter in the other policies, if any, it has been pursuing in the field of economics. The plain fact is that we believe the tax bill is irrelevant to the many serious problems of today. That is the most charitable thing one
Income Tax Act
could say about the bill. That is its basic weakness and that is why I find it almost incomprehensible that this government is insisting that it should have priority at this time. This is not merely a confusion of priorities. It is not just a simple mistake in judgment. It is in fact an admission by this government that it has nothing relevant to say or propose to the Canadian people at this time.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: It is in fact an admission that this government has no policies to deal with the problems of unemployment, inflation and trade. I do not need to take the time to indict the government. The government has indicted itself. I said that at best the bill is irrelevant in respect of these problems which face us. When the bill was drafted and presented to the House the economic context in which Canada found itself appeared then to be markedly different from the context in which we find ourselves today. It is true we had very heavy unemployment, despite all the predictions of the Minister of Finance (Mr. Benson), but at the time the bill was introduced our exports were doing quite well. It was the unsatisfactory rate of growth in the domestic sector that was generally considered to be causing the unemployment. Indeed, our exports have been expanding because of the expanding economies of our customers.
At the time when the tax bill was introduced I suppose the darkest cloud that was visible on the horizon was the much discussed entry of Great Britain into the Common Market, and the very real and very justified concern as to what this might do to some of our exports. This was the darkest cloud visible on the horizon so far as our exports were concerned. Then, as we know, in mid-August President Nixon announced his new package. We all remember the surtax that was imposed, the visit of two of our ministers to Washington, and the rumours and speculation as to matters between our two countries that the United States wished to see changed. We now know that the Secretary of State for External Affairs (Mr. Sharp) had requested a bill of particulars, so to speak, with regard to the removal of the surtax, but this has not been received. However, there has been a great deal of discussion in the press and elsewhere as to matters for which the U.S. may be pushing in terms of long-term and fundamental changes in the trading relations between our two countries. These suggestions have not only come in the press, indeed they came from the Prime Minister (Mr. Trudeau) himself as well as from the Secretary of State for External Affairs.
On September 23, the Prime Minister expressed concern that while he believed the United States was . . . legitimately just trying to correct their adverse trade balances, that they are really trying to solve their near-crisis in their balance of payments, and that they are attacking it in a very drastic way. I do not think that the U.S. is deliberately trying to beggar its neighbours and make this into a permanent policy. But if it is- and you know this is your question-if it is, we will have to have a fundamental re-assessment of our whole economy.
More recently, on Sunday last, the Secretary of State for External Affairs, in a television program, gave similar information. He was asked a particular question, and he said:
Yes. I'd like to know too, I'd like to know the answer to that.
24319-55:

Income Tax Act
That is, whether there is some fundamental change in our economic relationship under way. He said:
No, what you have to do is to react to particular changes and if a pattern begins to emerge then you know that there is no return to the old sort of relationship that existed before August 15 so that it's an ongoing process and this is one of the reasons why in the government we have decided to have a look at the options because we can't wait until we are finally sure what the American position is going to be. We must have done a good deal of thinking in advance so that at least we are prepared to take appropriate action.
I quote the Prime Minister and the Secretary of State for External Affairs in order to indicate that for some reason the government of Canada has some concern that there may be under way a long-term change of some sort in the trading relations between Canada and the U.S. Both the Minister of Finance (Mr. Benson) and the Secretary of State for External Affairs have referred to the need for Canada to consider her alternatives. I will not take the time of the House to read the statement made by Mr. Petty, the under secretary of the Treasury or to speculate about how much truth there might be in the story in the Chicago Tribune. These have been discussed earlier today and on previous days in the question periods, but I think it is quite clear from what the Prime Minister, the Secretary of State for External Affairs and the Minister of Finance have said that they are concerned about possible changes in the trading relationship between Canada and her biggest customer, the U.S.A.
Therefore, I suggest that it hardly makes sense to consider a tax bill now which involves a complete new package. It involves a vast change, a reform in the law, if you like, relating to the taxation of the incomes of corporations. It involves, of course, changes in personal income tax schedules and exemptions. It makes a lot of sense to consider these, and I am not suggesting that they should be dropped, but in terms of this vast new structure of taxation of companies, partnerships and business profits generally, I suggest that this whole structure may need substantial revision, even in the eyes of the sponsors of this bill, when the smoke clears and our position vis-a-vis the U.S. in terms of trading relationships becomes clearer. Even those who sponsored this bill last spring may themselves come to feel that this is not the appropriate kind of tax structure for Canada to have in the new circumstances which the Prime Minister, the Secretary of State for External Affairs and the Minister of Finance have said may be evolving. They have all expressed the hope- and I hope their hope is justified-that any fears they might have would prove groundless.
However, it is hardly sensible for the House to proceed with this tax structure as if nothing at all had happened in view of the quite disquieting statements that the Prime Minister and senior members of his government have made in public. We have the U.S. surtax on many of our exports to the U.S. We have tax changes now before the U.S. congress, including the so-called DISC program. We have the statements of our own ministers that in view of all these things there may be a need for a fundamental revision of our relationship with the U.S. in terms of trade. If this is so, I could say a good deal about the kind of commentary that this deterioration makes on the kind of policy that the government has been pursuing with regard to the United States, but that is not my point today.
|Mr. Stanfield.1
October 12, 1971
I do not rise today to criticize the government in connection with the Canada-U.S. relationship, since there will be another opportunity to do that. My point is that these changes to which the Prime Minister and the ministers have referred may require a quite different approach to business taxation, especially with regard to companies, partnerships and individuals engaged in the exporting business. Premier Davis of Ontario made this point very effectively I think toward the end of last week. It might be said that whatever changes prove to be necessary in any newly evolved international context, whatever that may be, such changes can be made by special legislation in time. If the changes under way are anything as fundamental as the Prime Minister and the Secretary of State for External Affairs have suggested, changes which would require a complete new rethinking of our whole relationship, then the changes in our tax structure to meet this situation may need to be very far reaching. Indeed it might be much more advisable for us to approach this question, and any new stance we wish to adopt by way of incentives, in terms of our general tax reform legislation rather than in terms of special taxation which might attract undue attention and, in the eyes of our competitors, look like a subsidy of some sort.
This bill is enormously complex, especially with regard to small corporations. I do not think anybody will deny for a minute that it will take quite a bit of time for a small company to get used to it. The small businessman will need quite a bit of advice for tax consultants on a continuing basis to learn how to operate satisfactorily in the new milieu that this tax bill would create. In view of its complexity, in view of the difficulties it will create, the added difficulties in the lives of business people at this time, it is not the sort of thing the House should enter upon lightly.
I suggest it does not make very much sense for us to be asked by the government to consider a bill of this complexity at this time if in fact the government is considering other options with regard to Canada's trade stance in the world. If the government feels it is compelled at this time to consider other options with regard to trading policies generally, then it is pretty likely to feel compelled to consider other options with regard to taxation policies, particularly as they effect industries and companies engaged in exports.
I must also remind the House that the Science Council has become so concerned with the plight of the technological sector of our manufacturing industry that it felt it was necessary to produce a special interim report, particularly in view of the deterioration that has taken place in the position of our technological industries within the past two or three years. The Council has emphasized the pressing need for an industrial strategy which, it says, is nonexistent at the present time.
I ask the Minister of Finance who sponsors this bill in the House, is the government of Canada going to develop an industrial strategy, as recommended by the Science Council, and will tax policy play any part in that industrial strategy? The Science Council does make a brief reference to tax policy. Indeed, it expresses the hope that things might be a bit better under the proposal related to half capital gains and allowance for half capital losses. I
October 12, 1971

assume that when the Council speaks about things being better it is speaking relatively, in comparison with what conditions would have been under the white paper proposals, because the Science Council refers very emphatically to the unattractive climate for investment in manufacturing in Canada today.
When I asked the Prime Minister some questions about the Science Council recommendations, he seemed to be a little bored with the whole thing. I do not think any Canadian could read the interim report of the Science Council without sharing the great concern that is expressed quite eloquently by the Science Council. The Science Council says that an industrial strategy is needed. Is tax policy to be a factor in that, because it is certainly not taken care of in this bill? I have referred to the complexity of the bill, to the difficulties that will be added to the ordinary normal difficulties of people in business, particularly those small businessmen engaged in exporting.
In view of the complexity of the bill, in view of the call for a new industrial strategy-a strategy which the Science Council is convinced does not exist-in view of the hints, or at least the concern expressed by the Prime Minister and by senior ministers that we may need to engage in a whole review of our trading position, in the light of all these circumstances why does the government try to push this bill through in all its complexity at this time? Even assuming, as I do, that the provisions in the bill were considered appropriate in the eyes of the sponsor. I think they can hardly be considered appropriate in the eyes of its sponsor today. I suggest, indeed I request, that the Minister of Finance bring in a bill that does justice to the needs of individuals, that is, with relation to tax deductions to the ordinary taxpayer, tax deductions for senior citizens, for the blind, a bill providing for exemptions; in other words, a bill designed to meet the needs of the individual for a more just personal income tax system.
Surely, Sir, it is important that the government of Canada and the people of Canada get a clear view of our position in the economic world as it exists, and obviously none of us is very clear at the moment as to what that world is. None of us is very clear as to what kind of a world Canadians will be doing business in, and surely it makes sense not to push through a very complex bill, a complete tax reform relating to commercial activities when apparently the future is so obscure to the Prime Minister, to the Minister of Finance and to the Secretary of State for External Affairs.
Let us provide justice for individuals in terms of their personal income tax problems. Let us provide that kind of justice, but let us not change the general tax system relating to companies and partnerships until we know the context in which we are dealing and operating, until we know the industrial strategy that the government intends to bring forward. It will then be appropriate to deal with it, but not necessarily through a bill such as we have today, but a bill that we will be able to discuss in terms of the actual context within which Canadians will be operating. I suggest that it makes very little sense for the Minister of Finance to try to jam this bill through at this time when he cannot possibly know, in view of what he has said and of what the Prime Minister has said, the condi-
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tions under which Canadians will be trying to do export business.


David Lewis: Mr. Speaker, I enter the debate at this stage with a speech, which I hope will not be very lengthy, for three reasons which will become evident as I continue.
When the government informs Parliament and the people of Canada that it is engaged in a total reappraisal of its economic relations with the United States which may, as developments occur, become necessary, I think the whole sense of the bill before us becomes rather obscure and difficult to understand. I suggest to you, Mr. Speaker, that there is no way in which such a reappraisal, if it is taking place in the ranks of the government and if it results in some new direction of government policy, can be achieved without affecting the tax structure of Canada.
The tax measures now in this complicated and unreadable bill-I challenge anyone to read this bill in the course of a week and understand at least half of it-really concern in part our economic relations with the United States because they still give emphasis to the resource industries; they still make important tax concessions to the large foreign controlled corporations that yank Canada's wealth out of the ground and ship it elsewhere. That, Mr. Speaker, is one of the basic facts of the present tax bill. As was said during the debate on the budget by members of my party and the hon. member for Duvernay (Mr. Kierans), the general thrust of the proposition of the government is to continue to tax the large corporations and the resource extractive industries lightly and to continue to tax ordinary Canadians heavily. That imbalance, that inequity in the tax system, is directly related to our economic relations with the United States. It is obvious that when one gives corporations that have their headquarters in the United States continuing tax concessions, one invites them to continue controlling our economy and indeed to increase that control.
Therefore, Mr. Speaker, I say, since it is my wont to speak pretty frankly and strongly, that the government is not being frank with us when it says it is reappraising our economic relations with the United States and when it says that, it is just talking about something that is a theoretical, academic exercise undertaken by the mandarins and their assistants in the various departments as a matter of regular routine rather than as a matter of meaningful reappraisal of our position vis-a-vis the United States. Either that is what is happening or the Secretary of State for External Affairs (Mr. Sharp) was boasting about something that is not really the case, playing games with words and with the people of Canada. Either that is the case or the government must withdraw the tax bill now before us and look at it again in the light of any reappraisal that is really taking place in government ranks.
That seems perfectly logical to me, Mr. Speaker, because no reassessment of our economic relations with the United States, no program of action and policy following such a reassessment that changes the direction of Canada's economy, that I can conceive of would not involve the Minister of Finance (Mr. Benson) and his tax

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measures. Any such reassessment must involve some changes in the tax structure vis-a-vis individuals, vis-a-vis corporations generally and vis-a-vis foreign owned corporations in particular. Again I emphasize, I cannot imagine it resulting in any policy which would not require a new kind of tax approach to the resource industries. We have emphasized again and again, and I merely restate it as briefly as I can without the details, that the continuation of the forgivable taxes, the deferred appreciation, the speeded up exploration costs, the speeded up depletion allowances and the deferred taxes on resource corporations in this country is an iniquitous provision both because it is inequitable in the tax structure and because it continues to sell out Canada's economy to foreign corporations, mainly American.
One cannot discuss this bill without dealing with the over-all economic situation that faces Canada. In fact, Mr. Speaker, I feel we are being a little like Alice in Wonderland discussing a huge unreadable and almost unintelligible tax bill at a moment in our economic history when we have had far too high unemployment for the month of August and a threat of massive unemployment in the autumn and winter months. I feel that the government is making this Parliament deal with a subject that is not immediate, which, as far as I am concerned, will have value mainly for the corporations some time hence, when what we ought to be dealing with is the immediate concern of unemployment in Canada and the dreadful-I repeat, Mr. Speaker,-the dreadful situation that the workers of Canada are likely to find themselves in during the next two or three months and for some months to follow. We are told all the time by the Minister of Finance and the Prime Minister (Mr. Trudeau) that the government is in the process of working up a program to create jobs this winter and then, there is this delay. Mr. Speaker, I say to the government and the Minister of Finance who is here, that I cannot understand the reasons for that delay. I cannot see anything ahead but great trouble and hardship as a result of that delay.
In answer to a question which I put to him the other day, the Prime Minister said in effect that there are many things the federal government can do on its own on the question of employment this winter. He did not say that is what it is going to do, I appreciate that. He did not say the program it was discussing was going to be exclusively one that should be implemented by the federal government alone in every respect. However, he did say-which is sometimes his wont-what I said which did not answer the question at all. Since then, I have tried to think and understand what the federal government could do to create jobs this winter without the participation of municipal and provincial governments of Canada.
One of the things the federal government could do, Mr. Speaker, is to introduce some meaningful and sizeable tax cuts immediately, affecting the low and low middle income groups in this country. It could do that without consultation with the provinces and the municipalities. I say to the Minister of Finance that this should be done and it should be done immediately. If the government were to come forward with a program to seek tax cuts in addition to those proposed on an inequitable basis in the present tax bill, I am sure that all members of the opposition-and I can speak for members of my own party-

would pass such a bill if it had the effect of cutting taxes for the low and middle income groups in Canada with the least possible debate and in a short time. The purchasing power of the people would thereby be increased immediately for the purpose of stimulating the economy in a very short time. Of course, there is always a time lag between the date tax cuts take place and when their effect is felt on the market and on the economy. We, in our party, would be willing to consider that kind of proposal with the least possible debate, unless it were as horrendous in its inequity as some other proposals which have been produced by the Minister of Finance. Obviously, he does not intend to do any more than is suggested in this tax bill. Otherwise, I cannot understand why he would not already have told us that he intends to make the necessary amendments to the necessary clause of the tax bill in order to produce those tax cuts without delay.
The other thing that I suppose the federal government could do on its own would be to spend some money on its own public works programs. It could build some more fancy, federal office buildings-at least that would produce some jobs. Yet I want to argue this afternoon that I am not interested in make-work proposals. There are necessary things that must be done for the welfare of the people of Canada, and any program of winter jobs ought to be directed towards those objectives.
Even the large amounts of money which might be spent by the Department of Public Works or some other departments of government in connection with programs that the government could undertake would obviously not create many jobs in Canada. I therefore assume, and perhaps I am naive in making this assumption, that any programs for jobs this winter announced by the federal government would include, no matter what else it may or may not include, some money which is to be made available to the provinces or municipalities with respect to various works that the provincial and municipal levels of government may carry out this winter and start immediately. I hope that assumption is correct. If it is not, we will not get a program from the government; we will get a shadow. We will merely get useless suggestions from the federal government for work this winter because the provinces and municipalities will not be involved. I say that because the area in which the federal government, by itself, can produce jobs is so narrow that it will not even touch the issue of unemployment this fall and winter.
I must, therefore, assume, and my colleagues may disagree with me for being so generous, that the government is not unintelligent and that it is sufficiently intelligent to know that it must bring the provinces and municipalities into the picture for any valid, useful and large job creating program. If that is the case, Mr. Speaker, I say to the government that its failure to call an earlier conference on the unemployment question, and I do not care whether the conference was to have been between ministers of finance, treasurers or heads of governments across Canada, was unforgivable. The government ought to have called an earlier federal-provincial conference. Its failure to call that conference last month or, indeed, within the next few weeks, for the purposes of working out collectively a program that would create a massive number of
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jobs this winter, constitutes a betrayal of its duty to the people of Canada in view of the present unemployment situation and the unemployment situation that is to come.
The Prime Minister has tried to blame other first ministers for the fact that an earlier conference is not being held. According to my reading of the situation, and I have seen the correspondence that has been made public, this government has never asked for and never called a conference to deal with the unemployment situation. The discussions were to be on general economic subjects. If the government intends to make a proposal, present a program or offer some finances in order to create jobs this winter which will involve implementation in part or in whole by provincial and municipal governments, then the present delay on the part of the government in announcing its program is reprehensible. I cannot see how provincial and municipal governments can make ready their plans for jobs in November, December, January and February, if they are not told how much money the government of Canada will make available for that purpose. It should make that known before the end of October, and we are now in the middle of October. The delay, in my humble view, is unforgivable. In my submission, it indicates a hesitation on the part of the government in dealing seriously with the unemployment situation that faces us now and will become more serious in the months ahead. This again indicates the government's failure to consider in human terms this problem affecting millions of Canadians, and its failure to deal sensitively with this massive unemployment situation. It has failed to display the sense of urgency and emergency which the situation requires.
There are no magic ways for dealing with the unemployment situation, Mr. Speaker. Nobody can wave a magic wand and settle these problems. As we discuss this tax bill, the changes in the tax structure which are being made and the inequities which still remain. I wish to put forward some suggestions which I believe are important. First, the government must present a program that will guarantee at least an additional one quarter of a million jobs during the four or five months of winter. Any program that provides additional work for fewer than a quarter of a million of our people will not scratch the surface, since in all likelihood our unemployment this winter will reach well over the half million mark, and perhaps come closer to the three quarters of a million mark, both because of the internal economic situation and because of the reactionary, protectionist Nixon policies of the United States. That is the first point I make, Mr. Speaker. At least a quarter of a million additional jobs must be created by any program that the government will propose.
My second point relates even more directly to the tax bill before us. If it becomes necessary in some way for the government to find the funds which will be necessary for carrying out my suggestion, the government has the responsibility of doing so. My studies and inquiries have shown me that this kind of program cannot be accomplished without a massive injection and expenditure of funds. I am talking of amounts between three quarters of a billion dollars and one billion dollars. Any program that is smaller than that will no more than scratch the surface of the unemployment situation, merely raise the expectations of people which will not be realized and again betray
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the desirable as well as justifiable hopes of the Canadian people. They hope that something will be done. I submit that much of this money ought to go into an increased housing program. It ought to develop, particularly, low cost housing both for renters and for those who may be able to buy a house if the down payment is reduced sufficiently, if interest rates are reduced sufficiently and if the income to which the house purchase is related is made more reasonable and practical, in the light of the present situation. I am sure everyone here will agree with me that nothing can create jobs more quickly, and even here there will be quite a time lag, than a massive housing program.
I am aware, and I want to say it before anyone else does-although perhaps nobody else will bother to say this-that housing starts this year have been running at an annual rate of around 220,000, 230,000 or 240,000 units.


Mr. Benson:: I think the rate was at better than 250,000 units as of last month.


David Lewis: It may even be 250,000 units. That performance is much better than the performance of recent years. I do not deny that. I suggest to the government, none the less, that it ought not to be complacent about this, because the need for housing is away beyond 250,000 new units per year. The need for housing is so great and urgent in many parts of this country that you could create jobs this winter and meet the pressing need of the Canadian people. That is what I meant when I objected to any criterion that created jobs by make-work programs, by building unnecessary buildings and by erecting buildings that are fancier than the situation requires. That is throwing money away even though it may create jobs. As far as the social good for Canadians is concerned, that does not accomplish anything. Building homes, renovating homes which are now unliveable, creating an environment for the Canadian people in which they can live in decency, providing day care centres for working mothers or fathers, providing necessary parks for the children of Canada and necessary facilities for amateur sports in this country will not only create jobs, but meet urgent social needs in this country. That is the kind of program for this winter that my party suggests the government ought to propose before long. It is too late already.


Some hon. Members:: Hear, hear!


David Lewis: The long delay in making the payments under the Temporary Wheat Reserves Act is related to the economic situation, the tax situation and the unemployment situation. The financial bind in which the farmers have found themselves for the past couple of years has directly resulted in lay-offs at equipment manufacturing plants in Brantford, Toronto and elsewhere in this country. If the government had not broken the law as it did, without conscience, but had paid out the money under the Temporary Wheat Reserves Act when it should have, many farmers in western Canada would have been able to buy equipment and parts and the workers in eastern Canada who produce the equipment and parts would not now be walking the streets in idleness. That, too, is a

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matter which is the responsibility of the government and greatly adds to the unemployment rolls in this country.
Fourth, with regard to the whole economic situation which faces us, any plan for jobs this winter must not merely turn over large sums of money to some agency. There ought to be careful planning. I again plead with the Minister of Finance and the Prime Minister that they call without delay a meeting of whatever representatives of all the governments of Canada can get together in order to set the policies and programs governing winter employment, jobs on the scale to which I have referred. The time is long overdue to get out of the constitutional straitjacket into which the Prime Minister has put himself, that is, merely because the municipalities are constitutionally the creature of the provinces he cannot take steps to have the municipalities participate in this kind of conference.


Some hon. Members:: Hear, hear!


David Lewis: This is nonsense. Anyone who knows Canada knows that one of the areas in which it is possible to do job creating and socially useful work in winter or, in fact, at any time of the year, is the municipalities of Canada. They need a lot of help. Whether it be sewers, streets, urban transportation or the fight against pollution that requires waste treatment plants, most communities in Canada, large and small, do not have any or sufficiently modern and effective plants. The areas of municipal involvement, housing, community planning, renovation of houses all involve the large urban centres and large urban regions.
I have studied the constitution, and over the years I have studied the cases affecting the constitution. I have not seen anything in logic which prevents the federal government from inviting representatives of the federation of municipalities of this country to be present at a conference which will discuss the priorities governing the creation of jobs this winter. They should be there, and not just the provincial representatives.


Some hon. Members:: Hear, hear!


David Lewis: These are some of the things that can and ought to be done without delay.
In conclusion, Mr. Speaker, I suggest that a general discussion of the tax bill looks almost irrelevant at this point. If the Minister of Finance wants to be relevant to the present situation in Canada, the threat to Canada's economy and Canada's employment picture from the employment policies, he ought to make immediately some decisive changes in the bill before us. He ought to propose immediately some massive changes in the tax structure as far as it affects the low and middle income groups. He should reduce the tax burden on them without delay. Indeed, this should be effective from the beginning of this year, January 1, 1971.
Then, Mr. Speaker, in order to make the tax bill have any relevance to the present economic situation in Canada, the minister must deal with those clauses in the bill that continue to give, as I have already said, the inequitable, undesirable Canada sell-out tax concessions to the major foreign-owned resource corporations in this country. That has to be adequate if there is to be any

meaningful reassessment of our economic relations with the United States.
Finally, Mr. Speaker, this bill can be more relevant only if the government, either through the Prime Minister, the Minister of Finance or any other minister, because as far as I am concerned they are all equally competent-it is difficult for Hansard to hear the quotation marks around the word "competent" as I enunciated it-presents a program for jobs this winter. The delay is already far too long. It is unforgivable that it has been delayed even this long. If it is delayed more than a day or two beyond today, the government will again carry the responsibility for a winter of misery, hardship, insecurity and dislocation for a large section of the Canadian people from coast to coast, particularly in the disadvantaged areas of this country such as the Atlantic provinces, parts of Quebec and other parts of Canada.
Before I resume my seat, Mr. Speaker, if the government has a program for jobs this winter, I plead with them not to delay it any longer. Let us hear about it, not because we are curious to know what it is, although we have a right to that kind of curiosity, but unless it is announced immediately and gives the provinces, municipalities and private organizations, if they should be involved, the necessary time to make the plans and arrangements, the program will be less than a success, perhaps even a total failure.


Joseph Adrien Henri Lambert: Mr. Speaker, the legislation now being discussed has undergone a very long period of gestation. Indeed, in the normal course of things, natural gestation lasts approximately nine months, but that of this pretty legislation, which has a rather impressive thickness, is the fruit of some ten years of labour. And I am convinced that this House does not expect-especially not this government-that it may be passed within a few hours.
I should like, during the few minutes put at my disposal, to review the aspect of this bill which concerns particularly credit unions and co-operatives. That is a most interesting field for us and one that we must consider seriously so as to analyze the legislation now being considered and, if it is passed by this House, to determine its consequences and advantages, if required, so as to make the best possible use of it.
Obviously, the movers of this very complicated legislation should give much more explanations about it so that the interested parties may know its true implications. First there is the whole population, if we think of the important changes brought to the personal income tax act. Then there are the corporations, companies, industrialists, business firms and especially co-operatives and credit unions whose taxation system is running the risk of being radically changed. It is important to look particularly into the amendments suggested for these institutions in this piece of legislation as well as into their demands regarding the system contemplated by the government.
Let us deal first with the co-operatives. We see that the government has introduced two new essential elements in the present taxation system, namely: the principle of capi-
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tal employed, and new limits on the payment of dividends or refunds.
In practice, for the calculation of the taxable income, the profit, after deduction of dividends or refunds to members, shall not be below 5 per cent of capital employed (i.e. 5 per cent of assets less liabilities), this 5 per cent limit to be reduced only by the inclusion of the amount of interests paid to members. Let us point out that the 3-year exemption period allowed to new co-operatives is completely eliminated.
Under the present system, the limit is not 5 per cent, but 3 per cent, and it allows co-operatives to pay their members, as dividends, a greater part of their profits. Moreover, it is possible to deduct from the 3 per cent, in addition to the interests paid to members, all kinds of interests except those paid to banks and credit unions.
If the legislation is passed as drafted, a greater part of the profits of the co-operative itself will be taxable at the same rate that applies to ordinary corporations, that is 50 per cent, except, of course, for profits under $50,000 that are taxable at 25 per cent, as previously provided.
Therefore, for the same amount of profits reported by co-operatives throughout the country, the government will be able to get significantly higher revenues, while showing no concern about penalizing this way, first, the co-operatives as institutions by depriving them of an important part of the resources they urgently need to expand and, secondly, the hundreds of thousands of members whose individual and collective effort would have been rewarded by these new restrictions in respect of the distribution of benefits or dividends.
To get a clearer view of the probable effects of the government's proposed amendments, let us consider the example of a co-operative whose total capital is $800,000 distributed in round figures as follows: shareholders assets, $500,000; long term debts, carrying interest at 6 per cent, $300,000.
Under the present tax system, this co-operative pays income tax only on profits which, after deduction of dividends, may not be lower than 3 per cent of the total capital, the amount from which it can deduct the interest paid on its long term debt, which breaks down as follows: capital stock, $800,000; shareholders, $500,000; long term debts, $300,000.
Tax is therefore calculated as follows: 3 per cent on $800,000, $24,000; 6 per cent interest on debt of $300,000, $18,000.
After subtracting the taxable profit of $6,000 according to the present table, tax payable would be $1,500.
The situation might change considerably as a result of the propositions contained in Bill C-259. The rate is no longer 3 per cent but 5 per cent and it no longer applies to the total co-operative capital but only to the portion corresponding to the shareholders capital. On the other hand, because of the concept of utilized capital as a basis for calculation of taxable income, the co-operative can no longer deduct from that amount the amount annually allocated to service of the long term debt, and consequently the figures would be the following:
Total capital: $800,000; long-term indebtedness: $300,000, computation of tax: at 5 per cent of $500,000, $25,000; tax payable: 25 per cent of $25,000, $6,250.
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The taxable amount is therefore increased by $19,000 and the tax payable increases from $1,500 to $6,500, which is over 400 per cent in the case I have just outlined. If, for purposes of normal development, a co-operative decided to provide a mid term, that is a policy for the distribution of patronage dividends, this could lead to an unfortunate situation where a variable part of the co-operative's profits would be taxable at the same time as the dividends legitimately received by its members. Obvioulsy, at the moment the possibility exists, at least in theory, of double taxation. Furthermore, a large part of the dividends are usually re-invested and thus re-integrated into the cooperative's capital and the co-operative can use those funds to buy back the shares of those members who during the year decide to withdraw.
Thus to compel co-operatives to reduce unduly the amount of such dividends could have the following direct consequence: on the one hand, some co-operatives would find it impossible to reimburse their members, and financial and administrative problems would follow, and, on the other hand, to prevent any significant development of a given co-operative which could only rely on its usual income which is absolutely necessary for normal expansion.
That example must be considered as a typical case around which can exist all kinds of intermediate conditions, according to the situation of each co-operative, its importance, its previous commitments, the size of its debt, if necessary, etc.
However, the legislators should be thoroughly convinced that the tax reform proposals of the Minister of Finance (Mr. Benson) are liable to change greatly not only the overall condition of the Canadian co-operative movement, but that of hundreds of co-operatives which have not yet reached the development level enabling them to sustain the heavy blows striken by the new taxing system, unless some of its more controversial aspects are altered.
The authorities and representatives of the various cooperative movements throughout the country have widely taken part in discussions intended to lead to a global tax reform, the principle of which is greater tax equity, so that each category or stratum of society might contribute to the activities of the state according to its respective real possibilities. Needless to say, everyone recognizes that principle and doubtless the leaders and members of the Canadian co-operative movement share it.
Still, that principle, although fundamentally sound and reasonable, must not be laid down as some kind of absolute; it would only lead to rigid positions on the part of the government, and many frustrations for a large sector of the population.
The co-operative movement, if one is to judge by the countless protests against the provisions of clause 135 and the principle of capital employed seems to be one of the main victims of this wish for unconditional tax equality. Co-operative members singled out, in particular, the following points in the bill: the notion of capital employed threatens to reduce considerably the amount of patronage dividends to be paid the members in connection with transactions amongst themselves, and therefore threatens directly the ability for a large number of co-operatives to
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reimburse the social capital their members request, and indirectly their ability to expand and develop.
Any further increase in the co-operative's reserves leading to an increase in what has been called the employed capital would mean, rather oddly for that matter, that in a given fiscal year, a co-operative would find itself in the obligation of paying more in income tax although during the same year its real profits had remained static or had decreased. Now that is a wonderful system for the Canadian treasury to collect taxes even when production decreases during the year.
Instead of being forced to adopt the methods of ordinary corporations and to deduct from their taxable income the interest paid on the capital supplied by their members, the co-operatives would like to see their own operating rules respected and to be allowed to keep on distributing their annual operating surplus in the form of patronage dividends.
It must not be forgotten that co-operatives are based on principles and concepts fairly different from what is found in ordinary commercial or industrial corporations. In the first place, a co-operative is an association of men instead of being a simple converging point for capital. The factor "work" and the "collective effort" concept prevail over the notion we consider erroneous of capital for the sake of capital. Men associate to do business, to gain advantages and not first and foremost to make profits. And if the associated individual draws benefits, he must automatically and necessarily take them into account when filing his income tax return and, through the personal income tax return, the government levies the share it wishes each individual to contribute to the financing of the affairs of the state.
The co-operative system can make a large contribution to the improvement or, at least, the humanization of our present capitalist system which is so much criticized in some areas, especially by the youth which will have to accept or reject what they will have been left with by the preceding generation.
If this principle of fiscal equality, which is generally recognized and which is not endangered by any serious threat because it is accepted by everybody, is furthered too blindly and perhaps too rapidly, it would be rather surprizing to see the government commit by the same occasion serious inequities by not amending the discriminatory measures toward the co-operative movement that it is about to have passed by this House. These measures do not take into account either the characteristics or the methods particular to the co-operative associations. The new taxation pattern does not seem to correspond with their specific nature and will force them to relinquish their distinct characteristics or simply disappear as co-operative associations as such. A fiscal mechanism would be introduced in the relationship between the co-operative and its members by modifying the redistribution pattern of surpluses which is peculiar to co-operatives. Because of this mechanism, they would be forced to contravene the laws by which they are regulated.
There is here, at the very least, an obvious contradiction, all the more as the House, through the Finance, Trade and Economic Affairs Standing Committee had
[Mr. Lambert (Bellechasse).j
expressed the wish, when considering the white paper on tax reform, that while no tax concession should be granted to organizations such as co-operatives, in the future, their activities should not be hindered nor should they be heavily taxed.
It is therefore a question of vested interests, and it would be prejudicial, to say the least, that in wanting to be too fair on one particular point, we were grossly unfair on other aspects of the same problem. We therefore suggest that the government, while not overlooking the basic purpose of tax reform, introduce the new taxation system of corporations gradually and selectively, unless it is willing to reconsider on the whole the first clauses of Bill C-259.
The step that the co-operatives are asked to take appears definitely too big, and many of them, not so well organized or more recent, may simply disappear, and this would kill the co-operative movement, which would not be questioned. Special consideration should be given to consumer co-operatives with rather small assets and that are non profit-making.
In addition to this progressive concept, it would also be logical to establish some selective feature, so that all cooperatives would not be on an equal footing and some effort would be made to take into account, among other things, the development level of each one, and that in this way some consideration would be given according to fair and realistic criteria, to the tendency of each to compete with corporations or ordinary commercial and industrial firms, since that is the fundamental argument brought forward by the latter.
It may be correct to state that some co-operatives, super co-ops, realize some very substantial profits on which they should be taxed accordingly, especially where they are competing with ordinary companies which do not enjoy the same tax privileges. This situation should obviously be straightened out, which is perfectly in line with the guiding principles of any tax reform which is to be equitable. But there is a risk of losing sight of this principle of equity, if the same provisions should apply fully to several hundreds of co-operatives which have not yet reached a degree of development allowing them to bear the burden of these new tax measures. In those cases we would run the risk of destroying the very spirit of the co-operative movement which it was so difficult for us to inculcate upon the people. Therefore we should not chance freezing or paralysing a basically sound and human sector of our economy by being adamant on a principle concerning tax reform.
Not only co-operatives are endangered by the measures proposed by the Minister of Finance. Caisses populaires and credit unions are running the risk of being squeezed out before long because the bill remains very uncertain about the tax system that will be applied to them. Those institutions themselves have recognized that they should, from now on, be taxed according to their profits. Anyway, they will be taxed on the same basis as corporations, which is, at a rate of 25 per cent on profits up to $50,000, and of 50 per cent on those in excess of this figure-which will be a substantial change from the non-taxation position in which they have been to this day.
However, those organizations are asking for the establishment of a basically fair taxation system-a system
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which would not open the way to situations of double taxation. In this connection, it is recommended that interest paid to members, as well as the amount of compulsory reserves accumulated under provincial laws, be deductible from the income of caisses populaires. By only allowing deduction of so-called normal reserves, the amount of which they would set in arbitrary fashion, the federal government might run counter to well established provincial laws which set the amount of such reserves at a higher level. In my opinion, we must avoid creating such
distortions in the various measures that rule the activities of Canadians, whether it concerns co-operatives or credit unions. Reducing the amount of tax deductible reserves will unfortunately oblige those institutions to pay smaller dividends to their members. Another consequence of the proposed legislation will be to force former members of credit unions to get credit elsewhere at considerably higher rates.
On the one hand, we therefore risk further choking the small wage earner who greatly benefits from the healthy operation of the credit institution to which he belongs and, on the other hand, as is the case for co-operatives, we seem to forget the judicial nature of credit unions and caisses populaires. We would thus tend to deprive them of their co-operative status to consider them as banks or finance companies. As a matter of fact, if caisses populaires enjoyed the same privileges as chartered banks, as far as creating money is concerned, I might then think they could pay income tax as banks do, but that is not the case. A caisse populaire does not have the power to create money, therefore it cannot make any profit on the creation of credit or exploit it. It can only lend its members' money. I want to point out that the shares of the members of such institutions should not be considered as the equivalent of shares in a company since they are, in principle, redeemable any time and constitute, for all practical purposes, a saving which clause 137 of omnibus Bill C-259 does not seem to recognize.
We suggest that the government specify as quickly as possible in a clearer language the points that are still obscure in some clauses with regard to the taxation system applied to caisses populaires and credit unions in order that these institutions may know exactly what they can expect from the federal tax system, even if only to help them better plan their activities on short, middle and long terms. Among the points which require clarification there are the deduction of dividends on the authorized capital before computation of the taxable income and the status of investments made by credit unions. We will have to revise as in the case of co-operatives, the concept of used capital and to remove for credit unions the obligation of doing business in a single province, as is presently the case, since from now on they will be taxed on the same basis as any other corporation. Finally, the credit unions should be authorized to invest in municipal, school board and Crown corporation bonds.
Many credit unions, Mr. Speaker, have been established at the cost of a great many scarifices on the part of initiators, because they had to cope with many difficulties, namely poverty in the parochial environment, where promoters wanted to establish a caisse populaire to serve the local population.
I can well remember the establishment of a Caisse in a new settlement even though headquarters which were authorized to decide whether a caisse could be established in such or such a parish, had dimissed the idea on account of the poverty of the people. So the promoters organized a party to raise the funds required by headquarters, to pay the expenses of an agent and enable him to proceed to the establishment of the caisse in that parish.
That, Mr. Speaker, is a proof of the confidence bestowed upon the Caisses populaires and the proof of great dedication, showing the earnestness with which people may want a credit union in their area. The travelling expenses of a responsible person, authorized to open such a caisse, are defrayed.
And that is what actually happened. That man went to the parish and the Caisse was established. For 30 years now it has rendered innumerable services to the community there and still serves it.
That goes to show that Caisses populaires are most of the time the outcome of dedication and sacrifice. That is why I deem unfortunate that this government, who have a pressing need for money, due to the wasting in many cases of public funds, should be obliged to bring forward a tax reform under which the co-operative movement, caisses populaires and credit unions are equally taxed.
As regards most of the Caisses, managers worked voluntarily at the outset of operations. More than once, I have seen a manager working full time as a voluntary worker, for a 12, 24 or 36-month period, in order that the caisse may survive and provide the services that people were expecting.
The administrators, the counsellors, the credit officials have been working and are still working without pay. Dedication alone made a success of the Mouvement Cooperatif Desjardins as well as of other co-operative movements which have benefited from many people's dedication, whether they be professionals, businessmen, workers, or farmers and all of them have given their time to run those co-operatives which have rendered many services to our citizens.
I say it is absolutely necessary to take into account the social role played by co-operatives and caisses populaires instead of considering only the material aspect of the situation and therefore considering them as corporations and applying an unconditional tax levelling which would not be necessarily beneficial to the community. These organizations where a great deal of free dedication is prevailing, are moreover a guaranty of stability against the ever-increasing control of our economy by foreign big business and this is why we should not hinder them unduly. Recently, we again witnessed the dedication and enterprise of co-operatism.
Part of the Gaspe population is facing a difficult situation. Thanks to organizations like the Catholic Farmers' Union and other co-operative organizations, they want to set up a cardboard factory at Cabano to make use of the environmental natural resources, that is the broad-leaved trees, to produce cardboard since they are assured of being able to sell that production in certain European countries. This firm is presently facing a situation so difficult that the issue was raised in an article published
24319-56}

October 12, 1971
Income Tax Act
by the newspaper Le Soleil of Wednesday, October 6, 1971, and I quote:
Without the help of the government, the Cabano cardboard factory will be taken over by foreign interests.
Mr, Speaker, the factory has not been established yet and one can already foresee foreign interests taking over its operations and profits.
This is why, as I say, we must be careful before passing this bill so we do not nip in the bud those projects resulting from the initiative of people anxious to render great services to the province and the country. We must rather allow this project to become reality and make sure that those people get the services that they have a right to expect.
I hope, Mr. Spaker, that the minister will be prepared to give those thoughts due consideration and propose himself the necessary amendments. I also wish to point out to the government that it is not good for the Canadian economy to tax too heavily private enterprise for it will only discourage those who have initiative and talent for business. Unfortunately, we hear too often businessmen say, why strive to develop a business or an industry because the government takes away through taxation too large a share of those profits we have worked so hard for.
Recently the Canadian Chamber of Commerce held a congress during which its president stated the following:
The business heads must act more vigorously to avoid new legislation putting an end to their operations.
Never in the course of our history have the skills of Canadian businessmen enabling them to efficiently manage their enterprises, provide for expansion, make a reasonable profit and sustain competition been so severely put to test by legislation.
If the excessive burden and the interference of governments are not alleviated, our businessmen will no longer be in a position to exercise their main functions, that is to promote business and ensure economic development.
Mr. Speaker, here we have the president of a Canadian organization who, in very clear terms, sounds the alarm to warn all Canadian businessmen that the situation is dangerous and tell the government that it is taking the wrong direction and risks, through its legislation, discouraging, as I said a while ago, all those talented men of goodwill who really want to make their contribution to Canada's economic development. That is a warning, I might say, that should be heeded by the government.
The important question is the following: Then, how can the country's expenses be financed if co-operatives, caisses populaires and private enterprise are already fully taxed? The government needs money. Where will it get it? Here is a very wise solution, a solution that ought to be applied one of these days, and the sooner the better.
Here it is: a tax reform is more pressing than ever, but we should first have a monetary reform to modify the method of financing the public sector. Greater use of the Bank of Canada is imperative for the creation of new credits entailing administration charges only as interest, which would greatly lower government expenditures.
This afternoon, in answer to the question of my colleague, the member for Compton (Mr. Latulippe), who asked him whether he felt that the Bank of Canada should reduce its interest rates that chartered banks might lower theirs in order to give our economic activities a new impulse and reduce inflation, the Prime Minister
(Mr. Lambert (Bellechasse).j
(Mr. Trudeau) replied very candidly that the rates of interest are set by the Bank of Canada.
Mr. Speaker, is the Bank of Canada an institution of Parlement? Should it not submit itself to the instructions of the government? One may also ask whether it is subject to the whims of chartered banks. If that is the case, then neither the government nor the bank can decide, but rather chartered banks which have the privilege of controlling credit in the country and making the most of it to their advantage while penalizing everybody else.
It is against this state of affairs that we protest; as long as it lasts, it will be our duty to warn the government that they are not entirely in the right direction and if they are able then to take steps to reform or change the present institutions, we will be here to approve them.
I was listening in this very House, a few days ago, to the hon. member for Edmonton West (Mr. Lambert) speaking about an international monetary reform. I support him, but if we proceeded first with a domestic monetary reform, this would contribute to the solution of international problems.
Mr. Speaker, I would have much more to say. I could speak about taxes affecting individuals and families as such. I have no time to analyse today this aspect of the bill, but I shall come back to it at the report stage to lay down the rights of individuals and families and show once more that these categories of people are overburdened with taxes and cannot enjoy a secure and free normal life.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Laniel):: Order. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Compton (Mr. Latulippe)-Finance-Government attitude on negative tax formula; the hon. member for Egmont (Mr. MacDonald)-Agriculture-Potatoes-Assurance to producers respecting seed export market; the hon. member for Timiskaming (Mr. Peters)-Air Transport-Establishment of Nordair as regional carrier for northeastern Ontario and northwestern Quebec-Ontario application for regional charter.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Gray (for Mr. Benson) that 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
October 12, 1971
[Stage Direction]
the amendments to that act, be read the second time and referred to the committee of the whole.
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, the debate on this tax bill is almost an anti-climax. What seemed so important this past few years, the long awaited revision of our tax structure, has been dwarfed by a single national issue, the future of Canadian-American relations. The average Canadian may not know a great deal about the complexities of international fiscal affairs, but there is no doubt that there is a feeling in the land that the Ottawa experts, politicians and mandarins alike, have critically miscalculated the United States reaction to its own problems. There has been the government's failure to solve inflation, plus the employment crisis. There has been an obvious lack of effective communication between Ottawa and Washington. This has not been helped in any way by the Prime Minister's (Mr. Trudeau) obvious hostility toward the Americans. There is substantial evidence, and it is feared by all, that we may well be led into another great depression.
The problem with this tax bill is that it is tailored to a decade that has passed. It is perhaps perverse misfortune that the tax review and tax changes have come at the beginning of the decade of the seventies. Ever since 1968 there has been slow, vague, but unmistakable evidence that equity was not the only prerequisite for tax changes. The mere scrapping of much of the white paper on taxation indicates that the government, I believe much against its will, has given some recognition to the necessity of economic growth.
What are the two most important things that have to be considered in relating the tax bill to our economic needs? The crux for Canada falls into two main problems at the internal level. The first is that Canada has the fastest growing labour force relative to population in the western world, but the cost of creating jobs for those entering the labour force is on the rise. The investment required to create a new job in conventional manufacturing is around $25,000, and in advanced, technological manufacturing around $75,000. Technological advance accelerates the investment required to create jobs with each passing day.
Much of our trouble is a consequence of a sharp rise in the birth rate a generation ago, something for which even the politicians cannot be blamed. A decade from now policies and social attitudes will need to be altered to take account of an opposite situation, a slowing of the labour force growth resulting from a steep fall in the birth rate since the early 1960's. Indeed the present taxation proposals might well be more applicable ten years from now than they are in the decade of the seventies. A perusal of birth rates indicates an increase from 1956, when there were 461,000 births, to a figure of 479,000 births in 1960, followed by a steady drop to 362,000 in 1968. So, it can be seen that there will be a large number of young people entering the labour force during the seventies, estimated by some people as between 21 million and 3 million. Whether or not jobs will be created for them will depend on our economic system, on the stimulus that business, both private and government, can generate to create new jobs. In my opinion, the effect of this tax bill will not be nearly sufficient to have this result.
Income Tax Act
There are other interesting developments in our society that may have an influence on this group now coming into the labour market. The finding of jobs for this group will be difficult. Many may remain unemployed, or at least under-employed, for a great part of their lives. The trend towards education may turn some of these people into so-called perennial students, at least until they are in their thirties or even forties. The rise of the drug culture, and an increase in the so-called hippies or drop-outs, may be larger than usual. Indeed, it may well be that many of the people who were born in the 1950's and 1960's will never really be gainfully employed, at least in the context experience by those born prior to that time.
There is little we can do about the numbers entering the work force, unless by some control on immigration, but there is something that we could do through this bill about the second most important feature of our economy in the seventies. I refer to the enormous welfare costs that we have experienced, that we are going to experience, and that will expand even further. I think it is important to give careful thought to the proposed tax changes because it is fairly obvious that the new tax structure will have to generate the revenues to carry the welfare system. Successive federal governments have laid the foundation for and erected most of the structure of the most comprehensive and generous welfare scheme in existence. Generating the income to finance it is already straining our resources. Perhaps the awareness of this fact had something to do with the crunch issue in tax reform-economic growth versus social equity. I believe that the recognition of these two main facets of our Canadian life in the seventies has to be considered when we discuss changes in the taxation system.
The high costs of government are nowhere more apparent than in the latest official projection of Statistics Canada. This year governments collectively will claim revenues amounting to about 46 per cent of the nation's total production of goods and services, or 42 per cent if pensions and hospital premiums are excluded from the accounts. It seems that when new government departments are established, or old ones upgraded, they must produce programs costing many millions of dollars if they are to be taken seriously. Sometimes one program is put forward as a substitute for another. For example, family allowances were notably wasteful. Much of the money went to people who did not need it. Under the revision undertaken by the Minister of National Health and Welfare (Mr. Munro) they will certainly be more purposeful, and this will cost the taxpayers $150 million more the first year. Again, Mr. Speaker, the Minister of Labour (Mr. Mackasey) has taken some of the insurance out of unemployment insurance. The creation of jobs and the control of government spending will be most important in the decade of the seventies. This tax bill does not in any way recognize the needs of the decade. Even if the bill deviates from the white paper, it would appear to be far too equity orientated and not growth orientated.
There are numerous ways in which this tax bill could be upgraded into a more useful document. I would like to enumerate a few of the areas in which this legislation is deficient. The first obvious area is that of unincorporated

October 12, 1971
Income Tax Act
business. This comprises somewhere in the neighbourhood of a million to two million Canadians, and includes the many small storekeepers, the small entrepreneurs, tradesmen and farmers. The new income tax legislation absolutely ignores them because the income tax group in which most of these people would fall will be more heavily taxed than previously.
The progressive income tax is orientated to those who are consumers alone and not to those who must, after their income tax is paid, provide the capital necessary to carry on their small farm, their business or their enterprise. We have heard much about the movement of people in Canada from rural to urban areas. Because this individual, unincorporated entrepreneur is so important to rural investment in Canada, because we are a nation with a sparse population scattered over many hundreds of square miles, we must pay, economically and socially, more attention to this group. The present tax bill will do nothing for these individual businessmen and farmers, and I believe that this is a pity.
Recognition is given to some extent to people who invest in large companies by means of dividend tax credits, but nothing is changed or improved for the group of people who are the unincorporated businessmen. This is a pity because even the most rabid believer in government does not see the small, unincorporated business person or farmer as a cartel or a threat to the economic well-being of Canada.
I would point out that those people who are on salary or wages are in positions where the capital which is provided is sustained by other means than their own, and are in a preferred position as opposed to the unincorporated businessman so far as capital is concerned. These salary or wage people have the option of saving or not saving after their income tax is paid, but this is not so for the unincorporated businessman who must, out of his income after his income tax is paid, provide the capital necessary for the expansion and sustenance of his small enterprise.
This is an area in which the tax bill does nothing, and indeed with the increased tax that most people in this $5,000 to $20,000 bracket will pay as a result of the inauguration of the capital gains tax, they will be worse off than they were previously. As the capital investment needed to provide income increases, the proposed tax structure, so far as these people are concerned, is a retrogressive step. Mr. Speaker, these people should receive more attention from the country to weather the international situation which we are facing and provide a reasonable standard of living without absolute reliance on international trade and finance.
I would next turn, Mr. Speaker, to what I feel is a serious defect in the tax bill and that is the treatment of the small, incorporated business. In my opinion, the treatment accorded the small incorporated business is really no treatment at all from a tax point of view. This is understandable considering that the revenue department expected that the great bulk of the increase in revenue needed to make up for the reduction in the personal income tax would come as a result of the changes in the tax structure relating to small incorporated business. This perhaps explains why the tax department has virtually made a mockery out of the suggestions from the Parliamentary Committee on Finance, Trade and Economic
(Mr. Ritchie.J
Affairs which, having heard a great number of representations, suggested that the reduced rate of income tax on the first $35,000 of the profits of an incorporated business was valuable in our economy. Mr. Speaker, the new tax changes would indicate that while the government is paying lip service to an accumulation of capital by the small incorporated business it in effect is effectively preventing the function of this most important facet.
From personal experience, I know that many small incorporated businesses are incorporated solely because of the limited liability feature in the event of bankruptcy. Having studied, in a personal way, the tax structure of small incorporated businesses, I can see very little advantage in the long run, so far as taxation is concerned, in having the business incorporated if the company does not expand. It was useful for a company that was expanding rapidly and needed a fair amount of capital generation. What is wrong with the present proposals? Mr. Speaker, it seems to me that they are too complex and too vague to be of much value. If a company had a good growth pattern, and this I believe is what is needed in our economy, the owner would be discouraged from taking advantage of the reduced taxation on the first $50,000 because it would severely limit his ability to manoeuvre in the future.
I would regard this portion of the tax reform measure as being extremely retrogressive, and if the government feels that the reduced taxation of the first $50,000 of income is good for the economy on the one hand, then it has largely reversed itself by hedging this feature with so many restrictions that it will lose much of its value. If the government intends to restrict the sale of Canadian companies to foreign countries, which is synonymous with America, they are going about it in a heavy-handed way. Whatever we may decide about American capital in Canada, this particular device of preventing the sale of Canadian industry does not seem valuable. Mr. Speaker, I would suggest that the various restrictions on tax relief for small businesses are so confining that they defeat the purpose of furthering business incentive in a substantial way.
Turning now to the effect of the tax bill on Canada's extractive industries, I would like to say a few words on this subject, Mr. Speaker. Much has been said by the economic nationalists to the effect that every bit of ore mined in Canada should be fully manufactured into consumer goods before being exported. Indeed, it would seem that the economic nationalists believe that we are able to do this. They say that the great employment opportunities are in manufacturing but, Mr. Speaker, Canadian manufacturing, no matter how you look at it, is, on balance, a high cost industry. The extractive industries, the pulp and paper industry and the agriculture industry, have allowed the people of Canada to accumulate the wealth to consume the products that our high priced manufacturing industry produces. Without the exports from the resource industries, there would be a much smaller manufacturing industry in Canada than now exists.
From my observations of the mining industry and the oil and gas industry while on the parliamentary Finance Committee, I would assert that taxation is a cost of doing business. If we increase the taxes, the mining industry will contract; if we decrease the taxes, the mining industry will expand. Assuming that there is a market for the
October 12, 1971

products mined, it seems obvious that increased taxes can only be borne when the price of the mineral rises on the domestic or international market or that more lucrative grades of ore only will be mined. If the tax on the resource industries is substantially increased and there is not a corresponding increase in the price on the international market of that product, then mining will decline. There may be some argument for the contraction of mining as a conservation measure but I think it should be achieved apart from the taxation structure.	*
Perhaps what makes the debate on resource taxation so obscure is that the areas dependant on the resource industries are so far removed from the high population centres of Montreal and Toronto. Mining towns in my province of Manitoba, like Lynn Lake, Flin Flon and Thompson, would not exist without ore to be mined and a market found for it. On September 21, the Globe and Mail, reported Mr Goodeve, Treasurer of McIntyre Porcupine Mines Limited as having said:
The tax reform package will make the development of new mines less attractive by lowering the return on mining investment. Certain marginal mines, which would be economic under present conditions, will no longer be viable under the new tax regime.
But these effects probably will not be felt immediately because the new system is to be phased in gradually. 'The most basic uncertainty regarding the new provisions relates to exploration, yet its impact will be more immediate because the investment decisions which must be made now are concerned not with the short-term but with the eventual rates of return from discoveries not yet made, which must compare favourably with investment opportunities elsewhere.'
I think that Mr. Goodeve has made a signification charge against the taxation bill and it is up to the government to prove that his statements are wrong. Similarly, in oil and gas, the proposed taxation changes have been accepted only to the extent that they are much less punitive than the original white paper.
It has been estimated that the oil and gas industry of western Canada has provided for a million more people on the Prairies than we would presently have. When it is remembered that that industry was almost completely developed with American and western Canadian capital, and that the eastern financial groups showed no interest in western oil for many years, I think we have to look carefully at the effect of increasing the flow of taxes to Ottawa and correspondingly decreasing those to the provinces. Last year the estimated reserves of oil, excluding the tar sands, in Alberta, the main oil producing province, declined. This decrease it is suggested came about largely because the White Paper on Taxation caused cessation of drilling and exploration. Mr. Speaker, we hear much of Canadians being hewers of wood and drawers of water for the Americans. By this tax bill the government has indicated that it wants western Canadians especially to be hewers of wood and drawers of water for central Canada. Although we may have our problems with the Americans, at least we can control them politically in western Canada. The same cannot be said for the Ottawa, Montreal, Toronto axis.
Now, Mr. Speaker, in its statement on co-operatives, the government has adopted a very severe attitude. It is particularly damaging to the prairie regions because of the
Income Tax Act
great importance of producers' co-operatives in that area. The government's proposal will be damaging for all regions. I wish to speak mainly about producer co-operatives and about wheat pools, which are co-operatives. In order to raise the taxes that will be imposed on the wheat pools of the three prairie provinces, which are involved in grain handling there will have to be a substantial increase in the handling charges on grain. This will come at a time of particularly severe crisis in the western economy.
There are great discussions about the need for modernization of the western grain handling industry and massive expenditures would seem to be necessary for this. This particular taxation change, in so far as it effects the wheat pools, means that if the western grain industry is to be modernized, there will have to be a drastic increase in the handling charges for grain. Mr. Speaker, in effect the farmers are going to be hit by a double blow. As it is, the Wheat Pools are responsible for about 50 per cent of the grain handling volume in western Canada. In any case, the farmers will have to pay for modernization of the grain handling system by increased tariffs on grain and, as well, provide massive increases of money for the cooperatives to meet the new tax levies. As well, other producer co-operatives that provide a service to the western farm industry are similarly concerned.
The co-operatives and credit unions, Mr. Speaker, have stated their case most forcibly to the Minister of Finance (Mr. Benson), and I would hope that some reason will prevail. There are substantial ways and means by which the taxation of co-operatives could be changed. I would hope that there will be a full discussion of these clauses at the proper time, that the government will introduce appropriate amendments and at least be more reasonable with regard to its tax on co-operatives and credit unions.
There are a good many areas in the bill which, in a minor way, could be attacked. Those areas are severely restrictive of growth. I refer to areas such as depreciation allowances for buildings, which I feel are too severe, although I admit certain changes ought to have been made. These should be depreciation allowances for buildings different from those brought forward. There needed to be changes in that high income individuals have been able to buy, say, apartment blocks without any fear of having to pay tax. Yet I submit that the clause dealing with this is far too severe. The government seems to have brought forward a cannon, whereas a peashooter would have been much better in this situation. I think, as time goes on, it will be shown that clauses such as this are very restrictive and will impede the growth of small businesses, particularly in the smaller communities.
There is, however, a final and important area that I should like to talk about, namely, the proposal for the taxing of our international accounts. It would appear that the government wishes to renegotiate the tax treaties so that it can levy a tax on capital gains on defined Canadian property and offer to restrict Canada's withholding tax on investment and passive income to 15 per cent, in place of the 25 per cent provided for in the new tax legislation, in the years after 1975. The proposed new legislation significantly changes the treatment of investments by Canadian taxpayers in the shares of non-resident corporations that could be described as foreign affiliates. The present provisos regarding dividends which are deductible in comput-

Income Tax Act
ing taxable incomes received by Canadian corporations from a non-resident corporation in which the Canadian corporation holds more than 25 per cent of the voting shares would be narrowed considerably after 1975. The proposed new law provides that after 1975 only dividends from foreign affiliates in countries with which Canada has a new tax treaty will be deductible in computing taxable income. The proposed new law also includes in a Canadian taxpayer's income an arbitrary amount of "property income" with respect to each of the taxpayer's foreign affiliates. The rules are painted with a broad brush but appear quite arbitrary. The new provisions treat the "passive income" derived from foreign investments more harshly and, in effect, penalize non-operating business incomes.
The proposed law also provides that the capital gains of a non-resident will be taxable. Finally, after 1975, foreign tax credit on the investment income of individuals will be limited to 15 per cent, with the excess being treated only as a deductible expense. In view of the various moves by the United States which will encourage production and investment at home, Bill C-259 is totally inappropriate. Canada is threatening to increase the rate of withholding tax on investment and passive income to non-residents to 25 per cent, just when we need more savings and investment to replace the gap that will be left by the United States programs. Further, the proposed capital gains tax on foreign investments would be more onerous than that imposed by the United States.
Why should foreigners invest in Canada when better tax treatment is available? Canada is hoping to pressure other countries into re-negotiating tax treaties when these other countries are beset by serious global monetary problems. At this time, when it is important for Canada to establish new opportunities to make up for less investments from the U.S., we are going out of our way to antagonize alternative markets and sources of capital. We are penalizing, too, foreign affiliates of Canadian companies, so that retaliation will ensue.
Under the tax bill, foreign affiliates of a Canadian company would have their profits taxed in Canada at the same rate as if the manufacturing were carried on in Canada. This could put such corporations at a disadvantage, compared to other companies located outside Canada. If the foreign affiliate were located in country X with a 20 per cent corporate tax rate, other companies located in country X would be paying taxes at the 20 per cent rate, but not Canadian companies. At a time when virtually everyone agrees that Canada can get the required scale and specialization to compete internationally only through the development of its own multi-national corporations, the tax bill offers nothing. In fact, as mentioned previously, there are positive handicaps offered to such companies which would be severe roadblocks.
I should like to quote from John Meyer's column in the Montreal Gazette of October 12, 1971. He said this about the American surcharge:
On the other hand, some of the conditions-at least two of them-would be very much to Canada's advantage to acknowledge. The first of these is an end to the discrimination against
foreign investors, and Canadians investing abroad, which is written into the tax reform legislation.
There never should have been that discrimination in the first place. We'd be wise to get rid of it.
He goes on with other points. This tax bill will not, in my opinion, provide adequate stimulus for jobs in Canada in this decade. It tends to favour the manufacturing industries of central Canada at the expense of the periphery of the country. It assumes that manufacturing is better than resource development per se. At a time when the countries of the world are becoming more interdependent on one another, it assumes that Canadians should look inward. Since the present federal government has its head in Montreal, perhaps it is only natural that it is carrying on a 200-year exploitation as in the days of the Northwest Trading Company, whose line extended out of Montreal through the Ottawa valley and on through Winnipeg, the Prairies and the mountains to the Pacific ocean.
This tax bill will only increase the tendency to fragmentize our country. To western Canadians, the pull of the continent is north and south. The tax bill does not recognize this in any way. Indeed, how could it, considering the authors? it is an inward looking document and will not greatly enhance the goal of a strong independent Canada.


Robert Elgin McKinley: In taking part in the debate this afternoon on Bill C-259, Mr. Speaker, it seems that one of the major issues and difficulties facing the House at this time is the unintelligibility of this bill. There are many people in this country who do not completely understand what this bill means. I am one of those who do not completely understand all the implications of it.
As we proceed, many members will be forced to vote on provisions of a bill that is very difficult to understand. One tax consultant, Mr. Ferguson, conceded in the August issue of Canadian Business:
Most people in the business world think this law is a great improvement over the White Paper. Whether we are right or not may take years to learn. After all, we are still having appeals about the interpretation of the 1948 law. This new Tax Reform Bill will prove no easier to interpret, and without any question it will be much more difficult for the Department of National Revenue to administer.
More re-writing of the Income Tax Act is not too many years in the future.
Another specialist has summed up this bill with regard to its intelligibility as follows:
Have you been puzzled by the strange silence since Mr. Benson's tax reform Bill was published?
We really have not heard as much about the bill as we did about the white paper.
The reason is that people are waiting for the tax experts to tell them what it means. But after two months of intense study the tax experts are still stupefied with bewilderment.
Well, you may say, so the tax experts are not as clever as they thought. If they have to work a little harder, what's wrong with that? If the tax experts are suffering some temporary agony, they richly deserve it. Besides, they will be more than adequately paid for their trouble.
Unfortunately, things are not this simple. First let me explain that I am not complaining about that kind of tax reforms Mr. Benson wants to give us. I agree with most of those reforms. At least I think I do. The trouble is, I can't tell if the Bill says what Mr. Benson says it does. The Bill is so huge, so complicated, and so badly drafted that it is almost unreadable.
|Mr. Ritchie.]
October 12, 1971

An example of the Bill's tortuous wording is the section describing what a capital gain is. That section, number 39, is about half a page long. As statutes go, that isn't too bad. However, after reading four lines, the reader is directed to turn back to section 3 and read in another page of type. If this were not bad enough, you are told at the same time to read section 3 as though it said the opposite of what it does say.
Rather strange circumstances, Mr. Speaker.
The explanation for this, I think, is that the draftsman, working under great pressure, took what to him was a helpful shortcut. He probably understands what he was saying. But, for several years afterwards, taxpayers, their advisers and judges will have to do these mental gymnastics a thousand times over. Little drafting shortcuts like these are going to cost the country a great deal.
I know that many will say that the tax experts are merely adding hypocrisy to their other sins by complaining. But we are not so selfish and irresponsible as to believe that an economic bonanza for us is necessarily good for the country. None of us want to be the beneficiaries of a law which imposes a higher than necessary compliance cost on the rest of society. As Canadians, we want the laws to be such that most people can understand and comply with them without the constant attendance of a professional adviser.
Everyone knows the amount of money it takes to hire professional help to complete an income tax return.
Few people realize it, but the weakest link in the legislative process is legal drafting. Statute-drafting is the least glamorous and most exacting work a lawyer can have. As a result, practitioners of the art are few, under-valued and grossly over-worked. This, combined with the pressure to get large volumes of legislation through Parliament as quickly as possible, produces many laws which are unclear.
Usually these shortcomings don't matter too much. Most statutes, after all, touch directly only a few people or, if they apply widely, affect one only infrequently. Judges, lawyers and government officials manage to make the laws work reasonably well most of the time. The nuisance and expense occasioned by flaws in a statute are rarely a major problem.
There is a difference between income tax law and criminal law, for instance, Mr. Speaker. It is more necessary that income tax law be easily understood since it affects almost everyone in the country at one time or another. It seems to me that legislation of this sort should be framed with precision and at the same time made as simple as possible. Any cost occasioned businessmen or manufacturers in filling out complicated tax returns will be added to the cost of the products they sell; indeed, there is no other way in which they can reimburse themselves. Thus, any errors or complications in this legislation will cost a great deal of money in the future. The legislation may be a bonanza for our lawyers and accountants but I expect it will cause them a good many headaches too. Many people have contended that this bill should be rewritten. In view of the attitude of the government, I do not think this is likely; the government has already proven it wants the bill passed.
The impetus for this tax legislation came from the Carter commission set up a few years ago by a former government. The commission reported in 1967 and proposed many changes. Then the government published a white paper entitled "Proposals for Tax Reform", I believe in November 1969. I am sure all members are familiar with the response made to that white paper. Thousands of submissions on it were sent to Members of Parliament and to the minister. As I recall, he had to hire staff to help him answer the submissions that were made.
Income Tax Act
The House of Commons Committee on Finance, Trade and Economic Affairs, and also the Senate Committee on Banking, Trade and Commerce, heard many submissions and held hearings across Canada on the white paper. The findings of these committees were reported back to Parliament and, I think, acknowledged to a certain extent in the legislation now before us. Certainly the minister seems to have listened to some of them. I believe he has also listened to many of the representations of Conservative members on this side of the House. Compared with the proposals in the white paper, the legislation before us is a considerable modification.
Some parts of the legislation particularly concern me and I should like to turn to these now. One concern is how the legislation will affect farmers. I should like to give hon. members a rundown on the hardships farmers will suffer under the legislation. Farmers and fishermen will still be able to compute their income on a cash basis, as they always have. They will still be entitled to use the averaging basis for computing income, which means they can average their income over any five-year period that they may choose.
Under the former law a farmer could classify his cattle as a basic herd. Any gains or losses would be treated as a capital gain or a capital loss and such gains would be exempt from tax. Under the present bill the basic herd and straight line depreciation provisions will be eliminated and livestock farmers will have until December 31 this year to establish their basic herd. Following that, any gain on the basic herd will be tax free but no new additions to the herd will be allowed. In addition, assets acquired after December 31 must be depreciated in accordance with the diminishing balance system. If proceeds from the sale of assets depreciated on a straight line basis exceed their valuation, then the amount of the excess is regarded as a capital gain.
I think this will be the greatest hardship the farming community will suffer under the new legislation. At the present time a farmer can purchase a combine or a tractor, and since it has a motor it is depreciated at the rate of 20 per cent. Therefore, in five years this machinery would have been completely depreciated. At the same time, it would retain some commercial value and could be traded in on a new machine. In turn, this would mean another farmer who could not afford a new machine could buy a used one. This was regarded as a capital gain and the farmer did not have to pay tax on the amount he realized on the machine.
Under the provisions of the new legislation the proceeds of sale will be taxed as a capital gain, and as I understand the situation the farmers will be very reluctant to trade in any machine for a new one if it still has some commercial value. This will mean that the machinery manufacturing companies will lose business and their employees will suffer. In addition, more farmers will look to custom combining instead of purchasing their own machines. I believe this will be one of the major hardships suffered by farmers under the legislation.
Other capital gains will also be subject to tax. Hobby farmers will be able to deduct only $5,000 of any loss incurred. In this regard I wish to raise a grievance with the Minister of Finance (Mr. Benson) or, more particularly, with the Minister of National Revenue (Mr. Gray).

October 12, 1971
Income Tax Act
Some tax offices want to be assured in black and white that losses claimed by farmers for income tax purposes did occur in anticipation of their making a gain. It is sometimes quite difficult for the farmers to do this and some of the income tax offices, particularly the one in Kitchener, have been very difficult in this regard. Even when reasonable proof has been furnished, the attitude of these offices has caused farmers tremendous hardship. The offices say the tax will be given back when the farmers actually show a profit as anticipated. This represents a considerable hardship for those involved.
In a general way, any advantages to farmers in respect of income tax will be wiped out under this reform, and we all know that the agricultural industry is not tremendously prosperous. It is an industry which under this government, is engaged in providing cheap food for the rest of the country. I do not believe that is a proper activity in which farmers should be engaged. They should be entitled to as much income as people who belong to unions and will not work for less than $5 per hour.
Valuation day will prove to be another difficult time for farmers. I am not sure I can be in favour of a capital gains tax in view of the situation in which we find ourselves in this country. This is a young country which requires growth and risk capital to develop in the manner we would like. Under the capital gains regulations in the bill a farmer will be allowed an amount similar to that allowed a person owning a house in the city, in accordance with the terms of the white paper. Under this silly recommendation in the white paper they were to be allowed $1,000. This simply means that a lot of people would be doing a great deal of bookkeeping for nothing.
Since the white paper and the presentation of this legislation, that condition has been wiped out for home owners. It has been left in respect of the farmer, who can have a gain of $1,000 on his house, a barn and an acre or so of land, free of capital gains tax, but pay capital gains tax on the rest of the farm. A great many farmers have more than one house and a barn, but the legislation states that only the house the farmer lives in, one barn and a few acres may be exempt from capital gains tax. The change I suggest is that all the buildings on the farm, whether they be one or two sets of buildings, four, five or 20 sets of buildings, should be exempt from capital gains tax.
An article in the Globe and Mail of July 1 suggested that a farmer whose children did not want to carry on the family farm would have to sell his assets and pay capital gains tax on $50,000, for example. He might then reinvest his capital in the market, liquidate three or four years later and find that so far as his investment was concerned he had suffered a loss of $50,000. In all fairness he should not pay any tax because he is no further ahead. He has paid the capital gains tax and has suffered a non-taxable $50,000 loss, therefore he ends up even. Another farmer with the same experience but in the reverse order, having suffered a $50,000 capital loss and later made a $50,000 capital gain would not pay any tax because the legislation provides that a loss can be carried forward indefinitely. This does not seem to be an equitable situation and the legislation should be revised to provide the same treatment in both cases.
My information is that one of our large wheat pools is among the few organizations which has supported this tax reform on the assumption that because farmers represent a low-income group with higher exemptions, many farmers will not pay tax. This is a very foolish way to judge the legislation. We should be making an effort to put farmers in a taxable position.
It has been suggested that the capital gains tax will hit farmers and small businessmen particularly hard because most of them, as we all know, endeavour to retire on the proceeds from the sale of their farms or businesses built up over a lifetime of hard work, and without high living. Now they are being put in a position where the proceeds from all this hard work will be whittled away by capital gains tax. It is suggested that farmers and small businessmen should have a registered retirement plan, the premiums of which should be deducted from the proceeds. We know there is in existence a registered retirement plan, but a sensible solution to the difficulty would be for the government to allow, through this tax legislation, the retired farmer or businessman to sell his assets and invest in the retirement plan before any capital gains tax is charged.
I should also like to refer to the treatment of co-operatives and credit unions under this legislation. These movements have been formed by people getting together for many reasons, one of which is to continue operations when things are difficult. Under the present income tax laws, co-operatives are exempt from tax for the first three years. That advantage will be wiped out as a result of this legislation. We can only assume we will see few, if any, new co-operatives. I do not think this will be good for Canada.
Under this legislation consumer dividends will remain exempt as long as they are distributed. Patronage dividends on production goods can be considered as exempt, but the goods must be taken in as income by the recipient and are taxable at the recipient's personal rate. Patronage dividends for production goods will remain as income under this bill. The capital principle has been drastically changed. At present, co-operatives cannot reduce their taxable income below 3 per cent, but the formula for calculating the tax under the bill we are discussing will include essentially every equity, such as shares, loans to members and general reserves, and the rate has been increased to 5 per cent from 3 per cent. This creates a tremendous hardship for co-operatives.
The only deduction allowed will be the interest paid on loans to members. These changes will have an accumulative effect on loans and co-operative earnings in that the earnings will have to be distributed as patronage dividends on purchases made by members of co-operatives. This means that the earnings of the co-operatives will gradually have to be distributed on the basis of the equity owned by the members. It would force them into a pattern of investor-owned corporations rather than the service corporation which they were initially established to be.
When co-operatives reach the point that this legislation forces upon them, their value as co-ops will be gone. I trust amendments will be made and presented to the government to try to alleviate this situation. When this

October 12, 1971

situation is reached, if it comes, it would be better for co-ops to incorporate as ordinary corporations. It is hard for me to believe that the government really understands what it is trying to do or what the legislation will do, and I hope the government will find some reason to reverse its stand in this regard.
One thing which I think the government should keep in mind at all times with regard to co-operatives is that any dividends paid to the private members of the co-ops are taxed at the regular personal income tax rate, the same as any other dividend. This, in my opinion, together with other taxes that co-ops pay, should be all that the government should try to get from these bodies which are basically service organizations to groups which are usually farming communities. However, now they have appeared in urban centres and they provide many services to citizens of Canada. On occasion the minister has indicated that he may see fit to make some changes in this regard.
I should like to suggest that the same consideration should be given to credit unions. Credit unions are small organizations of groups of people in a town. They could be church groups or any other group, but they come together primarily to provide a service to each other. Basically they come into existence because people have not been able to receive the services they require from banks in the community. This legislation will hit them very hard, and we hope the minister will see fit to make changes in this regard.
Credit unions have advised me that they do not require permanent capital to conduct their operations. They make loans only to the extent that members can borrow. This is regulated by federal legislation at present and they have only members' savings available to lend. They exist only to promote the economic and social interests of their members, individuals united under a common bond. Although they are chartered as legal entities and exist as incorporated companies, they have no incentives and no independent economic goals other than the welfare of their members. There is no need, then, to accumulate earnings in the credit union, and traditionally these have been allocated to members.
Again I would mention that the allocation of any of these earnings by credit unions to members would be taxed on the regular personal basis. I cannot understand why any government would feel the need to create such hardship for credit unions, thus preventing their being useful to their members, because any advantage that would be gained from borrowing or from putting savings into the credit union would be completely wiped out. They have in the past served a very useful purpose in our country and I hope will do so in the future if the opposition can get their ideas through to the government so it will make some changes.
I should like to read a letter which credit unions received from the Prime Minister (Mr. Trudeau):
On the occasion of International Credit Union Day, I am very pleased to send my greetings to credit union members in Canada and throughout the world.
Credit unions have experienced enormous success because they encourage both regular savings and the wise use of credit. But even more important, credit unionism encourages self-help, mutual assistance, and personal involvement. In this sense credit unions are more than financial institutions, they are a positive social force within our communities.
Income Tax Act
To over 38 million members of the credit union movement in many countries of the world, I send my best wishes for continued growth and prosperity.
I cannot believe that after sending such a letter to the credit unions the Prime Minister would wish to turn around and force through the House, by his majority, legislation which would practically put credit unions out of business. I trust that amendments will be forthcoming at the committee stage and that the government will accept those which will alleviate the hardship imposed on credit unions and co-operatives through this legislation, so they may continue to serve their members as they have for many years.


Mr. Speaker:: Order, please. I regret to interrupt the hon. member. It being six o'clock, I do now leave the chair, to resume same at eight o'clock.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
Mr. Roland Godin (Portneui):: Mr. Speaker, a few days ago the Canadian Parliament passed Bill C-262, an Act providing that the government would pay out $80,000,000 to counteract the effects of the 10 per cent American surcharge on imports from this country, and support employment in Canada.
Now as the problem today is to tax Canadians more heavily, there is before the House a legislation which is altogether different, namely Bill C-259, entitled "An Act 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."
This document contains 710 pages. Indeed, it is the bulkiest ever introduced in this House. Those hon. members who have been sitting here since 1965 will be able to boast of having seen everything and of having been through the mill.
In 1958, we examined Bill C-150, recognized as an omnibus bill, about 1-1/4 inch thick, which gave the green light to a very particular group of individuals. Now we are faced with a 3 inch thick bill bringing certain changes to the Income Tax Act.
After passing a bill favouring certain abnormal Canadians, the government is now ready to pass a bill introducing some changes into the Income Tax Act, namely favouring the messing around with money taken from the pocketbook of normal Canadians.
To maintain the employment level, the government, by presenting an 8 page bill, intends to pay out $80 million in grants. At the same time, it proposes, through a 710 page bill, to tax Canadians more. If an 8 page bill yields $80 million in grants, how many billions could the government collect with a 710 page bill?

October 12, 1971
Income Tax Act
Members who have spoken before me have tactfully stated that the bill now under study is confusing but in my mind it is not confusing at all as it is clear that it is simply a bill to collect more money from Canadians.
The way the Minister of Finance (Mr. Benson) introduces this bill astonishes me. When he accepted the post of Minister of Finance, we thought for a minute that this Canadian would assert himself; but his actions prove the contrary. In introducing this bill to us, he simply proves that he bows to another power.
On August 26 last, at the Royal York Hotel in Toronto, the hon. minister said, and I quote:
As I said in my speech on the budget, the publication of the white paper was an important step in the evolution of participatory democracy in Canada. Thanks to the ensuing debate and discussions, it has been possible to develop a program of tax reform which, in addition to meeting the needs of Canada, also reflects the views of Canadians.
Mr. Speaker, if we merely refer to that quotation, the bill now under consideration owes its birth to participatory democracy, debate and discussion. According to the minister's statement, this bill reflects the views of Canadians.
Mr. Speaker, I challenge the minister to disclose the contents of most letters which he has received. As for mine, they are available. The earliest goes back to last year at the time when the minister tabled his white paper on tax reform. I still receive some every week and I faithfully keep them.
My constituency is made up of 27,000 families, according to a report published by the Post Office Department in September last. The population of Portneuf is higher than that of Prince Edward Island and I have not yet received a single letter asking me to support the bill of the Minister of Finance.
It is obvious that for the Minister of Finance the needs of Canada are identified with those of big business. For the Minister of Finance, this reform is merely one which reflects the views of his friends who contribute to the electoral fund.
Mr. Speaker, I am still waiting for a letter urging me to support Bill C-259, and I say again that in all those that I had, the reverse is asked as regards the reforms proposed by this present Liberal government. Further to letters from ordinary citizens, I have received some from presidents of industries. The majority of firm directors have never been so concerned with public life, because they feel involved with Bill C-259. They are aware of the fact that 50 per cent of them will have to close shop if the bill passes.
This famous bill could be adopted; so there is reason for concern and that is why Canadian industrialists are worried at the present time. Their letters to us are evidence of this. Whether those industrialists live in the Montreal region, in Portneuf, in Riviere-a-Pierre, in Saint-Ray-mond, in Pont-Rouge, in l'Ancienne Lorette or Loretteville does not make much difference, the effects of this 710 page bill will be the same.
The Canadian Chamber of Commerce attempted to stop the government from taking this action through a well prepared brief sent to us on April 16, 1970.

Among the correspondence that I have received since then about Bill C-259, there is a wire sent by Mr. Andre Martel, president of the Societe Cooperative Agricole de Sainte-Catherine. I have in hand two other telegrams, one sent to me by Mr. Franpois Racette, president of the Meunerie cooperative agricole de Saint-Augustin de Portneuf, and the other by Mr. Jean-Paul Julien, president of the Cooperative agricole de Pont-Rouge.
I personally met with other managers, especially with the manager of Les Ecureuils Co-operative.
All these came as a result of the action taken by the executive director of the Cooperative Federee de Quebec, as evidenced by a letter dated August 19, which I will take the liberty to quote:
To all managers of farm co-operatives:
Dear Sirs:
Please find enclosed the following papers:
(1)	Letter addressed to farm co-operative directors.
(2)	Brief explaining the position of Canadian co-operatives
concerning Bill C-259.
The executive director then goes on to say:
We expect that on receiving this letter, you will (a) immediately obtain the agreement of the president of your co-operative, and (b) send a telegram, without any delay, to the member-


The Deputy Speaker (Mr. Honey):: Order, please. I recognize the hon. member for Edmonton West (Mr. Lambert).


Marcel Joseph Aimé Lambert: Will the hon. member please forgive me. I do not want to interrupt his speech, but I would like to point out to him that the situation we are witnessing tonight reflects a lack of courtesy toward the hon. member.
Moreover, I feel it is a disgrace that no representatives of the Department of Finance should be in the House to hear the hon. member's speech and to answer questions as to what proceedings of the House are to follow. Although one minister has just entered the House, neither the Minister of Finance (Mr. Benson) nor the Minister of National Revenue (Mr. Gray), nor even their parliamentary secretaries are present.
I suggest that is quite an abnormal state of things, to which I want to call the attention of the House because there are certain matters we would like to discuss with representatives of that department.


Mr. Gaston Clermont (Parliamentary Secretary to President of the Treasury Board):: Mr. Speaker, concerning the point of order raised by the hon. member for Edmonton-West (Mr. Lambert), may I say that the Parliamentary Secretary to the Minister of Finance (Mr. Mahoney) asked me to substitute for him today as he had to visit his riding. We know what are the responsibilities of a member of Parliament, and I believe I should mention that the Parliamentary Secretary to the Minister of Finance has been very assiduous in the House. Therefore, it is quite normal that he should devote one day to his riding, and I kept my word. I said that I would replace him all day. I have been here all afternoon and this evening, I was one of the first here at 8 o'clock. If the hon. member has any remarks to make either to the parliamentary secretary or to the Minister of Finance, I shall be glad to answer them.
October 12, 1971

1English]


Mr. Deputy Speaker:: Order, please. The hon. member for Edmonton West (Mr. Lambert) has raised a point of order, but he did not cite any authority or standing order. I think the hon. member has a grievance, as he has stated to the Chair. The government is responsible-


An hon. Member:: Irresponsible.


Mr. Deputy Speaker:: -for determining how it conducts its affairs in the House, and it is for the government to determine in what manner it wishes to respond in the circumstances. I think that hon. members have made their points.


Roland Godin: Thank you, Mr. Speaker. I was quoting part of a letter which reads as follows:
We expect that as soon you receive this letter, you will (a) obtain immediately the consent of the president of your co-operative and (b) send without delay a telegram to the member for your riding as well as to all Quebec ministers within the federal cabinet. It would be advisable to meet your member if you think he could influence favourably the ministers of the Trudeau cabinet.
That is a concerted action which requires the co-operation of every co-operative in this province and we expect that your cooperative will make it its duty to answer without delay our appeal.
Thanking you in advance, I remain
Faithfully yours,
Geo. -E Turcotte
General manager
Mr. Speaker, having been director of a co-operative for ten years, and having participated in the various activities connected with this function, I can say that in the province of Quebec alone, there are now more than 300 farm co-operatives affiliated to the Cooperative Federee. Some consumer co-operatives belong to another chain, that is the Federation des magasins co-op. According to official statistics published in the report on "Cooperation in Canada in 1969", 1,690,000 citizens of this country were distributed among 2,373 co-operatives. In view of the fact that Social Credit members are not alone in Parliament, I presume that hon. members from other parties, including even Liberals, have received the same kind of correspondence as we have. I am under the impression that they intend to rise and give us their views and those of their co-operatives in respect of the income tax reform bill.
I have received a letter from the Rural Economic Council, Portneuf Chapter. It comes from Donnacona and reads as follows:
Mr. Roland Godin, MP House of Commons,
Ottawa.
Sir:
The Rural Economic Council, Portneuf Chapter, is strongly opposed to the changes introduced in section 135 of the Income Tax Act as suggested by Bill C-259.
We think that there is no other example in the world of the concept of capital employed being applied in any tax system.
It will be impossible for the co-operatives to raise the funds necessary to reimburse capital and pay dividends with the new provisions of Section 135. It is obvious that if our co-operatives must hand out more capital than they receive, they will be forced out of business within a few years.
Income Tax Act
This method of taxation is thus anti-social and backwards: since it does not take into account the effect that a durable economic and social revival can only be achieved throughthe people. In view of those principles and their effects on the population as a whole, we believe that co-operation isthe most valuable factor of this awareness of the population.
This is why the Rural Economic Council, Portneuf Chapter, of strongly supports the views of the Conseil Canadien de la Cooperation and the Co-operative Union of Canada as they were submitted on August 11 of this year.
Yours truly,
Jean-Paul Julien, President.
Mr. Speaker, I have here the brief mentioned in that letter which is in fact the brief submitted by the Conseil Canadien de la Cooperation, a 14-page brief that concludes by asking for a meeting between the directors of the co-operative movement and the Minister of Finance to make known their objections to this bill and discuss the suggestions submitted in the brief.
I have also with me a letter addressed to all members of Parliament by Le Conseil de la Cooperation du Quebec. This letter, dated September 20, was addressed to us by Le Conseil de la Cooperation on behalf of the 21 Quebec federations which operate in all our social sectors. Among these federations is La Federation des Caisses Populaires Desjardins which has addressed a two-page letter in both official languages to all Members of Parliament. This letter was received on September 24 or 25. It reads as follows, and I quote:
Gentlemen:
Most of you are members of a Credit Union or Caisse populaire. If you are not you know certainly people from your district who are members. Almost a quarter of all Canadians are members of a Caisse populaire or Credit Union.
Bill C-259 is seeking to alter the present tax structure that applies to Caisses populaires and Credit Unions and to eliminate the exemptions they enjoy in practice. The members of the Credit Unions and Caisses populaires do not oppose taxation in itself and agree to pay their share of public expenditures. However, they wish to point out the serious concerns they feel as to the tax rates which shall be applied to the Caisses populaires and Credit Unions. They want to be sure you will keep in mind their concerns-
In connection with the main concerns of the members of the Caisses populaires, the letter stated and I quote:
I. The members of the Credit Unions and Caisses populaires are asking for a tax system equivalent to that granted to private corporations which are allowed a reduced tax rate of 25 p. 100. In effect, private corporations can almost indefinitely claim a reduced tax rate through the payment of equity dividends. Now, the provincial legislation applicable to the Caisses populaires and Credit Unions forbids them from distributing their accumulated reserves to their members thus allowing them to benefit indefinitely from the reduced tax rate.
The credit unions and the caisses populaires request that the rules be changed in order to extend the period during which the reduced rate of taxation of 25 per cent applies to them and ensure them the same situation as private companies.
Mr. Speaker, the caisses populaires, the credit unions went further, since they submitted a brief to the Minister of Finance. That brief was published on August 27 in the newspaper Ensemble. This is quite a comprehensive document from which the Canadian government could draw serious and essential amendments conducive to honest administration.

October 12, 1971
Income Tax Act
On the one hand, the present government enacts legislation designed to protect the consumers and, on the other hand, it enacts other legislation aimed at exterminating the associations made up of the same consumers, since those acts tend to the establishment of unfair and arbitrary taxation. In my opinion, we have there an instance of flagrant contradiction.
Everything established in this country under the cooperative system really represents the only wealth of the Canadian people since they are the owners and such undertakings cannot be sold to foreigners. Moreover, the co-operative formula is very simple, and within everybody's comprehension. It enables people to get information, to be protected against certain abuses and to derive profits according to their participation. Its application unfortunately was always difficult because high finance always disliked it since it wished to keep control over economic activities.
The federal government, that acted until now under pressures exerted by big corporations, has always maintained certain restrictions on the administration of financial activities of the caisses populaires and consumer co-ops.
Thus now, for instance, owing to their low assets and their non-profit feature, consumer co-operatives are dangerously threatened by Bill C-259. If that legislation is enacted, the expansion plans of the Federation of Co-op Stores to establish sales outlets in urban shopping centres will become very difficult since local co-operatives will no longer be entitled to take part in those plans.
On January 13, 1969, newspapers reported a statement made the day before in England by the right hon. Prime Minister to the effect that, in his opinion, the best way to administer a country was the communist way.
On January 21 last, I showed in the House with evidence in hand that the American communist party was infiltrating into Canada, owing to the support of certain people whose names are on the pay list of some Crown corporations.
Newspapers published recently a statement made by Mr. George Wallace, the Governor of Alabama which was reproduced in La Presse of September 27, 1971 and which reads as follows:
Scrutinizing public opinion before an eventual campain for the Presidency, Mr. Wallace-
-stated, and I quote:
"We have a crypto-communist Prime Minister in Canada, just north of our border. His background is even worse than that of President Castro himself."
Mr. Speaker, we know some liberal Members admit all this privately, and they are concerned about the fact that their chief is leading us on slippery ground.
As the Liberal Party was constituted and maintained for the defence of capitalism it is nevertheless normal for true Liberals to be concerned today about the project of their leader who can no longer hide his cards.
Mr. Speaker, it is evident that co-ops are barrier for those who wish to install communism. In socialist countries, private enterprise is a thing of the past. Since the co-operative movement has been and still is the complement of private undertaking in our country, this probably explains the action of this government, led by the right

hon. member for Mount Royal who finally made it to Prime Minister. We see his mischievious smile and with this smile he is now leading his entourage.
Mr. Speaker, the way the Minister of Finance is acting also leads us to feel that Canadians can no longer bank on him. The proof of it is that he is not even here tonight. In spite of that, I come to the conclusion that all is not lost. That the Minister of Finance should be useless, that the Prime Minister, with the co-operation of irresponsible civil servants, should prepare as barbaric a bill as Bill C-259, all that is "small potatoes" since we still have rights in this Parliament. We have the right to speak up, and the right to vote. As for voting, majority wins. This means that a bill proposed by well paid civil servants, unknown and unseen, who work according to the wishes of the Prime Minister, can be without effect unless hon. members approve it.
The Prime Minister, Mr. Trudeau, will not be the only one to support Bill C-259. It is not even necessary, because the few members of the cabinet working with him are well-known and are pursuing the same aim, that is, to abolish a system which has been tested abroad, with the results we know. However, we realize that among the members and the ministers, there are only a few who hold such views.
I therefore hope that the bill will be defeated, because I think that most will give up prostituting themselves further.
This is how I see things. I am not desperate, because I still believe that there is still a majority of honest Liberals in this House.


Stanley Howard Knowles: Mr. Speaker, if someone were to interrupt me before I get started and say that just about everything has been said about this bill, I would find it difficult to disagree.


An hon. Member:: Sit down, then.


Mr. Peters:: That is not what he got up to speak about.


Stanley Howard Knowles: However, I think there is value in placing on the record in more or less tabular form the main changes that people like me think ought to be made to Bill C-259. Accordingly, it is not my purpose to roam around in the upper atmosphere of economic and fiscal policies. These questions are important, but they have been dealt with very well by others who have taken part in the debate.
I do not even intend to take time documenting our contention that this bill is not a piece of major tax reform but simply a number of changes in the present tax law. Rather, as I have already indicated, I wish to summarize six areas in the bill where I think very significant and important changes should be made. Indeed, it is because of the bill's shortcomings in these six areas, either that it does not go far enough or that it goes too far, that I think it should not be put over on the Canadian people at this time.
The first of these areas has to do with the income tax exemption levels. As everyone knows-and it has been repeated many times during the course of this debate-all that this bill is doing in that area is raise the income tax
October 12, 1971

exemption level for a single person from $1,000 to $1,500, and for a married taxpayer from $2,000 to $2,850.
When one considers that the present levels of $1,000 and $2,000 were established in 1949, 22 years ago, and when one also considers the increase that has taken place in the cost of living in that 22-year period, I suggest it is a delusion and a hoax on the Canadian people for the government to raise these exemption levels by only the figures that are set out in this bill. As a low, rock bottom minimum, those figures ought now to be $2,000 a year for a single person and $4,000 a year for a married person. It would even be better if they were $2,500 for a single person and $5,000 for a married person.
When one realizes that it has taken 22 years to get before the House a government proposal to raise the levels that have been in effect all this time, one can only ask, how much longer will it take to get another change? Will it be another 22 years for another few hundred dollars? By that time the whole meaning of exemption levels will have completely disappeared. It would be almost better for nothing to be done at all, and thus for the issue to be regarded as yet unresolved rather than hand the Canadian people these very low exemption levels.
Surely the whole concept of exemption levels is that there is a certain amount of money that people must have to get by, which should not be taxable. I contend, as have many members during the course of this debate, that that amount is much greater than $1,500 for single persons and $2,850 for married persons. This, Mr. Speaker, is one of the major deficiencies of Bill C-259. The fact that the government is going this far is one of the major hoaxes in this piece of legislation. I hope when we get into committee of the whole and reach the appropriate clauses that the government will pay some heed to the arguments that have been made and raise these exemptions to substantially higher levels.
The second area in which I feel this bill is deficient has to do with the amount that is allowed to workers for their expenses on the job. To put in a figure with a limit of $150 a year is an insult. Why bother with such a small allowance? For the average worker who has expenses that he can charge under this heading, his income bracket is lower than that of the wealthy; therefore, the amount that he will actually save in income tax will only be a percentage, whether it is 20 or 30 per cent, of the $150. For the wealthy, it is another little handout, a much larger one in relative terms yet meaningless to them. Those who are in the income brackets such that their tax rates are 40 or 50 per cent will get that much more off their income tax because of this $150 allowance.
I urge two things about this allowance to workers for their expenses for income tax purposes. In the first place, the amount should be higher. In the second place, this is one of many areas where the government should be introducing the concept of tax credits rather than the concept of a specified exemption. The wealthy do not need this concession, but those who earn wages in industry, the people for whom this measure supposedly has been designed, need far more than the $20 or $30 tax relief they may get out of it. They need a credit against their actual income tax for what they have to pay out for expenses incurred in connection with their work. In fact, even more important than the amount that is allowed as an exemp-
Income Tax Act
tion to workers is the need to move into this other approach, namely, the approach of allowing a tax credit instead of special exemptions as proposed in this legislation.
For many years members of this House, particularly members of this party, have been arguing for special consideration in respect of expenses that workers incur. I suppose we should be dancing with joy because at long last this principle is being recognized. But I assure you, Mr. Speaker, there is no such dancing, because the $150 is far too low for the average worker and because in principle it is wrong to do it this way rather than by way of a tax credit. We give tax credits to people who draw dividends and make profits in certain ways, but we seem to forget that approach to the problem when we get to the situation facing our workers.
My third area of criticism has to do with senior citizens. We welcome, of course, the improvements in the tax bill affecting pensioners. There are two main improvements. On the one hand we have the extra allowance for age made universal at age 65, and this allowance is to be raised to $650 per year from the present figure of $500. The other change affecting older people is the decision to regard income received under the guaranteed income supplement as non-taxable.
With respect to the latter, the government has agreed to make it effective January 1, 1971, and this will take care of a number of anomalies. It will solve the sort of problem that veterans under war veterans allowance face; their tax position has been worsened because they were pushed from war veterans allowance over to the guaranteed income supplement. Therefore, we welcome this change. However, if it was possible to make this kind of change that is designed to improve the position of older people effective as of January 1, 1971, why was it not possible to do the same thing with respect to increased exemptions for senior citizens generally? I would urge that such a change be made.
I realize that when we first started asking the minister to make that change retroactive to January 1, 1971, there were still five or six months left in the present calendar year and in a sense there seemed to be more point to it then than there now seems to be, when the end of the year is but 11 or 12 weeks away. But I would point out that the time when people are most conscious of the total amount they have to pay by way of income tax is when they file their returns in April. Unless the government makes this kind of change, it will mean that in April, 1972, when people aged 65 years or over are filing their income tax returns they will be hit between the eyes with the fact that the change that has been made-namely, the $650 exemption at age 65-is not for them until they make out their tax return a year later, in 1973. If there is this concern for the position of our older people which the government has said prompted it to make this change, I would urge that the change be made effective January 1, 1971, along with the change making the guaranteed income supplement non-taxable.
Having made those comments under the heading of what the bill does or fails to do for our older people, I want to urge that much more serious consideration be

October 12, 1971
Income Tax Act
given to the whole concept of tax credits rather than special exemptions. Just as I argued for this in the case of workers' expenses, so I argue very strongly for it in the case of our elderly and retired people. We welcome the $650 exemption and we welcome its being made universal at age 65. But there are people, not many but some, in that age bracket whose incomes are higher and this change will simply mean that of the $960 that they get as old age security, $650 will be tax free. We have to give this to the wealthy in order to get the principle established for those in the middle and lower income brackets.
I suggest that what we really ought to do is look at the literature that the organization known as Pensioners Concerned has put out and at the literature published by other organizations, and to realize the validity of their claim that retired people should not have to pay any income tax at all if their income does not exceed a certain figure. I think there is good reason and logic to accept the levels suggested by the Pensioners Concerned, which I believe are $3,000 or $3,500 for a single person and $5,000 for a married couple.
I am not suggesting that the income tax exemption levels be raised to those figures for all people 65 years of age and over, because this would give a tremendous bonanza to those in the upper income bracket. But I am saying that retired people whose income is not over $3,500 if they are single, or, if they are married, not over $5,000, should not have to pay income tax at all. The way to cope with this problem is not to fiddle around with the exemption levels, but to make the principle of tax credits applicable in their case. This is the only fair solution to this problem of how to establish exemptions and at the same time establish justice. I think in this area, as in the area of workers' expenses, the concept of tax credits ought to be considered at this time.
I strongly urge that this suggestion be looked upon, not just as an academic exercise that may produce results the next time there is a Carter report, the next time there is a white paper or another round of this sort of thing, because that may be 15 to 20 years away; I think that when we go into committee of the whole on this bill is the time to introduce this concept of tax credits.
In particular I urge, if I may now speak to the second and third points to which I have made reference, that with respect to the allowance to workers for expenses on the job, and with respect to the tax position of senior citizens or retired persons, that we adopt the tax credit principle. In terms of actual dollars, the amount that workers get as a tax credit should bear some reasonable relationship to the expenses they actually incur. In the case of retired people I think that the figures I have already quoted are reasonable.
I urge, as the retired people have urged, that having spent their lives helping to build up this country and having paid taxes, municipal provincial and federal, for decades on end, it would be little enough for a country like Canada to provide for these people in their retirement years a tax credit system that leaves them with the levels of income I have suggested. This, of course, would have to be complemented by pretty substantial increases in old age security-but that is another subject, not covered under this bill. But whatever is the bill that is before us, we must do a great deal more to provide security, justice
[Mr. Knowles (Winnipeg North Centrel.J
and dignity for our older people than we have done so far. As far as this bill is concerned, I think that in terms of taxation we can do something for this particular segment of society. I therefore hope the points I have been making will receive serious consideration when we move into committee of the whole.
I move on to my fourth point which relates to the government's intention, as set out in Bill C-259, to abolish the federal estate tax. As members of my party have pointed out on many occasions, we think this is totally wrong. We think it is wrong because it will probably lead to an estate tax war among the provinces. Even apart from that, we think the whole notion that in a society as inequitable and unjust as ours it should be possible for people to pass on great wealth to those who come after them without those who come after having to do anything about it, is completely wrong. We are completely opposed to the proposal in this bill to abolish the estate tax and we hope reconsideration will be given to that matter when we get to that portion of the bill in committee of the whole.
The fifth point I want to make is that although we welcome the decision to introduce the idea of a capital gains tax into our legislation, we think the terms of that tax as set out in the bill are not in keeping with the just society, if that idea is still around, and are not in keeping with the principles of fairness. Everywhere else the ordinary people of the country have to pay taxes on their income on the principle that a dollar is a dollar. When it comes to capital gain, of course, the government has gone soft and suggests the tax will be on only half the dollars one gains in that way. We think this is wrong and that if the principle of a capital gains tax is to be written into our legislation, it should be written in on a proper basis.
My sixth and last heading has to do, again, with something which has been a theme of a great many of the speeches made during this debate, namely, the unfairness of the government in the tax proposals it has set forth regarding co-operatives and credit unions. It has been a delight to some of us to hear many members speak about this, particularly those from the government side of the House. The case has been well made and I do not intend to repeat it in terms of details or argument, but I do urge the Minister of Finance (Mr. Benson) and the government to realize how strong is the feeling about this matter among the many hundreds of thousands of Canadians who are members of co-operatives and credit unions. The clauses of the bill which deal with this matter are quite offensive to many Canadians and I hope that when we get to these clauses something will be done about them.


Mr. Alkenbrack:: Where do you stand on that?


Stanley Howard Knowles: Where does the government stand, is the real point.


Eldon Mattison Woolliams: We want to hear where you stand.


Stanley Howard Knowles: I stand in favour of the position taken by the co-operatives and credit unions.


Eldon Mattison Woolliams: You stand where the votes are, Stanley.
October 12, 1971


Stanley Howard Knowles: Mr. Speaker, I promised myself, even if I did not promise the House, that my remarks during this debate would be brief and that I would try to set them out in tabular form. I am going to impose upon the house for another 90 seconds to list again the six areas about which I have been talking.
They are, the need for a higher exemption level, a better deal in respect of workers' expenses, and improvements so far as old age pensioners are concerned. They include, also, the removal of the clauses which would repeal estate taxes, putting capital gains on the same basis as any other tax, namely that a dollar is a dollar and, finally, giving a decent break to the co-operatives and credit unions of this country. The government's weaknesses on these points make this a bill which is not satisfactory, but if these six points could be met the bill might then be one which we could consider.


Mr. Deputy Speaker:: Is the House ready for the question?


Some hon. Members:: Carried.


Some hon. Members:: On division.


[Stage Direction]
Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Honey in the chair.
Edgar John Benson: Mr. Chairman, in discussions with hon. members opposite there seems to be agreement that we not proceed with the clause by clause discussion this evening. Perhaps if we start that tomorrow right after orders of the day we can clear it up by tomorrow night.


Some hon. Members:: Oh, oh!


Edgar John Benson: I doubt that very much. However, there does seem to be agreement among members opposite that at this point we proceed with the next order of business and take the clause by clause discussion of this bill tomorrow or in accordance with an agreement reached by the House leaders. At that time I will make a statement and discuss possible amendments to the legislation.


Gerald William Baldwin: Mr. Chairman, I think that is one of the few excellent suggestions to come from the minister.


Some hon. Members:: Oh, oh!


Gerald William Baldwin: We will go along with it, but I should like to make one suggestion. During the weeks and weeks of discussion we will have on this bill in committee of the whole, when some good points are made by hon. members on this side, as happens from time to time, we hope the government House leader will consider dealing with some of the good pieces of legislation on the order paper so the country may have the opportunity of seeing them.


Edgar John Benson: Mr. Chairman, in brief reply to that suggestion I can say I understand my hon. friend's view, that he does not want to deal with this piece of legislation but wants to get on to something else.


Stanley Howard Knowles: Mr. Chairman, I am wondering if I might make a request which could perhaps be met before we resume the discussion tomorrow. As far as I can ascertain, copies of Bill C-259 are not
Employment Support Bill
on our files here in the chamber. If every member of the House of Commons has to carry that book down from upstairs we will all be exhausted before we start. I wonder if arrangements could be made to get a government truck or something in order to make sure there is a copy of the bill in every member's desk before we proceed with it tomorrow.


Russell Clayton Honey: I understand that will be the case and that hon. members will have a copy available. Hon. members have heard the suggestion. Shall I rise, report progress and request leave to sit again at the next sitting of the House?


Some hon. Members:: Agreed.
Progress reported.



EMPLOYMENT SUPPORT BILL


Allan Joseph MacEachen: the second reading of and concurrence in amendments made by the Senate to Bill C-262, to support employment in Canada by mitigating the disruptive effect on Canadian industry of the imposition of foreign import surtaxes or other actions of a like effect.


[Stage Direction]
Motion agreed to, amendments read the second time and concurred in.
Stanley Howard Knowles: Ten o'clock.



BUSINESS OF THE HOUSE

Allan Joseph MacEachen: Mr. Speaker, I understand that discussions have taken place. Because of the desire not to begin the committee stage of the tax bill tonight, because I have not really given the House any advance notice about any other items and, further, because the item upon which I had intended to make a time allocation is about to depart from our midst, I would like merely to advise hon. members that it has not been possible to secure an adjournment of the court action which is to commence tomorrow in Regina. In view of the reluctance of the government- indeed, the refusal of the government-to involve the court in this issue, the government has decided not to proceed further with the grain stabilization bill, and it will make payments under the Temporary Wheat Reserves Act.


Some hon. Members:: Hear, hear!


Allan Joseph MacEachen: Tomorrow we shall begin the committee stage of the tax bill. If it is the wish of the House, I would be happy to note the unhappy departure from our midst of the grain stabilization bill by calling it ten o'clock.


John (Jack) Henry Horner: Agreed.

October 12, 1971
Proceedings on Adjournment Motion


Gerald William Baldwin: I just want to say we would be happy to provide the usual memorial service and headstone.


Mr. Speaker:: Is it the wish of the House that we move to the adjournment proceedings at this time?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Laniel):: Order. I invite hon. members who wish to leave the House to do so as quickly as possible so that we may proceed with the adjournment debate and allow the hon. member for Compton (Mr. Latulippe) to present his point.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Henry P. Latulippe: Mr. Speaker, on June 16, 1971, I put a question to the Minister of Finance (Mr. Benson) regarding some tax injustice, more precisely in order to find out, and I quote:
-whether he approves the negative tax formula suggested by many authorities as a method to assure a better distribution of the purchasing power? Does the minister believe that it would be a desirable means to stimulate the economy?
The Chair then stated that my question invited the Prime Minister (Mr. Trudeau) or the Minister of Finance to give an opinion, and so we did not hear the view of the minister. So, I invite him tonight to tell the public what he thinks of that.
The negative tax is a return which would benefit those who earn less than $3,000 annually.
Mr. Speaker, we all know of course that a tax policy is required to serve first the interests of Canadians and to provide each individual with a vital minimum, as a birthright.
I think it is a reversal of the roles that is needed. It is merely a question of distribution; we should distribut the surplus of our national product, which was of $91 billion in 1971, while consumption was only of $50 billion, which gives a difference of $41 billion.
So, we must give back to the country its national balance and its economic independence. The whole world is asking for economic balance and not equality. Revolutionary experiences carried out in the name of equality have all failed.
Mr. Speaker, there is no economic future with the present system. It is our whole way of thinking that must be changed, so that our governments will not remain deaf to the representations of the people who tell us again and again that what they need is food, clothing, housing and education.
Would a negative tax provide the essential and take these factors into account? I doubt it. But I must admit that it would bring a degree of relief to the poorer classes.

Above all, it would be a recognition of the importance of a number of human beings.
I think, Mr. Speaker, that we should analyze the causes of all these difficulties which are, after all, only administrative and economic problems which call for the use of the mental faculties of the ruling class.
Mr. Speaker, every individual lives within his family and within society. Everyone does something for choice or for profit. I would say that on the one hand, there is love and on the other, interest. Let us stop believing that the two are necessarily opposed. There must be a way of reconciling one with the other.
Parliament consists of 264 members elected by the citizens of Canada under the Canada Elections Act. It is the responsibility of members to see that justice prevail in 1971 among the 22 million Canadians, according to the production of goods and services in that year.
It may be normal, when exercising supreme authority, that governments are inclined, with equal opportunities, to favour their friends, their constituents or members of their political party, but without prejudice of their love for other Canadians. Interest should not do away with love!
If the Prime Minister has any feelings for the 22 million Canadians who are subjected to the "supreme" authority he shares with the other 29 ministers and the 264 members, he will no doubt see to it that the monetary, economic and political mechanisms bring about a fair distribution of goods and services among these 22 million citizens, according to their essential needs, before someone piles up too large a share of this tremendous production, after having spent what he needed to live in affluence and not in luxury. That is simple and understandable!
If Parliament had the social attitude it should have, capital would automatically become social as well as labour. Credit would automatically become social in all its institutions, in every Canadian family.
The Canadian government makes sure every month that the 22 million citizens are well administered according to the national production, according to the administrative formula recognized by all managers: The revenue is equal to expenses and net profits.
Every Canadian must get a sufficient guaranteed income to provide for his essential expenses, and to allow for a certain margin for savings, profit and contingencies, according to the formula recognized by all-


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


Mr. Andre Ouellet (Parliamentary Secretary to the Minister of National Health and Welfare):: Mr. Speaker, this formula of negative taxation is one of the many methods that this goverhnment could use to achieve a more equitable redistribution of incomes in favour of those groups with low incomes.
The federal government has developed a whole series of programmes to make direct payments or to provide certain services to the Canadian population. I refer to all the social security measures that have been put forward by the various federal governments that have been in power in recent years. I am thinking particularly in terms of
October 12, 1971
COMMONS DEBATES______________________________
Proceedings on Adjournment Motion
unemployment insurance, medicare, hospital insurance, old age pensions, family allowances and so on. All those measures achieve a redistribution similar to that mentioned by the honourable member.
Of course, if he is talking about the love of the Right Honourable Prime Minister, he will find that all the measures that have been proposed recently by him and his ministers prove his deep love for the Canadian people.
If the government ever sets out to propose a formula of negative taxation, it will do so in the House in an appropriate form and manner and according to the usual method.



AGRICULTURE-POTATOES-ASSURANCE TO PRODUCERS RESPECTING SEED EXPORT MARKET

David Samuel Horne MacDonald: Mr. Speaker, I rise this evening to deal again with a matter of great importance to the potato producers of this country but primarily, I think, to the seed producers of Prince Edward Island and New Brunswick. As is well known, many aspects of agriculture in this country have been severely affected by two recent economic decisions, one taken by this country and one taken by the U.S.
The first was the effect of the floating of the dollar, which had a very serious effect on our agricultural exports to the United States and in effect decreased the competitive advantage that our potatoes and other agricultural products enjoyed in the U.S. Then, of course, more recently we were faced with the imposition of the 10 per cent surtax which has created a very serious problem, as has been acknowledged on a number of occasions by the Minister of Agriculture (Mr. Olson) in this House, beginning the first week of the reconvened session in early September and as late as this afternoon when the minister made reference to the special attention that was being given to the turkey producers of Canada.
I think that many members of this House, and certainly many thousands of potato growers, have been most unsatisfied with the answers given to date by the Minister of Agriculture with respect to what forms of assistance might be forthcoming for those faced with very serious prohibitions on the entry of their products to the U.S. and the amount of return they could expect for that product. The hon. member for Malpeque (Mr. MacLean), myself, the hon. member for Joliette (Mr. La Salle) and others have attempted from time to time to obtain a specific answer from the Minister of Agriculture with respect to what forms of assistance will be forthcoming.
The minister has talked in general terms about the agricultural stabilization board, suggesting that under the act assistance would be forthcoming. There have been at least two meetings of which I am aware with the departmental officials and with the ministers of agriculture of New Brunswick and Prince Edward Island, but no clear statement has yet been brought forth as to the nature of the assistance that will be provided. The minister has indicated that at the appropriate time he will make a statement indicating what assistance will be available in a more specific way, and yet assistance is required almost immediately.
We know that the potato harvest in New Brunswick is almost completed. The potato harvest in Prince Edward Island is more than half way completed. Our harvest comes a little later because of a later frost period and I am informed by the potato shippers in P.E.I. that we have already loaded ships for export, that other ships are being loaded at present and these are primarily destined for U.S. markets. I am also informed that if we do not have an indication within the next week or so of the kind of assistance that the minister will bring forward, markets will be closed off for hundreds of thousands of hundredweights of potatoes that we would normally ship into the seed importing areas of Florida, Puerto Rico and the New England states.
It is a well known fact that most potato producers produce at least 15 per cent to 20 per cent above and beyond that which they can hold in their potato-holding facilities. In other words, these are potatoes that must clear the market before the heavy frost sets in in the middle or late November. Therefore, if potato producers do not have the luxury of holding their product for an indefinite period of time, as might be done with other kinds of produce, they are forced on to market and they must have an assurance immediately as to the kind of assistance that might be provided.
I should like to mention (wo things that might be taken into consideration. One is tne possibility of freight assistance or subsidy that might enable new export markets to be opened up as an alternative to the present U.S. ones which are becoming increasingly difficult for us. I realize that we would have to take into account the necessity of facing certain areas where there might be retaliation through increased tariffs, but I think certainly the Department of Industry, Trade and Commerce and the Department of Agriculture should be examining the proposal.
Second, if in the employment support bill we have adopted the principle of two-thirds reimbursement for industries directly affected by the Nixon surtax, the same principle could apply to agriculture, namely, a two-thirds reimbursement could at least be given as assistance in direct wages to those involved at the point of assembly, to those involved with stevedoring and the assembling of potato shipments for export. The nature of that program would not open up retaliatory measures on the part of the U.S. and would ensure that the present producers, growers, distributors and shippers would not be adversely affected or be in very great danger of losing their markets entirely.
I trust that the Minister of Agriculture or his representative can give some clear assurance this evening that action of this or a similar nature will be taken within the next few days so that the already serious situation of our potato growers will not be worsened.


Mr. Marcel Lessard (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, the hon. member for Egmont (Mr. MacDonald) has asked, with respect to the seed potato export market to the United States, if the minister "is not able to offer some indication to the many producers in these two provinces, as to the extent of any assurance". In reply the minister stated that such assurances had been given in a very clear fashion. Indeed, Mr. _________________________COMMONS DEBATES
Proceedings on Adjournment Motion
October 12, 1971
Speaker, if I quote from Hansard for September 7, at page 7588 the minister said:
I give an undertaking tonight that we are going to look at these on a commodity by commodity basis and utilize the Agricultural Stabilization Board to assist in those areas which are severely hurt.
I doubt that it is possible to be more clear. Further, in his statement to the House on October 1, 1971, the minister stated that the Agricultural Stabilization Board and the Agricultural Products Board have been authorized to come forward with individual commodity programs designed to help producers adversely affected by the surtax.
With respect to potatoes, both seed and table-because they are treated the same under the surtax provisions- discussions have been taking place between the board and agricultural officials of New Brunswick and Prince Edward Island and the minister will be pleased to announce in due course, in the usual manner, any program that develops from these talks.



AIR TRANSPORT-ESTABLISHMENT OF NORDAIR AS REGIONAL CARRIER FOR NORTHEASTERN ONTARIO AND NORTHWESTERN QUEBEC-ONTARIO APPLICATION FOR REGIONAL CHARTER

William Arnold Peters: Mr. Speaker, on September 29, as recorded at page 8278 of Hansard, I asked the Minister of Transport (Mr. Jamieson) the following question:
Under our national air policy as it involves regional carriers, have negotiations been finalized regarding Nordair as the regional carrier for northeastern Ontario and northwestern Quebec?
The minister replied:
Not that I know of, Mr. Speaker. There have been discussions between Air Canada and Nordair with respect to possible exchange or co-operation for certain air routes but to the moment at least, and so far as I know, no conclusions have been reached.
I then asked:
Has a charter been sought from the Canadian Transport Commission by the Ontario government through its commercial carrier, White River Air Service? If so, what role in the regional transportation system is being filled by this application?
The reason I asked this question, Mr. Speaker, is that in northern Ontario we are being told that Air Canada will not be able to service both the area of northeastern Ontario and northwestern Quebec for the very simple reason that it has not any planes on order that will operate economically in that area. The applications that have been made have both been approved by the Air Transport Committee of the Canadian Transport Commission. They were made on September 30 and were in regard to Voya-geur Airways Limited and White River Air Services, operating under the name of norOntair.
The Ontario government has got into the regional air service and is operating a circular route that starts in Timmins, or Sault Ste Marie, and covers the towns of Sault Ste Marie, Timmins, Earlton and Sudbury, returning to Sault Ste Marie. This has since been changed and the flights will originate in Sudbury. This airline is operating two aircraft owned by the Ontario government and leased for the sum of $1, and obviously it is going to play a role in the regional air service.

The Voyageur application, Mr. Speaker, is from Ottawa to North Bay and return, and also is going to play a role. But these two services that are operating in the region do not make any connection with each other, and while it is possible to get on the airline in Earlton and go to Sudbury, if you are coming to Ottawa it is necessary to get from Sudbury to North Bay to make a connection with the other airline. This is the whole problem and it is the problem the Minister of Transport outlined on October 20, 1966, and again on August 15, 1969, when he said that in this case the organization of regional service in the area might require the consideration of route service between North Bay and Ottawa and consequently have an effect on the viability'of the service authorized by this decision.
We in northern Ontario, Mr. Speaker, are not interested in getting on an airplane and going around in a circle. We want to get on an airplane at any point in northern Ontario and make connection with the national service in Canada, that is Air Canada, with its lines running east and west, or Canadian Pacific also running east and west. Anything less is already being handled by small charter aircraft in the area. I think it involves a decision by the Minister of Transport to inform the Canadian Transport Commission as to the integration of the various services chartered by the Canadian Transport Commission, to integrate service that will provide the opportunity of travelling from one place in northern Ontario to either the major centres of Montreal, Ottawa or Toronto. Any carrier that has not a direct connection to those major points is not serving the needs of the region of northeastern Ontario nor, I presume, northwestern Quebec.
So I ask the question, Mr. Speaker, because I think it should be brought to the attention of the Minister of Transport that the people in northern Ontario are very concerned that he has not insisted that Air Canada buy a 20-passenger aircraft for this type of service. We in northern Ontario are very much in favour of Air Canada being able to continue the service that we receive and, what is more, in improving that service.
I believe that the more flights a day there are, the more passengers will travel on the airline. To run a passenger aircraft out of my area, leaving in the middle of the day and getting into Toronto or Montreal late in the afternoon does not serve the needs of businessmen. Most businessmen therefore drive. I suggest if we are to charter commercial flights within this region nothing can be served by having them go around like the Ontario government service, in a circle, making no connections with anything, and in fact just moving from my area about 12 businessmen who have an interest in travelling through northeastern Ontario and getting to all the major points.
It seems to me that the Minister of Transport in announcing regional policy has an obligation to see that the Canadian Transport Commission puts this policy into effect. While I am in agreement that they have reserved the right for Nordair to get into the area, we have a bigger obligation and that is not to ask an unknown regional carrier to take on an additional responsibility. We as a Parliament have a responsibility to insist that Air Canada buy the type of aircraft that will enable them to service the regional areas in which they now operate, and continue to do so. Anything less will be a dereliction of duty on the part of the Minister of Transport.
October 12, 1971


Mr. Gerard Duquet (Parliamentary Secretary to Minister of Transport):: Mr. Speaker, on the subject of negotiations between Air Canada and Nordair, and in answer to the questions asked by the hon. member for Timiskaming (Mr. Peters) on September 29, the minister answered that discussions had reached no conclusion at that time. I must say that as far as I know, the situation is still the same and no decisions have been reached.
The hon. member also talked of his concern about the development of air service to northeastern Ontario. I am sure he has now read the decision of the Air Transport Committee of the Canadian Transport Commission on September 30. The decision was in favour of additional air service to service the points of Sudbury, Sault Ste Marie, Timmins and Earlton. The application, as he mentioned in his question to the Minister of Transport (Mr. Proceedings on Adjournment Motion
Jamieson) was made by White River Air Services, Limited.
Briefly, the service in question was considered as an experimental service for a period of three years and there were additional limitations spelled out to the carrier to protect the public interest as well as the competitive position of other air carriers in this region. There also was direct reference to the regional air carrier policy and its application to this service. The proposed service is third level in nature and supplements the existing service in this region.
Mr. Speaker, the hon. member has made some interesting points which I will be glad to bring to the attention of the Minister of Transport. I will also provide the hon. member with a copy of the decision which I brought with me.
Motion agreed to and the House adjourned at 9.34 p.m.

Wednesday. October 13, 1971