1971-11-18

PRIVILEGE


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I rise on a question of privilege of which I gave rather belated notice to Your Honour through no fault of my own.
My question concerns contradictory statements made by the Secretary of State for External Affairs and by the Minister of National Revenue. These statements are contradictory in themselves, and the two ministers have contradicted each other. The statements concern official documents of the executive government of Canada. These documents the government has refused to table. The statements also concern other documents which have been reproduced in the public press. The publishers allege them to be in one case an authentic version of one of the documents first mentioned, and in the other case a true copy of one of the documents first mentioned.
Certain of these statements have been made by the ministers in this chamber and others have been outside this chamber to the public media. Whether made in this chamber or outside it, these statements have themselves been reproduced in the public media. Again, the statements made outside this chamber have been the subject of questions in this chamber.
At this point I intend to meet an argument which I anticipate may be advanced. It is that statements made outside this chamber by members of the House are outside the jurisdiction of the House to deal with as a matter of privilege. In other words, a minister of the Crown, although constitutionally responsible to the House, may quite properly inform the House on a matter of public business by making a statement in the House, and may inform the public on the same matter of business by making a contradictory statement outside the chamber. And, because these contradictory statements are made by the minister when he is physically in two different places-although these places be only 100 feet removed- the House does not have the right to investigate these contradictory statements. If the law of Parliament says that, Mr. Speaker, my submission is that the law of Parliament is, as Mr. Bumble said, an ass.
Of course, Mr. Speaker, the law of Parliament does not say that, however much the ministers of the Crown may feel at home with such an interpretation.
The privileges which members of the House enjoy are exercised in trust in the right of the public. The right of this House to be informed in this chamber on a matter of public business is the right of the citizen to be informed, whether the citizen is informed in this House or outside it.
It is strictly from Alice in Wonderland to say that the citizen is entitled to one version in the House and another version outside it. It is a parody of the privilege of freedom of speech to hold that the citizen does not have access to the courts with respect to a statement made by a minister in the House because the minister is protected by the privilege of freedom of speech and at the same time to hold that this House cannot investigate statements made by a minister outside the chamber which do not agree with statements made inside it on the same matter. In this regard I would refer your Honour to the excerpt contained in paragraph 4 on page 419 of Beauchesne's Fourth Edition.
Because of the overriding importance of the whole matter, the right of members of this House to be informed, the right of the citizen to be informed, and because of the serious nature of the contradictions within the statements made by the Secretary of State for External Affairs himself, and between those of the Secretary of State for External Affairs and the Minister of National Revenue, I ask leave to move the following motion:
This House orders that the Standing Committee on Privileges and Elections forthwith investigate all statements made by the Secretary of State for External Affairs and the Minister of National Revenue concerning the Gray report, so-called, the published so-called authentic version of that report and the purported cabinet document dated July 29, 1971, concerning a screening mechanism to control foreign investment in Canada.


Mr. Speaker:: The hon. member for Yukon has given notice of his intention to bring this matter forward by way of a question of privilege. As the hon. member knows, there is a slight technical difficulty in that the Standing Order does require an hour's notice to give the Chair an opportunity of looking into the matter and considering precedents and citations. Unfortunately, because of circumstances beyond the hon. member's control, there was a slight delay. I am satisfied that the hon. member is not responsible for that delay and I am prepared to accept the notice on this basis as satisfying, on that count, the requirement of the Standing Order.
The hon. member has put forward for the consideration of the Chair and submission to the House a proposed question of privilege which I submit is essentially the same as one proposed the day before yesterday. The Chair considered the matter extensively having asked for the forbearance of hon. members and the co-operation of the House to give me an opportunity to look into the precedents and citations, which I did for some hours in the afternoon. As a result of this consideration I made a ruling which is reported at pages 9618 and 9619 of the Commons Debates for November 16.
I suggest to the hon. member that the precedents quoted therein are applicable to the circumstances on which the proposed question of privilege is based. I do not want to

November 18, 1971
Assistance to Apples Blueberry Producers be unfair to the hon. member, but the impression I get is that he has considered the ruling that the Chair delivered on November 16, found it wanting, and in a way is now appealing, in effect, that decision. I do not think an appeal is possible, either directly or indirectly, from a decision of the Chair. If a ruling is delivered by the Chair on a given set of circumstances, I think it would be highly irregular for the Chair, on the same set of circumstances, to deliver a different ruling two days later.
The hon. member has made much of the ruling of the Chair in regard to statements made outside the House. The hon. member knows even better than I the rulings which have been made on this subject, Speaking from memory now I would refer to the ruling in 1964, I believe, by my distinguished predecessor, Mr. Speaker Macnaugh-ton, on statements made outside the House. I was Deputy Speaker at that time and following these matters with some interest, and my recollection is that a very strong argument was made then by the hon. member for Yukon in which he invited the Chair to make a distinction between statements made outside the House and statements made inside the House.
I might say that the arguments used at that time by the hon. member for Yukon have been used by the Chair on a number of occasions since. The Chair did agree with the arguments forcefully made at that time by the hon. member, and the arguments that he brought to the fore then are applicable equally to the present circumstances. I feel I cannot alter, change, amend or reverse a ruling made on a similar set of circumstances, and that the matter cannot be referred to a committee or put to the House at this time as there is no prima facie case of privilege.



ROUTINE PROCEEDINGS


Right Hon. P. E. Trudeau (Prime Minister):: Mr. Speaker, under Standing Order 41(2) I should like to table copies in English and in French of the communique prepared by the federal-provincial conference of first ministers which finished yesterday.



ANNOUNCEMENT OF PAYMENT TO BLUEBERRY PRODUCERS AND GRANT TO PROMOTE DOMESTIC APPLE CONSUMPTION

Hon. H. A. Olson (Minister of Agriculture):: Mr. Speaker, further to my recent statements on the program to provide assistance to agricultural producers, I now wish to advise of programs authorized for blueberries and apples.
Blueberry producers this year received reduced returns and direct payments will be made to them through the

Agricultural Stabilization Board. Data will be collected on sales to distributors and processors and payments of one and a half cents per pound will be made upon proof of sale.
Support to apple producers selling to the fresh market will be provided in the form of a grant for apple promotion. The Agricultural Stabilization Board has developed a program in consultation with the Canadian Horticultural Council and producer groups. The grant will be used to promote domestic apple consumption. Producers now pay a levy for apple promotion purposes. This grant will be used to reduce their levy payments this year and will therefore improve producers' returns.
Details of these programs are going to the producer groups and payments will be made when data has been collected.


Mr. I. P. Nowlan (Annapolis Valley):: Mr. Speaker, the statement by the Minister of Agriculture (Mr. Olson) is most welcome, although rather brief. I hope the support programs are sufficiently large. In complimenting the minister may I say I have some knowledge of the discussions between the minister and representatives of the producer groups and the Canadian Horticultural Council about a support program for apples. I only hope that in terms of dollars and cents payments to the apple industry will be much larger than the statement of the minister today. It is commendable that at long last discussions have been held with producer groups in this country regarding support that is so necessary as far as apples are concerned. This is a basic industry which has suffered in so many ways apart from anything the apple producers could do. I am glad the minister has made this statement and I hope he will give us the details later. I hope that the result in terms of dollars and cents to the industry will be much larger than this statement.


Mr. Mark Rose (Fraser Valley West):: Mr. Speaker, in response to the minister's statement, which was received at ten minutes after two this afternoon, my remarks, of necessity, must be both brief and general. Coming from a province which is a major producer of both apples and blueberries I welcome the news that there is to be support for both these proudcts.
The fruit industry of British Columbia, in fact the whole agricultural industry in Canada, is not in a state of vigorous health today. Anyone who has followed the debates in the House of Commons dealing with the problems of grain production facing the western farmers could find little to disagree with in that statement.
Regardless of what kind of promotion we may be able to undertake with this assistance from the Agricultural Stabilization Board, the main problem is the low price of imported apples from Japan and Mainland China which are used mainly in the pie-making industry across Canada.
In addition, the depressing of the price of the local product because of the low price of United States apples to wholesalers has injured Canadian growers even though none of these apples are actually imported. Returns from many agricultural products, including apples, have been reduced. At the same time, many families in Canada are deprived of apples for their children. Perhaps we should
November 18, 1971

be thinking along the lines of a free school lunch program that might include apples. Instantly available machinery is definitely needed for the protection of our producers when injury is caused by cheap imports.
In addition to the action announced by the minister today, I hope we can look forward to further studies of this very important problem. If we look at some of the measures the United States has taken recently to protect its economy, perhaps we will realize that while we do not want to engage in overt retaliation we should do no less for our own people.


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I wish to thank the minister for what he has just announced.
I would however draw his attention to the fact that the new program might help on a temporary basis perhaps the blueberry producers. Because I live in the main blueberry-producing area of Quebec I feel qualified to talk about it.
In fact, the decrease in the income of blueberry producers can be attributed to two causes: first of all, to a blueberry shortage and secondly, to a drop in prices.
The blueberry shortage is essentially due to the fact that oil is used to burn the blueberry fields. It was thought, in the past, when forest fires happened every 10, 15 or 20 years, that blueberry crops were enhanced by these fires. People came to the conclusion that blueberry fields had to be burnt every two or three years, which has brought about the systematic destruction of almost all our blueberry fields in the North, because all new shoots are burnt. Results can easily be anticipated.
Government experts have set up their research centre in Saint-Leon in a neighbouring constituency where there are only two blueberry fields, while we have 14. All our blueberry fields are being destroyed by that excessive burning.
The main cause of the decrease in income is the shortage of blueberries which has grown worse in the last two or three years.
The second reason is the price. Prices have gone down steadily, especially when the blueberry pickers union came into the picture and tried to corner the blueberry market. Competition was not tolerated. American buyers used to come every year. I have seen bumper years where 16 to 20 buyers showed up. Now, there is not one. Such few as do come all deal with the union, setting their own price, so that pickers are not even interested.
I believe those are the two main reasons for the slump. The department will have to tackle them, listening not to the self-styled experts in Saint-Leon, but to buyers who know something about blueberries. They know they are wild fruit and that destroying their habitat, which is the forest, results in their disappearing. Actually, they are trying to grow blueberries in "deserts". That's the main trouble.
Mr. Speaker, I merely want to draw this matter to the attention of the Minister of Agriculture-I would have a lot more to say-that he might have a serious inquiry made by blueberry producers, those who really know the
The Canadian Economy
business, and not by people who know nothing about it. Then we might get a sensible report.


Mr. Lambert (Bellechasse):: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: The hon. member for Bellechasse on a point of order.


Joseph Adrien Henri Lambert: Mr. Speaker, it is with much hesitation that I do so, because on many previous occasions I have thought of drawing the attention of the Chair to the following fact: when a minister makes a statement, it is normal for a representative of each party to express his opinion on the reaction of his party to the statement. But when it is time for the Social Credit spokesman to take the floor and speak in French as he has every right to do, very often hon. members talk between themselves so that the hon. member who has the floor can hardly be heard.
I realize that there is no ill-will, but I request that, in future, the right of speech of any member of my party be respected so that one may hear what he has to say.


Mr. Speaker:: I am sure that all hon. members will consider the remarks of the hon. member for Bellechasse. I believe them to be well founded, and I invite all members to remember that those who speak on behalf of their party, following a ministerial statement, have the right, under our Standing Orders, to be heard by their colleagues.



THE CANADIAN ECONOMY


Mr. Steven Otto (York East):: Mr. Speaker, I rise under the provisions of Standing Order 43 to request the unanimous consent of the House to make a motion in connection with the passage of the Domestic International Sales Corporation provisions by the Senate of the United States yesterday. The pressing and urgent nature of the situation arises out of the fact that the DISC legislation will lead to a massive exodus of manufacturing plants from Canada to the United States in order to gain the advantage of a tax-free position. The effect will be to close down half of Canada's industrial production and produce massive unemployment. In these circumstances it is imperative that this House debate what measures should be taken to ensure Canada's economic survival. I would therefore move, if unanimous consent is given, the following motion:
That this House now consider what economic measures should be taken in response to the passage of the DISC legislation in the United States.


Some hon. Members:: Hear, hear!


Mr. Baldwin:: We agree, Mr. Speaker.


Mr. Knowles (Winnipeg North Centre):: Agreed.


Gerald William Baldwin: And I will second the motion, Mr. Speaker.

November 18, 1971
Availability of Jobs


Stanley Howard Knowles: Agreed.


Mr. Speaker:: Has the hon. member indicated who is seconding the motion?


Steven Otto: Mr. Speaker, I believe a volunteer has already indicated that he will second it.


Gerald William Baldwin: I second the motion, Mr. Speaker.


Mr. Speaker:: I will inquire whether there is unanimous consent. I should like to bring to the attention of the hon. member for York East and the hon. member for Peace River, who has seconded the motion, that there might be some difficulty about the form of this motion since it asks the House to consider what economic measures should be taken. I am not sure how this would be done or what would happen if the motion were carried. I appreciate, however, that if the motion were carried unanimously perhaps we might agree on the form of the debate, so I will not pursue the procedural aspect of the motion and will simply inquire whether there is unanimous consent.


Some hon. Members:: Agreed.


Some hon. Members:: No.


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


Gerald William Baldwin: Who said no?


Mr. McGrath:: It was the parliamentary secretary opposite.



LABOUR CONDITIONS


Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I should like to move a motion under Standing Order 43. Its import will be obvious from its content. If there is consent, I would move, seconded by the hon. member for Regina-Lake Centre (Mr. Benjamin):
That the striking contradiction between the Prime Minister's assertion that there are plenty of jobs available if the unemployed really wanted to work and the results of a survey of Canada Manpower Centres which shows that there are 480,762 persons registered with Manpower looking for work and only 48,057 vacancies to be filled by Manpower-a ratio of 10 to 1 of people looking for jobs over available jobs-be referred to the Standing Committee on Labour, Manpower and Immigration for immediate investigation.


Mr. Speaker:: The House has heard the motion proposed by the hon. member for Winnipeg North. This motion requires the unanimous consent of the House. Is there unanimous consent?


Some hon. Members:: Agreed.


Some hon. Members:: No.


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



ORAL QUESTION PERIOD


Gerald William Baldwin: Mr. Speaker, before I ask the Prime Minister a question I want to say on behalf of myself, and particularly on behalf of the Secretary of State for External Affairs, how much we welcome him back.


Mr. Sharp:: I second the motion.


Gerald William Baldwin: In view of the statement in the communique tabled today by the Prime Minister that the provincial first ministers were informed of the efforts of the federal government directed at the reconsideration by the United States of proposed economic measures and at mitigating the effects of such measures, can the Prime Minister tell the House whether the federal government presented to the conference any specific measures to enable Canadian exporters to face the difficulties posed by the proposed tax incentives for U.S. exporters and the DISC proposal?


Pierre Elliott Trudeau: Nothing beyond what has been stated in the House, Mr. Speaker.


Gerald William Baldwin: As a supplementary question, Mr. Speaker, does the rather brief and truncated economic review delivered by the Minister of Finance to the conference contain the sum total of the presentation made by the federal government to the provinces on this particular issue?


Pierre Elliott Trudeau: Mr. Speaker, I apoligize. I missed hearing the question. There was something about a truncated statement. If the hon. member would repeat it I would be glad to answer.


Gerald William Baldwin: I am always glad to repeat a question in different form. Does the unusually truncated and brief statement that the Minister of Finance made to the conference contain the sum total of the presentation made by the federal government to the provinces on this issue?


Pierre Elliott Trudeau: Well, Mr. Speaker, a communique is not a repetition of the speeches which are made. A communique is as brief a summary as possible of the general lines and substance of a presentation, so obviously it is not a total summary of what the minister said throughout three days of the conference.


Gerald William Baldwin: In view of the decision taken by both Houses of the United States Congress in favour of tax incentives for U.S. exporters, and DISC in one form or another, has the government any contingency plans to assist Canadian exporters and the Canadian economy in this event, and when will these plans be presented to the House of Commons for discussion and appropriate action
November 18, 1971

or, if not presented, will the plans be leaked in the usual way by the government?



UNITED STATES DISC PROPOSAL-REQUEST FOR STATEMENT ON GOVERNMENT MEASURES-PLANT RELOCATION MONITORING-GENERAL ADJUSTMENT ASSISTANCE PLAN EXPANSION

Mr. T. C. Douglas (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I wish to direct a supplementary question to the right hon. Prime Minister. In view of the fact that the Nixon administration and the United States Senate and House of Representatives have all agreed in principle on the DISC proposal and its passage awaits only a conference of the Senate and the House to determine the percentage of the tax deferment that will be permitted, and in view of the very serious repercussions that this will have on Canadian exports and Canadian jobs, is the Prime Minister prepared now, or will he be prepared on motions tomorrow, to make a statement on the measures that the Canadian government proposes to take to deal with this matter? In particular, may I ask him if any monitoring machinery has been set up to ascertain whether there are indications of plant relocation south of the border, or in order to monitor any future indications of such plant relocation that might arise?


Pierre Elliott Trudeau: I will consider the suggestions made by the hon. member, Mr. Speaker.


Thomas Clement (Tommy) Douglas: In view of the fact that according to the alleged cabinet document of July 29 the Minister of Industry, Trade and Commerce was asked by the cabinet to prepare plans for an expansion of the General Adjustment Assistance Plan, GAAP, have such plans been completed, and when will the government be able to tell us what this expansion of GAAP entails?


Pierre Elliott Trudeau: Mr. Speaker, I do not think it would be good practice to comment on cabinet documents which have not been made public.


Thomas Clement (Tommy) Douglas: Mr. Speaker-


Mr. Speaker:: Order, please. The Chair will recognize the hon. member for Hamilton West on a supplementary and return to the hon. member for Nanaimo-Cowichan-The Islands later.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I would like to ask the right hon. Prime Minister if it is the government's intention to expand the General Adjustment Assistance Program, and in view of the fact that contingent upon such expansion would be an outline of the government's industrial strategy, does the government intend within the next few days to make a statement both with respect to its industrial strategy and expansion of the GAAP?


Pierre Elliott Trudeau: Mr. Speaker, I will inform myself of the intentions of the various ministers in this regard.
Inquiries of the Ministry



UNITED STATES DISC PROPOSAL-POSSIBLE SPLITTING OF INCOME TAX BILL TO ENABLE RECONSIDERATION OF CERTAIN PROVISIONS

Mr. Lincoln M. Alexander (Hamilton West):: Mr. Speaker, now that the DISC program is more than likely to come into effect, and in view of the fact that in this House we are dealing with a tax bill that is now outdated, is it the intention of the government just to introduce the more attractive features of that bill and hold the other controversial parts for further consideration?


Pierre Elliott Trudeau: No, Mr. Speaker.



UNITED STATES DISC PROPOSAL-ESTIMATE OF UNEMPLOYMENT THAT MAY BE CAUSED IN CANADA

Lincoln MacCauley Alexander: In view of the fact that at the time the United States surcharge was invoked on August 15 the government produced figures with respect to the trade losses and the jobs that would be lost as a result of that surcharge, has the government now got any figures on what the DISC program will mean in terms of unemployment in Canada? As I recall it, the government estimated that if the surcharge remained in effect for a year the unemployment caused by it would total some 90,000 jobs. Has the government any figures in this regard?


Pierre Elliott Trudeau: Well, Mr. Speaker, the figures we do have show that exports have continued to go up in the past ten months.


Lincoln MacCauley Alexander: Mr. Speaker, I direct one further supplementary question to the Minister of Labour. In view of the fact that the country will certainly be faced with massive lay-offs in the future, can the minister advise when in fact he will have the regulatory provisions regarding bi-weekly and bi-monthly computations in order that industry can now calculate the type of formula that will be used?


Hon. Bryce Mackasey (Minister of Labour):: I hope fairly soon, Mr. Speaker. The hon. gentleman has pointed to an area which is very complex, and I think he can well understand the degree of planning required necessitates a certain degree of co-operation and openness that hitherto has not always been available.


Mr. Donald Maclnnis (Cape Breton-East Richmond):: Mr. Speaker, I have a supplementary to the original question and I will direct it to the Prime Minister as soon as I can get his attention. In view of the fact that I and other Members of Parliament are on the mailing list of the Prime Minister's office, would the Prime Minister give consideration to putting members of the House on the leak list?


Some hon. Members:: Oh, oh!

November 18, 1971
Inquiries of the Ministry HEALTH



MEDICARE-STUDY OF WAYS TO MEET COSTS AND PROVIDE SERVICES

Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of National Health and Welfare arising out of discussions at the recent federal-provincial conference concerning the costs of medical care. In view of the rising costs in this area, is the government giving consideration to an over-all and comprehensive study of ways in which these costs can be met and services provided, rather than just trying to solve the problem by cutting off what the federal government would pay and leaving the rest to be paid by the provinces?


Hon. John C. Munro (Minister of National Health and Welfare):: Mr. Speaker, there is no suggestion of cutting off what the federal government is paying. The suggestion is that if we can implement many of the reforms identified, of which there were some 80 in the joint federal-provincial study on health costs, we could have funds available to do many other needed things that should be done and that indeed many provinces are doing in their own way.


Stanley Howard Knowles: Is the only answer of the government in that area to tie the federal contribution to the level of the GNP and not to consider other factors?


John Carr Munro: No, Mr. Speaker. The suggestion is that the formula be on a base year and be escalated in accordance with annual increases in the GNP. There would also be further moneys, some $640 million over a five-year period, as an incentive to the provinces to get into new areas and bring about reforms in the health services system.



THE CANADIAN ECONOMY


Mr. Leonel Beaudoin (Richmond):: Mr. Speaker, I have a question for the Prime Minister.
Would he tell the House whether the government agrees with the Senate Standing Committee on National Finance that indirect taxes should be abolished in order to check inflation and unemployment in Canada?


Pierre Elliott Trudeau: Mr. Speaker, I believe the hon. member is referring to a report to be tabled in the Senate at this very moment. As I was not able to obtain copies of the report as quickly as the hon. member, I have not yet read it and I cannot now answer the question.


Léonel Beaudoin: May I ask a supplementary question, Mr. Speaker?

Could the Prime Minister tell us if the government intends to freeze prices and wages in order to fight inflation and unemployment and to stop the 10 per cent American surtax on some Canadian products exported to the United States from having adverse effects on our economy?


Pierre Elliott Trudeau: As we have said on previous occasions, Mr. Speaker, that is an alternative which we have considered and to which we are ready to give further consideration if the need should arise. For the present, as the hon. member knows, inflation is not what is threatening the Canadian economy.



PROPOSED REDUCTION OF FEDERAL SALES TAX

Mr. Georges Valade (Sainte-Marie):: Mr. Speaker, I would like to put a supplementary question to the Prime Minister.
Does the government feel that reducing taxes, the sales tax included, would improve the economic situation in Canada?


Pierre Elliott Trudeau: Mr. Speaker, the Minister of Finance told us, barely fifteen days ago, I think, as well as in June that personal and corporation taxes had been greatly reduced. So as far as tax cuts are concerned, we indicated our agreement. It remains to determine where such cuts will benefit the economy most.



NATIONAL DEFENCE


Right Hon. J. G. Diefenbaker (Prince Albert):: My question is directed to the Minister of National Defence and relates to the agreement entered into on June 6, 1963 between Mr. MacNamara on behalf of the United States and the present President of the Treasury Board, then Minister of National Defence, in connection with the sale and production of defence material. Last year the credit balance in favour of Canada was, I think, well over half a billion dollars. Has the United States now called on Canada to make greater purchases in the United States in order to bring about what was described in the agreement as a fair balance of expenditure? Has there been anything like that recently?


Hon. Donald S. Macdonald (Minister oi National Deience):: Mr. Speaker, the primary responsibility for this agreement lies with my colleague, the Minister of Industry, Trade and Commerce. However, I can confirm to the right hon. gentleman that in particular the United States has been very enthusiastic in pressing upon us the purchase of the Lockheed Orion aircraft as a long-range patrol aircraft. At all stages I have made it clear to the Americans that we would buy such equipment as was suitable to our needs in what we regarded as the best possible market.
November 18, 1971


John George Diefenbaker: Apparently the United States has been exerting some pressure on Canada. The simple question is: Has the American administration asked for a reasonable balance as between these purchases and, in particular, that in the next year or two Canada should purchase from the United States a great deal more defence material than ever before? If so, has the government of Canada pointed out that to bring about that balance under the agreement of 1963 would mean a loss to Canada of $500 million a year in trade and increased unemployment within our country?


Donald Stovel Macdonald: Mr. Speaker, I share the right hon. gentleman's viewpoint. In general terms, no, the United States officially has not impressed upon me the necessity of righting this balance. As I have said, any representations made to me have only been in regard to the Orion aircraft which, as I have said, we will not necessarily buy, nor any other American aircraft, if it does not meet our requirement.


Mr. Speaker:: Order, please. I will allow a supplementary to the right hon. member for Prince Albert but I would invite hon. members to limit supplementaries as I am anxious to recognize those who were not given an opportunity to ask their questions yesterday and are waiting to do so now.


John George Diefenbaker: Mr. Speaker, I just want an answer to that simple question whether the United States is now applying pressure to Canada in this regard. Has the Canadian government pointed out to the United States the adverse results of anything like a balance being established for defence as between our two countries?


Donald Stovel Macdonald: Mr. Speaker, I shall be glad to respond to the hon. gentleman for the third time. There has not been general pressure on me as Minister of National Defence. There has been with regard to the Orion aircraft-


John George Diefenbaker: That is defence material.


Donald Stovel Macdonald: -as I pointed out to the hon. gentleman.


Mr. Speaker:: Order, please. The hon. member for St. John's East (Mr. McGrath).



MANPOWER


James Aloysius McGrath: I should like to direct a question to the right hon. Prime Minister. Based on the report that the Prime Minister stated on Friday that many jobs are going begging in Canada because Canadians do not want certain kinds of work or are not prepared to leave their homes, I should like to ask the Prime Minister if this kind of evidence is provided by the Department of Manpower and Immigration and, if so, will this statistical information be made available to the House?
Inquiries of the Ministry


Pierre Elliott Trudeau: I think this is information I got from a member of the opposition, Mr. Speaker, who was complaining that in his riding there were not enough workers to pick fruit from the trees of his constituents.


Gerald William Baldwin: How about parliamentary secretaries?


James Aloysius McGrath: May I ask the Prime Minister if it is his view that Canadians are in fact too lazy to go to work and are not prepared to leave their homes?


Mr. Speaker:: Order, please.



AVAILABILITY OF JOBS IN THOMPSON AND SUDBURY

David Orlikow: I have a question for the right hon. Prime Minister. In view of the fact that in the last couple of weeks International Nickel Company has announced lay-offs in Thompson and Sudbury, may I ask on what information the Prime Minister based his statement that jobs are available in those two centres?


Pierre Elliott Trudeau: Mr. Speaker, I was referring to a statement I had made a year ago when there were jobs. In the same answer I referred to a comment on my answer which had been made at that time by Mr. Mahoney of the steelworkers saying that I should ask permission before saying there were jobs in Thompson.



THE CANADIAN ECONOMY


Mr. Norman A. Cafik (Ontario):: I have a question for the Minister of Regional Economic Expansion. Do the provincial authorities have the criteria and forms necessary to assist municipalities in making application for loans under the new $160 million loan fund recently set up to encourage employment during winter months?


Hon. Jean Marchand (Minister of Regional Economic Expansion):: Mr. Speaker, I think the Minister of Finance wrote to all the provinces saying what the criteria are and setting down the conditions. We have forms here in Ottawa but they do not have to fill in their applications on those forms. They have all the necessary information and they just have to follow the guidelines and forward their requests.


Gerald William Baldwin: Is that for this year or next year?


Jean Marchand: This year.


Norman Augustine Cafik: Are any further agreements required between the provinces, particularly Ontario, and the federal government before this program can be implemented?


Jean Marchand: Mr. Speaker, I think it has to be approved by both parties before it is implemented but first we have to receive the application.
Inquiries of the Ministry INDIAN AFFAIRS

November 18, 1971



NORWAY HOUSE AND CROSS LAKE-FINANCIAL ASSISTANCE TO PROVIDE TELEVISION SERVICE

Mr. Robert Simpson (Churchill):: I have a question for the Minister of Indian Affairs and Northern Development but in his absence I shall address it to the acting minister or the parliamentary secretary.


Erik Nielsen: The parliamentary secretary is not there; try the Prime Minister.


Robert Simpson: If neither is available I shall address it to the Prime Minister. In the areas of Canada where large numbers of Indian people are living, such as the closely adjacent communities of Norway House and Cross Lake in Manitoba, and television services are non-existent, can the Prime Minister say whether the Department of Indian Affairs and Northern Development is considering any means whereby they can assist financially in providing this greatly needed service?


Mr. Speaker:: Order, please. I suggest to the hon. member that this question ought normally to be placed on the order paper. I realize that the matter is important but if there is urgency it is not apparent to the Chair. Perhaps it might be given priority in being considered at the time of adjournment.


Robert Simpson: On a point of order, with the greatest respect, Mr. Speaker, I thought that the minister might be able to throw some light on this question, and in view of the fact I was not able to ask the question during the last two days when he was present, I felt I should ask it today because the answer is very important.


Mr. Speaker:: Order, please. Perhaps in view of the circumstances the question might be given priority at the time of adjournment.



REPORT ALLEGING DETERIORATION OF RELATIONS WITH WESTERN EUROPE AND GREAT BRITAIN-REQUEST FOR STATEMENT

Mr. Lloyd R. Crouse (South Shore):: My question is for the Secretary of State for External Affairs. Is the minister aware of a report by Leonard Beaton for the British-North American Research Association that Canada's traditional trading links with western Europe are disappearing and that our relations with Britain have sunk to a level of triviality? If so, is the government studying this report and will a statement be made on these vital relationships?


Mr. Speaker:: Order, please. I suggest most respectfully that this again is the type of question which ought to be placed on the order paper. The question might be answered to the extent of whether a statement will be made on motions.


Mitchell William Sharp: I am not aware of the statement, Mr. Speaker. I

do not agree with it and therefore I have no occasion to make a statement.



MANPOWER


Mr. Les Benjamin (Regina-Lake Centre):: I wish to return to a matter raised earlier in the question period and direct a question to the Prime Minister. It does not involve a statement he made a year ago but one which was quoted in the November 13 edition of the Toronto Star where he is reported to have said: "Today, if they want to do anything, there are plenty of jobs." In view of that statement, is the Prime Minister willing to accept inquiries direct to his office from unemployed people looking for jobs inasmuch as the Department of Manpower says there are only 48,000 available and there are 480,000 applicants?



FAMILY INCOME SECURITY


Mr. Roch La Salle (loliette):: Mr. Speaker, I have a question for the Minister of National Health and Welfare.
Could he tell the House whether the Quebec government and the federal government agreed on a family allowances policy? If there has been an agreement in principle, will it guarantee the Quebec government the legislative precedence while leaving with the federal government the responsibility of issuing cheques?


John Carr Munro: No, Mr. Speaker, there is no agreement yet. Talks are still going on at the official level. When those talks reach definite conclusions and political decisions are made, an announcement will be made in the House.



BROADCASTING


Hon. W. G. Dinsdale (Brandon-Souris):: My question is for the Secretary of State. In light of the initiation of cablevision legislation in Quebec and the desire of Quebec to discuss the jurisdictional issues involving cable television with the federal government, is the Secretary of State now going to meet with the Quebec Minister of Communications on this matter?


Hon. Gerard Pelletier (Secretary of State):: Mr. Speaker, I met the Quebec minister of communications many times and I shall meet him again.
November 18, 1971

The purpose of these meetings is to explore the activities of the Quebec and the federal governments in this field and to study the meaning of the legislation passed by the National Assembly of Quebec.


EXTERNAL AFFAIRS
Mr. Heath Macquarrie (Hillsborough):: I should like to direct a question to the Secretary of State for External Affairs. Based upon the statement yesterday of the Canadian Ambassador to France that a vital question for Canada is whether it can establish rapport with an enlarged and more integrated European community, can the minister advise if in this urgent matter there are any special plans for early top level discussions with members of the European Economic Community?


Mitchell William Sharp: Yes, Mr. Speaker, except that these are not plans; these are realities. We have had discussions with the members of the European Commission. We are now in the process of establishing the kind of links to which the hon. member has referred.


Heath Nelson Macquarrie: May I ask the minister if he has any lack of confidence in this area in that we might be left out in the cold unless we do a little more?


Mitchell William Sharp: No, Mr. Speaker, we have a very warm relationship with the European community.


Gerald William Baldwin: The trouble is they don't know it.



FINANCE


Mr. P. V. Noble (Grey-Simcoe):: In view of the fact the Minister of Finance has not been in the House this week, perhaps I can direct my question to his parliamentary secretary and ask him to bring it to the minister's attention. Will the minister take the first opportunity on motions to tell the House what segments of their operations restrictions will be imposed on foreign controlled investment firms by the government?



THE CANADIAN ECONOMY


Mr. Thomas M. Bell (Saint ]ohn-Lancaster):: My question is for the Prime Minister. I had hoped to ask it earlier. Did the Prime Minister give any indication to the provinces that he would again be discussing foreign investment
Inquiries of the Ministry
policy with them and, if so, will this be done before the end of the year?


Pierre Elliott Trudeau: Yes, Mr. Speaker. The communique states that we did discuss this subject. I told them I hoped there would be other occasions to discuss the general subject with them.


Thomas Miller Bell: Is there any hope that the whole foreign investment policy will be announced before the end of the year?


Pierre Elliott Trudeau: Yes, Mr. Speaker.



FOREIGN INVESTMENT-POSSIBLE SALE OF MONTREAL CANADIENS HOCKEY TEAM TO UNITED STATES INTERESTS

Mr. Barry Mather (Surrey-White Rock):: I have a question for the Minister of National Revenue in his capacity as the minister who is very much concerned about the extent of foreign investment in Canada. Is the minister aware of reports today emanating from Montreal which indicate that some consideration is being given to the sale of the Montreal Canadiens hockey team to United States interests and will he look into the reports?


Hon. Herb Gray (Minister of National Revenue):: Mr. Speaker, I was not aware of these reports until the hon. member asked the question. I will be happy to look into these reports in so far as I have any jurisdiction or responsibility in this area.



REGIONAL ECONOMIC EXPANSION


Joseph Adrien Henri Lambert: Mr. Speaker, I should like to direct a question to the Minister of Regional Economic Expansion.
Since the minister is well aware of the problem created in Montmagny by the closing of the Chemcell plant, could he tell the House if plans are being made to establish new industries in this area, in order to create jobs for the workers who will be laid off soon?


Jean Marchand: I believe, Mr. Speaker, I shall have very good news to announce soon.



FEDERAL-PROVINCIAL RELATIONS ALLEGED WIDENING OF EQUALIZATION PAYMENT SYSTEM

Georges-J. Valade: Mr. Speaker, I would like to ask the Prime Minister a question.
Following the Premiers' conference the Prime Minister said yesterday on television that the province of Quebec and the federal government had agreed on how to enlarge

November 18, 1971
Inquiries of the Ministry
the equalization plan, which the premier of Quebec denied categorically.
Could the Prime Minister clarify that situation and tell us whether the federal government and the province of Quebec have really reached an agreement on a formula to enlarge the equalization plan?


Pierre Elliott Trudeau: Mr. Speaker, I cannot have said that there has been an agreement on the enlargement equalization plan in the sense proposed by the province of Quebec and by other provinces. I have said that in fact there has been-and that appears in the communique-an enlargement of $18 million which will be added to the amounts subject to equalization, but it is following a technical review that we have improved the application of the system to a point.


Georges-J. Valade: I want to ask the Prime Minister a supplementary.
I would like to ask him whether a mere technical difficulty, or more basic principles, are involved in this discussion.


Pierre Elliott Trudeau: Mr. Speaker, there is one basic principle on which all provinces were in agreement-that the rich provinces should help the less privileged ones. Because of this principle, the province of Quebec received hundreds of millions of dollars under the equalization formula. It is asking for more, but the provinces which have to foot the bill say that too much money has been redistributed already.
The federal government improved the system, without, however, going as far as some of the poorer provinces would have wished. It still went much further than the Conservative government had planned to do in 1962. The 1967 formula is far more generous towards the poorer provinces.
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AIRPORTS


Mr. Jerry Pringle (Fraser Valley East):: My question is directed to the Minister of Transport. Is the minister aware of the possible aviation safety hazard being created by Canadian National Railways at Hawkesbury airport and, if so, is he taking any action to correct the situation?


Hon. Donald C. Jamieson (Minister of Transport):: Yes, Mr. Speaker, I am aware of it. I have conveyed the problem to Canadian National. I understand they have met with the parties concerned but I am not sure whether they have reached any agreement.
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INQUIRY OF THE MINISTRY

Mr. John Lundrigan (Gander-Twillingate):: I have two brief questions to direct to the Prime Minister which I hope he will treat candidly. Can the Prime Minister con-

firm whether he has requested the resignation of the Minister of National Revenue?


Mr. Speaker:: The hon. member for Broadview.


John Howard Lundrigan: Perhaps the Prime Minister will answer this question candidly, Mr. Speaker. Can he confirm, in view of the-


Mr. Speaker:: Order, please. I suggest to the hon. member that it is not in order to ask a minister, or the Prime Minister, whether he will answer a question candidly. The hon. member has the floor in order to ask a question, not to make a speech.


John Howard Lundrigan: I will rephrase my question and ask the Prime Minister whether he will answer the following question. Can he confirm, in view of the conflict within cabinet, that unless there is a consolidation of opinion along his own defined lines he will resign his own position as Prime Minister and leader of the Liberal party?


Mr. Speaker:: The hon. member for Broadview. Order, please. I apologige to the hon. member for Broadview. I hope to be able to recognize him in a moment or so. The hon. member for Gander-Twillingate rises on a point of order.


John Howard Lundrigan: Mr. Speaker, my question was asked in all sincerity-


Some hon. Members:: Oh, oh!


John Howard Lundrigan: -and I hope the Prime Minister, even if he does not want to answer, will be given an opportunity to indicate whether-


Mr. Speaker:: Order, please. Even if the Prime Minister wanted to reply he could not do so because the question is certainly not in order.
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UNEMPLOYMENT INSURANCE


Mr. John Gilbert (Broadview):: Mr. Speaker, my question is directed to the Minister of Labour. In view of the high unemployment rate and the hon. gentleman's desire to help solve this serious problem, is it his intention to employ more staff at the Holly Street branch of the Unemployment Insurance Commission in Toronto to help process claims rather than have the present employees work overtime three nights a week?


Bryce Stuart Mackasey: I shall inquire whether more people are needed at this branch. If such a need is obvious, I shall have no hesitation in recommending the appointment of additional staff.

November 18, 1971



LABOUR CONDITIONS


Mr. Raymond Rock (Lachine):: I have a question for the Minister of National Revenue about the possible loss of 800 to 900 jobs at the Dominion Engineering Works in Lachine, Quebec. Is the government, through its antidumping laws, looking into the possibility that Russia used dumping tactics when submitting her bid for the supply and installation of turbines for the Mica Creek project of British Columbia Hydro? The bid was lower by $4,800,000.


Mr. Speaker:: Order, please. The hon. member is now making a speech. He has the floor for the purpose of asking a question, not to make a speech.



THE CANADIAN ECONOMY


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I have a question for the Minister of Manpower and Immigration who is apparently a roster buster today. In his absence I should like to direct it to the Minister of Labour. Has there been any change in the regulations pertaining to the winter works program? In particular, I have in mind the 30 man-month regulation. Can he tell us what changes have been made, since many of the smaller communities have not been able to comply with some of these regulations?


Bryce Stuart Mackasey: Perhaps I may have missed the point, Mr. Speaker. The Minister of Manpower and Immigration will be away until the end of next week in connection with his responsibilities as minister in charge of immigration. With regard to the specific question which was asked concerning regulations, I am not aware, frankly, that there has been any change. I know this matter has been under consideration in light of certain representations which have been made. I will find this out today and make sure that a report is made to the House tomorrow, either by myself or by one of my colleagues.



AIR TRANSPORT


James Aloysius McGrath: Mr. Speaker, I should like to address a question to the Minister of Transport. What steps has he taken to improve security at our airports and on our airlines in view of the latest hijacking incident and repeated requests from the Canadian Airline Pilots Association?


Donald Campbell Jamieson: great many steps have been, and are being, taken. I am
Inquiries of the Ministry
sure the hon. member would not wish me to disclose them in detail in public. We have consulted with the pilots association at each step of the way. I do not think it is a breach of secrecy to indicate that detection devices have been installed at a number of airports and that others are on order. As soon as they have been received they will be installed. The department has agreed to pay for them so the burden will not be borne by the airlines.


James Aloysius McGrath: May I ask the minister what steps he is taking to improve security in the air?


Donald Campbell Jamieson: Again, this is a very difficult question to answer briefly. I think we have taken part in every international conference which has been held on this subject. The difficulty is to devise rational responses to acts which are totally irrational. We do the very best we can, and I think that up to now our efforts have received the full co-operation of the pilots and other groups, including the airlines.


Erik Nielsen: Since most of the detection devices to which the minister has referred, or a good many of them, are installed in the major airports on a portable basis, can the hon. gentleman assure us there will be a change of policy in this regard and that permanent detection devices will be installed?


Donald Campbell Jamieson: I cannot give a categorical answer to that question. I can say that we are trying to find the best possible solution to the problem. I am sure Your Honour would not be indulgent enough to allow me time in which to answer in detail. The volume of traffic at certain airports is much greater than at others and we are trying to deal, first, with the airports which are used most. Eventually, I hope we shall have most of our airports covered.


Mr. Speaker:: Order, please. I have to remind hon. members again that we are running short of time. I realize the importance of this question, but if hon. members feel that further supplementaries might be left until tomorrow I will recognize the hon. member for Peace River.



COMPETITION BILL


Gerald William Baldwin: Mr. Speaker, I should like to direct a question to the Acting Minister of Consumer and Corporate Affairs. In light of the decision by the minister to withdraw the new Competition Act and bring in a new bill next session, may I ask whether the subject matter of the new bill will first be referred to a committee so that a more acceptable piece of legislation than the existing bill may be available?


Donald Stovel Macdonald: On behalf of my colleague, the Minister of Consumer and Corporate Affairs, I would point out that he was really reaffirming his previous position that the present bill would not be advanced this session but that a new one would be brought forward in the next session. I do not think there is any question of withdrawing it.

November 18, 1971
Inquiries of the Ministry


Gerald William Baldwin: The minister did not answer the last part of my question. Is it the intention of the government to first refer the subject matter of this bill, as with other repugnant bills, to a committee with a view to getting better legislation?


Donald Stovel Macdonald: No, Mr. Speaker. Neither is it a repugnant bill.



INCLUSION OF PROVISIONS TO DEAL WITH FOREIGN OWNERSHIP

Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I have a supplementary to the previous question directed to the Acting Minister of Consumer and Corporate Affairs. In view of the statement that the competition bill is to be revised, I wonder whether the hon. gentleman, or the parliamentary secretary, can tell us whether there will be any proposals in the bill to deal with foreign ownership?


Donald Stovel Macdonald: Mr. Speaker, I did not catch the first part of the question asked by the hon. member for Yorkton-Melville. I cannot answer as to the general proposition he made, but I will bring the matter to the attention of my colleague directly he returns to Ottawa.



LABOUR CONDITIONS


Hon. Paul Hellyer (Trinity):: Mr. Speaker, I should like to direct a question to the Minister of Labour. Would the minister consider introducing into the House at once legislation withdrawing the right to strike in all essential services under federal jurisdiction and substituting the rule of law, and including in the legislation the telephone service and air traffic control?


Bryce Stuart Mackasey: Mr. Speaker, the hon. gentleman should know that Air traffic control does not come within the responsibility of the Minister of Labour but under the public service. Whether or not we can do without telephone service over the next month depends, of course, entirely on how much we use it. As to whether I am going to bring in anti-labour legislation in this House to suit the wishes of the hon. gentleman, the answer is categorically no.


Paul Theodore Hellyer: Does the minister not feel that ordinary citizens have some right to the continuous provision of essential services?


Some hon. Members:: Hear, hear!


Mr. Speaker:: Order, please. Obviously the hon. member and the minister are anxious to embark on a debate, but I would not think this is the time for it.
[Mr. Macdonald (Rosedale).)



THE CANADIAN ECONOMY


Mr. Gordon Ritchie (Dauphin):: Mr. Speaker, I have a question for the Prime Minister arising from the right hon. gentleman's announcement that a statement on government policy with regard to foreign capital will perhaps be made before the end of the year. Has the government under intensive study at this time the options that Canada would have open to it in its economic relations with the United States ranging from, say, a commodity agreement like the auto pact to a customs union as proposed by the Premier of British Columbia?



REGIONAL ECONOMIC EXPANSION


Mr. Colin Gibson (Hamilton-Wentworth):: Mr. Speaker, I should like to put a question to the Minister of Regional Economic Expansion.
Did the policy of his department cause the removal of an industry from the city of Hamilton to a poor area of Canada? For instance, was an amount of money paid Aerovox Canada Limited, as the mayor of Hamilton claimed, if we are to believe the news report published yesterday in the Hamilton Spectator?


Jean Marchand: Mr. Speaker, I am ready to make the same effort and to answer in English; I hope I will be as clear as the question was. There is no doubt that the decision to close down the Aerovox plant in Hamilton was taken even before an application was made to my department.


Donald MacInnis: Mr. Speaker, I have a supplementary question which I address to the minister and also to the questioner. Is he aware of the fact that the question asked and the answer given are a reflection on Premier Regan and his administration?
3|c	3|c	3|c



INQUIRY OF THE MINISTRY

Mr. Rene Matte (Champlain):: Mr. Speaker, I should like to put a question to the Prime Minister.
Has the French version of the report of the Senate Committee on Poverty been tabled?


Pierre Elliott Trudeau: Mr. Speaker,
I did not understand the question. Would the hon. member mind repeating it?
November 18, 1971


René Matte: Has the French version of the report of the Senate Committee on Poverty been tabled?


Mr. Speaker:: I feel that question should be put in the other place.



AGRICULTURE


Mr. R. E. McKinley (Huron):: Mr. Speaker, I have a question for the Minister of Agriculture. At the meetings of the United Nations Food and Agriculture Organization, did the minister make representations on behalf of Canadian agricultural producers to those countries that have high tariffs and levy systems, thereby making it impossible for Canadian products to be exported to those countries? Were talks along that line held and were representations made?


Horace Andrew (Bud) Olson: Mr. Speaker, the formal sessions of FAO are not designed for the purpose of negotiating trade arrangements or agreements. Nevertheless, informal discussions do take place during the meetings, especially after hours, and at all times I can assure the hon. member that the interests of the Canadian farmers were promoted vigorously by all members of the Canadian delegation.


Robert Elgin McKinley: A supplementary question, Mr. Speaker.


Mr. Speaker:: Order, please. We have just about run out of time. Perhaps the hon. member might pursue the matter tomorrow. I was anxious to give the hon. member a chance to ask his question.


Robert Elgin McKinley: Ten o'clock, Mr. Speaker.


Mr. Speaker:: The hon. member can ask his supplementary at ten o'clock, and he will be given priority again since this is obviously an urgent matter. The hon. member for Kootenay West will be allowed a question, and then we will call orders of the day.



PROPOSED FLOODING OF SKAGIT RIVER VALLEY-INTERNATIONAL JOINT COMMISSION REPORT

Mr. Randolph Harding (Kootenay West):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Has the government received a report from the International Joint Commission on its recent investigation into the proposed flooding of the Skagit Valley and, if not, when is a report expected?


Mitchell William Sharp: Mr. Speaker, I have not yet received the report but I will make inquiries.


Mr. Speaker:: Orders of the day.
Business of the House BUSINESS OF THE HOUSE



WEEKLY STATEMENT

Gerald William Baldwin: Mr. Speaker, I raise my usual Thursday point of order. I should like to ask the parliamentary secretary to the government House leader about the business for the rest of this week and next.


Mr. Jerome:: Mr. Speaker, we will continue in committee of the whole on the tax bill. In accordance with earlier discussions, we will carry on with groupings so that discussion on any one of the sections in a group will constitute discussion on all of them. In line with that, we will deal today and tomorrow with co-operatives and credit unions.
On Monday we will deal with international income, on Tuesday mining and petroleum, and then one day on each of the following subjects later in the week, namely corporations and their shareholders, and business and property income. It is not possible at this moment to say exactly which days the last two groups will fall on because there have been some preliminary discussions about using the fifth day of next week, wherever it may fall, as an opposition day. Discussions on that subject are continuing.
We have endeavoured, as in the past, to prepare a list of sections that will be dealt with under each heading, and if the House is so inclined I should like to go through the sections at this time, since I think there is a high level of interest in them. I have prepared a list and will distribute copies to the House leaders.
Monday's debate on international income will include sections 2, 17, 56 to 58 inclusive, 90 to 95 inclusive, 113 to 116 inclusive, 126, 133, 134, 212, 219 and 257. It will be observed that some of those sections are overlapping with ones already discussed but not passed. We have purposely included them in the list to make sure that the discussion has full range.


Gerald William Baldwin: Would the parliamentary secretary circulate that list among his backbenchers who are showing unusual interest in the bill at the present time?


Donald MacInnis: Mr. Speaker, I have a point of order, one that I had hoped to raise before the Prime Minister left the House. It relates to the protests made from this side of the House with respect to the roster system. The appearance in the House today of five ministers who were not supposed to be here according to the roster appears to indicate a breakdown in the management of the roster system by the Prime Minister. In view of the many protests raised on this side of the House, I thought in all fairness that I should draw to Your Honour's attention and to the attention of the House the fact that the roster system has completely broken down, as indicated by their presence, and at the same time object to the fact that ten ministers who according to the roster are supposed to be here are not present today.


Mr. Speaker:: Orders of the day.

November 18, 1971
Income Tax Act



GOVERNMENT ORDERS


[Stage Direction]
The House resumed, from Wednesday, November 17, 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.
The Chairman:: In accordance with the statement made by the Parliamentary Secretary to the Minister of Finance, as recorded at page 9630 of Hansard for Tuesday, November 16, 1971, the committee will now proceed to sections 135, 136 and 137 dealing with co-operatives and credit unions. Hon. members will know that with respect to these three sections there are four amendments before the committee that were moved by the government.
On clause 1-section 135: Deduction in computing income.


Russell Clayton Honey: Shall the amendment to section 135 carry? The hon. member for Regina East. May I beg the pardon of the hon. member for Regina East. I did not notice the hon. member for Moncton in his place. I think I should recognize him in the first round of debate on this group as a spokesman for the official opposition.


Mr. Thomas (Moncton):: Thank you, Mr. Chairman. I presume, in speaking on these sections, we will probably follow the practice we have followed of discussing these three sections, 135, 136 and 137, at the same time because they definitely are related. Is this correct?


Russell Clayton Honey: That is my understanding.


Charles Humbert Thomas: Mr. Chairman, these three sections of Bill C-259 illustrate very vividly the problems this House faces in attempting to intelligently and dispassionately discuss this bill. Very few other sections have caused as much controversy as these three. There has been a great deal of argument pro and con concerning the purpose and effect of these amendments. I should like briefly to discuss, as dispassionately and objectively as I can, the reason the government has brought in these amendments and my view concerning why I believe these amendments are not desirable.
In most of the presentations which come in on either side of the fence, there is obvious concern about the purpose of the amendments and the reason the government deems them to be desirable. I have read the white paper and all the preliminary background material to this bill. The only excuse the government has given for these sections is contained in the statement of the Minister of Finance to the House on the proposed amendments to these sections. At that time the minister stated that the original changes created a great deal of discussion and went on to say:
The government's intention in the tax reform bill has been to provide a more appropriate tax treatment of these organizations in relation to other business enterprises.

That statement says very little and many things can be read into it. One thing I read into it, however, is that the minister considers these amendments to be reform. Many things have been said or done under the guise of reform in this tax bill. We continually hear the government spokesman, the parliamentary secretary, talk about reforms and how these sections will benefit the taxpayer and make the act more equitable. I have yet to have explained to me- and perhaps the parliamentary secretary will do so later- how these sections contribute to tax reform. I should like to know how they reform a section of the Income Tax Act which has been the subject of a great deal of controversy for a great many years and, in fact, ever since its existence. If the parliamentary secretary can explain this later, I would be happy to have him do so. However, since we are talking about tax amendments or tax reform I believe we must keep in mind that a good tax system demands certain prerequisites. There are many and varied ideas concerning a tax system and what it should do. Briefly, I should like to present to the House my ideas of what a tax system should be, and how I feel these sections are in conflict with the basic principles of a good tax system.
First, I think any tax system should be designed with simplicity of application in mind. After all we are dealing here with hundreds of thousands of individual taxpayers and any good law should be an intelligible law. I do not need to comment further on how these sections meet this criterion, other than to say that these sections along with the more than 700 pages of the bill, the more than 100 amendments, the amendments to amendments and second and third editions of amendments have not only confused the ordinary taxpayer but have also confused the tax consultants, tax accountants and tax lawyers. In fact, these sections, along with other sections of this bill, lead to such complete confusion that most responsible people are now suggesting the government should start all over again.
The second criterion I would suggest which should be very essential to a tax system is the principle of equity. Equity oversimplified simply means that taxpayers in similar circumstances should carry an equal share of the tax burden. This is a theory which was made popular by the late Kenneth Carter and has led to the "cops and robbers" theory of taxation which this government has adopted and in which the Minister of Finance has become the proclaimed Robin Hood. A taxation system is much more complex than the simple theory of equity according to which everyone pays an equal share of the tax burden. I was interested in reading an article by Howard Ross of the Private Planning Association of Canada in which he discusses this apparent preoccupation of the government with the theory of equity in taxation to the exclusion of all else. Page 19 of this booklet of the Private Planning Association of Canada contains this statement:
I would be much happier if the minister talked, not of his great ambition to give us an equitable tax system, but rather of making our system work better. I despair of a really satisfactory solution unless we abandon the defender-of-the-poor posture and adopt a tough clinical determination to look at our problems unemotionally. We will not have achieved the right atmosphere for optimum solutions until someone can get up and announce publicly that he is not in favour of attempting to close all loopholes in our tax legislation.
November 18, 1971

It would seem to me that Mr. Ross has put his finger right on the core of the whole government attitude in respect of this tax reform bill. The government has become so obsessed with the fact that a few big fish have been getting away with tax evasion that it has put out a big net to haul in everyone indiscriminately. The result is there are many ridiculous situations created by this bill. Two such situations are created by these particular sections. There are many situations resulting from this bill which should not occur under a valid, viable tax system. Mr. Ross went on to say:
But very often relatively small amounts are involved, and if, to close the loophole, the government must hire more staff to administer the necessary machinery and all of us have to fill out more forms to effect compliance, then in such cases it may be better to forget about the whole thing.
He goes on to point out that a review of this magnitude of the tax system should not have been undertaken lightly merely because the minister wanted to plug some loopholes. He points out that it has been said our tax system is full of loopholes. He asks, if our system is riddled with these loopholes, how bad is it really. After comparing our system with that of the United States and of the United Kingdom, he says that our tax system does not compare too badly and there is no great disadvantage. Apparently the minister has been totally preoccupied with plugging these loopholes. The Department of Finance, in referring to co-operatives and credit unions in its news release, says that many of them have now grown to a point where they compete with large-scale business enterprises and should be subject to a fair burden of taxation.
Here, again, the minister was preoccupied with equity, imaginary or real. I question the minister's approach to this whole business of tax reform that is before us. Apparently, although we are interested in equity, the department is suggesting arbitrary concepts for the levying of taxation and no explanation has been given as to how they have arrived at the rates involved. For example, the capital employed concept in the present act has apparently been pulled out of thin air. No one has explained to me how the 3 per cent figure was arrived at except by saying that that is a reasonable figure. As I say, no government spokesman has said why that figure was arrived at. When the white paper was produced the government must have said, "well, 3 per cent is too low, so we had better make it higher." And what rate did they come up with? They said to themselves apparently, "we had better set the percentage at about the rate currently charged for farm loans." That rate of interest at that time was approximately 8j per cent. Then, after protests started pouring in, the Minister of Finance apparently said, "that rate seems to be too high; perhaps we had better set the rate at 5 per cent for capital employed in the co-op." Therefore, the whole hit and miss approach is not far different from that used back in 1946, when the capital employed concept was originally introduced into the act.
Let us suppose, for the sake of argument, that the minister's approach to plugging tax loopholes is valid, and I do not for a minute admit that it is valid. However, let us, for the sake of argument, say that there are loopholes and that they should be plugged. If that argument has any validity it is fair to ask, what loopholes is he trying to plug
Income Tax Act
with these sections? What tax advantages have co-operatives been enjoying, since the minister seems to be saying that from now on they should bear their fair share of taxation. Furthermore, are these loopholes real or imaginary?
We are all aware of the arguments to the effect that co-operatives enjoy a tax advantage, that they do not pay their full share of the tax load, and so on. I submit to the committee that this is just not so, because you are oversimplifying the argument when you merely talk about tax payments. Even if you argue that the co-op itself may not pay a certain tax, you must consider the tax that is paid at the individual's level and that a co-operative still pays taxes on retained earnings. For that reason, I question whether co-operatives enjoy any real tax advantage. We have also heard it argued that co-operatives enjoy a special advantage because they may deduct patronage dividends before paying taxes. It is not true that they thereby enjoy an advantage. Any corporation may deduct the same patronage dividend payments.
I was interested in reading another article by a tax expert, Dr. A. K. Eaton. He is just as much an expert in his own right as Mr. Carter was. In his statement before the Royal Commission on Banking and Finance in October 1962, Dr. Eaton said:
All in all, we have in Canada, pretty sensible laws for co-operatives. Actually, the main provision which alleviates their tax position is not limited to co-operatives at all but applies to any company. Any company which holds forth the prospect of patronage dividends to its customers may deduct the amounts disbursed in this way in computing its income for tax purposes.
He went on to say later:
There is no special privilege in this tax provision. It merely recognizes one of the ordinary practices in doing business. Profitsharing plans are not uncommon in private industry.
Interestingly enough, Dr. Eaton goes on to refer to the rather curious provision limiting the deduction of patronage dividends. Of course, he was referring to this business of capital employed which, as he says, makes no sense and is a bit farfetched. So, I submit to those who would support these sections of the bill on the ground that cooperatives enjoy an unfair advantage, that this is just not so and that they do not.
Let us suppose, and I do not for one moment admit this, that there is a difference in the levying of taxes as between co-operatives and private corporations. I say that this difference is still valid under principles of equity, because an equitable tax system simply demands that taxpayers in similar circumstances bear a similar share of the tax burden. However, I submit that there is a valid distinction as between co-operatives and other types of corporations.
I do not want to repeat old arguments about the nature of co-operatives. Such arguments have been advanced many times in the House and no doubt will be repeated. Nevertheless, there is a basic difference between co-operatives and other corporations. The main difference, of course, is that the members of the co-operative combine together, through their own efforts, to obtain increased services from the co-operative. They do not join the cooperative for the sake of obtaining a profit. If they joined it for that reason they would be ill advised, because they could better invest their money in a corporation which

November 18, 1971
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pays dividends. Therefore, the members of the co-operative join that co-operative for services rendered and not for the sake of making profits. I could recite the other basic differences, namely, that the member's share in the co-operative must be redeemed by him, that it cannot be sold on the market as other shares listed on an exchange may be sold, and that there is no capital gain on the members share. All these differences and distinctions are well known to the committee. Knowing these differences, I cannot understand why the minister would take the approach he has taken.
Not long ago I read an article by John C. Satterfield, past president of the American bar association. In it he talked about co-operatives, and said that co-operatives are criticized for not paying their fair share of taxes, for being fore-runners of socialism, and so on. He raised all the well-known arguments. Nevertheless, he pointed to something that I have known for many years when he said:
In the free-enterprise economy, which is ours in the United States of America today, the co-operative is a potent factor in retarding the rapid march of this country toward socialism and a government manipulated economy.
Here, we are getting down to the crux of the argument on co-operatives. These people have pulled themselves up, as it were, by their own bootstraps. This is individual enterprise in its purest form. Now, under the guise of taxation reform, the state has started to step in and put controls on these people. One thing we must always remember about a co-operative is that it represents enterprise in its purest, elementary form.
Mr. Satterfield went on to shoot down the argument that a co-op enjoys an advantage over other conventional organizations. He said:
The fact is that the profits of the conventional business corporation belong to the corporation and not to its individual stockholders, may be retained or distributed in the discretion of the directors and are properly part of the corporation's taxable income.
Exactly the opposite is true of the margins between the amount received by a co-operative from its patrons and the cost of the goods or services furnished to its patrons or patron-stockholders-
Tax favouritism, tax advantages or tax discrimination in favour of co-operatives does not exist.
Whether or not the committee agrees with my assessment is immaterial at this point because I know there is a vast difference of opinion on the subject of how co-operatives should be taxed vis-a-vis other corporations. But I would like to go into my third criterion for a good tax system, which I think is important at this time.


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.


Some hon. Members:: Continue.


Russell Clayton Honey: There is an indication that the committee would like the hon. member to continue. I should ask if there is unanimous consent.


Some hon. Members:: Agreed.


Russell Clayton Honey: It is agreed. The hon. member for Moncton.


Charles Humbert Thomas: I thank hon. members for their indulgence and I will not abuse it. It is pretty widely admitted that co-operatives have performed a very useful function in this country. The Minister of Finance said so in the statement that I quoted. He said he was concerned about the fact that co-operatives had a part to play in our society, and that was why he was bringing in his amendments to the original proposal.
I would emphasize to the committee that any sections of a tax bill, or of any other bill, that are as contentious as these three sections are, should be considered very carefully before becoming law. If there is any doubt at all that this principle is bad we certainly should not aggravate the situation by making it more difficult for co-operatives to operate. If there is any danger at all, and I am firmly convinced there is, of smaller co-operatives not being able to function under these new proposals, again I say the committee should not pass these sections.
If the government will not accept any amendments, and is determined to pass this bill in its entirety, then I plead with the parliamentary secretary to at least consider passage of the bill with immediate implementation only of those sections which have met general agreement, and with deferral of sections such as this for further study, on the understanding that such sections would not become law until the House has made a further determination. By doing this we would show good faith both to those who are advocating higher taxes on co-operatives and those who claim that higher taxes will force some co-operatives out of business.
I submit that very little intelligent analysis has been made of these proposals when the Minister of Finance simply pulls a percentage out of the hat and does not attempt to justify it, other than to say the previous limit was too low. It is quite obvious that these sections were not given thorough study, and I request the parliamentary secretary to give them much close thought and study before they are passed.


Mr. Burton:: Mr. Chairman, after studying the government's proposals and amendments as they affect taxation of co-operatives and credit unions, I have come to the conclusion that their effect will be to strangle the co-operative movement. The original proposals in Bill C-259 would have resulted in quick strangulation. The amendments that have since been introduced will change that to slow strangulation. I am not sure which is preferable. Of course co-operatives do have an alternative if the government's proposals are adopted. They can adjust their structure and carry on their operations like an ordinary corporation, such as paying out dividends on capital; but if they do so they will destroy themselves as co-operatives. I ask hon. members to reflect seriously on this matter.
What kind of society are we living in if we cannot devise a tax system that is capable of taking into account a form of economic organization different from the corporate structure which is characteristic of private economic endeavour? I maintain that the co-operative approach is different. I maintain that any society that cannot adjust to a different form of doing things is doomed in the long run.
It is also necessary to make reference to the token support and half-hearted, patronizing encouragement given to small co-operatives. I think that sometimes we

November 18, 1971

even see crocodile tears shed for them. It is said by some that our tax laws should help small co-ops, and that large co-operatives are just like any other business so they should be subject to tax like any other corporation. In support of this argument, it is suggested that large cooperatives are no longer close to their members and are no longer really co-operative. Anybody who says this does not know what he is talking about. He does not know how bodies such as the Saskatchewan Wheat Pool, the Federated Co-ops Ltd. and Co-op Implements work with their members and keep in touch with their members. Such an argument also ignores the fact that many of the large co-ops were formed by the smaller co-ops and are today an integral part of their operations.
However, there is another important and subtle point involved in such an argument. There are some people who really are not worried about the small co-op that has to try and survive on an independent basis in today's economic jungle. It does not really count by itself in a world of corporate power. What those people are worried about are the co-operatives that are big enough to have some economic clout, that are in a position to really help people on a major scale.
In dealing with this bill I would like to review the situation as it affects co-operatives and credit unions. First of all, I would like to say that any suggestion that either co-ops, or the dividends paid by co-ops, are exempt from taxation at the present time is inaccurate, and in some cases dishonest. Co-operatives have been subject to tax since 1946 under a formula which, for most co-ops, involved paying tax on surpluses up to a level of 3 per cent of capital employed, as defined. The white paper proposed raising the percentage to 7 per cent. Bill C-259 split the difference and came up with a figure of 5 per cent. At the same time, however, it widens the definition of capital employed in a way that will seriously hurt some co-operatives.
p.ra.)
We have before us an amendment that provides for an option to tax co-operatives at a level equivalent to one-third of taxable income as calculated on a corporate basis. This will provide some relief to many co-operatives and may look very good on the surface. But it ignores the double taxation involved, it ignores the nature of a cooperative, and most important, it opens the door to taxing co-operatives on a straight corporate basis. The one-third figure is arbitrary and can be changed to one-half, two-thirds or 100 per cent just as the 3 per cent capital employed figure is now being changed to 5 per cent and was originally proposed at 7 per cent. There are other changes as well that I shall not go into now.
However, I shall make brief mention of one illustration of the type of thing for which we have to watch. Mention has been made that there is an amendment before the Committee which would provide a ten-year phase-in rule for co-operatives. I think it is important to note that this provision does not apply to some co-operatives in the way the bill is set out. It will not apply to any co-operative that is handled and governed on a delegate basis. If the government will look at section 136, and the way the new phase-in rule applies, they will see that that is certainly the effect of the rule.
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What is the significance of these gyrations in the government position? They demonstrate that some people do not understand what co-ops are all about. More ominously, though, there must be people who do know what they are doing to the co-operative movement. We know that there has been a well financed movement for years whose sole object is to destroy the co-operative movement as an effective economic instrument. The government has listened to these people. But even the government had to back off to some degree from its impossible position. The changes have only been in degree. There is no logic or rationale to the government's proposals. They are indefensible as they stand.
I should like to turn now to the position of credit unions and caisses populaires. They were not previously subject to income tax in Canada. First of all, Bill C-259 proposes to apply the capital employed concept to credit unions, and now the one-third of income formula has been introduced with respect to credit unions, in the same way as to co-operatives. This completely ignores the fact that while co-operatives and credit unions are based on similar principles, their capital structure and their operations are very much different. It is ludicrous to think of using the capital employed concept for credit unions.


John Gilbert: Right on.


John Stratford Burton: Bill C-259 poses other problems for credit unions. Interest or dividends on share capital could not be deducted from taxable income if this had the effect of reducing the capital employed below the 5 per cent level. This has been changed by the amendments. Credit unions could not qualify for the small business tax incentive. This situation has been improved with the amendments. There remains the problem of how reserves are treated. Credit union reserves are not the same as bank reserves. A credit union is not the same as a bank. Statutory reserves are required by provincial legislation I believe in every case across Canada, and most reserves are ineligible for distribution to members at any time, even if the credit union is being dissolved.
There remains a curious question. If the government did respond to credit union representations, and I acknowledge this fact, why didn't it respond to co-operative representations? Again, I can only conclude that there are forces behind the scenes working to destroy co-operatives. I think we need to take careful note of the co-operative position on taxation. Mr. E. K. Turner, President of the Saskatchewan Wheat Pool made his position clear in a statement on October 22, which contains a number of important points which we need to consider. He said:
Co-operatives are prepared to pay tax at the ordinary corporate rate on any earnings retained by the co-operative. Earnings returned to the member should become part of his income.
In addition, I might say that it was made clear that in cases where income is not distributed, where it is retained, co-operatives are prepared to accept taxation of such income as a whole.
For a taxation act to force an imputed taxable corporate income on a co-operative is to interfere with the democratic right of members to run their own business. Such a treatment is not applied to co-operatives in any other country, to our knowledge.
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Mr. Turner said:
The taxation proposals completely ignore the basic principle of a co-operative, which is that earnings are a result of surplus on operations and belong to members. Earnings are not a return on investment.
I think we need to keep clearly in mind, Mr. Chairman, that co-operatives are designed to provide a service to their members at cost or as close to it as possible. They are not designed to operate for profit.
Mr. Turner then went on to state:
The fundamental characteristics of a co-operative must be respected in the taxation bill:
(1)	That co-operatives provide primarily a self-help service required by members.
(2)	That co-operatives distribute earnings to members in proportion to member business.
(3)	That co-operatives raise and service equity capital by revolving the same in relation to the use of the co-operative by its member.
(4)	That capital contributed by a member of the co-operative is to provide himself with service and not to produce a return on investment.
The Co-operative Union of Canada, speaking on behalf of co-operatives, has also made its position clear in opposition to the capital employed concept in particular, and has presented an alternative. I quote from their recent submission to the Minister of Finance:
Co-operatives request that they be permitted to distribute to their members the annual earnings resulting from business done with their members, with any earnings retained in the hands of the co-operative to be taxed at a corporate rate of tax. This proposal is subject to the following restrictions and conditions:
1.	That there be paid by the co-operative a withholding tax on all distributions made by way of a patronage refund.
2.	That the withholding tax paid in respect to patronage refunds be creditable toward the recipient's personal tax. If the recipient is not taxable, the withholding tax will be refundable upon filing the usual tax return.
3.	That the payment of patronage refunds be limited to the extent of income derived from member business and that any income derived from non-member business be taxed at the appropriate corporate rate, unless patronage refunds are paid to both members and non-members.
4.	Any surplus remaining in the co-operative after making distributions by the co-operative, shall be taxed in the hands of the co-operative at an appropriate rate of corporate tax.
In particular, Mr. Chairman, co-operatives object to the capital employed concept. No other country to my knowledge uses it. No other industry in Canada is subject to it. It erodes and can destroy the very existence of co-operatives. It hurts the operating position of co-operatives because of the turnover of equity capital. It will eliminate or substantially reduce the only source of equity capital for co-operatives. It will result in double taxation because tax will have to be paid on the imputed income of the co-op and on most patronage refunds when they are allocated to the recipient. This, I suggest, is a clear case of discrimination when we take account of the fact that shareholders of corporations are allowed a dividend tax credit of 33 per cent under the new income tax bill before us.
The capital employed concept will make it impossible for most co-ops to pay cash dividends. It strikes at the very heart of the co-operative movement. In addition, I

have already outlined why the option proposed in the government amendment is unacceptable. This is the central issue and this is why I feel it is necessary to deal with this matter at this time. I would like to propose an amendment at this stage which would remove these objectional features. The amendment will do away with the capital employed concept and also the alternative which has been proposed by the government. Neither are adequate in terms of the situation facing the co-operative movement and the reality of their operations. I move:
That the amendment to Section 135 be amended by deleting all words after the words "page 356" and substituting the following:
"and also by striking out lines 20 to 47 on page 357, lines 1 to 23
on page 358 and lines 33 to 40 on page 359."
The effect of this amendment will be to remove from section 135 subsection 3, subsection 4(f) and subsection 6. These contain all the references in section 135 to the capital employed concept and also to the option proposed in the government amendment. I should also note at this time that if this amendment is accepted, and it is proposed to accept the co-op proposal, it will be necessary to further amend section 153 which has already been passed by this committee. It will be necessary to reopen this section and propose the following amendment. I quote the amendment it would be necessary to propose but, of course, I cannot place it before the committee at this stage. The amendment would read as follows:
that Section 153(1) be amended by adding thereto after paragraph (h):
"(i) allocations in proportion to patronage."
This would make it possible for the Department of National Revenue to apply a withholding tax to patronage refunds in the same way they now do with regard to payroll deductions, lump sum payments of pension contribution refunds and a number of other categories set out in section 153 (1). I urge the committee to give this amendment serious consideration. It involves the very life of the co-operative movement. It will be a very heavy responsibility on this committee and this House if a set of provisions are passed which will have the long-run effect of strangling the co-operative movement, however gently it might be done from year to year. For this reason, I suggest this is a very serious situation. It deserves the earnest consideration of members of all parties in the House.


Russell Clayton Honey: The Chair will put the amendment. I might say I have some doubt about its acceptability. It seems the hon. member might achieve the same thing in a more procedurally acceptable manner by voting against the proposed amendment and then moving consequential amendments with regard to the other parts that are deleted. However, I do not think this is a serious matter. If there are no objections, I think it would be in the-the Parliamentary Secretary to the Minister of Finance.


Mr. Mahoney:: Mr. Chairman, I just want to make it clear that the intent and the effect of the amendment would be to transfer the tax burden from one taxpayer or one class of taxpayer, the co-operatives, to another taxpayer or class of taxpayer, the members of co-operatives. This is clearly what the hon. member is stating. As such, I think the amendment is very definitely out of order.
November 18, 1971


Stanley Howard Knowles: Mr. Chairman, the point that the parliamentary secretary seeks to raise is, of course, quite different from the point which Your Honour drew to our attention. As for the point raised by the parliamentary secretary, I think Your Honour's rulings have been quite consistent throughout the debate on this bill. When a member seeks merely to reduce a tax on any particular group of taxpayers, providing he does not move to put a tax on another group, Your Honour has found no objection to that kind of amendment. All this amendment does is give us an opportunity to exercise our right to vote against certain subsections of the section that is before us at the present time. I submit, therefore, that there is no validity to the objection raised by the parliamentary secretary.
I also wish to comment briefly on the point Your Honour raised a moment ago. Merely to vote against the amendment of the Minister of National Revenue that is before us leaves us in the position of accepting what is previously in the bill as subsection (3). We are opposed to both versions, both subsection (3) as it was originally drafted or as it has been proposed by the Minister of National Revenue. That is why we prefer to deal with it in the manner in which the hon. member for Regina East has placed it before Your Honour.
The amendment would strike out the substitute wording that has been proposed by the Minister of National Revenue and also leave out the original wording which was already there. That is what the minister's amendment does, namely strike out the original wording and put something else in its place.
Since the other two parts, subsection 4(f) and subsection 6 are relevant to the same issue and consequent to the removal of subsection 3, it seems to us that the simplest thing to do would be to have one vote on the whole issue of the capital employed concept. If Your Honour feels there is not that much one way or the other, I hope you will consent to this amendment being put. In one vote it will give hon. members the opportunity to say "yes" or "no" to the capital employed concept as far as co-operatives are concerned.


Russell Clayton Honey: I thank the parliamentary secretary and the hon. member for Winnipeg North Centre. I expressed initial reservations because, although I have some reservations about the procedural acceptability of the proposed amendment; I feel the Chair should try to expedite the proceedings rather than spend our time on procedural arguments. I should put on record that I agree in principle with the argument of the hon. member for Winnipeg North Centre. I indicated this a day or two ago in my ruling on the proposed amendment by the hon. member for Edmonton West. I suggested that, with complexity of this bill and the somewhat unusual procedure we have been following, unless we give a bit of latitude hon. members will not have the opportunity to express opinions on the substantive aspects of the bill. In this instance it may be, as the hon. member for Winnipeg North Centre has argued that if we follow the procedure suggested in the subamendment of the hon. member for Regina East, it would give members of the committee a better chance to register an expression of opinion.
Income Tax Act
With respect to the argument put forward by the parliamentary secretary, I think this is a point which does not raise much difficulty. I was really concerned with finding the best way of dealing with the matter which the hon. member for Regina East wishes to bring before the committee. Unless there are further objections, I am prepared to put the subamendment in the name of the hon. member for Regina East.


Charles-Arthur Gauthier: Mr. Chairman, my remarks will be mostly about section 137 concerning Caisses populaires.
I should like to call the attention of the Parliamentary Secretary to the well marked difference that exists between private corporations and Caisses populaires. Then, I shall read communications from persons concerned with Caisses populaires.
The Parliamentary Secretary is well aware that there is a vast difference between private corporations that I shall describe as capitalist corporations, and Caisses populaires. As a matter of fact, they are capitalist corporations since they exist mostly for the purposes of capital-money. In those institutions, each share entitles the holder to one vote. That is what we call capitalistic companies.
However, there are institutions where the directors establish the terms of the voting rights. In a co-operative institution, all shareholders have their say as long as they have one share. Even if one shareholder has 50 shares and his neighbour has only one, each is entitled to a single vote.
That is the whole difference between these two kinds of institutions, and I think that today, with the bill that we are in the process of passing, we are discriminating against co-operative institutions and credit unions as regards deductions allowed when computing income tax.
The Parliamentary Secretary to the Minister of Finance (Mr. Mahoney) will perhaps tell me that the government has proposed amendments. At page 9158 of Hansard, I read the amendment on the computation of cumulative deductions:
(4.2) For the purposes of subparagraph 125(6) (b) (i), the amount of a credit union's taxable income for a taxation year shall be deemed to be the amount, if any, by which its taxable income for the year otherwise determined exceeds the lesser of $25,000 and ) of its taxable income for the year otherwise determined.'
Mr. Chairman, I will point out that co-operatives with capital stock just have to convert it and invest it. As for co-operatives, they can do so, especially the caisses populaires which are corporations with capital stock. Thus they cannot put it into reserves; they do not have the alternative offered to a private corporation, that is either to put it into reserves or invest it.
For example, if the caisses populaires decided to transform their reserves into capital stock, this would create a problem because a member can withdraw his capital stock at any time. This represents a serious danger to the security of the caisses populaires, which does not happen to private corporations. This is why, despite a few weaknesses still contained in this legislation and account being taken of the small amendment brought in, we would hope that the government raise the exemption ceiling from
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November 18, 1971
Income Tax Act
$25,000 to $50,000. I think this would be most helpful, especially to small credit unions because they certainly need the first reserve funds to assure their future and give confidence to their members.
So, without wanting to be too long-this is just a reminder to the parliamentary secretary-I would like to read the communications which we receive. The first, given by the chapter of credit unions affiliated to the Ontario Federation of Credit Union is as follows:
On behalf of the credit unions affiliated to our chapter, I want to express our concern regarding the legislation now under consideration, Bill C-259, relating to the section dealing with caisses populates and credit unions.
Despite the few favourable amendments brought in the House recently, it is evident that even exports do not know the effect this bill will have on caisses populates and credit unions in Canada.
Since 1900, the co-operative movement has been fighting usury in Canada and trying to improve the financial situation of our people who need it most. It would be unfortunate if the government of Canada, in order to collect more revenue, ruined the ideal means for Canadians to help themselves.
Another spokesman of the Federation des Caisses Populates du Quebec says what follows:
Caisses populates and Credit Unions very much appreciated your co-operation and the interest you expressed regarding the methods of taxing them as proposed in Bill C-259.
There have been several amendments to section 137. They will allow Caisses populates and Credit Unions to maintain the services their members expect from them while integrating them into the new tax system. We have already informed the Minister of Finance of the importance of those amendments.
However one point is still of concern to us. That is the application to small companies of the concept of total business limit, as provided in section 125.
We requested that the first $50,000 taxable revenue be excluded from the computation of the total business limit. The proposed amendment grants a $25,000 deduction in this regard.
We feel our request was reasonable because:
(a)	Our reserves are built up solely in the interest of the group to
which they belong.
(b)	They are for the most part required by provincial legislation.
(c)	They are not subject to distribution among members.
(d)	They never result in capital gains or personal benefits.
(e)	The tax paid on such reserves will never result in tax credits.
To that effect, we have asked the Minister of Finance, whether
he could review amendment 137(4.2).
At the present time, we are still waiting for the draft of the regulations applicable to Caisses populaires and Credit Unions. We hope that those regulations will continue to recognize the characteristics of Credit Unions and Caisses populaires.
Those were the comments which I wanted to make to the Parliamentary Secretary to the Minister of Finance and I am sure that if he considers the requests of the representatives of co-operatives and Caisses populaires, he will surely propose an amendment, as requested by the federations for the common good of the Caisses populaires.


Mr. Hales:: Mr. Chairman, I will limit my remarks to credit unions and caisses populaires in discussing the section dealing with co-operatives and credit unions. I do not think there is a member in the House who has not received some correspondence expressing great concern at the proposed taxation of credit unions and caisses

populaires. I think it is only right that we pause a minute to think of the great value of the work of credit unions in the community. I doubt that there is a member of the House who does not have a credit union or caisse populate in his constituency, be it a credit union at a factory, at a college or university, or one in the community at large.
In many areas of western Canada there would be no financial institutions had it not been for credit unions. In areas that were too small for banking institutions, credit unions offered their services. In the province of Quebec there are caisses populaires in many areas which banks consider too small to serve, and these provide a very useful and necessary service.
May I repeat very briefly some remarks made by the McDougall report in 1945, which report was tabled in the House of Commons. Page 52 of the report reads as follows:
It-
That is, credit unions.
-provides a method whereby people in poor circumstances are encouraged to develop a habit of thrift, since by pooling their savings they can provide a source of credit for themselves in times of need.
The bond of association, occupation or other community interest on which the membership of credit unions is based tends to minimize the element of risk which has to be considered by another type of lending institution when considering an application for a loan from an individual with little or no collateral security.
Accordingly, it provides a service for those who are either not provided with credit services from other lending institutions at all, or only at much higher rates because of the risks involved.
The tangible material and other benefits which can be derived through the credit union form of activity enable and encourage the members to solve their problems through self help rather than by relying on government aid in times of emergency or depressed conditions.
Then, at the same page the report continues:
Credit unions return to their members a very high proportion of their surplus earnings. In some cases, however, they are retaining amounts which appear to be larger than are required for reserves against bad loans and losses on the basis of past experience. If they were to be taxed by the methods we have recommended for co-operative associations, additions to these excess reserves would be made subject to tax. However, the individual amounts to be assessed would, in many cases, be very small.
As a result, the royal commission recommended that the income of credit unions continue to be excepted from taxation. I would like to challenge anyone who claims that credit unions are not motivated today by the very same principles and philosophy that impressed the legislators in 1945. If the movement is larger today than it was then, it is only because credit unions have met an enormous need in Canada. I do not think there was any doubt in the mind of the royal commission about the usefulness of credit unions and caisses populaires. I am very concerned that the minister is taxing these organizations in a way that makes it quite evident that the smaller credit unions will have to close, and that will mean a real service will be lost to the community as a result of the minister's action. I realize the minister has made some amendments, but the amendments do not go far enough to enable the credit unions to survive.
I am sure all members of the House could quote letters they have received on this issue, and I should like to quote
November 18, 1971

one or two. For example, the fiberglass employees credit union at a large factory in Guelph has this to say:
A credit union is beneficial to the lower and middle income population of our country. We feel that taxation is extremely heavy in this area at present and Mr. Benson appears to be trying to drain even more.
Then, the tobacco workers' credit union, again at Guelph, make this point:
We regard our credit union operation as simply a sensible, share-the-risk extension of loaning money between member employees. The fact that full tax is paid by member employees receiving compensation for use of their money, we question the reasoning behind the credit union being also taxed.
Many letters along similar lines have been sent to me. As I understand it, the amendments that the minister tabled on October 28 relating to credit unions and caisses populaires will hopefully facilitate their transition from what was tax-free status to that of a taxable financial institution. The first of these amendments relates to the small business tax incentive, and the second and third amendments deal with the level of tax-free reserves.
In the case of the first amendment this new tax reform bill provides that the Canadian controlled private corporation will pay 25 per cent of its first $50,000 of annual business income and that beyond that level of income the rate will be the 50 per cent rate generally applicable to other corporations. Once such corporations accumulate a taxable income over $400,000 the lower rate of tax will no longer be applied but the corporation can extend the use of the lower rate by paying regular dividends to its shareholders. Every $3 of dividends would reduce the taxable income by $4 according to the Department of Finance. Although the small business incentive is available to credit unions and caisses populaires the credit unions and caisses populaires are not permitted to pay dividends under their statutory reserves. So, this again will not be of much use to them. They will not be able to pay dividends under their statutory reserves and therefore are inhibited in their ability to reduce accumulative income by dividend payments as other business corporations are allowed to do.
After these amendments were tabled on October 28 I received a letter from one of the credit unions, the College Heights Community Credit Union Limited, which reads as follows:
Some of these amendments will help our movement, but one area still remains a grave major problem.
This is the part to which I draw attention.
This is in the area of reserves and is primarily one of a conflict between federal and provincial governments. Ottawa looking for money, regards our reserves as being too high. The provinces on the other hand, by statute, require all credit unions to set aside for bad debt purposes amounts varying from 9.5 per cent of yearly earnings, in the case of Nova Scotia to 20 per cent in several other provinces including Ontario, to protect the weakest links in the credit union movement. (Incidentally this bad debt reserve will account for approximately 90 per cent of the reserves Ottawa regards as so high!). The reserve for bad debt purposes cannot be used for anything other than covering the write-off of bad debts. Under most provincial statutes should a credit union be wound up, this reserve must be distributed to charity.
I say again that the credit unions and caises populaires are not permitted to pay dividends under statutory
Income Tax Act
reserves and therefore are inhibited in their ability to reduce accumulated income by dividend payments. In the other place, this matter was discussed at some length. I believe a very sensible recommendation was made. I wish to read it so that we, the parliamentary secretary and the minister can give further consideration to the very important matter of the survival of credit unions and caisses populaires. I used the word "survival" because I think it is that important. The Senate Standing Committee on Banking, Trade and Commerce made this recommendation:
That caisses populaires and credit unions should not be required to include in their 'cumulative deduction account' (for purposes of determining the available balance of their total business limit of $400,000) such portion of their taxable income as is set aside in the year as a reserve to the extent that such reserve is not available for distribution to members. This should be subject to the further limitation that no recognition be given to any such reserve to the extent that the total amount set aside does not exceed, say, 5 per cent of the organization total deposits and share capital at the commencement of the year.
The Senate Committee considered it sufficiently important to recommend that this matter be given further consideration by the government since the effect of other amendments introduced by the government differs from the above recommendation. When we have a body of men of experience and ability studying this matter and making a recommendation like this, surely the government should pay attention to the recommendation. I realize there is a problem here. A credit union may be a very large organization and someone might suggest, since it is somewhat in the position of a bank, that it should be taxed the same as a bank.
Perhaps the department would give some thought to having an escalated scale of taxation. I am thinking of the small type of credit union or caisse populaire such as might be found in a very small area of the country. In such cases the members often do much of the work for nothing. There may be only one paid executive in a community co-operative. Why should we drive these people out of business. Perhaps there should be a tax free area up to a certain level of, for instance, $100,000 or $200,000 and then over that level the tax would apply. It would seem to be an almost impossible task to strike a tax rate for credit unions if it is to be done on a fair and equitable basis.
I hope the parliamentary secretary and his officials will give consideration to the protection of the small, most useful credit unions and caisses populaires which are so prevalent across Canada. I hope also that amendments will still be made that would make it possible for these essential financial organizations to exist, flourish and continue to serve a very useful purpose.


Mr. Blair:: Mr. Chairman, we are having a most interesting discussion and the remarks I propose to make immediately are not, I regret to say, the final views I will express on this subject because I hope that today and tomorrow there may be an opportunity for all members who are interested to contribute their ideas in this debate. I think the first thing that must be said is with reference to the comment made by the parliamentary secretary a few minutes ago when he said with respect of the amendment of the hon. member for Regina East that it shifted the incidence of taxation from the co-operative or credit union to the member. I have a feeling that many people in

November 18, 1971
Income Tax Act
the country are unaware of the true incidence of taxation as it applies to co-operatives and their members. The fact is that the incidence of tax now falls upon the members no matter what happens, and the effect of the proposals which are being made to us by the credit union and co-operative movement is to reinforce this integration of tax liability upon the members, rather than upon the organization which they have formed to render service to themselves.
I think also it is important to bear in mind that neither the co-operatives nor the credit unions are seeking exemption from taxation but are inviting this House to consider the fairest way of applying it and achieving an equitable incidence of that taxation as between these organizations and their members. I hope hon. members will have registered very carefully the serious point made by the hon. member for Regina East in which he pointed out that there is a defect of serious proportions in the definition of a co-operative in the bill. The present definition, as I understand it, would exclude the large co-operatives which are well known to all of us, the large co-operatives in western Canada such as the prairie wheat pools and others which operate on a delegate system of voting. This, to me, is something which requires immediate repair and attention and I do not think it would be prudent for any of these sections to be incorporated until this type of curative amendment is placed before us.
At this stage, Mr. Chairman, I should also like to comment on the substance of the amendment proposed by the hon. member for Regina East. He was quite correct in asserting that the basis for the computation of tax against credit unions and the co-operative movement is entirely novel. These are the only organizations in the country to whom income is imputed for the purpose of computing tax. And this basis of the imputation of income is one which co-operatives have consistently and correctly objected to, in my opinion, for many years. It is proposed that parliament take advantage of the fact that our tax system is undergoing major review and that this type of artificial approach be eliminated. The proposal is that tax be levied, as it should be, on the cash which flows through to individual members and that some appropriate, average rate of tax be applied that would give proper recognition to the reality of the operation of co-operatives and credit unions. These organizations propose that the incidence of the tax shall apply, not artificially, to the corporate body but, rather, to the members. I hope that hon. members will have an opportunity to comment on the detailed suggestions made by the co-operatives and credit unions. I suppose I ought to give fair warning of my further intervention at a later stage of debate.


David Orlikow: Mr. Chairman, let me begin by saying that for the first time since the hon. member for Grenville-Carleton was elected, I agree with the position he has taken and look forward to seeing him vote for the amendment proposed by the hon. member for Regina East when that vote is called.
Ever since the Carter Commission report was published, we have seen in this country a concerted effort by the vested interests of this country to get the government to reject, in principle and detail, every useful recommen-

dation made in that report. Virtually every proposal for equity spelled out in that report has been either ignored or watered down by the government, and almost nothing remains of the original commission recommendations. If the government were not so concerned about protecting the interests of this country's corporations and of this country's self-employed people who, as Carter pointed out, have done very well over the years out of the existing tax system, we would not need to consider a bill like Bill C-259 which runs for more than 700 pages. A bill running to more than 700 pages is needed because the government has taken so many steps to protect the concessions which have been made over the years to business interests and to self-employed people.
Ever since the Carter Commission made its report, representations have been coming to the government and to Members of Parliament from mining companies, oil companies, manufacturers and the self-employed. These representations have attempted to show why the principles enunciated in the Carter Commission report should not be implemented. When the government brought out its white paper we saw, at that time, just how far the government had moved away from those principles which had been enunciated in the Carter Commission report. Yet, even the white paper was met by hostility, almost universal hostility I might add, from the business community of this country. The business community is still not satisfied. It still attacks the modified provisions of Bill C-259, because business feels that those provisions infringe on the rights and privileges which business has enjoyed until now.
The ordinary citizen, as usual, has not been included in the representations made to the government on tax questions. The ordinary citizen who pays income tax cannot afford to hire tax lawyers and chartered accountants to put his case before the government. Our ordinary citizens have been virtually unrepresented. However, the credit unions and co-operatives which, by their very nature, deal with ordinary citizens have made representations to the government. Every single Member of Parliament, I am sure, has heard from credit unions and co-operatives in his constituency. It is no small wonder that members have heard from them, because the provisions of this bill affecting credit unions and co-operatives might just as well have been written by officials of the tax department, by the finance companies, by the Equitable Tax Foundation, by the private grain companies or by companies like the Richardson Securities Company. And, Mr. Chairman, they could not have done a better job of attempting to destroy the credit unions and co-operatives than do the provisions of the bill we are now discussing.
As a result of the complaints of credit unions made to Members of Parliament on the government side as well as to members on the opposition side, the government made some concessions. Some amendments have been brought in to lighten the full force of the crippling effect that certain provisions of this tax bill would have had on credit unions. However, I do not believe it is by accident that those sections which will most seriously affect credit unions remain virtually intact and remain precisely as the government first introduced them.
I join in supporting hon. members from all parties who have said that if the provisions of this bill affecting credit
November 18, 1971

unions are passed in their present form, many credit unions will disappear completely and the ability of others to serve their members will be so severely curtailed that the major function they have performed for their members will disappear. The parliamentary secretary has always impressed me as being a man with a great deal of business experience. He represents very well-and I am not criticizing him-the members of the business community. They, too, are entitled to be represented just as everyone else is. They, too, are entitled to have their spokesmen.
As I say, the parliamentary secretary has always impressed me as one whose major interest and experience has been in the business community. Does he not realize the effect which these sections of the tax bill will have on credit unions? Does he realize that the tax the government proposes to impose will mean that the most important area of reserves which must be set aside under the provisions of provincial legislation will be very adversely affected? Not only are the transfers to reserves non-discretionary because of provincial legislation under which credit unions operate, but there is a legislative bar to their distribution to the members even on the winding up of the credit union. What this means is that the basic principle, that shares in a credit union which may only be redeemed at par irrespective of the amount of reserves on hand, will not be able to operate. The fact that these reserves are beyond the reach of the shareholders removes in effect shareholder ownership, a very cardinal quality of income as contemplated in the Income Tax Act.
Commercial corporations are in an entirely different position. Retention of corporate income increases the value of the shares, and in this way gives a benefit to the shareholder. Or alternatively, amounts reserved may be paid out as dividends, again benefiting the shareholder and earning for him a tax credit on his dividend, which essentially represents a rebate of the corporate tax. The effect of the provincial legislation controlling credit unions is to deny these benefits, which are available to corporations, to credit unions. Because of the lack of equality of income, and because these non-discretionary reserves cannot be distributed to members, credit unions find themselves trapped by section 125 of the Income Tax Act. There reserves will be considered income in the "business limit" of $50,000 per year and in the total "business limit" of $400,000 which is contemplated under this bill.
The very fact that the credit union is statute barred from distributing these reserves means that the "total business limit" will automatically be reached in a very short period of time. Aggravating this situation is the fact that transfers to the reserve must be tax paid. No provision exists permitting income taxes to be charged against these reserves. The sum of these factors means that section 125, which provides for a reduction of tax under certain conditions, will not apply to a medium sized credit union beyond five years, after which time a transfer of $50,000 to reserve will attract a tax of $50,000. Mr. Chairman, talk about confiscatory taxation-that is what the government is proposing for the credit unions.
Income Tax Act
The credit unions have proposed that section 137, the credit union taxation provision, be amended to provide that amounts required to be transferred to statutory reserves be excluded from the calculation of the "business limit" and the "total business limit" in the application of section 125. The effect of such an amendment would be that tax paid transfers to reserve would attract a tax equal to 33 per cent of the reserve requirement as opposed to a tax equal to 100 per cent of the reserve requirement. Surely, if the government is concerned about the so-called tax advantages which the credit unions and the co-ops have been able to enjoy as compared with ordinary corporations, it ought to be willing to agree to this very modest proposal made by the credit unions unless, as some of us who are politically partisan and motivated believe, the government is out to help destroy the credit unions.


Patrick Morgan Mahoney: Nonsense.


David Orlikow: The parliamentary secretary says no. It would be interesting to hear him explain to members on both sides, including his colleague the hon. member for Grenville-Carleton, why the government, at least up until now, is insisting on imposing these punitive tax provisions on the credit unions.
Earlier, Mr. Chairman, I said that the government had agreed to some amendments of the tax legislation affecting the credit unions. But to date there has not been the slightest indication, to my knowledge, that the government is prepared to meet in any way, shape or form the criticisms of the co-ops with respect to this tax legislation. And if the parliamentary secretary can agree with me on anything, although I sometimes wonder about that, I am certain he can agree with me when I say that co-ops by their very nature are not very radical, revolutionary, aggressive organizations. They are part of the free enterprise or mixed economy system which exists today. When they have made representations to government I have always felt that if they erred, they erred on the side of moderation. Yet, Mr. Chairman, there has not been a single indication on the part of the government that it is prepared to modify this tax legislation one jot, one little, to meet the criticisms and requests of the co-ops.
Let us look at what the co-ops have said about this tax legislation. I know that the government will say, "Well, we are prepared to protect the little co-operative, the little consumer co-operative and the little credit union, but it is the big co-ops, which are really in the same league as private corporations-the wheat pools and the Federated Co-operative-which we think have not been paying their fair share of taxation." I say to the parliamentary secretary and to the government that the little co-ops in the towns, villages and cities of Canada, and the little credit unions would not have been able to survive unless they had the assistance, the technical advice and the detailed knowledge that they have been able to receive from the wheat pools, from the United Co-operatives in Ontario, and from the Credit Union League, all of which were built up through the contributions of the ordinary members of the credit unions.
What have the co-ops said? The President of the Saskatchewan Wheat Pool has called for further amendments to this bill because he says that the proposed amendments

November 18, 1971
Telecommunications Satellites
still limit the way in which co-ops pay patronage refunds to their members.


The Deputy Chairman:: Order. It being five o'clock it is my duty to rise, report progress and request leave to sit again later this day.
Progress reported.



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Speaker:: Order. It is my duty pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Hillsborough (Mr. Macquarrie)- Fisheries; the hon. member for Saskatoon-Biggar (Mr. Gleave)-Grain; the hon. member for Compton (Mr. Latu-lippe)-External Trade. It being five o'clock, the House will now proceed to the consideration of private members' business as listed on today's order paper, namely, notices of motions (papers), private bills and public bills.


Stanley Howard Knowles: Mr. Speaker, on behalf of two of my colleagues I wonder if I may ask for consent for the first two items under the heading of "Motions for Papers" on today's order paper to be withdrawn. I refer to order No. 24 in the name of the hon. member for Winnipeg North (Mr. Orlikow), and to order No. 49 in the name of the hon. member for Saskatoon-Biggar (Mr. Gleave).


Mr. Speaker:: Is this agreed?


Some hon. Members:: Agreed.
Orders discharged and motions withdrawn.



PRIVATE MEMBERS' MOTIONS FOR PAPERS


Heath Nelson Macquarrie: That an order of the House do issue for a copy of the agreements between Hughes Aircraft Co. on the one hand and Northern Electric Co. of Montreal and Spar Aerospace Ltd., Malton, Ont. respecting component parts for telecommunications satellites.
He said: Mr. Speaker, the original inquiry now seems a bit ancient since it was raised here in November, 1970. The matter with which it deals, however, has not by any means become obsolescent. Indeed, it is a strange coincidence that in many ways this question is especially germane in this Parliament and in this country today. It deals with documentation which is not revealed. As we have often thought in recent months, far too many publications

are concealed from study by Members of Parliament and from perusal by the public which they concern.
The matter, of course, also deals with the tremendously important item of competition from foreign industry, an eternal situation I suppose in recent years. It reveals a collapse of the expectations which the government had created in and for the Canadian people. I recall the heady days of yesteryear when the present hon. member for Duvernay (Mr. Kierans) used to have such high-flown hopes and such lofty ambitions for what was to be done in the stratosphere in the realm of telecommunications.


Thomas Miller Bell: Whatever happened to him?


Walter Gilbert Dinsdale: He went into orbit.


Heath Nelson Macquarrie: I often thought when things got worse in the postal department that the rosy hopes in the communications branch became more and more rosy. Lower and lower went the morale of the Post Office and up and up into the stratosphere went the satellites. I used to say of the former incumbent that as a postmaster general he was a good economist. I still think he is a good economist, and in these matters he should be listened to by his associates across the way. I ask for these documents because I am very concerned about what has happened to the hopes which we had been led to entertain in reference to a very important matter, the development of a domestic telecommunications system for this country. Important legislation was passed, very serious scrutiny and discussion in committees ensued and there was a good deal of public discussion and a great deal of public expectation on this extremely important matter.
One of the prime inducements which was set before this House as the bill was passed and as the estimates were passed and this money was voted, was that the development of a domestic satellite system would add tremendously to Canadian technology, especially in the advanced field of scientific technology. We were led to believe that there would be a tremendous spin-off, that Canada would advance itself immeasurably because of the application of the ability of its scientists and of its highly refined and sophisticated industrial workers in this very important scientific equipment.
We were led to expect breath-taking gains in the important field of scientific and technological innovation. I believe it was not so much the spinning of the satellite itself but the spin-off from the industrial technological development which sold the people of Canada on this. There was no reason Canadians should not look upon that future as reasonably hopeful. Canadians were not and are not infants in the field of space age technology. The Alouette satellite went up years ago and proved to be extremely successful. The life span and performance reached was better than expected. Alouette II was also very successful. Isis A and B "flew" very well. They were well constructed and were very capable, operating birds, if I may use the expression.
When the government produced its white paper it was under the imprimatur and inscription of the then minister of industry, who is now President of the Treasury Board (Mr. Drury). There was some clear outline of what would happen. I shall read a paragraph or two from the white paper called "A Domestic Satellite Communication
November 18, 1971

System for Canada" published in 1968. This, we were told, and I think rightly so, was the guideline for the program which led to the Telesat establishment. At page 50, appears the following:
It is at this early stage of the development of a satellite communication system that Canada must decide whether to be simply a user of these new means, as they may be developed by others, or to be a leader in their development. Only the latter will permit the realization of their full benefits and opportunities for the Canadian public.
It is evident that Canada already possesses to a large degree the essential technology to determine the design and construction of its own domestic satellite system as a result of successful programs of the Department of Industry, the Defence Research Board and the Department of Transport. This is not to say that every part of the system be manufactured in Canada. Components or sub-systems may be brought from other countries when the volume might not justify Canadian development of production. When this is the case, however, effective control can only be maintained through the exercise of choice and specification. The control of specification, design, and construction, can and must be retained in Canadian hands. The development of satellite communications will employ the most advanced "state of the art" in many fields of technology. An important corollary, therefore, to the undertaking of such development by Canadian industry will be to enable it to apply the resulting skills to the development of other high technology products. The complex technology of satellite systems involving advanced techniques, new planning methods and higher standards of industrial performance will, in a few years, become the technology of many industries. It demands the rapid evolution of techniques, reliability of products, control of production, interdisciplinary development work, anticipatory research and system management, and long term program planning.
I am almost overwhelmed' Mr. Speaker, as I read this document, even at this late date. I am filled with nostalgia. At page 52,1 find this:
National identification is intimately associated with technological progress. The power of programs such as this to attract and hold scientists, engineers and others, and to cause them to identify their own aims with those of Canada, cannot be ignored.
The programs, both private and public, to prepare Canadian industry for participation in space communications, have been markedly successful. The government intends to use to the full this capability in realizing a domestic satellite communication system.
I shall end the lesson there, Mr. Speaker. Then, I recall the minister of communications at that time thinking out loud. He was a very engaging minister in the House and outside and I may say that I miss him profoundly. He reflected one day that:
A 100 per cent Canadian-built satellite will come with a price tag, both in dollars and in the length of time it takes to build.
A 100 per cent foreign-built satellite will come more cheaply and more quickly, but bring with it no benefits to Canadian scientists, engineers, industries.
It boils down to deciding the price we are prepared to pay for being Canadians.
That was on January 27, 1969.
Now, Mr. Speaker, the inquiry for papers was prompted by what happened to this outburst of technological nationalism, if I may call it that. Who is constructing the satellite? Is it being built by a Montreal firm, a Toronto firm, a Brandon firm or a Charlottetown firm? The name is the Hughes Aircraft Co. of California. How much Canadian content will there be in the Canadian satellite? If you combine the bit that was given to Spar and the bit that was given to Northern Electric you get something a
Telecommunications Satellites
little less than 20 per cent Canadian content in the satellite, the whole system of which may cost this country many, many millions of dollars.
When it was suggested that we buy off the shelf one of the American satellites and send it up at a very low price, it was said that we could not do this to our own technology and that it was worthwhile to pay a little more. However, there is surely here the fear that we have, as is so often the case, fallen between the two stools. We do not pay the price to have a purely Canadian operation, and we do not go into the market place purely on business terms and buy an American satellite.
So far, we have taken the costly road. We reached the stage where we used Hughes Aircraft Company of California. They became the principal creators of our satellite. We do not know the terms. We do not know the correspondence. We do not know what went on between the relevant department and the Canadian firms who were interested. We do not know what kind of arrangements were made for and with Hughes, yet this is one of the most costly and important developments which the Canadian government and, therefore, the Canadian people have moved into in our day and age. I resent the secrecy profoundly. There is no reason, in terms of competition on an economic or commercial basis, this information should not be revealed. It is high time someone told us the full story of our collapsed hopes in industrial nationalism as revealed by this business.


Walter Gilbert Dinsdale: Mr. Speaker, I am pleased to have the opportunity to support my colleague who has made an eloquent presentation here this afternoon. I am sorry that the present Minister of Communications (Mr. Stanbury) is not in the House because I sometimes get the feeling that the present Minister of Communications, who inherited the mantle of his predecessor, is not fully aware of the complete background that has given rise to the motion that has been put forward here today.
I followed very closely the development of the idea of a Canadian communications satellite. In fact, I attended most of the committee meetings. Like the hon. member who has just spoken, I was impressed by the eloquence and the spirit of the white paper which was the basis upon which the Parliamentary committee conducted its deliberations. The optimism expressed in terms of the development of the Canadian satellite communications technology was one of the reasons the bill, when it came before the House in 1969, received such enthusiastic and unanimous consent. As has been pointed out, the rules have been changed in the middle of the game. We are now heading in a completely opposite direction from that which was presented to the committee and the House when the act was under consideration.
I wish to review briefly the history of Canada's participation in the satellite program. In 1962, the decision was made to proceed with the launching of our first 100 per cent Canadian satellite; that was Alouette 1. It was such an overwhelming success that Canada went on from strength to strength. I believe we now have four of the Alouette series in orbit. It was my privilege to be at the
9690

November 18, 1971
Communications Satellites
Vandenburg air base last April when number four in the series was launched. I was impressed to discover that all four of the Canadian built satellites were still in orbit, functioning and producing useful information in the bigger function of atmospheric probing. The other statistics given to us at that time were also impressive. I discovered that Canada was number three in terms of functioning satellites still in orbit.
It was interesting to hear the briefing of the experts at the Vandenburg air base where NASA was charged with the responsibility of hurtling the Canadian satellite into orbit. Throughout the day's briefing, they were full of negatives. They said that many things could happen. We were told that so much of the technology was marginal in launching one of these complex gadgets into space that it was highly likely that this fourth launching would not be a success. Notwithstanding the misgivings and the warning that had been issued throughout the day, when the launching finally took place that evening with a thunderous roar, Alouette 4 went off into outer space. I think the statistics indicated it entered orbit within two miles of the designated point. This indicates that Canada has indeed achieved remarkable technological skill in sophisticated space technology.
When the decision was made in 1962, we were at the beginning of the decade of the sixties. We were moving toward Expo 67 and our centennial. Canadians were aglow with confidence. That spirit still prevailed in 1969 when the Parliament of Canada made its decision with regard to proceeding to develop our own communications satellite. Within the past two years, Mr. Speaker, that optimism, glowing spirit of Canadianism and confidence in Canadian technology has unfortunately deteriorated. This is one of the reasons I wholeheartedly support the motion we are discussing this afternoon. A government that has completely reversed itself in such a short space of time should certainly be responsible enough to the House of Commons to indicate by the publication of documents why it has now backed away from this positive and optimistic note and is moving in a completely negative and pessimistic direction.
I also support the mover's note that today we are facing a general climate in Canada of growing concern over the penetration of American technology into the Canadian economy. This is one of the major issues that seems to be before the country as a result of the leaks that have emerged within the past few days. Today, we are looking for documents which have not been made available to the public or to this House. I hope it does not become necessary to have another leak in the ship of state in order to get the information that Parliament has the right to expect, in view of the wholehearted support that it gave to the original intentions of the government. That support was based on more than the white paper to which reference has been made this afternoon. It was based on a detailed report which was referred to as the Chapman Report, presented in 1966, which supported wholeheartedly the concept of a Canadian domestic space program. The author of that report is now the Deputy Minister of the Department of Communications, He appeared before the committee when the proposed legislation was under discussion and no doubt we shall have an opportunity in due course to examine a number of officials, including Dr.

Chapman, with respect to the reversal of that policy. As I re-read that report-and it has been necessary to go over the documentation-I see that this was to have been an entirely Canadian project. It was to depend upon NASA, the United States space agency, for launching only. This is the program on which the Allouette series was predicated. It was the anticipated basis with respect to the operation of Canadian satellites.
Today we find that the rules have changed radically, as compared with the proposals in the Chapman Report. I would point out that in 1967 the Science Council of Canada endorsed the Chapman Report. It was out of both these preliminary documents that the white paper of 1968 came forward in support of Canadian technology in such eloquent terms as were quoted by my hon. friend. To sum up the spirit of these reports-and they were examinations of the subject in depth-the conclusion was that Canada could not afford to become completely dependent in this field upon the super powers, whether the United States or the U.S.S.R.
What has happened since then, is, of course, that the policy has been reversed. This is why I had hoped the Minister of Communications might have been in attendance during this debate; had he been here he might have thrown some light on the current thinking of the government in this regard. The former minister originally shared the enthusiasm of the reports I have outlined today. He stated emphatically when the Telesat Canada Act was before the House in 1969 that a Canadian designed and built satellite with associated ground facilities would result from the passage of that measure.
It was then, Mr. Speaker, that the Hughes Aircraft Corporation of America got into the act-I am not referring to the act of parliament itself. They put in a bid on the project and it was then that the accent used by the former minister of communications (Mr. Kierans) took on a slightly southern tone. He began to talk of a 100 per cent Canadian effort as a case in Canada re-inventing the wheel. So, we were moving into an entirely new scheme of things after the bill had been passed unanimously by the House. Apparently there is a cost figure involved here which has not been explained in any detail by representatives of the government. We have been given some inkling as to why the government has changed its mind. Instead of a project with a 67 per cent Canadian content, United States technology playing only a minor role, they talk now of a 20 per cent Canadian content to be provided by such Canadian firms as Northern Electric and Spar Aerospace Products Limited of Malton, Ontario.
There has been a further development. The United States authorities themselves are now getting into the act and urging a joint United States-Canadian project. From what I gather from the meagre information available from government sources, this is where the matter stands at the moment. It is no longer a 100 per cent Canadian effort. It is now a Canada-United States joint project, with the huge Hughes Aircraft Corporation providing the technological skills and Canada reverting to the role she has assumed only too often of following in the footsteps of the United States giant. And this in spite of the fact that we have proof of our skill and competence in this area in four
November 18, 1971

successful satellites which are still in orbit; that we happen to be No. 3 in terms of functioning satellites still orbiting. Nevertheless, there has been no attempt made by the government to reveal in any detail even the financial picture which persuaded it to completely change its concept of a 100 per cent Canadian communications satellite.
It boils down to this. Government policy in this field, as in others, has been confusing because of its meandering from one position to another. The same criticism could be made with respect to other areas of the government's activities. For example, we are presently debating a government bill proposing tax reform. It has gone from complexity to complexity and from confusion to confusion until the whole of the Canadian economy finds a pall of uncertainty hanging over it. I know that in the field of satellite technology, Canadian firms such as R.C.A., Northern Electric and Spar Aerospace feel they are competent to move into this area. I appeal to the government, not only on behalf of opposition members but for the sake of its own backbenchers as well, to table the document which has been requested and which has been withheld.
I believe that having regard to the leaky condition of the ship of state at the moment we shall get the documents anyway. But let us do this in the regular way, not by the back door method. Evidently there are those in the civil service who are becoming disenchanted with the government's disposition to keep all these matters away from the public. The government should move to restore our faith, and it can only do so by showing less readiness to resort to a cloak of secrecy and taking Members of Parliament into its confidence.


Some hon. Members:: Hear, hear!


Mr. Charles Turner (London East):: Mr. Speaker, the motion of the hon. member for the production of the contract signed between Telesat Canada and the Hughes Aircraft Company for the construction of Telesat Canada's domestic communications satellites must be opposed for the reasons set out in the Telesat Canada Act of 1969. The act clearly establishes that Telesat Canada is not an agent of Her Majesty or a Crown corporation within the meaning of the Financial Administration Act. Rather, it is an independently operating commercial corporation which only reports to government respecting certain matters delineated in the Telesat Canada Act. The powers of the company are spelled out in section 6 of that act.
On several occasions in statements to this House and in answers to questions, the Minister of Communications (Mr. Stanbury) has stressed that as a result of the commercial nature of the company it would not be in the interests and objects of the company to have information of a private and confidential nature made public. In short, then, Telesat Canada is a private company subject to certain limited powers possessed by the Minister of Communications or the government as laid down in the Telesat Canada Act. Essentially it is a common carrier which is subject to certain government regulations in the same way that the other, old common carriers are.
Telesat is a limited company in which the government is a major but not controlling shareholder and in which
Communications Satellites
other shareholders also have rights. Aside, therefore, from certain corporate actions specified in the Telesat Canada Act in which either the Minister of Communications or the Governor in Council must concur, the management of the company is responsible to shareholders in the company. Given this private, commercial nature it is particularly important that Telesat's right to privacy in its negotiations with members of the communications industry be preserved.
Telesat's contract with the Hughes Aircraft Company is a complex commercial and technical document dealing with the most advanced technological equipment. Some of the confidential information included in it is the property of the Hughes Aircraft Company, which almost certainly, and quite understandably, would regard its public disclosure by Telesat Canada as a breach of faith.
Since the hon. member's motion for the production of the Telesat-Hughes contract and other documents was made, the company's 1970 annual report has been tabled in this House as provided by the Telesat Canada Act. It contains up to date information on the financial and program activities of the company as required by the Canada Corporations Act and the Telesat Canada Act. In July of this year a semi-annual report was distributed to shareholders of record in the company. I am further advised that the company, like any other Canadian commercial corporation, will respond to any private inquiries for additional information in connection with its program.
For the above reasons I cannot support the motion at this time and suggest the hon. member should contact the president of Telesat for the information he desires.


Walter Gilbert Dinsdale: Would the hon. member who has just spoken accept a question? He made the point that it would not be possible to reveal information because of the involvement of private companies. Is he aware that the Trans-Canada Telephone System and the CN-CP Telecommunications system offered to build a Canadian communications satellite without any public involvement at all, and had it not been for government insistence we would have had our domestic satellite communications system?


Mr. Arnold Peters (Timiskaming):: Mr. Speaker, this is another opportunity for members to point out to the government their resentment at the retention of information in a field of general interest if not of general advantage. The hon. member for Brandon-Souris (Mr. Dinsdale) referred to the technology we have developed in Canada, of which all Canadians are duly proud-the Alouette satellite, which was not a highly secretive program. I understand that some of the so-called scientists tdok parts of it home and worked on it in the basement, that they did not have proper insulating materials and used the fibre-type coffee cup. Then they talked the United States into putting this mass of coffee cups in the air, and the satellite is still up there working very satisfactorily, probably much to the chagrin of every other scientific body in the world.
Liberal governments have a habit of not allowing information to be made public. I am not familiar with what is in these particular papers or with the background outlined by previous speakers, but I do know that many Canadians are of the opinion that the Telesat operation
24372-54j

November 18, 1971
Communications Satellites
should be a public utility in Canada, that it should operate to the advantage of communications systems in this country and play a useful role in sending messages to all parts of the world. In addition, this would enable Canada to stay in a prominent position in the communications field.
While it may have been necessary to bring in a consortium to provide the scientific knowledge, most Canadians were of the opinion that we had decided to go that particular program alone and were increasing the expertise we had already developed in this field. The Canadian public was aware of the fact that we are the second or third most interested country in this type of communication. We have a vast area geographically, and therefore need scientific knowledge of this sort.
When the Liberal government suggests that the publication put out by the Telesat Corporation was sufficient to provide information about the changes that have taken place in government thinking over the last several years, it seems to me that they have not read the pamphlet, since all it gives is the names of the board of directors and very little else. It does not say why we did the things we did. It does not say why we had to negotiate a contract with Hughes.
I had thought the argument had been resolved on the side of Canadian development, and I was given the impression the other night from a television program that we were building a plant at Shirleys Bay for the purpose. I stand to be corrected, but I think we are now building a plant in California, where the sun shines much longer than it does in Canada and where everything is done in a big way, and Hughes may make a big splash with this as he did with other projects over the years, much to the dismay of many shareholders in that corporation. However, I suggest that the government is obligated to give the information asked for in both motion No. 96 and motion No. 97. I think the Canadian public is entitled to know whether or not we have totally abandoned the building of telecommunications facilities of the kind we believed we were embarking upon.
The former Minister of Communications did admit a cost factor was involved, and this raised another problem. I suppose in the Liberal party there are two lines of thought. There are those who believe that Canadian development is worth while though it may cost something; there are others who believe it is better to give the money to the United States and buy technology. Perhaps we will now give the money to the Russians since they seem to be doing pretty well, too, in certain fields. Or perhaps we should shop around in Eaton's and Simpsons'.
p.frl.)
I think there are many people in this country who agree with the former Minister of Communications who said, in effect, "So what?"-because there is a change. We spent a lot of money developing much useless scientific knowledge in this country, and here is a place in which we have established some expertise and have decided we can build a communications facility which can be used not only by Canada but by other countries, and to which we can add in order to do the things which will be necessary to make a contribution in the communications field which we are unable to do in other fields. I presume the same difficulty exists in the Conservative party, because as I understand

the hon. member for Hillsborough (Mr. Macquarrie)-and I am always very interested in listening to his speeches because he seems to be taking a new line in the Conservative party-


Walter Gilbert Dinsdale: It is Progressive Conservative.


William Arnold Peters: He may be the progressive in that party, progressing to a new position in the political spectrum. But he seems to be saying in a very progressive way that we should take the money and buy it as cheaply as possible, and what is wrong with buying it from the United States? The hon. member for Brandon-Souris is a little more old-fashioned and says there might be some merit in keeping it in Canada. I should like to see these papers so we could look at the developments that have been made.


Walter Gilbert Dinsdale: We started this in 1962.


William Arnold Peters: That proves the point. A real Conservative never lets go of something. The year 1962 seems to have become a fixation. The hon. member for Hillsborough, however, is really talking about something happening right now, and I am particularly interested in something which will happen in the future. I believe most Canadians are interested in the development of expertise in certain fields. We have made some bad mistakes in this country. We have made them in the aircraft industry. We developed probably the best team of scientific experts in the aeronautical field in Canada and then, through government intervention and lack of foresight among other things-this is history-we scrapped the project and lost these scientists.
This cost us a lot of money. In my opinion we had the largest expenditure in that field and only had to find out what we would do with the baby. We had to make up our minds whether we had a bomber, a fighter aircraft, a trooper or what. However, we scrapped it. It seems to me this is what we are doing in respect of the expertise we have developed in the telecommunications field. I was interested in the fact that Northern Electric is involved in this development. Northern Electric, as you know, Mr. Speaker, is a subsidiary of Bell Canada, which is another public utility. Bell Canada is before us now, wanting more money.
I should like to learn from these papers just what Northern Electric is doing. It is interesting to note that Northern Electric has started to lay off a number of people and close down its wire and hardware division. It has laid off people in my area and has closed down in Ontario, I am told, something like 16 outlets. It has laid off a large number of employees who have been with the company for a long time. It does not appear to be too interested in an aggressive sales program. I am wondering how that company fits in with the Telesat program and with other developments in this field.
I should like to see these documents. Also, I should like to see them published so that the news media could see them and perhaps do some research into the question of why we became involved with Hughes Aircraft Company in the United States. I was of the opinion, as I believe most people in the country were, that we had decided this was a field of prime importance to Canada because of the need for television in the Arctic and in remote and inaccessible
November 18, 1971

areas. I do not know whether we will pay for the launching or how we will get it into orbit, but we probably have figured that out. However, we were to build it. It was to be ours and we would have a commodity in which we could sell space communications to other people.


Walter Gilbert Dinsdale: A good, Conservative policy.


William Arnold Peters: As my friend says, "A good, Conservative policy". I think it was, but the new Conservative policy amuses me because it is one the Liberals had for a few months. The Liberals gave up their position of continen-talism and my friends in the Conservative party have taken it up. I do not know where this leaves them. These papers might indicate where it leaves them.
I have not supported that proposition in either the old or the new position, but believe Canadians should do all they can and should be as expert as possible in fields where it is feasible. I wholeheartedly accept the proposition that these papers should be made public and ask that the government, in the interest of the Canadian public, not provide this information through leaks but in a formal manner so that business can be conducted in an orderly fashion.

Mr. ]acques-L. Trudel (Montreal-Bourassa): Mr. Speaker, I have listened closely to the comment made by the hon. member for Hillsborough (Mr. Macquarrie) who, apparently, wanted to emphasize three main points.
He stated first of all that there was a lack of information and he attempted to give reasons for this. He then quoted the white paper.
Then, to show that Canada's share was not very great, he referred to certain speeches.
His colleague from Brandon-Souris (Mr. Dinsdale) proceeded in a totally different manner, and he proved that there was in fact a telecommunications system in Canada by going over past events.
I share the view of the hon. member for Timiskaming (Mr. Peters) that the hon. member was then showing that there had in fact been participation and that we did participate in the telecommunications system. He spoke of the Alouette and the trip he made to Vandenberg last April when another satellite was launched.
If I may answer the question asked by these two members concerning the lack of information, I would like to make some remarks. On the contrary, it seems to me that we have the necessary information in order to ascertain just how far we have gone in the field of telecommunications.
There is a point on which I would like to insist before commenting on another subject. The hon. member for Brandon-Souris seemed to suggest that we reversed the engine, that we had changed the government policy. On the contrary, I think he has demonstrated himself that not only did our policy remain unchanged but also that we still apply what has been decided previously.
At this point, I would like to review for the information of hon. members certain striking facts which certainly concern the national system of telecommunication by
Communications Satellites
satellites, including Telesat, which was established by the government.
On July 31, 1970, after it received permission to do so from the government of Canada, Telesat opened negotiations with the Hughes Aircraft Company, which led to a contract under which Hughes Aircraft was to build the spacecraft needed by Telesat for its national satellite communications system.
On September 30, a month later, after the Minister of Communications had approved the Canadian contents of the project, as required under the Telesat Canada Act, representatives of Telesat Canada and the Hughes Aircraft Company signed the contract, which amounted to some $31 million.
The contract stated that Hughes Aircraft would provide three spacecraft for implementation of the space part of the Telesat system. Before this contract was signed, Hughes Aircraft had signed contracts with its two main sub-contractors-the Northern Electric Company in Montreal, and the Spar Aerospace Products Ltd. in Toronto. Northern Electric is to provide the whole electronic system-particularly all the communication devices of the spacecraft-which would represent not a 20 per cent content, as mentioned by the hon. member for Hillsborough, but rather a 100 per cent content in that case. Spar Aerospace Products Ltd. will supply the structure of the spacecraft and the technical support staff. The suggestions of the hon. member for Hillsborough might perhaps be vindicated by saying that owing to the contribution of two Canadian sub-contractors, more than 20 per cent of the elements of the spacecraft will be Canada-made.
Contracts have also been signed by Hughes Aircraft, Spar Aerospace and Northern Electric whereby the two Canadian companies would provide the electronic system and structure for about fifteen other similar spacecraft which Hughes Aircraft hopes to sell on the world market.
It is interesting to note that the structure of the first spacecraft which will be launched has already been delivered to Hughes Aircraft by Spar Aerospace Products Ltd. on August 23, long before the deadline and that works on the electronic equipment are progressing at the new Northern Electric plant at Lucerne in Quebec.
The contract between Telesat and Hughes Aircraft calls for delivery of the first spacecraft in October 1972; the second and third are to be delivered at four months' intervals. The contract of some $31 million calls for performance pay to Hughes Aircraft during the whole useful life of the satellites and penalties payable by Hughes Aircraft for delays in delivery. In other words, Hughes Aircraft will not receive the total amount stipulated in the contract as long as the satellite's performance has not been satisfactory for its whole useful life. The company will also be penalized if it does not deliver the spacecraft as scheduled.
Telesat will be one, if not the first national satellite telecommunications system in the word to use satellites on synchronous orbit.
Each satellite will have 12 channels of which ten will be available for commercial use, and the other two reserved. Each channel will be able to carry a signal for colour television, or the equivalent in message traffic, that is a maximum of 960 unilateral telephone lines.

November 18, 1971
Communications Satellites
Present plans foresee the launching of the first satellite Anik I for the end of 1972, and the start of commercial operations early in 1973. The second satellite will be launched after six months of satisfactory operation of the system. This second satellite will thus offer a maximum degree of system reliability, and the same capacity as Anik I, for the number of usable channels. The third spacecraft will be kept on the ground as a standby.
Furthermore, in their remarks, the hon. member for Brandon-Souris and the hon. member for Hillsborough have said that there was a lack of documentation, that no figures were available and that we were groping in the dark.
Allow me to give a few other figures. Amounts in the neighborhood of $30 million were mentioned in the motion for tabling of papers. It is important to consider that the Canadian telecommunications industry is among the most sophisticated in the world. Its investments are estimated at more than $5 billion, a figure which will double over the coming decade if this industry keeps its present rate of growth.
Canada also has the longest micro-wave system, 50,000 miles, on a per capita basis. It comprises three main relays, owned by public corporations in the telecommunications field, such as the Trans-Canada Telephone System and Canadian National-Canadian Pacific.
I still have many notes before me. The information they contain is public and they are available to hon. members.
As other hon. members wish to speak, I shall let them have the floor. As for the reservations expressed by the hon. member for London East (Mr. Turner), I cannot, at this time and after reading them, be in favour of the production of papers.
Mr. 1. Roland Comtois (Parliamentary Secretary to Minister of Communications): Mr. Speaker, I think I should also take exception to two notices of motions of the hon. member for Hillsborough (Mr. Macquarrie) who is asking for a copy of the agreements between private companies supplying spacecraft to Telesat Canada. Such a request is based on the fact that these matters are of no public interest or of no interest to Telesat Canada, a private concern.
The agreements referred to in the notice of motion could be either the sub-contractor agreements negotiated between Hughes Aircraft and the two Canadian firms for making components for the spacecraft of Telesat Canada, or else the agreement under which the two Canadian companies will participate in building other similar telecommunications satellites whose number-it was given a while ago-could reach 15 and which Hughes Aircraft hopes to sell bn the world market.
In either case, it concerns agreements between Hughes Aircraft and two Canadian sub-contractors, Northern Electric and Spar Aerospace Products Limited. Telesat knows the terms of the sub-contractor contracts concerning satellite construction, but is not a contracting party. Mr. Speaker, I think that is important. The arrangements Hughes Aircraft and the two Canadian companies made regarding their participation in the production of similar satellites for future customers were negotiated between the three private corporations which are the ones concerned and not Telesat.
That is why it would be impossible for Telesat to make public all arrangements of which it could be aware and which would bind Hughes Aircraft, Northern Electric and Spar Aerospace Products Ltd. in view of a future market where other customers are involved.


Mr. Speaker:: I am sorry but I must interrupt the hon. parliamentary secretary; the time provided for private members' business has now expired. The House now resumes the debate interrupted at 5 o'clock.



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 consequent upon the amendments to that act-Mr. Lachance in the chair.
The Deputy Chairman (Mr. Lachance):: Order, please. It being six o'clock, I do now leave the chair. The committee will meet again at eight o'clock.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS
[Stage Direction]

The committee resumed at 8 p.m.
On clause 1-section 135: Deduction in computing income.
David Orlikow: Mr. Chairman, when I spoke this afternoon I tried to put on the record the difficulties which this legislation, as it is now drafted, will create for credit unions. The difficulties which will be created for co-operatives are even more serious because up to this point the government has refused to make any changes in the legislation despite the most strenuous objections by the cooperatives and, I understand, despite the very careful and moderate representations made in private to the government by representatives of the major co-operatives.
The president of the Saskatchewan Wheat Pool has made the position of his organization with regard to the legislation very clear. He has said that the proposed amendments will give a choice of a formula based on one-third of income or 5 per cent of capital employed. He has said:
This results in forced imputation of taxable income and is not acceptable.
In its news release the Saskatchewan Wheat Pool said:
The proposed formula of 5 per cent of capital employed compares with 3 per cent at present. It would be introduced gradually, over a ten year-period.
We feel that this formula has no basis in reason and must be discarded.
Co-operatives are prepared to pay tax at the ordinary corporate rate on any earnings retained by the co-operative. Earnings returned to the member should become part of his income.

November 18, 1971

For a taxation act to force an imputed taxable corporate income on a co-operative is to interfere with the democratic right of members to run their own business. Such a treatment is not applied to co-operatives in any other country.
I think that the members of this House, members of co-operatives and the public in general have a right to know why the government is taking such an extremely hostile approach to credit unions and co-operatives. As I said earlier this afternoon, it seems to me that the government is following the suggestions made on many occasions over a long period of years by the finance companies which are upset, as well they should be, by the rapid growth of credit unions.
Surely the government and the parliamentary secretary know that for the hundreds of thousands of people who belong to credit unions and caisses populaires there is really no alternative except the not very gentle clutches of the finance companies. Surely the parliamentary secretary does not want us to think that he wants the ordinary citizens of this country to have to go to the finance companies and pay 18 per cent or 24 per cent on the money that they must borrow? Yet this legislation will help to destroy credit unions and will boost finance companies.
Similarly, Mr. Chairman, co-operatives such as the wheat pools, which have done a tremendous job for the farmers of western Canada, have their very existence challenged by this legislation. I cannot think of anybody except the private grain companies and organizations such as the Equitable Tax Foundation who can be happy with the legislation now before the committee.
I say to the parliamentary secretary and to the Minister of Finance that deathbed repentance is better than no repentance at all. On three or more occasions the minister introduced pretty substantial amendments to the bill as originally proposed, and it is not too late for him to introduce the kind of reasonable amendments, moderate amendments which would permit credit unions and co-ops to continue the very fine work they have been doing, to give their members the kind of service which they have been giving and to give the people of Canada alternatives to the completely free enterprise, profit-oriented companies to which otherwise they must resort.
Again I say to the parliamentary secretary that it is not too late to introduce the kind of amendments which credit unions and major co-operatives have been seeking, giving them some of the equity which those of us who greeted the Carter commission recommendations with a great deal of joy hoped to see in the new tax legislation when it was finally introduced.


James Aloysius McGrath: Mr. Chairman, the section of the bill now before the committee affords members of the House an opportunity to speak on a very important phase of Canadian life, namely, the co-operative movement. Nowhere in Canada is the small co-op more important and nowhere does it play a more important role in the life of the community at large than in the province of Newfoundland. There is not a constituency in the province of Newfoundland that does not have more than one active co-operative. In this respect I refer specifically to my colleague, the hon. member for Grand Falls-White Bay-Labrador, who has a very active co-op movement in his constituency and has worked closely with it in relation to
Income Tax Act
the amendments contained in the bill before the committee.
It is interesting, and I think worth placing on the record, that the latest statistics available to members of the committee and released by the Department of Agriculture show that at the end of 1969 there were 2,373 co-operatives in Canada, consisting of approximately 1,600,000 members. These co-ops range in size from the large, super co-operatives in western Canada to the much smaller ones scattered all over the country. The smaller ones are especially active in the Atlantic provinces and more particularly in my own province of Newfoundland.
It appears to me, Mr. Chairman, that the drafters of this bill and the subsequent amendments have forgotten the essential nature, indeed the method of operation of the co-operative, and the essential difference in the purpose of the co-operative and in its capital structure from that of an ordinary corporation. This fact has been given little or no attention and it seems to me that it is not very well understood.
This legislation is forcing co-operatives to adopt a position which is at variance with their philosophic foundation. It forces them to take a financial approach to their operation which was never intended by the co-op movement. We believe, as many co-operatives across the country do, that the fundamental distinctions in the nature of the co-operatives must be respected by the tax laws of this country. These distinctions are: first, the co-operative provides a self-help service required by its members; second, the co-operative distributes its earnings to its members in proportion to member business and on the basis of capital equity; third, the co-operative raises and services its equity capital by revolving the use to its members and, fourth, the capital contributed by a member of the cooperative is to provide him with service and not to produce a return on investment, which the government in this proposed amendment is forcing it to do.
In general, co-operatives are objecting to the provisions for taxation contained in section 135 of the bill which retain the requirement that prior to the payment of any patronage refunds, income must be allocated to the capital of co-operatives on the basis of a fixed percentage of "capital employed by the taxpayer at the commencement of the taxation year". This, according to co-operatives, interferes with their freedom and ability to distribute earnings as patronage refunds. I think that fact has been forgotten by the government.
Section 135 of Bill C-259 gives co-operatives two choices, in my view. They can pay tax on the capital employed formula or they can pay tax on the basis of one-third of their income. Both choices, according to co-operative spokesmen, result in a forced imputation of taxable income to the co-operative. This changes the whole thrust of what a co-op is supposed to be doing. The concept contained in Bill C-259 substantially reduces the amount of patronage refunds which could be paid to members on business done with members of the co-operatives.
Even with the amendments proposed by the minister, the basic, underlying principles of the taxation of co-operatives have not been changed. The tax amendments provide co-operatives with the right to elect either to pay tax

November 18, 1971
Income Tax Act
on 5 per cent-formerly 3 per cent-of members' contributions and capital existing after 1971, or to pay tax on one-third of the income before patronage dividends but after interest is given to members. This forces co-ops, if they wish to attain minimum taxation, into reorienting the whole basis of their business.
I might also add that although the taxation position of co-operatives in different countries varies considerably, in no other country is a minimum tax base or minimum earnings imputed to co-operatives by law. This legislation forces co-operatives to become oriented toward the return of earnings on investment rather than the return of savings to members.
Mr. Chairman, I realize that the parliamentary secretary has demonstrated great patience during the discussion of various amendments to this bill in committee-


Patrick Morgan Mahoney: Flexibility and understanding as well.


James Aloysius McGrath: -and is a little tired of this whole process. I would say the solution to this problem, however, lies within his own jurisdiction. I would suggest to him a choice which should be taken by the government, and that is to realize that the very detailed clause by clause examination of the bill should be referred to a committee of this House and should not be taking up the time of the committee of the whole House.


Mr. Reid:: An excellent idea.


James Aloysius McGrath: I am thinking, Mr. Chairman, of the parliamentary secretary because I am concerned for his welfare. Perhaps there is no better way to illustrate what I have been trying to say than to quote from a letter which I received from a co-operative in my constituency. This is a co-op organization in Newfoundland which has grown to over 500 active members, with gross sales almost reaching $1 million. The co-op writes:
This success has been due to a combination of a very hard working board of directors, management and staff and a dedicated membership. Our patronage dividends returned to our members (while operating on a competitive basis with other businesses)-
This is important.
-have been 6 per cent for the past three years. This tremendous savings to our members has been a godsend in many cases. Our board of directors at the last meeting were very much concerned with Bill C-259 which will have the effect of just about wiping out savings earned by members in the form of patronage dividends, destroy all incentive in co-operatives and result in the total collapse of the co-operative movement. We strongly protest the passage of this bill in its present form and request that you do everything within your power to have the contentious sections 135 and 136 rescinded as they apply to co-operatives.
Mr. Chairman, I repeat what I said at the outset of my remarks, that co-operatives in the Atlantic provinces and particularly in the province of Newfoundland are not large. Generally speaking they are very small, but they are a very important aspect of the social life of the community. They are in fact a different form of enterprise to that which is familiar to the parliamentary secretary who comes from the great city of Calgary, Alberta. They are self-help organizations which are always Canadian and, generally speaking, always locally owned; in fact, they are owned at the community level.

They fulfil a very important function and a very important social need in the community. They are generally found in primary production areas of the country for the marketing of grain, dairy, farm and fishing products, and the merchandising carried on largely serves the industries or groups of people located in these areas as required. In many instances they require services which, if they did not initiate them or show enterprise, would be denied to the people living there. Should people be denied the right to self-help organization recognition because their attempts to cut living costs cause some profit-oriented corporations to lose some business thereby?
I can only speak from the experience of the co-operative movement in my own province of Newfoundland. In many cases the only competition to the resident merchant in a small community is the co-op. If it did not exist, he would have a monopoly on the retail business in that area. This is a fact the government has lost sight of in drafting this bill. I strongly believe that the government has lost sight of the very simple fact that the co-operative movement is a people-oriented movement designed essentially to serve people at the local level. The government should take cognizance of this fact.
I hope the parliamentary secretary, who is a dedicated member of this House and has sat in on all of the meetings of committee of the whole and patiently listened to the speeches, will take this fact into consideration. I realize that this will be very difficult for the parliamentary secretary, coming from the city of Calgary, Alberta, where I am sure the co-operative movement is not an actual fact. I would like the parliamentary secretary to leave Calgary some time and travel across this country. If he visited the small communities of eastern Canada, the Atlantic provinces and Newfoundland, he would see how important the co-operative movement is to people in our smaller communities. If he did that, he would not sit so smugly trying to defend these amendments to the bill which are, in fact, repugnant to the co-operative movement of this country.


Patrick Morgan Mahoney: I would first like to say, Mr. Chairman, that coming from the city of Calgary I am not entirely ignorant of the importance of the co-operative movement or its significance in Canadian life, economically and socially. I subscribe to a school of thought that believes that the co-operative movement does indeed fill a need socially and economically. While one of Tory persuasion might feel that the private enterprise system should do all these things, the fact is the conventional private enterprise system has not succeeded in achieving everything. People have had to organize in something less than traditional ways in order to maximize the benefits they can achieve from our economic system. In the result I regard the co-operative and credit union movements most highly.
Second, I do not wish the hon. member and others to make speeches in the House representing that the very serious points that have been brought to the government, members of Parliament and the public by co-operatives and credit unions have gone unheard. As I listen to successive speeches and hear quotations from various representations made by the credit union and co-operative movement read verbati into the record by hon. members, sometimes giving credit for them and at other times
November 18, 1971

adopting them as their own words but nevertheless paying attention to them, I cannot heip but say that the representations have been heard. They have been heard by hon. members on all sides of the House. They have been heard by the government, and the government has paid attention to them.
Since first reading of the bill now before us the government has introduced substantive amendments that go a long way toward meeting the legitimate complaints that came in response to the bill as originally tabled. At this point I think it is appropriate to note that the particular areas of dispute and the intensity of dispute that has arisen regarding this tax reform measure in so far as they affect co-operatives and credit unions is a very explainable thing because these movements did not take particular exception to the philosophy of the white paper. The idea of flow through and gross up and credit was entirely in accord with their philosophy. Accordingly, we did not hear a great deal from the co-operative and credit union movement during the white paper debate that extended for almost a year from November 1969.
Subsequently, and as a result of changes made due to the input of public representations, the philosophy of the white paper was not followed through, at least in that particular area, and the credit union and co-operative movements were presented with a real problem. I know many people have been critical of these movements for not stating their views earlier and for the intensity of the type of campaign that has been mounted since then. That criticism is not justified because the white paper did not present the problems to them that the tax bill does.
I thought the hon. member for Regina-Lake Centre might be somewhat more silent tonight than usual. Perhaps his TV was on the blink last night.


Leslie Gordon Benjamin: Next year.


Patrick Morgan Mahoney: The great "next year" country. In any event, Mr. Chairman, the hon. member for Regina East and the hon. member for Grenville-Carleton raised a practical point today that perhaps certain co-operatives, because of a definition contained in Bill C-259, will be excluded from some of the provisions that are intended to apply to all co-operatives. This is not the intention of the government. I can assure members on all sides of the House that as a result of these representations we are taking a close look at that particular aspect of the bill.
I can also say that if it is indicated that amendments to the legislation, rather than an administrative ruling, are necessary to make sure that all co-operatives are treated alike under the bill, an amendment to the bill will be presented.


Some hon. Members:: Hear, hear!


Patrick Morgan Mahoney: I say this in the sense that where we have had the opportunity, not only throughout the white paper debate but throughout the debate on Bill C-259 to deal with specifics, to come to grips with particular issues that are raised as a result of the policy decisions made by the government, the government is flexible. The government is willing to accommodate legitimate representations. However, I must say that general indictments of this, that or the other policy such as we have sometimes heard, not
Income Tax Act
on this particular block of sections but on others, are not likely to prove fruitful.
The government has made some policy decisions. For example, it made a decision, I may remind some members of the official opposition, to tax capital gains. That is a decision for which it will account to the electorate.


James Aloysius McGrath: It sure will.


Patrick Morgan Mahoney: It is not a decision that is likely to be renegotiated on the floor of the House of Commons in committee of the whole. However, where people are willing to take this bill and the amendments that the government has presented to the bill and debate these in specific terms and illustrate where the bill and the amendments heretofore presented do not in fact reflect the policy declarations of the government in the budget speech of June 18, we are certainly willing to entertain and introduce amendments.
I am sorry that on occasion the hon. member for Peace River seeks to say that the government should not be introducing amendments, or says in a ridiculing way, "What, more amendments?" I am not the least bit ashamed of and I do not apologize for any amendments that the government may present as a result of representations made by interested individuals, taxpayers, organizations and by members of this House in committee of the whole.


James Aloysius McGrath: Mr. Chairman, I find the parliamentary secretary's contribution, if it can be classed as that, to be rather unfortunate at this stage of the debate. I make no apology whatsoever for putting forward in committee of the whole the views of the co-operative movement in Canada. Secondly, I say to the parliamentary secretary that I find his remarks to be inconsistent with the role he is charged with, that of piloting this bill through the House. I find his remarks to be inconsistent with the amendments now before the committee. I say to the parliamentary secretary that if he continues to manifest this attitude in committee of the whole we will be here for a long time on this bill.


Patrick Morgan Mahoney: Filibuster; that's it, Jim.


Russell Clayton Honey: Is the hon. member for Peace River rising on a point of order?


Gerald William Baldwin: Yes, Mr. Chairman. I find the parliamentary secretary is more to be pitied than anything else.


James Aloysius McGrath: He is losing his cool.


Gerald William Baldwin: I think he is stir happy; he has been confined too long.


Colin David Gibson: You should be confined somewhere.


Gerald William Baldwin: He is a prisoner of the bill. However, with respect to his observation, what we have witnessed is the most ridiculous, stupid, nonsensical thing I have ever seen in this House. Amendments to this bill were brought in on October 22-96 of them. Amendments were brought in on October 29-28 of them. Now we have eight amendments to the amendments to the amendments to the bill. This is

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absolutely stupid. I know what will happen. When we go to the other place asking for royal assent, the parliamentary secretary will rush into the Senate and say to Mr. Speaker there, "I have another amendment to make."
I could go on for some time in this vein, Mr. Chairman, but I think I am slightly out of order. I think you will agree with me there. I was provoked to enter the debate, having been sitting quietly behind the curtains minding my own business. Then I was invited to come in so I made that point. In my opinion, the reason this bill has taken so long is that it is the stupid action of a stupid government.


Mr. Leblanc (Laurier):: Mr. Chairman, taking part in this debate, I would like in the first place to point out my interest in this matter, since I am one of the founders of the Caisse populaire Saint-Denis in Montreal and was president of that caisse up to 1964, the year I was elected to Parliament.
As the previous speakers, I am in a position to appreciate the important social and economic role played by the caisses populaires. I am pleased to note in the galleries this evening people interested in co-operatives, credit unions and caisses populaires and I hasten to welcome them.
Evidently, it is easy for the opposition to criticize a tax bill carrying out a complete and essential tax reform which Her Majesty's loyal opposition undertook in 1962 by creating the Carter Commission. At the present time, they are criticizing several points of the bill under consideration and they have become the protectors of the widow and child. This evening more especially, they want to be the sole defenders of co-operatives, credit unions and caisses populaires. I want to put on the official record that we too, of the Liberal party, are most concerned by this subject, and, obviously, we want to make this legislation as equitable as possible.
To this purpose, we have finally managed to bring before the House a reform which may not be perfect, but, to my knowledge, no income tax act is perfect in any country. The bill before us is but an attempt to correct certain anomalies which existed previously, to fill several loopholes, and to tax certain people who, previously, did not pay any taxes.
Let us not think, Mr, Chairman, that the caisses populaires in particular are opposed to paying taxes. I think this is worth mentioning. When their representatives appeared before the Committee on Finance, Trade and Economic Affairs-of which I had the honour to be a member-we heard during the morning of Thursday, June 18, the representatives of co-operatives, and in the afternoon, those of the caisses populaires. On that occasion, I was pleased to put certain questions to them. At page 6613 of the proceedings, one can read what Mr. Andre Morin, Director of the research service of the Federation des caisses populaires Desjardins de Levis, said, and I quote:
Mr. Leblanc, if you don't mind I will try to answer your question. In the past co-operatives were not subject to taxation during the first three years. In our brief, we agree that this assisted co-operatives to begin operations. We do not have too many examples of 
this to give you. We agree that this exemption of three years should be eliminated-
Regarding my suggestion that the Caisses populaires do not object to being taxed, Mr. Morin had this to say:
We agree that this exemption of three years should be eliminated for the simple reason that in practice during the first three years a co-operative does not have that much surplus.
Reference is mostly made to co-operatives as no taxes were then levied on Caisses populaires. But I know the same principle applies equally to the latter and we had the privilege, at the recent Quebec caucus, to welcome the representatives of the Caisse populaire of Levis which is the main organization of its kind in Quebec.
We were repeatedly told that the movement was prepared to pay taxes but not according to the ways set up in Bill C-259 before the amendments were introduced. In fact, when they were submitted to the House the amendments of the minister of Finance (Mr. Benson) were not tabled in full.
Certain amendments to the bill have been tabled since that time.
And Mr. Morin went on:
In practice there would be very little tax to pay. And if it is a privilege which is granted to co-operatives only, this might give rise to political difficulties. There will be talk about the co-operatives' privileges when, in fact, this privilege brings them very little tax relief.
Of course, they are prepared to pay taxes because they have today assets which the founder of the Caisses populaires evidently never expected they would build.
In their brief which can be found on page 66:146 of the Proceedings of the Committee on Finance, Trade and Economic Affairs there is the following introduction and I quote:



INTRODUCTION

[Stage Direction]
This brief was prepared by La Federation de Quebec des Unions regionales des Caisses populaires Desjardins, grouping in Quebec 1,310 Caisses populaires, owned by 2,375,000 members. As of December 1969, the total assets of these 1,310 Caisses populaires amounted to $1,854,000,000.
One must therefore admit the importance-and this is fortunate for the province of Quebec-gained by those financial institutions. In fact they render tremendous services but they no longer want to be cast aside and be denied participation in our overall economy.
One of the points raised following the introduction of Bill C-259, and which I consider most appropriate, deals with the global business ceiling set at $400,000 by this bill as the cumulative income before tax to enable corporations to qualify for the 25 per cent rate. And in a submission to the Minister of Finance dated July 1971, the representative of the caisses populaires stated the following:
The method to be used in computing the total business limit of $400,000 under section 125, calls for some explanation in the case of caisses populaires.
Now, since then, we have given some explanations to the caisses populaires. I resume the quotation:
We believe that an equitable formula to establish annually the portion of the surplus after taxes which should be used as a basis for the computation of the total business limit of the caisses populaires, would be that portion of the surplus after taxes, if any,
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[Stage Direction]
retained by the caisses populaires and which exceeds an annual reserve of $50,000.
As to the amendments proposed on October 28, the Minister of Finance appreciates the merits of the request made by the caisses populaires and determines that contrary to small corporations, the caisses populaires may benefit from an accumulated income after taxes, which means that if a caisse populaire or a corporation has a taxable income of $50,000, its accumulated income after eight years would reach $400,000 and would be liable to the rate applicable to other so-called public corporations, according to the definition to be found in Bill C-259.
Now, the Minister of Finance having recognized the merits of the request of the caisses populaires said this: If, by any chance, your taxable income is $50,000, you will pay $25,000 in taxes and thereafter that amount of $25,000 will be deducted from your income for the purpose of computing the business limit. This means that before reaching a total business limit of $400,000, according to the examples given and those I have in mind, a period of 16 years instead of eight would have to elapse.
Moreover, the amendments provided for the payment of tax at the rate of one tenth per year, so as to enable the Caisses populaires, the co-operatives and the credit unions to become acquainted with the new responsibilities that will automatically be theirs under the act and to enable them also to plan their finances according to the new income tax act.
We achieved something reasonable there. I believe the caisses populaires find that satisfactory in general. Of course, there is not a taxpayer who is always pleased with his lot. Our taxes are always too high and we always believe that we pay more then our neighbor.
However, I believe the government did its best. The amendments are most acceptable and I hope the caisses populaires will also accept them.
Roch La Salle: Mr. Chairman, like many other hon. members, I would like to express my views on the sections which we are discussing tonight, and which are extremely important for the Canadian people.
Several hon. members have already asked the minister to show greater understanding towards the co-operative movement, which includes credit unions and caisses populaires.
I believe it is the duty of every member to ask the government to give special attention to co-operative movements, in view of the aims which they pursue.
I do not think it is necessary to state the origin and objectives of these movements again. Representations have been made to the government on several occasions asking them to safeguard the special nature of co-operative movements. I still believe that those representations were definitely justified. I therefore hope that few hon. members will hesitate to take part in the debate on those sections in order to sensitize the minister to the requirements of co-operative movements.
True, some corrective action has been taken following representations by those movements. Yet it seems that that action could have been still more favourable to coincome Tax Act
operative movements, caisses populaires and credit unions.
I would like to point out particularly the objectivity of the briefs which were submitted. I have read attentively many of them, and they make one realize to what extent those movements respect the government. I am pleased to see that those organizations have not tried to run down or criticize the government, but have rather given a positive approach to their representations, and that explains already the step made by the hon. Minister of Finance (Mr. Benson) in favour of these movements. But a new and more precise orientation for the benefit of these movements still must be asked of the minister.
It is obviously important that each member does not limit his efforts in order to sensitize the government and the minister responsible so that these corrections to be made as soon as possible. If I understood him well a few moments ago, the Parliamentary Secretary to the Minister of Finance (M. Mahoney) confessed that the government is still considering the possibility of submitting new amendments if necessary. I dare believe that through the cooperation of all members who understand what a co-operative movement is, for they have some in their respective constituency, the government will meet the request of these co-operatives, account taken of the interests these movements represent. Some members from the province of Quebec will doubtless express their views on the cooperative movement in their area, but I am too familiar with the work of the caisses populaires not to make a few remarks. They have always fought for public interests, and like all co-operative movements generally, they have the right to expect the government to protect and help them, as we all should.
I ask that all members spend a few minutes and try to make the minister aware of the interest the people have in this movement, and of the consideration it deserves.
The Caisses populaires Desjardins in the province of Quebec were, in a sense, a school of thrift. They taught thousands of Quebecers the need to save, why there was a need to save and how to save. I also know that these movements have succeeded in inducing Quebecers to go into business and this through the efforts of the Caisses Desjardins which have given all kinds of assistance to low income people.
We are all aware in Quebec that the Caisses Desjardins have achieved marvels. Going through the caisses populaires' history we find that at the beginning they were not taken seriously by some businessmen who thought they were of interest to middle-class Canadians only.
Today we realize that from an economic viewpoint, the organization has been most successful in the province of Quebec and we are happy with it as with the co-operative movement which through efforts of its own is pursuing the most commendable objectives. I think the performance of our co-operative movements, of our savings funds and credit unions is of the noblest kind.
In view of the aims of those organizations, I think it is my duty as member for Joliette to ask the government to allow them to preserve their particular character and to find a way of giving them still greater assistance.
There are people who claim that the Caisses populaires today will agree to pay taxes because they are on a sound-

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er financial basis, since caisses populaires, co-operative movements or some co-operatives are now enjoying a certain stability. Of course, privileges have been granted to them and I dare hope they will be maintained. I hope the government will not hesitate to support and help an organization which has the interests of the community at heart.
It is most important to give such an opportunity to these movements that enable every citizen to capitalize at a level that gives him economic strength. Every citizen wishes to control at least a good part of his savings.
Co-operatives and the Desjardins movement pursue the noble aim of seeking the participation of citizens and giving them economic guidelines for the benefit of their area.
Keeping in mind such high and commendable objectives, I urge the government to give special consideration to granting whatever assistance it can to those co-operative movements. I am convinced that not one hon. member in this House intends to object to such a policy. And even though the hon. minister knows all about the representations made by the various movements, I feel that more should be done for them.
I believe the hon. minister, who might not as yet have had the opportunity to take an active part in co-operative movements, will have heard so many opinions and claims as to appreciate the significance of this issue. I even hope that the Quebec members, of all parties, will not hesitate-


An hon. Member:: Do not forget the independent members!


Roch La Salle: Of course, the independent members are always anxious to take part in a debate over a serious matter. Thus, like other members, I am, in a very independent way, acting as the spokesman for those movements that operate in my riding. I would hope to see other members do the same and realize that it is their duty-apart from any party considerations-to fight for the interests of their co-operatives and credit unions the fruitful achievements of which are well known to us all. If we act this way, we will succeed in shedding enough light on the matter for the Minister of Finance so that it will be a pleasure, and not a duty, for him to inform these organizations that they will keep their particular character, their privileges, for the good of their operation and for the economic wellbeing of their members.


Mr. Gleave:: Mr. Chairman, I just wish to point out two things. The parliamentary secretary said that if we on this side of the House stay with certain limits, what we say will be noted in due time. It is very nice of him to be so kind to us. He said that some representations will be fruitful and, by implication, that some will not be fruitful. When he was speaking he did not make one of the most important observations he might have made, which is whether the particular amendment before us is acceptable. He says that debate on specific terms will be accepted, and so on. This is a specific amendment.
In all kindness to the parliamentary secretary I would say the opinions and debate he is getting on the question of co-operatives should not surprise him at all, because surely before this House recessed at the end of June there

had been discussion on taxation proposals with the cooperatives and how this legislation would affect them. To my knowledge, members of co-operative organizations have been coming to Ottawa and talking to the department concerned about the taxation proposals set out in this bill. They were here last summer and fall, and the minister and his parliamentary secretary have not lacked notice of the attitude of co-operatives and their members to these proposals.
The government made the basic mistake of accepting the advice and opinion of certain organizations which tried to peddle the line that co-operatives are one thing but that members of co-operatives are quite another. That reminds you of the line sometimes taken in foreign affairs. People say, "People in this other country would be very nice if only they were not represented by such objectionable leaders".


An hon. Member:: As in this country.


Alfred Pullen Gleave: This government is saying that co-operatives are very nice, that the principle is fine and the only trouble is that sometimes they get big enough to do something for the people who put them together.


Some hon. Members:: Hear, hear!


Alfred Pullen Gleave: I have read statements by the responsible minister-


An hon. Member:: The irresponsible minister.


An hon. Member:: Which one is responsible?


Alfred Pullen Gleave: -and I have never seen such nonsense. During the time I have been farming I have put money into co-operatives. I have lent them money and collected dividends. I have had dividends retained by co-operatives because they had to do certain things which were required. This legislation is saying, Mr. Chairman, "If you have a little co-operative that is all right, but don't let it get too big."


Patrick Morgan Mahoney: Is that a family co-operative?


Alfred Pullen Gleave: What was that intervention?


An hon. Member:: Don't bother; it was not worth while.


Alfred Pullen Gleave: Does the parliamentary secretary think it is more important for me to have access to a co-operative store in Biggar where I can buy fuel for the farm or groceries, or to have access to a co-operative of the nature of the Saskatchewan Wheat Pool which can build a terminal at the west coast and handle my grain? Is the government really trying to peddle this line to the people of Canada and to this House?


Patrick Morgan Mahoney: You tell us which is more important.


Alfred Pullen Gleave: I will tell the parliamentary secretary. Probably the terminal at Vancouver is more important because nobody but the co-operative would build it. The government "Joe'd" the co-operative into building it. Furthermore, the government Joe'd the co-operatives to set up XCAN. I do not know whether the parliamentary
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secretary knows that: I expect he does, since he moves in business circles in Calgary and he said to one member from Newfoundland that Calgary and Alberta are not without knowledge of co-operatives. We are not without knowledge of them in Saskatchewan.
I say to the government, in all seriousness, that it had better adopt a different approach and consider what cooperatives really do, what they were designed to do and what the people who put them together intended them to do. If this legislation as drawn up by the government is passed, one knows only too well what will happen. Cooperatives will have to change their structure altogether and their methods of accounting, or they will not be able to build up the reserves necessary and the money which is needed to do the various things they need to do.
I find the government's attitude somewhat amazing. A few weeks ago a little volume came to my desk, complete with a picture of a rather "beat" looking, whiskery-faced man. The volume was entitled, "Poverty in Canada." It was the report on poverty.


An hon. Member:: That was not a picture of Pat Mahoney.


Alfred Pullen Gleave: No, it was not his picture. On the one hand members of the other place have been going across the country holding hearings and bringing out a report which tells us what is happening to all the poor people in Canada, and if we are to do something about poverty we should introduce the guaranteed annual income, yet on the other hand the government has come before this House with an attempt to destroy what the disadvantaged people of this country have put together from Vancouver Island to Newfoundland over the last century and a half.


Some hon. Members:: Hear, hear!


Alfred Pullen Gleave: Mr. Chairman, that is what is being attempted. You can read what the Equitable Tax Foundation says-


Colin David Gibson: That is the most exaggerated statement of the year.


Alfred Pullen Gleave: Does the hon. member think so?


Colin David Gibson: Yes.


William Arnold Peters: Just because Mahoney told you to say that does not mean it is true.


Alfred Pullen Gleave: The hon. member may suggest that that is a most exaggerated statement, but I tell him and others on that side of the House that the wheat pool committees, the credit unions and the local co-operatives in my constituency do not think it is exaggerated, Mr. Chairman. That applies not only to my constituency but to all constituencies across this country. I get letters from Ontario, from Alberta and from the Maritimes-and I am a Saskatchewan member. I get letters from all these places and they do not suggest that what I am saying is exaggerated.


An hon. Member:: Only the Liberals think so.


Patrick Morgan Mahoney: They don't know what you are saying.


Alfred Pullen Gleave: They are all very much concerned.
Income Tax Act


William Arnold Peters: The parliamentary secretary thinks that these people cannot read or listen to television.


Alfred Pullen Gleave: I do not know how the hon. member arrived at his conclusion.


William Arnold Peters: They may be poor, but they are not stupid.


Alfred Pullen Gleave: Listen to what the Equitable Tax Foundation says about co-operatives and their method of building reserves:
This device of 'paper dividends' provides all other co-operatives with a similar and completely unwarranted advantage over their investor-owned competitors.
What people do they think own these co-operatives? Do they think they are people who come from the ocean? At any rate, that is the Foundation's approach and that is the idea which is behind the proposals that have been put before this House.


Patrick Morgan Mahoney: Oh, no.


Alfred Pullen Gleave: The co-operatives have been told, according to what I have learned, "If you pay interest on what these people are talking about-that is, on the dividends that are retained-your taxes will be reduced." In other words, if they reduce the amount of money they retain, they will not pay so much tax. Mr. Chairman, it is not the business of those on the other side of the House to determine whether or not a co-operative should pay interest, or the amount of interest it should pay. That is not their business and it is not the business of the Equitable Tax Foundation. It is my business, because it is my money. And if I think I am making a satisfactory earning through its being used in the manner in which it is being used, that is my business.


Patrick Morgan Mahoney: That is screwy socialism.


Alfred Pullen Gleave: Probably the parliamentary secretary does not know anything about socialism. He probably went to one of our orthodox Canadian schools which spent a great deal of time trying to tell him how to run the standard system that we have in Canada, and not much time on teaching him how to do anything else.


Patrick Morgan Mahoney: I agree with you. I just don't know how you support David Lewis.


Alfred Pullen Gleave: Mr. Chairman, I have noticed the predelic-tion of the parliamentary secretary, not only tonight but on previous occasions, that when he runs out of logic he starts needling the other side because of some ideology held by it or because of what some provincial government is doing. I sincerely hope that a few of the backbenchers opposite who do know something about co-ops and how important they are will take him behind the woodshed and acquaint him with the facts of life before too long, in the next few days if possible.
The government is attempting to make things more difficult for organizations that have attempted to bring some balance into the economic structure of this country and give some weight to those who are economically disadvantaged and who lack bargaining power. These organizations can retain some industry in Canadian ownership.

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That is another factor which must be considered. Co-operatives are Canadian owned; they are not subject to raiding or foreign takeover.
We spent a lot of money getting a report on the price of farm machinery and spare parts. The Barber commission report was costly. I only hope that one day some minister will be able to rise in his place and tell of just one thing good that has happened to our farmers as a result of that report. The organization that is really trying to do something for farmers with respect to the price of farm machinery is Co-op Implements, but this legislation will make things more difficult for it.


An hon. Member:: Come on, Alf.


Alfred Pullen Gleave: My hon. friend to my right may disagree. Perhaps I would not agree if I were in his position. But it is about time people on the government side of the House realized what this legislation is all about and what it can mean to Canadians. The government should pause to consider the matter, in light of the amount of investment that has been quoted tonight and the importance of the co-op movement across Canada.
Mr. Chairman, I do not think the co-op movement is any great threat to the multinational corporations that now control much of our industry and economy. I do not know why they are getting into such a sweat. I urge the government to consider carefully the possibility of accepting these amendments before passage of these sections of the bill.


Joseph Adrien Henri Lambert: Mr. Chairman, I have studied with great interest the proposed amendments tabled by the Minister of Finance (Mr. Benson) concerning the new tax burden which co-operatives, credit unions and caisses populaires will have to bear.
My interest is all the greater as I pointed out, a short time ago, the inequity of a number of the new provisions submitted initially.
As I was giving particular attention at that time to the case of co-operatives, I had stressed the concept of "capital employed" and the new limitations which it was introducing in relation to the payment of patronage dividends to members.
I had taken the hypothetical case of a co-operative with a total capital of $800,000 made up as follows: shareholders' holdings, $500,000; long-term debt, $300,000. To substitute to the present method of computing tax that which is proposed in the bill meant for such a co-operative an increase in taxable income of some $19,000 and tax increase of between $1,500 and $6,250, that is a sharp rise of over 400 per cent.
While everyone recognizes the principle of tax equity, one must nevertheless consider that the bill, as it now reads, gives rise to an extremely sudden change which would seriously jeopardize the very existence of some co-operatives whose level of development is not such as to allow them to support a tax burden which is so much heavier.
I had emphasized at the same time that in addition to penalizing unfairly and inconsiderately the individual and collective efforts of co-operative members, the new tax

provisions introduced by the Minister of Finance would have harmful effects. First, there was the danger of creating double taxation conditions, at least theoretically. Some of those co-operatives could thus be caught in a financial and inextricable deadlock, where they would find themselves unable to repay the members the shares of the social capital rightfully claimed by those wishing to withdraw from the movement. And finally, on account of that still controversial concept of capital employed and also of the necessary accumulation of minimum reserves, a co-operative could have found itself in the ridiculous situation of having to pay, for a given fiscal year, more tax than during the previous year, even if its profit for the current year might have been the same or even lower than that of the previous year.
Mr. Chairman, the amendments proposed by the Minister of Finance help however to ward off some fears or threats. In fact, we can but rejoice that, under these amendments, a co-operative may choose the lesser amount arrived at by either methods for computing taxation. At that, the government has not discarded the concept of capital employed, so much decried by the Canadian co-operative movement, but at least the co-operative can pay as patronage dividends up to two-thirds of its profits, which shows greater respect for the traditional operating rules of the co-operatives. No doubt this is an interesting compromise as compared to the rigid initial rate of 5 per cent of capital employed.
If we come back to the case of the co-operative with a total capitalization of $800,000, we can see that for a given year during which the registered profit was $60,000, the tax payable could be somewhat different according to the computation method used.
Here is an example: The employed capital method implies taxation at 5 per cent of $500,000 which results in a taxable income of $25,000 and a tax assessment of $6,250, or 25 per cent of $25,000.
On the other hand, under the amendment, the second method would be the profit volume method: With an aggregate profit of $60,000, less the portion payable as patronage dividends (or 2/3 of $60,000), profits amount to $40,000. Therefore, the taxable amount is 1/3 of profits, namely $20,000, with a tax assessment of $4,000, or 25 per cent of $20,000.
Of course, a certain latitude is given to the co-operatives which, however, are not spared the burden of the capital employed concept which puts between the co-operative and its members a taxation mechanism and, thus, government action which is contrary to the co-operative principle and interferes with the normal relations which should prevail between this institution and its member for business transactions entered into by them in a quite legitimate way. The amendment in question leaves at best a little more elbow-room, but only where the second computation method permits to alleviate the tax burden of the co-operative involved in a given taxation year.
So, I am glad to point out that this will be unavoidably the case of co-operative corporations with relatively moderate profits. I am not pleased at the thought that the profits will be limited, but I am only looking at this with the legislation in mind. We say again that this is not a
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partial recognition of the particular nature of the co-operative movement.
I hoped that the Minister of Finance (Mr. Benson), in addition to introducing a progressive tax provision whereby each co-op would pay over ten years only an escalating percentage of the increase in taxes they will thereafter have to pay, would give as much consideration to my second suggestion demanding that appropriate selection provisions be included in the tax treatment of the different co-operatives. It is because, as much as the government and probably more so, I so fully support the principle of tax equity that I would like the new tax system for co-operatives to apply only to those which obviously and effectively tend to compete with other ordinary companies.
I regret very much that consideration has not been given neither to the level of development reached by individual co-operatives nor to their type of activity and other factors which would be significant indicators as to each one's ability to come under the new tax system.
I ask the government to reconsider the matter and try to understand, for example, that a small farmers' co-operative in Quebec or in the Maritimes cannot be treated on the same basis as a huge Prairies wheat pool.
The Social Crediters would be most happy if the government would set up guidelines enabling the small cooperatives to still be subject to the present tax system until such time as their growth level and development will allow them to be integrated, like the flourishing and strong co-operatives, into the proposed tax system, unless naturally the government simply gives up the notion of capital employed.
This additional mitigation which I advocate would bring at least a measure of respect and confidence towards the co-operative movement, for due to unconditional tax leveling and no longer to simple tax fairness, it would be inconsistent to lay upon small co-operatives a burden which they would not be in a position to carry.
It seems very interesting to spread the cost over a period of ten years, but it remains nevertheless that there will then be other newly-formed and little developed cooperatives which will also have to abide by the same tax regulations which will have by then come to full maturity and will simply apply with all their severity.
We must therefore state again that co-operatives are above all associations of men who pool their efforts, and are not simple aggregations of capital. It cannot be said too often, because it is imperative, to my mind, that the marked difference be recognized.
I also point out that values such as "work" and "cooperative effort" override any other essentially material consideration. Finally, it may be useful to add that the co-operative movement cannot be conceived as a dangerous industrial or commercial trust: instead, it should be considered as a wholesome extension of the current notion of enterprise, which enables our present system to be more humane, more equitable and better suited to the needs of individuals.
In closing, I should like to recall some of the positions adopted by the co-operatives after the Minister of Finance introduced his amendments.
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The co-operatives did not ask, and are not asking, to be exempted from corporate taxes on voluntarily retained earnings. They merely ask not to be forced, through an arbitrary formula, to retain their earnings. In other words, they ask that their structures and their own operating rules be respected. This is what the president of the Co-operative Union of Canada had to say in his letter to hon. members:
Patronage dividends constitute one of the main sources of funds to ensure the liquidity required to maintain a stable capital structure and to improve the services required by the members.
And he added:
The members, by contributing to the capital of a co-operative, are not investing. Above all else, they aim to improve and extend the services they need, and receive at year end dividends in proportion to the use they made of those services.
The Finance Minister's press release of October 28 last recognizes that co-ops have special obligations because of their capital movements. The amendments introduced are no doubt a step in the right direction. I welcome them but on the other hand I would ask the minister to see if other relief measures would not be possible, especially for small or average co-ops. According to the release, discussion showed that amendments were necessary in order to take into account certains aspects and certain needs of these establishments.
I would like to add that if some progress was made, it is first due to such organizations which have succeeded in efficiently bringing forth their views and drawing them to the attention of the political power. I congratulate and encourage them to persevere so that the representatives of the people be always better informed of the needs and aspirations of the people who, on the other hand, would be able to consider Parliament and the legislative mechanism, not as the docile instrument of an omnipotent government, but as the expression of the will of the sovereign people.
This afternoon, my colleague, the hon. member for Roberval (Mr. Gauthier) dealt with the effects of Bill C-259 and particularly with sections now before us regarding caisses populaires and credit unions. I wish merely to draw the attention of the government on the fact that we must again distinguish a co-operative service organization from a profit-making one.
On October 28, as shown on page 3 of the document, the hon. Minister of Finance made the following statement about credit unions and caisses populaires:
These corporations were exempted from taxation, but under the provisions of Bill C-259, they will be taxable generally in the same way as other financial institutions.
In my view, we should not consider the Caisses populaires as financial institutions enjoying the same benefits as chartered banks. Banking institutions enjoy privileges that are not awarded to the Caisses populaires or Credit unions. That is why I say these two types of financial institutions should not be taxed or imposed in the same manner.
It would also be perfectly logical to affirm that the credit so created by the banks, under a privilege granted to them, constitutes some sort of reserve which should be considered for taxation purposes. There is therefore a very great difference between the operations of these two types of institutions. That is why it is unfair to impose the

November 18, 1971
Income Tax Act
same tax burden on Caisses populaires and Credit Unions. From page 3 of a brief submitted to the Minister of Finance (Mr. Benson) by the Federation of "Caisses populaires" and Credit Unions, I quote the following:
Corporation shares in a "Caisse populaire" are basically different from shares in a company. They are redeemable on demand, although subject to notice thereof according to regulations. No share certificates are issued. The "Caisse populaire" delivers instead to its member a booklet into which deposits and withdrawals from his capital account are entered, just as is done for bank savings accounts. As a general rule, a member may transfer his capital to his savings account, and vice versa.
That is, generally speaking, the practice in the caisses populaires.
I quote further:
Both the Porter Royal Commission on banking and the Carter Royal Commission on taxation have recognized that the social capital of members is essentially made of savings ... And one must consider that if the caisses populaires would have to pay bonuses or dividends from those surpluses after tax they would be in a inequitable position as compared with other financial institutions. Indeed, the mere fact that the social capital of the caisses populaires is reimbursable on demand makes it impossible to pay bonuses or dividends in the form of shares and to establish an immobilized capital by transferring at the same time the burden of the tax and safeguarding 50 per cent of the taxable income within the business operation. That situation certainly will create a cash problem for the caisse populaire.
For my part, I believe that we must take those recommendations into better account if we want to keep the caisses populaires alive, and the co-operative movement of credit unions to preserve the impetus which has kept them going for the past 25 years. In the interest of our country's economy, we have to keep the co-operative movement alive. And if we are to keep it alive, we should not drain it of the economic blood it needs in order for its operation to remain profitable for its members.
I have here a letter, dated November 6, 1971,1 received from the Toronto and Niagara Area Chapter of the Caisses Populaires, which seem to share the views of Quebec and Western co-operatives. I will quote only a few lines:
Since 1900, this co-operative movement has been fighting exorbitant interest rates in Canada and working to improve the financial situation of those of our citizens who most need it.
It says so in so many words! I quote further:
It would be unfortunate to have our Canadian government destroy the ideal means which Canadians have to help themselves, and this, only for the purpose of collecting additional revenues.
So, Mr. Chairman, as it is-


Gérald Laniel: Order. I regret to interrupt the hon. member, but his time has expired.


Colin David Gibson: Mr. Chairman, I enter this debate with some humility.


Joseph Adrien Henri Lambert: Mr. Chairman, I rise on a point of order.
There is a custom, in this House, to the effect that when the time of an hon. member has expired, the Chair requests from the House leave for that member to conclude his remarks. Now, I am convinced that the Chair did not show any ill-will, but-


Gérald Laniel: Order. I understood the point of order. However, the hon. member knows the Standing Orders. He must have the unanimous consent of the House to carry on with his remarks.
Is there unanimity?


An hon. Member:: No.


Colin David Gibson: Mr. Chairman, at the outset I would like to apologize if by chance I rose too soon. I had no intention of interrupting the interesting speech of the hon. member. I enter this debate with some humility.
[DOT]	(9:40 p.m.)


Gérald Laniel: Order. The hon. member for Laurier (Mr. Leblanc) rises on a point of order.


Fernand-E. Leblanc: Mr. Chairman, with regard to the point of order raised by the hon. member for Bellechasse (Mr. Lambert), I am under the impression that the House has given him unanimous consent to continue his comments. So, I cannot see why-


Gérald Laniel: Order. If the Chair chose to recognize the hon. member for Hamilton-Went-worth (Mr. Gibson), it is because I heard some "no's".


Colin David Gibson: Mr. Chairman, I approach this debate with some humility as one who is not an expert on credit unions and caisses populaires.


Some hon. Members:: Hear, hear!


Colin David Gibson: However, in my limited experience I have had the advantage of travelling across Canada and, as a member of the constitutional committee, heard briefs on the benefits of credit unions, caisses populaires and the like. In my respectful opinion the amendments proposed are good and are fairly courageous. I would like to see a little more life pumped into them. It is very much like a football team which in the fifty-ninth minute of the game is down to the ten-yard line. I would like the government to have the courage to support the credit unions more and increase the exemptions substantially, if possible.
I say that because it has been said by the government that allowing relief to credit unions would tend to let them compete with other financial institutions. In my respectful submission that is a healthy sign that the credit union movement has done much social good in this country, particularly when compared to some of our banking institutions.
The loan policies of credit unions, caisses populaires and the like are of social benefit to Canada. I do not want to push the government too hard on this.
[DOT]	(9:40 p.m.)


An hon. Member:: Why?


Colin David Gibson: Because together with bringing in the capital gains tax it would be hypocritical, as the hon. member for Saskatoon-Biggar would say. He wants the tax and he
November 18, 1971

wants complete exemption for certain groups. We cannot go too far along this line because all people in this country are supposed to be equal under the rule of law.


Charles Humbert Thomas: The Prime Minister doesn't believe that.


Colin David Gibson: Oh, yes, he does. He is one of the greatest believers in the rule of law. He might have made a mistake-


Some hon. Members:: Oh.


Colin David Gibson: -but you will not find he makes many. The criticisms coming from the hon. member for Saskatoon-Biggar are the wild, half-baked ideas of the New Democratic Party. They would ruin our economy and drive us back to the middle ages when we were just hewers of wood and drawers of water. The ideas of the hon. member for Saskatoon-Biggar are no more than impractical dreams and visions. None of them has had any successful experience of running a business. They are hypocritical in their approach. They pretend they want the tax, and as soon as we bring in the tax they say they do not want it. There has to be some common sense and balance when taxes such as these are brought in.


Alfred Pullen Gleave: On a question of privilege, Mr. Chairman, I do not mind the hon. member taking exception to my opinions and point of view with regard to co-ops, but I think I have a legitimate question of privilege when he says I was never able to run a successful business. I am entitled to say that I have successfully operated a business, that I am perfectly competent to do so and that the hon. member is ill-informed.


Gérald Laniel: Order. That is not a question of privilege. The hon. member for Hamilton-Wentworth has the floor.


Colin David Gibson: I am glad to hear the hon. member is a capitalist. I welcome him to this side of the House. He must be the only capitalist in that party. As for the criticism directed against my hon. friend from Calgary South who has sat here day after day conducting himself in a brilliant manner, although he is not a cabinet minister-I hope he soon will be-


Gerald William Baldwin: Irrelevant and incorrect.


Gérald Laniel: Order. The Chair is having a difficulty time following the speech of the hon. member. I wish the hon. member would direct his comments to the Chair.


Colin David Gibson: The government has stated that the cooperatives will be given ten years in which to adjust to the increase in the level of their taxes. I do not think ten years is enough.


Alfred Pullen Gleave: Not for you.


Colin David Gibson: Knowing the difficulties faced by the cooperatives, I suggest that about 18 years would be more appropriate.


William Arnold Peters: What about a hundred?
Income Tax Act


Colin David Gibson: The hon. member asks, "What about a hundred?" I think that is ridiculous. It is typical of the irresponsible comments and views of the NDP. They are incapable of any really constructive approach.
I believe there should be more latitude given here. Eighteen years would give the credit unions and co-operatives a chance to adjust their operations, and I think they are entitled to it. I say this as a lawyer who has known people who have sustained an accident or suffered a calamity which has deprived them of every source of funds except those available from a credit union plan. I am a firm booster of the credit union movement and I hope the government will consider action along the lines I have suggested.


Robert Simpson: Mr. Chairman, while the committee is dealing with amendments to sections 135, 136 and 137 of Bill C-259 I think it is opportune to mention that once again the House of Commons has been presented with an omnibus monstrosity. It is a monstrosity which only this government could dream up, a real nightmare. If ever there was legislation which should have been presented by way of several different bills, it is Bill C-259 which is one more glaring piece of evidence of the incompetence of the government.


Patrick Morgan Mahoney: You don't believe that. You are just reading that stuff they gave you.


Robert Simpson: The parliamentary secretary has made one or two interjections this evening. I am pleased he has. Later in my speech I shall draw a comparison between remarks he has made and some of the statements the minister has made on this subject.
We have seen other examples of the way in which the government endeavours to patch up its mistakes in a piecemeal manner by introducing omnibus legislation. For example, there were the changes made to the Criminal Code and the bumbling manner in which they handled the abolition of capital punishment, to name only two instances. One thing is certain about this monstrosity, Bill C-259: some of the non-contentious items such as the removal from the tax rolls of a considerable number of low-income earners should have been presented by way of separate legislation so that the House might have dealt with them expeditiously, thereby assuring to this group of people relief from an unjustifiable tax burden. We repeatedly asked the government to do this, and I am sure every member of the House is in favour of such a move, but the government has said no. As a result, we are obliged to deal with this 707-page monstrosity into which some 95 or 100 amendments have already been injected by the government itself-


Patrick Morgan Mahoney: One hundred and forty-five.


Robert Simpson: -not counting numerous amendments to be put forward by the opposition. Then the government says, "If you don't pass the bill quickly you will be preventing several hundred thousand low wage earners from receiving tax relief."


Patrick Morgan Mahoney: Actually, 5 j million.


Robert Simpson: First, the government produced a white paper which it indicated was the plan. Then after a deluge

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Income Tax Act
of protests from groups and individuals representing all segments of the economy the government made it known there would be some backtracking as far as some of the resource industries were concerned. Then came the bill itself, a massive piece of ill-conceived legislation, proven so by the large number of government amendments already proposed. No doubt there are more to come. Only a few weeks ago the Minister of Finance introduced further measures adding more changes to an already obscure picture.
Let us consider some of the provisions which particularly affect co-operatives and the credit union movement. There appears no room for doubt that the government is determined to penalize these two organizations which have proven extremely helpful to hundreds of thousands of Canadians. I am quite certain that the Consumers Co-operative which functions in the city in which I live has been a strong factor in keeping prices reasonably in line. A very admirable service has also been provided by the local credit union.
My seatmate, the hon. member for Wellington, has already put on the record this afternoon the structure of credit unions and caisses populaires in Canada and the services they provide, so there is no need for me to repeat it. I think this will probably meet with the favour of the hon. member for Calgary South, who as I have said was earlier on his feet telling members of the opposition they are being too repetitious and that the government does not need to hear the same thing over and over again. What I am attempting to do in the short period of time available to me this evening is to re-emphasize some of the things the government has been told but about which they have obviously done nothing.
The co-ops and credit unions were extremely concerned by indications in Bill C-259 that their future was undoubtedly very bleak. However, after meetings with the minister and representations made by members of the opposition the co-ops and credit unions were told that the implications in the bill would be reviewed by the government. Amendments have been proposed to the sections relating to co-ops and credit unions but the damage that will be done to these organizations is still very apparent.
As far as the co-ops are concerned, the use of capital employed as a base for taxation is entirely wrong and discriminatory, and although the government has come forth with amendments to sections 135, 136 and 137 of the bill I do want to impress upon the minister, through his parliamentary secretary, that the measures the government originally introduced might quite easily have sounded the death-knell of many co-operatives. Certainly the amendments proposed by the government are unsatisfactory from the point of view of these organizations.
I suggest to the government that co-operatives be allowed to continue to distribute annual savings in a form which would enable members to continue their investment in the co-operative. It would also make it possible for co-operatives to carry on with the essential policy of retirement of equity of those members who no longer use the co-operative.
Since the disclosure in June that credit unions will be very much affected by the tax reform legislation they
(Mr. Simpson.]
have been exceedingly concerned with the threat that the tax proposals constitute for them. If enacted, the proposals will severely undermine the definitive characteristics of credit unions and will surely place them at a disadvantage in the competitive business market. Bill C-259 reveals a very basic misunderstanding of the nature of credit unions, and although some amendments have been introduced by the government, the proposals still project a tax formula that is inequitable.
May I also point out to the minister that these amendments do not meet the objections of the co-operatives, who insist that the fundamental distinctions in their nature be respected by the taxation statute. These distinctions are as follows: First, the co-operative provides primarily a self-help service that is required by its members. Second, the co-operative distributes its earnings to its members in proportion to member business. Third, it raises and services its equity capital by revolving the same in relation to the use of the co-operative by its members. Finally, the capital contributed by a member of a co-operative provides the member with services and does not produce for him a return on investment.
As all of us know, the members of co-operatives have strenuously objected to the "capital employed" concept contained in Bill C-259 which substantially reduces the amount of patronage refunds which could be paid to members on business done with themselves. Reducing patronage refunds hits at the economic existence of cooperatives. These refunds are part of the investment required to enable the co-operative to continue to exist.
Members usually invest some of these refunds in their co-operative which provides a substantial portion of the capital required for the operation and growth of the cooperative, and especially for the revolving of member capital to keep the ownership of the co-operative in the hands of the user of the co-operative. I am pleased that the minister has been convinced of the error of his original ideas in respect of co-ops and credit unions. However, again I assure him that the members of these organizations are still far from satisfied.
In conclusion, I say to the parliamentary secretary from Calgary South, who a short while ago gave the committee a lecture on what he called the repetitiveness of the speeches by members of the opposition, that it appears quite obvious from a letter that all Members of Parliament received this afternoon from the Co-operative Union of Canada, signed by its president, that this government needs to be told things many, many times before it gets the message. I quote part of this letter which reads as follows:
Co-operatives have recently received a letter from the hon. Minister of Finance, the final paragraph of which reads:
"The government considers that the proposed new tax bill, as
amended, will result in a fairer distribution of the tax burden
while helping co-operatives in the transition from exempt to
taxable status".
This illustrates very well that the government has to be told these things time and time again since the co-operatives are not presently exempt from taxation.
Progress reported.
November 18, 1971



PROCEEDINGS ON ADJOURNMENT MOTION

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

Heath Nelson Macquarrie: Mr. Speaker, on October 13 I asked the Minister of the Environment and Fisheries (Mr. Davis) this question:
In the wake of last week's conference over which the minister presided, is the government now giving serious consideration to asserting Canada's jurisdiction over the continental shelf in so far as fisheries management is concerned and, if so, when may an announcement be expected?
The minister gave this reply:
Mr. Speaker, our primary concern is for sound conservation out over our continental shelf, and we require the co-operation of other nations to bring that about.
The minister is always very precise in his replies. It was once said of an official of this House years and years ago that while he may never have lacked conviction, he was sometimes a little short on accuracy. I remember a matter raised by my colleague from St. John's East who had noted that in an official publication of the House the minister was designated only as Minister of the Environment. I note that the parliamentary secretary is listed in Hansard as the Parliamentary Secretary to the Minister of the Environment, not to the Minister of the Environment and Fisheries, so I take it he has not troubled to make that correction. While it was not in the designation, what I think is far more important is whether or not the fisheries aspect is in the consideration of the man in charge of the portfolio.
It is interesting that at this time when our country is troubled about the state of its secondary industries, when we are in great travail over those industries, our basic or primary industries are at their nadir. No one has to talk about wheat, no one has to mention mining; certainly no one has to talk about what is happening to the great pulp and paper industry, or what happened long before "Nixo-nomics." We have watched with great anxiety what is happening to the most ancient of our industries, namely, fisheries.
There is a serious story in so far as the east coast is concerned. Stocks are being depleted and many important fish are in very serious short supply. There is overfishing. There is foreign intrusion with dangerously sophisticated equipment. All sorts of fish are being swept up from the bottom of our seas. This constitutes a grave challenge. I am afraid there is not sufficiently high priority for the fishing industry of Canada.
In my province-I think this is unique to that province- the government has managed to elude, evade or escape its proper and constitutional responsibility for fishing centres, the fishing industry and, more important, the harbours in this precarious industry. According to the British North America Act, section 91, subsections 9, 10 and 12, special responsibilities are set out in respect of beacons, buoys and lighthouses. These are clearly the responsibili-
Proceedings on Adjournment Motion
ty of the federal government. In the province of Prince Edward Island, under the device of designated ports some ports get the attention of the federal government through the Department of Public Works and these are designated not by the federal government, which has the responsibility, but by the provincial government. So there is a clear evasion of responsibility. But on October 131 was particularly interested in what was being done on the international front in respect of our dangerously depleted fisheries.
As one looks at this problem one is concerned about the contradistinction which is being made by the government, that the vigorous unilateralism in the Arctic is not reproduced in reference to the Atlantic. In reference to the issue of the 12-mile limit I remember when the former Secretary of State for External Affairs, now government leader of the Senate, came to the External Affairs Committee and proclaimed the 12-mile limit. My colleague, the hon. member for Oxford (Mr. Nesbitt), said there were so many officials there that there must be some announcement no less important or world shattering than a declaration of war. Then we had the appearance of the ViceChairman of the Council of Ministers of the Soviet Union.
I am not one of those who deplore that or one who fears or criticizes it, but I say in reference to that visit that through all the current exercises in summitry we must ask the question: What is the concrete result thereof?
In the communique which followed the exchange of pleasantries at the time of the visit of the distinguished leader of the Soviet Union to our country, there was no place or priority for fisheries. I had hoped that that occasion would have served as an opportunity to express our concern about our fishery and the control of the continental shelf. I have attended many international gatherings and I know that when you have the Soviet bloc you have quite a bloc: they are fairly numerous and extremely cohesive. But, Mr. Speaker, after all the tumult and shouting about coexistence had died down, and after the captains and kings had departed, what was there left for the east coast fisherman? Did we move one inch forward in our claim to management of fisheries resources over our continental shelf? Did we get the support of the Soviet Union? Did we gain their assistance for any future international conclave?
Now comes the question that the minister must answer and that his parliamentary secretary, who is here tonight, must answer. Are we trying hard enough to safeguard the livelihood of the men who are engaged in this most perilous of industries? I would profoundly, happily and joyously welcome some indication to show that apart from our interesting talk about controlling the environment and advancing on many esoteric grounds, some serious attention has been given to this much assaulted industry and that action has been taken.


Mr. Eymard Corbin (Parliamentary Secretary to Minister of Fisheries):: Mr. Speaker, I would be a fool if I were to disagree with the hon. member who has just spoken and suggest that there is not a serious depletion of our fisheries resources on the east coast particularly. This is a recognized fact. The government is conscious of it and is conscious also of its responsibilities as a coastal state. The government knows that the sea must be managed more intelligently in the future. As I say, the government knows

this. It is determined to do everything in its power to prevent destruction by pollution and overfishing as well as by undue exploitation the life-giving resources of our coastal seas.
On the other hand, the government is also aware of its responsibilities as a member of the international fishing community. It is anxious to achieve its objectives in a spirit of co-operation with its neighbours wherever possible. During the past two years, as the hon. member himself just outlined, the government has taken various steps to correct some of the wrongdoings which have taken place in the past, as well as some of the mismanagements of the past in the hope of arriving at better international agreements regarding the management of the fisheries.
The government of Canada has drawn base lines from headland to headland, has established a 12-mile territorial sea limit and has established closing lines to close off large bodies of water such as the Gulf of St. Lawrence and the Bay of Fundy for the exclusive use of Canadian fishermen. All this was done on Canada's own initiative. The government at present is also in the process of phasing out from our exclusive fishing areas countries which have had traditional fishing practices there. Also, it has initiated a series of negotiations which should bear fruit in the very near future.
Hon. members will recall that the Secretary of State for External Affairs (Mr. Sharp) stated in the House on September 27 that we are making very rapid and satisfactory progress on a treaty with the French government which will cover a number of these matters. The government further intends to discuss with fishing countries the question of the management of this resource on the whole of our continental shelf and the practices necessary for a sustained yield harvesting of the fisheries resource. The minister announced recently that he hoped to convene next year a meeting of all international fishing nations of the world in order to discuss this very important subject.
Finally, Mr. Speaker, the hon. member referred to the recent visit of the Premier of the Soviet Union and the role that Canada played at that time to bring to the attention of our neighbour to the north our great concern about the overfishing of the fisheries. Answering a question put to him in the House by the hon. member for South Shore (Mr. Crouse), the minister said that we have not failed to reach an understanding with the U.S.S.R., that we have made various submissions and that we hope we will be able to carry out our points and get the U.S.S.R. to agree to our proposals.



GRAIN-LIFT PROGRAM-REPAYMENT REQUESTS TO FARMERS-REFERENCE TO LEGAL OFFICERS OF GOVERNMENT

Alfred Pullen Gleave: Mr. Speaker, I raise this question this evening because I have not been able to obtain satisfactory information. On October 13 I asked a question of the minister in charge of the Wheat Board (Mr. Lang) in regard to certain letters sent to farmers demanding repayment of moneys which they were paid under the Lift program. On November 1, I again asked a question with regard to the legal aspects of the matter. I asked whether the individual cases of farmers

November 18, 1971
Proceedings on Adjournment Motion
were examined by counsel in the Department of Justice or in any other department of government before repayment was demanded by letter. I would like the answers tonight.
I would like to know how many letters were sent out by the department demanding repayment. I would like to know how much money in total has been demanded from farmers. I would like to know how much research was undertaken in each case before letters were written demanding money. From time to time I return to my constituency. Last weekend I attended a meeting where I met a number of farmers. Some came to me saying, "I have been asked for so much money. I have received a letter demanding repayment. What shall I do?" They do not know the basis upon which they are asked for repayment.
I am sorry that the minister is not in the chamber tonight. The Lift program was hastily put together. We know that through necessity the government may have hired people who were inexperienced and asked them to undertake supervision of the program. But to demand from a farmer that he repay money on the basis of an aerial photograph, showing this or that in regard to his farm, is just not right.
To demand repayment from a farmer because in the opinion of the people concerned in the department he had not cut a cover crop as of a given day, even though extensions had been publicly granted that summer, is not right. To demand money from a person under these circumstances is not right. It is not right to send a letter to such an individual asking him to sign what in effect is a promissory note to undertake eventual payment of the amount demanded.
The minister responsible should rise in this House on motions and explain what is happening. We should be given answers, but we are not getting them. The hon. member for Meadow Lake (Mr. Cadieu) also asked for answers on this subject. I do not know what he got but I know what I got. I sincerely hope that this evening we will receive some worth-while answers.


Mr. Marcel Lessard (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, a few days ago on behalf of the minister I provided some information that was requested by the hon. member for Meadow Lake (Mr. Cadieu). The hon. member who has just spoken has asked for more information. I regret that I am not in a position to give him a complete answer right now but I would say to him that one of the main aims of Operation Lift was quickly to provide co-operating prairie farmers with some much needed cash. To achieve this, cheques covering an initial payment were sent out to producers following a quick examination of their applications. Later, a more detailed examination was carried out, and in those cases where it was evident that an overpayment had been made the producer was advised of the discrepancy and a return of the overpayment was requested.
It was originally estimated that about 4,168 overpayments had been made, and to date more than 888 producers have replied to the request. Of these, more than 528 have returned the overpayment and more than 360 have provided further explanation which has justified their original payment.
November 18, 1971

As I pointed out in the original reply to the hon. member, each individual case was not examined by the Department of Justice. However, the Department of Justice has endeavoured to classify the reasons for overpayment into a number of categories: for example, a change of facts since the original submission, a change of residence, etc., with a view to determining what course of action should be taken with respect to each category. Our department is still awaiting a reply from the Department of Justice. We are also awaiting a reply from some farmers who have been asked to reimburse the money. As I pointed out, some of them have complied with the request and others who feel they should not reimburse the department have given satisfactory explanations and things are settled. I suppose among those cases which remain to be settled there will be many more farmers who will give a proper explanation that will settle the matter. We hope this will be the case.



MEASURES TO ALLEVIATE WORLD MARKET COMPETITION

Mr. Henry Latulippe (Compton):: Mr. Speaker, on September 28 I did put a question that was considered too general in scope to call for an immediate answer. I will quote the question I then put to the hon. Minister of Industry. Trade and Commerce:
What policy does the government plan to implement in view of the re-organization of trade blocks in the world, and how will the Canadian economy subsist in the next few years if it tolerates cost increases such as those we experienced in the last few years while being able to meet the competition on world markets?
Mr. Speaker, we already have to face the European Common Market the members of which can certainly produce cheaper than we can even if their economy differs from ours. Our economy is one of increase in taxes, interest rates, salaries, cost of living and, consequently, in products. The more we progress, the more we experience such a situation. The more prices and costs increase, the more difficult it is to compete with other countries.
I was asking the government what kind of solution it had to suggest to cope with the serious economic conditions which we are experiencing.
I would term that, Mr. Speaker, an unfair economic advantage, an economic unbalance. This unbalance is obvious, because we will witness in the near future a considerable decrease in Canadian exports, such as we have known and are experiencing at the present time. These decreasing exports are due to the high interest rates which the industry, as well as ourselves, has to pay to obtain the necessary capital to carry on in business. This condition is also ascribable to exorbitant federal, provincial, municipal and school taxes which still raise the cost of all products. Thus in all those sectors it becomes more and more difficult to compete with other countries.
We can expect in future even worse conditions than the present ones. I was asking the government whether it could not give us satisfactory answers and tell us, for
Proceedings on Adjournment Motion
instance, what is being done now to remedy this situation, to find other means of financing our industries at lower interest rates and to improve the situation with regard to bonds and loans.
Consider the case of debentures. When manufacturers have to issue debentures on the market, they do so because they have enormous bills to pay and carry tremendous overhead expenses. Even the cost of insurance is too high for manufacturers. The financing of production and warehousing is also too costly. Formula 88, as put out by the banks and financial institutions, entails a 12. per cent interest rate.
Those are as many factors that contribute to increasing prices, to creating problems for the Canadians, to restricting our imports, for prices are endlessly going up.
Therefore, Mr. Speaker, I ask the government whether it could not find some technical formula such as a compensated discount to reduce prices. We must absolutely establish a price reduction policy in order to control all factors of increase. That is why I am asking the government what kind of policy it can offer the Canadian people and our industries in that regard.


Mr. Bruce Howard (Parliamentary Secretary to Minister of Industry, Trade and Commerce):: Mr. Speaker, the hon. member for Compton (Mr. Latulippe) has raised an interesting question this evening because Canada is indeed concerned about its trade problems around the world. Canada has a reputation of being the highest per capita trader in the world. Of course, we are particularly concerned because of developments in the trading world such as the enlargement of the European Economic Community.
I caution the hon. member against taking too pessimistic a view because of the situation. Temporary adjustments will be necessary. I advise him to look at the opportunities that exist in the enlarged economic community in Europe. The large market that exists there is growing every year. Their average tariff level is very reasonable. There are many opportunities for Canada as a great trading nation.
We have been very conscious of the problems that exist in making those adjustments. We carried on discussions with the British as they considered their entry into the Common Market. We were able to make special arrangements with the British, which they carried into the market on behalf of Canada, with regard to special products of great concern to Canadian trade. We are doing other things as well. We are promoting the development of multilateral trading negotiations within the OECD. We believe that real progress in advancing Canada's interest in international trade will be made when there is a new round of trading negotiations. This will lead to freer trade in the world.
The hon. member referred to the problem of keeping costs in line in order that we may maintain our trading advantages in the world. We should remind ourselves over and over again that Canada has the lowest cost of living increase of any of the western nations. The figures published by the OECD last year showed that Canada had a

November 18, 1971
Proceedings on Adjournment Motion
cost of living increase of 3.4 per cent. This is the lowest of any of the OECD countries.
I would remind the hon. member that the OECD countries include the great trading nations of the western world, the nations with which we do business, so we have not done too badly in this regard. Everyone in the country should, of course, be concerned about increases in costs. The government has been extremely concerned, and we
shall continue to be concerned, about this important ingredient in maintaining our trading position. But we have experienced a notable increase in our world trade despite difficulties in the world trading picture. Last year there was a record merchandise trading surplus of $3 billion, the largest we have ever known-


The Acting Speaker (Mr. Boulanger):: Order.
Motion agreed to and the House adjourned at 10.28 p.m.

Friday, November 19, 1971