1971-10-18

WELCOME TO RIGHT HON. MEMBER FOR PRINCE ALBERT ON RETURN

Mr. Speaker:: May I at the outset say how pleased all hon. members are to see the right hon. member for Prince Albert (Mr. Diefenbaker)-


Some hon. Members:: Hear, hear!


Mr. Speaker:: -back with us and looking so dangerously well.


Some hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I rise to request the unanimous consent of the House to propose a motion on a matter of urgent and pressing necessity.
In the Votes and Proceedings of the House for October 8, 1971, No. 187, at page 864, under the heading "Returns and Reports Deposited with the Clerk of the House" appears the following purported record of a proceeding in this House:
By Mr. Chretien, a member of the Queen's Privy Council,- Report of the Northern Canada Power Commission for the year ended March 31, 1971, pursuant to section 24 of the Northern Canada Power Commission Act, chapter N-21, R.S.C., 1970, together with the accounts and financial statement certified by the Auditor General, pursuant to section 75(3) of the Financial Administration Act, chapter F-10, R.S.C., 1970.-Sessional Paper No. 283-1-196.
Mr. Speaker, this entry contains two allegations intended to mislead this House.
The first allegation is a misrepresentation of the law. The report purports to be made pursuant to section 24 of the Northern Canada Power Commission Act. The report was not tabled pursuant to section 24: the Minister of Indian Affairs and Northern Development and the officers of the commission violated the law by failing to file a return as required by that section.
The second wrongful allegation is a misstatement of fact. The Auditor General, an officer of this House, did not certify the accounts and financial statement of the
commission pursuant to section 75(3) of the Financial Administration Act. On the contrary, he advised the minister:
Due to the continuing unsatisfactory condition of the records, I am unable to express an opinion as required by section 77 of the Financial Administration Act on the validity of either the accounts or the financial statements for the year ended March 31, 1971.
There also appear to be other violations of the law by the Minister of Indian Affairs and Northern Development and by the officers-


Mr. Speaker:: Order, please. As the hon. member knows, the purpose of this Standing Order is that all members may have the opportunity to move a motion in very special circumstances without the 48-hour notice normally required under the Standing Orders. The interpretation of this section is that hon. members have to indicate briefly why there is urgency and what the motion is. I suggest to hon. members and to the hon. member for the Yukon that the Standing Order does not make it possible for hon. members to make lengthy statements in support of a motion. I am sure the hon. member will want to take that into account and indicate as soon as possible what the motion is that he proposes for the unanimous consent of the House.


Erik Nielsen: Mr. Speaker, the only reason I felt that it should be a little more detailed than usual under Standing Order 43 was that two officers of this House were involved, namely, the Clerk of this House and the Auditor General. In any event, I had almost completed the sentence, the rest of it being-of the commission as detailed by the Auditor General in paragraph 131 of his report for the fiscal year ended March 31, 1970. I therefore propose to move, seconded by the hon. member for Peace River (Mr. Baldwin):
That the report of the Northern Canada Power Commission for the year ended March 31, 1971, deposited in this House on the 8th October 1971, as Sessional Paper No. 283-1-196, be referred to the Standing Committee on Justice and Legal Affairs to inquire into violations of law by the Minister of Indian Affairs and Northern Development and the responsible past and present officers of the commission in their conduct and management of the affairs of the Commission; and, as well, to inquire into violations of the rules, practices and conventions of this House with respect to the depositing of the said report in this House; and to report to this House, as quickly as possible, its findings and recommendations.
And that it be an order of this House that, pending the report of the committee and further order by this House thereon, the Minister of Indian Affairs and Northern Development be suspended from the service of this House; and that this House urge the government to suspend the officers of the Northern Canada Power Commission from their duties in the Public Service and place the conduct and management of the commission under the Auditor General of Canada.

October 18, 1971
Indian Affairs


Mr. Speaker:: Hon. members have heard the motion. Is there unanimous consent?


Some hon. Members:: No.


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



INDIAN AFFAIRS


Mr. Don Mazankowski (Vegreville):: Mr. Speaker, under the provisions of Standing Order 43 I ask the unanimous consent of the House to propose a motion for the purpose of discussing a matter of urgent and pressing necessity, namely, the escalation of the school boycott by Indian students in northeastern Alberta. The issue has been aggravated this past weekend by the supportive action of another reserve, bringing the total number of students now being withheld to 1,600. This action, if allowed to continue, may very well escalate into a province-wide walk out, since today the chiefs of 43 Alberta bands are meeting to discuss further courses of action.
In view of the minister's continued refusal to visit the reserves affected, and his failure to respond with any positive commitment to overcome the problems and difficulties which are being experienced, I propose to move-


Mr. Speaker:: Order, please. The hon. member says that he is now going to move the motion. I have to bring to the attention of hon. members again, and to the attention of the hon. member for Vegreville in particular, that Standing Order 43 does not make it possible and does not entitle hon. members to make speeches, accusations and charges. The hon. member must realize that under the Standing Order there is no possibility for any member on behalf of another party or on behalf of the government to reply to the statement made under the terms of the Standing Order. I suggest to all hon. members that the Standing Order can be used only for the purposes of indicating the urgency of the matter, not to argue in support of the motion and that the motion must be put as briefly and succinctly as possible.


Donald Frank Mazankowski: Mr. Speaker, I was merely trying to outline the gravity of the situation and was about to put the motion. I propose to move, seconded by the hon. member for Peace River (Mr. Baldwin):
That the government take immediate action to appoint a mediator to investigate and examine all aspects of the situation with a view to recommending a satisfactory solution as quickly as possible.


Mr. Speaker:: Hon. members have heard the motion proposed under the terms of Standing Order 43. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



QUESTIONS ON THE ORDER PAPER

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

Mr. Barnett: 1.	Within the guidelines laid down by the Department of Indian Affairs and Northern Development for a MacKenzie pipeline system (a) how many residents does the Minister estimate will be employed in the building of oil and gas pipelines (b) how many residents would be employed in continuing operations?
2.	(a) What is the estimated cost of (i) a gas pipeline (ii) an oil pipeline through the MacKenzie Valley (b) will the government require that a percentage of the equity be raised in Canada and, if so, what amount in each case?


Hon. Jean Chretien (Minister ol Indian Affairs and Northern Development):: 1. Estimates of potential northern resident employment of a gas and oil pipeline through the MacKenzie Valley are: (a) on construction, 800 to 1,000; (b) on operations, 150 to 170. Depending on the outcome of the studies there are possibilities of additional employment but until these studies are concluded, it is not possible to give an estimated number.
2.	(a) It is estimated that northern pipelines may cost around one million dollars per mile; however, no firm estimate of total cost can be prepared until final design criteria have been prepared based on operating requirements, ground conditions, and environmental protection stipulations, (b) The Government guidelines on northern pipelines issued in August, 1970, indicated that the extent to which it is proposed by the applicants, Canadians should have an opportunity of participating in the financing and ownership of the pipelines, will be of particular interest to the Government.


ASSOCIATION OF CANADIAN AUTHORS AND COMPOSERS
Mr. Lambert (Bellechasse): 1.	Is the Association of Canadian Authors and Composers officially recognized by the government?
2.	Is this Association subsidized by the government and, if so, by what departments?


Hon. Ron Basford (Minister of Consumer and Corporate Affairs):: 1. There is no association known as Association of Canadian Authors and Composers. In the question, reference was probably intended to be made to the Composers, Authors and Publishers Association of Canada Limited, commonly referred to as CAPAC. The Composers, Authors and Publishers Association of Canada Limited is a performing rights society within the provisions of section 48 of the Copyright Act, R.S.C. 1970, chap. C-30.
2.	The Composers, Authors and Publishers Association of Canada Limited is a private company with share capital, incorporated under the Canada Corporations Act and is not subsidized by the government.
October 18, 1971


ENERGY, MINES AND RESOURCES-INCENTIVE PROGRAMS
Mr. Broadbent: 1.	What programs of the Department of Energy, Mines and Resources provide grants, subsidies and other cash incentives to private industry?
2.	What amount was provided to industry through each program in each of the past five years?
3.	What amount, by program, has gone to each of the five major regions of Canada in the same years?
Questions


Hon. Otto E. Lang (Acting Minister of Energy, Mines and Resources):: 1. (a) Subsidies to the coal mining industry; (b) subsidies to the coking industry; (c) assistance to gold mining operators.
2. (a) Subsidies - coal industries: 1966-67, $37,698,975; 1967-68, $33,332,465; 1968-69, $6,510,792; 1969-70, $8,595,733; 1970-71, $5,939,251. (b) Subsidies - coking industry: 196667, $82,260; 1967-68, $71,550. (c) Assistance to gold mine operators: 1966-67, $14,839,822; 1967-68, $15,336,403; 196869, $14,932,575; 1969-70, $13,858,941; 1970-71, $13,440,130.
3.	(a) Subsidies-coal industries:
Region	1966-67	1967-68	1968-69	1969-70	1970-71*	$	I	t	tAtlantic	
33,649,720	29,678,342	2,839,614	5,129,009	4,050,000Quebec	
-	-	-	-	-Ontario	
-	-	-	-	-Prairie	
2,321,312	2,356,309	2,404,097	2,229,305	1,889,251British Columbia	
1,727,943	1,297,814	1,267,081	1,167,419	-
(b) Subsidies-coking industry:
Region	1966-67	1967-68	1968-69	1969-70	1970-71f	f	t	t	fAtlantic	
60,903	52,254	-	-	-Quebec	
-	-	-	-	-Ontario	
-	-	-	-	-Prairie	
-	-	-	-	-British Columbia	
21,357	19,296	-	-	-(c) Assistance to gold mine operators:	Region	1966-67<'>	1967-68	1968-69	1969-70	1970-71$	t	$	$	SAtlantic	1,085	Quebec	
3,742,291	3,951,125	4,277,932	4,155,986	3,143,080Ontario	
9,986,697	9,983,633	9,244,107	8,571,394	8,053,722Prairie	
222,253	146,085	73,477	21,926	-British Columbia(2)	
655,059	619,215	544,837	429,368	474,602
Notes: <'>Totals shown are for calendar year 1966 as fiscal year totals are not available. <'>Yukon and Northwest Territories not included.


DEPARTMENT OF AGRICULTURE INCENTIVE PROGRAMS
Mr. Broadbent: 1. What programs of the Department of Agriculture provide grants, subsidies and other cash incentives to private industry?
2.	What amount was provided to industry through each program in each of the past five years?
3.	What amount, by program, has gone to each of the five major regions of Canada in the same years?

October 18, 1971
Questions


Hon. H. A. Olson (Minister of Agriculture):: FISCAL YEARS (000's)	
Program	1966-67	1967-68	1968-69 1969-70	1970-71(i) (ii) (iii) (iv)	Assistance in construction of potato warehouses	
Subsidies for cold storage warehouses	
Grants and other assistance in accordance with the Cheese and Cheese Factory Improvement Act	
Grants to Ontario Flue Cured Tobacco Growers	67 26 1,601	1,610 142	137 -	II IITOTAL	1,694	1,752	137 -	-
FISCAL YEARS (000's)
Program	R egior	1966-67	1967-68	1968-69	1969-70	1970-71(i)	Eastern 	
26	(ii)	Quebec	
67	(iii)	Eastern 	
23	15	13	-	Quebec	
713	766	7?	-	Ontario 	
845	788	35	-	Prairie	
13	27	11	Western	
7	14	1	(iv)	Ontario	
-	142	-	-TOTAI	
1,694	1,752	137	-


RIDING MOUNTAIN NATIONAL PARK
Mr. Stewart (Marquette): For the last twelve years what amount has been spent each year at Riding Mountain National Park in the following categories (a) maintenance and upkeep (b) improvements (c) administration?


Joseph Jacques Jean Chrétien: 2.	How many full-time employees associated with the Job Vacancy Survey were on the payroll of Statistics Canada and the Department of Manpower and Immigration at the end of the fiscal years 1966-67, 1967-68, 1968-69, 1969-70, 1970-71?
3.	What is the operational definition of a vacancy in the survey?
4.	What is the first month in which results from the Survey were prepared?
5.	How many vacancies were found in Canada and in the five regions in this first month and in subsequent months to date?
1968-69	1969-70	1970-71

1. (a) Maintenance and Upkeep
(b)	Improvements	
(c)	Administration	
861,386
251,046
125,741
771,441
124,425
157,083
805,289
393,219
155,871
Note. The information requested prior to 1968-69 is not readily available and would have necessitated extensive research at prohibitive costs to the taxpayers.


JOB VACANCY SURVEY
Mr. Blackburn: 1. What was the total expenditure associated with the development and the operation of the Job Vacancy Survey, in each of the fiscal years since 1966-67?
[Mr. Olson.1


Mr. J. A. Jerome (Parliamentary Secretary to President of the Privy Council):: I am informed by the Department of Manpower and Immigration and Statistics Canada as follows:
Department
Statistics Manpower and
1. Fiscal Years	Canada Immigration	Total
Dollars
1966- 67	
-	-	-1967- 68	
289,254	-	289,2541968-	69	
661,894	22,702	684,5961969-	70	
1,010,501	54,036	1,064,5371970-	71	
1,043,733	77,669	1,121,402
October 18, 1971

Questions
Department Statistics Manpower and
2. Fiscal Years	Canada Immigration	Total
No. of Employees
1966- 67	
1	-	11967- 68	
66	-	661968-	69	
88	2	901969-	70	
100	5	1051970-	71	
99	7	1063.	The definition of job vacancies used in the present Canadian Job Vacancy Survey is a job: (1) That was vacant for the full reference day. (2) For which some specific recruiting action was undertaken during a specified time period. (3) That was open to workers from outside the establishment and (4) Was either immediately available or available at a specified future starting date.4.	June, 1970.5.	The data from the Job Vacancy Survey are being evaluated and prepared for publication. In the initial publication, monthly data for the period commencing June 1970 forward will be reported. Thereafter, the data will be reported monthly. Publication is scheduled to begin before the end of 1971.


SUPREME COURT OF CANADA ACT
Mr. Fairweather: 1.	Is the government considering an amendment to the Supreme Court of Canada Act to solve the backlog of cases waiting to be argued?
2.	Will such amendment require all civil appeals, regardless of the amount of money involved, to come before the Court first in the form of a motion seeking leave to appeal?


Hon. John N. Turner (Minister of Justice):: Consideration is being given to the best method of reducing the workload of appeals that is presently coming before the court and it is the intention to consult the Canadian Bar Association and other interested groups in this regard.


CLEAN AIR ACT-ESTABLISHMENT OF AIR SAMPLING STATIONS
Mr. Aiken: 1.	Following passage of the Clean Air Act, have any new sampling stations been added to the national surveillance network and, if so, how many?
2.	Are additional funds being allocated for the work of the air sampling program?


Mr. Eymard Corbin (Parliamentary Secretary to Minister of the Environment):: Mr. Speaker, new stations are being added continuously to our National Air Pollution Surveillance Network. This program has been accelerating since January, 1970. This past summer, for example, we have added stations in both Prince Edward Island and Newfoundland as well as the province of Quebec. Our coverage as of this date is 237 sampling instruments in 36 cities across all ten provinces. This reflects a substantial improvement over the situation on January, 1970 when the coverage consisted of 128 instruments, 20 cities, and seven provinces.
The answer to the second part of the question is yes. Additional funds are being allocated to the air sampling program as well as to the whole of the air pollution control program as a result of passage of the Clean Air Act. These additional funds will be reflected in supplementary estimates for next year and in the main estimates for next year as part of my department's environmental quality program.


ACADIAN CABLE T.V. LIMITED
Mr. Fairweather: 1.	Has Acadian Cable T.V. Limited a licence to operate a eablevi-sion system in St. Stephen, Milltown or any other location in New Brunswick?
2.	Was the company's application denied by CRTC and, if so (a) on what date (b) what steps does CRTC intend to take to compel Acadian Cable T.V. Limited to cease operations?
3.	Is Acadian Cable T.V. Limited operating a cable undertaking without a licence contrary to the Broadcasting Act and Regulations?
4.	Has A. Clayton Weatherby a licence to operate a cable undertaking in St. Stephen and Milltown, or any other location in New Brunswick and, if so, when was this licence issued?


Hon. Gerard Pelletier (Secretary of State):: Mr. Speaker, I am informed by the Canadian Radio-Television Commission as follows: 1. No.
2.	Yes. (a) Public Announcement dated March 5, 1971. (b) The CRTC is still investigating the matter.
3.	The CRTC is still investigating the matter.
4.	The CRTC issued a licence to Alexander Clayton Weatherby to carry on a broadcasting receiving undertaking to serve St. Stephen and Milltown, New Brunswick, on November 2, 1970.


INDIAN AFFAIRS AND NORTHERN DEVELOPMENT-GRIEVANCES FILED BY PUBLIC SERVANTS
Mr. McQuaid: By province how many grievances were filed by public servants employed by the Department of Indian Affairs and Northern Development in the past two years?
8766

October 18, 1971
Inquiries of the Ministry


Joseph Jacques Jean Chrétien: Newfoundland	3
Prince Edward Island	1
Nova Scotia	19
New Brunswick	18
Quebec	1
Ontario	74
Manitoba	4
Saskatchewan	12
Alberta	45
British Columbia	41
Sub-total	218
Yukon Territories	51
Northwest Territories	6
Total	275


NOVA SCOTIA-FORESTRY RESEARCH
Mr. MacKay: Has the Department of the Environment participated in silviculture projects in the Province of Nova Scotia and, if so (a) to what extent in the last fiscal year (b) what amount of financial assistance has been given that Province for forestry research and development?


Eymard G. Corbin: Yes, (a) The Department of the Environment has conducted or collaborated in fifteen active silviculture projects throughout Nova Scotia in 1970-71. This work involved the full or part-time employment of eleven professional and eleven technical staff of the Mari-times Forest Research Centre, (b) No direct financial assistance for forestry research and development has been made in 1970-71 to that province.


COMPENSATION TO SWORDFISH INDUSTRY OF CANADA
Mr. McCleave: Has a formula been agreed to with regard to the compensation to the swordfish industry of Canada and, if so (a) what is the formula (b) what consideration does the formula give to the plight of crew members?


Eymard G. Corbin: Yes. (a) Vessels which gained substantial portions of their 1970 fishing incomes from swordfishing are being compensated on a 50-50 basis by the Governments of Canada and Nova Scotia in accordance with the following formulae: two-thirds of the new cost of overboard fishing gear which is exclusive to the swordfishing industry, and one-half of the new cost of on-deck equipment which is exclusive to the swordfishing industry. The Government of Canada is purchasing, at cost, stocks of Canadian-caught swordfish held by Canadian firms, (b)
[Mr. McQuaid.J
The compensation afforded to vessel owners, together with technical assistance provided by the two governments, will assist materially in re-equipping such vessels for participation in other fisheries, and thereby provide employment opportunities for crew members. The Canadian Government has also offered retraining assistance for crew members on request.



ORAL QUESTION PERIOD


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, I wish to ask the Prime Minister whether he has any statement to make with regard to the reported assault on Premier Kosygin on Parliament Hill and any report to make with regard to security arrangements or any explanation as to how this could have happened to a guest of the government of Canada?


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, I am afraid I cannot report on the latter part of the question. I have asked for a clarification of what happened in terms of the security arrangements. I was present at the incident. I can only say it was a most regrettable one and certainly a very humiliating event for Canadians to have suffered. It makes one ashamed at the way some Canadians or people in Canada seem to be more interested in problems elsewhere than in exercising Canadian democratic rights and respecting the basic laws of our country.



THE CANADIAN ECONOMY


Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: My question is for the Minister of Manpower and Immigration. It is with regard to the local initiative program which will probably come to be known as LIP. I ask the minister whether the government is able now to announce the distribution of the $100 million which has been allocated for this program. In view of the fact that its primary purpose is to provide jobs for the unemployed, will the government use the same formula which it is using for the special loan development program or are other criteria to be used and can the minister tell the House what those criteria are?


Otto Emil Lang: Mr. Speaker, I do not have the exact figures with me, but certainly the intention is to use basically similar criteria to those used in allocating the special development loan funds.


Thomas Clement (Tommy) Douglas: Can the minister now or very soon give to the House the exact amounts which will be allocated to each province and can he tell the House whether there will be any allocation within the provinces on the basis of unemployment in specific regions?
October 18, 1971


Otto Emil Lang: I shall certainly look into the question of doing this. In the case of the local initiatives program there may be something in the nature of a preliminary administrative allocation. There may well be some flexibility depending on the type of applications which in fact come foward.



BASIS OF ALLOCATION OF FUNDS FOR SEWAGE TREATMENT PLANTS AND LAND ASSEMBLY

Thomas Clement (Tommy) Douglas: In
the absence of the Minister of State for Urban Affairs, may I ask the Minister of Finance whether he can tell us the basis upon which the government proposes to allocate the princely sums of $4 million for sewage treatment plants and $1.7 million for land assembly?


Mr. Speaker:: Order, please. Perhaps the minister might be allowed to reply, but the hon. member will appreciate that the Chair has some reservations about the form of the question.


Hon. E. J. Benson (Minister of Finance):: These amounts are part of the total amount of $113 million which is an advancement of commitments that would normally have been made in the subsequent period.



LOCAL INITIATIVES PROGRAM-INCLUSION OF YUKON AND NORTHWEST TERRITORIES-AMOUNTS TO BE ALLOCATED

Erik Nielsen: I have a supplementary question for the Minister of Manpower and Immigration with respect to the press release on this subject which came from his department listing the approximate allocations to be made to each of the ten provinces but omitting the Yukon and the Northwest Territories. Can the minister tell us whether the Yukon and the Northwest Territories will be included in the program and, if so, will he indicate the amounts to be allotted to them in the same way as he has done for the provinces?


Otto Emil Lang: The Yukon and the Northwest Territories are included in the program.


Erik Nielsen: Would the minister answer the second part of the question as to the amounts to be allotted to the two territories?


Otto Emil Lang: I will certainly do that, if and when I do the other.



GOVERNMENT PROGRAM TO PROVIDE EMPLOYMENT-NUMBER OF JOBS TO BE CREATED

Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I ask the Minister of Finance whether the
Inquiries of the Ministry
government is yet in a position to give an indication of the total number of new jobs to be created by the program announced last Thursday night?


Edgar John Benson: No, Mr. Speaker. It is very difficult to measure. A large number of jobs will be created as a result of the program, but I do not think one can tie it down to specific figures at this time. It would just be a matter of guessing.


Stanley Howard Knowles: Could the minister at least tell us what the government's target is?


Edgar John Benson: The government's target is to reduce unemployment in Canada as much as possible.



OLD AGE SECURITY-LOWERING OF PENSIONABLE AGE TO PROMOTE EMPLOYMENT

Mr. Real Caouette (Temiscamingue):: Mr. Speaker, I should like to put a question to the Prime Minister.
Since the government is interested in creating new jobs in Canada, does it consider granting the old age security pension to 60-year old citizens as well as to their spouse even if they have not yet reached 60, in order to create new job opportunities for young people?


Pierre Elliott Trudeau: Mr. Speaker, the hon. member knows that we have announced a $1 billion program. I would like to say that such a scheme is not included in the $1 billion program and that at the present time, we have no intention of doing so.


David Réal Caouette: Mr. Speaker, would the right hon. Prime Minister be willing to add another quarter of a billion dollars, so that those elderly people might get the pension as soon as they reach 60?


Pierre Elliott Trudeau: Why should the leader of the Creditiste party be so stingy, Mr. Speaker. Why not another billion and a half?



REGIONAL ECONOMIC EXPANSION


Mr. lames A. McGrath (St. John's East):: Mr. Speaker, I should like to direct a question to the Minister of Regional Economic Expansion. In view of the reports of the Atlantic Development Council, the Rural Development Council and, more recently, the Atlantic Provinces Economic Council, which all agree that the minister's department is overly centralized, inefficient and aimless, can the minister tell the House whether some over-all action is now to

October 18, 1971
Inquiries of the Ministry
be taken to reform his department's structures, goals and priorities, and whether a statement will be made soon?


Hon. Jean Marchand (Minister of Regional Economic Expansion):: Mr. Speaker, at least 50 per cent of the moneys allotted to my department were used in the Maritime provinces to create jobs, set up companies, develop the economy and help Devco. However, I wonder whether the hon. member wants to start a debate; I see no objections to it, but he certainly will not get a yes or a no for an answer.


James Aloysius McGrath: I wonder whether the minister is now prepared to answer the question I asked instead of throwing a red herring across the House. I asked specifically whether he is now prepared to respond to the recommendations of the Atlantic Provinces Economic Council which charge that his department is aimlessly going about the business of regional development and that it is overly centralized.


Jean Marchand: My reply was as narrowminded and mean as the question of the hon. member.


James Aloysius McGrath: A further supplementary question, Mr. Speaker, I am prepared to hand the minister a copy of the APEC fifth annual review, since obviously the minister has not read it.


Mr. Speaker:: Order, please. The hon. member was recognized for the purpose of asking a supplementary.


James Aloysius McGrath: More specifically, may I ask the minister whether he is prepared to assure the House that expenditures under his department will not be used to bolster the sagging Smallwood administration in Newfoundland during the next week and a half?


Mr. Speaker:: Order please. The hon. member for Dart-mouth-Halifax East.



INQUIRY AS TO SIGNING OF AGREEMENTS WITH NOVA SCOTIA

Mr. J. M. Forrestall (Dartmouth-Halifax East):: Mr. Speaker, my question is also for the Minister of Regional Economic Expansion. Is the minister now in a position to advise the House whether or not there are any agreements between the federal authority and the province of Nova Scotia which are ready for formalization by signature?


Jean Marchand: I will inquire and answer the hon. member on Wednesday, Mr. Speaker.


J. Michael Forrestall: You said you would do that last week.



CANADA LABOUR CODE


Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Labour. In view of certain reports may I ask the minister whether he has any intention of withdrawing from his bill relating to industrial relations the measures having to do with technological change, or is he, rather, planning to strengthen those sections and make them more along the lines of the Freedman report?


Hon. Bryce Mackasey (Minister of Labour):: Mr. Speaker, it would be inconceivable that any legislation brought in after 28 years would not deal with technological change and I have no intention of withdrawing those parts of the bill. When I tabled the bill in June I did, however, invite representations from labour and management, the purpose of which is to improve the bill. It is quite possible that some amendments may be introduced to that part of the bill, the basic objective being not to nullify the sections but to improve them.



ADMINISTRATION OF JUSTICE


Mr. Eldon M. Woolliams (Calgary North):: Mr. Speaker, I should like to ask a question of the Minister of Justice. On October 14 I asked him whether his legal officers had looked into the question whether it was legal under the law of Canada for the government to offer $100,000 for students to use marijuana, hashish and other drugs for experimental purposes, and whether the minister had consulted his legal advisers in this respect.


John Napier Turner: Mr. Speaker, I have taken the matter up with them, but whether or not I would be free under the rules of the House to give a direct reply is another question.


Eldon Mattison Woolliams: With the greatest respect to the Minister of Justice-I know he is hedging-I am not asking the minister for a legal answer. I am asking him whether he has taken the matter up with his legal advisers and is putting a moratorium on all prosecutions in view of the fact that it is illegal to carry on such experiments?


John Napier Turner: Mr. Speaker, the part of the question I should like to answer is that there is no moratorium.


Eldon Mattison Woolliams: Mr. Speaker, has the Minister of Justice given his personal endorsation to the spending of $100,000 on the use of marijuana and hashish by students and other young people?


John Napier Turner: Mr. Speaker, I do not think that is a question that I would be expected to
October 18, 1971

answer since it concerns the administration of another department.


Erik Nielsen: Mr. Speaker, may I ask a
supplementary question of the Minister of Justice. Have any arrests been made among personnel at the Experimental Farm for growing and possessing this illegal drug? If such arrests have not been made under the provisions of the Criminal Code, then under what law are they being exempted?


John Napier Turner: There have been no such arrests, Mr. Speaker.


Mr. Speaker:: The hon. member for Prince Albert.


Eldon Mattison Woolliams: I rise on a question of privilege, Mr. Speaker. I asked the Attorney General of Canada an ordinary, straightforward question whether the government is permitting certain people in society to break the law and is endorsing the breaking of the law, while at the same time prosecuting other people for similar offences. Surely that is a question of privilege affecting every member of the House and every Canadian. We have seen lawbreakers on that side of the House before and they are breaking the law again.


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


Some hon. Members:: Hear, hear!
He *	*



LABOUR RELATIONS


Right Hon. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I might preface my question, Sir, by saying that I was so touched by the reception by all hon. members that, having regard to my Welsh blood, if it had not been for the rules of the House of Commons I might well have burst into a paean of praise. My question today, therefore, will be unprovocative, as always.
I should like to ask the Minister of Labour a question concerning the situation in Uranium City and the strike there at Eldorado Nuclear Corporation. What is the present position, has the strike been settled, and what is the government doing in this regard?


Bryce Stuart Mackasey: In light of the fact that I have had the honour of having the first question by the right hon. gentleman since his return directed to me, my answer will be as non-partisan as possible. Last Friday, on the initiative of a member of the opposition, the hon. member for Meadow Lake, a meeting was held in Ottawa chaired by an official of the Department of Labour and attended by people from management and labour as well as the mayor of that community and the president of the Chamber of Commerce. As a result of that meeting I have been informed by my department that both management and labour now welcome
Inquiries of the Ministry
mediation services of the Department of Labour. A mediator has been appointed and I imagine that negotia-tons will resume as early as tomorrow.


John George Diefenbaker: That is all to the good, Mr. Speaker. Will the minister do everything he can to secure a settlement through the mediator because what has happened there is strangling business and destroying that very enterprising town?


Bryce Stuart Mackasey: Yes, Mr. Speaker. I have already appointed one of our top mediators, Mr. Tysoe, from Vancouver, and if that is not sufficient then other means will be placed at the disposal of management and labour if it is found necessary. My instinct tells me that if both sides have the same consideration for the community as expressed by the right hon. gentleman a settlement could be arrived at very shortly.


John George Diefenbaker: A Crown corporation should give of its best.



REGIONAL ECONOMIC EXPANSION


Mr. Doug Rowland (Selkirk):: Mr. Speaker, on Thursday I asked a question concerning the consolidation of the Imperial Oil refinery plants in the Prairie provinces at Edmonton. I wonder whether the Minister of Manpower and Immigration is now prepared to answer?


Jean Marchand: I presume that when the hon. member refers to the Minister of Manpower and Immigration he means me. I have inquired into that case. There was no consultation with the department by Imperial Oil regarding the consolidation of the operations of the company at Edmonton. Four months ago an official of the company was in touch with the department in order to find out what kind of assistance could be given to the company in connection with its consolidation process. He was told that there was no incentive at all because Edmonton is not a designated region and, as the hon. member knows, refineries are not covered by the Regional Development Incentives Act. This is the only information we have.
The day previous to the announcement there was a meeting between my officials and officials of the department of the government of Saskatchewan. I do not know whether the government of Saskatchewan knew about the decision of Imperial Oil but the question was not raised.


Douglas Charles Rowland: In light of the fact the minister has already pointed out that Edmonton is considered to be an area of rapid economic growth and Winnipeg and Regina are not, would the minister undertake to hold consultations with Imperial Oil with a view to seeing whether or not the consolidated plant could be located in an area of slower economic growth?

October 18, 1971
Inquiries of the Ministry


Jean Marchand: The only bargaining power I have as minister is to offer a grant when a plant is located in a designated region. I have no other power unless the hon. member wishes me only to intervene in order to discuss the company's decision to consolidate outside Saskatchewan, and this is an entirely different problem.



GOVERNMENT ORGANIZATION


Mr. Robert Simpson (Churchill):: I have a question for the Prime Minister. In view of the recent announcement that a considerable number of federal civil servants and departmental officers are being transferred to Hull and in view of the report that the Minister of Supply and Services is endeavouring to have the Canadian Mint transferred to Winnipeg, would the Prime Minister give consideration in any further planning of decentralization to the transfer of some government departments to northern towns or cities in Canada which are one-industry towns in order to provide a more viable economy for those towns and also avoid the problems of urban sprawl?


Pierre Elliott Trudeau: My first comment on the question is that certainly the first two postulates are disjointed and although the first one may be right the second, I believe, is apocryphal. Beyond saying that, I think that every party in the House has done its best to decentralize Ottawa's main industry, which is politics. I am sure that many of us are preoccupied with decentralizing Ottawa in that sense and perhaps creating urban blight across the country. But I cannot see how the solution proposed by the hon. member will solve the problem of centralized and decentralized administration. I could go on, but I think that is enough.


EXTERNAL AFFAIRS
Robert Lorne Stanfield: should like to ask the right hon. Prime Minister whether it is the intention of his government that an agreement should be reached between Canada and the U.S.S.R. with regard to trade relations during Premier Kosygin's visit and, if so, when the House will be informed as to contents of such agreement?


An hon. Member:: Have you any suggestions?


Pierre Elliott Trudeau: Mr. Speaker, obviously we will be discussing trade between the two countries but so far as I know there is no intention to sign a trade agreement, if that is the hon. member's question.


Robert Lorne Stanfield: Is it the intention of the right hon. gentleman that his government should reach any agreement

with regard to scientific, technological or cultural matters with the U.S.S.R. during Premier Kosygin's visit and, if so, when will the House be informed as to the contents of any such agreement?


Pierre Elliott Trudeau: These subjects also are under discussion. It is conceivable that we might sign some general agreement along these lines, but the discussions have not proceeded far enough for us to make a report, even a progress report, to the House at this time.


Mr. S. Perry Ryan (Spadina):: My question is for the
Prime Minister. Statistics Canada has reported that imports from Japan rose by 26.8 per cent in the month of September. Is the government satisfied that Japan is not dumping goods in Canada because of the United States surcharge situation and, if not, is the government going to make a statement in connection with this matter?


Pierre Elliott Trudeau: We are
watching this situation very closely and if there is any evidence of dumping we will act under our laws to prevent it.


Sylvester Perry Ryan: As recommended by the Canadian Manufacturer's Association, is the government speeding up investigation of suspected dumping activities of Japan and other countries as a result of the U.S. surcharge?


Pierre Elliott Trudeau: I believe the Minister of Industry, Trade and Commerce the other day or the other week indicated that he has these problems under review and that if necessary he would take action, as I said in my previous answer would be done.



MANPOWER


Mrs. Grace Maclnnis (Vancouver-Kingsway):: I have a question for the Minister of Manpower and Immigration. In order to assist the large number of women and young people now seeking employment, is it his intention to introduce legislation which will amend the occupational training act so that living allowances can be extended to people who have not been in the labour force for three years?


Otto Emil Lang: The first and immediate intention is to shape the on the job training programs which have most recently been announced in such a way that they will be available for people who are prevented from enjoying the benefits of the other program.
October 18, 1971


Winona Grace MacInnis: Would this mean that women or young people, without having been in the labour force, could avail themselves of manpower training with allowances?


Otto Emil Lang: Mr. Speaker, it would be misleading to simply answer yes because the matter of allowances may be the wrong emphasis since persons in on the job training may be receiving salaries at going rates within the area, with compensation to the employer for a large portion of that salary. The answer, in conclusion, is yes. Without the qualifications for the current training program the person can be put into an on the job training program and receive the benefit of it.



VETERANS AFFAIRS


Mr. Robert McCleave (Halifax-East Hants):: Mr. Speaker, my question to the Minister of Veterans Affairs arises out of a suggestion made on Friday as recorded on page 8754 of Hansard. Will extra bodies be appointed on a temporary basis to the Canadian Pension Commission to deal with the several thousand cases of veterans which are backlogged behind the very good and non-partisan veterans legislation of this House?


Hon. Jean-Eudes Dube (Minister of Veterans Affairs):: Mr. Speaker, as a result of the very generous amendments to the Pension Act of last spring it is true there is a much greater number of applications for pensions than before and it will take some time before this backlog can be processed completely. However, I wish to assure the hon. member that the full contingent of commissioners that can be appointed under the act have been appointed. They are very much aware of this backlog and are working with all possible diligence.



RATE OF INTEREST TO BE PAID TO FARMERS ON MONEYS OWING UNDER TEMPORARY WHEAT RESERVES ACT

Mr. R. R. Southam (Qu'Appelle-Moose Mountain):: Mr. Speaker, I have a question for the minister responsible for the Canadian Wheat Board. Can the minister advise the House what will be the rate of interest to be paid western farmers on moneys long overdue and owing them under the provisions of the Temporary Wheat Reserves Act?


Otto Emil Lang: Mr. Speaker, I would expect to be able to make an announcement very shortly about the exact amount which will be going to the Prairie farmers in the very near future, an amount which will include the interest referred to by the hon. member and also some adjustments in view of the time at which the Wheat Board has been able to make its final calculation with regard to the 1969-70 pool.
Inquiries of the Ministry


Richard Russell Southam: Can the minister assure the House that the rate of interest paid will be commensurate with that which the farmers themselves have to pay when they borrow money?



REGIONAL ECONOMIC EXPANSION


Mr. Adrien Lambert (Bellechasse):: Mr. Speaker, my question is for the Minister of Regional Economic Expansion.
In view of the importance, for the population of eastern Quebec, of the establishment of a cardboard plant at Cabano, can the minister tell the House if the Societe populaire des pates et papiers du Quebec has applied for a grant to establish such a plant at Cabano?


Jean Marchand: I think the hon. member asked the same question about a month ago and I answered at that time that we had not received any application. I will check if we have since received one and I will be in a position to answer the hon. member within a few days.


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


Joseph Adrien Henri Lambert: Yes, Mr. Speaker. I assume the request has been made.
May I ask the hon. minister whether he would, after perusal, be prepared to recommend that his officials give the matter special attention, so that a reply may be sent as promptly as possible?


Mr. Speaker:: This, of course, is a representation the hon. member is making to the hon. minister, and he must assume the minister will take it into consideration.



FINANCE


Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, my question is for the Minister of Finance. Yesterday on the program "Cross Country Checkup" the minister indicated that the economy today is much stronger than it was in 1961 because there is no danger of the dollar being devalued. Was the minister stating government policy? Is it his intention to maintain the Canadian dollar at par with the United States dollar?


Edgar John Benson: Mr. Speaker, the Canadian dollar is floating freely.


Mr. Baldwin:: So is the government.

October 18, 1971
Inquiries of the Ministry


Walter Gilbert Dinsdale: Would the minister use his customary capacity in respect of these matters to change the situation in view of the fact that there has been a drastic reduction in exports with resulting unemployment among Canadians?


Edgar John Benson: First of all, there has not been a reduction in exports. Exports have been climbing. Second, we have not intervened in the value of the dollar since it was floated except to keep changes on a regular basis without having wide fluctuations.


Walter Gilbert Dinsdale: In view of the fact that the increase in exports is in the resource field, which is Canada's heritage, rather than in manufactured articles, would the minister take the necessary action?


Mr. Speaker:: The hon. member for Winnipeg North.



CANADIAN CULTURE


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, this question is addressed to either the Secretary of State or the Minister of State in charge of the citizenship branch, whichever minister is responsible. Would the minister consider making an early statement on motions spelling out the amounts of money that will be made available by the government to help develop the cultures of the minority ethnic groups, as announced by the Prime Minister about a week ago, the criteria that will be used in allocating the funds and whether meetings will be held with organizations representing the various ethnic groups to discuss the types of programs which will be undertaken by such groups?


Hon. Martin P. O'Connell (Minister of State):: Mr. Speaker, all these subjects are under active consideration. There certainly will be consultations with the various cultural and ethnic groups across Canada and there will be significant funds available to develop the program.


David Orlikow: In view of the great expectations among the various groups because of the Prime Minister's statement, will there be an early announcement concerning the type of programs and amounts of money available so that these groups and organizations can begin planning the kind of work they want to do?


Mr. O'Connell:: Yes, this information will be available in due course.



EDUCATION


Mr. Walter Deakon (High Park):: Mr. Speaker, this question is addressed to the Secretary of State. Has the minis-

ter or his department taken steps to ascertain the disposition of the moneys granted by the federal government to the provinces for the purpose of French language education, especially in the province of Ontario, to ensure that these funds are used for the purpose for which they were designated and intended?


Gérard Pelletier: The answer is as follows. When it was agreed to refund provinces for the teaching of a second language or the official language of the parents' choice, provincial governments accepted to pursue some objectives. However, it was understood that after a full year, and when six or seven more months would have allowed us to get complete results of operations undertaken under the program, we would engage in a collective and detailed revision of measures taken and we would try to determine if grants really helped reach the objectives approved by the provinces at the beginning. We shall soon make this revision which, besides, was announced the moment the program was initiated.



CROWN CORPORATIONS


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Prime Minister. Perhaps he may wish to refer it to one of his ministers. Was the government aware that 250 employees of Polymer Corporation in Sarnia were given only 24 hours notice when they were laid off?


An hon. Member:: You weren't here last week when we talked about it.


Pierre Elliott Trudeau: I will take the question as notice. I know it was discussed in the House last week and I must say the facts as stated by the hon. member are surprising to me. I will verify them and see if he can be given an answer.



RESEARCH


Mr. P. V. Noble (Grey-Simcoe):: Mr. Speaker, I would like to direct a question to the Minister of Agriculture. What progress is being made respecting the development of the fur farm research centre as a component of the national research centre?


Horace Andrew (Bud) Olson: Mr. Speaker, the plan that the hon. member is aware of is still in place, but so far as the details of what progress is being or has been made, since the last time that he raised the question,
I have sent an inquiry for that information.


Percy Verner Noble: In view of the fact that the government is looking for make-work programs, does the minister not
October 18, 1971

think this would be a logical time to use his good offices and have something done with respect to its development?


Mr. Speaker:: Order, please.



AGRICULTURE


Mr. Robert C. Coates (Cumberland-Colchester North):: also have a question for the Minister of Agriculture, Mr. Speaker. Would the minister indicate to the house the progress within his department on the effects of the 10 per cent United States import surcharge on Canadian agricultural products and if it is his intention to make a statement in this regard to indicate what assistance will be made available?


Horace Andrew (Bud) Olson: Yes, Mr. Speaker. I think the hon. member will find it very useful to read the statement I made in the House on September 7 and then another one about three weeks later.


Robert Carman Coates: In view of the fact that this is not September-it is October-and I believe that there must be indepth information available to the minister now that was not available to him then, I would like to know when we might hear about what action his department is going to take to assist agriculture?


Horace Andrew (Bud) Olson: Yes, Mr. Speaker. The House has heard about specific action that has been taken with respect to some products, and there are other cases such as the assistance for potatoes. In that case a series of meetings was held last week attended by the Premier of Prince Edward Island and the Premier of New Brunswick, and as soon as a consensus is reached on what would be the most useful kind of program that too will be announced.



MANPOWER


Mr. Heath Macquarrie (Hillsborough):: Mr. Speaker, I wish to direct a question to the Minister of Manpower and Immigration, prompted by the report that job opportunities for executives, accountants, engineers and professionals were 15 per cent lower at September 30 this year compared with a year ago. In light of that dreary statistic can he advise whether managerial, executive and professional persons and programs will be included in the inindustry training and retraining programs announced last week?


Otto Emil Lang: Mr. Speaker, at this stage I would have in a basic way, to take that question as notice rather than comment on it specifically.
Inquiries of the Ministry


Heath Nelson Macquarrie: In light of declining job opportunities for professionals and other highly educated and skilled people, is the government preparing a national industrial development strategy as urged by the Science Council and others and, if so, will action be taken this fall?


Otto Emil Lang: Mr. Speaker, the government has very significant industrial policies and many of the programs of my colleague, the Minister of Industry, Trade and Commerce, are directed to developments of a high technological nature in Canada, which are useful in assuring jobs for the most highly skilled.



POLLUTION


Mr. Randolph Harding (Kootenay West):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs. In view of the recent report that there will be a delay in the signing of the Canada-U.S. agreement for a clean-up of the Great Lakes, I would like to ask the minister if any delay is anticipated in signing the agreement and, if so, what is the reason?


Hon. Mitchell Sharp (Secretary of State for External Affairs):: Mr. Speaker, I cannot confirm that there will be any delay. When I met Secretary Rodgers in New York a few weeks ago I asked him to look into the question because I was concerned about the implications of the recent decision concerning the use of detergents in the United States upon the progress of the program that they and we had agreed upon, and I have not yet had a reply from the United States government as to whether there will be any resultant delay. I hope there will not be any delay.


Randolph Harding: Are some terms of the agreement still to be negotiated and will the meeting of the water quality standards, set for 1975, be changed?


Mitchell William Sharp: Mr. Speaker, it is our hope that the objective will not be changed. Of course this involves agreement with the United States, and I have not had any information yet that the objective has been changed by the United States. We continue to adhere to this as a feasible and, we hope, acceptable objective.



COMPETITION BILL


Mr. Thomas M. Bell (Saint ]ohn-Lancaster):: Mr. Speaker, I wish to direct a question to the Minister of Consumer and Corporate Affairs. In light of recent developments, is the minister having another look at Bill C-256, commonly called the competition act and, if not, why not?


Stanley Ronald Basford: Mr. Speaker, it is not a case of having another

look. I indicated in late June, when the bill was introduced for first reading, that it was not the intention of the government to proceed with passage of the legislation this session but to invite suggestions on it. That is what I have done and we are now receiving suggestions. In so far as the suggestions are constructive and useful, they will be given very careful attention.



THE CANADIAN ECONOMY


Mr. J. P. Nowlan (Annapolis Valley):: Mr. Speaker, I wish to direct a question to the Prime Minister. I would like to know if the government has designated or intends to designate one department to implement that portion of the Benson bundle announced last Thursday referring to the winter works program?


Mr. Speaker:: Order, please. I am not sure whether the terminology of the hon. member is quite within the rules, but I suppose the intent of the question is understood by the minister to whom it was directed. Perhaps we should allow the question to be answered.


Pierre Elliott Trudeau: Mr. Speaker, the program is to be co-ordinated by the Minister of Manpower and Immigration. That is the way it will be unbundled.



RESPONSIBILITY OF MINISTER OF REGIONAL ECONOMIC EXPANSION IN RESPECT OF WORKS PROGRAM

James Aloysius McGrath: Mr. Speaker, I wish to direct a supplementary question to the Minister of Regional Economic Expansion. I wonder whether he will be responsible for any part of the program dealing with works, the creation of jobs and, if so, will the minister assure the House that he will consult with the Atlantic Development Council, other agencies in his department and APEC, and perhaps he might even consider consulting the Holy Ghost, who seems to be on the side of these agencies-


Mr. Speaker:: Order, please.


James Aloysius McGrath: Perhaps I might rephrase my question and again direct it to the minister who does not seem to be plugged into the Holy Ghost or anybody else. Would he tell the House whether or not he has any responsibility for any part of the programs announced by the Minister of Finance, especially with respect to the works program and, if so, will he consult with the provinces?


Jean Marchand: Mr. Speaker, some programs will surely come under my department. They will undoubtedly be the subject of consultations with the provinces, which for that matter is what I do on a regular and systematic basis for all the other programs administered by my department.

October 18, 1971
Inquiries of the Ministry



LOCAL INITIATIVES PROGRAM-REQUEST FOR DETAILS ON NATURE OF PROJECTS, AMOUNTS OF MONEY AVAILABLE AND FINAL DECISION

Thomas Clement (Tommy) Douglas: Mr. Speaker, I wish to direct a supplementary question to the Minister of Manpower and Immigration. Since the municipalities and private organizations will want to start work on employement-creating projects as early as possible, may I ask the minister whether he will be making an announcement to the House and the public regarding the nature of projects that will be approved, the amounts of money that will be available to each province, and where the final decision will lie, whether it will be with the local manpower offices to which applications will be made or will the applications be made to, checked and vetted in Ottawa?


Mr. Mcllraith:: You can expect an answer soon.


Otto Emil Lang: Yes, very soon.


Mr. Speaker:: Orders of the day.
[DOT] <3:00 p.m.)



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, October 13, consideration in committee of 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-Mr. Benson-Mr. Boulanger in the chair.
Mr. Korchinski:: Mr. Speaker, in rising to participate at this stage of the debate on the proposals for tax reform, I want to raise certain objections for the consideration of the Minister of Finance and his officials, I hope there is still time to correct what I believe to be an inequitable situation as it affects various aspects of community life within the constituency that I represent. My time is limited and I may have more comments to make later, but at the moment I wish to deal with one or two items in the hope that they may be elaborated upon when other members rise to speak.
There are many objectionable areas in the present proposal. In rural areas where farm incomes are low, not many farmers in the past have had to use chartered accountants to prepare their income tax returns. Over the years they had become accustomed to completing the forms themselves and were able to do so at a minimum cost. The present proposals with regard to evaluation day for property make things so complicated that farmers may find it necessary to turn to professionals for help. I can easily realize why the Minister of Finance would want to establish such a system. As an accountant himself, he has to do something for his friends and this is one way of giving them a little bit of the windfall he would have liked
October 18. 1971

to have when he was in business. Of course, after this reform it may happen that he will be back in the accounting business himself.
I, personally, have strong objections to the concept of a capital gains tax. I realize that my party has come out for it to a limited degree. But many parts of my constituency are only 25 or 30 years old, and I do not believe this type of area will be best served by the introduction of a capital gains tax. Indeed, I think it will be a deterrent, a mistake, but I will not dwell too long on that aspect. I know that members of the NDP feel the capital gains tax does not go far enough. Of course, you cannot convince them that anyone who is in business is not a millionaire or a multimillionaire, that there are many people in business who do not make vast fortunes. For some reason the NDP feels that you must go after anybody who calls himself a company or a corporation.
In the end, I believe the people to be hurt are those who the government is professing to help. Let me examine one aspect which is very discriminatory as far as the farmer is concerned. The new proposals provide that a home on one acre of ground shall be exempt. This is fine for people living in cities and towns but when we compare a city home with a farm home is there any equity in this form of taxation? Certainly, there is not. Anyone who has ever looked at the real estate section of a newspaper realizes that city homes have appreciated in value, in fact, have skyrocketed. Many homes in Toronto and Vancouver are worth $50,000 or $60,000 but how many in the rural areas are worth that much? In the magazine section of the Ottawa Citizen last weekend, there was an article which pointed out that lots in the Vancouver area are valued at $15,000 to $20,000. But the Minister of Finance should consider that a home on a quarter section of land in the west might be comparable to a lot which is usually less than an acre. An acre of land within city limits could be worth as much as a million dollars but there is not much farmland that would sell for a million dollars an acre.
I know that the minister is comparing like with like, home with home or acre with acre but he is certainly not comparing value with value. I concede that it is always going to be difficult to have equity. In the west where land is divided by quarter section or section or in acres, any deed you hold is to land which has not been subdivided. A lot has been subdivided. In cities many homes of 50 years of age have and will appreciate because of the shortage of housing. In the country a home can cost $20,000 but because of a reduction in family size and the changing pattern of education as well as the deterioration of community life, large homes are no longer being built. The value of the home on the farm may go down, whereas the value of the city home goes up. That distinction must be drawn and the minister ought to consider it. After all, what can a man do with an acre of land? Is he to incur the legal costs of subdividing an acre?
It could be that a farmer has built at $15,000 home on a $10,000 parcel of land to which he has title. That is quite possible. In any event, consideration must be given to that parcel of land on which the farm home is built. In some cases, land values have gone up and homes have appreciated. It may be that land values will continue
Income Tax Act
climbing. At the same time, I think that the suggestion I am making is a fairer and more equitable way of looking at this question. I realize that the minister is to allow annual depreciation of $1,000 against the home. At the same time, it must be realized that in many cases the farmer has to trade-off some of his land simply to stay in business. If the minister wishes to be fair, he will leave open to farmers the option with respect to that $1,000 annual depreciation in home value. In any event, the amount of revenue the government will lose in these cases will not be great.
In the few minutes remaining, I wish to touch on several other areas, including co-operatives. I have received representations in that regard. In also wish to touch on lumbering, which affects my area, and mining. There is one other aspect applying to farmers that I shall touch on.
I wish to talk about the accrual system of depreciation. I believe the minister should allow either the accrual system or the straight-line system of depreciation. If he maintains that the accrual system should be used, he ought to realize that only in the first two years will the accrual system be of advantage to a farmer, and only if the farmer buys a new machine. That is, the system will bring advantages in the calculation of income tax. Yet I ask, how many farmers are in a position to trade their machinery every two years? Not very many, I suggest. Usually, if a farmer trades within two years, he has bought a lemon and wishes to get rid of it. In that case he will take a loss, anyway. If that farmer wants to remain efficient, and that is the aspect to which the government has failed to give consideration, he must trade his machinery when necessary. I submit that under the accrual system the farmer will simply delay trading his machinery. He will try to get as much out of it as possible in write-off benefits. Yet, if he holds on to his machinery for too long, his efficiency will suffer.
Look at it another way, Mr. Chairman. If a farmer has great sales in one year, he will certainly not trade his machinery in that year if he has at his disposal unused accumulated depreciation benefits, because that unused depreciation will be charged against his income tax if he trades. So, he must wait for a year in which his sales are low. That year, when he ought to tighten his belt, will be the only time he can write off the accumulated depreciation against income tax. Because of his low return in that year, he can use the unused portion of his accrued depreciation and write it off in that year. That is to say, he will have to add the unused portion of his depreciation to his income tax. That is what will happen under the accrual system. So, the farmer will not trade in the good year but must wait for a bad year. This approach defies all logic. Would any banker grant you a loan if you told him you have had a bad year? Would he not say to you, "What's the matter with you, man; get with it and tighten your belt. You should not take out a loan this year because you may have another bad year next year." Yet that is precisely the position the farmer will be in if the minister adopts the accrual system as against the straightline system, as proposed.
Page 6 of the brief of the Canadian Federation of Agriculture reads:
The fact is that in farming income is typically low in relation to investment, obsolescence is rapid, inflation of farmers costs con-

October 18, 1971
Income Tax Act
tinues year after year, and more expensive and sophisticated machinery, equipment and structures have to be constantly introduced into the business.
The Federation suggests that the farmers should be allowed to retain the option of depreciating assets on a straightline basis. They go on to say, as recorded on page 7, that they believe farmers must:
Be able to maintain a separate bookkeeping on assets acquired up to December 13-71 on the present straightline basis, with assets subsequently purchased separately set up on a diminishing balance basis.. . . That capital gains if any, be calculated on the difference between disposition price and original cost or Valuation Day value, whichever is the higher.
I will go even farther than the Canadian Federation of Agriculture and suggest that either system ought to be allowed. One must realize that farmers have constantly struggled to maintain efficiency, and we should not deprive them of any leeway in that regard. Farmers, I think, have been fairly good businessmen over the years and have tried, whenever possible, to remain in business. I do not think that hemming them in under an accrual system will work to their advantage or to the advantage of the industry, as a whole.
Another aspect that I wish to cover, if I have time, relates to the basic herd concept. Mr. Chairman, it takes years and years to build up a basic herd. Yet you can dispose of that herd in one easy sale. All you must do is order a truck to pick up the herd and take it to market, and that is the end of your herd which has taken years and years to establish. The Federation of Agriculture deals with this. They believe that a herd should be treated as capital. I think there would be an advantage to farmers if the minister were to treat the herd as capital. As I have already pointed out, it takes years to establish a herd. Also, you can dispose of the herd in one easy sale. I realize that the averaging concept may come into play. Yet averaging could be useful for only four or five years if you have had a series of setbacks after a period of good years.
One must also consider the case of the farmer who, for reasons of health, must dispose of his cattle or capital. Possibly the farmer and his son have been working together, and perhaps the son has been doing most of the manual work. Perhaps the son finds that they cannot carry on the business, and they must therefore dispose of the herd. I think the minister ought to look at this matter on the basis of previously calculated income tax or on the basis of future income tax that may be calculated. I think he ought to consider the 20 or 25 years it may have taken to build up a herd of this type. The minister ought to take all this into consideration.
I now wish to touch briefly on co-operatives. Many people in my riding have had experience with co-operatives or credit unions.


The Deputy Chairman:: Order, please. I regret to interrupt the hon. member, but his time has expired.


Some hon. Members:: Continue.


Gérald Laniel: The hon. member may continue only with the unanimous consent of the committee. Is there such unanimous consent?


Some hon. Members:: Agreed.


Stanley James Korchinski: I thank the committee, Mr. Chairman. I will be very brief. I only want to deal briefly with the "co-op" aspect of the proposal. Many co-operatives have been established to service a local need. I agree with this concept. I have done my share of work in this field. I think the objection which is made by members of the co-operative movement with regard to double taxation is valid. Although the minister has introduced some amendments, the Co-operative Union of Canada does not think they go far enough to meet their requirements. Perhaps the minister may wish at this time or some time in the future to exempt the .local co-operatives, since they serve a local need.
Some co-operatives have become large monopolies. They were established in earlier days to cut down on the unfairness and unethical practices of some individuals. They have served a need. Once they become large corporations, they are somewhat of a nightmare to many small businessmen in the communities. In some instances they speed up the day when small communities become depleted. Once communities are depleted, it is only through the co-operatives that any type of service can be maintained or sustained. At that time no enterpriser will go into the community because he fears he will lose money on the venture. Many co-operatives are established as a result.
In the interest of maintaining some form of service in the small communities, the minister should look upon co-operatives as small enterprises. They should be kept separate from the large enterprises. In so doing, the minister will meet some of the objections which the small businessmen have to the co-operative idea. At the same time, the minister must realize that we have to maintain the small credit unions in communities where the banks have failed to help the local businessmen and farmers. In cases where the banks simply refuse to make loans on the basis of past experience, the credit unions have often done so. The interest rate may be higher for that reason.
I will not take up any more of the time of the committee. I again thank the committee for having allowed me a few extra minutes. I may elaborate on these points at a later time.


Mr. Barnett:: Mr. Chairman, I make no claim to having read every word of the 707 page bill which the minister has placed before us for consideration. I make no apology for that at this point because it seems that this mammoth bill is largely the result of the inconsistency of the government's approach to fair taxation. Had the government seen fit to put before this House the basic principles of the royal commission report, commonly referred to as the Carter report, we could have had a much less extensive and more readily understandable bill than the one we are considering today.


Mr. Mahoney:: Would you have read it?


Thomas Speakman Barnett: However, the choice has been that of the government and this is the bill we have to consider. I rise this afternoon to deal with one aspect of the bill. The hon. member who preceded me touched on this aspect in his

October 18, 1971_____________________COMMONS DEBATES	8777
closing remarks. I will not attempt to take quite the same line of attack as he did.
I suppose other hon. members received, as I did, a letter from the Co-operative Union of Canada dated October 15, 1971. I wish to put the contents of this letter on record. The letter, addressed to Members of the House of Commons, reads as follows:
Since we wrote to you on September 20th, the government has introduced amendments to Section 135 of Bill C-259 relating to the taxation of co-operatives.
Co-operatives wish to advise you these amendments do not meet the objections of co-operatives.
Co-operatives insist that the fundamental distinction in their nature be respected by the taxation statute. These distinctions are:
(a)	the co-operative provides primarily a self-help service required by its members.
(b)	the co-operative distributes its earnings to its members in proportion to member business.
(c)	the co-operative raises and "services" its equity capital by revolving the same in relation to the use of the co-operative by its members.
(d)	the capital contributed by a member of the co-operative is to provide himself with services and not to produce a return on investment.
Co-operatives request that they be permitted to distribute the income from member business to their members as a patronage refund as is intended by their charters, bylaws and nature with no limitation. These distributions, of course, will be dealt with by the members in their personal taxable income in a manner similar to the distributions of the earning of a partnership to its members.
Yours sincerely,
W. B. Melvin, President, on behalf of Co-operative Union of Canada and Le Conseil canadien de la Cooperation
As a member of this House, I say at once that I stand four-square behind the statement submitted by the president of the Co-operative Union of Canada. It is little short of disgraceful that a government which calls itself Liberal and sometimes expresses a desire for a free society in this country, should, by a taxation law, seek to twist and distort the basic freedom of co-operatives to operate as co-operatives. This is the issue that has to be joined at this point.
There is a lot of talk from time to time by various political spokesmen in this country about what is referred to as free enterprise. If we are going to have freedom of enterprise, there should be freedom of enterprise. The citizens of Canada who decide they wish to band together as a non-profit organization to operate as a co-operative should be allowed to do so. The Minister of Finance has no moral right to place a tax bill before this House which negates the basic principles of co-operatives. This is what he is obviously doing, as one can see by referring to the letter from the president of the Co-operative Union of Canada.


An hon. Member:: What would Carter have done?


Thomas Speakman Barnett: That is a very good question. If the principles of the Carter commission report had been followed, this sort of nonsense about co-operatives would not be before us. The Carter commission recommended, in effect, that we move toward doing away with the complicated system of taxing income in the hands of corporations and again in the hands of individuals. As far as the corporation tax is concerned, the government has rejected
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that principle. It is trying to suck the co-operatives into the basket, and that is why I say that was a very good question.
At the outset of my remarks, I said that if the government had brought in a tax bill based upon the principles of the Carter commission report, we would not be indulging in this silly nonsense of trying to twist, squirm and appease the multitudinous members of co-operatives. I want to make it clear that I, as an individual, and the party to which I belong, as a matter of policy accept the principle that co-operatives should be encouraged to develop freely along the lines on which they were organized. We should not seek to twist and distort the basic principles of the co-operative movement with income tax laws like the one presently before us, even with the so-called concessions the minister has put before the House. I have been a member of consumer co-operatives for many years.
I, and other members, recognize the fact that the credit unions are essentially co-operatives in the business of lending money. They operate on the same basis. The credit unions have placed their position before us along much the same lines as have the co-operative unions. One of the briefs which has been received has come from the Ontario Credit Union movement. I have a copy here of a letter which was addressed to me under date of October 4, 1971 by the Ontario Credit Union League. They raise this question of what constitutes fair taxation. They point out that there is held an inaccurate opinion that there are tax concessions made to credit unions. I have received for a number of years, now, a lot of drivel from this so-called Equitable Tax Foundation which has been trying to argue that co-operatives and credit unions are receiving special tax concessions. I have looked at it, and then done what I thought was appropriate-I put it in the waste basket. Apparently the Minister of Finance (Mr. Benson) has been sucked in by this sort of drivel and propaganda. I suppose one should not be too surprised at that. It is a symptom of the type of hodge-podge Liberal policies so often wind up as being.
Let us not be fooled by the amendments the minister has suggested should be made to the bill. The president of the co-operative union has placed the issue squarely before us and I, as one member of this House, am prepared to stand behind that position with the support, I believe, of every member of my party. We do not want any of this weaseling and squirming, this effort to appease the credit unions and the co-operatives on the one hand and the private corporations on the other hand. Members of our party have admitted from time to time in various debates there is a place in what is sometimes called a mixed economy for the private profit making type of enterprise. We have never said we intend to abolish it or discriminate against it. But we have also said we believe there is a place for the co-operative type of enterprise, that it should be allowed to operate freely and be available to those who wish to use it in its varying forms and manifestations. So I wish to register my strong protest against the bill we have before us, even with the suggested amendments which are apparently to be foisted upon the co-operative movements unless somehow we can per-

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suade the majority of members of this House to reject the proposals of the government in this field as they stand.


David Orlikow: Mr. Chairman, I have spoken several times on the general principles embodied in the legislation with which we are now dealing. I have expressed the opinion that what we have before us is not by any stretch of the imagination tax reform but simply tax change; that the tinkering the government proposes is mere tinkering and that the inequities of our tax system as outlined by the Carter Commission, which made it very clear that the people in the lower income brackets are paying substantially more in tax than they ought to pay, and that the people in the middle and upper income brackets are paying substantially less, will continue after this proposed revision of our tax system.
I wish to deal specifically today with one matter which has been raised with some success, but not enough, by the co-operatives and credit union movement. Unfortunately, after the government tabled its white paper in response to the Carter Commission Report, and after the minister brought in his bill, unfortunately, but not too surprisingly, the vast bulk of the representations which were made to the minister and to the parliamentary committee which dealt with the white paper and the bill on taxation came from those who had the ability, the knowledge and the money to hire experts to make the representations outlining the complaints which they felt should be made, namely, the business community, the self-employed people who felt that the minor changes which the minister first proposed in his white paper and the even smaller changes which he proposed in his tax bill, went too far. The vast bulk of the people, the ordinary people, the wage and salary-earners who pay every penny of income tax which the law requires them to pay, who have no way of making deductions for expenses or trips or anything else, were not able to make representations.


Mr. Osier:: They did it in Winnipeg last week, did they not?


David Orlikow: It is an interesting development we see in regard to the hon. member for Winnipeg South Centre (Mr. Osier). When he was running as a candidate he was careful to try to create the impression that he was just an ordinary citizen like everybody else. But since he has come down here, increasingly we find in his interjections and in his speeches-and I do not mind them, because he usually puts his foot into his mouth-that the real person comes out. He is from one of the few top families in Winnipeg. They've got it made, and he is going to keep on seeing that they are protected. That is the kind of interjections we get from him.


Edmund Boyd Osler: I asked you whether it was only rich people who gave you the gears in Winnipeg last week.


Gérald Laniel: Order. The Chair feels that the committee should not proceed in this direction through conversation or interjections from one side or the other. Speeches should be relevant to the bill before us without referring to private members and their capacity or their personality.


David Orlikow: I shall be happy to discuss the principle of this bill. If the hon. member will stop interjecting he will not get the kind of replies which his interjections deserve.
The one group which made representations, and very strong representations, to the minister, to other cabinet ministers and to every Member of Parliament, was the co-operative and credit unions. They made their views known strongly. Let me quote from a press release put out some time ago by the United Co-operatives of Ontario with regard to the proposals contained in this bill:
Upon careful study of the proposed tax legislation presented to the ways and means committee, the Co-operative Union of Canada finds that compliance with these proposals will create extreme difficulties for- co-operatives. The net result will be to force cooperatives to abandon their basic nature-
The Co-operative Union of Canada feels it is not the prerogative of a taxation body to interfere with the relationship between an organization and its members. The taxation imposed should be in keeping with the nature of the taxpayer. The proposed legislation totally disregards objections raised in the Co-operative Union's submission to Mr. Benson and to the taxation committee of the House of Commons and of the Senate.
The proposals failed to take into consideration the basic nature and method of operation of a co-operative, which is to distribute surplus earnings to members in proportion to the business they have done with their co-op rather than in relation to capital investment.
Co-operative philosophy, regulations, etc. make it impractical for most co-ops to distribute their surplus earnings as proposed. Further the proposals failed to recognize the difference between the nature of equity capital employed by co-operatives and by other corporations.
If there is one group that has done a great deal to protect the ordinary citizen, it is the credit union. This is the one organization that protects not the Member of Parliament, the businessman, the doctor or lawyer, who can usually go the bank and arrange a loan if they get into financial difficulty, but the ordinary citizens who do not have much income or any collateral to offer as security for a loan from the bank and who in increasing numbers are being forced to go to the loan companies.
I am not going to criticize the loan companies. They are not breaking any law in this country; they are fulfilling a function that no other organization with the exception of the credit union has been fulfilling. But the loan companies have been doing so at exorbitant cost, to say the least. They have been acting legally but, in my view, unconscionably, lending money to citizens in this country at interest rates of 18, 24, 30 per cent per annum. Anyone who doubts this needs only look at the interest rates charged by finance companies on the purchase of automobiles. No one can argue today that an automobile is any longer a luxury; it has become a necessity in this country. The one organization that has stood between the loan companies-the "loan sharks"-and the ordinary citizens is the credit union. If any government brought in any legislation that would destory the credit unions, it was the original bill brought in by the Minister of Finance.
As a result of representations made by the co-operatives and credit unions to Members of Parliament and the government, the minister has announced a series of amendments, I think 95 in all, to this bill. Nevertheless, today I was in touch with representatives of the credit
October 18, 1971

unions in this country, and while they are pleased with some of the changes and agree that some of the amendments that the minister introduced go part of the way to overcoming the problems the original bill created for them, they made it very clear that there are still some sections of the bill that must be amended. If they are not amended, then the ability of the credit unions to function, to grow and to give the kind of protection they have been giving increasingly to thousands of Canadians who need this organization will be jeopardized.
Let me put on the record the comments which the representatives of the credit unions made to me today in the hope that it is not too late and that the Minister of Finance will demonstrate that he does sometimes listen not only to the representations made by mining, gas and oil companies but also those made by ordinary citizens. Perhaps within the next few days the minister will add another couple of amendments to the 95 he has already tabled so as to take care of the difficulties created by this legislation for the credit unions.
The officials from the credit unions have told me that the section of the bill dealing with the opening reserve that will be established on January 1, 1972, as now drafted, leaves a good deal to be desired. The government proposes to allow credit unions reserves similar to those held by banks. The credit unions are concerned about what will happen to the statutory reserves they are required to hold and maintain by the provinces, and about whether they will be taxed retroactively. The credit unions are asking that they be allowed to begin the taxation year in January 1972 at point zero; in other words, that their prior reserves that have been built up under the requirements of provincial legislation be ignored so that new reserves can be accumulated, as is the case with other corporations. I want to make it clear that the credit unions are not asking for any special consideration but that they be given the same treatment as other corporations.
The credit unions are concerned about one other important aspect of the tax legislation, and this is the small business limit concept. Credit unions will not be permitted to take advantage of the small business limit concept. Small business, under the proposal made by the minister, will be permitted to set aside reserves of $50,000 a year which will be taxed at the low rate of 25 per cent rather than the usual 50 per cent. Credit unions, as they understand it, will not be permitted to do this because the reserve funds required by the provinces are locked in and therefore cannot be distributed to the members. Since the credit unions will be unable to distribute any dividends to the members, they will not be able to reduce their taxable income.
I think that what the credit unions want is fairly simple to understand and is a very fair request to make. They want the same tax incentives that are now allowed small business. Although credit unions are large organizations with many thousands of members, I would imagine that, in 99.9 per cent of the cases, those members are in a much poorer financial position than the small businessman who will be permitted a lower tax rate. As I say, the credit unions are asking for the same kind of treatment in the matter of taxation that small businesses will be permitted
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under this legislation, and as I say it is not too late for the minister to bring in a further amendment that will give the credit unions this kind of treatment. No proposal that I know of was greeted with such unanimous criticism by the credit unions and co-operatives as the original proposal made by the minister. I hope the minister will do something pretty substantial to meet what I consider to be the very legitimate concerns of the credit unions and co-operatives in respect of this legislation.
I should like to deal with just one more matter before I sit down and that is my feeling that the minister, while appearing to try to meet the needs of ordinary citizens in a much more equitable manner by raising income tax exemptions from $1,000 to $1,500 for a single person and from $2,000 to $2,850 for married couples, in fact has not come anywhere close to meeting what the situation was when the $1,000 per single person and $2,000 per married person basic exemption was put into the legislation more than 20 years ago. Need I remind the minister of the tremendous increase in the cost of living in the past 22 years since that floor was set for calculating income tax exemption? Need I remind the minister that under his proposal there will be tens of thousands, probably hundreds of thousands of Canadian citizens who will be paygngihcome taxi7evem7though,i7according to thecalcula-tions of the Economic Council of Canada, they are in fact living in poverty?
It seems to me that there is something wrong in principle, and something cruel, about a government in the year 1971 proposing that people who are living in poverty should be required to pay any income tax. I urge the minister to adopt the proposals put forward by organizations such as those representing the pensioners who have suggested that the minimum basic exemption in calculating income tax should be $2,000 a year for a single person and $4,000 a year for a married one. I know that the minister has been very adept at putting on the record again and again, the fact that hundreds of thousands of people will no longer have to pay income tax when the new schedule and the new exemptions which he is proposing are put into effect. But the minister has been very careful not to explain to the public how little income tax is paid by those who will now be exempt, a few dollars a year. Of course it is good that they should not be paying it, but those people should not have been paying income tax for years. What the minister has done is in fact too little and too late.
The minister has done the same kind of public relations job, the same kind of snow job, as he did the other day when he announced in his package of last Thursday that in order to try to get the economy moving, the economy which he has been saying has been doing very well, in order to reduce unemployment, there would be a cut of 3 per cent in income tax. An across-the-board cut for the person with a taxable income of $4,000 or $5,000 a year comes to a few cents a week. To the person earning $20,000 a year or $30,000 a year a 3 per cent cut in income tax is a very substantial amount of money. So, last Thursday the minister did what he has done on nearly every occasion on which, when I have heard him make a

October 18, 1971
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proposal for change, he has given more to those who already have than to those who do not have.
May I express this last plea to the minister before I sit down, that the minister give serious consideration to wiping out the kind of restrictive proposals in this tax legislation which he originally proposed for co-operatives and credit unions; that he meet their very reasonable suggestion that their task of looking after their members, who are on the whole very ordinary citizens in the moderate income brackets, be not made more difficult than it has been and that he do things to help them to get more members and to expand their services to those people who really need the kind of service which they perform; and also that the minister give serious and favourable consideration to raising basic exemptions on income tax so that those people who cannot afford to pay income tax, people in the lower income brackets earning less than $2,000 a year and family people earning less than $4,000 a year, not be required to pay any income tax at all.


Erik Nielsen: Mr. Chairman, one of the features of Bill C-259 would eliminate an exemption which hitherto has existed with respect to prospectors. I want to devote some of my remarks this afternoon to the impact that this proposed legislation will have on the mining industry generally and on the oil and gas industries. Perhaps the place to start is where most new mines start, with the hard work and dedication of the individual prospector. As was pointed out in the letter by the management of the British Columbia and Yukon Chamber of Mines to the Prime Minister on September 1 last, the fact has been clearly established that:
-prospectors are vitally important to the future of our mineral industry. You will note that prospectors in British Columbia-Yukon have been responsible for discovering at least 1,377 million tons of ore valued at $8,605 million, and that it would take 97,000 man years of work to extract the ore. In other words, a great many jobs for Canadians over a period of many years.
Bill C-259 would abolish the existing exemption of prospectors so that the proceeds of their efforts, if they ever do realize them, are free of tax. That was not the attitude, however, of the standing committee because in its final report dealing with the white paper on taxation the committee recommended that prospectors be exempted from this tax. Unfortunately, not only the Minister of Finance but the government did not see fit to accept the recommendations of the standing committee. However, that is not surprising and it is another indication of the so-called reform of the committee system and how useless it is. The mining industry in Canada has become the country's most important industry, accounting for perhaps more than 40 per cent of Canada's export dollars, with well over 25 Canadian communities being entirely dependent upon the industry, and in the north, not only whole communities but in the case of the Yukon the whole of that geographic entity, is dependent almost entirely and absolutely on a healthy and viable mining industry. The industry is a little over 100 years old and already it consists of some 240 or more producing mines. Several briefs were presented to the standing committee when the whitepaper proposals were considered. One of the best, and perhaps one of the most humorous, was the brief presented by Dean Vaughan who heads a group of prospectors from Toronto. He says on page two of that brief-and I believe this is actual-

ly what happened in respect of one of the proposals in Bill C-259-if this country were secretly invaded by hostile Martians intent on crippling the Canadian economy, they would be very well advised to infiltrate our government and politically cripple the mining industry, which has created for the Canadian economy more than $40 billion in new wealth in the past 25 years. And then he asked, how better could these Martian politicians, under the guise of tax reform and social reform, sabotage the third largest mining industry in the world. He suggests a timetable by which that sabotage could be carried on by the federal government. He says that the leader, in this case he would be the Minister of Finance, would recommend to his superiors, the Prime Minister and his government, the following program.
The first item would be to tax new mining ventures to death before they are on their feet. That is exactly what these proposals will accomplish. Instead of waiting until new mines are in production and contributing to the wealth of the country, we are going to start taxing them before these mines are even discovered by imposing a tax on the potential gains of the prospector, a prospector who in some cases has been searching for mineral deposits for some 20 years, or a quarter of a century, and who may never realize anything from his efforts. Certainly, the odds are highly against any single prospector hitting it twice.
The second step in Mr. Vaughan's program would be to immobilize the self-employed prospector by cutting off his supply of risk capital via the imposition of a capital gains tax on money won by the prospector and his grubstakers. That is exactly what happens now. It takes a good deal of persuasion to convince hard-headed business persons to invest in such a high risk venture as a prospector or grubstaking a prospector in the search for new mines. A prospector can promise nothing but hard work and, usually in my part of the country in any event, a very short season. There is no guarantee to the investor that he will have any return on his high risk investment.
The third step suggested in the program is to harass the mining industry as a whole by enacting emotional, hasty and retroactive restrictions in an otherwise free economy. Again, that is what the proposals in Bill C-259 are aimed at. The fourth step suggested is to conspire to establish a lack of confidence within the country and throughout the mining industry, not only here but outside our borders, and in the minds of foreign investors regarding future socialistic and jingoistic political ambitions.
In a report produced recently for the British Columbia Mining Association by an internationally recognized firm of chartered accountants, Prince, Waterhouse, it is estimated that the investment capital inflow in mining activities in the Yukon in 1970 after the publication of the white paper proposals was reduced by 72 per cent over the preceding year. The white paper on taxation and the proposal to replace the Yukon Quartz Mining Act with Bill C-187, the Yukon Minerals Act and the Land Use Regulations, combine to scare off investment capital to that extent and I daresay to the same extent this year. Unless some relief is forthcoming, and unless we have some statement from the Minister of Indian Affairs and
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Northern Development and from the Minister of Finance, we face a more bleak year ahead so far as exploration activity in the Yukon is concerned during the season of 1972.
As a fifth step in his program of sabotaging the industry, Mr. Vaughan suggests the introduction of prejudicial legislation regarding foreign ownership; for example, England may control Canadian uranium mines but the United States may not. We have seen the reaction across the border with regard to the restrictive legislation that has been imposed with regard to the inflow of capital investment into this country from south of the border. This government is in deep trouble with regard to its relations with the United States. It is inconceivable that there could have been such rapid deterioration of our Canada-United States relations in so short a time. Investor confidence in the United States so far as investment in our mineral and resource industries is concerned has hit a new low. This is one reason we find our economic plight in the Yukon so desperate and why we have so little to look forward to during the forthcoming season. This is an industry which is highly risky so far as investment capital is concerned. It is an industry which, instead of having restrictive provisions such as are proposed in Bill C-259 and C-187, should be given incentives.
The sixth point in Mr. Vaughan's program for sabotaging the industry would be to sell foreign investors and companies mining exploration permits under one set of rules, then change the rules in the middle of the game and then change the rules back again. For example, look at what happened to Gulf Oil at Woollaston Lake and Phillips Petroleum and Atlantic Richfield in the Arctic. We have a good example of that in the intention of the government to include a power to make regulations in Bill C-187. That fits hand in glove with the powers which will exist under the legislation before us and also the power under the Territorial Lands Act under which all oil and gas exploration permits are granted.
The seventh step in the program would be to impose sweeping uneconomic legislation restricting the disposal or sale of concentrates or mining products with no industry-wide dialogue or advanced notice. That is precisely what was proposed in Bill C-187 where the minister would have absolute control over any ore exported from the country in excess of I believe 5,000 tons. I could be mistaken on that figure. In other words it was not management of the mining industry by the investors and shareholders but rather was management of the industry by the government. This is state control over an industry which has enjoyed its spectacular growth as a result of incentives and freedoms in the past.
As a final step in his program to sabotage the mining industry, Mr. Vaughan suggests we impose a recurring five-year reassessment of capital gains tax, with all its attendant catastrophic implications. If there is one area where capital gains should not apply it is in the area of the gains which are achieved by the prospector who discovers the mines in the first place. Any member of this committee who has knowledge of or personal acquaintanceship with prospectors, knows the hardships which these individuals must endure, for the most part over many,
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many years, before they realize anything from their efforts.
It is said, not only by the Minister of Finance but by his colleague, the Minister of Indian Affairs and Northern Development, that technology has rendered the prospector obsolete. I submit that this is not so, and that new mines and new mineral prospects continue to be discovered by the prospector in the initial instance. Why should a Canadian in the position of a prospector who works for 20 years or a quarter of a century,-I know several in this category who have spent their money and efforts over the course of those long, arduous years-and who happens to become successful, wind up paying a tax on the gain that he might make from his participation in a producing mine?
As I pointed out a moment ago, in the last 100 years there were 240 mines discovered. Assuming an individual prospector was responsible for each individual discovery, what real gain does the government get from taxing 240 individual prospectors, instead of adopting the approach of giving them some incentives to discover new mineral prospects in the hope that they can bring new mines into production. Certainly, the government will derive more revenue from taxing new producing mines and from taxing all the employees of those mines than from taxing the individual prospectors.
There are several factors in the fiscal approach of the government which are scaring off investment capital from minerals. We might ask ourselves why some of the greatest incentives for hunting oil and gas in Canada are not created by Ottawa, by our fiscal measures, or by any fiscal measures adopted in the provinces, but actually come from Washington, for Americans? Why is it that Canadians are not prone to invest in the development of their own country, in one of the greatest single areas where development would be welcomed, and in fact is needed? Why does U.S. capital come across in greater volume than it comes from within our own country? I suggest that despite the new tax reforms proposed in Bill C-259 the greatest incentives for hunting oil and gas in Canada will continue to come from Washington for Americans, and not from the provinces or from Ottawa.
When the past minister of communications resigned from the federal cabinet he did not lose much time in expressing his dissatisfaction with our present economic policies. One key are of his discontent was that Canada's mismanagement of its natural resources and the apparently favourable tax climate in which natural resource companies operate, were to our detriment. In fact natural resource companies, such as those in the Canadian oil and gas industry, are severely handicapped in Canada by existing tax laws. I cannot bring myself to agree with the position that is taken by members of the NDP. It simply bespeaks an ignorance or lack of information on this subject, and I say that with great respect. Tax laws in the United States make it easier for foreign owned companies to operate in Canada, and they are also one of the main reasons why much of Canada's oil and gas industry is owned by companies in the United States.

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The key to a successful oil and gas operation is the productivity of its exploration program, and that goes for the hard rock industry as well. Without exploration no minerals would be found. Without exploration no oil and gas would be found. That is certainly fundamental. Some of the greatest incentives for hunting oil and gas in Canada are not created here in this country, in Ottawa or in the provinces, but come from Washington for Americans. I want to illustrate this.
Under Canada's present tax laws no real incentive or encouragement is given to Canadians to participate in a risk taking venture. We have given them some meagre incentives which the government now wants to abolish. Quite to the contrary, however, American tax laws favour the use of essentially private capital in such ventures. These laws provide a means by which well to do Americans-by that I mean people with surplus capital who are looking for investment areas-can find relief from high taxes. I am going to discuss this by describing what the industry calls drilling funds.
A drilling fund is essentially a pool of risk taking money, collected from well off professionals such as doctors, lawyers, engineers and others who may be paying as much as 50 per cent of their top layer of income in tax. Millions of dollars are pouring into Canada from such U.S. drilling funds. The key to the success of the American drilling fund is that the fund guarantees, by virtue of U.S. law, a 92 per cent tax write off. On an initial investment of-


Gérald Laniel: Order. I regret to interrupt the hon. member, but his time has expired. However, with the unanimous consent of the House, the hon. member may carry on with his remarks. Is there unanimous consent?


Some hon. Members:: Agreed.


Gérald Laniel: Agreed.


Some hon. Members:: Agreed.


Erik Nielsen: I thank members of the committee. I was discussing a drilling fund, and the fact that U.S. tax laws provide a 92 per cent tax write off for people fortunate enough to invest $10,000, $5,000, or whatever it may be in such a drilling fund. Let us take $10,000 as an example. $9,200 is deductible, and 8 per cent is commission on the purchase of fund units and is non-deductible. Thus the investor saves $4,600 in tax, making his net cost in that investment only $5,400.
If oil or gas is found, the investor has an additional source of income from the newly discovered oil or gas well. If he makes an annual income from the newly discovered well, of again let us say $10,000, he has to declare this additional income, which is taxable. However, this time the investor is given a 221 per cent depletion allowance, leaving a taxable income of only $7,750. If he reinvests the $7,750 in the drilling fund he can again get a 92 per cent write off, and now claims $3,875 as a tax write off. And so it goes. According to Art Klimchuck, who is a vice president of American Quasar Petroleum Co., only

167,000 of an estimated 2,600,000 U.S. taxpayers in the 50 per cent bracket have used such funds. Obviously, this kind of investment has barely touched its potential.
Two examples will illustrate the effect such a drilling fund has on Canada's oil and gas industry. The first is the Canadian-American Resources Fund Inc. (Can-Am), an offshoot of the previously mentioned American Quasar Petroleum Co. Each investor in Can-Am buys his participation in $5,000 units as a partner in a venture, not as a shareholder. Can-Am makes drilling money available to Quasar Petroleum Ltd. of Calgary, a Canadian subsidiary of American Quasar. The profits from this joint venture are split 60 per cent to the fund's partners and 40 per cent to Quasar. For the individual fund partner, success means income and failure means success because of a lighter tax burden through write-offs.
The second example is Husky Oil. According to Gene Roark, President of the Company, Husky was able to raise $32.5 million in the United States through its drilling fund at a time when the stock market was severely depressed. Much of this money will be spent in Canada on Husky's extensive nation-wide exploration program. Implementation of Bill C-259, as presently proposed, will continue to favour those elements in the tax structure that have led to the foreign domination of Canada's oil and gas industries. At a time when some public concern favours Canadian nationalism in this area, some serious changes are warranted that would at least provide parity incentives for Canadian investors in the oil and gas industries.
According to the views of the former minister of communications, the hon. member for Duvernay, it is quite true that natural resource companies in Canada enjoy a favoured tax position relative to other industries in Canada. This, however, is not the main point of contention; much more important than Canadian tax favours to natural resources companies is the fact that American companies operating in Canada enjoy an even more favoured position under American tax laws. If Canada is truly concerned about ownership of its own resources and the participation of Canadians in the development of Canada and is not using that ploy as a political straw man, then Bill C-259 will do little to foster these aims.
Perhaps the only solution to this problem is that tax laws in Canada should provide the same basis for at least a fair competition with foreign concerns. This objective could be achieved in one of two ways-provide a shelter for Canadian companies or change the tax laws so that they would provide a true incentive for Canadians to participate in risk ventures and the ultimate development of our own resources, regardless of the tax position of these industries relative to other industries in Canada. This is precisely the principle which I think the government is overlooking in the restrictions now being placed on this industry in Canada, not only the mining industry but the oil and gas industry as well.
Mr. Chairman, I have other submissions to make with respect to the principle of the bill as it affects the mining industry itself upon which I have not touched. I have spoken about the mining industry in which the prospector is going to be almost eliminated by Bill C-259 and one or
October 18, 1971

two aspects that affect the oil and gas industry, contrasting our laws and those of the United States. I have not touched on the hard rock industry and I propose to do that at another stage of these committee proceedings.


David Réal Caouette: Mr. Chairman, I agree completely with what the hon. member for Yukon (Mr. Nielsen) had to say about prospecting. I well understand that people in his riding are interested in such activities. Some of my own electors are also highly interested, but I believe that prospectors have never been truly recognized by government authorities, whether provincial or federal. Prospectors have often been deprived of their rights, and the situation is the same today.
Recently, I mentioned, as an example, an incident that occurred in the federal riding of Villeneuve. A prospector named Lavoie had truly discovered a mine in Senneterre and, when the Department of National Defence decided to build a radar station there, the prospector was simply thrown out. His lands were nearly confiscated and the Department of National Defence failed to pay him any indemnity.
Mr. Chairman, with regard to prospecting, the government should, through Bill C-259, show greater generosity and a greater awareness of existing opportunities. In Northwestern Quebec, there are huge mining possibilities. However, the government failed to encourage prospecting. They did not omit to tax prospectors with incomes but they omitted to help them, to encourage them when they were in financial difficulties.
I agree with the comments of the hon. member for Yukon regarding prospectors and the possibility of developing new mines in our respective regions.
Bill C-259 is the natural result of the famous White Paper that has been so much talked about across Canada. The government has tried to put into concrete form the White Paper data in this Bill C-259 which is so complex that even chartered accountants are giving up trying to understand it. One accountant explains it one way, while another explains it another way. Even economists can't figure it out. It is so true that the Minister of Finance (Mr. Benson) had to bring in 97 amendments to his own bill C-259. This means that nobody really understood what was meant by this reform of our present tax system.
Mr. Speaker, in my opinion, fiscal reform brings about no increase in the total national income of Canadians. I suggest that Bill C-259 will be of little benefit to the poor. However, it will leave the rich practically unaffected whereas the middle class will be most directly hit.
People earning $8,000 to $60,000 a year are the ones who will offset tax reductions announced in regard to small wage-earners and those whose yearly incomes are very large.
It is therefore the middle class that Bill C-259 tends to eliminate and it has been followed by the announcement, a few days ago, of the famous program of winter works and government assistance to municipalities and provinces. In June last, when the Minister of Finance introduced his budget, he had to maintain surcharges and
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special or temporary taxes. He now says that he is ready to reduce taxes in order to increase purchasing power and to undertake federal public works estimated at $1 billion.
This morning, I heard the Minister of Indian Affairs and Northern Development (Mr. Chretien)-I regret that he is not here-on the Frenchie Jarraud program in Montreal. He was asked why there were no funds available to develop our natural resources. The minister answered, with all humility I'm sure, that he was not a Creditiste and could not print money.
I would have liked to talk to the minister this morning to ask him where the government is taking that $1 billion in deficit, which it is ready to spend across Canada. It did not exist before the statement of the Minister of Finance and yet it could be found. So why not find more money? As the Prime Minister (Mr. Trudeau) was saying this afternoon, why be so stingy, why not be more generous? I am willing to be more generous, but the Prime Minister is not. But he was ready to spend up to $1.07 billion, independently of Bill C-259.
Through this bill, it is proposed to help the people in the low income bracket. One can read in the papers that the government is striking 750,000 small wage earners from the income tax rolls.


Mr. Bechard:: That is true!


David Réal Caouette: This measure is worth how much to them? A couple of hot dogs each! The hon. member for Bonaventure-Iles-de-la-Madeleine (Mr. Bechard) did not even figure the saving for these people. However, when one talks about the sheer number-750,000-this number is striking, but it is only powder thrown in the eyes of the public.
It is mere window-dressing for the electors of Bonaven-ture-Iles-de-la-Madeleine. That can do for a while, but not forever-and I say it for the benefit of the hon. member- because people will not be laughed at indefinitely.
It is so true that in order to make this famous bill complete, the government has to foresee a deficit of $1.07 billion. When I was asking last year that more credit be put into circulation, the hon. member for Bonaventure-Iles-de-la-Madeleine thought it was funny. Today, the government is putting in $1.07 billion, which do not come from anybody, which are created-


Albert Béchard: That is pure demagogy.


David Réal Caouette: That's it, let's hear about demagogy. Demagogues! For the hon. member's information, it is spineless characters of his kind who do not have the guts to rise and make claims on behalf of the people-


Albert Béchard: The hon. member should have listened to the programme of his party.


David Réal Caouette: Mr. Chairman, I hear the hon. member refer to our party. If there is a demagogue in his area, he is the one. As a matter of fact, his own constituents in the Bonaventure-Iles-de-la-Madeleine area are the ones who say so. If he wants to see letters-


Gérald Laniel: Order, please.


Albert Béchard: Would the hon. member allow a question?

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David Réal Caouette: Go ahead.


Albert Béchard: I would like him to name those who call me a demagogue.


David Réal Caouette: If the hon. member will come to my office as soon I am finished, I will show him letters from people in his constituency of Bonaventure-Iles-de-la-Madeleine who attended the recent Creditiste convention in Hull. Those people told me in so many words that the member for Bonaventure-Iles-de-la-Madeleine was gutless-


Albert Béchard: Mr. Chairman-


Gérald Laniel: Is the hon. member rising on a point of order or a question of privilege?


Albert Béchard: Mr. Chairman, I should like to put a question to the leader of the Social Credit Party.
Since they attended the convention in Hull, and elected him by a vast majority, I trust he will give me their names, for they must have registered. Other than Creditistes, naturally!


David Réal Caouette: Earlier I invited the member to come to my office to check the names. It is so true that his electors think he is a demagogue, that even his colleagues find it amusing that I should give him a tongue-lashing. It does him good.


Albert Béchard: He is far more of a demagogue than I am.


David Réal Caouette: That is his reply.


An hon. Member:: That is the only word he knows.


David Réal Caouette: The only answer he can give.


Gérald Laniel: Order. I would ask the hon. member to kindly address the Chair and, at the same time, to bring up logical questions as well as give logical answers.


Mr. Fortin:: On a point of order, Mr. Chairman.
As a member of the House, I wish to protest against what you have just said. It is not for the chairman at a sitting to decide during a discussion whether or not an hon. member is talking with logic. I would like to remind you that it was your duty to call to order the hon. member for Bonaventure-Iles-de-la-Madeleine, who was desperately shouting "demagogy" without having been recognized by you, while my colleague from Temiscamingue was in fact dealing with the subject. I would therefore appreciate it if you would clarify that matter and call to order the hon. members opposite. If they do not have the guts to stand up, at least they should listen.


Gérald Laniel: Order. I simply said that my remarks were intended for all hon. members.


David Réal Caouette: Honestly, it is all the same to me. You may address them to me personally, that will not disturb me and will not prevent me from saying what I think of the hon. members opposite.


Albert Béchard: The same goes for me too.


David Réal Caouette: The hon. member for Bonaventure-Iles-de-la-Madelaine says that the same goes for him too. I do not care because it does not bother me so much.
The hon. member may always resort to a speech explaining wherefrom his government is going to obtain the $1,070,000,000 which will be distributed all over Canada. Wherefrom? Let him tell us. If he does not know, then let him listen to me. As far as I am concerned, I can tell him because I know where this money will come from. It does not come the hon. member's pockets or the prime minister's or the treasury but from the finance and credit comptrollers. This is money which we are borrowing to create a $1,070,000,000 deficit. This loan will probably be placed as usual in the United States. The hon. member for Bonaventure-Iles-de-la-Madelaine, together with others, will probably crawl their way to the United States begging them to finance the development of our natural ress-ources and enable us to do what we can and must do here, in our country. We are opposed to such a scheme.
Let us turn to the Bank of Canada. Digit "7" is the same whether it is written by the Bank of Canada or the United States. Would the hon. member for Bonaventure-Iles-de-la-Madeleine care to tell me the difference between the two.
And when the Americans lend us some money let us not kid ourselves. They do not base their credit on their assets but on what we will be developing in Canada. This is so true that if we were not developing anything the Americans would not lend us anything. If we keep on borrowing from them at interest rates of 9 or 9 i per cent, it is quite clear that in 25 or 30 years from now all that will have been developed will belong to the Americans and we will still hear people say, we must regain control over our economy.
Mr. Speaker, we are completely on the wrong track, completely wrong. When we expose the truth in such broad daylight we are called demagogues by irresponsible men such as the hon. member for Bonaventure-Iles-de-la-Madeleine. We are used to that. I could hear the same things 25 years ago when I first came to this House. But today, for example, we are proving what we used to say 25 years ago: We are stating facts. This is so true that in June-not even six months ago-the Minister of Finance had to tinker with taxation and say: We need revenues. The expected deficit is $400 million. We shall be in for $1 billion 70 million by trying to reduce taxes not by increasing them. A 3 per cent tax reduction will affect personal income. A miner working at Noranda mine and paying now $300 in yearly taxes will have his taxes decreased by $9: that is the approximate cost of two hot dogs and three ice creams. Nine dollars a year is not even 75 cents a month.


Albert Béchard: It is $9 less.


David Réal Caouette: Is the government going to say it has been quite generous for those people?


An hon. Member:: This hurts.
ctober 18, 1971


David Réal Caouette: No, it is far from hurting. But this $1 billion 70 million will hurt you.
Mr. Chairman, we do say that we should spread affluence instead of poverty among Canadians. If the Minister of Finance, in bill C-259, determined that any annual income under $5,000 for married people and under $3,000 for single people is to be tax-free, the whole problem would be settled.
Social welfare should be replaced by some better formula, for, among other things, Bill C-259 includes social welfare. And social welfare-I touched upon the subject last week and shall say more today-gives rise to crying abuses in several respects. It might be objected that the provinces make the decisions, that the offices are administered by them and that the federal government pays 50 per cent of the expenditures, which is true. However, if the federal government pays 50 per cent, I feel that it should be entitled to control what goes on in some provinces. We know full well that some people are paid welfare allowances whereas they do not need them, and vice versa. That happens in Montreal as well as at home.
On a recent air trip, I met a worker who receives a pension from the Quebec Workmen's Compensation Commission. He gets $86.54 per week; that is the maximum. According to him, it is not enough. So he went to the regional welfare bureau to get more money. He was told he had enough and could not get more but that if he was short of money at the time, he could get an advance, providing he would sign a form stating that he would pay back the money upon getting his next cheque. The worker said he would not sign, that he would find some other way. Therefore he went back home and said to his wife: "Go to the welfare bureau, say I deserted you, that we are separated, that I live with my father, that you are left with our two children and need welfare benefits." His wife complied and went to the welfare bureau. The manager said: "Madam, you are entitled to it." And ever since, they have been paying her $220 per month because of her statement that her husband had left her. Such are the abuses brought about by the welfare system and the same is true of unemployment insurance. Some jobless people, if caught working a few days, are punished by discontinuation of benefits for a week or two. If the person can get away with it, he gets his unemployment insurance benefits. In this way it is a game of hide-and-seek with the welfare system as a whole.
Under the present system, if a person receiving welfare benefits attempts to work he is immediately cut off from payments and if he has worked only a few days, he also comes off badly. So, what does he decide to do? Stay at home without moving, which is an incentive to sloth instead of an incentive to work.
I am convinced that the program I am suggesting would cost less than the present one. I invite hon. members to make a simple calculation. I would suggest social security payments to all citizens, including members of this House, Single persons with an income from $1,500, couples who get over $2,500 would be entitled to them and each child up to the sixth would receive $250. This would mean a maximum annual income of $4,000 for each family with six children, if such social security payments were guaranteed to each Canadian. Hon. members, the poor, the
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small wage-earner, indeed everybody would receive that payment and if the farmer, the labourer, the miner, the unemployed or the welfare recipient find some work, the amount guaranteed as social security would not be cut off. This payment would be made in addition to his salary. If the individual involved has a family which would allow him to receive $3,000 per year and finds some employment where he can earn $4,000 or $5,000 per year, it would assure him a yearly income of $8,000. And this, Mr. Chairman-


Gérald Laniel: Order. I regret to interrupt the hon. member, but his time has now expired, including the two minutes for the questions which he answered. The hon. member cannot carry on, unless he obtains unanimous consent. Does the House authorize the hon. member to continue?


An hon. Member:: No.


Some hon. Members:: Agreed.


Gérald Laniel: I am sorry, but I have heard a no.
The hon. member for Red Deer (Mr. Thompson). [English]


Mr. Thompson:: Mr. Chairman, I am quite willing to allow the hon. member for Temiscamingue to carry on if he has permission from the House.


Some hon. Members:: Agreed.


Mr. Clermont:: Mr. Speaker, I rise on a point of order.
I would like you to ask the House again whether the hon. member for Temiscamingue might be allowed to continue his speech.


Gérald Laniel: I shall ask the question again. Is there unanimous consent to allow the hon. member for Temiscamingue to continue his speech?


Some hon. Members:: Agreed.


Gérald Laniel: The hon. member for Temiscamingue.


David Réal Caouette: I thank you, Mr. Chairman. I also heard a no, but at any rate, I wish to thank my colleagues for their courtesy, even the hon. member for Bonaventure-Iles-de-la-Madeleine (Mr. Bechard) who has been one of the first ones to say go ahead. I thank him.
Mr. Chairman, we are clearly in a democratic Parliament. Thus the hon. member for Bonaventure-Iles-de-la-Madeleine may not share my views on certain matters the same way as I may not share his, but one point on which we agree is that everybody must enjoy freedom of speech, which is not seen in certain foreign countries, something that we would not wish to happen in this country.
Mr. Chairman, I will nevertheless take no advantage of that generosity of hon. members. As I was saying, the social security which we are promoting would enable us

October 18, 1971
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for instance to do away with almost all assistance and social welfare offices and to eliminate exorbitant expenses incurred by most provinces. I suggest that more than 50 per cent of the money allocated to social welfare is handed out to bureaucrats responsible for the administration of provincial plans.
Even if 50 per cent of the monies are paid by the federal government, these people take offence at a federal intervention. This is absolutely intolerable. Offices are organized where it is fantastic to note that service is better than in the offices of federal members of Parliament. Huge sums are allocated to an administration where in most cases people on relief, the really needy are forgotten.
I say that a program of social security for all would eliminate the heavy bureaucracy which is more harmful than helpful. That would surely create surprises. A social welfare officer, for example, who draws a salary of $18,000, $20,000 or $25,000 as a deputy minister or department head perhaps will be disturbed a little, but should a whole population be disturbed instead of a public servant or a bureaucrat? This is the question which must be put.
In my opinion, a national program of social security would eliminate all these expenditures, even unemployment insurance benefits, because an unemployed would get as much in social security payments as he is now getting for other reasons. And he would be allowed to work while drawing an allowance under the social security program.
In my mind, members of parliament, government, people concerned by public affairs should seriously consider the establishment of a program which would help everyone, and not only one category of people at the expense of another.
In English, they say: "Take away from those who have something in order to give to others who have nothing. Take away from the haves to give to the have nots". I say that quite often. "At the end you will have all kinds of have nots and no more haves in this country. And it is exactly what is going to happen".
But we are in a position to vote credits required for the development of our country. It is so true that, as I said earlier, the Prime Minister and the Minister of Finance confirmed it last Thursday when they announced their program of assistance to municipalities and provinces. We do not object to help being given to the provinces and the municipalities; but we do object to the fact that those billion dollars be equal to a debt towards a few oddballs who have never built anything in Canada, except debts to plunge into debt those who are building the country.
Our party would like to see a responsible government making use of the services of our national bank, the Bank of Canada, which was not instituted for nothing. To date it has not fulfilled its function.
The right hon. Mackenzie King-who in spite of everything, is the spiritual father of all hon. members on the government benches-stated, way back in 1935, that: once a country divests itself of its control of credit and money, it is of little importance who legislates in that country. Once the practice of charging exorbitant interest rates takes command, it ruins any nation! Canada is no exception. This is so true that the more we legislate, the more
(Mr. Caouette.]
we mess about with budgets, and the more we submit mini and big budgets, the more trouble we invite.
It was alleged, last week, that the unhappy state of affairs in Canada and the increase in unemployment during the month of September should be attributed to the 10 per cent American surtax on Canadian exports to the United States. Nevertheless, on the same day, just a few hours later one could read in the Ottawa and Hull newspapers that in spite of the 10 per cent surcharge our exports to the United States had increased by 9 per cent in September. The tax has been in force since and the number of unemployed has increased even then! There is some inconsistency in that.
Mr. Speaker, let us use the services of a bank that was created for us, that is the Bank of Canada. This is not demagogy since it is our bank. Instead of going to the United States, let us go and see Mr. Rasminsky and tell him that the final decision rests with the Parliament of Canada and not the Bank of Canada. It is up to us to decide, and instead of going to the United States to get the one billion dollars we need let us have Mr. Rasminsky print them. This would be better because it would cost us less to create our own credit to finance our school boards, our municipalities and our provinces.
Then, Mr. Chairman, we could say that such a bank would promote the establishment of a genuine social security scheme under which there would no longer be any discrimination against the various social segments of our society. As a consequence, we could guarantee economic security and personal freedom to all. That is what my colleagues of the Social Credit party are advocating, that has been our objective since we have been sitting here and that is why we invite our colleagues to study this program seriously and objectively.
If the Liberal members agree, I am going to vote like them. If the Conservative members also agree, they have only one thing to do: to come and sit among us. Of course NDP members would gain much by becoming Creditistes.


Mr. Trudel:: Mr. Chairman-


The Chairman:: Does the hon. member for Montreal-Bourassa wish to ask a question?


Jacques L. Trudel: Mr. Chairman, I wish to put a question to the hon. member for Temiscamingue.


Russell Clayton Honey: Will the hon. member for Temiscamingue allow a question?


David Réal Caouette: Yes, Mr. Chairman.


Jacques L. Trudel: Mr. Chairman, last week the hon. member made a speech in which he mentioned his social security program designed for all Canadians. This week he is making another speech in which he again refers to social security. The matter is very complex and, from what I could understand, he is quoting the figures of $1,500 and $2,500 for a family, and of $250 for a child. Last week, he did not seem to trust the Canadian economists and said that he would have proper research made to determine what the Canadian people would have to pay in return for this program apparently quite clear in his mind.
October 18, 1971

This is the question I should like to ask him: Does he know anyone who could give us figures as to the total cost of the plan he advocates?


David Réal Caouette: Mr. Chairman, that question gives me much pleasure and proves that my good friend, the hon. member for Montreal-Bourassa, or is it Ahuntsic?


An hon. Member:: Montreal-Bourassa.


David Réal Caouette: -Montreal-Bourassa. It is a pleasure to reply to that question and it proves he was watching television last night. The hon. member is eager for information.
Mr. Chairman, I do not have the statistics in hand, but I am sure that without bureaucracy, it would cost the Canadian people, under the program I advocate, less than it costs at the present time with the program in force in all the Canadian provinces.
In any case, as soon as I get the statistics-they are being prepared-it will be a pleasure for me to inform the hon. member.


Mr. Leblanc (Laurier):: Would the hon. member allow me a further question?


David Réal Caouette: Yes.


Fernand-E. Leblanc: With respect to social welfare, would not the program advocated by the hon. member create a problem in connection with federal and provincial jurisdictions since some welfare programs come, at present, under provincial jurisdiction and others are under federal jurisdiction?


David Réal Caouette: I suggest the federal-provincial conflicts would be eliminated by the establishment of a national plan. Family allowances and old age pensions in the amount of $80 would come under federal jurisdiction. Then, no province would be opposed to such a program if everyone was treated on an equal footing.


Fernand-E. Leblanc: Does the hon. member not believe that the government could then be described as a centralizing power?


David Réal Caouette: No, I do not think that we are regarded as centralists because of the old age security pensions. I readily admit that we will still meet with swelled heads like Michel Chartrand, Reggie Chartrand and Lemieux, from Montreal, but nevertheless our program is of national interest and intended for the whole Canadian people.


Robert Norman Thompson: Mr. Chairman, I wish to speak generally about one aspect of Bill C-259 that has not been mentioned heretofore and which I believe is of vital concern to a great number of the Canadian people. I refer to the section of the bill that eliminates the gift tax.
The elimination of the gift tax not only creates difficulties for the provincial governments because of the lack of consultation with them and the loss of revenue it constitutes for most of them, but it is also logical that the capital gains aspect of the bill as introduced-assuming this
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provision will be passed-be phased in with the elimination of the gift tax to avoid complete disruption for the provinces and also for those people who have been vitally concerned with this aspect under the previous tax laws.
To begin with, I should like to commend the government for increasing the allowable tax deduction for recognized charitable organizations from 10 per cent to 20 per cent. I believe this is a very positive way of providing an incentive for Canadian citizens to participate more directly in many worth-while organizations that come under the category of "charitable organization". I am thinking particularly in this regard of the new "ngo"-non-government organizations-department of CIDA.
It is the policy of the government to allot a certain portion of its budget to this department of CIDA in order to encourage the non-governmental organizations-the private sector organizations-to participate in and contribute to international development. It is rather interesting to note that the private organizations have made a very sizeable contribution to the emergency created by the Pakistani refugees in India at the present time. In fact, as of the end of last month the government itself had directly contributed $6,098,610 to the refugee fund to relieve the disastrous situation in India. Private organizations over the same period of time, according to the records, contributed $1,393,216, though I believe the amount contributed is actually greater than this figure since some money has been sent directly to India without notice being given to the government. In any event, this contribution is more than 20 per cent of the contribution made by the government.
This is the kind of participation and involvement that I think is good, and it is to this end that the ngo department of CIDA was established. I also note in this regard that during this time the provincial governments had given some $370,000, which means that the citizens of Canada have directly donated more than four times the amount contributed by the provincial governments. I am referring only to the amount given for the relief of the Pakistani refugees; there are many other forms of international and emergency relief, not to mention charitable donations to home based projects.
I believe that what I have to say this afternoon is representative of the views held by a wide range of nongovernmental organizations. I do not mention only those organizations that are related to religious bodies, but if I may speak generally may I say I am voicing opinions held by the Jewish Congress, representatives of the Jewish faith, the opinion of the Catholic church and its various organizations coming within the category of registered charitable organizations, and I am speaking also for a broad section of the Protestant churches.
In addition to these religious organizations, I am speaking for organizations such as UNICEF, the Community Funds and Councils of Canada, the Canadian Hospitals Association, CARE of Canada, the National Council of the YMCA, the many associations across the land having to do with retarded children which do a tremendous amount of work on a voluntary basis, and also for the Canadian Institute for the Blind. The gift tax proposals affect a broad range of organizations, and I do not think

October 18, 1971
Income Tax Act
the government has fully realized that its proposals affect this aspect of charitable giving.
In my opinion, the Canadian way of life is greatly enriched through efforts and contributions made by charitable organizations. Many of them provide facilities for education, physical development and research. Many others help alleviate the hardships that often come in the wake of disasters, such as the Pakistani refugee emergency. Opportunities to serve society become available in a way that could not be provided by government, and as a result the government is relieved of many administrative and financial costs that would otherwise have to be provided out of taxation.
I feel that the needs of the Canadian people and of the Canadian government would be better served by encouraging private charity and philanthropy to support endeavours of a philanthropic nature, where otherwise they could become needs that the public would expect the government to meet. It is a rather sad commentary on the attitude that we take to one another today that so many people in Canada regard it as not their responsibility to meet these needs; rather they look to government to meet them. Therefore, I think we should be careful to see that nothing is done that would impair charitable giving; rather, we should provide incentives and encouragement. From this standpoint, the elimination of the gift tax will have an adverse effect.
If the government were required to meet all these needs, I feel that the quality of the services would suffer simply by reason of scarcity of funds. The proposed increase of the permitted charitable deduction from 10 per cent to 20 per cent of the taxpayer's income provided for in Bill C-259 is a great encouragement. However, other provisions in Bill C-259, namely those that impose a capital gains tax at the time a gift or bequest is made to a registered Canadian charitable organization, may very well jeopardize the concept of charitable giving in Canada as we know it. Liberalizing the tax laws of Canada in favour of charitable organizations will result in a very small loss of revenue to the government. However, I believe that the benefits to the community will greatly outweigh such loss and will actually reduce the need for government expenditure and subsidy.
The proposed new Income Tax Act contains several sections that change the present provisions relating to gifts for charitable purposes. One major change is the increase from 10 per cent to 20 per cent of permitted charitable deductions. Unfortunately, the sections relating to deemed realizations on capital gains at the time of a gift or on death do not except gifts or bequests to registered Canadian charitable organizations. I believe that under the old tax laws there probably existed many loopholes of which organizations took advantage to go outside the intent of the law, and I believe that such loopholes should be closed. My comments relate to legitimate charitable organizations, and I recognize that the government has a responsibility to see there is no evasion of the law. Inasmuch as the imposition of the capital gains tax on such deemed realizations was apparently meant to replace the tax received under the estate tax and the gift tax sections of the Income Tax Act, neither of which of course previously taxed gifts or bequests to registered Canadian

charitable organizations, it concerned us greatly that under the proposed new sections the government will not only not be carrying out at least its old views, encouraging charitable giving, but in fact will be severaly penalizing any donors who may wish to make gifts to registered Canadian charitable organizations.
So I would respectfully submit that gifts or bequests made by any person to registered Canadian charitable organizations should not be subjected to a capital gains tax, and further, that the value of such gifts should be based upon the fair market value of the asset as at the date of the transfer. In section 70(5) it is provided that a depreciable property of a deceased taxpayer is deemed to have been disposed of, at a fair market price, on the date of death of the owner. The "amount" realized is then liable to a capital gains assessment. Similarly, paragraph 69(l)(b) provides that the same situation applies where a taxpayer makes a gift of such property to any person, inter vivos, or literally "among the living".
These rules would have a seriously inhibiting effect on a person who wishes to bequeath property to a charitable organization, or who wishes to make an outright gift of it while he still lives. A person making a donation of property which had originally cost $10,000 and which is now worth $50,000, would find himself assessed as though he were making a personal profit of $40,000, 50 per cent of which would be taxable. The raised limit of 20 per cent of income allowable as tax deductible donations to charity, that is to make a gift such as the one mentioned above worth $50,000 and to avoid a tax on $20,000, would require a person to have an income of at least $100,000 over a two year period according to the paragraphs on valuation day produces and capital gains contained in the bill. To fully realize a tax saving on the entire $50,000, a person would need an income of $250,000 over the two years.
The minority report of the Royal Commission on Taxation, the report of the House of Commons standing committee, and the report of the Senate committee on the white paper proposals for tax reform, have some very interesting statements to make in this regard. In these reports a number of unbiased observers concluded that the application of a capital gains tax to charitable gifts of appreciated property would create unfair tax burdens inconsistent with the policy of encouraging such gifts, which has always formed part of Canada's tax system. While a number of donors do make outright gifts or bequests to charities, many others would prefer to irrevocably transfer money, securities or other assets to a trust which would pay the donor or his nominee an income during his lifetime, and possibly to his spouse for her life if she survives him, and on the death of the survivor the remainder would go to a registered Canadian charitable organization.
The Department of National Revenue has interpreted the provisions of the present Income Tax Act to permit a charitable deduction to donors who purchase a charitable annuity from registered Canadian charitable organizations for any excess of the purchase price of the annuity over the amount expected to be returned to the donor. Since this type of charitable deduction is already being permitted by the government, it would not appear to be a
October 18, 1971

large extension of that idea to permit similar deductions for gifts to charitable remainder trusts.
The new Income Tax Act should encourage the creation of charitable remainder trusts, and therefore we would suggest that there should be amendments to Bill C-259 which would permit donors to create inter vivos and testamentary charitable remainder trusts such that the following benefits would accrue: first, that any capital gain on such disposition to the trust should not be deemed as taxable to either the donor or to the trust; second, that the gift value be based upon the fair market value of the assets on the date of transfer; third, that the donor obtain some type of income tax deduction for his irrevocable gift of future interest to the charity; fourth, that the deduction generated be subject to the 20 per cent of income limitation or such other limitation as the government may agree to, and the carry over provision with respect to the unused surplus of such charitable donation be increased from one year to five years in view of the amounts usually involved; and fifth, that the wording of the act be made clear to permit a donor to give appreciated property other than cash.
I think also that it would be wise to allow this new act to encourage a pooled income fund concept which is a variation of the simple charitable remainder trust. Under this method, donors make gifts to a pooled income fund, where it is invested together with gifts of others who make similar life income gifts. The donor receives his share of pooled income fund earnings each year during his lifetime and on his death the remainder of his gift would become the property of the charity. I would suggest that this type of gift have similar tax benefits as we suggested for the simple charitable remainder trust.
Another but a new concept-because what I have just mentioned is really contained under the present legislation but omitted under the new through the elimination of the gift tax-would be provision for a short term trust. Under this method, a donor would be entitled to place part of his property into a trust for the benefit of a registered Canadian charitable organization for a short term, say two to five years, during which time the income from such property would be transferred to the charity and at the end of the term the donor could recall the property from the trust at the same cost base at which the property went into the trust, and then proceed as before. I believe also that it would be very wise if Bill C-259 contained a provision which would extend the carry over provision which at the present time is only for one year but which could well go for five years to permit donors to take full advantage of the charitable deductions.
I believe that these suggestions are much more worthwhile and of much greater significance to more Canadian people than most of us realize. I believe that by adopting such changes the government would continue to encourage a society in which individuals are generous in helping each other, and would be encouraged to give as a means of demonstrating good civic responsibility and in fulfilling their sense of moral responsibility. Therefore, not being able to move amendments of this type when we come to clause by clause consideration, I urge that the government give serious consideration to the implementation of these simple but basic suggestions as they relate to charitable
Income Tax Act
giving. The present law is changed in a negative way in Bill C-259, probably in a way that was not really intended.


Robert Carman Coates: I should like to participate in this debate by taking a somewhat more general approach than the hon. member for Red Deer, although the thought behind the proposition that he advanced to the government should be given the consideration it deserves and should result in amendment No. 98 being proposed by the government and placed before the House for consideration. I should like to take a more general approach and go back to the period of time when the government brought forward its proposals in the white paper on tax reform. At that time, it was suggested to the Canadian public that we were going to have a complete reform of taxation in Canada and that, as a result of it, many changes would be made in the taxing system. As we look at the situation today, and as we watched the Minister of Finance perform the other evening, we discovered that from that period until now there has been a very depressing reaction within the business community. It is very easy for the government to say that the 650,000 people who are unemployed in this country are unemployed because of the 10 per cent surcharge or because of some other situation beyond their control.
The very depressing situation within the business community started with the government's white paper on taxation. For over two years, the business community of this nation was put through the wringer. Members of the business community had no idea what would happen. They continued making suggestions to the government, and warned of the great dangers they faced and the difficulty they had in planning their programs. They also pointed out the instability which had been created in the minds of businessmen in this country. The government paid absolutely no attention. It went forward and one did not know from one day to the next what we would have in the way of tax legislation. Certainly, a businessman who wished to prepare himself had no idea what he would have to pay in the way of taxes when the government finally made up its mind concerning what the tax reform legislation would be. So, in June we were pleasantly surprised by Bill C-259 because it certainly is not as damaging as we were originally led to believe it would be. At the same time, however, there are a great many aspects of this legislation which do anything but create confidence in the minds of members of the business community.
I listened with great interest a few months ago to the Minister of Energy, Mines and Resources when he explained to the House that money for development goes to areas where the businessman can obtain the greatest return and expect the greatest amount of stability. Certainly, no businessman in this nation or in the world could become very excited about Canada as a place in which to invest money during the whole, long searching period in which the government forced the business community to wait while it determined what the tax policy would be. Then, last June the government brought forth its tax legislation. In many aspects it is depressing to the business community. It also limits the confidence that should have been built up at that time because of the very evident signs that the economy is in trouble. But the government
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O ctober 18,1971
Income Tax Act
went forward and introduced its capital gains tax, this and that and other things.
Then, after all the period of time in which the government could consider what its tax reform legislation would involve, 97 amendments are slapped before us to be incorporated in the biggest bill which I believe has ever been presented in this House. Regardless of whether or not the amendments were the result of consideration and representations, the bill certainly is not a very stabilizing factor for the business community because, once again, any plans any businessman might have will have to await the consideration of the amendments that are proposed.
I come from the Atlantic provinces of Canada. We must expect the federal government to provide legislation that is conducive to the attraction of capital from all over the world to our area in the hope that we can develop our economy in such a manner that it will produce jobs for the 15 per cent or 20 per cent of our people who will face unemployment this coming winter. There is no way this government will create any confidence in the minds of any businessman in the world community. Certainly, this government will not create any confidence in the minds of any persons in this nation sufficient to encourage them to invest money in any enterprises that would produce employment. Certainly there is nothing about the Minister of Finance or his proposals, whether they be those of the other evening or of last June, or any others, that would create any confidence in the mind of a businessman.
Surely, one of the first steps this government should take would be to provide this country with a minister of finance who would instil confidence in the business community and give the business community a feeling that Canada is a good place in which to invest money. We must have confidence in government planning, and that has been non-existent up to the present time. Every time the government is provided with information by Statistics Canada it has to change its predictions because every time that information is different from what the minister had predicted it would be. It is only common sense that if this is the type of direction we have from this government at the present time, no businessman in his right mind would have any confidence in what the government says or in the way in which it does something. Unless something is done about the finance portfolio and soon, we cannot expect anything more than a greater degree of unemployment in the months ahead. This is the sad and unfortunate fact of life in Canada today. It is very depressing that any Canadian should find himself in this situation.
If we believe it is depressing, it certainly is depressing for the 650,000 unemployed and the additional 100,000 who today are frightened to death because they know that before the winter is over they also will be without jobs. It is a desperate, frightening situation for every municipal government in this nation which has to provide the money to pay welfare to those who are unemployed and are not eligible for unemployment insurance because they have not worked long enough in the past 12 month period. Certainly, the federal government in its time in office has done nothing to produce the money to help these municipalities in any way. In fact, the government has done everything to scare the money away and has placed

additional burdens on the shoulders of these municipalities. It is a desperate situation in which we find ourselves at the present time. It will not improve. It will not or cannot improve so long as the present Minister of Finance holds that portfolio. The sooner something is done about that, the better off everybody in this nation will be. There is no doubt about that.


Mr. Deputy Speaker:: Order. Before I see the hon member for Calgary North, perhaps he and other hon members would permit me to read the proceedings for the adjournment debate this evening.



PROCEEDINGS ON ADJOURNMENT MOTION


The Deputy Speaker:: It is my duty pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The hon. member for Vancouver-Kingsway (Mrs. Macln-nis)-Health-Birth Control-Grants to municipalities and voluntary organizations; the hon. member for Hillsborough (Mr. Macquarrie)-External Affairs-Conference of Francophone countries-Appointment of delegates, voting instructions.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration in committee of 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-Mr. Benson-Mr. Honey in the chair.
Eldon Mattison Woolliams: Mr. Chairman-


Mr. Guay (St. Boniface):: Let us hear about justice.


Eldon Mattison Woolliams: I hope my good friend from St. Boniface will bear with me today, because the last time I spoke and the last time my leader spoke, the hon. member frequently expressed himself from where he sat. I know he is a good member, conscientious and always polite outside the House. I hope he will exercise some restraint inside the House today.
I want to start by touching on two points. The first is what happened here on the night of October 14. I would remind the committee that on June 18 the government presented a supplementary budget. On October 14 the government announced there would be a second supplementary budget. This means, basically, when you look at the tally, that there have been two supplementary budgets in 35 sitting days of Parliament. That fits into the picture presented by the last speaker, the hon. member for Cum-
October 18, 1971

berland-Colchester North. This is exactly what he was warning the country, the government and Parliament about-the uncertainty.
Unfortunately, the government has buried the two minor tax changes presented in the supplementary budget of last June in a 700-page bill of so-called tax reform. For the record, now that we have had a chance to review them, the government has tabled 95 proposed amendments, some of which are rather substantial although others are minor. So in a period of economic crisis in Canada there have been three budgets presented in one session. The Minister of Labour used that in his speech the other night, in supporting the government.


Erik Nielsen: Lunch-bucket Mackasey.


Eldon Mattison Woolliams: He said that we have the most flexible Minister of Finance since confederation, a man who could move at every opportunity. As I say, during a period of economic crisis there have been three budgets in one session. We will now be spending weeks discussing a revamping of the tax structure and this, basically, will be somewhat of a waste of time. In committee of the whole we are now debating 700 pages of tax reform. If that bill were passed right now, I ask what effect would the supplementary budget, the mini-budget of October 14, have if its provisions were read together with the changes proposed in this bill?
I do not think the Minister of Finance, the parliamentary secretary or their experts can deny that in various provisions the bill basically puts taxes up. I see the Parliamentary Secretary to the Minister of Finance frowning, but if he will give me a few moments I will cite examples of where taxes are going up. If I understand correctly what happened the other night, the government got the country into such an economic mess, with unemployment now up to 7.1 per cent, seasonally adjusted, in some places 8.9 per cent-I believe this is so in the province of Quebec-and more than 8 per cent in the Maritimes, that the ministers said to themselves, "We will have to follow the suggestion of the Leader of the Opposition. We will have to do what he has been asking us to do for months. We will have to reduce taxes." So they came in here and reduced personal income tax by 3 per cent and corporate tax by 7 per cent.
I am not the only one who feels this way about what has been going on during this session, with three budgets. This is a three-budget government. I heard the Prime Minister say during his press conference the other day, "Don't worry. If we find that things change, even tomorrow we will have another budget." The government is going from budget to budget to budget. Things move up and down like the mercury in a thermometer. The hon. member for Calgary South knows that the temperature in that city can change very rapidly during the winter. It can be 30 below and rise to 50 above within a short space of time. This is exactly the way with the government's economic policy; it is up and down all the time.
I listened carefully to the Minister of Labour the other night. He put his finger on the government's trouble. He is a likeable chap. As the hon. member for Yukon said, he is the friend of the lunch-bucket group, the labour group. I have spent some time overseas with him. He has a likeable 24319-674
Income Tax Act
character. There are times when he stumbles onto the truth. This is what he said, as recorded at page 8714 of Hansard, and it is an astonishing admission. I have not seen it written up anywhere. It is not very long. After he had cried about unemployment and talked about what the Bank of Canada and the government were going to do, somebody got to him and he became excited. Somebody said, "Hear, hear," and the minister said:
I happen to be one-
I have heard that expression many times over during my years in this House.
I happen to be one-I am not speaking for the government-
He was very careful because he remembered the cabinet oath and he could see his salary on the line. He did not want to go to the woodshed. Only one minister went to the woodshed.
-I am not speaking for the government but for myself-who feels that never again can we tackle the problem of inflation with the blunt instruments of fiscal and monetary policies.
That is exactly what the opposition has been saying for months during the question period and in numerous debates on the budgets. Now the Minister of Labour agrees.


Robert Carman Coates: He said last year that 6 per cent unemployment was courageous.


Eldon Mattison Woolliams: It may have been, and the Prime Minister said you could take it or lump it. If ever there was a piece of legislation that should be shelved, it is this tax measure, because if you worry the business world and the labour world, you are worrying the whole economy and creating instability across the board. The government should withdraw this tax measure. I guess it doesn't take a lot of brains-


Joseph-Phillippe Guay: That statement will be printed.


Eldon Mattison Woolliams: I heard my hon. friend from St. Boniface. He has an open mouth but not an open mind. I hope that when the people of St. Boniface read the debates they will realize and appreciate this.


Joseph-Phillippe Guay: On a point of order, Mr. Chairman, if the opposition would only make sense in what they say, I would be glad to get up and give them a reply. But I do not think what they say is worth it.


Erik Nielsen: You have been told not to say anything.


Eldon Mattison Woolliams: There is an old expression we use out west, and perhaps they know it in Manitoba: Let us talk about wood. How is your head?
The government should immediately withdraw this bill because again it is creating economic chaos. If there is to be any good come out of what was done the other night by the government and the Minister of Finance, no doubt after hours of debate in cabinet, this bill should be withdrawn. This will put more cold water on the economy. The Minister of Labour was right in saying that we should not use blunt instruments to tackle inflation. That is the first point I want to make.

October 18, 1971
Income Tax Act
I would ask, therefore, that special consideration be given to withdrawing this bill. If the member for St. Boniface feels this is a good piece of legislation and that the policies of the government of ever-increasing taxes will get the economy going, then he does not agree with the Minister of Finance, the Minister of Labour or the front benches. I do not know where he stands, because he is always in his seat.
The next thing that I should like to deal with in connection with the debate of October 14 is the statement of the Minister of Finance which adds to my argument that this bill should be withdrawn because, basically, it is the fourth budget. The Minister of Finance began by saying:
I should like to announce certain measures to deal with the current problems facing the Canadian economy and to sustain and reinforce the growth of production and employment now taking place. In terms of production, employment and prices, the Canadian economy is on the course I envisaged at the time of my June budget, before the United States economic measures of last August were announced.
Let it be clear that all of us agree that with the United States imposing the surcharge and with the problems of our exchange with trading nations, we are in economic trouble. But prior to the announcement of these measures and the actions taken by the United States there was between 6 per cent and 7 per cent unemployment in this country. To date, however, there has been no fall-off in exports: the record shows that they have remained stable-so the surcharge has not affected the economy. If the government wants to hide under the economic umbrella of the United States surcharge and what it has done to our trade, there are no facts to support this. Unemployment is at almost the identical level it was before, and our exports have increased. That argument does not hold water.
This government's policy for the control of inflation has been wrong, Mr. Chairman. As the Minister of Labour said, they used a blunt instrument. It was so blunt it was a sledge hammer and it brought about 7 per cent unemployment. The Minister of Finance continued:
No doubt the explanation is complex.
Of course it is complex. The minister then said that those who are recorded as unemployed include men and women who have lost their regular employment, teenagers and older people. He went on to list the number of people out of work. This was exactly the message that the Prime Minister tried to leave at his press conference, that more women were coming out of the homes and the woodwork and applying for jobs, that everything the Minister of Finance predicted was correct except that they did not realize that more people would be looking for jobs. He said that was the only mistake the government made. Well, it is a pretty important mistake. However, ever since I came to this House governments have been saying that more people have been going to work than previously. The GNP is based on population growth, on wealth growth, on our total economic growth. If the government missed that point, they missed everything-and now they are making excuses.
The third thing the minister said was that the government is going to retrain people. I received today an interesting letter from a university student who owes the gov-
(Mr. Woolliams.]
ernment $2,900 for a grant obtained under the university loans system. He has two degrees but has returned to university because he cannot get a job. He has received a letter from a collection agency giving him seven days to pay the $2,900. I will send the letter to the parliamentary secretary. I am sure he will be interested in it. I called the bank and they told me it was not their responsibility. Now the matter is in the hands of a collection agency and it is between the Minister of Finance and the bank. Unless this student pays within seven days, his savings in the bank will be garnisheed. That is the type of program the government is operating at the present time. What is the use of training people when there are no jobs for them? As the Leader of the New Democratic Party said in that debate, we will be the most overtrained, unemployed nation in the world.
The government must get the economy moving. On the question of reduction of taxes, we on this side of the House go along with the government. True, they poured $1 billion into the economy, but that has to be analysed. The truth is, when they brought in the mini-budget they already had $750 million; so they added only $250 million. A deficit of $1 billion might have some good side affects. When the Progressive Conservative party formed the government and had to face the problems of deficit financing, the Liberal party said, "You have to balance the budget". I hear the hon. member for St. Boniface talking from his seat again. The wind blows and blows and blows!
I want to come to another point in reference to the $1 billion deficit. It may affect our exchange so that our dollar may fall below that of the United States. We will be able to do business with the United States and other countries if our dollar is below par value. The mini-budget is good; there are good facts in it.


Some hon. Members:: Hear, hear!


Eldon Mattison Woolliams: It may be late, but it is better late than never. But now the government is bringing back a tax bill that will hit it on the head. We are back where we started, if we pass this bill. It is the middle-income group that will pay more taxes under the new bill. If a million people are taken off the tax rolls-I am not sure whether it is a million or half a million-the taxes have to come from middle-income people, because expenditures are continually increasing. Surely that can be understood even by the hon. member for St. Boniface. They are undoing what they tried to do the other night when, basically, everybody with some reservations offered congratulations to the government for listening, after three years of economic stagnation.
I have not very much time left and will have to deal with further points later. But I should like to speak on the question of the petroleum industry. The hon. member for St. Boniface is still talking; he never ceases. He is like a twin debater, but unfortunately his words do not get into Hansard.


Joseph-Phillippe Guay: Go ahead; read what you have there.


Eldon Mattison Woolliams: Don't worry about my reading. When I first came to this House members made speeches without reading, but today speeches are read, read, read. The
October 18, 1971

bureaucrats write the speeches for them and members don't know what they are reading. That is why the Minister of Finance is in this mess.


Erik Nielsen: The member for St. Boniface cannot even read.


Thomas Speakman Barnett: Quiet, boys, or we will not get to the question of oil before six o'clock.


Eldon Mattison Woolliams: In its submission to the Minister of Finance, the Independent Petroleum Association of Canada has made a preliminary review of the 1971 tax reform legislation in respect of those provisions which particularly affect the oil and gas business.


Russell Clayton Honey: Order, please. I see the hon. member is about to read a document. Before he does so, I must advise him that his time has expired. He may continue if there is unanimous consent. Is there such consent?


Some hon. Members:: Agreed.


Eldon Mattison Woolliams: Mr. Chairman, I thank the committee. I see we have seven minutes left. The Independent Petroleum Association said this in their submission:
While the full impact of a number of important changes in taxation policy may not be known for some time, our association feels certain matters require reconsideration prior to the enactment of legislation.
The oil and gas industry today is most important for our economy. It is important for the economy of the country generally and for the economy of western Canada in particular. That industry, as will be seen if one checks the figures, is responsible in large part for our favourable balance of trade with the United States. Basically, through that industry we sell a raw commodity: we sell crude petroleum and natural gas-energy-producing fuels needed by the United States in very large quantities. An application has been before the National Energy Board. It may have made its decision, or it may be about to decide. It concerns the export, over ten years, of an additional 2.5 trillion cubic feet of natural gas to the United States. That country is hungry for energy. It needs our crude petroleum and natural gas and by-products of those commodities.
I hope that the hon. member for Calgary South, who I know understands these matters, will bend a sympathetic ear to requests for changes in the legislation, because the oil and gas industry is needed in order to keep other industries healthy. The well-being of that industry is felt through the gross national product of Canada. From that industry comes thousands and thousands of jobs all across the country. I do not have the figures with me, but I submit that $300 million or $400 million spent by that industry of western Canada finds its way to Ontario industries. The oil and gas industry orders valves, pipes, steel and other products. If we keep the oil and gas industry healthy we shall help to keep industry throughout the country healthy, including industry in Ontario and other provinces.
The association in its brief went on to say:
Income Tax Act
We are relieved that some of the provisions of the white paper-
The provisions that were considered by the committee.
-which we felt would present serious problems for the Canadian economy, and for our industry in particular, have been dropped from the legislation.
Some provisions have been dropped and they are glad to note that. The association continues:
However, we are concerned that certain changes in the proposed legislation which seem entirely appropriate have not been made. The areas which still continue to give us concern are as follows-
The first matter giving them concern-this was discussed in my party's caucus when we were the government, and I am sure it is discussed in the government's caucus and elsewhere-is that of depletion. In order to put this question properly before the parliamentary secretary I will read from the association's brief. They put the matter in better words than I could use:
Our association-
The Independent Petroleum Association of Canada.
-continues to feel that the abandonment of the depletion concept as it is generally understood in the worldwide oil industry and its replacement with the concept of 'earned depletion' will not attract the necessary capital to the Canadian petroleum industry.
I pause there. There is not very much competition in the case of companies exploring for and developing the sale of natural gas because natural gas is a continental export. Nevertheless, Canadian companies that are engaged in the development and exploration of crude petroleum are in competition with companies throughout the world. We have been fortunate in this regard. There are periodic ups and downs in the petroleum business, in line With the law of supply and demand. Those ups and downs follow economic and international conditions throughout the world. For instance, supplies of petroleum from the Middle East or from Venezuela may be cut off, and at those times the United States requires from us more petroleum. Basically, however, we are on a quota.
The point I wish to make before six o'clock-I will continue these remarks another time-is that in order for companies that are Canadian-owned or financed by Canadian investments to compete, they should be subject to the same tax laws in Canada as similar companies in other countries. Only that way will companies which are developing oil resources in Alberta, in our north and elsewhere stay healthy and in business. We must recognize that there are fluctuations in the market. Sometimes such companies must continue development in other countries in order to ensure their survival in the worldwide oil development program.
I congratulate the parliamentary secretary for the position he has reached in the House. He is from my city and I think he is a very capable man. I just hope he will take to heart the recommendations of the Independent Petroleum Association's brief. I will have more to say about their recommendations, perhaps not this evening but later in this debate.
At six o'clock the committee took recess.

October 18, 1971
Income Tax Act AFTER RECESS
The committee resumed at 8 p.m.


Mr. Ritchie:: Mr. Chairman, I feel at a considerable disadvantage in speaking on this bill because it is so enormous and complex. A great sheath of amendments has been filed in the past few days. It has been difficult to make an assessment of the bill which is almost incomprehensible to many people much more knowledgeable about such things than I am. This bill assumes great significance, particularly at this time of our changed conditions in face of the American surtax and the mini-budget presented last Thursday.
The tax bill has only passed second reading. We are now only on a general discussion of its clauses. At the moment, large portions of the bill are being rewritten. We can expect this process to continue as more of its provisions are found to be contradictory. The bill will be subject to differing and conflicting interpretations, with some unforeseen results. It may ultimately be self-defeating to the avowed purposes of the so-called tax reform. It really means it is difficult to have tax reform. We can have tax change.
Even if the bill moves quickly through the legislative process, the odds against its implementation seem to have lengthened. The sheer complexity of the bill is staggering. This in itself is a considerable obstacle. Further, Mr. Chairman, new barriers have been erected by the American surtax and American objections to the bill. I think it is very significant that the Americans have possession of the bargaining power with which to make their objections stick.
Certain things in this bill have already attracted the interest of the Americans. Pension funds are required, under the reform legislation, to limit their foreign assets to 10 per cent in order to retain their tax-free status. The Minister of Finance has made the same case for limiting the qualification for lowering the corporate tax on the first $50,000 to Canadian-controlled companies. While we may feel these measures are beneficial to us, they have invited the interest of the Americans. This is of significance. It is one of the things included in the so-called shopping list which was leaked to the Chicago newspaper last week.
The Minister of Finance has denied that there is discrimination. However, if one set of investors is given favourable tax treatment there is certainly discrimination against the other. I do not think many in Canada have "bought" the argument of the Minister of Finance. Certainly the Americans have not. We will see whether there will be any changes in the future.
I wish to specifically deal with the small business deductions. This aspect of the proposed tax changes came in for a great deal of discussion during the hearings on the white paper on tax reform. It was no secret that the authors of the white paper believed that the small business deductions should be wiped out entirely. Indeed, their tables indicated they expected to get the bulk of the money to make up the deficit for lowering the personal income tax from wiping out the small business reduced taxation on the first $35,000 of profit.

It is significant to note that everyone was in general favour of the retention of the reduced rate for small business, including the very large corporations. They all suggested that the small business alleviation was very useful and necessary, even though it was agreed that it should not be available for very large corporations. There was some agreement that some restrictions should be put into the new reform legislation. My criticism is that these have been far too great, larger than necessary and may well defeat the purpose of the small business alleviation.
It should be noted at the outset that the incentive is in fact restricted to an incorporated enterprise and is not available to a proprietorship, partnership or business trust. This is not good. It is one of the weaknesses in the taxation bill now before us. The preservation of the distinction between forms of business enterprise for tax purposes will make it impossible for the courts to look to substance rather than form in many instances, for the form is deemed by the tax statute itself to make substantial differences in tax treatment. I think this is a problem that we have in tax legislation. We do not recognize the unincorporated business, the individual entrepreneur, nearly enough in our economic community.
Generally speaking, the present tax on corporations, regardless of the size or nationality of the ownership, is 21 per cent on the first $35,000 of taxable income and 50 per cent on the excess. The new bill will cause a reduction of one percentage point per year until it reaches 46 per cent. This, of course, has been changed by the minister's announcement of a reduction of 7 per cent only until the end of 1972, when presumably it will revert to 49 per cent unless the government decrees otherwise.
The clauses dealing with small business deductions have been subjected to such rigidly prescribed conditions that it is doubtful they will do the job that this reduced rate was supposed to do. Indeed, it is one of the items in the so-called shopping list which the Americans felt discriminated against them. There are so many restrictions in the tax bill on small business that it seems almost certain that many will not take advantage of it.
Under the new tax rates the small business incentive is significantly less generous than the present low rate, particularly when the annual taxable income is less than $35,000 and where the corporation accumulates its taxable income. For instance, a corporation which recorded earnings of $30,000 would be required to pay $6,300 in taxes, whereas under the new rate it would pay a further $1,450. So the new tax proposals are far less generous than in the past, particularly in light of the proposal to reduce the corporation tax rate from 50 per cent to 46 per cent-at the present time, from 50 per cent to 43 per cent.
It is significant that small business will soon be taxed at the rate of 25 per cent. In an extreme situation it could happen that an otherwise qualified corporation which earned a taxable income of $400,000 in the first year of the new system and paid no dividends would be eligible for $50,000 of small business deduction in that year and no subsequent small business deduction. It would then cease to qualify for the small business deduction. This can be contrasted with the present system where both corpora-
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tions would be eligible for the low rate of tax on the first $35,000. It is also significant that taxable incomes are important factors in the cumulative deduction account, so that the $400,000 maximum amount would be net of business losses, but would include non-business income and capital gains, which would have the effect of significantly reducing the attractiveness of the small business low rate.
The corporations eligible for the small business rate have been significantly reduced in number. They must be private corporations resident in Canada. They cannot be public corporations or controlled in any manner whatsoever by a public corporation, and they cannot be held in any manner whatsoever by one or more non-resident corporations. A public corporation is defined as one listed on the Canadian Stock Exchange or by definition of the minister.
Mr. Chairman, because payment of dividends can extend the period for eligibility, there will be considerable jockeying going on between not paying dividends, facing a potentially higher capital gain, and not getting further small business deduction on the one hand and, on the other hand, paying dividends, thereby extending eligibility for the small business deduction which potentially reduces the subsequent capital gain, but facing the immediate impact of personal taxation.
The new tax changes basically require an owner to run his business to comply with the regulations so that he can obtain the best tax advantage rather than running his business as an expansionary corporation. In dealing with the matter of so-called ineligible investments, the bill seems to be quite complex. The thrust of the intended procedure is to ensure that the 25 per cent small business deduction is available only where the funds are used to expand business or have been brought to personal tax by dividend distribution. The corporation can no longer be used to shelter excess funds from personal tax unless the excess funds are invested in short-term paper or bank accounts. One major criticism of the bill in this area relates to its complexity so far as small business is concerned. It appears that the small business corporation has most of the accounting difficulty of the larger business, and additional problems in complying with clause 125. What, in effect, is the 25 per cent tax on business income on Canadian-controlled private corporations is arrived at by deductions from the usual corporation tax rate. The tax decreases as the general corporation rate decreases, thus arriving at the 25 per cent figure at all times. It might have been simpler to have taken the 25 per cent tax rate on the small business when the preferred rate ends.
In the clauses dealing with the Canadian-controlled private company which has taken advantage of the small business low rate of taxes, an interesting situation would arise. The complicated formula for the new tax is applicable, but in fact it means that there will be a recapture of the small business deduction benefit previously received, minus an allowance for dividends previously paid. The maximum amount recapturable would be $100,000. It appears obvious that control could change voluntarily by the sale of that control to non-residents, but could also occur involuntarily with the death of a Canadian controlling shareholder who bequeaths his shares to a non-resident heir.
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The tax would also not become exigible if control were acquired by a Canadian public corporation or if the company itself went public. It would appear that in both these cases subsequent conversion to a private corporation controlled by non-residents would trigger the tax. The apparent intent of these new clauses is presumably to prevent the sale of Canadian companies to non-residents. This required refund of the small business deduction tax savings is likely to depress the price a non-resident is prepared to pay for the shares of the corporation, particularly where the price placed on the shares is close to break-up value.
When taken together with the deductibility of interest on money borrowed to buy shares, it would seemingly place acquisition-minded Canadian corporations in a better competitive position vis-a-vis their non-resident competitors. However, this aspect is one of government policy. As the Minister of Finance (Mr. Benson) stated in his budget speech on June 18, "We intend that the small business incentive be available only to Canadians, that it should encourage Canadian ownership of our expanding business. Accordingly, if control is acquired by non-residents, the corporation must repay over a five-year period the tax advantage it has received".
However, it is pointed out that clause 190 appears to apply only to share purchases and that the whole principle of the clause can be circumvented by foreign companies making a purchase of assets. This would create an artificial situation. In addition, we note that to the extent the cumulative deduction account has a positive value, a Canadian purchaser may also be driven to purchase assets rather than shares. We therefore question whether the proposed legislation has done anything except require a sale of assets rather than a sale of shares as far as the United States resident purchaser is concerned.
Mr. Chairman, in the clause related to small business deductions the government has significantly narrowed the small business advantage. It has increased the tax on all those who are eligible from 21 per cent to 25 per cent under the $35,000 profit. Only in the group making from $35,000 to $50,000 profit will there be any significant tax relief, and this group seems very limited.
In effect, under this act the government has substantially reduced tax relief to small business. The effect of clause 125 on small businesses which some years are over $50,000 and some years under is to discriminate against them. If there is in excess of $50,000 in any one year, it cannot be applied against the deficiency in another year. It seems likely that only small businesses which do not intend to grow will be happy with this proposed tax feature. Companies that had a good growth potential might still decide to pay full taxes in order to increase their leeway for future selling.
The clauses dealing with the sale of companies to nonresidents are definitely discriminatory and are viewed as such by the rest of the world. By allowing capital to move freely across our borders we are, in my opinion, improving prospects for Canada's independence far more than by setting up nationalistic barriers to investment. New capital bolsters our economy by strengthening it, and it is

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that strength that will help ensure our national survival. The clause dealing with the sale of small companies to foreign investors, losing tax incentives earned in previous years, seems to me a retrogressive step.


Mr. Gleave:: Mr. Chairman, I should like to touch on two aspects of the bill before the committee. One is its effect on co-operatives and credit unions, the other its effect on the farming sector in general. I have spoken before in this House about its effects on co-operatives and credit unions and I do so again only because I am daily receiving representations from national offices of co-operatives as well as from local co-operatives and credit unions in my constituency. Since being here I have yet to receive so many representations expressing serious concern, not simply that less money will be saved by the members of co-ops or credit unions but that co-operatives and credit unions will not be able to stay in business at all or be able effectively to discharge their responsibilities to the people in their community, those who established the credit unions in the first place.
The credit unions in western Canada, and I suppose in central Canada as well, offer an alternative to the regular commercial bank. They do not displace the commercial banking system; in business centres of any size one will see both the credit union and the commercial bank doing business and operating effectively. However, to a very large extent they probably have displaced finance companies in small centres or, if they have not displaced them, have certainly served needs well enough to limit the operation of finance companies, as we use the term, in such communities. If that is the case, then the credit union is saving those communities a considerable amount of money as well as increasing the spending power of the people. For those reasons I become very concerned when the government proposes what is almost a punitive tax in this regard.
I should like to read part of a letter I received from the Langham Credit Union. They say:
In connection with the taxation proposals affecting credit unions, the board of directors of the Langham credit union, at our meeting on October 12, have gone on record as being opposed to the taxation of dividends and guarantee reserves of credit unions.
The board of directors have acted on behalf of the interests of our 1,200 members and ask for your support of our position when the tax bill is being debated.
I also received a letter from the Hafford credit union some 40 miles further to the north, who write in the same vein. I am not going to quote the letter, but it does set out in detail the amount of money they handle as well as the amount of credits which pass to their members. The total savings in this community amounted to $948,062. In terms of business operations these days, that is not a large amount, but this credit union is pretty important to the people of the community because it allows them to use their money to help themselves. This credit union states that its members are quite willing to pay taxes on the income they have, but they do not think that any tax proposals put through this House should prevent their using the money to effect savings.
Consumer and production co-operatives seem even more concerned about how this legislation will affect them. These co-operatives include retail outlets in the city

of Saskatoon as well as the Federated Co-operative which operates refineries, feed mills and lumber mills and manufactures fertilizer. This is a large, producer-oriented organization.
In the House today the Minister of Regional Economic Expansion was asked whether he could do something about Imperial Oil moving refineries from a certain area in western Canada so as to ensure that some development was left in less industrialized areas. As I recall, his reply was that he did not have control in those areas, that he could lend money to commercial organizations such as Imperial Oil-although I do not know why it would be necessary-in order to influence their decision, but that that essentially was the limit of his power. I suspect he was quite right.
However, there is one refinery in Regina which is owned by co-operatives and which will stay in the area. No government will have to bribe it to stay in the area and no law is necessary to force it to stay there, because it is owned by the people of the area and that is where they want it. With their money they built it and it is Canadian owned; we do not have to worry about the Americans, the Japanese or any other country owning it and moving it away.
There is another reason why I find it so difficult to understand the approach of the government with regard to co-operatives in western Canada. If it is employment we want, we want institutions that can employ people and improve their standard of living such as co-operatives, credit unions and credit societies that are gradually built up over the years and can provide this service. It may be that as we carry on with this very complicated and, as the previous speaker said, complex and wide ranging bill affecting a great many people, some changes will be made. But it started out pretty badly and has left a great many people wondering what its objective really is, whether it is to raise money, to please the equitable tax foundation or to cut down the effectiveness of co-operatives as real competitors within our society, because that is what they are.
I should like to say a few words regarding farm taxation as it is dealt with in the bill. One thing about which we are concerned with regard to farm taxation is that the method of taxation does not make it any easier than it is now for the family farm or the individually operated or controlled farm to survive. Some aspects of this bill seem to work against the survival of the individual farm, particularly in the areas of capital formation and the maintenance of capital in the individual farm.
Individual farms are not very strong units in terms of capital formation and the retention of capital; that is, the resources available to them are usually limited. This is demonstrated by the fact that over the years we have had the Farm Credit Corporation lending money to farms and we have had to set up a federal agency to provide working capital for farm structures to enable them to expand to a workable size. This would indicate to anyone who thinks about it that the ability of the individual farm to gather together working capital is limited. The fact that provincial governments have moved into this field from time to time indicates the same thing. Yet the bill takes no
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account of this fact in its approach to the capital gains tax.
It seems to me that some thought should be given to the possibility of not collecting a capital gains tax so long as the transfer is made within the family from one generation to another. It should be possible to devise a method whereby capital gains tax was not collected so long as the farm remained within the family. If at some point it was transferred out of the family's hands and a realized capital gain was made, the taxing body would be entitled to treat that unit in the same way as any other business enterprise with regard to recovery at that point.
I do not know whether members across the way are as concerned as we are about the continuance of the family farm or the individually-operated farm as against the corporate structure. If they are, they should try to ensure that the tax structure is such that the family farm can survive and continue to operate.
There are two other areas of concern that occur to me, one of which is the basic herd concept. The proposal is to eliminate the basic herd concept, and that is not good. The simple idea behind the basic herd concept was to allow an accumulation of capital in a basic herd because it was difficult for the farmer to acquire in one chunk the amount of capital necessary to put together a complete herd, and this was a method by which capital could be accumulated and a herd built up. It is as simple as that.
I sat with a group on a reserve in Saskatchewan listening to them talk about getting together a couple of hundred thousand dollars to build a herd. The first thing they talked about was management, and the second was money, where to get the money with which to go into this kind of enterprise. We had a system which permitted this kind of accumulation and I cannot understand why it is now thought necessary to tear it down.
The same consideration should be given to the depreciation of farm machinery. I would hope we could continue with the straight line depreciation which permits the retention of gains when machinery is traded back. There may be those who complain because any capital gain that may be made at the time of the trade is not taxed immediately. But I suggest that if we insist that any capital gains be recovered at the time machinery is traded, one of two things will happen-either the capital value of farm machinery as a whole, as well as the investment, will decline or the method of trading farm machinery will be completely altered in the very near future; because it should be obvious that a farmer can hardly pay the income tax on a capital gain of $5,000 when he does not have any actual cash out of the deal.
The alternative, of course, is to buy the new machine at the lowest possible price and sell the old machine outright for whatever it will bring. This would cause a major change in dealership operations as well as farm operations in respect of the purchase of machinery. If this is the government's objective, all right, but surely the government should understand what it is doing and what the net result will be.
These are the few points I wanted to make in a general way this evening. My main point is that by this bill you
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can change the structures which exist in respect of doing business in the farm sector, you can tear co-operatives down and cause a great deal of difficulty, but it will take much smarter men and a government with a much greater understanding of the needs of the farmer and the rural community to put these structures together again.


Mr. Howe:: Mr. Chairman, not having participated previously in this debate, I thought I should make a few comments at this time on Bill C-259. I join those who have said that the effect of this bill on co-operatives and credit unions will not be good. The government talks about its financial and monetary policies to curb inflation, but why does it have to increase the tax on organizations which are providing services and goods to ordinary people?
Co-operatives and credit unions will not go out of business because of this bill: they will stay in business, but will have to charge more for the goods and services they provide to the people. Probably they will not be in a position to pay the same kind of dividends to people who hold shares in their organizations. This item in the bill is inflationary because the people who use these goods and services will have to pay more for them because the government thinks it will get a little more money by taxing co-operatives and credit unions. I hope the government will take a second look at this part of the legislation which is obnoxious to many people.
A good deal has been said about the size of this bill, its proliferation of material and how it will affect the lives of Canadians. We have had income tax bills before. Probably there were loopholes in the legislation and areas which did not cover all the fields in which the government might collect money. However, rather than bring in this huge monstrosity I think the government might have been wise to consider other income tax legislation and amend it here and there, instead of bringing in this bill which lawyers and accountants say will be so difficult to understand that they are not sure it will provide the benefit or advantage that has been suggested.
Most of us in this House realize from time to time that the people of Canada never have been too happy about paying income tax, because most of us have had people come to us with income tax problems. These people ask us to get them out of a mess with the government, or with the law so they can look their fellow man in the face again. When this legislation becomes law, the courts probably will not be large enough to handle all the cases because no one will be able to understand what is going on.
We remember the feeling people had when a man came to their door with a briefcase and said he was going to charge them with an infraction of the income tax laws. Many of us have had the experience of farmers who wondered whether someone was coming to say something was wrong with their income tax return. This feeling will be magnified as a result of the immense bill we have before us tonight. And even that is not big enough because we understand there are to be 100 more amendments to it. Of course, the parliamentary secretary will realize this is not new in respect of this government. I would like someone to point out how many pieces of legislation have been brought in here in the last five years which have not had to be amended either by the government itself or through the assistance of the opposition. It
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is about time, with the proliferation of people in the government, that the government could bring in a piece of legislation which would not have to be amended.


Patrick Morgan Mahoney: It is respect for the opposition.


William Marvin Howe: Oh! Here we have the government arguing that the opposition is wasting time, and the parliamentary secretary indicating it is the opposition which improves the legislation. I had thought that with all the parliamentary secretaries and ministries of state there would not be many problems in preparing a piece of legislation.
Here, again, we have a piece of legislation which was mentioned in the budget of last June, and then just last Thursday they had to bring in another mini-budget to fill in the holes because they began to realize this legislation would do nothing for the economy of the nation and that it was necessary to bolster it up. But we know this is not the first time a Liberal government has got our country into a mess. I refer to 1957 when a Conservative government was elected. We found quite a mess in those days. Somebody found the report of the Department of Trade and Commerce and in it was the whole story.
Some of the features which were brought in last Thursday are supposed to be new. But how different are they from the measures the Conservative government adopted in 1957 to clean up the mess they inherited from the Liberal party? We are told about the thousands of people who are to be taken off the income tax rolls. The Hon. Donald Fleming did that in 1959 in order to bolster the economy after the mess we inherited. Hon. members opposite would not wish to remember or think about that.
Why are the farmers in such a mess today? It is because the government did not sell the wheat in the west and told the farmers to diversify. Farmers turned to the production of hogs and chickens and flooded the whole country with these products, with the result that agriculture is in a terribly depressed condition at this time. There are one or two suggestions I should like to make in respect of omissions from this bill, matters which were also left out of the mini-budget of last week. I refer to the fact that in spite of all the representations made by prospective home owners and householder organizations that the 11 per cent sales tax on building materials should be eliminated, this has not been done. I think it is very important that it be done at the present time because despite the announcement last Thursday that the government will be making more money available for the building of houses, the average individual today finds housing too expensive. Steps should be taken to reduce the cost of house building. If the sales tax were removed it would cut the cost of a house by $1,000-just enough to meet the inflation in house building for a one-year period.
According to Statistics Canada, between August, 1970, and August, 1971, the cost of lumber and lumber products went up by 12.3 per cent. What effect will that have on the building industry? It means that a man buying or building a house will have to pay a price that he really cannot afford. There are thousands of people in Canada who cannot meet present mortgage costs even though those costs are spread over a 30-year period. Most of us, Mr. 
Chairman, would be very disturbed if we had to carry the mortgage costs that some of our children have to meet today. If the 11 per cent sales tax on building materials were removed, it would be a tremendous incentive to people who want to buy their own homes.
I remind hon. members that a few years ago the government instituted a $500 bonus program payable to individuals who built their houses in wintertime. A recent survey by Manpower Services Limited indicates that there will be a 23.1 per cent reduction in personnel employed in the building and construction industry this winter. We have a lot of unemployment now, Mr. Chairman, but here is a survey which says there will be a 23.1 per cent reduction in personnel employed in this industry. If the government gave an incentive to people to build their own houses during wintertime, by eliminating the 11 per cent sales tax and offering a $500 bonus, this could have a tremendous effect on the industry and on keeping people employed in it.
There is another suggestion I wish to make. It would cost the government a little money but it is a program that worked in the days when we were in power. It would help some of the people in the building industry whose employment is threatened. I suggest an advertising program urging people to do repairs, plumbing and plastering during the winter months. Hon. members will remember the slogan, "Why wait for spring? Do it now." It was effective. The government should give some thought to reinstituting that program.
I do not think we have enough incentive programs for people to improve their way of life, the service they give, the product they make and the job they do. Many of us are disturbed that production per man in Canada has dropped considerably over the last year or so. In the Ottawa Journal of Friday, June 18, there was an editorial entitled, "Canada Would Be The 47th State." It quoted the views of Robert Bonner, the former Attorney General of British Columbia, who retired from politics and became vice-chairman of MacMillan Bloedel Ltd. He made these points speaking at the University of Western Ontario:
There was a time when Canada ranked second only to the U.S. as measured by gross national product per capita. We are now fourth in world rank by this measure-Sweden and Switzerland having displaced us in recent years.
If we are going to spend as the American Joneses, whom we unconsciously imitate, we should first try to earn as the Joneses do.
Canadian income per capita ranked ahead only of West Virginia, Alabama, Arkansas and Mississippi.
Our productive capacity per individual has dropped and this has had inflationary consequences. I believe that the government should introduce legislation providing an incentive to those corporations and companies which allow employee participation in profits. Such corporations should receive a special tax concession. If an individual knows he is going to get a little more for working harder and producing a better product, in turn his efforts will increase the gross national product.
Corporations would be able to reduce the price of their products or the services they supply. Such a program would create better employer-worker relations. The employee would feel he had a stake in the business. Today we hear many manufacturers complain that they have to
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take reduced prices for many of their products that are classed as seconds simply because of poor workmanship. This has an adverse effect on their profits. There are companies which operate in this way at the present time, but if the government provided incentives to corporations to allow employee participation it would be a great help in combating inflation, reducing costs and bringing about better employer-employee relations.
Finally, Mr. Chairman, when I look at this bill, see how long we will spend on it-not to mention the 95 amendments tabled by the minister-and realize the number of businessmen, accountants and lawyers who will have to spend weeks and months trying to understand and interpret it, I feel it should be withdrawn. If implemented now, it will interfere with the ideas presented to us last Thursday night, ideas that might do the job that the government has been attempting for so long, namely, get the economy out of low gear.
I agree with the article in the Toronto Globe and Mail of October 15, headed "No Time for New Tax Law." From it I read the following excerpts:
W. A. Macdonald, Toronto tax expert, this week neatly capsuled for the Ontario Economic Council some of the reasons why it would be wiser to put the tax bill back on the shelf for the time being.
For one thing, it is so big and so complicated that only a few experts can ever hope to understand it and even they don't yet. As Mr. Macdonald says, it's ironic that a government which insists that business make everything understandable for the consumer should not give two pins about making taxation understandable for the taxpayer. On this score alone the bill should be delayed for proper assessment.. .
Finally, will the tax bill do anything to strengthen the Canadian economy to meet the pressures created by Mr. Nixon? The answer has to be no. It could damage the capacity of our industry to compete, it could enlarge our problems with the United States, our biggest customer, it would certainly divert vast stocks of both public and private energy to the sterile business of examining the tax structure when that energy is urgently needed on the economic front.
It hardly seems necessary to add that Finance Minister Edgar Benson should do at once what he should have done before- withdraw that tax bill and concentrate all his efforts on our real problems.


Gerald William Baldwin: Withdraw the bill and then resign.


William Marvin Howe: Mr. Chairman, I sincerely hope that the government will take into consideration the suggestions I have made which I think are important if we are to get our economy back on track.


Mr. Rodrigue:: Mr. Chairman, I would like at this stage in the consideration of this bill to make a few comments on tax reform.
Almost two years ago, the government tabled a White Paper on tax reform. The White Paper and the introduction of the bill before us have not thus been conjured out of thin air. The bulky measure has been in preparation for at least ten years.
Indeed, that measure will have far-reaching effects on our economy. A great number of Canadians will be involved one way or another by the proposed changes. A certain number of persons-allegedly 700,000-will no
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longer have to pay income tax, which means that since they do not have a sufficient income, the experts of the department have decided to strike the names of those taxpayers off their lists.
On the other hand, new kinds of income will henceforth become taxable, probably in order to allow the government to collect the same revenue. I would be surprised by the contrary.
By the way cuts and additions have been made here and there, I would be surprised if the government were to collect less. I think it will collect more especially because of the new factors included in that tax reform.
Consequently the government is about to collect more. Experts say such is not the case but past experience allows us to believe it will be so.
After the supplementary budget was announced by the Minister of Finance (Mr. Benson) on October 14-budget that will show a deficit of over $1 billion-the government goes on following the beaten track. Interest rates will be pushed higher by new debts. Consequently, tax receipts will have to be maintained at the present level and perhaps increased. However, the bill now under study will ensure the continuity of tax receipts and everything in the bill has been planned to that effect. I am sure that this objective will be reached.
Since some people had nothing left because they had been squeezed until they were dead broke, it became necessary in order to keep the same level of tax income to impose another group by adding new elements to the tax system. So that was the trick.
In ten years from now, this group called the middle class will be eliminated, because we will then be at the same point we now are. The problem will be very hard to solve. Groups of experts and economists will be at work two years hence, to prepare the next tax reform, which will likely be introduced in this House in the eighties. Then, the middle class will not appear any longer on the list, because it will no longer be able to contribute to taxation. The tax burden will then be carried by the better off people. What we call tax reform is not really a reform at all.
In a speech the Minister of Finance delivered in Toronto on August 26 last, he stated, and I quote:
As I stated in my budget speech, the publication of the white paper has been an important stage in the development of participatory democracy in Canada. Thanks to the debate, the discussion it gave rise to, it has been possible to develop a tax reform program which not only meets Canada's needs but also reflects the views of the Canadian people.
I have received many letters and briefs from individuals, groups of citizens, co-operatives, caisses populaires and credit unions. Having read them, I have a feeling that "participatory democracy" is not functioning very well. I am rather inclined that it is a one way proposition.
I might understand better if the hon. minister were more specific about what he means when he speaks of the "needs of Canada and the Canadian people".
The tabling, by the minister, of 95 amendments to his own bill is another indication that he has doubts, that the proposed reforms are not specific enough, or that they have not been studied in depth. Is it any wonder, then,
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that there should be protests? We cannot expect the people to understand every proposed change, when those who have drafted and considered them for years are "lost" and unable to give straight explanations, especially on the clauses concerning co-operatives, caisses populai-res and credit unions.
In the case of co-operatives, the government has introduced a new aspect in its taxation system, that is the concept of used capital. This new element in the legislation and which applies exclusively to co-operatives and credit unions seems to me to be discriminatory.
Bill C-259 is aimed at burdening co-operatives and credit unions with tax loads similar to those which must be assumed by other kinds of ventures, while they do not enjoy the same advantages. They are submitted to a taxation method which is inconsistent with their nature and which would require, if they wanted to comply therewith, that they renounce their fundamental characters.
Co-operatives and credit unions are unlike other businesses. They do not enjoy the privileges granted to big corporations or to banks, which may mint the credit of society. All that co-operatives have managed to gather is voluntary service.
It matters, at this stage, to recall the elements which distinguish co-operatives from other firms. First, these are firms whose members are owners and users. Then, these are corporations whose members exercise control in a democratic fashion. And last, these are firms whose members distribute the benefits at the end of the year, not in proportion to invested capital, but on the basis of the use of services.
Starting from these three elements, one may say that co-operatives, caisses populaires and credit unions are different from other firms.
Bill C-259 purports to interfere with the internal management of co-operatives and the relationship between the corporation and its members, and this, against the basic rules of co-operation. The tax system to which Bill C-259 will subject co-operatives does not only retain the concept of an arbitrary return on the capital employed for the purpose of determining the income of such institutions; it also gives definitions and proposes a series of provisions which increase the gravity of the consequences of the use of that taxation formula, the latter having no logical basis and being, to all appearances, discriminating.
The co-operative movement has always stated clearly that it is not asking for any preferential treatment, but that it wants co-operative associations to be recognized for what they are. Far from acceding to this request, Bill C-259 places co-operatives and credit and savings unions in an unfavourable position by comparison with companies and other corporations.
When the government proposes, in the case of caisses populaires and the credit unions, that the social capital- which we call social shares-be considered on the same footing as company shares, that is simply arbitrary.
The members' savings called "shares" are, for all practical purposes, demand deposits which may be withdrawn

at any time. In short, such amounts are deposits similar to those committed to trust companies.
As the capital of the caisses populaires and credit unions does not appreciate, there cannot be any capital gains. It is exactly like all other funds deposited with trust and finance companies and banks.
It is no secret that trust companies and chartered banks are accepting deposits in the same way as the caisses populaires and credit unions. Are such deposits subjected or will they be subjected to the requirements which are anticipated for the caisses populaires and credit unions? I do not think so. So, why incorporate these provisions in clause 137?
Contrary to what we are led to believe by the tax reform bill and the minister's interpretation, the caisses populaires do no't need permanent capital to operate. They lend to their members the savings they receive on a day to day basis, or, very seldom, the amounts they are legally entitled to borrow. Therefore, aside from reserves for doubtful debts, they have no capital. They exist solely in order to promote the economic and social interests of their members, whose welfare is their only objective.
Up to now, the bonus paid to members out of social capital was viewed by the government as interest income and reported on T-5 forms, tax being paid by members receiving such interest.
The attitude of Bill C-259 towards caisses populaires and credit unions is arbitrary and anti-democratic. It is flatly taxing voluntary activities of people who for many years have been working without remuneration for these co-operatives, resulting in the accumulation of their present reserves and those of credit unions. Credit unions have been built up through voluntary service and dedication.
I know in some sectors they are viewed with disfavour, which is easy to understand since they do not allow for control and manipulation at will of the savings of the people. Thence the necessity for inequitable legislation to destroy the instruments the people have given themselves, building them up through their work over many years.
For the last 20 years, the caisse populaire in my hometown has financed the construction of some 1,000 housing units while the CMHC has built 53 only. If the people had had to wait until the government provided them with houses, I wonder where we would be today. I do not mention here the various loans granted to businessmen and individuals who would have been required to pay higher interest rates to finance companies which are nothing but branches in disguise of chartered banks.
The caisses populaires and credit unions have greatly assisted thousands of people in Canada and to some of them this help was the stepping stone which has enabled them to solve their financial difficulties and obtain the bare necessities of life. The merits and the part which credit unions have played in Canada are being recognized today across the country to the extent that if they did not exist, it would be necessary to create them.
We must keep in mind that people who put their money in cooperatives or caisses populaires are liable to income tax. There is no question that dividends received from
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savings organizations should be taxable, regardless of the level at which each member is taxed.
The whole of society will suffer great hardships unless we provide for some adjustment of our tax system to the structures and the unique role of co-operatives, caisses populaires and credit unions.
I have asked on several occasions during this session, on behalf of all Canadians, and particularly of the people in my constituency, for more equitable tax exemptions.
The $1,000 personal exemption is totally inadequate, in view of the price increases to which we have been subjected for the past 20 years.
The bill now under consideration would increase exemptions to $1,500 for single taxpayers and $2,850 for married, taxpayers-which amounts, for all practical purposes, to $29 a week for a single person, and $55 a week for a married couple.
Those amounts are even below the minimum needed to live decently which has been set by the Economic Council of Canada, a governmental body.
The present amounts of $1,000 and $2,000 were set 22 years ago, in 1949. If it took 22 years to economists and top civil servants to achieve such a result, I am wondering how long we will have to wait until a proposal is brought before the House again in order to review the basic exemptions proposed in this bill.
If he really wants to be realistic the minister should review his position concerning basic exemptions and think it over more carefully in order to take into account the present circumstances, especially the cost of living.


Mr. Hales:: Mr. Chairman, I should like to take a little of the committee's time and make a few points regarding Bill C-259 while we are still on the general discussion. I hope to be able to make further observations when we discuss the bill clause by clause. We are discussing one of the most difficult and complex pieces of legislation that has ever been presented to Parliament. It is immensely complicated. I only read as far as page 8, and anyone who does not think it is complicated need only look at such subclauses as are found on that page of the bill. I think it is worth putting clause 6(2)(a) on the record. It deals with the reasonable stand-by minimum amount charge with respect to the operation of a car and provides as follows:
-where the employer owned the automobile at any time in the year, an amount in respect of its capital cost to the employer equal to the percentage thereof obtained when 1 per cent is multiplied by the quotient obtained when such of the aggregate number of days hereinbefore referred to as were days during which the employer owned the automobile is divided by 30 (except that if the quotient so obtained is not a full number it shall be taken to the nearest full number or, if there is no nearest full number, then to the full number next below it)-
And so on.


Gerald William Baldwin: Mr. Chairman, there is no simultaneous translation.


Wallace Bickford (Wally) Nesbitt: Who on earth could translate that?


Thomas Miller Bell: Explain.
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Alfred Dryden Hales: I said it was complicated and I illustrated my point by reading part of one subclause.


Patrick Morgan Mahoney: That should not be beyond the grasp of the average individual.


Alfred Dryden Hales: This bill is tremendously important to the taxpayer and has a great effect on the pocketbooks of Canadians.


Wallace Bickford (Wally) Nesbitt: It will help to line the pocketbooks of lawyers and accountants.


Alfred Dryden Hales: The new tax system will have tremendous ramifications for us all. Certainly, the new income tax bill is a complex tax structure. In our consideration of this bill we must think of something else, too. This bill was drafted some time ago when the economy of the country was supposed to be moving ahead. Now the atmosphere is entirely different. Our economic outlook is far from good. We are faced with the 10 per cent United States surcharge. We have Great Britain entering the European Common Market and many other economic clouds hanging over us. They were not there when the bill was drafted.
Does the bill fit the present-day situation? If we ask ourselves that question sincerely, we will have to say no, it does not. Beyond the impact of the bill on individuals there is another aspect of taxation which affects the whole economy. That is its capacity for growth in the country, its capacity to adapt to changing conditions in the country and changing conditions in the world. The question we must ask ourselves and the government is, what does this tax package really accomplish in terms of the health of the whole Canadian economy? What do these changes do, for example, to help us fight the battle of massive unemployment and the battle of inflation? What do they do to improve or even maintain our trading position in the world where all the established trading partners are under attack and have been for a long time?
With regard to world trade, what is there in this bill that will take care of the situation of the United Kingdom entering the European Common Market? What about the free trade aspect of this situation? What discussions went on with regard to consideration of the products which we now sell to the United Kingdom? Was any thought given to Canada becoming an associate member of the European Common Market? I doubt whether this bill will fit into the general economic situation when we consider all these categories.
In the short time that is available to me I will restrict my remarks to four or five headings. First, the rearrangement of depreciation on residential apartments or accommodation; second, the concern of municipalities regarding tax reform on anti-pollution devices; third, how this new tax bill will affect the farmers as I see it in my particular area. I will mention one or two examples of the new tax as it affects the taxpayer who thinks he will have a great reduction in income tax. I think I will be able to show that it is not very great. There is also the idea of why some arrangement was not made for the young married couple, for example, buying a home. They are paying principal and interest on their mortgage, and no arrangement has

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been made and no thought given to their being able to deduct the interest payments from their taxable income.
I would like now to make a few comments under each of these headings, Mr. Chairman. With regard to the arrangement of the depreciation on residential apartments, this new tax bill will have no effect other than to raise rents and interest rates. It seems most unfair that the government has changed the rules of the game halfway through. Many people in Canada have invested their money in apartment buildings. They did so because there was a certain money into residential buildings, thereby providing housing or residences which are so badly needed in Canada.
Under this new bill there will be the matter of the terminal tax liability taking place. Each year the depreciation will have to be written off.. There are other facts stated in that clause which are very complicated. I must admit that I do not fully understand them, even lawyers and accountants will have their problems. In any event, it will not be conducive for people to invest their savings in apartment buildings, etc. They will not be keen to do so. It certainly will not be attractive for them to put their money into such enterprises. If this is the case, we will have higher rents and higher interest rates, two things we cannot afford in this country. We want the opposite. We want rents to come down and interest rates to be lowered.
With regard to the concern of municipalities in connection with tax on anti-pollution material, I understand the association of mayors and reeves is quite concerned about this. On June 18 the Minister of Finance said:
To further encourage the acquisition of anti-pollution equipment, I wish to announce the immediate withdrawal of the sales tax on such equipment used in production. This new exemption will apply to all machinery and apparatus which manufacturers or producers acquire to detect, prevent, remove or reduce pollutants of water, soil or air. The exemption will reduce revenues by about $8 million a year.
The municipalities are not to have the same privilege. The manufacturers and producers will be granted a blanket exemption from federal sales tax on all anti-pollution equipment. Municipalities will continue to be granted only a very few specific exemptions. The minister stated that the extension of this exemption to municipalities would create complex problems of definition. It is hard for me to realize why it would create a problem to arrive at a definition as between municipalities and the manufacturers who are going to buy such anti-pollution equipment. It seems most unfair that municipalities are discriminated against.
I wish to say a few words about how this bill will affect the farming community. There are several ways in which this bill will have very serious effects on farmers. Many have already been discussed in the House, but I would like to re-emphasize the extent to which these changes will work to the detriment of Canadian farmers. One general point is that all provisions applicable to farmers as individuals should in principle be applicable to family-held farming corporations. Many farmers have discussed this whole bookkeeping matter with their accountants. In many cases where there is a father and son arrangement, a partnership of brothers or some other family arrangement, they have been told it would be wise to incorporate their farms, there would be certain advantages. The same
(Mr. Hales.]
principle that applies to corporations should apply to the individual farmer.
What about the transfer of a farm within a family, whether by sale or inheritance, without realization of capital gains? This is very important. As I understand it, there is no provision for farms to be transferred within a family, except to a spouse, whether by sale or inheritance without immediate realization of capital gains. This is true of a sale or transfer of a farm to a son, or inheritance of the farm by a son.
We have been informed that this problem can be avoided in many cases by good estate planning through incorporation of a farm, and this may well be so. But even in such a case the death of a son, who would be the holder of common shares in an incorporation, prior to that of the father could result in realization of taxable capital gains while the father was still in active charge of the running of the farm, creating severe financial problems. There would be no alternative but to call an auction sale and sell the pure-bred herd which had been developed over the years and handed down. Now this kind of legislation comes in and there is no alternative but to fold up the whole works and call an auction sale.
Apart from this, I do not think it should in all cases be necessary for a farmer to incorporate in order to achieve stability and continuity of the farm business within the family. Payment of tax on capital gains out of the tied up assets of an on-going family farming operation could, and probably would be disruptive. I would strongly urge that the transfer of a farm to the son or daughter of a farmer, whether by sale, gift or inheritance carry with it no realization of capital gains at that time but that in later disposition capital gains be calculated on the basis of the evaluation initially established for capital gains purposes.
There is another clause in the bill which states that a farmer must be in residence on the farm during each year for which he qualifies for the $1,000 farm exemption option. There are real problems here. One only has to look at farming practices in western Canada and elsewhere. Some people do not have their principal residence on the farm; for reasons of the education of their children or other social amenities they live in adjacent towns or villages. This is especially prevalent in the prairie provinces. It should be possible, for years in which a taxpayer is engaged in farming, to utilize this option even if he is not resident on the farm. There are many problems which evolve from this. A son might be using the farm home while both he and his father work on the farm; the father might be retired and living off the farmstead while the farm continues to be worked by the son or hired help. There are many cases where this practice is prevalent.
The question of the basic herd has been discussed very thoroughly here tonight so I do not propose to take up the time of the committee other than to say that a farmer's capital investment in livestock should be treated as capital investment, and the only way in which this can be done is the way in which it has been done in the past, on the basis of a basic herd. Then we come to valuation day. When the value of the herd is to be established there are many things that come into the problem. It may be the
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time of year when the herd is not in its best condition, it may be a time when markets are at a low point, or it may be a time when the cows are in calf. All these things come into this question and create problems.
Then we have the matter of straight line depreciation. This is to be discontinued. Under the present bill, suppose a farmer bought a tractor for $10,000 and wrote it off down to $5,000; it appeared on his books as $5,000 and he traded it on a new one and a dealer allowed him $6,000 for the tractor. That $6,000 is not taxable under the present bill. Now he does not enjoy that option. He is to have a diminishing depreciation balance system which means, in the same circumstances, that with a $10,000 tractor he depreciates it to $5,000, trades it in and gets $6,000 for it, so he will have a gain of $1,000 and that $1,000 will be treated as capital gain. I do not think the farmer realizes that this is the situation he will face.
The first time he realizes what the government has done to him by changing straight line depreciation to the diminishing balance system will be when he trades his tractor for a new one. I think this is most serious, because farming is an operation which has to keep improving due to technological discoveries and inventions and with new machines coming out all the time. He has to replace his machinery frequently and this new tax will be a very serious handicap for him.
Many people think there is to be a great cut-back in taxes for Canadian taxpayers. I have considered the case of a married person with two children and an income of $8,000 a year. Under the present bill the tax would be $1,215. Under the new bill it will be $1,089. This is a reduction of $126 a year. Divide 52 into that amount and you get a cut of about $2.40 a week in income tax. This is a pretty small deal. It would pay for about five gallons of gas and he would burn that much up in no time going to and from work. So $2.40 a week is not much of a reduction. That is the way the working man looks at it-what comes off his weekly or bi-weekly cheque. When he sees about $2 a week taken off, he is not likely to be very enthusiastic about the new bill.
Take a single taxpayer getting the very minimum, or what we call a breadline wage of $1.50 an hour. He will be obliged to pay tax. He was paying a tax of $230 a year. Now that is to be cut to $204, a saving of $26 for a whole year. Divide that by 52 and you get a reduction of 50 cents per week. So it is not as attractive as we have been led to believe.
I do not know why provision was not made to take care of young people who are buying a home and struggling to pay off the mortgage. Principal and interest payments fall due every month or every six months, yet no thought has been given to allowing taxpayers to write off mortgage interest as part of their expenses, as is allowed business. I do not understand why.


Russell Clayton Honey: Order. I regret to interrupt the hon. member. I do so to advise him and the committee that his time has expired.


Gerald William Baldwin: Carry on.
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Russell Clayton Honey: Is it the unanimous wish of the committee that the hon. member be allowed to continue his remarks?


Some hon. Members:: Agreed.


Alfred Dryden Hales: Thank you, Mr. Chairman. I shall trespass on the time of the committee for only a very few minutes. As I was saying, I cannot understand why that was not done. Business is allowed to write off interest on mortgages, yet no similar consideration has been given to the position of a family buying a house. I cannot understand why this matter was not given consideration.
I shall conclude by saying that I think the minister has two things to consider and decide. Let me make two recommendations. First, this vast volume of 707 pages, weighing 5 pounds 14 ounces, should be divided into the portion that it is essential to complete by January 1, 1972. I think it is an imposition on the House to ask us to complete the whole bill in a thorough and a comprehensive way between now and the end of the year. It would be much better for the minister to pick out those sections that he feels should come into operation on January 1, 1972, and let us deal with them.
Second, I think the minister should give serious consideration to postponing the bill in view of the economic climate in this country and in the world in general. Now seems to be the wrong time in our history to bring in a revision as comprehensive as this to the tax structure of Canada. It would be much better to wait until the economy settles down and we know where we are going and what the future has in store for us.
In closing I should like to read two or three questions asked in a letter that I received today:
Mr. Benson claims the economy is moving ahead at a fast rate. If so, why are so many municipalities complaining about their heavy welfare costs?
Mr. Benson claims an unknown quantity of persons have joined the work force and given a false picture of the unemployment statistics. If this is the case, again, why are the welfare rolls so inflated? Can it be that a vast majority of welfare recipients are not destitute and in need of welfare?
Mr. Benson reduces taxes after stating the government is ever watchful and take measures when needed. If this is the case, how did he bring down a program on the same day as the statistics were released? Are they satisfied with 7 per cent unemployment?
The government, just a few weeks ago, proclaimed the "winter works programs were wasteful and not effective". Why have they now brought down a program which dwarfs all other "winter works programs"?
It would seem to me the Liberal government are incompetent and arrogant and care little for the economy except as a political tool. Frankly, I am quite worried about the future and feel that we are in for a great deal of economic trouble unless we do something without weighing the political consequences first.
These are some of the sentiments of worried Canadians.


Gerald William Baldwin: Mr. Chairman, I listened with interest to my hon. friend and was tremendously impressed by what he had to say, as I am sure were hon. members opposite. However, as I have listened to what has been said by members on this side I have noticed that not one member on the government benches has risen to challenge the

October 18, 1971
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collective wisdom that has issued from this side of the House. If one member on the other side had had the courage to rise, I would have expected him to say something about the comments that have been made on this side, so we must take it for granted that hon. members opposite accept with some concern what we have been saying but have not the courage to admit it. I am afraid that when they come to vote they will follow the party line, as usual, and I regret this very much.
I was impressed by what the hon. member for Wellington had to say. He thought one thing the minister might do is to withdraw the bill. I would go one step further and say that he should withdraw the bill and resign, though I do not say necessarily in that order.


Mr. Hogarth:: Do you think you would get any support for that proposition over here?


Gerald William Baldwin: Yes, I think there is quite a bit of support for that proposition over there, but the fear of political liquidation that faces hon. members who would sometimes like to express their views prevents their doing so. After all, there may yet be a few changes in parliamentary secretary positions, and a few ministers of state have yet to be appointed.
I refuse to be distracted by comments from hon. members opposite, let me return to my thought about the minister resigning after he first withdraws his bill. I thought of the nearest literary similarity to this, which is found in "A Tale of Two Cities", when at the end of the book Sydney Carter walked to the guillotine. As he did so he said: "It is far, far better thing that I do, than I have ever done." Cannot we visualize the Minister of Finance ascending the steps of the political guillotine, clutching his withdrawn bill to him and uttering those tremendous words?
We like the Minister of Finance, he is a fine fellow, but as a minister he has been an awful disaster, a catastrophe. We know it, the country knows it and I think some of his colleagues know it. If he would withdraw the bill and resign, he would still have a place left for himself in the hearts of the Canadian people.


Mr. Perrault:: You are biased over there.


Gerald William Baldwin: No, not biased; I am being completely objective in making that statement. I should like to say this about the bill, though we will be given an opportunity to deal with it in more detail when we enter clause by clause study. In view of the hour I must speak until ten o'clock, because we certainly do not want the vote on third reading tonight. The essence of a tax measure should be simplicity and equity, and this bill fails dismally on both counts. As far as the wording is concerned, I could read some of the bill's provisions which were referred to by the hon. member for Wellington. However, there is no doubt in my mind that what has happened here is that although there are a very few elements of tax reform, the people in the department, operating through the minister, have smuggled into the bill a large number of administrative decisions to make easier the administration of the bill, and at the expense of the poor harassed taxpayer. That is the end result of most of the changes that are envisaged.

We are told by those who are on the bridge of the Canadian ship of state to be calm, to be reassured, not to worry or fret, because all that has happened was known and was predictable; that we are in fact following a scientifically charted course that will lead us away from the abyss to the highlands of safety and security-what is known as the "Benson Big Rock Candy Mountain". What nauseating nonsense, Mr. Chairman!


Patrick Morgan Mahoney: You said it; it is your speech.


Gerald William Baldwin: It is not only the people who are the elected representatives who are taking this course, those who have been chosen through the elective process to run the show, but their advisers, the modern witch doctors who are the new high priests at the altar of scientific economics, those who daily deal in the esoteric mysteries of predicting the course of human economic affairs. To these we have built great temples in Ottawa, and as they utter their incantations and follow their daily rituals, having looked deep into the holy vessels of their trade, they tell us what do to, how to do it, what will come to pass, when it will come, when we will go to the bathroom, what we will do when we get there, and how long we will stay. This is the kind of advice we are now getting from the economic advisers to the government.
If they should be out in their calculations, do they and their political masters accept the blame? No, of course not. Our employment figures are higher than they should be. Who is responsible? It is all those wretched and ungrateful people who insist upon working but are not supposed to work. They are the women who succumb to social pressures, as was indicated by the Minister of Finance and the Minister of Manpower and Immigration; those ungrateful women who, instead of staying home as they are supposed to and being a statistic according to the statistics of the minister and his advisers, want to go out to work because they have to make a living and supplement the incomes of their husbands in order to make ends meet. That is the reason-


An hon. Member:: Are you against that?


Gerald William Baldwin: I am for it, but it is the ministers, the government and the Prime Minister, who should know better now. In their statements they have said that the unemployment statistics are unexpected because these wretched people insist on working. This is the kind of drivel which we are being handed.
Then there are the young people who, unable to pursue their training because of financial difficulties, want a job. When these people do this, when they refuse to be statistics within the level of the statistical information furnished, it is enough to make a bureaucrat give up and want to quit his job. They are the masses who do not respond to what bureaucrats want them to do, who refuse to accept their position in the statistical scenario which has been written, and who insist on their right to work because there is more dignity and honesty in a job than in being an unemployment statistic.
It was this government or its predecessor of the same party, with the advice of the same people, which said in
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1965, "We must pay the Seaway workers an increase of 30 per cent," which set in motion an inflationary trend which did so much to destroy the economic life of this country. It was this government which said to us that with medicare and the pension plan our troubles were over, and now gives us the same bland assurance about unemployment insurance, a new labour code, a new competition act and a changed incidence of family allowances. They say that when these are passed we will have arrived at the milleni-um. What garbage!
Each time our great prophets solemnly and pompously told us that, and for a short while we accepted it; we had some belief in their hypotheses. But then the people began to wonder. They found it difficult to believe that the last few years would have left such a record of hopes blighted, of promises broken, of near disasters, of high intentions frustrated and low intentions consummated if we had been guided by other than error and mistake.
This reached its consummation when last Thursday the Minister of Finance and his fellow wanderers in the economic desert who do not have a chart and do not know how to look up at the stars made a statement in the House as to what their intentions were. Everything they had stood for, every premise which they had laid down, every cardinal economic philosophy which they had accepted was discarded when they did the greatest about-face in recent history.


An hon. Member:: Try to be objective.


Gerald William Baldwin: Many people have changed their minds, and it is proper they should; but none has left such a slimy trail behind him as the Minister of Finance in what he did last Thursday. Just one week before, the Minister of Finance and his colleagues-not only his discredited colleagues-has spoken against a positive program of tax reduction and industrial stimulation and incentive and had voted against it. I will not take the time, and even if I had the time the rules would probably prohibit me from going into greater detail, but on Thursday, October 7, there was a motion for discussion and a question for decision in the House which laid down a program of stimulating the economy, of providing for tax cuts and incentives, the sort of program which members of this party and of the party to my left had been pleading that the government embrace but which was rejected out of hand by the government which voted against it. The Minister of Finance, his parliamentary secretary and the Minister of Agriculture all voted against it.


Patrick Morgan Mahoney: Your timing is lousy.


Gerald William Baldwin: It is precisely the same thing which one week later they brought to the House and with great, pompous assurances said, "This is what the government will do". How can anybody have confidence in a government composed of people like that?


Patrick Morgan Mahoney: Get up and cheer, Jed. Don't criticize the opposition like that.


An hon. Member:: Don't get partisan.


Gerald William Baldwin: I have much more to say. I simply want to repeat what I started out with on the same high, objective
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level, that it is about time this government reviewed its position, assessed its intentions and said to the people of Canada that there may well be a need for tax relief and a need to deal with these other issues of which I have spoken, but the primary issue in this country today is to provide a climate and incentives which give effect to the instinctive human inclination to improve one's position. In that way, with the kind of incentives we need, this country may indeed move ahead and get out of the slough of despondency which this government has brought upon us.
Even at this late date, if the government really intended to do that, I am confident they would get the kind of support on this side of the House which would be necessary for a program of that kind. But we cannot believe the government, we cannot have confidence in it, nor can the people of Canada, when we consider the type of antics in which they have engaged.
I will suspend this part of my address and leave more severe castigations, in which I intend to engage at a later date, in the hope that the government will give some heed to what I have to say and will decide to act in a reasonable and moderate way to bring back to this country the kind of economic climate which it is entitled to have.


Some hon. Members:: Question.


Mr. McQuaid:: Mr. Chairman, it would be a shame to spoil a good speech by starting so late this evening. With your permission, may I call it ten o'clock?


Russell Clayton Honey: The hon. member has my permission. If he has the permission of other hon. members, we may call it ten o'clock. .


Some hon. Members:: Agreed.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION

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

['Mr. Speaker, I should like first to thank the hon. member for Hillsborough (Mr. Macquarrie) for his effective contribution to the Francophone countries throughout the world and I hope he will continue to support the assistance that the government is providing to the Francophone states.\nFollowing an invitation from the Secretariat of the Cultural and Technical Co-operation Agency to the Second General Conference of the Agency, the government appointed a delegation to represent Canada at that conference.\nThat delegation was headed by the Secretary of State (Mr. Pelletier), and I had the great honour to go with him. It also included ministers and officials from the governments of Quebec, New Brunswick, Ontario and Manitoba as well as federal public servants. A press release was issued last October 8 on this subject matter. As regards the vote, that question did not come up at this conference. It is provided that Canada will vote following consultations taking into account the interests of the provincial and federal governments. No difficulty is therefore expected in this regard.\nMotion agreed to and the House adjourned at 10:16 p.m.', 'Tuesday, October 19, 1971']
Winona Grace MacInnis: Mr. Speaker, I referred the other evening to a grant of $25,000 made by the Department of National Health and Welfare to an organization called Serena which uses birth control measures with a 25 per cent failure rate. What I tried to find out from the minister was whether similar grants would be available to municipalities and voluntary organizations using methods with proven lower failure rates. Instead of simply answering my question, the minister went into the filter-down theory under the Canada Assistance Plan and indicated his refusal to accept my statement that Serena has a 25 per cent failure rate. This may have been because I made an error and said 24 per cent, but I doubt it.
The minister's rejection of the 25 per cent failure rate figure is curious because it was taken from a survey made

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Proceedings on Adjournment Motion
by a special committee of eminent physicians named by the minister himself. On page 6 of the report, the preface of which is written by the minister, appears the following paragraph:
The contraceptive effectiveness of the rhythm method, if correctly taught, understood and consistently practised, especially if the temperature rhythm method is used, could achieve a low pregnancy rate of 1.8 per 100 women per year. However, statistics show that, possibly because of irregular cycles, or inexpert and careless timing, the result is a pregnancy rate of 25 per 100 women per year.
My question did not refer to what could be in the statistics; it referred to what actually is. The minister appears to be very forgetful in the matter of this report. I think he is also very forgetful of the great need to promote birth control on a large scale in Canada now. The report of the Royal Commission on the Status of Women, published almost a year ago, stated that in Canada families with higher education and in higher income brackets have had easy access to birth control methods. The poor and less educated have not. They also want an opportunity to plan their families. The principal responsibility for disseminating information on birth control methods rests with the health and welfare authorities.
The report recommends that the Department of National Health and Welfare do two things. First, prepare and offer birth control information free of charge to provincial and territorial authorities, associations, organizations and individuals. Second, give financial assistance through national health grants and national welfare grants to train health and welfare workers in family planning techniques. What has the department done? This is what I have been trying to find out for some time. In September I put questions on the order paper asking what organizations had been given grants for birth control activities and how much each had received, what organizations had been turned down and how much money they had wanted, what organizations are still being considered and for how much they are asking. So far I have had no answers.
Last week I asked if, in view of the $25,000 grant to an organization with a 25 per cent failure rate, other organizations with a proven lower rate of failure could get similar grants. I hope I can get an answer tonight. This is a serious matter for thousands of women and men across Canada who need access to hospital clinics, municipal health centres and premises of various other kinds where they can get the knowledge and the contraceptive means to plan, space and limit their families.
What the minister has done so far-that is, to the best of my knowledge-is to provide a total of $125,000 for birth control purposes throughout Canada. This is tokenism. So long as he does not take this matter more seriously we are bound to see the rate of abortions, legal and otherwise, remain at unnecessarily high levels, and there is no use pretending otherwise. The only way to bring that rate down is to provide birth control knowledge and contraceptives. The initiative in this campaign which the provincial and municipal authorities must share rests squarely on the shoulders of the minister.
Once again I ask my question: Are organizations with a lower failure rate-lower proven failure rate according to

the minister-given access to grants similar to the $25,000 grant that was given to Serena, an organization with a 25 per cent failure rate?


Mr. Andre Ouellet (Parliamentary Secretary to Minister of National Health and Welfare):: Mr. Speaker, in reply to the hon. member's comments I would like to reassure her as to the intentions of the government with regard to birth control.
It is a fact that the Canadian government intends to subsidize those organizations dealing with family planning. It has already been doing so for some time. The government has also indicated that it would contribute to an international program to help those countries that want to set up family planning services.
I would remind the hon. member that until now the government has made a grant of $100,000 to the Canadian Family Planning Federation.
It is also true, as the hon. member pointed out, that the Department of National Health and Welfare has made a grant of $25,000 to Serena, a birth control organization, to help it finance the printing and distribution of information on family planning.
I would like to call the hon. member's attention on a paper by Mr. R. Tietze, entitled "Ranking of Contraceptive Methods by Levels of Effectiveness" and submitted in 1971, in Boston, to the American Association of Medical Specialists in Family Planning, in which he classifies the sympto-thermal method as one of the most effective. This method must be distinguished from the calendar method. In proof of this, Messrs B. Vincent and associates have prepared a report entitled "Review of Temperature Methods in Contraception" which indicates that one failure occurred in 17,500 cycles. The method used for this calculation is as follows: 1,200 cycles are equivalent to 100 woman-year cycles. It is therefore found a 0.1 failure rate per 1,000 woman-year cycles. An international study mentioned an experiment conducted with 195 Canadian couples using this method. No pregnancy occurred over 1564 months.



Heath Nelson Macquarrie: Mr. Speaker, after the Dickensian, Demosthenesian and biblical statement of the hon. member for Peace River (Mr. Baldwin), I feel like a minor prophet. The question which I asked the Secretary of State for External Affairs (Mr. Sharp) on October 12, the reply to which prompted my intervention tonight, was not my first inquiry concerning the conference of Francophone countries.
On October 1, I asked the President of the Treasury Board (Mr. Drury) some questions on the conference. On that same day he intimated to the hon. member for York South (Mr. Lewis) that as soon as conveniently appropriate a statement would be made in the House. So far, Sir, we have not heard that statement in the House. It is regrettable that confusion and misunderstanding should
October 18, 1971

be allowed to develop on this matter because of failure to communicate but, as is so often the case, we must depend on statements made outside the chamber, or made by ministers in other jurisdictions, for information on matters of vital concern to the Parliament of Canada.
A Canadian Press item of October 9 indicates that after negotiations between the Secretary of State for External Affairs and the Minister of Cultural Affairs of Quebec an agreement had been entered into which gives Quebec the status of a participating government. I quote:
This gives Quebec the right to a separate delegation at the conference, a veto in matters under its jurisdiction and the right to participate wholly in all the institutions and administrative councils in the agency.
There are a number of interesting questions which arise from this statement. In the first place, one wonders by whom the judgment would be made as to whether a matter discussed at the conference would be under federal or provincial jurisdiction. One asks, further, about the role of the other provinces in Canada. Have they sought participating government status? If they have not, and this would appear to be the case, what is their position in reference to matters which in administration are under provincial jurisdiction? Does one province, namely, the province of Quebec, speak for all of them? Is it the sole custodian of French language rights?
As I walked past the centre block on the day the conference was held, I noticed that five flags were showing as symbols of people of this country-the flag of Canada, the flags of Manitoba, Ontario, Quebec and New Brunswick. Although I did not detect the New Brunswick flag, I presume it was there. I saw all the others.
Another matter on which there has been too little information, although it has been sought, concerns the appointment of the delegations. Presumably the "participating" government of Quebec would appoint its own delegation. Would the provinces other than Quebec have any role in naming the rest, or are they appointed by the federal government and do they form a part of the federal side of the representation when the conference gets under way- a conference, we must remember, of sovereign states?
Another matter which should be considered is the role of those other provinces which have Francophonic people within their bounds and for whom the provinces are carrying out programs in the extension and development of French language institutions. Are these people and their provinces without voice altogether at the conference of the Francophonic countries?
I still believe that the one area in which the competence and jurisdiction of the national government must be clearly supreme is in the field of international affairs. Divided jurisdictions and internal vetoes within delegations are in
Proceedings on Adjournment Motion fact a diminution of this sovereignty of the national government. We may for the sake of harmony be as euphemistic as we can about the terms we use to describe the arrangements, but nevertheless there has been a significant diminution of this government's role in the external affairs field.
Regrettably, this has been accompanied by a degree of confusion which cannot be helpful to the Canadian image. In the last two or three years we are developing abroad the impression that we are a country which makes a poor job of handling its own economy. It is to be hoped that we will not continue to rub off the lustre of bur international reputation by poorly conceived and awkwardly executed arrangements to solve internal intensions through the external field.
Even at this late date I ask the government to be forthcoming, to tell the people and their parliamentarians what is going on. Let the truth be told, let the record be set straight, let the information be revealed. These recent exercises in indirect discourse and secretive arrangements can do nothing but harm to this country.
It ill-behooves a government once dedicated to participatory democracy to be so unwilling to divulge techniques whereby the nation's external face is being altered. The creators of Information Canada surely should tell the story of our changing external profile even at this late date, and I invite a full statement on this disquieting matter.


Mr. Gaston Isabelle (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, I should like first to thank the hon. member for Hillsborough (Mr. Macquarrie) for his effective contribution to the Francophone countries throughout the world and I hope he will continue to support the assistance that the government is providing to the Francophone states.
Following an invitation from the Secretariat of the Cultural and Technical Co-operation Agency to the Second General Conference of the Agency, the government appointed a delegation to represent Canada at that conference.
That delegation was headed by the Secretary of State (Mr. Pelletier), and I had the great honour to go with him. It also included ministers and officials from the governments of Quebec, New Brunswick, Ontario and Manitoba as well as federal public servants. A press release was issued last October 8 on this subject matter. As regards the vote, that question did not come up at this conference. It is provided that Canada will vote following consultations taking into account the interests of the provincial and federal governments. No difficulty is therefore expected in this regard.
Motion agreed to and the House adjourned at 10:16 p.m.

Tuesday, October 19, 1971