1971-09-14

PRIVILEGE


Mr. E. F. Whelan (Essex):: Mr. Speaker, I rise today on a question of privilege that I believe affects every member of the House. My point of privilege has arisen because of a newspaper report that appeared in the Vancouver Sun datelined Friday, September 10, 1971 and attributed to the Sun's Ottawa bureau.
This report is one based on pure conjecture, perhaps mental telepathy, I suspect a bit of pure political partisanship and just plain poor reporting which may have been contributed to by hearing difficulties. The effect of the report reflects adversely on all members of the House and on me in particular. It has also given Sun readers a false version of what took place in the House.
This report states that I am in favour of the United States government setting off the atomic blast scheduled for Amchitka.


Some hon. Members:: Shame!


Eugene Whelan: It also claims that I was the only member who said "No" to the motion proposed by the member for Fraser Valley West (Mr. Rose) that this blast be condemned. Hansard for September 10, page 7701, shows this statement to be false. According to Hansard, at that page these words are recorded:


Some hon. Members:: Nay.
This is a clear indication that other members were opposed to what was proposed.
The Sun report also states that I did not recognize that the words used by the hon. member for Fraser Valley West in his motion were those of the Minister of the Environment (Mr. Davis) for Canada. This is the very reason, Mr. Speaker, that I said no. I did recognize that the hon. member for Fraser Valley West was plagiarizing the minister's brilliant speech for his own cheap political purposes.


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. I suggest to the hon. member that perhaps very soon another member will have a question of privilege. The hon. member knows that he cannot impute motives. Certainly he has no right to make the statement he has just made. I suggest to him that unless there is something more than what he has presented to the House up to this point he has no question of privilege I would invite the hon. member to conclude his remarks as quickly as possible.


Eugene Whelan: Your Honour knows that I do not bother you very much in the House, but I will withdraw the word "cheap". I read the minister's speech, I watched him on television, and I told him personally that I agreed 100 per cent with his stand.
I appeal to you, Mr. Speaker, to protect ordinary members of the House from this type of cheap journalistic tactic that attributes to one member something that the record of the House does not substantiate. The record shows that more than one member said "Nay". This report has given false information to the good people of British Columbia, some of whom believe the story in the Sun and think that I am in favour of this horrible blast. The record shows that a number of members said no to the tactic of trying to get credit for something which the capable Minister of the Environment and the government have already put on the record.


Mr. Speaker:: Order, please. I doubt that hon. members would want this matter to be pursued further.



ROUTINE PROCEEDINGS


Hon. Otto E. Lang (Minister of Manpower and Immigration):: Mr. Speaker, pursuant to Standing Order 41(2) I wish to table copies in both official languages of a Canadian Wheat Board press release on the recent sale of Canadian wheat to the People's Republic of China.



LABOUR CONDITIONS


Mr. Edward Broadbent (Oshawa-Whitby):: Mr. Speaker, I rise under the provisions of Standing Order 43 which states that in cases of urgent and pressing necessity a motion may be moved 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 and farm implement industries. 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 maintenance of the employment safeguards in the Canada-U.S.

September 14, 1971
Inquiries of the Ministry
Automotive Agreement, this uncertainty having arisen because of the repeated refusal of the Minister of Industry, Trade and Commerce to give the House the necessary assurances, and because of the Prime Minister's reference yesterday to the possibility of the safeguards being negotiable, and because of yesterday's recommendation by a presidential commission that the American government continue to press for the removal of the safeguards, this House resolves that such safeguards be maintained.


Mr. Speaker:: Hon. members have heard the motion proposed by the hon. member for Oshawa-Whitby. Pursuant to the provisions of Standing Order 43, the motion cannot be put without the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: No.


Some hon. Members:: Agreed.


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



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the Prime Minister. In view of the fact that the FISP bill introduced by the Minister of National Health and Welfare yesterday uses a substantially different standard of family need in relation to allowances for dependent children than does the tax reform bill introduced by the Minister of Finance, is the government proposing to introduce amendments to the tax legislation in order that the standard in respect of family needs in the two bills will be consistent?


Right Hon. P. E. Trudeau (Prime Minister):: No, Mr. Speaker.



FAMILY INCOME SECURITY


Robert Lorne Stanfield: In
the statement released yesterday by the Minister of National Health and Welfare reference was made to the FISP bill as part of the fight against poverty. Will the Prime Minister tell the House when such a co-ordinated government plan to fight poverty will be made public in order to facilitate rational consideration of the bill introduced by the minister yesterday?


Pierre Elliott Trudeau: Mr. Speaker, the over-all approach was spelled out by the minister [Mr. Broadbent.J
almost a year ago in his white paper, and the details of it are coming out as evidenced now in the FISP legislation and earlier in the increase in the guaranteed income supplement.


Robert Lorne Stanfield: I was wondering whether that was what the minister had in mind. In view of the proposal the Prime Minister is reported to have received from the Prime Minister of Quebec to the effect that subject to conforming to certain national standards the provinces should be allowed to determine the levels of family allowance to be paid by the government of Canada within the respective provinces, is the government considering this proposal and does it intend to confer with all the provinces on this matter before we proceed with second reading of the FISP bill?


Pierre Elliott Trudeau: Mr. Speaker, the House will recall that when the Minister of National Health and Welfare was preparing the FISP bill he had discussions with all the provinces during a long period last winter and spring. Indeed, our proposals at the Victoria conference followed very shortly a meeting by the minister with his opposite numbers in the provinces and indicated that the federal government was prepared to spend an extra $150 million in an attempt to meet some of the improvements suggested by the various provinces. We feel we have done a great deal to meet provincial suggestions.
This letter from the premier of Quebec arrived a little more than a week ago and contains an interesting proposal, but it was not received in time for us to readjust our bill, examine the proposal in detail or consult, as the hon. member suggests, with other provinces which might be interested. For the time being, all I can say is we are glad Premier Bourassa is in this case at least spelling out in a little more detail what kind of co-operation he thinks is needed to perhaps obtain a constitutional agreement. So we are prepared to discuss this administrative arrangement with him, and until that has been done I cannot report to the House concerning whether or not we will accept it or whether or not we will discuss it with other provinces. It is an interesting proposal and we are looking at it.


Hon. Theogene Ricard (Saint-Hyacinthe):: Mr. Speaker, I should like to put a supplementary question to the Prime Minister.
Is the government considering the possibility of making the necessary amendments to meet the requirements of the Quebec government?


Pierre Elliott Trudeau: I think, Mr. Speaker, that I tried to answer that question when it was asked by the Leader of the Opposition, but I can repeat to the hon. member that the Quebec premier, when rejecting the Victoria agreement, had stated that he was doing so because he would like to elucidate the interpretation of the clauses under consideration concerning the constitution and social security. If his proposal is an indication that he would like to elucidate those clauses, we would be quite pleased and I repeat that we would be ready to discuss with him the possibility of amending our legislation in order to attain the proposed goals.
September 14, 1971



REQUEST FOR TABLING OF LETTER FROM PREMIER BOURASSA CONCERNING DETERMINATION OF PAYMENT LEVELS BY PROVINCE

Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I ask the Prime Minister if he would consider tabling the letter that this government received from Premier Bourassa, assuming of course that Premier Bou-rassa is willing for this to be done?


Pierre Elliott Trudeau: Yes, Mr. Speaker. I have no objection at all. I will communicate with Mr. Bourassa's office and if he is in agreement we will table the letter. He may by then have made it public himself, but I will certainly follow up that suggestion.



SOCIAL SECURITY


Mr. Lincoln M. Alexander (Hamilton West):: In view of the fact that the government seems to be moving into the area of humanitarianism, as leaked by the Prime Minister the other day, is the government now going to bring in legislation to provide unemployment insurance for the self-employed and to provide for automatic cost of living escalators in federal social security programs?



THE CANADIAN ECONOMY


Lincoln MacCauley Alexander: In view of the concern that has been registered by people in Canada, particularly with regard to the United States DISC program and the 10 per cent surcharge, is the Prime Minister going to make a realistic statement concerning the state of the economy with special emphasis on the target for employment this year?


Pierre Elliott Trudeau: I will consider that very helpful suggestion, Mr. Speaker.



CANADA ELECTIONS ACT


Mr. Les Benjamin (Regina-Lake Centre):: Mr. Speaker, I should like to direct a question to the government House leader. In view of the fact that the report of the Special Committee on Election Expenses was tabled in the House on June 4, is legislation now being prepared by the government to amend sections 62 and 63 of the Canada Elections Act and is the government going to bring in new legislation pertaining to election expenses this session?
Inquiries of the Ministry


Hon. Allan J. MacEachen (President of the Privy Council):: Mr. Speaker, I would like to give some consideration to the question.


Leslie Gordon Benjamin: In view of the fact that the Prime Minister is on the record as favouring control of election expenses, limitation of election expenses and reimbursement for election expenses from the federal treasury, would he give the assurance that legislation will be brought before the House to complete the amendment of the Canada Elections Act in time for and prior to the next federal election?


Pierre Elliott Trudeau: When the House leader is giving consideration to that question I will join him, Mr. Speaker.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is also to the House leader. Would he consult with the other House leaders to see whether arrangements could be made to shorten the period of debate so that this important legislation on election expenses might be passed before the next election takes place?


Mr. Speaker:: The hon. member's supplementary question is in the form of a suggestion to the minister.



FINANCE


Hon. Marcel Lambert (Edmonton West):: My question is to the Prime Minister. In light of the announcement today by the Common Market countries that they propose to increase the value of gold in an attempt to force a devaluation of the United States dollar, would the Prime Minister advise the House whether any instructions have been given to the Minister of Finance to act as a mediator between the two contending parties? Also, what is the attitude of Canada at this meeting of the Group to Ten that is to take place tomorrow in regard to this whole monetary question?


Pierre Elliott Trudeau: I am sure the Minister of Finance will attempt to report to the House on the point of view that he took when he returns from Europe next week.


Marcel Joseph Aimé Lambert: Is the Prime Minister giving us to understand that the Minister of Finance has a free hand, that he can solo in this effort, or has he received any instructions from the government as to Canada's attitude in regard to the effect on the Canadian currency of a forced devaluation of the U.S. dollar?


Pierre Elliott Trudeau: The hon. member will have to wait and see, Mr. Speaker.


Robert Lorne Stanfield: have a supplementary question to that of the hon. member for Edmonton West with regard to instructions to

September 14, 1971
Inquiries of the Ministry
the Minister of Finance respecting the position that Canada will take before the Group of Ten and the International Monetary Fund. Is the Prime Minister not prepared to recognize that this is a matter of importance and concern to all the people of Canada, and would he not consider it appropriate that the people of Canada should have some opportunity to express an opinion about the stand to which the responsible minister may commit this country at those meetings?


Pierre Elliott Trudeau: Yes, Mr. Speaker, we hope very much that the people of this country, and particularly the opposition, will take a stand.


Robert Lorne Stanfield: That is not an answer to my question, Mr. Speaker. I asked the Prime Minister a perfectly straightforward and polite question, if I may say so. Is it not in the public interest, in the Prime Minister's opinion, that the people of this country should know in advance and have an opportunity to express an opinion in advance with respect to the position to which the government proposes to commit this country with regard to international exchange rates and the whole international exchange system?


Pierre Elliott Trudeau: No, Mr. Speaker, I do not think it is a very serious nor constructive proposal unless the Leader of the Opposition is suggesting that we debate in advance the whole range of positions which will be taken by the various members of the Group of Ten and all the different hypotheses which would lead our Minister of Finance to give different answers. I think the suggestion is completely unrealistic; it is not possible for the Minister of Finance to state before leaving exactly what he will do and to have the opposition debate it and have the country give its opinion on it.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: Is it the view of the Prime Minister that the government knows best and that the rest of us have to be stuck with whatever it commits us to?


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. I suggest to hon. members that we are getting into a debate at this point. I gather there are a number of members seeking the floor for the purpose of asking supplementaries. We might have two or three supplementaries and then go on to the next subject.



MAINTENANCE OF CANADIAN DOLLAR BELOW PAR WITH UNITED STATES DOLLAR

Mr. David MacDonald (Egmont):: I have a supplementary question for the Prime Minister. As the government earlier committed itself to a Canadian dollar that was neither unrealistically high nor unrealistically low, is the government now prepared to take whatever steps are necessary to keep our dollar below par with the United States dollar?


Pierre Elliott Trudeau: I do not
admit the premises of the question, Mr. Speaker.



MAINTENANCE OF CANADIAN DOLLAR BELOW PAR WITH UNITED STATES DOLLAR-REPRESENTATIONS BY MINISTER TO GROUP OF TEN

['Order, please. We will attempt to go to another subject. The hon. member for Vancouver East.']
Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, since the Prime Minister was kind enough to admit that this is a matter of concern to all Canadians, and since he is not going to inform us of the detailed plans, objectives and strategy of the Minister of Finance, can he tell the House in a general way whether the Minister of Finance has the objective of maintaining the Canadian dollar under the United States dollar and whether he will be trying to enlist the support of the European Economic Community and the Group of Ten in this regard before the International Monetary Fund meeting?


Pierre Elliott Trudeau: Mr. Speaker, I believe that not so many days ago the Minister of Finance himself said in the House that if he had the choice he would like to see the Canadian dollar rate lower rather than higher but that he may not be able to control all the monetary forces at work. He has stated his position which is that of the government.



Mr. David Lewis (York South):: Mr. Speaker, in view of reports that President Nixon is reconsidering the possibility of a nuclear test at Amchitka, against which the Canadian government has expressed itself on many occasions, and in view of suggestions in Washington that a further representation by Canada may have an important influence in President Nixon's consideration of the matter, would the Prime Minister make a personal approach to the President of the United States asking him to cancel the blast which is scheduled for some time next month?


Pierre Elliott Trudeau: Mr. Speaker, I attempted to answer this question last week. I said I would not rule out that possibility. If I felt it was necessary to do so I would take my cap in hand-


Some hon. Members:: Oh, oh!


Pierre Elliott Trudeau: -and go to the President of the United States.


David Lewis: Mr. Speaker, I would hope that this time the Prime Minister would leave his cap at home. One can make a trip to Washington, or a telephone call, without cap in hand.


Some hon. Members:: Oh, oh!


David Lewis: Mr. Speaker, hon. members opposite should have learned by now that shouting will not get them anywhere.


Mr. Speaker:: Order, please. Would the hon. member kindly ask his question.
September 14, 1971


David Lewis: Mr. Speaker, I would like to ask the Prime Minister a supplementary question. In light of the answer given by the Secretary of State for External Affairs on September 9 to the effect that his department has not yet definitely decided whether further representations should be made, in view of further reports from Washington which no doubt have been drawn to his attention, and in view of the fact that time is of the essence since the blast is scheduled for some time next month, could the Prime Minister not assure the House today that he will make such further representations personally to the President of the United States?


Pierre Elliott Trudeau: The answer is the same, Mr. Speaker. I dealt with this before. The hon. member is quite right in congratulating the government for having made representations at various times to the United States government on this matter. I do not know to what reports from Washington the hon. member is referring. If he can tell me what he is alluding to, and if it gives me additional cause to want to speak to the President, I will certainly consider that very seriously.


Mr. S. Perry Ryan (Spadina):: Mr. Speaker, I wish to direct a supplementary question to the Prime Minister. As the Soviet Union is much closer to Amchitka, the site of the intended undergrounded nuclear blast, has any objection been made by the Soviet Union to this test?


John Patrick (Pat) Nowlan: Mr. Speaker, I wish to direct a supplementary question to the Prime Minister. Since there are a number of very important issues involving Canada and the United States where direct consultation between the Prime Minister and the President might produce constructive results, could the Prime Minister inform the House whether it is pride, prejudice or policy that prevents him from undertaking the 350-mile trip to Washington after his travels round the world-


Mr. Speaker:: Order, please. This exchange has not produced very much up to now. I wonder whether there should be further supplementaries. The Chair will recognize the hon. member for Gander-Twillingate on a further supplementary question and then we will go to another subject.


Mr. John Lundrigan (Gander-Twillingate):: Mr. Speaker, the Prime Minister just threatened that he would at least consider making representations to the President of the United States. I wonder whether he could assure the House that, in order to avoid any possibility of such a blast, he will not make personal representations to the President of the United States?


Mr. Speaker:: Order, please. We will attempt to go to another subject. The hon. member for Vancouver East.



NATIONAL DEFENCE


Mr. Harold E. Winch (Vancouver East):: In the absence of the Minister of National Defence, who I understand is in
Inquiries of the Ministry
the United Kingdom, I should like to direct a question to the Prime Minister. In order to set speculation at rest, will the Prime Minister tell the House when it is intended to make public the policy and details of the government's plan to proceed with a winter works program by the Department of National Defence of a similar nature to the summer employment project?


Pierre Elliott Trudeau: Mr. Speaker, I have not heard of any such plan so I cannot tell when it is intended to make it public.



WITHHOLDING BY GOVERNMENT OF PAYMENTS UNDER TEMPORARY WHEAT RESERVES ACT

Mr. Don Mazankowski (Vegreville):: Mr. Speaker, I should like to direct a question to the Prime Minister. In light of the fact that the Temporary Wheat Reserves Act was not repealed by Parliament prior to July 31, 1971, and as the Canadian Wheat Board, in the normal manner, has presented numerous invoices to the Canadian government for payment under the provisions of that act, can the Prime Minister advise the House why these payments have not been made?


Otto Emil Lang: Mr. Speaker, the answer to this question appears in Hansard in answer to written questions.


Donald Frank Mazankowski: Is it the view of the Prime Minister that the government is within the confines of the law in refusing to observe its obligations under the Temporary Wheat Reserves Act?


Mr. Speaker:: Order, please. The hon. member will realize that he is asking a member of the government to express a legal opinion. In those terms the question is not in order.



AUDITOR GENERAL


Mr. A. D. Hales (Wellington):: I should like to direct my question to the President of the Treasury Board. Before doing so, however, I should think members of the House would like to join me in extending congratulations and best wishes to our Auditor General who has just been elected president of the Eighth International Congress of Supreme Audit Institutions of the World. Can the President of the Treasury Board advise the House what progress has been made toward establishing a benchmark for the employees of the Auditor General's office?


Hon. C. M. Drury (President of the Treasury Board):: Mr. Speaker, I think there is continuing discussion, and a report has been made to the Public Accounts Committee of which the hon. member is chairman. So far all we have

September 14, 1971
Inquiries of the Ministry
succeeded in doing is making arrangements for increasing the salary of the Auditor General himself.



INCOME TAX


Mr. Robert Muir (Cape Breton-The Sydneys):: My question is for the Prime Minister, Mr. Speaker. In light of the information that leaders of the co-operative movement in Canada at their recent meeting with the Minister of Finance voiced strong opposition to Bill C-259 as it will affect co-operatives and in view of the fact that they apparently did not meet with too much success, would the Prime Minister be prepared to meet with representatives of the Co-operative Union of Canada and Le Conseil Canadien de la Co-operation to discuss the matter further?


Pierre Elliott Trudeau: I would first have to seek a report on the meeting from the Minister of Finance, Mr. Speaker.


Robert Muir: I wonder whether the right hon. gentleman is really aware of the disastrous effects that the passage of the bill as it now reads will have on co-operatives and their future activities in this country?



PENITENTIARIES


Mr. Frank Howard (Skeena):: I should like to direct a question to the Solicitor General. In light of the situation at Millhaven where there is a virtual lack of recreational opportunities and work opportunities in the shop structure, would the minister look into the situation to see whether the frustration and anger developing among inmates because of these deficiencies can be dealt with?


Hon. Jean-Pierre Goyer (Solicitor General):: Mr. Speaker, I had the opportunity of visiting Millhaven this summer and while I noted that certain improvements were required, the institution in general is starting to operate in fairly normal fashion. We hope that the institution will be completely back to normal in the near future.



MILLHAVEN-REQUEST FOR TABLING OF DIRECTIVE CONCERNING INMATE CORRESPONDENCE

Frank Howard: May I pose a supplementary question to the Solicitor General. Would he be prepared to table in the House so that everyone can see it the directive issued to inmates of Millhaven with respect to inmate correspondence, which seems to countervail what the minister said earlier about correspondence by inmates?


Jean-Pierre Goyer: I certainly do not accept this allegation, Mr. Speaker, but I will inquire and should the instructions not be in accordance with the directive given, we will certainly have the situation corrected.



NATIONAL PARKS


Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Minister of Indian Affairs and Northern Development. It arises from the long-term agreement between the government of Canada and the British government with respect to the use of the Suffield military base in Alberta for the purpose of training British troops. Does this mean that the government of Canada and particularly the minister's department have abandoned the long-term plans for the use of this area along with a similar area across the border in Saskatchewan as a typical prairie grassland national park?


Hon. Jean Chretien (Minister of Indian Affairs and Northern Development):: Mr. Speaker, I am not aware of this particular problem. I shall inquire and report to the House tomorrow.


Walter Gilbert Dinsdale: While the minister is investigating this matter, in view of the area's ecological importance and fame as the land "where the deer and the antelope play" would he consider the possibility of using the large area available at the Shilo Canadian Armed Forces Base?



ROYAL CANADIAN MOUNTED POLICE


Mr. Erik Nielsen (Yukon):: I have a question for the Solicitor General, Mr. Speaker. I should like to ask the minister what action the government has taken or will be taking with respect to the killing of Chief Ed Bird in the Northwest Territories by a member of the Royal Canadian Mounted Police?


Jean-Pierre Goyer: Mr. Speaker, in my view, that question should be directed to the Solicitor General who, in the circumstances, is the responsible minister. However, I believe the coroner's inquest is underway, and I feel that it would not be advisable for me to comment on the matter at this time.


Erik Nielsen: In view of the fact that the inquest has been completed, is it the intention of the government to

September 14, 1971

institute any further inquiry, particularly with respect to the involvement of a member of the RCMP coming under the minister's jurisdiction, in connection with this tragedy? Second, will it be the intention of the minister to table the report of the investigating officer of the RCMP so that members of the House may be informed of the full circumstances of this killing?


Jean-Pierre Goyer: Mr. Speaker, I feel that the report of the coroner, who is essentially responsible for the inquiry, must first be studied.



UNEMPLOYMENT INSURANCE


Mr. Donald Maclnnis (Cape Breton-East Richmond):: Mr. Speaker, my question covers two departments, those of the Minister of Labour and the Minister of Consumer and Corporate Affairs; therefore I shall address my question to the Prime Minister. Would the Prime Minister undertake to examine an advertisement for which the Canadian taxpayers' money is being used in which the government advertises the new unemployment insurance plan in these words: "Unemployment Insurance Benefits Went Up, Beginning June 27. And That Was Just The Beginning. It's The Start of Something Big. The Full Story Is In Our 'Guide To The New Unemployment Insurance-Information For Employees'." Will the Prime Minister investigate the truth of this advertisement and the reason why the Canadian taxpayers' dollars are being used for this nonsense when the effort of the government should be directed toward creating employment, not increasing unemployment?


Some hon. Members:: Hear, hear!



INCOME TAX


Mrs. Grace Maclnnis (Vancouver-Kingsway):: My question is directed to the Minister of National Revenue. In view of the fact that the income tax department permits a man to claim a $2,000 exemption for his wife on the basis of his statement that they live together while it refuses to allow a wife a similar claim in respect of her husband, does the department propose to move to wipe out this flagrant example of discrimination against the female sex?


Hon. Herb Gray (Minister of National Revenue):: Mr. Speaker, I will be happy to look into the hon. lady's question, but at first glance it appears to be a matter of tax policy and that is the responsibility of the Minister of Finance.
Inquiries of the Ministry


Donald MacInnis: May I ask the minister to look also into what proof a wife must produce before she can successfully claim a $2,000 exemption for supporting her husband?


Mr. Speaker:: Order, please. I suggest that the supplementary should be placed on the order paper.



IMMIGRATION


Mr. William Skoreyko (Edmonton East):: Mr. Speaker, may I ask the Minister of Manpower and Immigration if it is the intention of his department to grant political asylum to the 20-year old sailor, Serge Kourdakov, who jumped ship at Vancouver? If so, when can the House expect a statement in that connection?


Mr. Speaker:: According to my recollection this question was asked yesterday, but perhaps the minister might answer if he has further information.


Otto Emil Lang: Mr. Speaker, there is no further information, but I should like to comment on the particular manner of perhaps granting legal status to the Russian sailor concerned. It may not be in the form suggested by the hon. member. As I indicated yesterday, it will not be long before a conclusion is reached.



STATUS OF WOMEN


Francis Andrew Brewin: Mr. Speaker, my question is supplementary to the question asked by my colleague the hon. member for Vancouver-Kingsway, but it is addressed to the Minister of State for Urban Affairs. I understood he was committed to the important task of reviewing the recommendations of the Royal Commission on the Status of Women and their various proposals. Is he prepared to report to the House on the results of his review and to tell us what legislation, if any, is proposed to implement the report?


Hon. Robert K. Andras (Minister of State for Urban Affairs):: Mr. Speaker, I am not in a position yet to give the report the hon. member is seeking simply because some of the working committee reports have yet to come forward and they must be reviewed and consolidated. There is no attempt to delay. We want to get on with it.



POLLUTION


Mr. Raymond Rock (Lachine):: Mr. Speaker, I have a question for the Minister of the Environment. Do officials

September 14, 1971
Inquiries of the Ministry
of his department intend to take any legal action against the International Paper Company for dumping black fluid into the St. Maurice River, thus killing thousands of fish, especially as the Quebec minister in charge of the environment, Victor Goldbloom, stated recently that this is now a federal matter?


Hon. Jack Davis (Minister of the Environment):: Mr. Speaker, we will be holding discussions with the Quebec authorities in connection with this matter.



FISHERIES


Mr. James A. McGrath (St. John's East):: Mr. Speaker, I should like to ask the Minister of Fisheries-and I should like to point out for the benefit of Hansard that there is still a Minister of Fisheries-if he intends to accept administrative responsibility for the conference on conservation which is being organized by his colleague, the Minister of Transport and if not, why not?


John (Jack) Davis: Yes, Mr. Speaker, we will accept responsibility for organizing the conference.


James Aloysius McGrath: May I ask the Minister of Fisheries if the conference will take place in Ottawa, when the conference will take place and who will represent the government?


John (Jack) Davis: Mr. Speaker, invitations have already gone out. We expect the conference to be held in Ottawa within the next two weeks.



NORTHERN AFFAIRS


Mr. Randolph Harding (Kootenay West):: Mr. Speaker, I have a question for the Minister of Indian Affairs and Northern Development. Have the proposed Arctic land use regulations been completed and approved by your department?


Joseph Jacques Jean Chrétien: Would the hon. member repeat the question, please?


Randolph Harding: Have the proposed Arctic land use regulations been completed and approved by your department?


Mr. Speaker:: Order, please. The hon. member no doubt realizes that the question ought to be addressed through the Chair. This having been said, the minister might reply.


Joseph Jacques Jean Chrétien: Mr. Speaker, the regulations in question were published in the Canada Gazette in July. Those who were interested had six weeks to present a report and make comments. Those six weeks have now

expired. We are studying the recommendations, and I trust the regulations will become effective about the middle of October.


Randolph Harding: Will these regulations be reviewed by the Standing Committee on Indian Affairs and Northern Development before final adoption?


Joseph Jacques Jean Chrétien: Mr. Speaker, I am not a member of the committee. These rules have been published and they are official; if the members of the committee want to consider them, it is their privilege and not mine.


Erik Nielsen: Mr. Speaker, will the minister make available to the committee which is now studying these matters the representations that he has received as a result of the publication of the regulations in the Canada Gazette?


Joseph Jacques Jean Chrétien: Mr. Speaker, I do not know which of these representations could be forwarded. Some of them have been on a confidential basis. As for those which are of a public nature, I have no objection against making them available to the committee.



INQUIRY OF THE MINISTRY

Mr.  R. Gordon L. Fairweather@Fundy-Royal: Mr. Speaker, I have a question for the Prime Minister about bad dreams which apparently are now in the public domain. May I ask the right hon. gentleman if bad dreams have cabinet collegiality? In other words, is the cabinet permitted to watch the national news television broadcast and, if so, do 90 per cent of the cabinet share the Prime Minister's bad dreams-


Mr. Speaker:: Order, please.


Mr. Fairweather:: -after hearing unemployment
statistics?


Mr. Speaker:: Order, please.



BUSINESS OF THE HOUSE


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, may I direct a question to the government House leader in reference to the business of the House during the income tax debate. Has he given serious consideration to seeing that none of the standing committees of the House sit during the tax debate because of the difficulty and complexity of the bill that is under consideration and which will be considered further in the committee of the whole house?
September 14, 1971

Hon. Allan ]. MacEachen (President of the Privy Council): Mr. Speaker, it is my intention to ensure that while the committee of the whole is sitting and discussing the tax bill no meetings will be scheduled for standing or special committees. That is the general policy that I hope will be followed. There may have to be an emergency committee meeting, but that is not planned. I hope committees will meet in the mornings and that we will have the rest of the day for the bill.



ST. LAWRENCE SEAWAY EFFECT OF POSSIBLE INCREASE IN TOLLS ON FARMERS AND OTHERS-GOVERNMENT DECISION

Mr. R. R. Southam (Qu'Appelle-Moose Mountain):: Mr. Speaker, I had a question for the Minister of Transport but in his absence I should like to direct it to the Prime Minister. In view of the widespread concern in the farming community as well as in other sectors of the economy as to whether St. Lawrence Seaway tolls will be raised, and in view of the several inquiries put to the government in this regard before the summer recess, is the Prime Minister now in a position to advise the House just what the government's decision is in this most important matter and, if not, when can we expect a decision?


Hon. lames Richardson (Minister of Supply and Services):: Mr. Speaker, the Minister of Transport is in Vancouver on government business but he will be in the House for the question period tommorrow.


An hon. Member:: Is he organizing a fishing conference?



LABOUR CONDITIONS


John Howard Lundrigan: Mr. Speaker, I have a question for the Prime Minister. Can he say whether the government now has a full employment policy and indicate whether this policy is active in terms of Canadian potential and not reactive in terms of recent American behaviour, and whether there will be any announcement of the-


Mr. Speaker:: Order, please. It seems to me that the hon. member is asking or restating a question that was asked during the question period earlier today.


John Howard Lundrigan: On a point of order, Mr. Speaker, if we are to raise questions from day to day on an issue which is of such immense importance to the Canadian people, with half a million unemployed, then certainly we have to continue asking these questions if we are to obtain a reaction from the Prime Minister who refuses to answer them.


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!
Inquiries of the Ministry


Mr. Speaker:: Order, please. I suggest to the hon. member that it is hardly orderly procedure to ask the same question too often at least during the same question period. I am suggesting to the hon. member that the question was asked earlier in the question period.


Robert Lorne Stanfield: Try it tomorrow.


Mr. Speaker:: Perhaps we should go on and give another hon. member the opportunity to ask a question.


John Howard Lundrigan: Mr. Speaker, I am asking my question on the basis of domestically created unemployment. On that basis may I repeat the question. Has the government a full employment policy similar to that which the United States is obviously working toward today, and will that type of policy be announced clearly to the Canadian people at an early date so that we do not get completely sidetracked by the chronic and serious problems created by the recent United States action?


Pierre Elliott Trudeau: Mr. Speaker, I thank the hon. member for his suggestion.


John Howard Lundrigan: Mr. Speaker-


Mr. Speaker:: Order, please. I must ask the hon. member, on behalf of his colleagues in the House, for co-operation. Hon. members have been trying to ask questions from the beginning of the question period. When we are nearing the end of the question period I think we should try to limit supplementaries. At the same time I appreciate the importance of the matter raised by the hon. member. If he will ask his supplementary we will then go to the next question.


John Howard Lundrigan: Mr. Speaker, I recognize that you must rule regarding supplementaries, but what kind of government do we have or what kind of opposition do we have if we cannot raise further supplementaries?


Mr. Speaker:: Order, please.


John Howard Lundrigan: May I put my point of order?


Mr. Speaker:: I ask the hon. member to resume his seat. The hon. member for Regina East.


John Howard Lundrigan: Mr. Speaker, on a question of privilege-


Mr. Speaker:: The hon. member rises on a question of privilege.


John Howard Lundrigan: Yesterday I sat in my place as a member of the House of Commons for half an hour listening to the hon. member for Winnipeg somewhere or other speaking on a question of privilege directed to one unique point. I am now seeking to rise as a member with the responsibility of presenting the problems of half a million Canadians who are today unemployed. If I cannot be allowed additional supplementaries in an attempt to elicit a sane, sensible response from the Prime Minister-


Some hon. Members:: Hear, hear!


Some hon. Members:: Oh, oh!

September 14, 1971
Inquiries of the Ministry


Mr. Speaker:: Order, please. That is not a question of privilege. The hon. member asked a question and a supplementary. He is now seeking to ask a second supplementary. I suggest to him, with respect, that perhaps we should give other members an opportunity to ask questions.


Some hon. Members:: Hear, hear!


Mr. Speaker:: As far as the Chair is concerned there are 40 minutes available for oral questions. If hon. members wish to spend the entire period on one subject, that is their responsibility, not mine. I try to be as fair as possible and to give every member a chance to ask his question. That is the only reason I suggested, very honestly and in good faith, to the hon. member that we might go on to another question. I recognize the importance of the matter and the right of hon. members to ask supplementaries, but the rules are clear. Supplementaries are within the competence of the Chair; and when the Chair feels that we have reached a point when other members should be given a chance to ask questions, hon. members should try as far as possible to co-operate and give the Chair an opportunity to move on to another member.


John Howard Lundrigan: In co-operating with Your Honour I should like to ask the Prime Minister whether he will make a clear statement tomorrow on motions regarding the plan of action the government has in mind to react to the domestic unemployment situation so that hon. members will not be obliged to take up the time of the House day after day attempting to pursue this serious question involving half a million Canadians today and a million Canadians several months from now? Will the Prime Minister make a statement on motions tomorrow?


Pierre Elliott Trudeau: If I had an assurance from all hon. members of the opposition that should I make such a statement they would ask no further questions I would make it.


Some hon. Members:: Oh, oh!


An hon. Member:: Wouldn't you be happy!


Mr. Speaker:: Order, please. We have about reached the end of the question period.


John Howard Lundrigan: If the Prime Minister would show a little co-operation in the House-


Some hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. The hon. member for Regina East.


Donald MacInnis: On a question of privilege-


Mr. Speaker:: I apologize to the hon. member for Regina East. The hon. member for Cape Breton-East Richmond rises on a question of privilege.



UNEMPLOYMENT INSURANCE


Donald MacInnis: Mr. Speaker, my question of privilege relates to the original question I asked the Prime Minister concerning two departments of government, namely, the Department of Labour and the Department of Consumer and Corporate Affairs. Inasmuch as the minister responsible for the latter department is present in the House, I will ask him, now, since the Prime Minister will not take the responsibility, why he, as minister of the department concerned, allows false advertising to be carried at the taxpayers' expense with respect to the unemployment situation in this country?


Mr. Speaker:: Order, please. That is not a question of privilege. The hon. member is repeating the question he asked a few minutes ago. Perhaps he did not get the answer he wanted. Nevertheless, the question having been asked, the minister might now be allowed to answer and then I will again attempt to recognize the hon. member for Regina East.


Hon. Ron Basford (Minister of Consumer and Corporate Affairs):: Since he asked this question the first time the hon. member has failed to send me the advertisement about which he complains. If he will do that, I will be happy to examine it.


Donald MacInnis: Mr. Speaker, further on the question of privilege-


Mr. Speaker:: Order, please. The hon. member should recognize that this is not a question of privilege. He asked the minister a question and I allowed the minister to reply. Perhaps there might be communication between the minister and the hon. member so that they could consult on the matter raised by the hon. member for Cape Breton-East Richmond.


Pierre Elliott Trudeau: What are you trying to hide?


Donald MacInnis: On a question of privilege arising from the remarks now being made by the Prime Minister who insists on trying to hide something, I am not going to hide anything.


Mr. Speaker:: Order, please. We are certainly not progressing very effectively or efficiently this afternoon. We have already reached the end of the question period. I am somewhat grieved that we have not had a chance to recognize a number of hon. members. I am sure we can remedy this situation tomorrow when, with the consent of the House, perhaps some of those hon. members might be allowed to ask a few of their questions. I doubt whether there is a legitimate question of privilege in the matter raised by the hon. member for Cape Breton-East Richmond.


Donald MacInnis: Does a question of privilege not arise when a member of the government imputes motives to a member of the opposition? This is exactly what the Minister of Consumer and Corporate Affairs has done and
September 14, 1971

what the Prime Minister has just done with his remarks from his seat.


Mr. Speaker:: The hon. member is quite right. It is not in accordance with correct parliamentary practice to impute motives and I have pointed this out already today to hon. members who in my view were doing that. I agree with the hon. member in that respect. Again I will call on the hon. member for Regina East. Perhaps he might ask his question.



AGRICULTURE


Mr. John Burton (Regina East):: My question is very simple and uncontroversial and it is addressed to the Prime Minister. I should like to ask the Prime Minister whether he has received a letter from Mr. E. K. Turner, President of the Saskatchewan Wheat Pool, asking that further action be taken to assist agriculture in offsetting the impact of the United States import surcharge? Can the Prime Minister tell us what response he has given to that letter?


Pierre Elliott Trudeau: I have no memory of receiving such a letter. Had I received it I would have referred it to the minister responsible for the Wheat Board to advise me on a possible answer.


John Stratford Burton: May I ask the Prime Minister whether the government has considered any further special measures to bring before Parliament to assist agriculture in offsetting the effects of the situation in which it now finds itself as a result of the United States economic measures?


Pierre Elliott Trudeau: The Minister of Agriculture in his speech on Bill C-262 indicated what the government proposes to do.


Mr. Speaker:: Orders of the day.


Donald MacInnis: I rise on a question of privilege.


Mr. Speaker:: The hon. member will have to find a new question of privilege because I have already ruled there is no question of privilege before us. The question period has expired, but I recognize that we are going to spend more time on a question of privilege. The hon. member has the floor.


Some hon. Members:: Oh, oh!


Donald MacInnis: My question of privilege arises from the fact that the government has advertised false information regarding the unemployment picture in this country. I would ask the Minister of Consumer and Corporate Affairs, as head of that department, whether it is not his duty to safeguard the interests of the Canadian public and the Canadian taxpayer by preventing money being wrongly spent by the government.


Mr. Speaker:: Order, please. I suggest to all hon. members that that is not a question of privilege. It is a matter
Income Tax Act
of debate between the minister and the hon. member and I think he should not pursue the matter further. I have already called orders of the day. In any event-


Donald MacInnis: Once more, on a question of privilege, I do not intend to stand here and listen to snide remarks from that minister who is failing to carry out the duties imposed upon him by the government.


Mr. Speaker:: Orders of the Day.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Monday, September 13, 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 consequent upon the amendments to that act be read the second time and referred to the committee of the whole, and the amendment thereto of Mr. Lambert (Edmonton West) (p. 7763).
Robert Lorne Stanfield: Mr. Speaker, it was as long ago as September 7, 1969 that the present government, with a great flourish of trumpets, tabled the white paper on tax reform. It was on November 28, some three weeks later, that the Minister of Finance (Mr. Benson) rose in this House to present the white paper on behalf of the government and to move its reference to the appropriate committee.
The minister said then that the white paper was not binding upon the government and that if anyone had any better suggestions to make those suggestions would be taken into consideration. But it quickly became apparent that the minister did not really believe any basic changes were needed. In fact, it was not even necessary to wait until he had reacted with hurt and astonishment to the first criticisms. In his opening speech, the minister let his mask of neutrality slip when he said, and I quote him:
We in government believe that the system proposed is a good one. As I said, it is being put forward as a proposal for discussion, to be brought into study whereby it will be accepted by Canadians as being a good tax system.
May I repeat the last phrase "to be brought into study whereby it will be accepted by Canadians as being a good tax system". What that means, if it means anything, is that Canadians would be given the right, as far as the government was then concerned, first to study the white paper and then to adopt it. The government may not have felt bound by the white paper, but it was clear from the outset that the Minister of Finance was, psychologically at least, very much bound up with its proposals. It was his baby and he was not about to give it up.
You may remember, Mr. Speaker, that the minister told us at that time that this was a fight between ordinary Canadians and big business, that it was a crusade, that it was to be a march to victory. It was an advance, however, that was quickly halted, then turned into a retreat and

September 14, 1971
Income Tax Act
finally a rout. The final act as far as the white paper and its sponsors were concerned took place on June 18 last when the minister, his tail set very firmly between his legs, stood up in this House to present a tax reform package whose closest relationship to the white paper was the fact that it was being introduced by the same man, a man who had grown older and perhaps somewhat wiser in the interval.
That was a sour defeat for this government, but it was at least a partial victory for the people of Canada. It was a defeat for this government at the hands of many people and not at the hands of big business, in spite of the minister's original claims. It was a defeat at the hands of small businessmen. It was a defeat at the hands of ordinary taxpayers who realized that they were to be victimized by hidden tax increases amounting to hundreds of millions of dollars. It was a defeat at the hands of homeowners and those who want to own homes in the future.
On the other hand, it was a partial victory for common-sense. It was a partial victory for the Canadian economy. It was some kind of victory for just about everybody except for the handful of men who temporarily form the government of this country.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: It was a victory, too, for the Conservative opposition.


Some hon. Members:: Oh, oh.


Mr. Mahoney:: This is the funny part.


Robert Lorne Stanfield: Hon. members opposite do not like that very much, Mr. Speaker. From the very start, we attacked many of the white paper proposals for their absence of humanity and lack of realism. We attacked them for their discouragement of incentive and their assault on investment in Canada by Canadians, and we forced the government to retreat. It was not, of course, just the force of our arguments that did this, strong though they were. We know that the government makes it a point never to listen to the opposition if it can avoid doing so.


Mr. Boulanger:: You said that we did.


Robert Lorne Stanfield: I will explain to the hon. member in a moment.


J.-H.-Théogène Ricard: He would not understand it anyway. He has no head for that.


Robert Lorne Stanfield: Then, I will be clear so that even he can understand. This time the government could not help listening to us. No matter how much it grated, this time the government had to listen and to take heed, because what we were saying was being said by others. The attack came from every direction-from both Houses of this Parliament, from business, labour, the farming community, and eventually even from within the caucus of the Liberal party itself.


Mr. Cote (Longueuil):: What about listening to your own caucus?


Robert Lorne Stanfield: Let me tell the minister who interjected that certainly his own party does not listen to its caucus;

that is well known. Certainly, no member knows it better than the hon. member sitting there in the middle row on the other side. But this time it was different; the government had to listen because, behind its own caucus and behind the opposition in Parliament, the government could hear the voters. Ordinarily, perhaps it would not even listen to them, but election time is coming and certainly the government can read the calendar, whatever may be its other deficiencies. This was why the government was forced to retreat. It was not because of big business or secret plotting; it was because the people of Canada rejected, and rejected summarily, the propositions that the government had put forth.
It is an impressive catalogue of retreat: retreat from the tax on the sale of a man's home; retreat from the hidden tax increase that was originally built into these white paper proposals; retreat from the unrealistically high capital gains tax that was proposed; retreat from the ridiculous proposal to tax capital gains on company shares that had not even been realized by the individuals concerned, which would have increased enormously the difficulties Canadians would have faced in retaining control of the Canadian corporations that we still happen to own; and retreat from the attempt to undo what little encouragement had been accorded to the small businessmen of Canada. In short, there was retreat from some of the worst elements that had been present in the original proposals made by the Prime Minister (Mr. Trudeau) and the Minister of Finance in the white paper of the government.
As I say, it was a victory for the Canadian people who need not now fear that they will be subjected to some of the more ridiculous schemes that were concocted by the present government. But we must remember, Sir, at this time that the victory is still only partial. A battle has been won but not the war. Instead of having our head banged on the hard floor, it feels a lot better when someone puts a pillow under us. But we must not forget that although the changes have been made, they were not made willingly. The government did not want to make these changes, and this is why the opposition in Parliament and the Canadian people generally have to keep a very wary eye to ensure that what the government could not get in through the front door it will not try to introduce through the back door.
I do not pretend, of course, to know the intentions of the government in this matter, but when I look at the present bill the most charitable conclusion I can come to is that perhaps the government itself does not know what it is doing. If many of the white paper proposals were totally unacceptable, we now have a bill before us that is in many respects totally incomprehensible. I suppose for this government this must be considered as some sort of an advance. In fact, most of the retreats made by the present government are advances as far as the Canadian people are concerned. The fact remains that from policies which were unacceptable the government has retreated into confusion. We are faced today on second reading with a jumbled mass of legislation which makes a can of worms look like a disciplined army on manoeuvres. It is a piece of legislation that has lost specialized lawyers and econo-
September 14, 1971

mists alike in a mass of regulations from which many can see no exit at all.
We are all familiar with the comments by the tax experts associated with the Canadian Bar in respect of the complicity of this bill. These are serious technical criticisms specialists in the field are making, Mr. Speaker. When we are dealing with technicalities in the field of taxation we must realize that technical problems turn quickly into human problems. If this law is unintelligible to tax experts, how much more frustrating is it going to be for the ordinary taxpayer and especially the professional men and women and small businessmen and women who are already wound up in miles of red tape?
These small enterprises in Canada did make some headway between the white paper and the present bill, but that will not do them much good if businessmen have to keep a chartered accountant or a tax specialist constantly on hand to advise them every time they turn around. That surely is not the kind of tax reform the Canadian people want and it is not the kind of tax reform the Canadian people were promised. They were promised greater simplicity and what the government has produced is simply greater chaos.
That seems to be pretty well the unanimous opinion of everybody outside the government. I note that both Canada's leading business weeklies, the Financial Post and the Financial Times, are now suggesting that the only solution is to delay, if necessary, the practical implementation of this bill. I may say that does not mean the government should delay measures for the immediate tax relief of those on lower incomes. There are other ways to do this than by a bill such as this.
Even if we forget the drafting errors and the complexities, and look beyond them to the substance, it is already clear there are questions which will have to be examined extremely carefully. Of course we are pleased by the almost immediate relief, though it may well be temporary, which will come to Canadians at the bottom end of the income scale. We on this side have been urging such measures for some time and we certainly accept them now.
This bill as put forward is a long-term measure, at least that is what the government says, so we have to look at the long-term effects of it. They are not so favourable to Canadians on lower incomes. The ones who are going to be hit hardest, without any doubt, are the hundreds of thousands of middle and lower income Canadians who, after possibly one or two years of temporary relief, will find themselves in a worse tax hole than ever before.
When we consider the natural and constant growth of cash incomes in Canada as a result of inflation, collective bargaining and promotion on the one hand, and on the other hand the steeply rising rates of taxation once somebody is on the tax rolls under this new bill, it becomes clear that this so-called tax reform is not going to operate to the benefit of any group of Canadians for very long. In the long run this so-called reform package is really a sham. That is what the government will not admit but that is the truth of the matter; the bill is a real sham.
Take a look at the position of small co-operatives and credit unions. They will find themselves denied their former position of encouragement under this proposed
Income Tax Act
legislation. There is a good deal of concern in those organizations about the legislation and we in the opposition are certainly going to take a good look at this aspect of this bill. We must not lightly allow any new law to change the whole nature of the co-operative and credit union movements.


Robert Muir: What has the minister from Nova Scotia to say about that?


Robert Lorne Stanfield: If it is true, as alleged, that the cumulative effects of this legislation would be to place a discouraging burden on the co-operative and credit union movements, this would certainly be a blow against the whole spirit of co-operatives in this country. The co-operative and credit union movements must not be killed and they must not be crippled by any hastily, ill-conceived measure. We in the opposition intend to make certain this does not happen.
We shall have to take a close look at the question of capital formation and the taxation on capital gains as well. Certainly, the present bill is an improvement over the white paper in this regard, but we want to know what the effects of this proposal will be, for example, on the family farm. We shall certainly reject any attempt by this government to sneak into a tax bill any measures designed to further weaken the position of farmers in this country, because this government has already done far more than its share to destroy the way of life in our farming communities. There comes a time when we have to attempt to call a halt to this process. That time is just about now, if it was not yesterday.
Furthermore, we want to know how the provisions of this bill will affect Canadian ownership of the Canadian economy. This is, of course, a matter of continuing or, indeed, permanent importance, but in the present circumstances when the whole question of the future contribution of United States-owned subsidiaries to the Canadian economy is being raised by the actions of Washington, such as in the proposed DISC measures, this question is especially vital. Let us make no mistake about it. If the DISC program goes through Congress, there will be tremendous pressure upon United States companies operating in this country to concentrate their production in the U.S.A., and we shall be the losers. We should be doing everything reasonable as the Parliament of Canada to encourage Canadians to participate in our own economy, and that is the point of view that we are going to take in looking at the details of this bill. That is the right point of view for us to take and that is the right point of view for this country.
Another serious problem is the relationship between the capital gains tax and the question of duties on estates. This leads us directly into the larger question of relationships between the federal government and the provinces in the field of taxation. It is clear there will have to be a massive re-adjustment in tax laws of the provinces to fit them in with any new federal tax package, this or any other package which may be adopted. Take for example the two great provinces of Quebec and Ontario. They will have to make fundamental amendments to their respective personal and corporate income tax laws if they are to be at all consistent with the proposed legislation we have before us.

September 14, 1971
Income Tax Act
The three provinces of Ontario, British Columbia and Alberta are also to be affected in quite a different way by the proposal to tax medicare premiums paid by employers. This again could cause serious disruption, not to mention injustice, to hundreds of thousands of Canadians and hundreds of thousands of taxpayers unless changes are made and made quickly. We want to know how far the discussions and negotiations have gone between this government and the provinces. We want to know if any assurances have been given with regard to uniform legislation and fair taxation. We want to know if we in this country are now in danger of creating a new and even more impossible tax jungle if this or any other bill should become law before January 1 next or indeed at any time in the near future. This is a tremendously important aspect of our discussions. One thing that has not changed from the original concept of the white paper in the present proposal is that the federal government is still doing it alone. It is preoccupied solely with its own needs. It is preoccupied with what the Canadian government itself wants to get from the Canadian taxpayer. I say that is just not good enough. The federal government must take the provinces and the needs of the provinces into consideration. It must consider the men and women who will have to pay the taxes, either to this government or to the provincial governments.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: Let us not forget one thing. When you come right down to it there is just one fellow paying those taxes whether they be federal, provincial or municipal. There is just one Canadian taxpayer. He is the one who will have to suffer from any tax jungle that exists. He is the one who will have to pay all the costs and suffer all the frustrations if we do not come out of this with a credible and understandable package.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: I do not mean just at the federal level. I mean at all tax levels. That is why it is irresponsible for this government to go off on its own and ignore the problems it may have created elsewhere and at other levels of government.
These are just a few of the questions the government will have to answer in the course of this debate. If those answers are not ready and if they are not convincing, then that is another reason for this government to take another look at its timetable because we shall certainly give no assurance that we will expedite measures which after all could cause more difficulty than they would solve. There is one other major question to be considered in this whole matter of timing. That is the matter of priorities. What is this massive and complex bill which is before us going to do to help solve the immediate pressing problems of the Canadian economy and, need I say it again, the problem of mass unemployment the spectre of which is again facing hundreds of thousands of Canadians this coming winter? What does this bill propose for that? I do not have to answer the question because it answers itself-nothing. In fact, the effect will be- negative because we will be

spending the time on this measure before we have any program adopted for our immediate problems.
This tax bill is important. It is vital that we clear up the uncertainty which has been plaguing the economy for two years or more. But this Parliament in this September of 1971 has another more urgent responsibility. By all indications we are racing into another winter season of massive unemployment. That is a situation we cannot afford to contemplate. One winter like the last one is already too much to have had to bear. A second such winter would be disastrous.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: What is this government going to do to ensure that this does not happen again or to even to try to ensure that it does not happen again? There are not any indications of it doing anything. Inaction we cannot accept. Inaction, Sir, we will not accept. Let this government not use that old line that this measure has to go through immediately to permit lower income Canadians to come off the tax rolls during the next fiscal year.
I have said before that we on this side of the House, speaking for my own party at least, have been ready to co-operate to the fullest extent with any effort made by the government to achieve its goal of providing tax relief to lower income Canadians. I proposed such relief a year ago and repeat the offer today. But I say the government could proceed immediately with such relief through a system of tax credits. I believe all parties on this side of the House have been advocating this. It is a system which would be easy to implement at relatively moderate cost. There is no need at all for these two issues, immediate tax relief for lower income Canadians and a general change in tax procedures, to become confused. If the government really wants to provide help for lower income Canadians it can do so without trying to ram this whole tangled mess of proposals down the throats of the members of this House of Commons.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: Let us have no more attempted blackmail on that score. That is something we certainly cannot accept. For that matter, does the government really know what it is doing with its whole anti-poverty program? Yesterday we received from the Minister of National Health and Welfare (Mr. Munro) some details concerning the family security program. There is evidence that there may be no co-ordination between the Department of National Health and Welfare and the Department of Finance-I do not know. I do not know whether these two ministers are speaking to each other these days. Perhaps they have had a quarrel. But surely, there must be people in their departments who talk to each other occasionally. If they do, however, they certainly are not communicating very effectively. The Minister of National Health and Welfare tells us, for example, that his plan takes into account the fact that it costs more to raise a child when he is 12 years old than when he is younger than that. So, under this measure the government proposes to provide more money for children at that level.
The Minister of Finance, in proposing his deductions for taxpayers, agrees it is more expensive to bring up older
September 14, 1971

children, but does not recognize the difference until the age of 16. Which minister is right? They cannot both be right. They cannot agree on that and they cannot agree either on where the magic line comes between those families which need additional help and which of those do not, on the one hand, and those which should not pay income tax and those who should, on the other. It is pretty clear that logically the group that needs help and the group that does not pay income tax should be the same, but that would be too simple for this government, so we have a Minister of National Health and Welfare telling us that any family with one child and an income of $4,500 or less gets special aid. The same person, however, under the tax law proposed, will be paying income tax on something over $1,000 of his income of $4,500. So, the Minister of Finance is telling us that that fellow not only does not need aid but he can afford to pay taxes, whereas the Minister of National Health and Welfare thinks he needs help. The government giveth, the government taketh away. But both those ministers cannot be right, although certainly the thought crossed my mind that they could possibly both be wrong.
This government is not just confused, it seems to be unconscious.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: Beyond that, Sir, we demand that the government do something effective and do something quickly to restore economic and social health to this country. We demand action to create a climate of economic confidence and to prevent the return of mass unemployment that threatens this coming winter. Tax reductions for the lowest income Canadians will help, but they are not enough. Under the present circumstances if we are to make any substantial progress in combating unemployment we must have reductions across the board in income tax rates. In addition to that, we must either have the complete elimination of or at least a very substantial reduction in the federal sales tax on building material.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: I think this is obvious. It is all the more urgent since the Minister of Urban Affairs (Mr. Andras) has indicated to the press that his housing program will inevitably be hurt by the diversion of $80 million to help the industries that may be hurt by President Nixon's export surtax, and also the minister fears that people who are trying to borrow money for homes are likely to encounter higher interest rates.
We should now be looking at other possibilities this winter, in conjunction with the provinces, such as the possibility of industry training and retraining support programs for men and women who are now employed to help them upgrade their skills. This, I suppose, is a longterm program, but it could start this winter and it would certainly increase in value over the next few years. We must, as I indicated a minute ago, look at the possibility of maintaining a proper rate of interest in this country. This would provide encouragement for the economy in general. It would help the Minister of Urban Affairs to maintain a housing program which would provide houses at a rea-
Income Tax Act
sonable cost, and of course it would also help us to withstand a further upward pressure on the Canadian dollar. In other words, it would help both our exports and our internal markets. We must also consider what we can do now in co-operation with all levels of government to get work for Canadians this winter.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: The hour is late, but there is surely no justification for delaying matters any further. For a start, we must help the citizens of Canada, as well as the provinces, in financing their welfare programs. We have had warnings from the governments of both Ontario and Quebec. They face a time of intense pressure on their welfare systems and it is very clear that those two provinces will not be alone. But we have to go beyond welfare. Welfare is not enough. It is work that is needed. We must get started immediately. I do not care how much pooh-poohing there is across the way, we must get started immediately in conjunction with the provinces on an effective winter works program.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: The government itself has set a precedent this summer in its Opportunities for Youth program which could well be described as a sort of summer works program. But there are worthwhile things that could be done this winter too, Sir, by this government and this Parliament. We owe something to the unemployed men and women of this country and the ones who will find themselves without jobs in the next few months. That is why I am demanding a winter works program. The government has already delayed too long. I am not looking for perfection; I realize that this is a palliative so far as this winter is concerned, but the government has let the situation become so serious that we have no other choice now.


Robert Muir: They are callous and do not care.


Robert Lorne Stanfield: Beyond these emergency measures, faced with the trend in the United States, we have to take a very urgent look at our export industry. I agree that our export trade has been hurt by the U.S. surtax. I support the measure brought forward, I support that principle. But I believe other urgent steps have to be taken. The legislation to which we have given second reading last week was, in my view, a hesitant and an inadequate first step which may or may not be effective, but our export trade is basic to the development of our whole economy, not only this year of course but every year, and the Americans have taught us a painful lesson with regard to President Nixon's surtax. They may very well be preparing us for an even more painful lesson in the long term with the export bonus proposals involved in the so-called DISC program. Let us take these lessons to heart and let us consider urgently what we can do for our export industry, what possibilities we have for aiding our export industry. Of course, the basic position is that we have to maintain or achieve a reasonable rate for the Canadian dollar, one that will enable our exporters to compete. But let us also consider what we can do, and indeed what we must do, to give tax encouragement to our export industries, particu-
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larly those that are important to Canadians from the point of view of employment.
Whatever other effects they may have, the actions of the United States have shown the hollowness of this government's complacency about Canadian exports. It just is not good enough for this government to preen itself by talking about success in selling raw materials abroad. Much of the secondary manufacturing industry of this country is approaching a crossroads in so far as foreign markets are concerned. I have been urging for a year or more that we formulate long-term policies to enable us to diversify our foreign markets and to embark upon serious programs to increase trade with trading blocs such as the European Common Market. However, I believe that this government has preferred to avoid the hard task of rethinking the options open to Canada and to this government. I say that trade missions, no matter how immediately successful they might be, are no substitute for long-term policies. The success of such missions must surely in the long run depend upon such policies. But that is something this government cannot understand. And now, even when the President of the United States talks about a new era opening in international trade, the significance of that statement has obviously not yet dawned on this government. At least it is not reflected in any action it has taken.
I sat in this House the other night and listened to the Minister of Finance give his usual complacent account of the economic situation. I do not want to be facetious, but I hope the Prime Minister will lend our Minister of Finance to the International Monetary Fund to help them work out their problems. It was the same old complacent record he gave us that we have heard for the last two years-prosperity is just around the corner.


James Aloysius McGrath: He didn't say what corner.


Robert Lorne Stanfield: I am surprised he did not go back even beyond Herbert Hoover and promise us a chicken in every pot. It is now pretty clear that the government has no intention of giving us any real projections for the coming months. I and my colleagues have been pressing for that. I guess we have been wasting our time. It is also very clear that the government does not intend to propose a program, either long or short-term, to restore the Canadian economy.
I have to ask, why is this government so stubbornly refusing to tell us its projections? Is it because even before the American moves they did not show that the upturn is just around the corner? Is it because the figures show that the unemployment situation is not going to improve for the balance of this year, as the government has been promising? Is that the reason the government won't release its projections? Or is it simply because the government has no reliable projections and no effective programs? Is the government simply whistling in the dark?
They can whistle if they like, Sir, but that is exactly the way they appear to me, and I think to most of the Canadian people at the present time.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: The only clue to the government's intentions so far lies in its ineffectual efforts with regard to wicked Washington. Obviously, the idea now is to lay the blame for our current and future problems on the backs of the Americans. I think we are being hurt, and we may be hurt more. I have already said that here, and I have said it outside this House. But this government, no matter how much it squirms, isn't going to be able to slough off its heavy responsibility for our present situation in this country. This government and no other is responsible for the two years of economic stagnation in this country. This government and no other is responsible for the policies that have led to a continuous massive unemployment that as yet shows no signs of substantial and significant decline. On the contrary, it threatens to grow worse in the months ahead. This government and no other is responsible for the uncertainty that has prevailed in this country for a year and a half on the whole vital issue of tax reform.
It is time for this government to share its responsibilities-well, not to share, even though we would be happy to share them . ..


Pierre Elliott Trudeau: Would you?


Robert Lorne Stanfield: Yes, we would be happy to share them, but we would have to be satisfied that the government is prepared to take some action first. We don't want to get involved in doing nothing.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: It is time for the government finally to move to boost the economy and effectively to combat unemployment. This is the first priority we have as we sit here today and during these weeks. This is the first priority which the legislation now before us does nothing to meet.
May I emphasize two things in closing. First, there are immediate, pressing problems that face us right now, and that will face us in the coming months, for which this bill is quite irrelevant. Regardless of whether or not the government proceeds with this legislation now, it has to act now with regard to these problems, problems that I am sure each member of this House recognizes as being serious and needing attention. It is not just the opposition in this House, Sir; it is not just me, it is not just my colleagues, and it is not just the members down here to my left who are demanding action. It is the people of Canada. It is the Canadian people who are demanding that this government take effective action to attack unemployment.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: There is very little if anything in this bill that will help spur the Canadian economy forward. There is nothing positive in this bill to encourage Canadians to invest in their own economy. I admit that there is the removal of a disincentive, and I suppose we should be grateful for small mercies, but there is nothing in the bill to help us build up our industries or build up our exports. In short, there is nothing in this bill, or for that matter in the policies of the government in general, to encourage the incentive on which the progress of our Canadian
September 14, 1971

economy and our Canadian society has been based, and will continue to be based, if we are to build in this country for the future.
The whole philosophy of this bill and of this government is to replace individual choice and individual initiative by government fiat. In its attitude towards taxation, just as in its attitude towards the economy, in its attitude towards welfare, and in its attitude towards the unemployed men and women of this country, this government ignores the power of incentive to encourage individual Canadians to work to improve their lot. That is where we part company with this government. Our goal is precisely a society where the role of government is, above all, to maximize the possibility of the free choice of the individuals and the groups that make up our country.


Some hon. Members:: Hear, hear!


Robert Lorne Stanfield: It is from this point of view that we shall examine this bill, as we have examined other policies of the government. It is from this point of view that we shall comment upon, and criticize, and fight where necessary. It is from this point of view that we have presented our amendment, its purpose being both to force the government to prepare a better bill and to force the government to face up to the real and urgent economic and human problems that confront us, the members of this House, the members of this government, and the people of this country right now.


Some hon. Members:: Hear, hear!


Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, in the next few minutes I would like to talk to the House about the effects of the bill under consideration, 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."
I read somewhere that this is the biggest bill ever introduced in the House. If it is true about its size it certainly does not apply to its quality or, at least, to its clarity. Considering that this bill covers some 710 pages, I do not think that I can deal with all the amendments to the Income Tax Act.
However, I should like, Mr. Speaker, to speak on behalf of the cooperatives of Richmond riding, to categorically oppose this bill which tends to change the method of computing the capital employed. I suggest that this would assuredly lead to double taxation for cooperative members or affect the capital invested by them in such cooperatives.
Mr, Speaker, I want to read a telegram that I received recently from the Cooperative de Saint-Paul de Chester, a small town in my riding. I quote:
The Cooperative of Saint-Paul de Chester is taking exception to the decision of the Minister of Finance to maintain the concept of capital employed as a taxation base for cooperatives STOP This concept is contrary to the very principle of the cooperative and it becomes even more unfair by the new provision of section 135 of Bill C-259 which changes the method of computing the capital employed STOP We believe that nowhere else in the world is there another example of this concept of capital employed in any tax
Income Tax Act
system STOP Adoption of this concept will weaken the financial structure of our cooperative and will also decrease possibility granting fair rebates to members STOP Asking for no favours but request that fiscal plan respect structure and operation of cooperatives STOP La Cooperative de St-Paul de Chester is a branch of La Cooperative federee de Quebec which was represented on the delegation which met the Minister of Finance August 11, 1971 to suggest alternative method of taxation for cooperatives which would not jeopardize the very existence of such institutions STOP Solicit your support with Minister of Finance to obtain amendment of bill presented along lines of recommendations already submitted by cooperatives.
Roger Croteau
Cooperative de St-Paul de Chester
Mr. Speaker, I have received dozens of telegrams with identical or almost identical wording in my office recently. I want to stress that I entirely endorse these protests.
On August 26 last, the Minister of Finance (Mr. Benson) said to the members of the Law Society of Upper Canada at the York Hotel in Toronto, and I quote:
The tax reform bill is proof that the government has taken into account the many briefs it has received and the proceedings of two parliamentary committees as well. I think that the majority of our most eager critics were surprised at the way the government met the wishes of Canadian taxpayers. The fact that the Bill contains virtually all the major proposals of the committee of the House is a tangible proof of that. Had it not been so, the publication of the White Paper would have been a meaningless farce.
And he went on:
As I said in my budget speech, the White Paper process was an important step in the evolution of participatory democracy in Canada. Through the debate and the discussions which took place it has been possible to set up a tax reform plan that not only does take into account the needs of Canada but also reflects the views of the Canadian people.
When I read this bill it does not seem to me that the minister paid much attention to the views he expressed that day at the Royal York Hotel. Neither does it seem to me that the cooperatives have made clear strongly enough their views on this bill.
I have here a copy of the memorandum submitted on November 7, 1969 by The Co-Operative Union of Canada and Le Conseil canadien de la cooperation. These two co-operatives represent La Cooperative Federee de Quebec, the Federation des Magasins Co-op, Pecheurs Unis de Quebec, the Federation Co-op Habitat du Quebec, the Federation de Quebec des Unions regionales des Caisses Populaires Desjardins, La Federation des Com-pagnies d'Assurance Mutuelle contre le feu, La Federation de Montreal des Caisses Desjardins, La Federation Regionale des Chantiers Cooperatifs de l'Ouest Quebe-cois, the Federation des Caisses d'Economie du Quebec, the Federation des Cooperatives etudiantes du Quebec, La Societe des Artisans, L'Assurance-Vie Desjardins, La Mutuelle SSQ, Assurances U.C.C., Compagnie mutuelle, La Sauvegarde, compagnie d'assurance sur la vie, La Societe d'Assurance des Caisses Populaires, Les Produc-teurs de Sucre d'Erable du Quebec, the Institut Coopera-tif Desjardins, La Societe de Fiducie du Quebec, La Securite, compagnie d'assurances generates du Canada, and L'Association Cooperative Feminine du Quebec.
It is, therefore, obvious that all the members of these companies think the same way and find many inequities in this bill-in its treatment of the capital invested in our
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cooperatives, in its way of evaluating the capital invested in our co-operatives.
About the brief I mentioned earlier, when we discussed with the representatives of co-operatives we compared co-operatives, closely-held and widely-held corporations. Here is what was said:
In a comparison of a closely-held versus a widely-held designation, a co-operative must of necessity be treated, by the very definition, as a closely-held corporation. However, the treatment of a co-operative as a corporation of any designation would certainly not result in an equitable treatment. The necessity for the recognition of the special form of co-operative distribution was accepted by the "McDougall Royal Commission" of 1945, the "Carter Royal Commission" of 1966 and again by the White Paper proposals.
Some of the reasons dictating this recognition of a separate treatment are as follows:
The capital nature of a co-operative is essentially different from that of a corporation. Whether the investment of the co-operative member is in the form of a loan or is in shares the member capital contribution is more like a deposit than a capital contribution in a corporation. The capital structure of a co-operative is a "fluid" type of structure subject to constant fluctuations whereas the capital of a corporation tends to have a "locked-in" aspect keeping it available for the purposes of the company.
This difference in capital structure must be provided for in any system of taxation which is to be applied to co-operatives.
To treat a co-operative as a corporation for tax purposes ignores the nature and ownership of co-operatives distribution and the claim which the patron owners have to the surplus earnings.
Any treatment of a co-operative as a corporation for tax purposes would create the problem of numerous T-5 returns for small amounts (and the necessity of devising a formula for passing on creditable tax with patronage refunds). Because many of the recipients of co-operative distributions will not be taxable many claims for refunds will result from the election of this method of taxation.
I think that Bill C-259 considers treating co-operatives on the same footing as closely-held corporations. Therefore, I believe that this would not be fair at all for members of co-operatives.
I would also like to draw the attention of the House to an editorial written by Mr. Jean-Paul Legare in the August 27, 1971 issue of Ensemble, and I quote:
Mr. Benson's 1969 white paper on tax reform took no account of the particularities of co-operatives and savings and credit unions.
Bill C-259, introduced for first reading in the House of Commons in June 1971 and advocating a new taxation policy takes no account either of co-operative institutions' particularities.
When we consider the fact that the Canadian co-operative movement clearly established its position through briefs presented the legislator in 1970, we arrive at one of two conclusions: either the federal government deliberately ignores the principles that guide the co-operatives, or it proves clearly its intention of evening out the taxes of companies in Canada.
As the prime concern of the state should be the application of a tax system that is fair to all companies under its jurisdiction, we fail to understand the attitude of the federal government which persists in its inequity towards co-operatives, savings and credit unions. Indeed, as provided for in Bill C-259, tax proposals continue to place co-operatives in an unfair situation compared with companies and other corporations.
Should Bill C-259 be adopted, it would interfere with the normal expansion of co-operatives. Not only would the federal government thus provoke a deplorable state of affairs, but it would deprive itself, in the future, of sources of revenue it seeks through taxation.
Co-operatives and credit and savings unions have repeatedly stated that they were not asking for any preferential treatment with regard to taxation .. .
The federal government is apparently giving way to the pressures brought to bear by Canadian corporations, judging by the provisions of Bill C-259 with regard to co-operatives. That is exactly where the government is in error and consequently places the co-operatives themselves in an unfavourable position.
The Canadian co-operative movement is united against Bill C-259, as it was against Mr. Benson's white paper. Its views were set out in two briefs presented to the Minister of Finance in July 1971 and reproduced on pages 14 and 15.
The co-operative movement invokes reasons of justice which must be the first concern of a government that advocates "a just society". We feel sure that the federal government cannot in all decency ignore the appeal of 4 million co-operative members.
. . . whom we represent.
Mr. Speaker, with my colleagues' co-operation, I merely wanted to draw to the attention of the House the views of the Quebec co-operatives, particularly with regard to determining the amount of capital invested in such cooperatives. My colleagues have pointed out, or will shortly do so, numerous other defects of this bill. Such are, Mr. Speaker, the points I wanted to mention.


Mr. Colin D. Gibson (Hamilton-Wentworth):: Mr. Speaker, I am sure the House is grateful for the compliments paid by the Leader of the Opposition (Mr. Stanfield) to the Opportunities for Youth plan. That shows belated support for the plan and it is encouraging. I believe it is the hon. gentleman's first public pronouncement in support of this great social measure which was such a success this summer. It really was encouraging to note that, in his speech, the Leader of the Opposition was able to say something constructive and new in his approach to government operations.


Stanley Howard Knowles: It is the hon. member's turn now.


Colin David Gibson: Yes, it is. At this stage I wish to refer to something else that the Leader of the Opposition said. He put this proposition to the House: what proposals has the government put forward to deal with the present problems of the Canadian economy? I submit that, among many other proposals, the government intends that 750,000 Canadians shall be removed from the income tax rolls in order that they need not pay income tax. Also, it has proposed very substantial tax amendments in order to alleviate the burden of poor people faced with pressing problems. Replying to the Leader of the Opposition may I say, after analysing his speech, that it is obvious that the tax reform bill was a victory for the government, the people, and the cause of participatory democracy. It is also apparent that the opposition, as usual, had very little to contribute to the debate on tax reform except vague and hackneyed generalities. We have heard the arguments which the Leader of the Opposition presented in his speech this afternoon in previous debates at different times. There was little new in them. I was disappointed that he could not come up with something more specific than the generalities about unemployment and the economy that he raised.

September 14, 1971

Yesterday the hon. member for Peace River (Mr. Baldwin) in scathing terms, criticized the hon. member for Sault Ste. Marie (Mr. Murphy) because that hon. member had asked him if he was suggesting that the government should take a draft of the legislation to Washington for approval before submitting it to this House. In his answer the hon. member for Peace River suggested that the government should come up with a number of contingency plans. May I comment on that.
I suggest it is ridiculous to expect any government to anticipate all the permutations and combinations of decisions which might be taken in the United States in the next few weeks and bring into this House a contingency plan. What could be more absurd, what could be more ridiculous, particularly at a time when governments are discussing these important matters among themselves at the official level, and just before the international meeting, headed by the Minister of Finance (Mr. Benson) as chairman of the Group of Ten nations, which is to commence today. How unrealistic and impractical can the opposition be?
The tax reform bill which is before the House for second reading is the product of the most democratic tax review ever conducted by any government. The white paper hearings, for the first time, provided the Canadian people with a direct voice in expressing their opinions on government tax policy. The facts are that the government responded to requests for substantial tax changes as a result of reaction to proposals outlined in the white paper. This attitude and this response have been acknowledged by a great many Canadian people as being successful methods of conducting reform in our system of taxation.
Before us now is a vast and complex bill. Admittedly, it is complex, because reforming the tax structure is a tremendously difficult task. Nevertheless, although there are complications in the bill, there is real heart in the approach to tax reform that has been taken by the government and the Minister of Finance, and the bill represents substantial relief to low income Canadians. I do not intend to outline and catalogue all of its legislative provisions. I wish to outline some of the highlights. Personal exemptions will be raised to $1,500 from $1,000 for single persons and to $2,850 from $2,000 for married persons. Exemptions will be $500 for children under 16 and $300 for children over 16. Child care expenses will be deductible, up to $500 per child under 14, for a maximum of $2,000 per family. An employment expense account of up to $150 a year is introduced. All taxpayers with married exemptions and income solely from wages and salaries will pay less tax than at present. All taxpayers aged 65 and over will receive a special exemption of $650. The guaranteed income supplement will be exempt from tax. Capital gains will be taxed on a reasonable basis. Comprehensive provisions have been made for corporations, so that they will be able to expand and develop without being hindered from expansion, as originally outlined in some provisions of the white paper. Incentive and encouragement to develop are the key notes relating to corporation tax provisions in the bill.
The total result of these measures reflects a fairer system for taxing the Canadian people. People on low incomes and retired people are treated with sympathy and justice. The integrity of the bill stands out in a major
Income Tax Act
overhaul under which unjust treatment of poor people is abolished. Over 750,000 people henceforth will no longer pay any income tax.
The attitude of the government, taken together with social security measures adopted for those on low incomes and with heavy family expenses by the Minister of National Health and Welfare (Mr. Munro) reflects a determination to direct Canada away from being a land with a high level of poverty. Opposition members, particularly the hon. member for Edmonton West (Mr. Lambert), have admonished and chastised the government in speeches made during this debate. They have criticized the wording of the bill and criticized continually every step taken by the government to bring about tax reform. Mr. Speaker, I suggest that a note of bitterness and pessimism was expressed by the hon. member for Edmonton West which, if accepted, could lead one to believe that any tax reform is impossible. He has seldom acknowledged the good features in the bill and merely emphasizes gloom and doom to the detriment of speedy action in this House.
For ponderous pontification and pessimistic prolixity the hon. member for Edmonton West takes the prize. Those who adopt his long speeches of technical misery as constructive criticism will find few followers among the electorate of Canada. Mr. Speaker, I urge all hon. members opposite to cut down on the length of their speeches and proceed to end this unnecessary second reading of the bill so that valuable time which could be better employed in committee of the whole will not be wasted.
The difficulties in draftsmanship are human difficulties, but there is not the slightest doubt that we on this side of the House are determined that the Canadian people are granted the fair and just tax reform bill before us.


The Acting Speaker (Mr. Laniel):: Is the House ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Laniel):: The question is on the amendment.


Lincoln MacCauley Alexander: Mr. Speaker, I had not expected to take part in the debate at this point primarily because I am not prepared. I wanted to have the opportunity to get some notes by me for reference. However, one does not need an agglomeration of notes in order to stand before the House and give some indication of the feelings of the Canadian people toward this bill. Not too long after the intervention of my hon. friend the Leader of the Opposition (Mr. Stanfield) the public became extremely concerned about what the government was attempting to do. They were concerned because the government appeared to give no recognition whatever to those who, after hard work and personal initiative, felt they were entitled to some reward. The government appeared dedicated to removing the reward factor from those who were deserving of reward. I am thinking of those who had struggled for a long time to acquire a home, a place they could call their own. The government wanted to tax them. Again, I think of those who through initiative and ability had been able to build

September 14, 1971
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up a small business and I reflect upon what the government wanted to do to them. In the end, members opposite had to back away. As my hon. friend the Leader of the Opposition said, the bill now before us is evidence of a retreat on the part of the government. It has admitted defeat. Government must recognize the desire of those who want to work to be rewarded for their work.
If we are to be faced with the continuing pleas of those who believe we should secure the ownership of a greater share of our own economic structure, then I would respectfully submit that incentives must be provided to the end that there might be something left in the taxpayers, pockets, money which can be used, not to buy back Canada, because I believe that to be impossible, but at least to acquire a larger share of Canada. Incentives must be provided to encourage industry to expand production and, in turn, to create a greater measure of employment. In considering this bill, we must ask ourselves whether the Canadian people are being given a greater opportunity to invest in their own economy, to invest in their own future.
The measure before us is so complex that even tax experts find difficulty in understanding it. As my hon. friend from Edmonton West has said, many of its provisions are confusing. As a whole, it is irrelevant to the needs of the economy in terms of growth, in terms of production, in terms of employment and in terms of assistance to secondary industry, and for these reasons it should not now be read a second time.


John Edward Broadbent: Mr. Speaker, the tax proposals before us have been described by the Minister of Finance (Mr. Benson) and other ministers as constituting one of the greatest pieces of legislation of the century. Great reforms, we are told, are now being presented to the people of Canada. Five taxpayers out of eight, it is said, will obtain substantial tax reductions.
At a time when we are faced with high taxes, high unemployment and high inflation levels simultaneously, and after nine years of supposed serious thought during which period we have seen the Carter Report and the white paper, one might have expected a substantially different set of proposals to have been presented to us, proposals which in a democratic society would benefit, in the main, the average and the poorer citizens of this country, that is, the vast majority of our people. Instead, looked at from any point of view, whether in terms of taxation or in the terms of effect upon employment or the development of our economy, the average person has nothing to gain from this legislation. The best that can be expected is that the average Canadian or the poor Canadian will find his position no worse.
Provision has been made for some marginal improvements to which I shall refer in due course, affecting the very poor, but in the main we are being offered no reform. This needs to be said, and I hope it will be said over and over again by all those who give serious thought to these proposals. I wish to deal with the question of equity, the effect on unemployment and the question of resource development. I propose to deal with these subjects one by one and explain my reasons for reaching the conclusions I have.
By raising the exemption level to $1,500 from $1,000 for single people and to $2,850 for a married couple, and by removing the 3 per cent surtax, as the Minister of Finance indicated, some one million people have been removed from the tax rolls. But how real are these benefits? How substantial are these gains after nine years of promises of significant tax reform? The tax proposals in the main, in terms of their effect on income, represent for most people a saving of about $100. For a family of four, spread over one year this would amount to about 50 cents a week for each member of the family. Real reform that is!
However, Canadians in income groups that are well above the average, those who are struggling to get by on an annual income, for example, of $30,000 a year or more, are going to make real gains as a result of this raising of the exemption level. For instance, a man who is ekeing out an existence on $100,000 a year will save $5,423 in income tax. A man who earns $400,000-there are not many in this category but there are a few, people who, by the way, finance and participate in the government party-will save as a result of this increase in the exemption level some $27,000 of personal income tax. Compare this saving with the $100 that the average worker will at best save during the course of a year.
The so-called "renegade report" prepared by the group of people who departed from the Senate inquiry into poverty indicates that over the past 20 years there has been no change made in the distribution of income in this country. For example, 20 years ago the top 20 per cent of families in terms of income had 40 per cent of total income in Canada, whereas the bottom 20 per cent had some 7 per cent of total income. This 7 per cent in terms of numbers represents about five million Canadians.
No action has been taken by the government-and I include the present tax proposals-to change one iota, this pattern of income distribution in Canada. Serious tax reform and major improvements for working Canadians would have led to some significant redistribution of income, but these proposals simply do not. For example, using tax credits instead of changing the exemption level would have been one means to make a move in this direction. However, this government, not surprisingly to members of my party, decided against that method.
Let us look at another category of reform, of great innovation, according to members of the Liberal party. They are claiming that the working people in Canada are now going to be able to deduct from their tax working expenses incurred. They will be allowed $150 a year for expenses directly related to their work for which they will get some tax credit. Is not the government magnanimous! It is telling all automobile workers in Oshawa, textile workers in Montreal and loggers in British Columbia: "Look, you fellows, we are really being very generous and are going to allow you what we have been allowing corporate directors, lawyers, doctors and indeed university professors for many years. We are going to allow you to claim some expenses that are related to your work as a tax deduction. However, we are putting a ceiling of $150 on those expenses".
However, this bill places no such limit on the expenses of corporate directors in this country or on those catego-

September 14, 1971

ries of professionals to whom I have just referred. Such people are going to be able to attend up to two conventions a year, which many of them do, and claim their expenses. They will be able to have a meal and spend a night in Montreal entertaining clients. They will be able to spend, not $150 spread over the course of a year but $150 in one night, at the same time, of course, enjoying themselves immensely. And they will be able to claim every bit of that expense as a tax deductible item. I suggest it is sheer hypocrisy for a government to say to the working people of Canada that they can claim up to $150 a year for expenses while those who want to work for corporations or professionals who regularly attend conventions will be able to claim almost unlimited expenses that they incur. This is the effect of this legislation and I challenge any member opposite to get up and deny it.
Let us look at a third example of the glaring and grotesque inequality that is found in these taxation proposals. One of the fascinating things about the Liberal party of Canada is that they are always talking about equality of opportunity, never about equality of condition. In every little village and town in the countryside you find members of that party saying that what we want in Canada is equality of opportunity. They espouse a great new society that has a wonderful class ladder. As long as all kids start at the bottom in supposedly equal position, it is all right to have this class division. I reject this whole concept of class but I would like to apply to the members of the Liberal party their own wonderful principle of equality of opportunity.
Let me deal with their wonderful estate tax proposal. As of the end of this year, Mr. Speaker, as the Financial Post of all papers, points out, it will be Christmas for the relatives of the wealthy of this country, not on December 25, 1971 but on January 1, 1972. Because as of that date all of the millionaires of this country will be able to pass on to others, without paying any federal tax whatsoever, their property and wealth. Think what it means in a democratic society. Think what it means in the city of Toronto where there are thousands of poor kids who will never inherit one cent. They are going to be born into poverty, as are some 20 per cent of the population in Canada today. Yet this great Liberal party, under its leader, Mr. Trudeau the reformer, is going to abolish estate taxes. There is real equality of opportunity! Many people in Westmount, Montreal, in Rosedale, Toronto and their equivalents in other big cities of this country, in the wealthy areas of the land, are going to be very happy indeed with this budget, because they are going to be able to pass on to their poor sons and daughters millions of dollars-and that figure is no exaggeration.
I would recommend that members of the Liberal party get John Porter's book "The Vertical Mosaic", because I suspect some of them are interested in reading, on occasion. In that book you will discover that the wealth and power of 85 of the 100 most wealthy and powerful families currently existing in this country are the result of long established family patterns. The party which governs this country is the one which talks about equality of opportunity. This is the same party that is abolishing estate taxes. So much for justice in that area.
Income Tax Act


An hon. Member:: Tell us about yourself.


John Edward Broadbent: Now that is a relevant question, a real gem, a profound bit of insight on the part of one of the government members. It is not bad enough that we do not have better tax proposals which remove tax burdens entirely from the poor-they are still going to be paying taxes-but if you apply the Economic Council of Canada concept of poverty in Canada, even with these proposed tax changes, the poor, whether they are single or married, are going to continue living in poverty and paying taxes while the rich can pass on their estates without paying a cent of tax on them.
In addition to improving the tax position of the poor, maintaining or increasing estate taxes, which the government has not done, other steps are necessary. We cannot just redistribute the tax burden and expect there is going to be a real and final redistribution of income. If we simply redistribute taxes so the poor and average have a bit more and do nothing about corporate power or pricemaking decisions by companies in this country, what is gained one day through serious tax reform can be lost in a matter of days and weeks as a result of automatic increases in prices. If we are really concerned, as opposed to Liberal party propaganda, what we need is an innovation in the power structure which would take some of the price decision-making authority away from some of the major corporations, and specifically in certain key areas.
What is needed to complement serious reform is a prices review board, or whatever you want to call it. We need some public agency with the determining authority in respect of price making policies of companies in essential areas like medicine, dentistry and the legal profession. We need such an agency to regulate the price of milk, bread, transportation and gasoline. Such an agency could fix prices in other areas of effective monopoly positions in the economic market place. I have in mind the automotive, steel and mining industries.
In all these areas in Canada what we need is a prices review board which would have, not a continuing and nagging bureaucratic function but a negative legal power enabling it to say to all those companies in essential or monopolistic areas, you cannot automatically pass on an increase in corporation tax to the average citizen. If they have a price increase that can be justified by a real increase in the cost of production, of course, this will have to be considered. The point is they should not have the right any longer to pass on automatically an increase to the average and poor people of our country. It is time we subjected those with corporate powers to the democratic test of responsibility. The only way this can be done is by setting up some kind of effective prices review board. To summarize, it is senseless to increase corporate taxes and decrease the tax on the average and poor people, and then allow such gains to the public to be wiped out by increased prices and profits.
Let me now deal with the question of tax reform and unemployment. It used to be part of the Liberal convention wisdom that 3 per cent was the highest level of unemployment a civilized, industrial society could permit. We now have a level of 6.5 per cent unemployment. There are some 650,000 Canadians out of work, not for a month, two months or three months but for one, two or three

September 14, 1971
Income Tax Act
years. That is the situation and it would not be tolerated in any other advanced industrial, liberal, democratic society. Only in Canada under that great reformer, Mr. Trudeau, do we permit, year in and year out, thousands of Canadians to go without jobs.
What does the budget offer in this situation? Does it really offer the stimulant of a significant across-the-board tax reduction? It does not do that. Does it offer major incentives to increase productivity by other means? It does not do that. It does nothing to change the unemployment situation whatsoever. I am informed that the statistics we will get tomorrow will show that things are getting worse. The unemployment statistics for the month of August, normally a good month, will show unemployment increases. The proposals we get from this government do nothing to change that situation.
In the views of the members of this party we should have major tax reductions, especially of sales tax on manufactured goods. This is certainly one good shortterm means of stimulating the economy and providing jobs. We should have removed the special tax privileges enjoyed by the extractive industries which currently employ relatively few people and make huge profits. Let me say something more about that, Mr. Speaker.
It is estimated that about $300 million in mining and oil alone is being lost in tax revenue because of special tax concessions to the extractive industries. Manufacturing in this country, which is taxed more highly, employs 1.7 million Canadians while the coddled and coaxed extractive industries, oil, gas and mining, employ only 100,000 Canadians. Let me give you some figures for 1968, the most recent period for which figures are available.
In 1968, the profits of the metal mining industry were $497.3 million. The taxable income was only $93.2 million. The percentage of profit being taxed was only 9.3 per cent and the rest went tax free. The profits in the oil and gas industries for 1968 were $339.8 million and the amount taxed was only $25.2 million. This represents a tax on only 12 per cent of the profits.
Let us compare this with the manufacturing industry. I will give you three examples. Manufacturing industry is labour intensive and a sector of the economy that provides many jobs. In 1968, the profits of the printing and publishing industries were $128.1 million and they were taxed on 41 per cent of that profit. The profits of the electrical products industry were $121 million and that industry was taxed on 37 per cent. Textile mills employ a great number of people and they were taxed on some 40 per cent of their profits.
The point has been made by members of our party, and more recently by the hon. member for Duvernay (Mr. Kierans), that what we need is a reversal of investment policies and taxation incentives, away from the extractive industries, which are high profit and low in terms of numbers employed, with a move toward the labour-intensive industries. The present tax proposals do not do that in the slightest. The special concessions to the oil industry and the mining industry are to be continued for another three years. It has been said that this gives them time to adjust. They have had a whole history of exhorbitant profits at the expense of the people of Canada and yet

they need three years to adjust. However, as the hon. member for Duvernay pointed out, when the special concessions which currently exist in respect of the mining industry are to be phased out a whole new system of accelerated tax write-offs for capital equipment will come into effect, which in turn will leave the industry virtually unchanged in terms of taxation. It is a sham of reform and is a backtracking, not only from the Carter Royal Commission report but even from the government's white paper proposals in this area.
In the past few years, the Carter Report has shown what can be done. It has shown we could substantially reduce taxes for the average person and simultaneously increase public revenue if we fill in the loopholes in the corporate structure and increase the tax on the wealthy, including a capital gains tax. It has been shown that this could be done. Members of the New Democratic Party have argued this in recent years. It was argued during the 1968 election and, I am sure, will be argued again in the forthcoming federal election. Very recently that would-be reformer who is now leaving the federal government, the hon. member for Duvernay, pointed out in some detail what could be done. Indeed, the Minister of Finance of the government of Manitoba, in essence, implemented within his province the kind of proposals I am talking about now. As a result, if I am not mistaken and if I am I hope someone will correct me, that province has now the lowest growth rate in terms of unemployment in this country. He recommended that the federal government follow similar procedures in terms of tax proposals but was turned down.
I should like to make the very sad observation that those who are right at the bottom of our economic system, that 20 per cent of Canadians who have only 7 per cent of the income, that whole group of people who on many occasions go to bed hungry at night, who live in homes which need plumbing facilities and indoor heating or who need new homes, will not benefit by these proposals.
I shall conclude by expressing, not in partisan joy at all, the regret of one citizen in any event who had some hope that in this area the party which has governed this country for so long, the party across the aisle, would do something that would have meant something to the average and poor guy. The government has not done so. This is something for which all of us in this House should feel some very genuine regret.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Laniel):: Order, please. It is my duty at this time, pursuant to Standing Order 40, to inform the House that the question to be raised tonight at the time of adjournment is as follows: The hon. member for Notre-Dame-de-Grace (Mr. Allmand)-Air Transport-Airline Pilots request for early action on hijacking.
September 14, 1971



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 the amendments to that act, be read the second time and referred to the committee of the whole, and the amendment thereto of Mr. Lambert (Edmonton West) (p.7763).
David Samuel Horne MacDonald: Mr. Speaker, as members of the House will recall, we are not at the present time in this House debating the income tax proposals which are presently before us but rather are dealing directly with the amendment proposed by the hon. member for Edmonton West (Mr. Lambert) in this House yesterday. I should like to repeat the amendment to remind hon. members that it is, in fact, this amendment with which we are dealing:
That all the words after "that" be struck out and the following substituted:
This House deeply concerned with unacceptable levels of inflation, persisting unemployment and stagnant industry and conscious of the necessity for meaningful tax reform declines to give second reading to a bill which does not provide sufficient stimulus to the economy of Canada with appropriate tax cuts and incentives, does not contain adequate tax exemptions and is not calculated to materially improve business and labour conditions in Canada now or in the foreseeable future.
It is very important that members of this House recall that it is this matter which is presently before us because it points up the basic weakness in this massive piece of legislation which has been presented to the House. As has been indicated here this afternoon and prior to today, there is a very real need for realism about the problems with which the country is faced at the present time. One would wonder whether someone on the government side, particularly among those who assume functions of responsibility, has somehow entered into a kind of Alice in Wonderland situation in which it is believed that things can be dealt with in terms which seem most attractive to the government, whether or not they bear any relationship to the facts.
The fact that we are going through a very serious economic situation, some part of which has been manufactured deliberately by the domestic policies of the government, and the fact that the government is seemingly ignorant of these present and future difficulties or treats them as peripheral items of concern, seems to me to be a clearcut indication of the lack of realism, or might I say the lack of sensitivity, of the government for the basic economic problems that face Canadians today. The fact that we have had for some months between half a million and three-quarters of a million unemployed, and the fact that there is no obvious indication we can expect any substantial reduction in that number, seems not to have caused this government to think that the measure it was intending to introduce in respect of taxation reform this fall might in fact have to deal with this very serious situation. This government seems more than willing to spend some weeks and perhaps some months in debate on the various intricacies of tax reform without, in the first instance, assuring the Canadian people that it is taking
Incovie Tax Act
every possible step to alleviate the serious problems of unemployment in this country which exist today and which will very obviously increase in the days and months which lie ahead.
There has been no clear-cut indication either from the comments of the Prime Minister (Mr. Trudeau), the Minister of Finance (Mr. Benson), the Minister of Industry, Trade and Commerce (Mr. Pepin), the Minister of Regional Economic Expansion (Mr. Marchand) or any other minister with regard to the economic side of their portfolios that they are prepared to accept responsibility in this very vital area of unemployment. Apart from the kind of glowing remarks that the Minister of Finance (Mr. Benson) is capable of uttering but incapable of fulfilling in terms of action they are quite willing, it would seem, to accept this as a standard situation, hoping perhaps in an Alice in Wonderland kind of way, that somehow it will go away. We have heard of other regimes at other times that have acted as if the problems that were most imminently under their responsibility would somehow cease to exist, as if there were no cause for alarm. Whether it was Nero fiddling in his time or the Czar and his family cavorting in their time, the ignorance of such problems of such massive proportions was simply a reflection of the distance they had placed between themselves and the people, and the degree to which they had insulated themselves from the real problems with which people were faced.
We need action today, not some months hence when we are in the midst of an even more serious economic situation in this country. The bland assurances of either the Prime Minister or the Minister of Finance will do little to answer the basic economic needs of thousands and hundreds of thousands of Canadians when they find themselves in the bread line and out of work. If this government is not prepared to discuss realistically the detailed plans it has now to meet these economic needs, then one can hardly criticize the members of this House who themselves, individually, refuse to discuss these things until the government has met these basic concerns. This government, on top of the fact that it seems to be unaware or incapable of facing the basic unemployment problems in this country, seems also to have opted for a series of economic policies and platitudes which do little to recognize the tremendous change that has occurred even in this last decade with regard to the economic situation, with regard to the monetary and fiscal problems of a highly developed nation such as Canada, with regard to the taxation requirements of other authorities, whether they be provinces or municipalities.
It would seem altogether too clear that the insulation that exists in terms of present problems also works against most of the economic realities that exist in a rapidly changing social and economic situation in this country. It would seem to me that this government continues to demonstrate its inability to face up to the real problems as they have presented themselves day after day to members of this House and to the people of this country. But in proposing this amendment to the House yesterday, we are simply assuring the many Canadians who have already had the opportunity to study the minister's taxation proposals that the government may take serious-
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ly the degree to which it has now entered into a program of mystification. We seem to find ourselves faced with a government which is running into serious objections to its basic economic policies. Its response is not to try to understand and relate to the real situation but to confuse and to mystify. What the government has done with respect to the taxation proposals is to produce an exaltation of ad hocery while giving unwarranted prominence to what surely must be described as the supertechnocrat. I am referring to those individuals who perhaps have dedicated the better part of their lives to drafting taxation laws in such a form that not only the average layman will be unable to understand them but that most of the people who are charged with administering them or dealing with them on a day to day basis will have great difficulty in understanding them as well.
It has been mentioned before that when the members of the Bar Association met they expressed their own frustration and concern about the imcomprehensibility of these taxation proposals. It should be said as well that the confusion and the disquiet that exists among many of the lawyers of this country, who of course will have much to do with the interpretation of any kind of taxation proposals, have extended well beyond the legal profession to include organized business as well. Anyone who has taken the time to study the recent submissions of the Canadian Chamber of Commerce-a pretty respectable and conservative institution in this country, I might say, and one whose members normally do not have too much difficulty in understanding the taxation proposals of the federal and provincial governments-would find that it, too, says time and time again, "We would like to have been able to understand more clearly what the taxation proposals meant but we were simply not able to get to the bottom of a number of fairly basic questions". This organization suggested, too, in its submission to this government that if the confusion is to remain it will become almost impossible not only for individual citizens, not only for lawyers, but for the business interests in this country to be absolutely sure they understand these new taxation proposals. Indeed, the Chamber of Commerce went so far as to suggest that there may well be need for some period of time-they did not indicate how long-during which some kind of special forgiveness would be granted to those individuals or corporations who incorrectly filled out their income tax forms. There should be some kind of relaxation of the normal legal controls that exist because it will be quite natural, under the present proposals, to make mistakes and not be aware of them.
It is a well known fact that a taxation program in any country is extremely important to the level of activity, not only economic but in a variety of related fields such as social and cultural, and if it is true that of the vast majority of the people who specialize in the taxation law many find it difficult to understand what in fact the government is proposing, has it not crossed the minds of some people that there may be a reason for introducing this kind of obfuscation? Why is it that the government which was seemingly pretty clear in its proposals in the white paper based on the Carter report, which was clearly understood by most of those involved in the taxation fields, suddenly introduced this new element of confusion and incomprehensibility? Is it possible that the government

has some hidden agenda, some reason that it has not indicated to the Canadian people for keeping them somewhat in the dark about what the eventual effect will be of these new taxation proposals? Why are these supertechnocrats so happy that most people, apart from themselves, seem unable to understand all of the implications and effects of these taxation proposals?
Could it be, Mr. Speaker, that some changes are being smuggled in under the guise of reform or progressive taxation that are exactly the reverse? Could it be that steps are being taken in this legislation to achieve some of the most repugnant aspects of the original draft of the white paper? It is a question that many members of this House, and hopefully many specialists in tax law, will ask themselves repeatedly in an attempt to understand what exactly the government is up to in the proposals it has placed in this bill.
And I do not think it should be enough, Mr. Speaker, to say that simply because we are dealing with a massive overhaul of the federal tax system it will not be possible for most people to understand the details of that kind of endeavour. That is purely and simply a snow job, one which members of this House and members of the public generally should refuse to accept. For this reason, I hope we will have the opportunity to consider all of the implications of the taxation proposals that the government has placed before us.
I am reminded of the words of the Minister of National Revenue (Mr. Gray) when he spoke in this debate yesterday, as reported at page 7756 of Hansard and I quote:
A good tax system must be capable of efficient, economical and objective administration. And, as I mentioned earlier, in a country such as Canada the federal tax system must be capable of being harmonized with provincial tax systems to avoid a tax jungle.
The first place to stop a tax jungle is in your own backyard, and there is just too much of a tax jungle at present in the proposals that have been placed before us. But, Mr. Speaker, as I said in opening, we are dealing at the present time with an amendment, one which in the first instance focuses on one of the key problems facing the people of this country since the people of this country essentially are not concerned with all of the intricacies of tax reform.
While all of these reforms will have direct and indirect effects on the people, and hopefully benefits, there is really only one question that is of major concern to the people of Canada, and that is the degree to which this economy fails to offer employment opportunities to a significant number of Canadians. To me, it does not seem possible that we can engage in economic actions related to tax reform or anything else unless they are dealing directly with the basic economic problem of our day, and that is the problem of unemployment.
Again to refer to the remarks of the Minister of National Revenue yesterday, he said at one point, as recorded at page 7757 of Hansard:
Passage of this bill by Parliament will mean that 1 million taxpayers who would have paid taxes next year will be removed from the tax rolls.
That sounds great. I am sure that everyone could cheer when realizing that those who, unfairly and unjustly, had
September 14, 1971

to pay income tax in recent years would now be relieved of that unjust burden. But if all we are doing is taking one million off the tax rolls while also ignoring one million people in this country who are unemployed, then that certainly is not an aid or assistance to this country. It leaves one million people suffering the indignity, the injustice and the misery that is inherent in not being able to support oneself and one's dependents.
Members of this party, and other hon. members have indicated that they would act immediately to process those elements that are in this bill which would relieve the onerous and unfair tax burdens on the people to whom the Minister of National Revenue referred. But we must take action now as well to deal with the problem of unemployment that exists in this country today, and the problems of unemployment that are bound to increase in the months that lie ahead.
It has already been clearly indicated that in presenting these proposals the government has not attempted in any co-ordinated way to deal with the continuing problems of unemployment and poverty that exist in this country. I am very tempted, as one who represents an area where there is an almost continuing problem of high under-employment and unemployment, to talk specifically about the special need for a co-ordinated approach to long-term and hard core poverty in this country. But there has obviously been no recognition by the government that policies must be co-ordinated, beyond speaking about them on occasion.
What has happened to all of the great hue and cry that existed when the Department of Regional Economic Expansion was originally established which suggested that this department finally, after so many years, was going to co-ordinate the economic approaches to the disadvantaged regions not only of the various programs of that department but of many other departments-Trade and Commerce, Agriculture, Finance, National Revenue? In almost every department of government that you can name, there are decisions being taken day by day which, in more than a few instances, simply counteract the attempts that are being made by other programs to overcome the long-term situation with respect to poverty and under-employment.
One would have expected, Mr. Speaker, that in committing itself to any kind of major tax reform the government would have been prepared to say that these reforms were directly related to an over all attack on the problem of poverty in this country, the problems of the 20 per cent who exist in that grey no man's land of subsistence living, and that they could point to programs in Health and Welfare, in Agriculture and in so many other departments to which these tax proposals were directly related in a co-ordinated fashion.
Yet today when the Leader of the Opposition asked the Prime Minister about the discrepancy between the FISC program introduced yesterday by the Minister of National Health and Welfare (Mr. Munro) and the program of exemptions in this taxation proposal, what did the Prime Minister say? He said that there will be no attempt to co-ordinate the approaches of both these programs, something which it seems so obvious is necessary when dealing with the same two constituent elements. How then can one expect to believe that the government has faced the situalncome Tax Act
tion realistically and is prepared to meet the real economic needs of Canadians?
Time and again it has been said, usually by people on the government side, that no specific proposals have been advanced by the opposition. They have said, "It is one thing to criticize; anybody can do that". I do not really agree with that. I think it takes some level of understanding to be critical, or at least to understand what the real problems are. But they say, "You are critical. So what? What would you do?" That is often the screen used to allow people to ignore all of the suggestions that have yet been made, some of which seem so obvious and so appropriate that one wonders whether hearing has not stopped altogether. It has been said so often that to repeat it almost seems to be repeating an obvious truism, that if there is to be a turnaround in the present unemployment situation direct action must be taken in the area of tax cuts. I am not talking about the kind of piddling 3 per cent action taken by this government in July, which was really only withdrawing something that it had almost illegally and certainly unethically foisted upon the Canadian people much longer than it had a right to do. Unless significant tax cuts are made there can be no significant stimulation of production and of our economy.
I am surprised, Mr. Speaker, that what seemed so obvious to most governments throughout the history of this country should seem almost beyond realization by the government that faces us this afternoon. If one wants to be even more specific, when faced with the prospects of increased autumn and winter unemployment, surely the most obvious area for government action is the cancellation of an item that has been argued by just about every responsible economist in this country for the past couple of years, that is, the 11 per cent tax on building materials. For the life of me, I cannot understand why anyone with any sense of the needs of this country should still have to argue for something that seems so eminently sensible. The favourable repercussions that would occur in the building trades, particularly the homebuilding industry which is so vitally important, seem obvious, yet this government persistently refuses to remove this barrier to increased activity in this field. Why is that so?


An hon. Member:: Stubborn.


David Samuel Horne MacDonald: Is it stubbornness? Is it pride? I recall the Prime Minister saying on more than one occasion that he likes to surprise people and that he does not like to go for the obvious. He is certainly being consistent in not going for the obvious when he rejects removal of that 11 per cent tax.
In the field of manpower retraining, which is very important in terms of the number of dislocations which have occurred in this country recently, there are obvious needs for revision of the act. With other hon. members, month after month I have requested the government to recognize the need for amendments to the Manpower Retraining Act so that many thousands of Canadians now denied further or new training could make use of this opportunity during the difficult months of winter unemployment. But again, Mr. Speaker, such an obvious step is rejected by this government.
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When we think of the difficulties that the continuing high interest rates cause small and large borrowers, small borrowers in terms of those who would willingly enter the mortgage field for homebuilding and large borrowers in terms of industrial expansion and specialization, we wonder why an attempt is not made within the many programs initiated or influenced by government financial activity to exert some control. The ironic paradox is that in most of the government lending programs over the last three or four years, interest rates have skyrocketed. If the government has given any leadership in the field of interest rates, it has been that everybody should increase them. What kind of economic nonsense is that in a time of high unemployment?
Repeated suggestions have been made in this House that programs such as the winter works program of earlier years or the recently completed youth programs operated this summer should serve as examples for additional economic stimulation during peak unemployment periods in the winter. One suspects that the government's reluctance to revive the winter works program mostly relates to a sense of pride. It was not their idea and the Prime Minister does not like to think that somebody else might have had an idea first or that he would be building upon the earlier experience of others. That kind of pride, Mr. Speaker, has meant a loss of respect and opportunity for too many Canadians for them to feel that it is in their best interests.
What is the government doing about the immediate problems that will be faced by many Canadians who will find themselves persistently and consistently on the welfare rolls? Last year and again this spring when provincial budgets were swollen because of increased charges for their welfare programs, there was no recognition of the special problems that might exist in the larger urban centres, places like Vancouver and Toronto, or for the poorer provinces that find difficulty in raising their 50 per cent share of the shared assistance programs. There was no recognition of municipal needs in this country and one suspects there is no sensitivity to a repeat performance this year. Surely, the government has a responsibility before the programs are fully implemented to respond sensibly to the immediate welfare needs that exist. As in so many other things in the economic field, one suspects that again they have simply buried their collective heads in the sand, hoping that somehow or other this problem will go away or that it can be ignored altogether.
When one examines the tax bill before us, one realizes its fundamental weakness, that there is little here to stimulate economic growth. We may have a revised taxation plan but without that economic stimulation we will not have met the basic economic needs of the people. It is no good to reapportion taxation responsibility unless the people can be assured of some benefit from it. What is being attempted in this amendment is a vivid reminder to this government that it must act now to alleviate the kind of continuing stagnation, under-employment and unemployment, that exists in this country, not only because the situation is bad now but because without some kind of responsible action it is bound to get worse.


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I am pleased to comment on 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".
Mr. Speaker, it is specified that it is an act to make "certain alterations". It is rather surprising to find in the title of this bill of more than 700 pages the mention "certain alterations".
Speaking for his party, the hon. member for Edmonton West (Mr. Lambert) moved the following amendment:
This House deeply concerned with unacceptable levels of inflation, persisting unemployment and stagnant industry and conscious of the necessity for meaningful tax reform, declines to give second reading to a bill which does not provide sufficient stimulus to the economy of Canada with appropriate tax cuts and incentives, does not contain adequate tax exemptions and is not calculated to materially improve business and labour conditions in Canada now or in the foreseeable future.
Mr. Speaker, if we could still hope to amend this bill presented by the Minister of Finance (Mr. Benson), I think all members would attempt to make scathing speeches in order to bring the government to its senses. I am sure, as are other members of the Creditiste party, that the speech which I am going to make this afternoon is not going to make the slightest difference to the contents of this bill. And I think this is also the opinion of practically all members who have spoken before me, as it will be of all who will speak to this bill after me, because this government has shown, ever since it came to power, that whenever legislation is submitted to the House, all is said, all is done, and the legislation has to be carried. Whether debates last a day, a week, a month or a year, the government, on the strength of its majority, has become so dictatorial that even criticism is no longer accepted. Finally, they sit back, as we see government members doing today, quite comfortably awaiting the end of the speeches in order to get on with the voting. That is the absurd side of the situation when a government has absolute majority. Again, I have always said that an absolute majority government works against the interests of the people, being in power merely to assist big finance. We have overwhelming proof of that today, to the extent that I feel hon. members take increasingly less interest in legislation brought before the House, not even venturing to debate, since they feel their speeches are lost in a vacuum. You might as well be speaking to rocks.
Mr. Speaker, I believe that the opinion of the people today is somewhat along those lines. They are being told: What is the use of speaking up and of fighting for you today, because with this government, the more they dig, the more they favour capitalism and discriminate against the worker and the consumer.
Mr. Speaker, this bill has been under discussion for a long time. I am a member of the Committee on Finance, Trade and Economic Affairs. Numerous briefs, submitted by all sorts of organizations have been discussed in the House. It seems to me that this should have prompted the government to amend this bill substantially.
September 14, 1971

Again today, on reading Le Devoir, one can see the dissatisfaction evident at the CICA convention about the new tax system, and I quote:
Dissatisfaction was expressed over the weekend with regard to the new federal tax system at the convention of the Canadian Institute of Chartered Accountants.
Most Canadians, it was stated, will benefit, but the small businessmen, the professionals, the self-employed and the investors will have a hard time figuring out their taxes.
The firms that will benefit from tax reductions will find any advantage greatly reduced due to the complexity involved in their bookkeeping and the interpretation of the law.
When an accountant has to read the whole bill and study it in depth, he will end up feeling a little like us:
I quote further:
Mr. I. H. Asper, editor of the tax column, stated that the public does not realize the complexities of the new bill: the tax expert will become more important, especially to the small enterprises with private capital.
He gave several examples to show that small enterprises will have to take a close look at their tax situation in order to protect their working capital.
Thus, said he, things will become very complicated at the time of the decease of the owner of an enterprise or farm; under the new system, the father's estate will be deemed to have sold its interests and will have to pay taxes on all capital gains realized at the time of the decease.
That is exactly what the government is doing today: after taking from the living, it will catch after death those who succeeded in escaping its tentacles. The provisions on succession duties will be the ones to give the fatal blow to private enterprise or family farms. The article goes on to say:
Since no real sale will have taken place, the family will have to find the money for taxes.
The first thing to do will be to pay taxes even before the burial.
The situation will only be worse if the provincial government imposes estate taxes in addition to capital gains tax at the time of death.
That is the scheme of the two governments.
Mr. R. A. Lachance from Montreal said that the federal tax proposals threaten to slow down real estate investments and reduce the amounts of Canadian capital normally invested in Canadian enterprises.
He recalled that the government does not want any more tax exemptions based on property depreciation, and he added:
"It seems that clever taxpayers will still be able to hide some of their income, so there will not be any of the much needed money for real estate.
The new taxation for non residents in Canada who have large interests in Canadian companies may force those companies to seek the required capital in Canada and not abroad".
This statement, as well as the dissatisfaction shown by the CICA, according to the item that I have just quoted from Le Devoir, should remind the government of the dissatisfaction of the people with Bill C-259 designed to amend the Income Tax Act.
Moreover, I myself have received, after certain studies, and after the representatives of our local organizations and groups appeared before the committee, the following telegram from La chaine cooperative du Saguenay, that is from Saint-Bruno:
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La chaine cooperative du Saguenay is greatly disappointed with the Finance Minister's decision to maintain concept of capital employed as basic principle for taxation of co-operatives. This concept goes against very principle of co-operatives and becomes even more inequitable by new provisions of clause 135 in Bill C-259 which changes calculation method of capital employed. We feel there is no other example in the world of the application of concept of capital employed in any tax system. Adoption of this concept will result in weakening our co-operative financial structure and reduce possibility to give fair returns to our members. We do not expect any special treatment but ask that taxation system respect structure and management of co-operatives. Saguenay co-operative chain affiliated to Quebec Cooperative federee represented within delegation meeting with Finance Minister August 11, 1971 to suggest alternative taxation system for co-operatives which would not endanger very life of such institutions. Request your support with Finance Minister to obtain amendments to bill according to recommendations made by co-operatives.
Leopold Harvey, President La chaine cooperative du Saguenay Saint-Bruno, Lac-Saint-Jean.
And here is another one I received from the Roberval Co-Operative Stores:
Roberval Magasin Coop strongly against amendment to Income Tax Act Section 135 as suggested Bill C-259. Roberval Magasin Coop unable to raise necessary funds for reimbursing capital and paying patronage dividends under new provisions Section 135. Evident that if our co-operative must spend more capital than it receives, it will have to cease operating within a few years. The Roberval Co-operative Store supports the demands of Le Conseil canadien de la cooperation . . .
This shows, Mr. Speaker, that the famous clause 135 of the bill goes entirely against the principle of credit unions which are, in short, owners. They are not ordinary corporations which sell shares, but merely owners. I have in hand a copy of a letter sent to the right hon. Prime Minister (Mr. Trudeau). As far as I know, the Prime Minister did not table that letter in committee. Anyhow, it reads as follows:
Mr. Prime Minister,
As a result of the Benson white paper on tax reform proposals, the representatives of the Caisses populaires Desjardins and the Co-operative Movement of Canada have met with the members of a joint committee of the Senate and House of Commons, in order to discuss with them the integration of credit unions in a new tax system proposed by the Benson report.
We would like to give you some particulars which will enable you to understand better the co-operative fact and the reasons for our recommendation to the said committee.
We are not seeking any special tax privilege. We are convinced that the co-operative nature of the Caisses populaires Desjardins must be recognized as such so that it might get a better treatment and be covered more easily in Minister Benson's white paper.
The following pages will show that, on the one hand, our position is motivated by the active co-operation we intend to maintain in order to continue participating in the economic development of our country and that, on the other hand, government revenues will not be reduced as a result of the integration formula which we propose. In addition, our position will lower the cost of collecting taxes from credit and savings unions.
The proposals of the Caisses populaires Desjardins and those of the white paper were annexed to this letter. I quote:
Until now the Caisses populaires Desjardins have not had to pay tax on their annual operating surplus which is charged to their reserve funds and which cannot be divided among members and does not create any capital gains on members' shares.
Members form a group to obtain services at cost, for surpluses over costs are redistributed as patronage dividends or interest adjustments to members.

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In practice, members pay into their reserves a part of their surplus earnings to ensure their financial stability.



SPECIAL TREATMENT OF COOPERATIVES PROVIDED BY WHITE PAPER.

[Stage Direction]
The White Paper proposes to treat Caisses populaires and Credit Unions as other cooperatives are treated for taxation purposes (4.73).
1.	The White Paper proposals do not take into consideration the fact that Caisses populaires must build up important general reserves in order to ensure their financial stability.
2.	The notion of the capital employed developed in the White Paper is not explicit for the cooperatives; it is far less explicit for the Caisses populaires. Furthermore, it is very hard to establish a direct relationship between operating surplus and capital employed, as well as between the profits and the capital stock of a company.
BASIC PRINCIPLE OF WHITE PAPER Therefore the Caisses populaires dispose of their operating surplus in two ways:
(a)	through refunds to their members;
(b)	through transfers to their reserve funds.
The amount repaid to the member becomes taxable in his hands .. . consistent with the principle of taxing the income in the hands of the person to whom it belongs.
In a Caisse populaire, the amount transferred to the reserve funds can never be distributed to members.

[Stage Direction]
The White Paper seeks to integrate concerns in either one of the following categories:
(A)	PARTNERSHIP
In order to qualify in this first category, the Caisses populaires Desjardins should have the signature of all their shareholders who would ask for such treatment (4.22).
Due to the great number of their members it would doubtless be difficult for the Caisses populaires to obtain the signature of them all (2,500,000).
(B)	WIDELY-HELD CORPORATIONS
The Caisses populaires Desjardins cannot be considered as widely held corporations.
1.	Shares not transferable.
2.	Limited territorial jurisdiction.
3.	Spontaneous non-profit participation of the community in the administration of cooperatives.
The Caisses populaires cannot be assimilated to this category.
C) Closely-held corporations
The Caisses populaires Desjardins must be considered as closely-held corporations.
The taxation treatment for closely-held corporations proposes that "they would have to pay a tax of 50 per cent on the taxable income of the corporation. However when the net profits are distributed to the shareholders, credit would be given for the full amount of the tax paid by the corporation on those profits" (4.24). Section 4.27 stipulates that dividends may pe paid in shares.
We understand that by this taxation treatment the White Paper's aim is twofold:
1.	To Safeguard the basic principle that income of enterprises should be taxed once only and at the rate of the individual to whom this income belongs.
Indeed, the 50 percent payment is only an advance payment. It will be reduced through the tax credit obtained by the partners up to the level of taxation of each shareholder . . .
2.	To safeguard corporate liquidities.
In effect, for the shareholders to profit from the tax credit the corporation has to distribute the profits among its shareholders.

However, as in par. 8.10 of the white paper, we think that the corporation will distribute its profits in the form of shares so no liquid assets will be necessary.
The corporations are sure of being able to keep 50 per cent of their net income for capital stock is not redeemable by a closely-held corporation.
The Caisses populaires want a treatment similar to that of capital stock companies which are considered as closely-held corporations.
However, because of the co-operative characteristics this taxation treatment does not meet the above-mentioned objectives:
1.	To allow our members to profit from the tax credit large production of T-5 forms would be necessary . . . Furthermore, these forms would then be taken up for analysis and tax collection by the federal and provincial income tax services.
Those are, Mr. Speaker, all the complications I was talking about a while ago. The Caisses populaires have more than 2,500,000 members: Can you imagine the situation if we had to send a form to each of our 2,500,000 members!
It goes on to say:
2.	The cashflow problem is even more important because the proposed treatment does not ensure maintaining adequate liquidities.
There is a great difference between the capital employed of a capital stock company and that of a co-operative.
The comparison here is between a capital stock company and a co-operative. In the former the capital stock is not redeemable but in the latter the capital stock can be withdrawn on demand. In the capital stock company the surplus can be distributed in the form of dividends whereas in a co-operative the surplus is never distributed to the members.
It goes on to say:
It should be well noted that for a capital stock company a transfer from surplus to capital stock . . . improves the liquidities of a company by freezing that part of the capital employed.
For a co-operative, the same action (for instance, partial transfer of excess payments to social capital) has a reverse effect. This action would make a more important part of the "capital employed" withdrawable on request.
The caisses populaires have made proposals and I quote:
The tax system applicable to co-operatives should follow two rules:
1.	Co-operatives should be able to eliminate taxable income by paying interest or patronage dividends to their members from excess payments.
2.	The portions of excess payments credited to the reserves of these collective enterprises and held by them would be taxable at the average rate paid by their members.
The purpose of this rule is to enable the government to secure the same tax yield as though the amounts credited to the reserves had been distributed to their members while permitting the collective enterprise to build up general reserves from its excess payments.
Mr. Speaker, in this brief the co-operatives have quite well explained the logical tax procedure and in connection with doubtful debts, transition periods, etc., the spokesmen for co-operatives feel that:
If caisses populaires are taxable it is quite normal that they should be able to build up, from their future taxable earnings, reserves for doubtful debts and liquidities comparable to those allowed to the banks.
September 14, 1971
[Stage Direction]
They are merely asking the government to grant them the same favour which it is granting to the regular banks in connection with doubtful debts.
As regards transition periods, they say:
If caisses populaires are subject to income tax they will have to revamp their account system so as to take the tax system into consideration.
This would not be a simple operation, as it concerns a movement composed of 1310 autonomous enterprises carrying business with their own accounting for many decades. A transition period to establish procedures permitting especially a reevaluation of the assets will surely have to be provided for.
In conclusion, we find the following:
This taxation treatment offered to collectively-held corporations or co-operatives would not show favouritism. It would be an equitable treatment respecting both the characteristics of co-operative corporations and the basic principle of the Carter Commission and of the White Paper stipulating that income of enterprises should be taxed once only and at the rate of the individual to whom this income belongs.
After all, the real owners of the co-operatives are their members taken together.
Mr. Speaker, this gives an idea of the situation, and my suggestions are aimed at renewing the opposition which showed while this notorious bill was being studied in committee. At the beginning of my remarks, I said that the first intent of this bill was to protect the big capitalists at the expense of workers, families and consumers.
We have always wished that the government would introduce amendments concerning basic fiscal exemptions. For some years, we have been requesting that the basic exemption be proportional to the cost of living and, to that end, we suggested that it be increased to $3,000 for single people, and to $5,000 for married couples. Today, a couple cannot live with less than $5,000: two married people can keep body and soul together with less, but to live as human beings, they need at least $5,000 a year.
If we do not accept this $5,000 basis, we are taxing the necessities of life. I think that Canada is wealthy enough so that we do not have to tax necessities, only the surplus over and above $5,000. This is why we have always advocated basic exemptions of $5,000 for married couples and $3,000 for single persons.
As for children exemptions, we repeat that there should be a $500 exemption for each preschooler and $1,000 for each child attending school. If this were provided in Bill C-259, we would have nothing but praise for this government.
At the present time, it is not to be commended for it is only proposing an increase in the basic tax exemption which is a sham, a mockery, and ignores the suggestions we have repeatedly made in this House.
We also asked the government to exempt transportation for workers, food, moving expenses as well as tools. It is not only an amount of $200 or $300; the cost of workmen's and professionals' tools must be deductible. It is normal that workers should be considered on the same standing as professionals, industrialists or traders.
If we accept as tax abatement the dealers' and professionals' expenditures, the same should be done for workmen who deserve as much as the others.
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We also had hoped that under the legislation, municipal and school taxes would have been deductible from personal income. It would have been one way of avoiding double taxation.
All those reforms would have been advisable and if the government had considered further the social aspect of the problem, it could have at last established social justice, as promised, not only for big financiers or capitalists, but for the entire community, the small workmen, the breadwinners and the child who goes to school, where discrimination exists between the children of rich people and those of poor people.
All these are loopholes which instigate reactions, not always good, from youth. Young people are right. Indeed, they think they are getting social laws, but these are antisocial laws, favouring capitalism to the utmost.
Mr. Speaker, I would have much to say, but as the time allotted to me has expired, I hope the government will come back to reason as soon as possible and will at last introduce, not omnibus or autobus bills, but bills of a social character which will benefit the people and protect human beings. Then, capital will no more be protected at the expense of men.
Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, in rising to speak on the amendment proposed to the tax bill by the hon. member for Edmonton West (Mr. Lambert), one is struck by the fact that whatever the bill brings, good or bad, to the Canadian economy it has been dwarfed by the impact of the American action in imposing surcharges on a large part of its imports, including highly vulnerable and politically sensitive Canadian manufactured products involving secondary industries.
The tax bill represents many years of effort, almost a decade in fact, since the Carter commission was appointed and I cannot help but wonder if the exercise was worth while. In the main, one has to recognize that we are dealing with the realities of a particular situation and that what seemed a logical and equitable tax system a year ago at the moment seems grossly inadequate and not capable of solving the taxation problems of our country.
The action of the United States government has brought home to us the enormous importance that the American economy has on our own. A mere 10 per cent surtax, and in actual practice much less, on one quarter of our exports to the United States has created violent consternation and controversy. Indeed, it indicates that no matter how carefully the tax system is set up, it has to conform with the needs of the time and it has to be adapted to best deal with the situation. What would have been an excellent tax system a year ago now becomes unworkable under the new conditions. I believe that the situation in which the Americans now find themselves is one that makes these proposed tax reforms largely superfluous, and if adopted as they now stands they will not facilitate our adapting to the new conditions in which we find ourselves.
Mr. George W. Ball, a leading American authority on international trade, stated the other day that if there is a serious delay in reorganizing world economy, or if the present disarray is long protracted, mounting protectionist pressures could lead to a destructive trade war, com-

September 14, 1971
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petitive devaluation, or both, with implications of catastrophe that cannot be overstressed. Foreign trade is a relatively small component of the United States gross national product, but Mr. Ball saw no conceivable means by which that country could immunize itself against the world depression that might follow. If this is true of the huge American economy, it is more true and more terrifying in the case of smaller and more vulnerable nations like Canada.
With this in mind, it is to be hoped that the strategy of Mr. Nixon to employ the lever of an import surtax to force nations to realign parity of their currency in relation to the dollar will in fact reflect the real purchasing power of that currency. The result should be to restore the United States balance of payments equilibrium. But this will require the full co-operation of powerful interests outside the United States, and the approval of the American people and Congress which in the end makes tariff policy.
All the measures taken by the American government so far are to be jettisoned once the balance of payment is restored, but they may well develop a life of their own and temporary measures have been known to continue for years. This situation is made even worse by the fact that high-cost American industries will like being shielded from foreign goods by import restrictions and will not want to abandon them, especially at a time of high unemployment, and an election year would make them very susceptible. But Mr. Ball remained optimistic about the self-defeating nature of economic warfare, bearing in mind the destruction in the thirties as a result of the tariff wars of that era.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.
William Gordon Ritchie: Mr. Speaker, when the bell sounded at six o'clock I was attempting to show that the new tax measures were based on an error and that we are now faced with a new set of circumstances which will make them somewhat unworkable and not nearly as useful as they might have been.
In the annual report of the International Monetary Fund which was published this week the situation has been likened to a world map drawn in 1944. It describes accurately and in detail a monetary system which no longer exists. There is no doubt that after the industrial nations have passed through a period of negotiation and adjustment, new formally structured monetary systems will be adopted, but it will certainly not be the Bretton Woods system with its rigid parities and weak adjustment mechanisms and its heavy dependence on the United States dollar as a reserve medium and reference currency. On March 7, 1969, while speaking in this House on the proposed amendments respecting the International Monetary Fund and exchange fund account I suggested that greater exchange rate flexibility might be attained by use of the so-called crawling peg. I suggested that Canada
should be in the forefront of change in the international monetary system. The collapse of the monetary system resulted from the massive $16 billion rise in international reserves in 1970; two-thirds of the 1970 increase in global reserves was concentrated in four countries, West Germany, Canada, Japan and France. This was largely the result of the U.S. balance of payments deficit. One method which might have helped to prevent this would have been the introduction of greater exchange flexibility over a period of time to allow currencies to be in better relationship one to another.
I do not feel that the bill will help those industries which will be affected by the surtax. The bill, as evidenced in the committee, is an open invitation to favouritism and regionalism. Payments are to be made on a plant by plant basis. It seems quite obvious that the plant which gets the ear of the board will end up with the money. This is not a good situation. The bill is designed to concentrate industry in a region which politics decides is most opportune. It would have been much better if the government had attempted to take the thrust of our exports away from the United States and reinforce companies in areas wherein we could make significant inroads. The new currency rates should increase our ability to compete in the western European and Japanese market especially. Rather than this bill, it seems to me an export incentive tax rebate would have been a proper tool to use to stimulate export growth to these countries. The effect of the United States action is to reduce their own expenditures in order to improve the internal economy. One interesting provision is the deferral for one year of welfare reform.
Speaking on the general tax question I should like to point out that Canada faces many problems. The most urgent at the present time are in fields in which this government has been least successful-economic growth, and in some sense Canadian participation in the world at large. As to the latter, its relationship to economic growth is obvious particularly in Canada, the sixth largest trading nation in the world where the equivalent of one-third of everything produced is exported.
In these tax reform changes the government has opted for equity rather than in favour of economic growth. We should remember that in the past 20 years we have seen significant changes in our population growth. We are still experiencing the massive birth-rate of the fifties and the entry into the market of these people. When one considers that in 1957 approximately 500,000 children were born in Canada, compared with some 360 thousand last year, it is appreciated that for some years to come we will be involved in providing jobs for this growth in population.
I believe the tax reforms are being brought in too soon. I think the idea of achieving complete equity before growth could well have been deferred for some years. In order to promote economic growth we need to encourage savings. By definition, savings and investment can be obtained only from what is remaining after spending. A person has to spend less than he earns. Capital investment, the main determinant of growth, can be financed only by saving.
September 14, 1971

I think one might say that by definition saving is an individual choice. Years ago, when our social services were not so well developed, saving was undertaken by an individual to assure himself of a comfortable old age and of a retirement income, but in many cases the individual is now free of these worries. He is free of the high cost of medical and hospital services which were often extremely worrisome to a person 60 years of age and over. Now this is handled by our social services. Also, in the matter of housing he is able to a large extent to buy a house and finance it on a long-term basis. So that although there may have to be some saving, not nearly as much is needed as when a person had to finance his house for a shorter period of time. In other words, the personal inclination to save has materially diminished and the problem of encouraging individuals to save should be tackled in the immediate future.
In the economic field no one can believe that the Liberal government has really laid the cards on the table. As usual, some people are trying to determine the government's policies by gauging public opinion, and as usual public opinion is blurred and drifting. Not since the belt-tightening program of 1962 has any solution to our economic problems been presented. Likewise, no one believes that some magic piece of legislation or embarking on a spend-your-way-to-prosperity program is the answer now, when in many areas governments in particular are already spending too much. Rather, it is widely accepted that what is required may be aptly described as a tough, positive, farsighted program for giving Canadians renewed opportunities.
In the matter of spending by the three levels of government in the field of health, welfare and education we have only begun to grasp the problem and to attempt to find ways of curtailing these expenditures. We must attempt to set down guidelines by which these various social services can be tailored to the money that can be allotted.
It is generally recognized that there is no alternative for Canada but to seek wider and more diversified access to markets, not only for our primary products but also for those manufactured goods in which Canada has or may be able to get a basic competitive advantage. This will necessitate exposing Canadian markets in return. Trade with the Communist bloc has been sadly neglected; the initiatives demonstrated by the wheat shipments during the days of the Diefenbaker government have generally been allowed to lapse. The Pacific rim area is the place of greatest potential gain, yet it has been all but ignored recently. It is acknowledged that this involves trading in new international markets for greater international trade, which will produce the maximum Canadian productive effort. I think that in this respect our tax system is most important.
The spur to Canadian business can come from access to new markets and the subsequent exposure to aggressive enterprises. On the other hand, Canada has made no counter proposals to Britain's current bid to join the European Common Market although Britain has been
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Canada's most valuable customer, the nation that has provided Canada with its biggest surplus on its current and trading account.
Obviously, Canada cannot merely decry Britain's efforts to join the Common Market. It must offer something tangible which would help to offset the theoretical lure of the European Economic Community. Free trade with Britain in manufactured goods might be the spur to tip the balance against Britain joining the EEC, particularly if public opinion there remains so divided. It should be remembered that Britain is our best customer, that our trade with her provides us with a huge surplus and that therefore we should make an effort to maintain this market.
Canada needs the opportunity to participate in new trading markets, particularly now when 65 per cent of our exports are going to one country, the United States. Needed, too, is the carrot of being able to keep more of what you make. This is an essential element of producing a positive climate for aggressive effort and risk-taking. This means the elimination of taxation proposals which would make it unprofitable for Canadian companies to expand overseas. Also, it means that there should be a shift in the burden of taxation from taxing earnings toward taxing consumption.
No one really believes that there is much likelihood of an over-all reduction in the Canadian tax burden in the near future, although that must be an ultimate goal. In fact, it is imperative that some of the weight of taxes be removed from the Canadian economy or entrepreneurs will move to more favourable economic climates. A shifting of the burden off the risk-takers and onto the consumers would be an important element in encouraging maximum productive effort.
Thus, we should encourage personal and corporate industry by shifting some of the tax burden from enterprises which are efficient and well managed to enterprises which are not so successful. There must be a slow weaning of Canadian secondary manufacturing industry away from its underlying branch plant psychology. There should be little reliance on artificial supports or other gimmicks of a legislative character, or on speeches before Canadian clubs in American cities, as a means of achieving greater Canadian control of our manufacturing industry and the requisite export effort.
Too much reliance recently has been placed on boosting Canadian participation and on talking for or against foreign investment. It is essential that capital flows on the basis of market decisions arrived at by considering the economic merits. We must rub the salt of reality into the wound of our depressed economy. What is required is the creation of a climate of competition in the international marketplace; then Canadian enterprises will find it to their commercial advantage to service an available market which is much larger than the Canadian market. Obviously, this will not be an easy or quick solution.
Speaking of the attempt to consider non-resident control of our companies through the tax bill, I do not think the answer to non-resident control rests with legal devices which counter the natural economic forces but,

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rather, with the encouragement of Canadian enterprise in positive ways and the discouragement of non-enterprise regardless of its parentage. For example, foreign nonenterprise could be discouraged by negotiating a tax treaty with the United States so that operating losses of American subsidiaries would not be used to offset income taxes of the parent company in the United States. In this way, unprofitable operation in Canada would not be encouraged, as is the case today, and true economic decisions would be made.
There is much more I could say, but I shall reserve further remarks until later in the debate when I can apply them to the specific areas on which I should like to speak.


John Howard Lundrigan: Mr. Speaker, this is becoming an unusual House of Commons. Last Friday we had to work like the dickens in the House of Commons to get an opportunity to speak in the debate because on one day there was, I believe, a ratio of five Liberal speakers to two opposition speakers on a piece of legislation having to do with the Canadian reaction to the American surcharge. We were amazed, because we had three or four points of view to put across and we had to work like the dickens to get them in and to express the official position from this side of the House.
Today we are dealing with a major piece of legislation, one of the most important that has been placed before the House of Commons in a decade. I have been here only three and one half years, but this must be one of the most challenging pieces of legislation to come before us, one of the most controversial in many ways. It is a piece of legislation that needs all the reactions of members of both sides of the House, the Gillespies and others who have taken part in tax reform chit-chat for years and years, the Kaplans and the others-


The Acting Speaker (Mr. Laniel):: Order, please. The Chair feels this might be a good opportunity to remind hon. members of the practice of the House according to which we do not call individual members by name. Over the past few days and weeks the Chair has noticed that hon. members in their speeches have referred to, and found ways to refer to, other hon. members by name and even to refer to ministers by name. Of course they may be excused for using the name of a member of this House by quoting it in a citation, which is acceptable. But this practice has developed more and more, and before it goes too far the Chair thinks it should take this opportunity to read citation 146 of Beauchesne's Fourth Edition which reads as follows:
It is the custom in both Houses that no member should refer to another by name. In order to guard against all appearance of personality in debate, members should be referred to in the third person as "the honourable member for-says or contends, etc." A minister should be designated by the portfolio he holds in the government as "the honourable minister of". It is usual to refer to the chiefs of the two main parties as, "The Prime Minister" and "The Leader of the Opposition".
This having been said, I wish to state that I am not blaming any hon. member in particular, but I thought
that something said in the last remarks of the hon. member for Gander-Twillingate (Mr. Lundrigan) offended against this citation. He is not one who is normally at fault in this matter, but he did give the Chair the opportunity to raise the point and read citation 146, which might be useful to hon. members during the course of debate.


John Howard Lundrigan: Thank you, Mr. Speaker. As a matter of fact, that was the first time I violated citation 146 which Your Honour quoted. Some of my bad manners, or perhaps some of the procedural disrespect manifest in my last remarks was prompted by the daily violation of that rule by the Prime Minister (Mr. Trudeau) during the question period, and I hope the Chair will remind that right hon. gentleman of the citation. The hon. members to whom I was referring were the hon. member for Don Valley (Mr. Kaplan) and the hon. member for Etobicoke (Mr. Gillespie), constituencies not quite as familiar to me as Gander and Twillingate.
The point I was trying to make was that today we have had six or seven members of the official opposition and other members on this side of the House taking part in the debate on this most important piece of legislation, one of the most burdensome and complex pieces of legislation presented to this House within the past decade, and we have not had a member of the party responsible for presenting this garbled mess to the Canadian people presenting any of that party's argument, points of view or positions.


Patrick Morgan Mahoney: On a point of order, Mr. Speaker-


John Howard Lundrigan: This is somewhat frustrating. We have had enough interruptions.


The Acting Speaker (Mr. Laniel):: Order, please. The Parliamentary Secretary to the Minister of Finance (Mr. Mahoney) rises on a point of order.


Patrick Morgan Mahoney: Mr. Speaker, I recognize that the amendment before the House gives this debate the broadest possible scope in respect of economic matters. I am not sure of the relevancy of the hon. member's remarks, but I am sure he would wish to be accurate. The hon. member for Hamilton-Wentworth (Mr. Gibson) did participate in the debate earlier today. It is unfortunate that the hon. member for Gander-Twillingate (Mr. Lundrigan) does not spend all his time here, as he would have us believe.


The Acting Speaker (Mr. Laniel):: Order, please. The Chair is of the opinion that the first part of the remarks of the parliamentary secretary was quite right and to the point, namely, that the rule of relevancy should apply to the House. I would point out that in his recent ruling Mr. Speaker put into perspective the importance of the relevancy of debate. I think that point was well taken, although the second portion of the parliamentary secretary's remarks was more or less a point of debate.


Colin David Gibson: Mr. Speaker, on the same point of order-

September 14, 1971


The Acting Speaker (Mr. Laniel):: Order, please. The hon. member tor Hamilton-Wentworth (Mr. Gibson).


Colin David Gibson: Mr. Speaker, I did speak in the debate this afternoon and my one regret is that the opposition were represented in the chamber by only one member of the Conservative party.


Mr. Bell:: Can you blame us?


The Acting Speaker (Mr. Laniel):: Order, please. Again, this is a question of debate, a matter which could be debated for a long time if we pursued this type of intervention. Therefore I would ask the hon. member for Gander-Twillingate to continue his remarks.


John Howard Lundrigan: Mr. Speaker, a lot of members were behind the curtain this afternoon during the ten-minute interruption that we had in the House, and I do not want to overlook the fact that we had several interruptions in the debate. Let me go on to deal with some aspects of the legislation.
I think it goes without saying, and without reflecting a lack of knowledge on anybody's part, that it would literally take years for the average Canadian to understand some aspects of the legislation before us. Even some of the greatest tax experts in the Canadian nation admit that its actual effects may not be known for years, perhaps a decade.
I would like to make a few remarks about one aspect of the legislation, namely, its impact on low-income Canadians. As the Leader of the Opposition (Mr. Stanfield) said this afternoon, we have almost been placed in the position of being blackmailed to present a positive outlook on this legislation because some low-income Canadians will receive an easement or some kind of reduction in taxation because built into this massive piece of legislation is one favourable feature which we can all support, even though some of us would go further and suggest that there should be greater increases in the basic exemptions proposed for low-income Canadians.
For the past three years one simple amendment dealing with such exemptions could have been brought forward. I know that I am not communicating effectively with the tax expert from Calgary, the Parliamentary Secretary to the Minister of Finance (Mr. Mahoney), because he does not have ears to hear average Canadians. But let me repeat that at any time during the last three years we could have passed a simple amendment in this House to give relief to low-income Canadians, instead of waiting and having such an amendment incorporated in this massive piece of legislation. By the time this legislation takes effect, bearing in mind that the proposals have been revised following advice from the Official Opposition and other Canadians, I believe some if not all of the potential benefits will have been eaten away by inflation which over three years has reached the cumulative effect of 15 per cent or 16 per cent.
Now I come to deal with the middle-income Canadian. Who is the middle-income Canadian in this country of ours? Some middle-income Canadians are professional people, some are technically skilled people and some run
Income Tax Act
small, unincorporated businesses. Although I have not seen statistics in this respect I suppose there are tens of thousands of middle-income Canadians or small businessmen across Canada who do not find themselves in a position to take advantage of the relief under the incorporated small business legislation. With the advent of the present income tax proposals we have seen middle-income Canadians express the sentiment that they might as well give up. The small businessman believes there is no advantage for him any more to engage more actively in the Canadian economy. A tremendous amount of apathy has crept into the attitude of the middle-income Canadian. Again, the word incentive, which creeps into everybody's language these days, is perhaps the one word that can be used to challenge the legislation before us.
I am not going to offer an opinion on this matter, but I am sure that people wonder whether these tax proposals will do very much to encourage Canadians to invest in their own country. The increase in taxation will make those Canadians who are trying to invest in any aspect of the economy take a second look at their prospects. I am not speaking of people who invest millions of dollars but, rather, the average small investor with $5,000 or $6,000. I cannot predict the impact that this measure will have on investment in our nation when we are crying out to Canadians to invest in their own economy.
Many people believe that the domestic international sales corporation proposed by the American government will become law. This, with the 10 per cent surcharge which has affected the secondary manufacturing industries and other resources, makes the tax package before us redundant. In his speech the other day the hon. member for Duvernay (Mr. Kierans) covered many things that we in this party have already said. In this tax package I do not see anything which is the kind of direction we were looking for as far as resource industries are concerned.
In later remarks the hon. member for Grand Falls-White Bay-Labrador (Mr. Peddle) will confirm that we were shipping millions of tons of iron ore from Labrador to the American market for manufacture. With just a large crane and half a dozen men we can ship millions of dollars worth of non-renewable raw resources, those which cannot be replaced. It can be seen that there is very little incentive for the paper industry or the fishing industry or any non-renewable or renewable resource industries. I do not know if it is because the government did not see fit to address itself to the problem or lacked the ability to do so, but the resource industries of this country are not mentioned to any great extent in this tax legislation.
I am not going to ramble on for 40 minutes speaking in generalities, Mr. Speaker. However, I have a few suggestions, not very sophisticated or complex, which could be considered. One small thing which would not excite many members opposite is the tax now to be imposed on scholarships and bursaries. At the moment, if a young Canadian, especially one involved in graduate work,

September 14, 1971
Income Tax Act
receives a scholarship worth $4,000 or $5,000, with the exception of $500 it will be subject to income tax.
This is a country that should believe in the development of human resources and should place almost unlimited funds at the disposal of young Canadians so that they may become actively engaged in our educational processes, yet it is proposed to impose a tax on scholarships and bursaries. Most other countries, especially the developing ones, must regard this as a joke. Yet we are a developing country, a country of vast raw, undeveloped resources. We have a population of 22 million and need to develop our skills to the greatest extent, yet it is proposed to tax scholarships and bursaries and other financial rewards given to outstanding students. This proposal should be reassessed if we are to encourage our young people and realize the value of human resource development.
I challenge any economist in Canada, the United States or Europe to deny that there is but a positive correlation between the educational development of a nation and its economic development. The reason for economic development may not necessarily be educational development, but the fact is that in most nations this does seem to be the case. I contend, Mr. Speaker, that we should never take any action which will discourage the development of our human resources.
Another point which I realize will be presented by other hon. members is the impact of this tax legislation on the co-operatives of Canada. There are not many co-operatives in my province-only five or six in my riding of Gander-Twillingate-but I think each one of them has made representations to myself and the Minister of Finance (Mr. Benson). They claim that the co-operative movement is in danger of having to completely reform its foundation and to become a corporate structure if it wants to survive, unless there are changes to Bill C-259. The fact that they will be forced to redirect their profits to the investor rather than the patron of the co-operative, and the increase of taxable reserves from 3 per cent to 5 per cent, means they will have to be restructured or go out of existence.
I should like to know who drafted this provision and why. It seems to be an attack on the co-operative movement and the credit union movement. Is there someone in a back office with some kind of a hang-up on co-operatives? When the hon. member opposite who is the expert on tax legislation is giving his prepared dissertation soon, I should like him to tell me the reason. We strongly recommend that the government reassess its position on this tax bill as it pertains to co-operatives in Canada.
The third point I should like to make briefly, Mr. Speaker, concerns the impact of the total tax legislation on the unincorporated, small business. In the last several years we have had considerable discussion about effective tax arrangements for the small incorporated business, but nothing on the unincorporated business. There must be thousands of them across Canada wondering what their future is to be-firms employing four or five men to drive trucks or, for example, small lumbering operations. They must be terrified by the complexity of the legislation
before us and the fact that there is no protection for them under the tax laws of the land. This is making some businessmen wonder why they should not just try for a job in a factory so they can come home at five o'clock in the evening to enjoy supper with the family and forget about the economy of the nation.
Everbody looks at General Motors, Imperial Oil, the American Oil Company. Has anybody ever looked at the small, unincorporated businesses in Canada? They do not have a very sophisticated structure and cannot present their case or briefs to the Minister of Finance and the House of Commons, but I would like the government to consider these people before driving them out of business altogether. The headache of running a small, unincorporated business when you do not have protection under the law taxwise, so to speak, when you do not have the assistance of accountancy firms and tax lawyers, must be unbearable. I make a plea on behalf of these people.
I wish to make a fourth point. I am trying to make a few simple points about subjects that have not been covered very extensively. In my province it has been announced that one of seven paper-making machines in the Bowater complex in Corner Brook, Newfoundland, is being closed. You will be hearing more about this as the days go by. When the announcement came, everybody got up in arms and said, "What are we to do to avert a disaster and to prevent between 1,000 and 1,200 people becoming unemployed?" "Conversion," some say, "may be possible." We must remember that even if we convert a piece of paper-making machinery, the conversion will take time and that will mean temporary unemployment. As I say, the conversion process will take time and put some people out of work. I am using this as an example.
Many industries in Canada today are finding that they must change their manufacturing process. In other words, they are being forced to change their entire process and are thereby forced to retrain their people or lay them off. I should like the government to take a much closer look at the question of industrial retraining. Let us not wait until the fish and chip factory in Prince Edward Island is forced to close its doors simply because it must bring in new machinery to manufacture weiners, say, and must retrain people to manufacture them. Could the Minister of Manpower and Immigration (Mr. Lang), who is responsible for most of the industrial retraining programs in Canada, not work with industry and bring about major changes in industrial retraining so that the workers who otherwise would become redundant could retrain and readjust to new methods and not be thrown out of work?
I should like to see some of the experts from the Department of Manpower and Immigration look into this question. They are not like hon. members of this House who are generalists, who have some knowledge of a few things and perhaps not a great deal of knowledge of many things. I should like to see civil servants in the Department of Manpower and Immigration who earn between $30,000 and $40,000 a year get together with ministers of education in the provinces and personnel in

September 14, 1971
Commons debates
industry and see what can be done to provide industrial retraining programs tor Canadians.
I should like to make another point, Mr. Speaker. For the last three years I have listened intently to the ram-blings of the Prime Minister (Mr. Trudeau) during the question period. Now and then members of the House have asked whether there have been provincial and federal consultations and whether federal, provincial and municipal authorities have come together so that we might find solutions to our economic conditions relating to unemployment, as well as to taxation problems. The philosophy that has been foisted on the Canadian people is that there are two different kinds of Canadians, the federal Canadian and the provincial Canadian; they are two different kinds of animal.
Nowhere is this philosophy adopted by the Prime Minister more evident than in his attitude toward taxation. People say that the Canadian taxpayer cannot carry the burden any longer and that we must integrate our taxation structures at the federal and provincial levels in order that our people can better carry the burden. Then we are told that the provinces can increase their taxes, as if you are talking about two different fellows, or as if there is a provincial fellow down there and his federal wife up there somewhere. I do not understand this. For the last several years we have been led to believe that we have in this country two* completely unrelated systems of government, the federal system up here and the provincial system down there.
We have reached the point where Canadians in Newfoundland are wondering if they are living in Newfoundland or in Canada, where Canadians in British Columbia or Quebec are wondering if they live in British Columbia or Quebec alone, or if they are part of Canada. I do not care whether we live under federal or provincial jurisdiction; there is need for more consultation and for greater integration. When you talk about integrating the tax system you must remember that today's taxpayers are being taxed by school boards, by municipalities and by provincial governments and the federal government. There must be some way for us to integrate our tax system to a greater extent so that Canadians can understand what is happening, instead of facing total frustration.
I am a believer in simplicity, and I speak from personal experience and for many thousands of Canadians when I say that when Canadians have to deal with our tax system the result is absolute and total frustration. The average Canadian has to have some knowledge of accountancy; he has to be a bit of an economist, a bit of an insurance agent, and so on. All this is causing a great deal of anxiety and confusion in the minds of Canadian people.
Perhaps I am just talking off the top of my head; perhaps I am not really putting my point very well to the members of the House of Commons. But, surely there must be some way for us to bring about greater integration of our tax structure so that Canadians will know where they stand on taxation. For example, I should like to see a greater effort made so that provinces receive
Income Tax Act
benefits from total taxation that are commensurate with their needs. The present system must be frustrating even for the province of Ontario. The Ontario government has done much to contribute to confederation and it must be frustrating for them to wonder if they can meet their obligations, because the tax burden which is imposed by the federal government in part is unrelated to provincial tax needs.
We hear much talk today about reducing taxes. Every time we talk about reducing taxes we hear members on the government side saying that we also want to reduce services. I am not an economist but according to authors whose works I have read, if the government had the courage, gumption and determination to reduce taxes substantially, increased tax revenues would be the end result. That move, as a matter of fact, would broaden the tax base in the country and increase revenue. It may seem foolish to say that you can reduce taxes and increase revenues, but I for one think you can do that. I think it is time we developed that point of view, because by reducing taxes we would give the people an incentive to spend money that would have been taken from them in taxes by the very fact that average earners would then have more money at their disposal.
Some economists insist that if you increase demand that way, you will also increase your tax base and tax resources available to the Canadian people. I firmly believe that. For example, to use the example given by the hon. member for Egmont (Mr. MacDonald), if you were to remove the 11 per cent sales tax on building materials, as has been advocated many tines, in a few years you would replenish any moneys lost from the federal treasury because you would create new tax sources. For instance, you would create a mini building boom, make housing more accessible for ordinary people and stimulate the economy as well. Look at the jobs that would result. But we cannot get that idea through to the Minister of Finance or to the Prime Minister. The people across the way refuse to accept our ideas when we raise them. They refuse to backtrack one inch because we in the opposition would get the credit for the ideas. I could develop other examples to show that by reducing taxes the average Canadian could buy a better car, better furniture and more groceries in the store. The total effect on the economy would be enormous.
We are getting no tax adjustment in this bill, Mr. Speaker. The government is increasing exemptions by a few hundred dollars for people who are already well below the poverty line. Yet the government has the gall to say to the Canadian people that it is readjusting their tax burden. That is a lot of gobbledygook.
I wish to sum up a point of view which I raised earlier. Your Honour will be hearing this point of view thousands of times in the coming months. It has been heard before. If we want tax reform in this nation, there has never been a period in Canada's history, especially in the context of the United States present attitude, when it was more necessary for us to reassess our whole position with regard to the taxation of basic resource industries. I

September 14, 1971
Income Tax Act
do not see any proposals for tax reform in the present legislation. I see tax changes hut not basic reform.
Let me give a few examples. We export $202 million worth of fish annually to the United States. I believe that roughly $101 million of these exports are affected adversely by the surcharge. We export a tremendous amount of fish. It may not sound much when one is thinking about a total budget of $14 billion, but fishing is a major Canadian industry and in my province alone it affects directly some 20,000 people out of a working force of about 150,000. We bring back our fish, we remove the meaty part of the fish and ship it to our neighbours to the south. They take it and chop it into little fishsticks, they tin it and cook it, etc., and their own people are on the production lines cutting up this fish. It is they who are employed in making fishsticks which sell at a very high price, while the fishermen of this country are still receiving 4 or 5 cents a pound for a product which sells here in Ottawa for 85 or 90 cents a pound.
Never has there been any assessment of ways in which we could give inspiration and incentive to our processing industries so that we could benefit from the labour content. Perhaps this is because we are only talking about exports amounting to $200 million in value-a relatively small industry like fishing. But look at the paper industry. In the last few years the international market has been softening up considerably all over North America. Has the government ever seriously considered offering some incentive for the further refining or processing of wood pulp products, or to measures designed to enable our lumber industry to compete more favourably in the international market?
Consider the iron ore business. I am sure my hon. friend from Grand Falls-White Bay-Labrador will wish to say something about this later in the debate. From time to time I visit Labrador on the way to my constituency and take note of the developments which have taken place in that region. Settlements have grown up such as Schefferville on the Newfoundland-Quebec border, and Labrador City and Wabush where 14,000 people live in an attractive, modern community in the north of Newfoundland. We in Canada are getting only a very small benefit from the profits of that investment. The real cream goes to Pittsburgh. We are exporting this raw material and the benefits end up in the pockets of United States investors and big American developers. I do not blame these people. They have the technology, they have the administrative expertise and they possess great financial resources. In addition, they have access to a market which caters for 220 million people. Nevertheless, I am convinced that if we were to encourage further development of these raw resources, the further manufacturing of these materials, great advantages would follow in terms of employment and increased prosperity and I have no doubt that tax arrangements could be developed which would give an incentive to this end.
I shall make another minor point. There lies off the coasts of Canada, both Atlantic and Pacific, territory which is just as much our own as the ground on which we are standing. It is called the continental shelf and it belongs to Canada. We still have to resolve the question

of fishing rights because other nations are permitted to harvest our marine resources in the area, but the bottom of that ocean is Canada's.. .all the minerals, all the resources, everything connected with the bottom of the sea is Canada's by law. There are places off the Atlantic coast where the continental shelf sweeps out for 400 miles. Right now companies such as Shell Oil and the American Oil Company are doing exploration work there.
We have never been given a clear and definitive statement by the government as to where it stands with respect to the taxation of these corporate giants. I have been informed by people knowledgeable in marine law that these great companies have not only been permitted but encouraged to go into these areas without even having to bid on the millions of acres over which they have control for exploration purposes. I have heard the expression that Canadians are the Arabs of the 1920s. I am not referring in a derogatory way to the Arab world. The point is that it was 50 years ago when these people were as naive about the value of their resources as we are in Canada today. We are considered by these corporate giants as being an extremely naive nation, as an extremely naive people.
I have never heard any statement in the House of Commons, for example, setting out what the taxation policy is to be as far as these companies is concerned. Nor have we been given any definitive statement as to what the government is prepared to do to protect the public interest in this field. There is no integration of federal and provincial effort; all we hear is wrangling between the provincial and federal governments while the oil companies are laughing all the way to the bank- and the bank is not a Canadian bank.
In addition to all this, we have a great opportunity to further develop our mineral resources in the opinion of some knowledgeable people in the area. Is this not another field in which we could encourage the corporate community of Canada, the business community, to become involved in exploration work? I remember when I was a little younger than I am today; the Prime Minister at that time was my hon. friend from Prince Albert (Mr. Diefenbaker). I recall being a long way from Ottawa-the east coast of Newfoundland is a long way from Ottawa.


The Acting Speaker (Mr. Laniel):: Order. I regret having to interrupt the hon. member, but the time allotted to him has expired. He may, of course, continue if the House gives unanimous consent.


Thomas Miller Bell: If Your Honour would check with the House I am sure you would find there is unanimous consent for my hon. friend to continue his very pertinent speech.


The Acting Speaker (Mr. Laniel):: Does the House consent to the hon. member for Gander-Twillingate pursuing his remarks?


Mr. Perrault:: I will give my consent if the hon. member will agree to answer a question before he ends his speech. I have been listening very attentively to what he has had to say.
September 14, 1971


John Howard Lundrigan: No conditions. I will answer the hon. member's question, after I have finished my speech, for half an hour if he wants me to.


The Acting Speaker (Mr. Laniel):: The Chair wishes to remind the parliamentary secretary that it needs more than the consent of the parliamentary secretary.


Some hon. Members:: Hear, hear!


The Acting Speaker (Mr. Laniel):: Does the House give unanimous consent to the hon. member for Gander-Twil-lingate to pursue his remarks?


Some hon. Members:: Agreed.


Raymond J. Perrault: I suggest it requires my consent as well. May I ask my question now?


John Howard Lundrigan: When I have finished my remarks. Then the hon. parliamentary secretary, the member for B.S.-


Some hon. Members:: Oh, oh!


The Acting Speaker (Mr. Laniel):: The hon. member now has the floor by unanimous consent and he is the one to decide when a question may be asked.


Some hon. Members:: Hear, hear!


John Howard Lundrigan: Thank you, Mr. Speaker. I did have a few further points to raise as suggestions. However, I shall not take the time of the House to make them now; I shall do so later when we get into committee of the whole and make a clause by clause analysis of the legislation before us.
As I was saying, in 1961 and 1962, when the right hon. member for Prince Albert was Prime Minister and we were even more distant from Ottawa than we are today because communications were not as sophisticated as they are now, I remember listening to the talk emanating from Ottawa about developing the north, about the vision of the north, and could visualize the Prime Minister of that day leading the Canadian people, with his usual style and magnetism, into the exciting prospect of developing the northern resources of this country.
I vividly remember that and the tremendous effect it had on me as a young Canadian who was just old enough to vote. I have not witnessed that kind of attitude in this country during the last three or four years. I have not seen the kind of leadership where our people are told that we must develop our great resources. The continent of Labrador, which belongs to the province of Newfoundland, with all its natural resources, the great oil reserves in Alberta, require for their full development vision, determination, incentive and drive. This is what is lacking at the present time. Not only is it lacking in this bland and bare piece of legislation now before the House; it is lacking in our whole attitude to the development of the resources of this country. We have no leadership, no development programs, no drive or determination.
I should like to see Canadian-owned and Canadian-inspired industries given a little extra incentive to devel-
Income Tax Act
op our natural resources in the north, our oil, timber and so on. But this is what is missing in this tax legislation and in the attitude taken by the government. In short, we lack leadership. I am receiving no inspiration from this government and neither is the average Canadian investor. No incentive or inspiration is being given to even our business community.
No incentive is given to encourage people to go into the north and make a few dollars for themselves. How many members of this House of Commons have seen our people spend six or eight months working in the north in order to earn a few extra dollars to put in their pockets? These people are adventurers, explorers and developers, yet they get little benefit from their efforts. They give up the easy amenities of life defined by the hon. member for Mount Royal, the one who believes that everything should be big and rosy under the street lights. Certainly there is lacking the inspiration reflected by the author of "Sam McGee," Robert Service and other great Canadian writers, and this whole attitude is compounded by the lack of leadership shown this country.
In conclusion-


Some hon. Members:: Hear, hear!


John Howard Lundrigan: -I want to deal with a matter that I am sure others will want to develop. We have in Canada today the Department of Regional Economic Expansion, sometimes called DREE, which sounds like some form of nasal congestion. This department is charged with eliminating regional disparity in Canada. Under this new, just society there is to be no more regional disparity in Canada.
One of the things that someone has dreamed up is that we are not prepared to amend our monetary and fiscal policies on a regional basis because we might offend Canadians in other parts of Canada. So the department has decided to give incentives to enable industries to be started, for example, in the Gaspe area, a slow-growth area which has been called a designated region. I do not know what Tom Kent calls it because there are so many different nomenclatures attaching to it. Although this has been the thinking and philosophy of the Department of Regional Economic Expansion and the officials of the department have shown a good deal of interest, their programs just have not worked.
Why have they not worked? It is because these designated areas are among the most backward in Canada, economically. They have few formalized business structures. Few of the businessmen in the Gasp6 are able to open up their books to prove they qualify for an incentive grant; they are not able to say that they received $40,000 from firm A and $50,000 from firm B. I am sure the hon. member will agree that business communities are not well formalized in the underdeveloped parts of the country in particular.
The fact is that the philosophy of the Department of Regional Economic Expansion-if there ever was one except in the mind of the former deputy minister-has not been a success. Put our loan program, our fisheries development program, the Farm Improvement Loans Act,

September 14, 1971
Income Tax Act
the Small Businesses Loans Act and our incentive programs all together in the same bundle, we still have not eliminated areas of greatest disparity in Canada. On this basis I challenge the Minister of Finance to rethink his tax proposals as he lets them float away down the drain during the next few months. Let him either consider modifying the monetary and fiscal policy of the government on a regional basis or reassessing the direction being taken by the Department of Regional Economic Expansion.
I put that forward as a suggestion, though I do not know that I can back it up with all of the examples that I would have to use to convince the hon. member from Calgary of its merit. But I can tell him that in the province that is most economically deprived and with which I am most familiar, the present tax package put forward by the minister and the programs under DREE are not to our advantage. These underdeveloped areas have great potential, yet they are made to feel like the foster children of the Canadian nation, as if they are having an unhealthy effect on the unification and Canadi-anization of this country.
I have rambled on for a few moments, Mr. Speaker, but I do want to give the hon. member for Burnaby-Seymour (Mr. Perrault) the opportunity to raise his point of order, which I am sure will consist of a calculated attempt on his part to embarrass me after hon. members opposite have listened to 50 or 60 minutes of a few things which must certainly hurt a little.


Raymond J. Perrault: Mr. Speaker, I can assure the hon. member that embarrassing him is the last thing in my mind. I have listened attentively to his remarks. The hon. member for Gander-Twillingate is a considerable orator, but some hon. members are somewhat baffled and bewildered by what he has said.


Robert Lorne Stanfield: Question.


Raymond J. Perrault: My question is this. I took copious notes of what he said and at one point he said, "We are being blackmailed into presenting a positive outlook on this bill". Does the hon. member find it painful to be positive? That is the question.


John Howard Lundrigan: Mr. Speaker, I am assuming in answering the hon. member's question that the House is giving me the time to do so in order that he will be able to understand my reply, though that would take a lot of time. Let me say very seriously that if that is the most serious question that he can ask me, having listened to my feelings for the last 50 or 60 minutes, I am amazed at his intellectual bankruptcy.
Secondly, if he would care to check the official report he would find 50 or 60 places in that report where I made adjectival or adverbial slips. My point is that when one talks from the heart, one really believes what one is saying and one does not worry about whether hon. members get the full adjectival and adverbial meanings that are intended. Quite frankly, that question does not bother me at all.


Mr. E. B. Osier (Winnipeg South Centre):: Mr. Speaker ...


Eldon Mattison Woolliams: The hon. member made "fuddle-dud-dle" the new magazine.


Edmund Boyd Osler: No, I did not. I have not enough brains to think of a name like that. You would have to be much more bilingual than I to think of a name like that. Before I get serious, Mr. Speaker, I should like to point out to the hon. member for Gander-Twillingate (Mr. Lundrigan) that...


An hon. Member:: You are reading.


Edmund Boyd Osler: Yes, I am, and I can read my own writing for a change. I made a note that suggests the hon. member for Gander-Twillingate (Mr. Lundrigan) said there was some dire reason why entrepreneurs from central Canada had not rallied to the aid of the oil industry in the west and that there must be some plot on the part of this government or a previous government of the same political persuasion. I do not know much about his part of the world and I respect his judgment in respect of Newfoundland, but in my part of the world a lot of people spent 40 or 50 years trying to convi: ce the people of Canada there was a gold mine in the oil fields in Alberta, but nobody did a thing about it. The Americans came in, started testing and took up land options. If anybody is to be blamed for the situatic n in the oil industry of western Canada, it is not the Americans. They took what was offered them and prospered as a result of the lack of action by the entrepreneurs in central Canada. I hope you people have more luck in your venture. Perhaps the people have become more sophisticated in the last few years.
I listened with a great deal of interest to the remarks of the hon. member for Dauphin (Mr. Ritchie). I have great respect for him and his opinions.


An hon. Member:: Why?


Edmund Boyd Osler: Mainly because he is a Manitoban, and they deserve more respect.


An hon. Member:: What about Borowski?


Edmund Boyd Osler: Borowski was one of the few people in that government with any brains.


Some hon. Members:: Hear, hear!


Edmund Boyd Osler: You had better watch out, because before you know it you may get him.


An hon. Member:: We wouldn't trade him for you.


Edmund Boyd Osler: You wouldn't have the chance, so that is a very academic question.
The hon. member for Dauphin referred to the fact that the personal savings of Canadians were dwindling and they were not being encouraged to save. He suggested this was the result of some mysterious plot fostered by the present iniquitous government. I do not have the

September 14, 1971

latest figures, but the figures tor last month show exactly the reverse. Canada has a higher per capita saving today than it has had for a very long time, probably higher than it has ever had. In addition, the gross national debt per capita is lower than it has been for many years.
There is a great deal of saving taking place. If this were not so, where would all the money be coming from to pay for the increased housing that is taking place? More housing units are being built in this country than ever before. More housing starts are occurring in one year than occurred in ten years under any other government. I ask where the money is coming from if the savings in the private sector have dried up or the people have been frightened off by the present government? There is something obviously wrong with the figures quoted by the hon. member, and I just point that out as one Manitoban to another. Perhaps his research men have made a mistake.
The hon. member for Gander-Twillingate talked as though the federal tax was putting such a drag on everything. I do not like the tax any more than he does, and if the federal tax could be decreased I would join with him in a whoop for joy. He must realize that municipal and provincial taxes are much higher than federal taxes. Provinces and municipalities obtain a far greater tax share from the people of Canada than the federal government. When you travel around your constituency, at least in my part of the country the main complaint is in respect of real estate taxes; that is what bothers people. This is a strictly provincial matter. Perhaps the provinces should ask the federal government to make a deal in this regard, but we cannot do a thing about real estate taxes as long as provincial and municipal governments grasp this avenue of revenue in their hot little hands. We are doing what we can. In any event, this matter does not have any place in a debate on federal tax reform.
It occurred to me there was a bit of cloudy thinking by the hon. member for Edmonton West (Mr. Lambert) in respect of the amendment he moved to this motion. He has a perfect right to disagree, and I expect him to do so because that is the job of the opposition. The motion suggests that we throw the whole bill out because of unacceptable levels of inflation, persisting unemployment and stagnant industry. If his statements were true they would have no place in this debate. They should be made during the budget debate, and that debate has concluded. There is a difference between budgetary problems and tax reform. We are now talking about tax reform. If hon. members did not like the budget they should have complained during the budget debate. They should not propose amendments relating to the budget during a debate on tax reform.
It seems there was a bit of cloudy thinking, again, on the part of the research department who advised that hon. member. He suggested the opposition wants meaningful tax reform as though there were no meaningful reform in this bill. That is stretching the point, even for an opposition member who is being paid to be opposite. There are increased exemptions. Some may think they
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should have been more and some may think they should have been less, but this is a meaningful tax reform. The removal of a million people from the tax rolls is a meaningful tax reform. The reduction in taxes for 4.7 million others is a tax reform.


An hon. Member:: What about the removal of the estate tax?


Edmund Boyd Osler: I will get to that.


An hon. Member:: Good.


Edmund Boyd Osler: The guarantee that people 65 years of age and over will not pay taxes on their taxable income of $2,250 for a single man and $3,600 for a married man is a welcome change. You cannot sweep these reforms under the carpet. You might say you would like to have more, but then you should suggest how the government will get more money in order to accomplish this purpose. You cannot sweep these reforms under the rug by suggesting there is no reform. By doing so you are discrediting this place, and parliamentarians cannot afford to be discredited.
There is also a reform in our tax system in that we are adopting the principle of a capital gains tax. I think it is time this country got into line with other countries in respect of a tax system including capital gains.


Mr. Orlikow:: It is only a half-price measure.


Edmund Boyd Osler: It may be suggested it should be 150 per cent and then everyone would be happy, but people engaged in business must have some enco tragement. If hon. members on the opposite side of the House do not believe in what the government is suggesting, they should say so where they campaign. Hon. members do not say so in Manitoba where the NDP has formed the government.
We are doing all kinds of things to encourage business. Hon. members opposite cannot encourage business by discrediting the government in respect of a capital gains tax.


An hon. Member:: Oh, come off it.


Edmund Boyd Osler: I tried to get a copy of the latest budget presented by the government of Manitoba but my secretary could not find it. My own secretary is on holiday and I have a new girl who is strange to the work. That budget will show that long before we brought in the proposition to eliminate the estate tax, the government of Manitoba had placed itself in a position where it had to increase taxes this year to balance its budget. It was then very easy for the government of Manitoba to be highly moral and suggest the federal government had committed a sin because it would cut them out of the 50 per cent or 75 per cent they would get from the estate tax. This is the way they felt in Manitoba in spite of all the assurances by the minister that they would be compensated.
Try to convince the farmers or the entrepreneurs that this is the case. Try to convince them that they can make

September 14, 1971
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as much money as they like and they will be taxed at the rate of 50 per cent, 75 per cent or 150 per cent on capital gains but get no relief in respect of succession duties, and you will see what little faith they have in this argument. If you try to become elected there against our promise that they will pay nothing when they leave their property to someone else, you will lose. Even if you were elected you would not have enough to pay the salaries of the ministers who are elected because there will be no one left in the province to pay the taxes.
So be realistic. If you are going to talk, try to talk a little sense. If you want to put on an estate tax, then suggest what the capital gains tax should be and what the estate tax should be and then tell us what it will do to people who have worked hard all their lives in order to pay the tax. Your Premier asks for heavy taxes to help Manitoba be a good province. I have nothing against the Premier. I just say to you, "Be consistent; tell the same story in this House that you tell in Manitoba and we will all be very happy."
The amendment I referred to earlier may have some bearing on the budget, but unfortunately we are not talking about the budget. We have already talked about the budget and have adopted it. The budget created a shift in monetary policy which has caused Canada to drastically expand its rate of growth. All we need do is look at the figures of OECD which indicate that prior to what happened last month Canada was coming out of whatever problems it was in and had attacked them in the right way and was on the right side.


Some hon. Members:: Oh, oh!


Mr, Osier:: You can laugh if you like. We are considering here a new tax policy designed to rationalize the tax system and introduce greater equity into it. Rationalization and equity have been achieved by the new deal for individual citizens, as I have pointed out. It may be suggested it is much nearer equity than anybody has proposed before.


Some hon. Members:: Oh, oh!


Mr.   Olser@: You can laugh, but let us see if anybody could make your system work. It was tried in England and in New Zealand, where it was thrown out. We do not need it here. We have had an opportunity to see how it works. If we were talking about a clause by clause analysis of this bill I would not be competent enough to speak because I am neither a tax expert nor an economist. However, we are talking about the bill in general at the moment.
When considering tax reform-and this new bill is just that-we must consider one aspect of that subject which I feel should be looked at when we are involved in the clause by clause study. I refer to the regional aspects of tax reform. We need to bring in tax concessions to encourage high employment industries in the slow-growth regions. As an example I refer to the Prairies. Manitoba has solved its unemployment problem, relatively speaking, by emigration. Between 1961 and 1966, 30,000

left as a result of emigration and, tragically, 11,500 of these were between 25 and 44 years of age. I could recite other figures, but I did not bother to look them up on this occasion; I have previously placed them on the record. Surely this is the wrong way to solve the unemployment problem. It is certainly not an example of the equality of opportunity for which this government stands. So far as we from Manitoba are concerned, it is not equality of opportunity to send our young people away in order to keep the unemployment rate down, and it is not good for Canada as a whole.
I point out that 44.5 per cent of the Canadian-manufactured products used on the Prairies come from Ontario and Quebec. Flowing the other way, only 1.9 per cent of the Canadian-manufactured products used in Ontario and Quebec originate on the Prairies. This represents a whopping 14.4 per cent of all Prairie-manufactured goods. In other words, the markets of Ontario and Quebec are very important to us. We are in a unique position. Our second most important market is the central part of Canada. So when you talk about DREE and the shift to manufactured goods, you are talking about a shift to manufactured goods which in the Prairies at least depends on the well-being of central Canada for a market. I submit that we on the Prairies are vitally interested in the economic well-being of the central region of Canada.


An hon. Member:: You are reading.


Edmund Boyd Osler: I did not read that. If Canadian policy allowed us to grow, as Canadian policy reputedly does, we would be able to buy from the central part of Canada more than the measly 6.4 per cent of the manufactured goods that we presently buy. Traditionally, we were supposed to be a captive market for the east. We do not now mean as much to the central provinces in terms of a market because they are interested in world trade. We mean very little to them, but they mean a great deal to us as we enter the manufacturing phase. Generally, we must have conditions which encourage the purchase in Ontario and Quebec of our manufactured goods. Of course, the big employer is found in the consumer services, but these in turn must feed on secondary manufacturing to reach a take-off point of their own and it is the secondary manufacturers I am humming away at tonight. We are nowhere near a take-off point yet and we need regional taxation policies that will help us get there.
The Prairies are the only region where the primary sector exceeds the secondary, commodity sector in labour force size. Within the Prairie region those engaged in agriculture represent 18 per cent of the primary sector, despite a decline in the farm labour force. This is a far larger percentage than anywhere else in Canada. Since agriculture still dominates our area, and since the agricultural labour force is declining, the labour force on the Prairies is bound to show less rapid growth than in other regions, despite the fact that we are shifting over to manufacturing and that we are doing everything we can to keep people from emigrating.
Though the percentage of total employment in service industries is comparable to that in the rest of Canada,
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the total labour force itself cannot grow as rapidly as in other regions until or unless employment in the secondary sector can take up the slack caused by slow growth of employment in the primary sector, the farming community. I suggest that when we look at tax concessions we should look very hard at encouraging to the maximum degree manufacturing processing and completion of our farm goods, in much the same way as our hon. friend suggested in respect of fish products in his part of the world.
Our economy has been tied into agriculture for a long time and I do not believe it is turning into a liability, as many people suggest. We should place more accent on manufacture and finishing of agricultural goods. This could go a long way toward providing a key for the future growth and prosperity of our part of the world.
In taking a hard look at tax concessions, the deliberate tax concessions built into our tax policy as a matter of regional economic expansion, let us not forget what is already being attempted under manpower training programs and DREE. If we can do this in respect of raw materials, mining and for Canada as a whole, we can surely have a good, hard look at doing it in particular cases in particular regions through encouraging regional growth.
After all, that is what DREE is doing or is attempting to do. It is doing a good job and it is not neglecting the Prairies. In 1969 and 1970 DREE put 26 per cent of its total outlay into the Prairies, that is, $52 million. Of that amount, $13 million went to our province of Manitoba. So it is wrong for the prophets of gloom and doom and the professional organizers of some parties to say that this party or this government does not understand or does not care for the west. It spent $52 million there, plus a great amount on housing, for which of course the government of Manitoba is taking credit but 90 per cent of that is federal money through CMHC in almost all cases. This federal government is doing more for the west than did any other federal government. It must try to do more; it must continue its efforts to understand the particular problems of the west and it must not allow itself to be stampeded by all the noises it hears from time to time from lesser elements that happen to hold office in other parts of the country.
There is nothing wrong with the DREE approach I encourage it and I welcome it, but I think it should be re-examined. If you are spending $52 million on the Prairies, would it not be better to give $52 million worth of tax concessions to secondary industry to produce certain results which you wish to achieve, and leave it to individual businessmen to take the initiative and to get going? It is something worth examining. At the same time I suggest that we take a very hard look at this aspect of multinational corporations and subsidiary corporations. In our tax bill we have good proposals in this regard, but I think we should look at them hard before adopting them finally on a clause by clause basis.


Mr, Benjamin:: We have been looking at them.
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Edmund Boyd Osler: But you cannot understand them. There is no use in your looking at them. I am speaking to people who are responsible and who can understand them. We have had opposition days for years, and they do no good. I am talking to the government. You people have made no constructive criticisms. Someone has to. This is a job for the backbenchers of this party, and we welcome it, both in caucus and in the House.


Some hon. Members:: Hear, hear!


Edmund Boyd Osler: I repeat what I have said. In general, I congratulate the minister for his bill, and in particular I think we should look with a great deal of interest at every clause as it goes through. I urge that from the point of view of my region we consider the possibility of putting DREE funds to better use in respect of tax concessions.


David Orlikow: Mr. Speaker, following as I do the hon. member for Winnipeg South Centre (Mr. Osier), I cannot speak without making a few comments on some of the things he said. He said again and again that the debate we are conducting at present is about legislation which will bring about tax reform in this country. If anybody outside this House were to characterize these proposed changes in the tax structure as tax reform, I would immediately say they were lying. I know that it is unparliamentary to use that kind of language about things which are said in this House, so I simply say that the hon. member for Winnipeg South Centre has misrepresented completely what this bill proposes to do.


Edmund Boyd Osler: I rise on a question of privilege, Mr. Speaker.


The Acting Speaker (Mr. Laniel):: Is the hon. member rising on a point of order?


Edmund Boyd Osler: I rise on a point of order just to point out that if I thought the hon. gentleman was serious and had thought through what he was saying, I would raise a question of privilege.


David Orlikow: I was never more serious than when I said that while this bill may change the tax structure in the country, there is nothing in the way of tax reform in it. The hon. member tried to create the impression that only the wild-eyed radicals in this part of the House were critical of this bill.


Edmund Boyd Osler: I rise on a point of order, Mr. Speaker. I do not think that I used the word "radical". Under no circumstances would I call these Tories radical.


The Acting Speaker (Mr. Laniel):: Order, please. The Chair has no alternative but to rule out the point of order because it is a point of debate.


David Orlikow: The financial columnist of the Toronto Globe and Mail, the anchor, the flagship of that great newspaper chain started in Winnipeg, F.P. Publications, Ronald Anderson, in discussing the legislation which we

September 14, 1971
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are now debating wrote on June 19 the following about the bill which the hon. member for Winnipeg South Centre lauded so much:
The tax bill brought down last night by finance minister E. J. Benson represents a major reprieve from the proposals advanced in the 1969 white paper on tax reform.
The capitulation, on almost every proposal that had met substantial opposition, was more complete than even the most vigorous critic of the white paper could have foreseen.
All the key proposals-the integration of personal and corporation taxes, taxation of capital gains at full rates, five-year revaluation of common shares, and the intended distinction between widely held and closely held corporations-have vanished without a trace, as has the plan to allow small corporations to be taxed as a partnership.
That was the assessment of these proposals by the financial correspondent of the Globe and Mail. The position we have taken with regard to the revision of the tax system in Canada has been a simple one. Our position has been that what we need in this country is to establish a tax system which will provide equity for the people of Canada, which will provide that the people who have the income will pay their fair share of the taxes which are required to meet the cost of government in this country.
Where did we get most of the ideas which we have been espousing for almost ten years? We got them from the report of a royal commission appointed by a Conservative government headed by the right hon. member for Prince Albert (Mr. Diefenbaker). That commission was chaired by Mr. Kenneth Carter, one of the most prominent chartered accountants in Canada, a former director of the Canadian Tax Foundation. That commission, which was appointed in 1962, took two years to make its study, spent about $3| million dollars and brought in a very detailed and comprehensive report on the Canadian system of taxation, what was wrong with it and what ought to be done. I wish the hon. member for Winnipeg South Centre, before he made his speech, had taken the time to look at the recommendations of the Carter commission, because those recommendations are a condemnation of almost every word of the hon. member for Winnipeg South Centre.
Let me summarize some of the points made by the Carter commission. It found that billions of dollars of income were escaping tax altogether, or enjoying tax privileges which lightened the tax burden on them. If I have time later I will put on the record from a speech made by the former Minister of Communications, a member of the Liberal party-a speech which obviously the hon. member for Winnipeg South Centre has not taken the trouble to read or, if he has, he certainly has not understood it-figures which show how much the mining, oil and gas companies of this country have been able to escape from paying their fair share of taxes.
The Carter commission recommended lower taxes for people making less than $10,000 a year and higher taxes for people making over $10,000 a year and for persons making capital gains. It certainly did not recommend a tax reduction for people who have an income of $100,000 a
year or more, as the government is proposing. The recommendations of the Carter commission were opposed vigorously, as could have been expected, by the 5 per cent of the people of Canada who get special privileges under our present tax system. And, Mr. Speaker, they were effective. The white paper introduced by the government watered down the proposals of the Carter commission a great deal and the tax bill presented by the Minister of Finance (Mr. Benson) has further watered them down so that there is very little left of them.
What did the Carter commission find? It found that present taxation does not afford fair taxation for all Canadians. It found that the present tax structure has led to Canadians being less well off, through lack of goods and services that could be provided through more efficient use of labour, capital and natural resources. It found that compliance and collection costs had been needlessly raised by duplication in provincial and federal administrations, and that federal tax administration is open to political influence. It found that the fiscal situation has not been used as effectively as it could to maintain full employment, contain inflation and encour-rage Canadian ownership of Canadian industry.
A few moments ago the hon. member for Winnipeg South Centre said that things were getting better in this country. Of course, he completely ignored the fact that for the last 15 months we have not in any month had less than 6 per cent unemployment on a seasonally adjusted basis. The Carter commission found that federal procedures to obtain and analyse new ideas on tax increases or for hearing the views of taxpayers were inrdequate.
What did the Carter commission recommend? It recommended that mining companies should have depletion allowances removed. Some 85 per cent of the benefit of such allowances go to only eight oil and mining companies, most of which do not need this incentive. Removing these exemptions would provide a minimum of $150 million a year to the treasury. That was in 1964, and those companies have become richer and more powerful since then.
The commission pointed out that the uranium industry in its meteoric existence to 1964, on an investment of just one-quarter of a billion dollars made a profit of over a quarter of a billion dollars, 100 per cent on its investment, but paid only $30 million in taxes. Do I need to remind hon. members from Ontario that having made these tremendous returns, the uranium companies walked out of Elliot Lake leaving the miners with no jobs, leaving them with houses that could not be resold and as a result caused individual homeowners and CMHC to lose a tremendous amount of money? The workers lost, the taxpayers lost, but the uranium companies did extremely well as a result of our tax system.
The Carter commission talked a great deal about how the life insurance companies got away with paying virtually no tax. I am not going to go into details in that regard because since then we have plugged some of the loopholes, although not all of them. It talked about how land speculators and freeloaders who played the stock
[Mr. Orlikow.l
September 14, 1971

market were able, and are able, to get away with paying virtually no taxes. I point out that this is about the last country on earth without a meaningful capital gains tax. A man who works and earns $5,000 a year pays tax, but a speculator who makes $50,000 on a land deal or in a flutter on the stock exchange does not have to pay income tax on his gain.
What is the government proposing? It. is finally proposing a capital gains tax but, Mr. Speaker, not a tax like anybody else would pay, not a tax on the full income earned as the result of a capital gain but a tax at half the rate which the ordinary taxpayers pay. That may suit the hon. member for Winnipeg South Centre but it certainly does not suit the ordinary workers who elected him to come to Ottawa. The Carter commission recommended that all income be taxable. I think Mr. Carter used some pretty good vernacular when he said that for the purposes of taxation a buck is a buck no matter how one earns it. What would that mean? It might hurt the hon. member for Winnipeg South Centre although I doubt that it would hurt many of his constituents.
If that recommendation had been adopted, all income would be taxable, including stock options, gifts-the government proposes to eliminate the succession duties and gift taxes and the hon. member for Winnipeg South Centre thinks that is a good idea-and pay of any kind such as strike money, unemployment insurance, compensation, sickness, group and life insurance, credit union and consumer dividends, tax free allowances, profit sharing, gambling gains, premiums paid by employers for hospital and medical insurance, and so on. Had these kinds of principles been included in the legislation which we are dealing with today, we would have seen a redistribution of the tax burden so that wealthy individuals and corporations would pay their fair share of taxation. The Carter commission estimated that in 1964, $523 million more in corporation taxes would have come to the federal government in one year, $271 million of that from foreign investors.
I suggest to the hon. member for Winnipeg South Centre that if Ottawa had that kind of money it could do something to help the provinces and municipalities overcome the difficulties such as his constituents have in paying their real estate taxes. The hon. member is more concerned about the profits of the mining companies than he is about the taxes of his constituents.


Edmund Boyd Osler: Mr. Speaker, I hate to be repetitive ...


The Acting Speaker (Mr. Laniel):: Is the hon. member rising on a point of order or a question of personal privilege?


Edmund Boyd Osler: On a point of order, Mr. Speaker. I do not mind taking the jolly chidings of the people on the other side; it is part of the game. They are not intellectually very significant and we can slough them off, but when one is misquoted it must be pointed out. I made no brief for the mining companies in any way. If you look at the record I think you will find that I said there should be special grants to other companies to provide jobs rather than just to extractive industries.
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The Acting Speaker (Mr. Laniel):: Order, please. The hon. member may be allowed to make a slight correction but he cannot make his speech again. I think the point was well taken, but I suggest that we allow the hon. member for Winnipeg North (Mr. Orlikow) to continue his remarks.


David Orlikow: Mr. Speaker, I said that the hon. member for Winnipeg South Centre had agreed with the government's proposal to wipe out the succession duties and gift taxes. Since the hon. member has objected-and he did not mention mining companies-let me correct what I said. The hon. member is more concerned about the millionaires in Winnipeg who will be able to leave their estates to their children without paying any taxes than about the constituents who are concerned about how to pay their real estate taxes.


Some hon. Members:: Hear, hear!


Edmund Boyd Osler: On a point of order, Mr. Speaker, an hon. member cannot impute motives to another. I cannot be told by an hon. member who I am more concerned about. If he has ten fingers he can count twice t e number of millionaires that there are in my constituency.


The Acting Speaker (Mr. Laniel):: Order, please. In the opinion of the Chair the point raised by the hon. member is, again, a question for debate. It is very difficult for the Chair to follow the debate if hon. members intervene any time another hon. member says somethirg with which they disagree. It is difficult to apply the rules of this House without the co-operation of hon. members.


David Orlikow: Mr. Speaker, I want to make it clear that I was not imputing motives; I was simply drawing what I considered to be a logical conclusion from the remarks made by the hon. member for Winnipeg South Centre.
If the recommendations of the Carter commission had been implemented they would have provided generous tax credits for post-secondary education costs. They would have put a tough limit on travelling and entertaining costs and stopped expense account living. They would have provided for the taxation of families as units with provisions for averaging year to year income over five years. They would have provided for the maintenance of basic exemptions in the form of zero taxes on the exempt amount and much lower taxes on the balance.
Compare those proposals with the proposals made by this government. What we find, Mr. Speaker, is not the movement toward a more progressive system of taxation. In the western world, whatever our political beliefs, we have come to believe that we want a more progressive, a more equitable system of taxation. What we have here is a deliberate plan to continue the regressive and unfair system of taxation which for years has been deliberately weighted so that people in the lower income brackets pay a higher percentage of their income in taxes than those in the middle and upper income brackets.
Let us look at some of the specific proposals contained in this legislation. One is that wage earners be allowed to

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deduct 3 per cent of their income or up to a limit of $150 a year for expenses incurred while working. I can take the hon. member for Winnipeg South Centre down to the trades hall located in his constituency and introduce him-I am sorry, Mr. Speaker, it is not quite in his constituency; it is in the constituency of the hon. member for Winnipeg North Centre (Mr. Knowles)-to a dozen people in his constituency who belong to unions. In the course of their work these people are required to buy safety boots, hard hats and tools. I can introduce him to dozens of people who have to drive 35 to 50 miles each way, daily, to get to the construction site where they are employed. For these people the government, which believes in a just society, which wants to give us a system of equitable taxation, has provided a deduction of $150 a year. This is what the hon. member for Winnipeg South Centre and the hon. member for Burnaby-Seymour (Mr. Perrault) are applauding.
Let us compare that with the deductions permitted the businessman or the self-employed person. He can go to a convention anywhere in the world as long as it pertains to his work, to earning an income, to creating more business for his company, and the entire expense will be borne by the taxpayer of Canada. He can take anybody he likes out for dinner or lunch and the cost of the meal and the drinks will be charged to the taxpayer. I say, Mr. Speaker, that if tomorrow we were to go to the Chateau Laurier or the Skyline Hotel at lunch time, 75 per cent of the people present would be on expense accounts. Why can we not get the same kind...


Mr. Prud'homme:: Mr. Speaker, would the hon. member be kind enough to answer a very short question? Is not the same principle applied to union leaders when they have to meet their people?


David Orlikow: Mr. Speaker, first of all, union leaders do not...


George Albert Proud: I have been entertained by them.


David Orlikow: Mr. Speaker, if the hon. member was entertained by union leaders because they thought they would benefit in some way, they certainly threw their money away.


Mr. Stanbury:: He can't be bought.


David Orlikow: I do not know how the expenses incurred by union leaders are charged, or whether they are taxed. To my knowledge, no trade union makes a profit or files an income tax return or corporation tax return. I do not know how a union leader's expenses can be charged to the taxpayer. They may be charged to the union member, but not to the taxpayer. Even if this were the case, it would be just as improper as for the businessman who charges his expenses to the taxpayer.


Mr. Faulkner:: Absolutely.


David Orlikow: The hon. member for Peterborough (Mr. Faulkner) says "absolutely" and I agree with him. I am not saying that businessmen should not be permitted to charge expenses. What I am saying to the hon. member

September 14, 1971
for Peterborough, who represents a heavily unionized constituency, is that union members should be entitled to some of the same tax benefits as the businessman who contributes to his campaign.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Warren Allmand (Noire-Dame-de-Grace):: Mr. Speaker, on September 10, I asked the Secretary of State for External Affairs (Mr. Sharp) if he had received a telegram from the Canadian Airline Pilots Association requesting early ratification of the Hague convention on aircraft hijacking and whether the government would soon introduce legislation on this matter, as promised. I should point out that on November 26, 1970, the Minister of Justice (Mr. Turner) in answering a question from the hon. member for Malpeque (Mr. MacLean) said that he hoped to introduce legislation this session. This can be found in Hansard at page 1495.
On May 13, 1971, the Parliamentary Secretary to the Minister of Justice (Mr. Bechard), speaking in the adjournment debate on behalf of the minister stated that his department was preparing a series of amendments to the Criminal Code, including certain articles on hijacking, and that these would be introduced shortly. When the Secretary of State for External Affairs answered my question the other day he said the matter was under study, but he could not give me a definite answer at that time. It is for that reason that I raise my question in the adjournment debate, hoping to get a full answer tonight.
The entire question took on new importance last fall, on September 5, 1970, when the Palestinian guerrillas hijacked four jet aircraft simultaneously and held the aircraft and passengers as hostages. Up until that time most of the hijacking was the work of individuals or small groups. The Palestinian guerrillas' hijackings were organized on a large scale for political purposes and placed many lives and much property in danger. Later in the fall, on October 15, 1970, a Soviet airliner was hijacked to Turkey, the stewardess was murdered and two pilots wounded. These events led to world wide discussion of the problem.
The twenty-fifth General Assembly of the United Nations during the fall of 1970 passed a resolution condemning hijacking in all forms and requested action by all countries to make it illegal. The resolution passed by 105 to none, with eight abstentions. Canada voted in favour of the resolution. The Security Council of the United Nations passed a resolution without a formal vote condemning hijacking and appealing for the release of the hostages who were being held.
September 14, 1971

The problem was also discussed by the Interpol general assembly in Mexico City, by the International Federation of Airline Pilots Associations, by ICAO and by I AT A during the autumn of 1970. All the resolutions passed demanded action. On December 15, 1970, ICAO approved an international convention known as the Hague convention which could make hijacking and related acts criminal offences, with severe penalties, and which ruled out political motives as an excuse. It was provided that the convention would come into force when ratified by ten countries. This happened last week when the United States became the tenth country to ratify the convention.
Although Canada approved the convention last December, we have not yet ratified it, nor have we introduced a bill to make this serious offence a crime. I hope that the minister or somebody on his behalf will assure us tonight that this will be done shortly, not only for the safety of pilots and crews of aircraft but for the protection of the many passengers who travel by aircraft throughout the world.
Proceedings on Adjournment Motion


Mr. Albert Bechard (Parliamentary Secretary to Minister of Justice):: Mr. Speaker, before the Canadian government can ratify the Convention for the Suppression of Unlawful Seizure of Aircraft, known as the Hague convention as requested by the Canadian Airline Pilots Association in its telegram of September 9, there will have to be certain jurisdictional amendments to the Criminal Code. The preparation of these amendments is in hand and the Ministry of Justice expects that they will be introduced in the House within a few weeks. In the meantime it should be borne in mind that there are provisions in the Criminal Code at present dealing with the hijacking of aircraft which, while not as sweeping as the Hague convention, deal with the problem to a considerable extent. I refer the hon. member for Notre- Dame-de-Grace (Mr. Allmand) and all hon. members of the House to the 1959 amendments, section 5A. It is the intention of the government to ratify the Hague convention as soon as Parliament has enacted the appropriate legislation.
Motion agreed to and the House adjourned at 10.05 p.m.

Wednesday. September 15, 1971